<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
New England Funds
Where The Best Minds Meet
---------------------------------------------------------------------------
Semiannual Report and Performance Update
---------------------------------------------------------------------------
New England Growth
Opportunities Fund
[ARTWORK APPEARS HERE]
-------------
June 30, 1995
-------------
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
July 20, 1995
Dear Shareholder:
We have good news to present in this Semiannual Report for New England
Growth Opportunities Fund, which includes your Portfolio Manager's commentary
and complete financial information.
Market Overview
Investors who stayed the course in 1995 were amply rewarded. Major U.S.
stock market indices soared to record highs and the bond market staged a
spectacular comeback from its 1994 lows. Fueling the rally was clear evidence
that the economy had begun to slow down as a result of the interest rate hikes
engineered by the Federal Reserve Board to keep inflation in check. Indeed, with
declining housing starts and rising unemployment numbers reported in the first
half of 1995, expectations grew that the Fed's next move would be downward, to
prevent the slowing economy from slipping into recession.
The bond market surged at the prospect of lower rates, and the stock market
followed suit, with the Standard & Poor's 500/(R)/ Index gaining 20.14% during
the first half of the year. The large, blue-chip companies led the way, in part
because a weak U.S. dollar gave them a competitive advantage overseas and
contributed to surprisingly healthy earnings reports. Finally, on July 6, just
after this reporting period ended, the Fed lowered a key short-term rate by
0.25%, a relatively modest move, but a significant psychological change in
direction.
Your Financial Adviser -- A Trusted Ally
As a shareholder in New England Funds, you have a valuable ally you can
turn to at all times -- your financial adviser. This experienced
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
professional can help you design an asset allocation program suitable to your
goals and risk tolerance. Most important, during times of market volatility or
uncertainty, your adviser can help you avoid making costly mistakes, such as
trying to "time" the market. Investors who go it alone can overreact to short-
term market events, buying and selling on the basis of this week's headlines or
chasing the latest "hot" investment. Such behavior can derail an otherwise
prudent investment program. But investors who work with a financial adviser
receive guidance throughout the market's ups and downs. Your adviser will help
you place short-term market swings in their proper perspective and keep you
focused on your long-term investment program.
Your adviser is just one of the experts whose talents we have tapped in our
effort to bring the best minds in the business to the task of managing your
money. These experts are a vital part of the investment process at New England
Funds, and we encourage you to take advantage of their skills to the fullest.
We invite you to read the accompanying management commentary and financial
highlights. If you have any questions or comments, please contact your financial
adviser or New England Funds directly at 800-225-5478. Once again, we appreciate
your continued confidence and investment in New England Funds.
Sincerely,
/s/ Peter S. Voss /s/ Henry L.P. Schmelzer
Peter S. Voss Henry L.P. Schmelzer
Chairman President
<PAGE>
--------------------------------------------------------------------------------
New England Growth Opportunities Fund
--------------------------------------------------------------------------------
INVESTMENT RESULTS THROUGH JUNE 30, 1995
Putting Performance into Perspective
The graph comparing your Fund's performance to a benchmark index provides you
with a general sense of how your Fund performed. To put this information in
context, it may be helpful to understand the special differences between the
two. Your Fund's total return for the period shown appears with and without
sales charges and includes Fund expenses and management fees. A securities index
measures the performance of a theoretical portfolio. Unlike a fund, the index is
unmanaged; there are no expenses that affect the results. In addition, few
investors could purchase all of the securities necessary to match the index.
And, if they could, they would incur transaction costs and other expenses.
--------------------------------------------------------------------------------
A $10,000 Investment in Class A Shares
--------------------------------------------------------------------------------
Compared to Standard & Poor's 500/4/
A chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class A Shares compared to Standard and Poor's 500
Index /4/. The data points from the graph as follows:
<TABLE>
<CAPTION>
New England Growth Opportunities Fund - Net Asset Value/1/
Year Amount
---- ------
<S> <C>
6/30/85 $10,000
6/87 $14,755
6/89 $15,682
6/91 $19,279
6/93 $24,847
6/95 $30,881
</TABLE>
<TABLE>
<CAPTION>
New England Growth Opportunities Fund - With Maximun Sales Charge/2/
Year Amount
---- ------
<S> <C>
6/30/85 $ 9,425
6/87 $13,907
6/89 $14,780
6/91 $18,170
6/93 $23,418
6/95 $29,105
</TABLE>
<TABLE>
<CAPTION>
Standard and Poor's 500 Index/4/
Year Amount
---- ------
<S> <C>
6/30/85 $10,000
6/87 $16,991
6/89 $19,065
6/91 $23,831
6/93 $30,714
6/95 $39,381
</TABLE>
This illustration represents past performance of Class A shares and cannot
predict future results. Investment return and principal value may vary,
resulting in a gain or loss on the sale of shares. Class B and Class C share
performance will be greater or less than that shown based on differences in
inception date, fees and sales charges. All Index and Fund performance assumes
reinvested distributions.
1
<PAGE>
--------------------------------------------------------------------------------
New England Growth Opportunities Fund
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Average Annual Total Returns 6/30/95
--------------------------------------------------------------------------------
Class A (Inception 5/6/31) Year to Date 1 Year 5 Years 10 Years
<S> <C> <C> <C> <C>
Net Asset Value/1/ 18.49% 23.58% 11.48% 11.94%
With Max. Sales Charge/2/ 11.65 16.49 10.17 11.28
Standard & Poor's 500/4/ 20.14 25.99 12.03 14.60
Lipper Growth & Income Avg./5/ 16.75 19.74 11.18 12.60
Class B (Inception 9/13/93) Year to Date 1 Year Since Inception
Net Asset Value/1/ 18.12% 23.04% 10.41%
With CDSC/3/ 14.13 19.04 8.85
Standard & Poor's 500/4/ 20.14 25.99 12.80
Lipper Growth & Income Avg./5/ 16.75 19.74 n/a
Class C (Inception 5/1/95) Since Inception
Net Asset Value/1/ 5.72%
Standard & Poor's 500/4/ 6.54
Lipper Growth & Income Avg./5/ n/a
</TABLE>
These returns represent past performance. Investment return and principal value
will fluctuate so that shares, upon redemption, may be worth more or less than
original cost.
Notes to Charts and Performance Update
/1/Net Asset Value (NAV) performance assumes reinvestment of all distributions
and does not reflect the payment of a sales charge at the time of purchase.
/2/With Maximum Sales Charge performance assumes reinvestment of all
distributions and reflects the maximum sales charge of 5.75% at the time of
purchase of Class A shares.
/3/With Contingent Deferred Sales Charge (CDSC) performance assumes a maximum
4% sales charge is applied to a redemption of Class B shares. The sales
charge will decrease over time, declining to zero five years after the
purchase of shares.
/4/Standard & Poor's 500 Index (S&P 500) is an unmanaged index representing the
performance of 500 major companies, most of which are listed on the New York
Stock Exchange. The S&P 500 performance has not been adjusted for ongoing
management, distribution and operating expenses and sales charges applicable
to mutual fund investments.
/5/Lipper Average is an average of the total return performance (calculated on
the basis of net asset value) of funds with similar investment objectives as
calculated by Lipper Analytical Services, an independent mutual fund ranking
service.
2
<PAGE>
--------------------------------------------------------------------------------
New England Growth Opportunities Fund
--------------------------------------------------------------------------------
REWARDING SHAREHOLDERS
FOR MORE THAN 60 YEARS
Through good times and bad, investors have come to depend on New England Growth
Opportunities Fund. This Fund is designed to pursue long-term growth from
investments in common stocks similar to those in the S&P 500/4/. Its focus on
large, well-established companies has produced a long history of solid
performance achieved by various portfolio managers. Please see pages 1 and 2 for
the Fund's most recent results.
[BAR CHART TITLE]
--------------------------------------------------------------------------------
Growth Opportunities Fund - Class A Shares*
--------------------------------------------------------------------------------
A $10,000 Investment Compared to the Standard & Poor's 500 Index/4/
May 1931 - June 30, 1995
Cumulative Return
A bar chart appears here, illustrating the cumulative return of an investment in
Class A Shares* compared to the Standard & Poor's 500 Index /4/ from May 1931
through June 30, 1995. The bar chart data is as follows:
<TABLE>
<S> <C>
New England Growth Opportunities Fund: $24,832,989
Standard & Poor's 500 Index/4/: $6,323,193
</TABLE>
*This information represents past performance only and cannot predict future
returns. Investment return and principal value will vary and may result in a
gain or loss on sale. Results assume sales charge of 7.25% in effect in 1931
and reinvestment of all dividend and capital gains distributions for period
through 6/30/95. Generally, this was a period of rising stock prices. Effective
10/1/90, the maximum sales charge was reduced to 5.75%. Five advisers have
managed the Fund, with changes occurring in 1968, 1983, 1988, and 1995.
3
<PAGE>
--------------------------------------------------------------------------------
New England Growth Opportunities Fund
--------------------------------------------------------------------------------
[ART WORK APPEARS HERE]
NEW ENGLAND GROWTH
OPPORTUNITIES FUND
Portfolio Manager: Gerald H. Scriver
Westpeak Investment Advisors, L.P./(R)/
Shareholders of New England Growth Opportunities Fund approved a change in
investment adviser, effective on May 1, 1995. The following report is a blend of
the observations and activities of Back Bay Advisors, managers until April 30,
and of Westpeak Investment Advisors, the Fund's new investment sub-adviser. Both
Back Bay and Westpeak are affiliates of New England Investment Companies, L.P.,
parent of New England Funds.
Although 1994's interest rate concerns and other uncertainties carried over into
the new year, the nation's financial markets enjoyed vigorous rallies in the
first half of 1995. The seventh and last of the Federal Reserve Board's year-
long series of interest rate hikes took place in February. These hikes were
aimed at slowing the growth of the U.S. economy and at averting what the Fed saw
as a real danger of inflation generated by too-rapid economic expansion.
Despite the unmistakable impact of the rate hikes--sluggishness in key
manufacturing sectors, housing and retail sales--the stock market was in a
positive mood, repeatedly setting new records in the popular averages. This
enthusiasm stemmed from the signs of a slowdown, from unexpectedly strong
profits at many companies, and from the expectation that the economy would
4
<PAGE>
--------------------------------------------------------------------------------
New England Growth Opportunities Fund
--------------------------------------------------------------------------------
achieve a "soft landing" from its earlier heights. All of these, in turn,
implied an easing of interest rates, which in fact came about a few days after
the period closed.
How Your Fund Performed
New England Growth Opportunities Fund took advantage of the market's strength to
produce a total return on net asset value of 18.49% for Class A shares. This
compares with returns of 20.14% for the Standard & Poor's 500 Stock Index/4/ and
16.75% for the Lipper Growth and Income Average/5/.
How We Managed Your Fund
At the end of 1994, we felt that investors would favor quality investments in
the new year. Therefore, continuing the portfolio structure that was in place
late last year, we emphasized the largest, most stable companies in each sector
of the Standard & Poor's 500 Index/4/. As events played out, the market was
especially rewarding to holders of large-capitalization stocks early in 1995.
The Fund was fully invested and well-diversified, with representation in every
industry sector found in the S&P 500/4/. Well-established companies, like those
that have long made up the core of the Growth Opportunities Fund's portfolio,
for years have been mainstays of the U.S. economy. Today, many are also
important participants in expanding world markets.
As has been the case in recent years, we also devoted 20% of the portfolio to
companies with low price-to-earnings ratios, and those that appeared to offer
solid value, to provide a potential cushion for market volatility.
5
<PAGE>
--------------------------------------------------------------------------------
New England Growth Opportunities Fund
--------------------------------------------------------------------------------
Later in the period, growth stocks, especially technology issues, were a major
factor in the market's almost daily leaps to new highs. We positioned the
portfolio to take advantage of this strength. We have also been stressing
interest-sensitive issues that we believe can do well as the economy remains
subdued and inflationary concerns abate. Given persistent sluggishness in the
economy, the Federal Reserve Board may feel justified in lowering short-term
rates again. Continued cuts, should they occur, may fuel an extension of the
bond market's 1995 rally.
Outlook for Our Shareholders
The outstanding performance of growth stocks has widely outdistanced value
stocks, for both the six-month and twelve-month periods that ended in June. Much
of this outperformance came from the technology sector. We feel this phase of
the market's cycle still holds potential, so we remain overweighted in
technology and interest sensitive stocks, and hold below average weightings in
consumer stocks.
For the next few months, we think growth stocks will continue to drive the
market, with leadership shifting to value stocks later in the year. Strength in
bonds, deriving from falling long-term rates, has also provided impetus for
stocks. We do not believe that the bond market's strength will persist into
1996.
We also think technology stocks will be increasingly vulnerable to a sharp
pullback, should speculation become more widespread. Under these circumstances,
we will scale back these issues if they move into a stage of excessive
valuations.
6
<PAGE>
--------------------------------------------------------------------------------
New England Growth Opportunities Fund
--------------------------------------------------------------------------------
<TABLE>
--------------------------------------------------------------------------------
Top Ten Portfolio Holdings 6/30/95*
--------------------------------------------------------------------------------
Company Percentage
of Net Assets
------------------------------------------------------------------------------
<C> <S> <C>
1. Exxon Corp. 3.0%
World's leading oil company
------------------------------------------------------------------------------
2. Mobil Corp. 2.5%
International oil and gas, exploration, and
development company
------------------------------------------------------------------------------
3. McDonnell Douglas Corp. 2.3%
Aircraft and aerospace manufacturer
------------------------------------------------------------------------------
4. Intel Corp. 2.3%
Manufacturer of semiconductors and
memory circuits
------------------------------------------------------------------------------
5. CIGNA Corp. 2.2%
Multiline insurance holding company
------------------------------------------------------------------------------
6. Hewlett-Packard Co. 2.1%
Leading electronic data and equipment
company
------------------------------------------------------------------------------
7. Medtronic, Inc. 1.8%
Manufacturer of cardiac and healthcare
equipment
------------------------------------------------------------------------------
8. General Electric Co. 1.8%
Manufactures consumer and industrial products,
also owns the NBC network
------------------------------------------------------------------------------
9. AMR Corp. 1.6%
Holding company for American Airlines
------------------------------------------------------------------------------
10. Coca-Cola Co. 1.6%
Leading soft drink and juice company
------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
*Portfolio holdings are subject to change.
7
<PAGE>
[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
New England Funds
Where The Best Minds Meet
Portfolio Composition, Financial Statements and Highlights
NEW ENGLAND GROWTH OPPORTUNITIES FUND
June 30, 1995
<PAGE>
PORTFOLIO COMPOSITION
Investments as of June 30, 1995
(Unaudited)
COMMON STOCK--96.7% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
AEROSPACE--5.0%
15,800 Allied Signal, Inc. ..................................... $ 703,100
10,250 Boeing Co. .............................................. 641,906
18,600 Lockheed Martin Corp. ................................... 1,174,125
39,400 McDonnell Douglas Corp. ................................. 3,023,950
10,600 United Technologies Corp. ............................... 828,125
------------
6,371,206
------------
AGRICULTURE & FOOD--4.6%
42,336 Archer Daniels Midland Co. .............................. 788,508
11,600 Campbell Soup Co. ....................................... 568,400
11,600 HJ Heinz Co. ............................................ 514,750
8,400 Hershey Foods Co. ....................................... 464,100
7,200 Kellogg Co. ............................................. 513,900
20,000 Philip Morris Co., Inc. ................................. 1,487,500
21,600 Sara Lee Corp. .......................................... 615,600
7,600 Unilever NV.............................................. 988,950
------------
5,941,708
------------
AIR--1.9%
28,000 AMR Corp. (c)............................................ 2,089,500
9,800 Northwest Airlines Corp. ................................ 346,675
------------
2,436,175
------------
BANKING--7.8%
13,887 Banc One Corp. .......................................... 447,856
21,700 Bank of Boston Corp. .................................... 813,750
24,000 Bank of New York, Inc. .................................. 969,000
9,000 BankAmerica Corp. ....................................... 473,625
5,500 Chase Manhattan Corp. ................................... 258,500
19,500 Chemical Banking Corp. .................................. 921,375
27,500 Citicorp (c)............................................. 1,591,565
4,900 First Chicago Corp. ..................................... 293,387
7,600 Fleet Financial Group, Inc. ............................. 282,150
5,050 Mellon Bank Corp. ....................................... 210,206
10,700 J.P. Morgan & Co., Inc. ................................. 750,338
8,700 NationsBank Corp. ....................................... 466,537
43,000 Union Bank of San Francisco.............................. 1,816,750
3,900 Wells Fargo & Co. ....................................... 702,975
------------
9,998,014
------------
BEVERAGES--1.6%
32,200 Coca Cola Co. ........................................... 2,052,750
------------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(Unaudited)
COMMON STOCK--CONTINUED
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
BUSINESS MANUFACTURES--4.6%
36,200 Hewlett Packard Co. ...................................... $ 2,696,900
12,700 International Business Machines Corp...................... 1,219,200
24,000 Pitney Bowes, Inc. ....................................... 921,000
5,100 Seagate Technology........................................ 200,175
7,100 Xerox Corp. .............................................. 832,475
------------
5,869,750
------------
CHEMICALS--4.1%
5,000 Air Products & Chemicals, Inc. ........................... 278,750
30,000 Cabot Corp. .............................................. 1,582,500
14,100 Dow Chemical Co. ......................................... 1,013,435
14,300 E.I. du Pont de Nemours & Co. ............................ 983,125
6,200 Monsanto Co. ............................................. 558,775
14,600 PPG Industries, Inc. ..................................... 627,800
6,000 Union Carbide Corp. ...................................... 200,250
------------
5,244,635
------------
CONTAINERS--0.2%
6,700 Ball Corp. ............................................... 233,663
------------
COSMETICS--1.5%
13,600 Johnson & Johnson......................................... 919,700
13,800 Procter & Gamble Co. ..................................... 991,875
------------
1,911,575
------------
DOMESTIC OIL RESOURCES--0.9%
6,600 Atlantic Richfield Co. ................................... 724,350
12,800 Phillips Petroleum Co. ................................... 427,200
------------
1,151,550
------------
DRUGS & HEALTH CARE--4.0%
19,200 Abbott Labs............................................... 777,600
6,900 Amgen, Inc. (c)........................................... 555,019
15,100 Bristol Myers Squibb Co. ................................. 1,028,688
6,400 Eli Lilly & Co. .......................................... 502,400
33,800 Merck & Co., Inc. ........................................ 1,656,200
7,100 Pfizer, Inc. ............................................. 655,863
------------
5,175,770
------------
ELECTRIC UTILITIES--3.0%
22,900 Consolidated Edison Co. NYC............................... 675,550
10,700 Duke Power Co. ........................................... 444,050
15,000 FPL Group, Inc. .......................................... 579,375
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(Unaudited)
COMMON STOCK--CONTINUED
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (A)
-------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC UTILITIES--CONTINUED
24,600 Pacific Gas & Electric Co. ......................... $ 713,400
16,600 Public Service Enterprise Group..................... 460,650
23,800 SCE Corp. .......................................... 407,575
23,600 Southern Co. ....................................... 528,050
------------
3,808,650
------------
ELECTRONICS--6.7%
9,400 Advanced Micro Devices, Inc. (c).................... 341,925
16,600 AMP, Inc. .......................................... 701,350
10,500 Andrew Corp. (c).................................... 607,688
8,400 Emerson Electric Co. ............................... 600,600
5,100 Harris Corp. ....................................... 263,287
12,700 Honeywell, Inc. .................................... 547,688
47,200 Intel Corp. ........................................ 2,988,350
7,000 Micron Technology, Inc. ............................ 384,125
9,800 Raytheon Co. ....................................... 760,725
6,900 Tektronix, Inc. .................................... 339,825
2,800 Texas Instruments, Inc. ............................ 374,850
19,200 Vishay Intertechnology, Inc. ....................... 693,600
------------
8,604,013
------------
FINANCIAL SERVICES--4.0%
33,300 Beneficial Corp. ................................... 1,465,200
5,152 Dean Witter Discover & Co. ......................... 242,144
10,800 Federal Home Loan Mortgage Corp. ................... 742,500
5,500 Household International, Inc. ...................... 272,250
29,900 Merrill Lynch & Co., Inc. .......................... 1,569,750
5,500 Student Loan Marketing Association.................. 257,812
13,867 Travelers Group, Inc. .............................. 606,681
------------
5,156,337
------------
GOLD--0.4%
12,600 Barrick Gold Corp. ................................. 318,150
7,600 Placer Dome, Inc. .................................. 198,550
------------
516,700
------------
GAS UTILITIES--0.4%
13,900 Williams Co. Inc. .................................. 484,763
------------
HEALTH CARE--2.4%
11,400 Baxter International, Inc. ......................... 414,675
29,600 Medtonic, Inc. ..................................... 2,282,900
7,200 St. Jude Medicine, Inc. (c) ........................ 360,900
------------
3,058,475
------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(Unaudited)
COMMON STOCK--CONTINUED
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
HOTELS & RESTAURANTS--1.3%
20,200 Marriot International, Inc. ............................. $ 724,675
23,500 McDonalds Corp. ......................................... 919,437
------------
1,644,112
------------
INTERNATIONAL OIL--6.4%
24,200 Chevron Corp. ........................................... 1,128,325
54,400 Exxon Corp. ............................................. 3,842,000
33,300 Mobil Corp. ............................................. 3,196,800
------------
8,167,125
------------
LIFE INSURANCE--0.9%
7,700 American General Corp. .................................. 259,875
12,200 American National Insurance Co. ......................... 744,200
4,800 Lincoln National Corp. .................................. 210,000
------------
1,214,075
------------
MEDIA--2.3%
2,720 CBS, Inc. ............................................... 182,240
16,000 Capital Cities ABC, Inc. ................................ 1,728,000
5,000 Clear Channel Communication.............................. 321,875
12,800 Walt Disney Productions.................................. 712,000
------------
2,944,115
------------
MORTGAGE--1.4%
39,900 Green Tree Financial Corp. .............................. 1,770,562
------------
MOTOR VEHICLES--2.0%
21,100 Chrysler Corp. .......................................... 1,010,162
27,200 Ford Motor Corp. ........................................ 809,200
16,900 General Motors Corp. .................................... 792,188
------------
2,611,550
------------
OIL REFINING DISTRIBUTORS--1.8%
13,800 Amco Corp. .............................................. 919,425
7,200 Royal Dutch Petroleum Co. ............................... 877,500
17,500 Unocal Corp. ............................................ 483,438
------------
2,280,363
------------
OTHER INSURANCE--5.7%
7,100 Aflac, Inc. ............................................. 310,625
10,100 Allmerica Property & Casualty, Inc. ..................... 223,463
10,500 American International Group, Inc. ...................... 1,197,000
8,200 Chubb Corp. ............................................. 657,025
35,600 Cigna Corp. ............................................. 2,763,450
4,000 General Re-Insurance Corp. .............................. 535,500
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(Unaudited)
COMMON STOCK--CONTINUED
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
OTHER INSURANCE--CONTINUED
7,300 ITT Corp. ............................................... $ 857,750
3,400 Safeco Corp. ............................................ 195,287
2,400 Transatlantic Holdings, Inc. ............................ 156,000
30,000 USF & G Corp. ........................................... 487,500
------------
7,383,600
------------
PAPER--1.3%
11,800 Champion International Corp. ............................ 615,075
16,600 Federal Paper Board, Inc. ............................... 587,225
10,000 Weyerhaeuser Co. ........................................ 471,250
------------
1,673,550
------------
PHOTOGRAPHY--0.4%
9,100 Eastman Kodak Co. ....................................... 551,688
------------
PRODUCER OF GOODS--7.6%
14,900 American Brand, Inc. .................................... 592,275
12,700 Briggs & Stratton Corp. ................................. 438,150
18,100 Caterpillar, Inc. ....................................... 1,162,925
18,000 Cummins Engine, Inc. .................................... 785,250
10,000 Deere & Co. ............................................. 856,250
40,000 General Electric Co. .................................... 2,255,000
16,100 Genuine Parts Co. ....................................... 609,788
9,500 Harnischfeger Industry, Inc. ............................ 328,937
17,100 McDermott International, Inc. ........................... 412,538
14,300 Modine Manufacturer Co. ................................. 525,525
5,800 Premark International, Inc. ............................. 300,875
11,400 TRW, Inc. ............................................... 910,575
10,200 Varian Associates, Inc. ................................. 563,550
------------
9,741,638
------------
PROPERTY--0.1%
5,700 Pulte Corp. ............................................. 159,600
------------
PUBLISHING--0.8%
3,400 McGraw Hill, Inc. ....................................... 257,975
11,200 Moore Corp. Ltd. ........................................ 247,800
21,000 Times Mirror Co. ........................................ 501,375
------------
1,007,150
------------
RAILROADS & EQUIPMENT--2.1%
12,700 Burlington Northern, Inc. ............................... 804,862
10,100 CSX Corp. ............................................... 758,762
6,000 Norfolk Southern Corp. .................................. 404,250
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(Unaudited)
COMMON STOCK--CONTINUED
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
<C> <S> <C>
RAILROADS & EQUIPMENT--CONTINUED
11,500 Santa Fe Pacific Corp. .................................. $ 293,250
8,400 Union Pacific Corp. ..................................... 465,150
------------
2,726,274
------------
RETAIL FOOD--0.5%
20,600 Albertson's Inc. ........................................ 612,850
------------
RETAIL OTHER--0.7%
7,400 J.C. Penney and Company, Inc. ........................... 355,200
9,700 Rite Aid Corp. .......................................... 248,562
6,300 Tandy Corp. ............................................. 326,813
------------
930,575
------------
SERVICES--3.0%
10,000 Automatic Data Processing................................ 628,750
13,200 H & R Block, Inc......................................... 542,850
19,200 Computer Associated International, Inc. ................. 1,300,800
14,700 Microsoft Corp. (c)...................................... 1,328,512
------------
3,800,912
------------
SOAPS--1.5%
8,100 Colgate Palmolive Co. ................................... 592,312
18,000 Gillette Co. ............................................ 803,250
23,600 Newell Co. .............................................. 578,200
------------
1,973,762
------------
TELEPHONE--3.3%
28,600 Ameritech Corp. ......................................... 1,258,400
11,700 Bell Atlantic Corp. ..................................... 655,200
20,200 GTE Corp. ............................................... 689,325
35,600 SBC Communications, Inc. ................................ 1,695,450
------------
4,298,375
------------
TIRES--0.5%
15,600 Goodyear Tire and Rubber................................. 643,500
------------
Total Common Stocks (Identified Cost $87,839,744)........ $124,151,110
============
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
SHORT-TERM INVESTMENT--1.6%
<TABLE>
<CAPTION>
FACE
AMOUNT DESCRIPTION VALUE (A)
-------------------------------------------------------------------------------
<C> <S> <C>
$2,125,000 Repurchase Agreement with State Street Bank & Trust
Co. dated 6/30/95 at 5.5% to be repurchased at
$2,125,974 on 7/03/95. Collateralized by
$2,165,000 U.S. Treasury Notes, 4.375% due
8/15/96, with a value of $2,168,525............... $ 2,125,000
------------
Total Short Term Investments (Identified Cost
$2,125,000)........................................ 2,125,000
------------
Total Investments--98.3% (Identified Cost
$89,964,745)....................................... 126,276,110
Cash, receivables and other assets................. 6,994,857
Liabilities........................................ (4,859,463)
------------
Total Net Assets--100.0%........................... $128,411,504
============
(a) See Note 1a to the financial statements.
(b) Federal Tax Information: At June 30, 1995 the net unrealized
appreciation on investments based on cost of $89,964,745 for
federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost........... $ 36,826,340
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value........... (514,975)
------------
Net Unrealized appreciation.................................. $ 36,311,365
============
</TABLE>
(c) Non-income producing security.
See accompanying notes to financial statements.
8
<PAGE>
STATEMENT OF ASSETS & LIABILITIES
June 30, 1995
(unaudited)
<TABLE>
<S> <C> <C>
ASSETS
Investments at
value........ $126,276,110
Cash.......... 381
Receivable
for:
Fund shares
sold......... 45,167
Securities
sold......... 6,642,406
Dividends and
interest..... 304,656
Dividend tax
reclaim...... 2,247
------------
133,270,967
LIABILITIES
Payable for:
Securities
purchased.... $4,503,212
Fund shares
redeemed..... 157,965
Dividends
declared..... 55,031
Miscellaneous. 12,028
Accrued
expenses:
Management
fees......... 72,921
Deferred
trustees'
fees......... 1,534
Other
expenses..... 56,772
----------
4,859,463
------------
NET ASSETS..... $128,411,504
============
Net Assets
consist of:
Capital paid
in........... $ 81,012,246
Undistributed
net
investment
income....... 14,221
Accumulated
net realized
gains........ 11,073,672
Unrealized
appreciation
on
investments.. 36,311,365
------------
NET ASSETS..... $128,411,504
============
Computation of
net asset
value and
offering
price:
Net asset value
and redemption
price of Class
A shares
($119,945,945
divided by
8,223,863
shares of
beneficial
interest)....... $14.59
======
Offering price
per share
(100/94.25 of
$14.59)....... $15.48*
======
Net asset value
and offering
price of Class
B shares
($8,425,977
divided by
577,198 shares
of beneficial
interest)..... $14.60**
======
Net asset value
and offering
price of Class
C shares
($39,582
divided by
2,710 shares
of beneficial
interest)..... $14.61
======
Identified cost
of
investments... $ 89,964,745
============
</TABLE>
* Based upon single purchases of less than $50,000. Reduced sales charges
apply for purchases in excess of these amounts.
** Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charges.
See accompanying notes to financial statements.
9
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995
(unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends............................................. $ 1,605,069(a)
Interest.............................................. 91,276
-----------
1,696,345
Expenses
Management fees....................................... $334,321
Service and distribution fees--Class A................ 173,812
Service and distribution fees--Class B................ 32,539
Trustees' fees and expenses........................... 12,151
Custodian............................................. 47,628
Transfer agent........................................ 125,623
Audit and tax services................................ 11,000
Legal................................................. 26,421
Printing.............................................. 38,885
Registration.......................................... 27,680
Miscellaneous......................................... 18,714
--------
Total expenses........................................ 848,774
-----------
Net investment income................................. 847,571
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on Investments--net..................... 11,073,867
Unrealized appreciation on Investments--net........... 7,981,845
-----------
Net gain on investment transactions................... 19,055,712
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS............. $19,903,283
===========
</TABLE>
(a) Net of foreign taxes of $8,404.
See accompanying notes to financial statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
(unaudited)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
1994 JUNE 30, 1995
------------ -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income............................ $ 1,921,190 $ 847,571
Net realized gain on investments................. 1,492,900 11,073,867
Unrealized appreciation (depreciation) on invest-
ments.......................................... (2,258,483) 7,981,845
------------ ------------
Increase in net assets from operations........... 1,155,607 19,903,283
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A.......................................... (1,788,514) (904,832)
Class B.......................................... (40,153) (34,600)
Class C.......................................... 0 (87)
Net realized gain on investments
Class A.......................................... (1,426,673) 0
Class B.......................................... (69,789) 0
Class C.......................................... 0 0
------------ ------------
(3,325,129) (939,519)
------------ ------------
Increase in net assets derived from capital share
transactions................................... 769,007 182,022
------------ ------------
Total increase (decrease) in net assets.......... (1,400,515) 19,145,786
NET ASSETS
Beginning of the period.......................... 110,666,233 109,265,718
------------ ------------
End of the period................................ $109,265,718 $128,411,504
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period.......................... $ 9,653 $ 106,169
============ ============
End of the period................................ $ 106,169 $ 14,221
============ ============
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
FINANCIAL HIGHLIGHTS
(unaudited)
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
--------------------------------------------- JUNE 30,
1990 1991 1992 1993 1994 1995
------- ------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.88 $ 9.54 $ 11.79 $ 12.20 $ 12.67 $ 12.41
------- ------- ------- -------- -------- --------
Income From Investment
Operations
Net Investment Income... 0.30 0.26 0.23 0.21 0.22 0.10
Net Realized and
Unrealized Gain (Loss)
on Investments......... (0.76) 2.63 0.86 0.75 (0.10) 2.19
------- ------- ------- -------- -------- --------
Total From Investment
Operations............. (0.46) 2.89 1.09 0.96 0.12 2.29
------- ------- ------- -------- -------- --------
Less Distributions
Dividends From Net
Investment Income...... (0.30) (0.26) (0.23) (0.21) (0.21) (0.11)
Distributions in Excess
of Investment Income... 0.00 0.00 0.00 (0.01) 0.00 0.00
Distributions From Net
Realized Capital Gains. (0.56) (0.38) (0.45) (0.27) (0.17) 0.00
Distributions From Paid-
in Capital............. (0.02) 0.00 0.00 0.00 0.00 0.00
------- ------- ------- -------- -------- --------
Total Distributions..... (0.88) (0.64) (0.68) (0.49) (0.38) (0.11)
------- ------- ------- -------- -------- --------
Net Asset Value, End of
Period................. $ 9.54 $ 11.79 $ 12.20 $ 12.67 $ 12.41 $ 14.59
======= ======= ======= ======== ======== ========
Total Return (%)(a)(c).. (4.3) 30.6 9.3 8.0 1.0 18.4
Ratio of Operating
Expenses to Average Net
Assets (%)............. 1.18 1.23 1.94 1.21 1.28 1.41(b)
Ratio of Net Investment
Income to Average Net
Assets (%)............. 2.92 2.28 1.18 1.70 1.75 1.49(b)
Portfolio Turnover Rate
(%).................... 6 12 10 4 6 78(b)
Net Assets, End of
Period (000)........... $55,726 $70,263 $90,945 $109,168 $104,081 $119,946
</TABLE>
(a) A sales charge of 5.75% (maximum) was not reflected in total return
calculations.
(b) Computed on an annnualized basis.
(c) Periods less than one year are not annualized.
As of January 1, 1993 the Fund discontinued the use of equalization accounting.
See accompanying notes to financial statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS--Continued
(unaudited)
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------- --------
SEPTEMBER 13(A) YEAR SIX MONTHS MAY 1(A)
THROUGH ENDED ENDED THROUGH
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1993 1994 1995 1995
--------------- ------------ ---------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $12.95 $12.66 $12.42 $13.84
------ ------ ------ ------
Income From Investment
Operations
Net Investment Income...... 0.06 0.16 0.06 0.03
Net Realized and Unrealized
Gain (Loss) on
Investments............... 0.01 (0.09) 2.19 0.77
------ ------ ------ ------
Total From Investment
Operations................ 0.07 0.07 2.25 0.80
------ ------ ------ ------
Less Distributions
Dividends From Net
Investment Income......... (0.03) (0.14) (0.07) (0.03)
Distributions in Excess of
Investment Income......... (0.06) 0.00 0.00 0.00
Distributions From Net
Realized Capital Gains.... (0.27) (0.17) 0.00 0.00
------ ------ ------ ------
Total Distributions........ (0.36) (0.31) (0.07) (0.03)
------ ------ ------ ------
Net Asset Value, End of
Period.................... $12.66 $12.42 $14.60 $14.61
====== ====== ====== ======
Total Return (%)(c)........ 0.6 0.6 18.1 5.7
Ratio of Operating Expenses
to Average Net Assets (%). 2.08(b) 1.93 2.11(b) 2.11(b)
Ratio of Net Investment
Income to Average Net
Assets (%)................ 0.71(b) 1.10 0.79(b) 0.79(b)
Portfolio Turnover Rate
(%)....................... 4 6 78(b) 78(b)
Net Assets, End of Period
(000)..................... $1,498 $5,185 $8,426 $ 40
</TABLE>
(a) Commencement of operations.
(b) Computed on an annualized basis.
(c)Periods less than one year are not annualized.
See accompanying notes to financial statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995 (unaudited)
1. The Fund is a series of New England Funds Trust II (the "Trust"), a
Massachusetts business trust, registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company. The Declaration of Trust permits the Trustees to issue an unlimited
number of shares of the Trust in multiple series (each such series of shares a
"Fund").
The Fund offers both Class A and Class B shares. The Fund commenced its public
offering of Class B shares on September 13, 1993. Class A shares are sold with
a maximum front end sales charge of 5.75%. Class B shares do not pay a front
end sales charge, but pay a higher ongoing distribution fee than Class A
shares, and are subject to a contingent deferred sales charge if those shares
are redeemed within five years of purchase. Expenses of the Fund are borne pro-
rata by the holders of both classes of shares, except that each class bears
expenses unique to that class (including the Rule 12b-1 service and
distribution fees applicable to such class), and votes as a class only with
respect to its own Rule 12b-1 plan. Shares of each class would receive their
pro-rata share of the net assets attributable to their class, if the Fund were
liquidated. In addition, the Trustees declare separate dividends on each class
of shares.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
A. SECURITY VALUATION. Equity securities are valued on the basis of valuations
furnished by a pricing service, authorized by the Board of Trustees which
service provides the last reported sale price for securities listed on an
applicable securities exchange or on the NASDAQ national market system, or, if
no sale was reported and in the case of over-the-counter securities not so
listed, the last reported bid price. Short-term obligations with a remaining
maturity of less than sixty days are stated at amortized cost, which
approximates value.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME. Security transactions
are accounted for on the trade date (the date the buy or sell is executed).
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Interest income is increased by the accretion of
discount. In determining net gain or loss on securities sold, the cost of
securities has been determined on the identified cost basis.
C. FEDERAL INCOME TAXES. The Fund intends to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies, and to
distribute to its shareholders all of its income and any net realized capital
gains, at least annually. Accordingly, no provision for federal income tax has
been made.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions are
recorded on the ex-dividend date. The timing and characterization of certain
income
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995 (unaudited)
and capital gains distributions are determined in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassification to paid in capital.
E. REPURCHASE AGREEMENTS. The Fund, through its custodian, receives delivery of
the underlying securities collateralizing repurchase agreements. It is the
Fund's policy that the market value of the collateral be at least equal to 100%
of the repurchase price. The Fund's sub-adviser is responsible for determining
that the value of the collateral is at all times at least equal to the
repurchase price. Repurchase agreements could involve certain risks in the
event of default or insolvency of the other party including possible delays or
restrictions upon the Fund's ability to dispose of the underlying securities.
2. PURCHASES AND SALES OF SECURITIES (excluding short-term investments) for the
Fund for the six months ended June 30, 1995 were $44,646,536 and $44,895,900,
respectively.
3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. Effective May 1,
1995 NEFM became the investment adviser to the Fund. Prior to May 1, 1995 Back
Bay Advisors was the Fund's investment adviser. During the six months ended
June 30, 1995 the Fund operated under two management fee contracts. The Fund
incurred management fees payable to Back Bay Advisors, L.P. ("Back Bay
Advisors") from January 1 through April 30, 1995 and to New England Funds
Management, L.P. ("NEFM") from May 1 through June 30, 1995.
Back Bay was paid at the annual rate of 0.500% of the Fund's average daily net
assets.
("NEFM") is compensated 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 the Fund's
investment subadviser, Westpeak Investment Advisors, L.P. ("Westpeak Advisors")
at the rate of 0.35% of the first $200 million of the Fund's average daily net
assets and 0.30% of such assets in excess of $200 million.
Certain officers and directors of Back Bay Advisors, NEFM, Westpeak Advisors
and their affiliated companies are also officers or trustees of the Fund. Back
Bay Advisors, NEFM and Westpeak Advisors are each wholly owned subsidiaries of
New England Investment Companies, L.P. ("NEIC"), which is a majority owned
subsidiary of New England Mutual Life Insurance Company.
Fees earned by Back Bay Advisors, NEFM and Westpeak Advisors under the
management agreements in effect during the six months ended June 30, 1995 are
as follows:
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
FEES EARNED ADVISOR PERIOD
----------- ------- ------
<S> <C> <C>
$188,176 Back Bay Advisors, L.P. 1/1 - 4/30/95
60,538 New England Funds Management, L.P. 5/1 - 6/30/95
85,607 Westpeak Advisors, L.P. 5/1 - 6/30/95
--------
$334,321 Total
========
</TABLE>
B. TRANSFER AGENT FEES. New England Funds is the transfer and shareholder
servicing agent for the Fund. For the six months ended June 30, 1995, the Fund
paid New England Funds $91,259 as compensation for its services in that
capacity.
C. SERVICES AND DISTRIBUTION FEES. Pursuant to Rule 12b-1 under the 1940 Act,
the Trust has adopted Service and Distribution Plans relating to the Fund's
Class A and Class B shares (the "Plans").
Under the Plans, the Fund pays New England Funds a monthly service fee at the
annual rate of up to 0.25% of the average daily net assets attributable to the
Fund's Class A and Class B shares, as compensation for services provided and
expenses (including certain payments to securities dealers who may be
affiliated with New England Funds) incurred by New England Funds in providing
personal services to investors in Class A and Class B shares and/or the
maintenance of shareholder accounts. For the six months ended June 30, 1995,
the Fund paid New England Funds $132,266 in service fees under the Plans.
Also under the Plans, the Fund pays New England Funds monthly distribution fees
at the annual rate of up to 0.10% of the average daily net assets attributable
to the Fund's Class A shares and up to 0.75% of the average daily net assets
attributable to the Fund's Class B shares, as compensation for services
provided and expenses (including certain payments to securities dealers, who
may be affiliated with New England Funds) incurred by New England Funds in
connection with the marketing or sale of Class A and Class B shares,
respectively. For the six months ended June 30, 1995, the Fund paid New England
Funds $74,085 in distribution fees under the Plans.
Commissions (including contingent deferred sales charges) on Fund shares paid
to New England Funds by investors in shares of the Fund during the six months
ended June 30, 1995 amounted to $114,551.
D. TRUSTEES FEES AND EXPENSES. The Fund does not pay any compensation directly
to its officers or trustees who are directors, officers or employees of Back
Bay Advisors, New England Funds, NEIC or their affiliates, other than
registered investment companies. Each other trustee is compensated by the Fund
as follows:
<TABLE>
<S> <C>
Annual Retainer $2,400
Meeting Fee $125/meeting
Committee Meeting Fee $75/meeting
Committee Chairman Retainer $125/year
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995 (unaudited)
A deferred compensation plan is available to the trustees on a voluntary basis.
Each participating trustee will receive an amount equal to the value that such
deferred compensation would have had, had it been invested in the Fund on the
normal payment date.
4. CAPITAL SHARES. At June 30, 1995 there was an unlimited number of shares of
beneficial interest authorized. Divided into three classes, Class A, Class B
and Class C capital stock. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1994 JUNE 30, 1995
------------------------ ---------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
------- ---------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Shares sold................... 741,304 $ 9,328,786 414,818 $ 5,658,419
Shares issued in connection
with the
reinvestment of:
Dividends from net investment
income...................... 108,264 1,344,727 48,636 682,843
Distributions from net
realized gain............... 95,270 1,182,298 0 0
---------- ------------ -------- -----------
944,838 11,855,811 463,454 6,341,262
Shares repurchased............ (1,175,898) (14,830,647) (623,161) (8,388,417)
---------- ------------ -------- -----------
Net increase (decrease)....... (231,060) (2,974,836) (159,707) (2,047,155)
---------- ------------ -------- -----------
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1994 JUNE 30, 1995
------------------------ ---------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
------- ---------- ------------ -------- -----------
<S> <C> <C> <C> <C>
Shares sold................... 324,614 4,082,014 179,333 2,433,298
Shares issued in connection
with the
reinvestment of:
Dividends from net investment
income...................... 3,181 39,511 2,421 34,053
Distributions from net
realized gain............... 5,447 67,595 0 0
---------- ------------ -------- -----------
333,242 4,189,120 181,754 2,467,351
Shares repurchased............ (34,082) (445,277) (22,093) (276,232)
---------- ------------ -------- -----------
Net increase (decrease)....... 299,160 3,743,843 159,661 2,191,119
---------- ------------ -------- -----------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995
---------------------
CLASS C SHARES AMOUNT
------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold................... 2,704 37,972
Shares issued in connection
with the
reinvestment of:
Dividends from net investment
income...................... 6 86
Distributions from net
realized gain............... 0 0
-------- -----------
2,710 38,058
Shares repurchased............ 0 0
-------- -----------
Net increase (decrease)....... 2,710 38,058
---------- ------------ -------- -----------
Increase derived from capital
shares transactions.......... 68,100 $ 769,007 2,664 $ 182,022
========== ============ ======== ===========
</TABLE>
17
<PAGE>
As a New England Funds stock fund shareholder, it's important that you're kept
up-to-date on all changes to the stock funds prospectus. Since there's been a
change in management for New England Star Advisers Fund, we've included a copy
of the supplement to the prospectus below.
NEW ENGLAND FUNDS TRUST I
NEW ENGLAND STAR ADVISERS FUND
Supplement dated July 13, 1995
to New England Star Advisers Fund Prospectus
dated May 1, 1995
and New England Stock Funds Prospectus dated
May 1, 1995
The following information reflects changes in the investment management and
policies of the Loomis, Sayles & Company, L.P. ("Loomis Sayles") segment of New
England Star Advisers Fund (the "Fund"):
^ Jeffrey C. Petherick, Vice President of Loomis Sayles and New England
Funds Trust I, and Mary Champagne, Vice President of Loomis Sayles, have
day-to-day management responsibility for the segment of the Fund that is
allocated to Loomis Sayles. Mr. Petherick has co-managed the Loomis
Sayles segment of the Fund since the Fund's inception. Mr. Petherick was
an investment manager at Masco Corporation prior to joining Loomis
Sayles in 1990. Ms. Champagne has co-managed the Loomis Sayles segment
of the Fund since July 1995. Prior to joining Loomis Sayles in 1993, Ms.
Champagne served as a portfolio manager at NBD Bank for 10 years.
^ Loomis Sayles manages its segment of the portfolio by investing
primarily in stocks of small cap companies with good earnings growth
potential, that Loomis Sayles believes are undervalued by the market.
Typically, such companies range in size from $100 million to $500
million in market capitalization, have better than average growth rates
at below average price/earnings ratios and have strong balance sheets
and cash flow. Loomis Sayles seeks to build a core small cap portfolio
of solid growth companies' stock, with a smaller emphasis on special
situations and turnarounds (companies that have experienced significant
business problems but which Loomis Sayles believes have favorable
prospects for recovery), as well as unrecognized stocks.
18
<PAGE>
-------------------------------------------------------------------------------
REGULAR INVESTING PAYS
--------------------------------------------------------------------------------
Five Good Reasons to Invest Regularly
1. It's an easy way to build assets
2. It's convenient and effortless
3. It requires a low minimum to get started
4. It can help you reach important long-term goals like
retirement or college funding
5. It can help you benefit from the ups and downs of the market
With Investment Builder, New England Funds' automatic investment program, you
can invest as little as $50 a month in your New England Fund automatically --
without even writing a check. And, as you can see from the chart below, your
monthly investments can really add up over time.
--------------------------------------------------------------------------------
The Power of Monthly Investing
--------------------------------------------------------------------------------
A line graph appears here, illustrating the hypothetical accumulation of monthly
investments at an 8% annual rate of return. The data points of the graph are as
follows:
Monthly investments of $50:
<TABLE>
<CAPTION>
Years Growth of Monthly Investments
----- -----------------------------
<S> <C>
0 $0
5 $3,661
10 $9,040
15 $16,943
20 $28,555
25 $45,618
</TABLE>
Monthly investments of $100:
<TABLE>
<CAPTION>
Years Growth of Monthly Investments
----- -----------------------------
<S> <C>
0 $0
5 $7,322
10 $18,079
15 $33,886
20 $57,111
25 $91,236
</TABLE>
Monthly investments of $200:
<TABLE>
<CAPTION>
Years Growth of Monthly Investments
----- -----------------------------
<S> <C>
0 $0
5 $14,643
10 $36,158
15 $67,772
20 $114,222
25 $182,472
</TABLE>
Monthly investments of $500:
<TABLE>
<CAPTION>
Years Growth of Monthly Investments
----- -----------------------------
<S> <C>
0 $0
5 $36,608
10 $90,396
15 $169,429
20 $285,555
25 $456,181
</TABLE>
For illustrative purposes only. These figures represent hypothetical
accumulation at an 8% annual rate of return, and are not indicative of future
performance of any New England Fund. The value of a New England Fund will
fluctuate with changing market conditions.
This program cannot assure a profit nor protect against a loss in a declining
market. It does, however, ensure that you buy more shares when the price is low
and fewer shares when the price is high.
You can start an Investment Builder program with your current New England Fund
account, or with any of our other funds. To open an Investment Builder account
today, call your financial representative or New England Funds at
1-800-225-5478.
19
<PAGE>
-------------------------------------------------------------------------------
SAVING FOR RETIREMENT
--------------------------------------------------------------------------------
An Early Start Can Make a Big Difference
With today's lengthening life spans, you may be retired for 20 years or more
after you complete your working career. Living these retirement years the way
you've dreamed of will require considerable financial resources. While it's
never too late to start a retirement savings program, it's certainly never too
early: The sooner you begin, the longer the time your money has to grow.
The chart below illustrates this point dramatically. One investor starts at age
30, saves for just 10 years, then leaves the investment to grow. The second
investor starts 10 years later but saves much longer -- for 25 years, in fact.
Can you guess which investor accumulates the greater retirement nest egg? For
the answer, look at the chart.
--------------------------------------------------------------------------------
An Early Start Can Make a Big Difference
--------------------------------------------------------------------------------
A chart in the form of a line graph appears here, comparing the growth of
investments made for 10 years by an investor who begins investing at age 30 to
the growth of investments made for twenty-five years by an investor who begins
investing at age 40. A hypothetical appreciation of 10% is assumed. The data
points from the graph are as follows:
Investor A-Begins investing at age 30 for 10 years:
<TABLE>
<CAPTION>
Age Growth of Investments
--- ---------------------
<S> <C>
30 $2,000
35 $15,431
40 $35,062
45 $56,468
50 $90,943
55 $146,464
60 $235,882
65 $379,890
</TABLE>
Investor B-Begins investing at age 40 for 25 years:
<TABLE>
<CAPTION>
Age Growth of Investments
--- ---------------------
<S> <C>
40 $2,000
45 $15,431
50 $37,062
55 $71,899
60 $128,005
65 $216,364
</TABLE>
Assumes 10% hypothetical appreciation. For illustrative purposes only and not
indicative of future performance of any New England Fund.
Investor A invested $20,000, less than half of investor B's commitment -- and
for less than half the time. Yet investor A wound up with a much greater
retirement nest egg. The reason? It's all thanks to an early start.
New England Funds has prepared a number of informative retirement planning
guides. Call your financial representative or New England Funds today, and ask
for the guide that best fits your personal needs.
20
<PAGE>
--------------------------------------------------------------------------------
New England Funds
--------------------------------------------------------------------------------
Stock Funds
International Equity Fund
Growth Fund
Star Advisers Fund
Capital Growth Fund
Value Fund
Growth Opportunities Fund
Balanced Fund
Bond Funds
High Income Fund
Strategic Income Fund
Government Securities Fund
Bond Income Fund
Limited Term U.S. Government Fund
Adjustable Rate U.S. Government Fund
Tax Exempt Funds
Tax Exempt Income Fund
Massachusetts Tax Free Income Fund
Intermediate Term Tax Free Fund of California
Intermediate Term Tax Free Fund of New York
Money Market Funds
Cash Management Trust
-- Money Market Series
-- U.S. Government Series
Tax Exempt Money Market Trust
To learn more, and for a free prospectus,
contact your financial representative.
New England Funds, L.P.
399 Boylston Street
Boston, MA 02116
Toll Free 800-225-5478
This material is authorized for distribution to prospective investors when it is
preceded or accompanied by the Fund's current prospectus, which contains
information about distribution charges, management and other items of interest.
Investors are advised to read the prospectus carefully before investing.
<PAGE>
[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
New England Funds
Where The Best Minds Meet
-------------------------
399 Boylston Street
Boston, Massachusetts
02116
-------------------------
95-0757 (GP58)
[LOGO OF RECYCLED PAPER APPEARS HERE]
