[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
Were the Best Minds Meet(TM)
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Annual Report and Performance Update
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NEW ENGLAND GROWTH OPPORTUNITIES FUND
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December 31, 1995
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<PAGE>
January 31, 1996
DEAR SHAREHOLDER,
It's a real pleasure to present to you the 1995 Annual Report for New
England Growth Opportunities Fund, containing your portfolio manager's
commentary and complete financial information.
FAVORABLE ECONOMIC CONDITIONS IN 1995
In 1995 subdued economic growth with little or no inflation created a
very favorable backdrop for the bond and stock markets. Long term interest
rates dipped on the positive inflation news, with the yield on the 30-year
Treasury bond falling to a low of 5.95% at year end. The stock market, fueled
by lower interest rates and solid corporate earnings growth, advanced 37.6%,
as measured by the Standard & Poor's 500 Index,* for its best showing since
1958. In July and in December, the Federal Reserve Board lowered short term
rates, signaling its belief that the economy was indeed on a path towards
slow, non-inflationary growth.
NEW ENGLAND FUNDS - WHERE THE BEST MINDS MEET
Over this past year we launched our new corporate identity - Where
the Best Minds Meet -which we believe reflects the essence of New England
Funds. Our unique multiple adviser structure brings together some of the best
investment minds in the business. As recent examples, consider New England
Star Advisers Fund, managed by four prominent equity advisers, and New
England Star Worldwide Fund, a global fund introduced this January which
builds off the Star Advisers concept. In addition, last May we launched New
England Strategic Income Fund, under the management of Dan Fuss of Loomis
Sayles. One of the industry's most respected managers, Dan Fuss was named
1995's "Bond Fund Manager of the Year" by Morningstar(TM) for his past
record of accomplishment in fund management at Loomis Sayles.**
* Standard & Poor's 500 is an unmanaged index representing 500 major
companies, the majority of which are listed on the New York Stock Exchange.
** Morningstar is a third party, independent mutual fund rating service.
<PAGE>
1995 DALBAR AWARD FOR SERVICE EXCELLENCE
Where the Best Minds Meet also refers to your financial adviser and
all the people at New England Funds who provide you with quality service. We
are proud to report that in recognition of our ongoing quality initiatives,
New England Funds has been named a 1995 Quality Tested Service Seal Winner by
DALBAR, an independent mutual fund service rating company. The coveted
DALBAR award was given to only seven companies for "providing the highest
tier of service excellence in the mutual fund industry."
OUTLOOK FOR 1996
Looking ahead, we believe interest rates are likely to remain flat as
the economy continues on its slow, steady, non-inflationary growth path. While
this scenario is extremely positive for the long term, it is unlikely that
1996 will see a repeat of last year's stellar performance. At this time it's
worth reiterating that long-term investors should not focus on one year's
performance. Instead, we recommend that you review your asset allocation
program with your financial adviser, then remain committed to that program to
carry out its objectives.
We believe you will find your portfolio manager's commentary
informative. If you have any questions or comments, please contact your
financial representative or New England Funds directly at 800-225-5478.
Also, please contact New England Funds for a prospectus on any of the funds
mentioned above. The prospectus details investment objectives and risks, as
well as management fees and expenses. You should read it carefully before
investing or sending money.
Sincerely,
/S/Peter S. Voss /S/Henry L.P. Schmelzer
Peter S. Voss Henry L.P. Schmelzer
Chairman President
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New England Growth Opportunities Fund
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INVESTMENT RESULTS THROUGH DECEMBER 31, 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
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 the Standard & Poor's 500
Index(4).
The data points from the graph are as follows:
<TABLE>
<CAPTION>
NEW ENGLAND GROWTH OPPORTUNITIES FUND--NET ASSET VALUE(1)
Year Amount
- ---- ------
<S> <C>
1995 $31,724
1994 $23,478
1993 $23,248
1992 $21,536
1991 $19,707
1990 $15,088
1989 $15,760
1988 $12,350
1987 $11,247
1986 $11,231
12/31/84 $10,000
NEW ENGLAND GROWTH OPPORTUNITIES FUND--
WITH MAXIMUM SALES CHARGE(2)
Year Amount
- ---- ------
<S> <C>
1995 $29,900
1994 $22,128
1993 $21,911
1992 $20,298
1991 $18,574
1990 $14,221
1989 $14,854
1988 $11,640
1987 $10,600
1986 $10,585
12/31/84 $ 9,425
STANDARD & POOR'S 500 INDEX(4)
Year Amount
- ---- ------
<S> <C>
1995 $39,860
1994 $29,002
1993 $28,613
1992 $25,997
1991 $24,159
1990 $18,535
1989 $19,132
1988 $14,539
1987 $12,480
1986 $11,862
12/31/84 $10,000
<FN>
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.
</TABLE>
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New England Growth Opportunities Fund
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AVERAGE ANNUAL TOTAL RETURNS 12/31/95
<TABLE><CAPTION>
<S> <C> <C> <C>
CLASS A 1 YEAR 5 YEARS 10 YEARS
Net Asset Value(1) 35.12% 16.02% 12.24%
With Max. Sales Charge(2) 27.29 14.66 11.58
Lipper Growth & Income Avg.(5) 30.82 15.47 12.78
CLASS B (INCEPTION 9/13/93) 1 YEAR SINCE INCEPTION
Net Asset Value(1) 34.34% 14.26%
With CDSC(3) 30.34 13.16
Standard & Poor's 500(4) 37.44 16.50
Lipper Growth & Income Avg.(5) 30.82 13.33
CLASS C (INCEPTION 5/1/95) SINCE INCEPTION
Net Asset Value(1) 20.15%
Standard & Poor's 500(4) 21.88
Lipper Growth & Income Avg.(5) n/a
</TABLE>
[FN]
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.
<PAGE>
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New England Growth Opportunities Fund
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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 5004. Its focus
on large, well-established companies has produced a long history of solid
performance. Please see pages 1 and 2 for the Fund's most recent results.
GROWTH OPPORTUNITIES FUND - CLASS A SHARES*
A $10,000 INVESTMENT COMPARED TO THE STANDARD & POOR'S 500 INDEX(4) MAY 1931-
DECEMBER 31, 1995 CUMULATIVE RETURN
[A bar chart in appears here, illustrating the growth of an investment in
Class A Shares* compared to the Standard & Poor's 500 Index(4) from May 1931
through December 31, 1995. The bar chart is as follows.]
Your Fund $28,318,289
S&P 500 Index(4) $ 7,233,687
* 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
12/31/95. 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.
<PAGE>
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New England Growth Opportunities Fund
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[PHOTO]
NEW ENGLAND
GROWTH OPPORTUNITIES FUND
Portfolio Manager: Gerald Scriver
Westpeak Investment Advisors, L.P.(R)
The stock market delighted investors with a red-hot
performance in 1995. The Dow Jones Industrial Average broke two historic
milestones, charging through the 4,000 and 5,000 marks, and ended the year
with the fourth best return in the post World War II era. Not surprisingly,
it was also a banner year for stock mutual funds, which posted one of their
strongest performances on record.
How Your Fund Performed
For the fiscal year ended December 31, 1995, New England Growth Opportunities
Fund's total return was 35.1% for Class A shares, at net asset value. Your
Fund's Class A share performance ranked 96 out of 438 in the Lipper Growth
and Income Average,(1) placing it in the top 22% of its peer group.
The Fund's 1995 results reflect the performance of Back Bay Advisors,
managers until April 30, 1995, and of Westpeak Investment Advisors, which has
managed the Fund since May 1, 1995. Both Back Bay and Westpeak are affiliates
of New England Investment Companies, L.P.
Emphasis on Controlling Risk
After taking over the Fund in May, we restructured the portfolio to reflect
our view that growth stocks were going to outperform value stocks, at least
over the following quarter. Consequently, we put more technology stocks in the
portfolio, benefiting the Fund handsomely. However,
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New England Growth Opportunities Fund
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by September we felt that technology stocks were becoming overvalued, so we
began cutting back our exposure in that sector. We were somewhat
underweighted in technology as of the end of the year. This timely movement
away from the technology area significantly boosted your Fund's performance.
The Fund was actually up 3.88% in the fourth quarter, while many other funds
were down 10% or 15%.
However, it's important to point out that we never overweighted the
technology sector to the extent that many funds did, to reach 30% or 40% of
assets. Such huge commitments carry too much potential volatility and are not
consistent with our philosophy of controlling risk.
Shift Toward Value
Toward the end of the year we began moving away from growth stocks, because
we believed they were overpriced. We've been shifting toward value, buying
stocks in the telecommunications area, like Bell South, Southwest Bell and
Ameritech. As of December 31, 1995 three of our top ten positions were in
this area, where we can get higher dividend yields and lower price-to-earnings
ratios. We've also been buying some electric utilities and oil stocks. We
took a large position at year-end in Exxon, which is a value stock with a low
price-to-earnings ratio and a high-dividend yield.
In the current sluggish economic environment, where corporate profit growth
is less certain, companies such as Exxon are good prospects, because they
have learned, through relentless cost cutting, to prosper without price
increases. Telephone and electric utilities have also benefited from
belt-tightening and restructuring.
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New England Growth Opportunities Fund
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One of the areas that we've liked throughout the year has been banks, where
we expect benefits to come via mergers and acquisitions and fiscal
streamlining. Banks, of course, have also benefited from lower interest
rates. Our three largest bank holdings at year-end were Citicorp, Bank of
Boston and Bank of New York. These are high-quality banks and, we believe,
solid value stocks.
Cautious Outlook
We don't expect the market's pace to continue in view of increasing signs of
economic weakness and growing worries over corporate earnings. We think that
the Federal Reserve Board will come through with another easing of short-term
interest rates, but that may not be enough to stave off a stock market
correction.
With that in mind, we are positioning the portfolio more conservatively for
the first quarter of 1996, emphasizing value. Value stocks tend to outperform
growth stocks in uncertain environments, just as growth outperforms value in
the stronger markets. Longer term, we believe that the fundamentals are
favorable for the stock market, and your Fund is well positioned to benefit
from the opportunities ahead.
[FN]
(1) Lipper Analytical Services is an independent mutual fund tracking
organization; rankings vary over time and do not reflect the effects of
sales
charges.
<PAGE>
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New England Growth Opportunities Fund
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TOP TEN PORTFOLIO HOLDINGS 12/31/95*
COMPANY PERCENTAGE
OF NET ASSETS
1. MERCK & CO. 2.9%
Pharmaceutical company
2. ROYAL DUTCH PETROLEUM 2.8%
Large oil and gas company. Owners of Shell
3. BELL SOUTH CORP. 2.8%
Regional telephone company for
Southern United States
4. EXXON CORP. 2.5%
World's leading oil company
5. COCA-COLA CO. 2.4%
Soft drink manufacturer and distributor
6. JOHNSON & JOHNSON 2.3%
Healthcare products manufacturer
7. AMERITECH CORP. 2.3%
Regional telephone company
8. SBC COMMUNICATIONS INC. 2.3%
Regional telephone company
9. UNICOM CORP. 2.0%
Holding company for Commonwealth Edison
10. SEARS ROEBUCK & CO. 2.0%
Large retailer
[FN]
*Portfolio holdings are subject to change.
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[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
Where the Best Minds Meet(TM)
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Portfolio Composition, Financial Statements and Highlights
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NEW ENGLAND GROWTH
OPPORTUNITIES FUND
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December 31, 1995
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PORTFOLIO COMPOSITION
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Investments as of December 31, 1995
COMMON STOCK--95.1% OF TOTAL NET ASSETS
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE (A)
- --------------------------------------------------------------------------------
<C> <S> <C>
AEROSPACE--2.1%
15,800 Allied Signal, Inc. .................................... $ 750,500
22,300 McDonnell Douglas Corp. ................................ 2,051,600
10,600 United Technologies Corp. .............................. 1,005,675
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3,807,775
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AGRICULTURE & FOOD--4.6%
11,600 Campbell Soup Co. ...................................... 696,000
17,400 H. J. Heinz Co. ........................................ 576,375
8,400 Hershey Foods Corp. ....................................
546,000
42,800 IBP Inc. ............................................... 2,161,400
7,200 Kellogg Co. ............................................ 556,200
38,200 Pioneer Hi Bred International, Inc. .................... 2,124,875
21,600 Sara Lee Corp. ......................................... 688,500
7,600 Unilever NV ............................................ 1,069,700
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8,419,050
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AIRLINES--1.6%
28,000 American Corporation Del ............................... 2,079,000
17,000 Northwest Airlines Corp. ............................... 867,000
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2,946,000
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ALUMINIUM--1.7%
57,700 Aluminium Company America .............................. 3,050,888
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BANKING--6.1%
13,687 Banc One Corp. ......................................... 516,684
37,100 Bank of Boston Corp. ................................... 1,715,875
33,600 Bank of New York, Inc. ................................. 1,638,000
9,000 BankAmerica Corp. ...................................... 582,750
27,500 Citicorp (c) ........................................... 1,849,376
5,400 Fleet Financial Group, Inc. ............................ 220,050
4,850 Mellon Bank Corp. ...................................... 260,687
10,600 J P Morgan & Co. ....................................... 850,650
20,300 NationsBank Corp. ...................................... 1,413,387
25,100 Union Bank of San Francisco ............................ 1,361,675
3,900 Wells Fargo & Co. ...................................... 842,400
------------
11,251,534
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BEVERAGES--2.5%
61,900 Coca Cola Co. .......................................... 4,596,075
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BUSINESS MANUFACTURERS--3.2%
6,000 Digital Equipment ...................................... 384,750
25,900 Hewlett Packard Co. .................................... 2,169,125
12,600 International Business Machines Corp. .................. 1,156,050
<PAGE>
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PORTFOLIO COMPOSITION--Continued
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Investments as of December 31, 1995
COMMON STOCK--CONTINUED
SHARES DESCRIPTION VALUE (A)
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BUSINESS MANUFACTURERS--CONTINUED
23,800 Pitney Bowes, Inc. ..................................... $ 1,118,600
2,600 Sun Micro Systems, Inc. ................................ 118,625
7,000 Xerox Corp. ............................................ 959,000
------------
5,906,150
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CHEMICALS--2.9%
5,000 Air Products & Chemicals, Inc. ......................... 263,750
30,500 Cabot Corp. ............................................ 1,643,188
14,000 Dow Chemical Co. ....................................... 985,250
14,200 Du pont E I De Nemours & Co. ........................... 992,225
6,100 Monsanto Co. ........................................... 747,250
14,600 PPG Industries, Inc. ................................... 667,950
------------
5,299,613
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COSMETICS--3.3%
51,200 Johnson & Johnson ...................................... 4,384,000
19,900 Procter & Gamble Co. ................................... 1,651,700
------------
6,035,700
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DOMESTIC OIL RESOURCES--0.6%
6,600 Atlantic Richfield Co. ................................. 730,950
12,800 Phillips Petroleum Co. ................................. 436,800
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1,167,750
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DRUGS & HEALTH CARE--6.6%
13,800 Amgen, Inc. (c) ........................................ 819,375
15,100 Bristol Myers Squibb Co. ............................... 1,296,712
40,200 Eli Lilly & Co. ........................................ 2,261,250
82,400 Merck & Co., Inc. ...................................... 5,417,800
14,200 Pfizer, Inc. ........................................... 894,600
28,000 Schering Plough Corp. .................................. 1,533,000
------------
12,222,737
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ELECTRIC UTILITIES--4.6%
25,000 Central & South West Corp. ............................. 696,875
45,900 Consolidated Edison Co. NYC ............................ 1,468,800
10,700 Duke Power Co. ......................................... 506,912
15,000 FPL Group, Inc. ........................................ 695,625
24,600 Pacific Gas & Electric Co. ............................. 698,025
28,800 Southern Co. ........................................... 709,200
115,700 Unicom Co. ............................................. 3,789,176
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8,564,613
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<PAGE>
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PORTFOLIO COMPOSITION--Continued
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Investments as of December 31, 1995
COMMON STOCK--CONTINUED
SHARES DESCRIPTION VALUE (A)
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ELECTRONICS--2.3%
5,100 Harris Corp. ........................................... $ 278,587
12,700 Honeywell, Inc. ........................................ 617,538
21,600 Intel Corp. ............................................ 1,225,800
19,600 Raytheon Co. ........................................... 926,100
6,900 Tektronix, Inc. ........................................ 338,962
5,600 Texas Instruments, Inc. ................................ 289,800
19,200 Vishay Intertechnology, Inc. ........................... 604,800
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4,281,587
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FINANCIAL SERVICES--1.3%
5,152 Dean Witter Discover & Co. ............................. 242,144
5,500 Household International, Inc. .......................... 325,187
10,500 Merrill Lynch & Co., Inc. .............................. 535,500
7,300 Student Loan Marketing Association ..................... 480,887
13,867 Travelers Group Inc. ................................... 871,888
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2,455,606
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GAS UTILITIES--1.3%
58,400 Oneok, Inc. ............................................ 1,335,900
13,800 Pacific Enterprises .................................... 389,850
13,900 Williams Companies, Inc. ............................... 609,863
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2,335,613
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HEALTH CARE--4.2%
45,900 Abbott Laboratories .................................... 1,916,325
11,400 Baxter International, Inc. ............................. 477,375
25,900 Boston Scientific Corp. ................................ 1,269,100
64,100 Medtronic, Inc. ........................................ 3,581,588
10,800 St Jude Medicine, Inc. (c).............................. 464,400
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7,708,788
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HOTELS & RESTAURANTS--1.0%
20,200 Marriot International, Inc. ............................ 772,650
23,500 McDonalds Corp. ........................................ 1,060,437
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1,833,087
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HOUSING BUILDING MATERIALS--0.2%
10,300 Centex Corp. ........................................... 357,925
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INSURANCE--LIFE--0.4%
7,700 American General Corp. ................................. 268,538
6,900 Transamerica Corp. ..................................... 502,838
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771,376
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<PAGE>
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PORTFOLIO COMPOSITION--Continued
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Investments as of December 31, 1995
COMMON STOCK--CONTINUED
SHARES DESCRIPTION VALUE (A)
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INSURANCE--OTHER--4.5%
7,100 Aflac, Inc. ............................................ $ 307,962
10,100 Allmerica Property & Casualty, Inc. .................... 272,700
33,350 American International Group, Inc. ..................... 3,084,876
8,200 Chubb Corp. ............................................ 793,350
12,200 Cigna Corp. ............................................ 1,259,650
2,800 General Re-insurance Corp. ............................. 434,000
21,000 Loews Corp. ............................................ 1,645,875
6,800 Safeco Corp. ........................................... 234,600
2,400 Transatlantic Holdings, Inc. ........................... 176,100
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8,209,113
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INTERNATIONAL OIL--4.5%
4,700 Chevron Corp. .......................................... 246,750
57,900 Exxon Corp. ............................................ 4,639,237
30,500 Mobil Corp. ............................................ 3,416,000
------------
8,301,987
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MEDIA--2.2%
75,500 Clear Channel Communication ............................ 3,331,437
12,800 Disney Walt Co. ........................................ 755,200
------------
4,086,637
------------
METALS--0.1%
3,700 Phelps Dodge Corp. ..................................... 230,325
------------
MORTGAGE--0.8%
10,800 Federal Home Loan Mortgage Corp. ....................... 901,800
25,300 Green Tree Financial Corp. ............................. 667,287
------------
1,569,087
------------
MOTOR VEHICLES--1.2%
21,100 Chrysler Corp. ......................................... 1,168,412
37,300 Ford Motor Corp. ....................................... 1,081,700
------------
2,250,112
------------
OIL REFINING DISTRIBUTORS--4.6%
44,800 Amoco Corp. ............................................ 3,220,000
37,900 Royal Dutch Petroleum Co. .............................. 5,348,636
------------
8,568,636
------------
OIL SERVICE--0.8%
28,400 Halliburton Co. ........................................ 1,437,750
------------
<PAGE>
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PORTFOLIO COMPOSITION--Continued
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Investments as of December 31, 1995
COMMON STOCK--CONTINUED
SHARES DESCRIPTION VALUE (A)
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PAPER--0.6%
16,100 Champion International Corp. ........................... $ 676,200
10,000 Weyerhaeuser Co. ....................................... 432,500
------------
1,108,700
------------
PHOTOGRAPHY--0.4%
11,800 Eastman Kodak Co. ...................................... 790,600
------------
PRODUCER OF GOODS--3.4%
14,900 American Brands, Inc. .................................. 664,912
9,300 Caterpillar, Inc. ...................................... 546,375
39,600 General Electric Co. ................................... 2,851,200
9,500 Harnischfeger Industries, Inc. ......................... 315,875
7,300 ITT Corp New ........................................... 386,900
7,300 ITT Industries, Inc. ................................... 175,200
12,500 Textron, Inc. .......................................... 843,750
10,200 Varian Associates, Inc. ................................ 487,050
------------
6,271,262
------------
PROPERTY--0.1%
5,700 Pulte Corp. ............................................ 191,663
------------
PUBLISHING--0.2%
3,400 McGraw Hill, Inc. ...................................... 296,225
------------
RAILROADS & EQUIPMENT--3.0%
28,200 Burlington Northern Santa Fe ........................... 2,199,600
12,000 Conrail, Inc. .......................................... 840,000
44,600 CSX Corp. .............................................. 2,034,875
6,000 Norfolk Southern Corp. ................................. 476,250
------------
5,550,725
------------
RETAILER--5.1%
3,800 Fastenal Co. ........................................... 160,550
15,000 Micro Warehouse, Inc. .................................. 648,750
95,200 Sears Roebuck & Co. .................................... 3,712,800
66,200 Staples, Inc. .......................................... 1,613,626
106,500 Walgreen Co. ........................................... 3,181,688
------------
9,317,414
------------
SERVICES--0.4%
9,900 Automatic Data Processing .............................. 735,075
------------
SOAPS--0.8%
18,000 Gillette Co. ........................................... 938,250
10,800 Premark International, Inc. ............................ 546,750
------------
1,485,000
------------
<PAGE>
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PORTFOLIO COMPOSITION--Continued
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Investments as of December 31, 1995
COMMON STOCK--CONTINUED
SHARES DESCRIPTION VALUE (A)
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TELEPHONE--10.3%
72,900 Ameritech Corp. .................................. $ 4,301,100
39,600 Bell Atlantic Corp. .............................. 2,648,250
121,000 Bell South Corp. ................................. 5,263,500
48,000 Cincinnati Bell, Inc. ............................ 1,668,000
20,200 GTE Corp. ........................................ 888,800
74,100 SBC Communications, Inc. ......................... 4,260,750
------------
19,030,400
------------
TIRES--0.4%
15,600 Goodyear Tire and Rubber ......................... 707,850
------------
TOBACCO--1.0%
20,100 Philip Morris .................................... 1,819,050
------------
THRIFT--0.2%
7,300 ITT Hartford Group ............................... 353,138
------------
Total Common Stocks (Identified Cost
$130,949,484)..................................... 175,322,616
------------
SHORT-TERM INVESTMENT--7.5%
FACE
AMOUNT
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$13,860,000 Repurchase Agreement with State Street Bank &
Trust Co. dated 12/31/95 at 5.000% to be
repurchased at $13,860,000 on 1/2/96.
Collaterized by $12,110,000 U.S. Treasury Notes
8.750% due 8/15/00, with a value of $14,138,340.. 13,860,000
------------
Total Short Term Investment (Identified Cost
$13,860,000)...................................... 13,860,000
------------
Total Investments--102.6% (Identified Cost
$144,809,484)..................................... 189,182,616
Cash, receivables and other assets................ 2,575,655
Liabilities....................................... (7,332,544)
------------
Total Net Assets--100.0%.......................... $184,425,727
============
(a) See Note 1a.
(b) Federal Tax Information: At December 31, 1995 the net
unrealized appreciation on investments based on cost of
$144,809,484 for federal income tax puroses was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost........... $ 45,496,927
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value........... (1,123,795)
------------
Net unrealized appreciation.................................. $ 44,373,132
============
(c) Non-income producing security.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS & LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments at value................................ $189,182,616
Cash................................................ 876
Receivable for:
Fund shares sold.................................... 2,237,789
Dividends and interest.............................. 322,278
Foreign taxes....................................... 712
Prepaid registration expense........................ 14,000
------------
191,758,271
LIABILITIES
Payable for:
Securities purchased................................ $6,677,864
Fund shares redeemed................................ 96,258
Dividends declared.................................. 375,334
Accrued expenses:
Management fees..................................... 104,555
Deferred trustees' fees............................. 3,512
Accounting and administrative....................... 3,124
Other expenses...................................... 71,897
----------
7,332,544
------------
NET ASSETS........................................... $184,425,727
============
Net Assets consist of:
Capital paid in..................................... $137,870,574
Undistributed net investment income................. 95,891
Accumulated net realized gains...................... 2,086,130
Unrealized appreciation on investments.............. 44,373,132
------------
NET ASSETS........................................... $184,425,727
============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A
shares ($150,692,799 divided by 10,468,941 shares of
beneficial interest)................................ $14.39
======
Offering price per share (100/94.25 of $14.39)....... $15.27*
======
Net asset value and offering price of Class B shares
($29,026,128 divided by 2,016,187 shares of
beneficial interest)................................ $14.40**
======
Net asset value and offering price of Class C shares
($4,706,800 divided by 327,065 shares of beneficial
interest)........................................... $14.39
======
Identified cost of investments....................... $144,809,484
============
<FN>
* 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.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Year Ended December 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends............................................. $ 3,259,887(a)
Interest.............................................. 313,571
-----------
3,573,458
Expenses
Management fees....................................... $856,469
Service fees--Class A................................. 340,216
Service and distribution fees--Class B................ 107,139
Service and distribution fees--Class C................ 5,588
Trustees' fees and expenses........................... 23,266
Accounting and administrative......................... 27,466
Custodian............................................. 106,769
Transfer agent........................................ 270,029
Audit and tax services................................ 23,000
Legal................................................. 33,645
Printing.............................................. 54,619
Registration.......................................... 45,774
Miscellaneous......................................... 23,902
--------
Total expenses........................................ 1,917,882
-----------
Net investment income................................. 1,655,576
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain on Investments--net..................... 21,443,541
Unrealized appreciation on Investments--net........... 16,043,612
-----------
Net gain on investment transactions................... 37,487,153
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS............. $39,142,729
===========
<FN>
(a) Net of foreign taxes of $12,488.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
FROM OPERATIONS
Net investment income............................. $ 1,921,190 $ 1,655,576
Net realized gain on investments.................. 1,492,900 21,443,541
Unrealized appreciation (depreciation) on
investments..................................... (2,258,483) 16,043,612
------------ ------------
Increase in net assets from operations............ 1,155,607 39,142,729
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A........................................... (1,788,514) (1,549,436)
Class B........................................... (40,153) (74,015)
Class C........................................... 0 (4,516)
Net realized gain on investments
Class A........................................... (1,426,673) (17,435,536)
Class B........................................... (69,789) (1,801,248)
Class C........................................... 0 (120,627)
------------ ------------
(3,325,129) (20,985,378)
------------ ------------
Increase in net assets derived from capital share
transactions.................................... 769,007 57,002,658
------------ ------------
Total increase (decrease) in net assets........... (1,400,515) 75,160,009
NET ASSETS
Beginning of the year............................. 110,666,233 109,265,718
------------ ------------
End of the year................................... $109,265,718 $184,425,727
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the year............................. $ 9,653 $ 106,169
============ ============
End of the year................................... $ 106,169 $ 95,891
============ ============
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------
1991 1992 1993 1994 1995
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year.......................... $ 9.54 $ 11.79 $ 12.20 $ 12.67 $ 12.41
------- ------- -------- -------- --------
Income From Investment
Operations
Net Investment Income.......... 0.26 0.23 0.21 0.22 0.18
Net Realized and Unrealized
Gain (Loss) on Investments.... 2.63 0.86 0.75 (0.10) 4.01
------- ------- -------- -------- --------
Total From Investment
Operations.................... 2.89 1.09 0.96 0.12 4.19
------- ------- -------- -------- --------
Less Distributions
Dividends From Net Investment
Income........................ (0.26) (0.23) (0.21) (0.21) (0.18)
Distributions in Excess of
Investment Income............. 0.00 0.00 (0.01) 0.00 0.00
Distributions From Net Realized
Capital Gains................. (0.38) (0.45) (0.27) (0.17) (2.03)
------- ------- -------- -------- --------
Total Distributions............ (0.64) (0.68) (0.49) (0.38) (2.21)
------- ------- -------- -------- --------
Net Asset Value, End of Year... $ 11.79 $ 12.20 $ 12.67 $ 12.41 $ 14.39
======= ======= ======== ======== ========
Total Return (%)(a)............ 30.6 9.3 8.0 1.0 35.1
Ratio of Operating Expenses to
Average Net Assets (%)........ 1.23 1.94 1.21 1.28 1.38
Ratio of Net Investment Income
to Average Net Assets (%)..... 2.28 1.18 1.70 1.75 1.31
Portfolio Turnover Rate (%).... 12 10 4 6 69
Net Assets, End of Year (000).. $70,263 $90,945 $109,168 $104,081 $150,693
<FN>
(a) A sales charge of 5.75% (maximum) was not reflected in total return
calculations.
As of January 1, 1993 the Fund discontinued the use of equalization accounting.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------- ------------
SEPTEMBER 13(A) YEAR YEAR MAY 1(A)
THROUGH ENDED ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
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 0.10 0.06
Net Realized and
Unrealized Gain (Loss)
on Investments......... 0.01 (0.09) 4.01 2.58
------ ------ ------- ------
Total From Investment
Operations............. 0.07 0.07 4.11 2.64
------ ------ ------- ------
Less Distributions
Dividends From Net
Investment Income...... (0.03) (0.14) (0.10) (0.06)
Distributions in Excess
of Investment Income... (0.06) 0.00 0.00 0.00
Distributions From Net
Realized Capital Gains. (0.27) (0.17) (2.03) (2.03)
------ ------ ------- ------
Total Distributions..... (0.36) (0.31) (2.13) (2.09)
------ ------ ------- ------
Net Asset Value, End of
Period................. $12.66 $12.42 $ 14.40 $14.39
====== ====== ======= ======
Total Return (%)(c)..... 0.6 0.6 34.3 20.2
Ratio of Operating
Expenses to Average Net
Assets (%)............. 2.08(b) 1.93 2.11 2.11(b)
Ratio of Net Investment
Income to Average Net
Assets (%)............. 0.71(b) 1.10 0.56 0.56(b)
Portfolio Turnover Rate
(%).................... 4 6 69 69
Net Assets, End of
Period (000)........... $1,498 $5,185 $29,026 $4,707
<FN>
(a) Commencement of operations.
(b) Computed on an annualized basis.
(c)Periods less than one year are not annualized.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1995
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 Class A, Class B and Class C shares. The Fund commenced its
public offering of Class B shares on September 13, 1993 and Class C Shares on
May 1, 1995. Class A shares are sold with a maximum front end sales charge of
5.75%. Class B shares do not pay a front end sales charge, but pay a higher
ongoing distribution fee than Class A shares for eight years (at which point
they automatically convert to Class A shares), and are subject to a contingent
deferred sales charge if those shares are redeemed within five years of
purchase. Class C shares do not pay a front end or contingent deferred sales
charge and do not convert to any other class of shares, but they do pay a
higher ongoing distribution fee than Class A shares. Expenses of the Fund are
borne pro-rata by the holders of each class of shares, except that each class
bears expenses unique to that class (including the Rule 12b-1 service and
distribution fees applicable to such class), and votes as a class only with
respect to its own Rule 12b-1 plan. Shares of each class would receive their
pro-rata share of the net assets of the Fund, if the Fund were liquidated. In
addition, the Trustees approve separate dividends on each class of shares.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
A. SECURITY VALUATION. Equity securities are valued on the basis of valuations
furnished by a pricing service, authorized by the Board of Trustees which
service provides the last reported sale price for securities listed on an
applicable securities exchange or on the NASDAQ national market system, or, if
no sale was reported and in the case of over-the-counter securities not so
listed, the last reported bid price. Short-term obligations with a remaining
maturity of less than sixty days are stated at amortized cost, which
approximates 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
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--Continued
- --------------------------------------------------------------------------------
December 31, 1995
determining net gain or loss on securities sold, the cost of securities has
been determined on the identified cost basis.
C. FEDERAL INCOME TAXES. The Fund intends to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies, and to
distribute to its shareholders all of its income and any net realized capital
gains, at least annually. Accordingly, no provision for federal income tax has
been made.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions are
recorded on the ex-dividend date. The timing and characterization of certain
income and capital gains distributions are determined in accordance with
federal tax regulations which may differ from generally accepted accounting
principles. These differences relate primarily to utilization of tax
equalization. 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 year ended December 31, 1995 were $120,695,295 and $88,204,593,
respectively.
3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. During the year
ended December 31, 1995 the Fund operated under two management fee contracts.
Prior to May 1, 1995 Back Bay Advisors was the Fund's investment adviser.
Effective May 1, 1995 New England Funds Management, L.P. ("NEFM") became the
investment adviser to the Fund.
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.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--Continued
- --------------------------------------------------------------------------------
December 31, 1995
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 year ended December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
FEES EARNED ADVISOR PERIOD
- ----------- ------- ------
<S> <C> <C>
$188,175 Back Bay Advisors, L.P. 1/1 - 4/30/95
283,805 New England Funds Management, L.P. 5/1 - 12/31/95
384,489 Westpeak Advisors, L.P. 5/1 - 12/31/95
- --------
$856,469 Total
========
</TABLE>
B. ACCOUNTING AND ADMINISTRATIVE EXPENSE. New England Funds, L.P. ("New England
Funds"), the Fund's distributor, is a wholly owned subsidiary of NEIC and
performs certain accounting and administrative services for the Fund. The Fund
reimburses New England Funds for all or part of New England Fund's expenses of
providing these services which include the following: (i) expenses for
personnel performing bookkeeping, accounting, internal auditing and financial
reporting functions and clerical functions relating to the Fund, (ii) expenses
for services required in connection with the preparation of registration
statements and prospectuses, shareholder reports and notices, proxy
solicitation material furnished to shareholders of the Fund or regulatory
authorities and reports and questionnaires for SEC compliance, and (iii)
registration, filing and other fees in connection with requirements of
regulatory authorities. For the year ended December 31, 1995, these expenses
amounted to $27,466 and are shown separately in the financial statements as
accounting and administrative.
C. TRANSFER AGENT FEES. New England Funds is the transfer and shareholder
servicing agent for the Fund. For the year ended December 31, 1995, the Fund
paid New England Funds $197,116 as compensation for its services in that
capacity.
D. 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, Class B and Class C 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, Class B and Class C shares, as compensation for services
provided and expenses (including certain payments to securities dealers who may
be affiliated with New England Funds) incurred by New England Funds in
providing personal services
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--Continued
- --------------------------------------------------------------------------------
December 31, 1995
to investors in Class A, Class B and Class C shares and/or the maintenance of
shareholder accounts. For the year ended December 31, 1995, the Fund paid New
England Funds $304,540, $26,785 and $1,397 in service fees under the Class A,
Class B and Class C 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 and Class C shares, as compensation for
services provided and expenses (including certain payments to securities
dealers, who may be affiliated with New England Funds) incurred by New England
Funds in connection with the marketing or sale of Class A, Class B shares and
Class C shares, respectively. For the year ended December 31, 1995, the Fund
paid New England Funds $35,676, $80,354 and $4,191 in distribution fees under
the Class A, Class B and Class C Plans.
Commissions (including contingent deferred sales charges) on Fund shares paid
to New England Funds by investors in shares of the Fund during the year ended
December 31, 1995 amounted to $954,690.
E. TRUSTEES FEES AND EXPENSES. The Fund does not pay any compensation directly
to its officers or trustees who are directors, officers or employees of 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>
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.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--Continued
- --------------------------------------------------------------------------------
December 31, 1995
4. CAPITAL SHARES. At December 31, 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 YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold................ 741,304 $ 9,328,786 2,225,960 $ 31,708,352
Shares issued in connection
with the
reinvestment of:
Dividends from net
investment income........ 108,264 1,344,727 84,290 1,188,168
Distributions from net
realized gain............ 95,270 1,182,298 1,061,665 14,664,607
---------- ------------ ---------- ------------
944,838 11,855,811 3,371,915 47,561,127
Shares repurchased......... (1,175,898) (14,830,647) (1,286,544) (18,048,545)
---------- ------------ ---------- ------------
Net increase (decrease).... (231,060) (2,974,836) 2,085,371 29,512,582
---------- ------------ ---------- ------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
------------------------ ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold................ 324,614 $ 4,082,014 1,584,901 $ 22,623,592
Shares issued in connection
with the
reinvestment of:
Dividends from net
investment income........ 3,181 39,511 5,067 71,601
Distributions from net
realized gain............ 5,447 67,595 121,353 1,687,756
---------- ------------ ---------- ------------
333,242 4,189,120 1,711,321 24,382,949
Shares repurchased......... (34,082) (445,277) (112,671) (1,588,699)
---------- ------------ ---------- ------------
Net increase............... 299,160 3,743,843 1,598,650 22,794,250
---------- ------------ ---------- ------------
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
------------------------
CLASS C SHARES AMOUNT
- ------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold................ 351,596 $ 5,050,733
Shares issued in connection
with the
reinvestment of:
Dividends from net
investment income........ 303 4,318
Distributions from net
realized gain............ 8,237 116,832
---------- ------------
360,136 5,171,883
Shares repurchased......... (33,071) (476,057)
---------- ------------
Net increase............... 327,065 4,695,826
---------- ------------ ---------- ------------
Increase derived from
capital shares
transactions.............. 68,100 $ 769,007 4,011,086 $ 57,002,658
========== ============ ========== ============
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Trustees of the New England Funds Trust II and the Shareholders
of the NEW ENGLAND GROWTH OPPORTUNITIES FUND
We have audited the accompanying statement of assets and liabilities of the New
England Growth Opportunities Fund including the schedule of portfolio
investments, as of December 31, 1995, and the related statement of operations
for the year then ended, the statements of changes in net assets for each of
the two years in the period then ended, and the financial highlights for each
of the periods indicated herein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
New England Growth Opportunities Fund as of December 31, 1995, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended and the financial highlights for each
of the periods indicated herein, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 2, 1996
<PAGE>
- --------------------------------------------------------------------------------
SHAREHOLDER MEETINGS
- --------------------------------------------------------------------------------
December 31, 1995
At a special shareholders' meeting held on April 24, 1995, shareholders of the
Growth Opportunities Fund voted for the following proposals:
<TABLE>
<CAPTION>
VOTED VOTED ABSTAINED BROKER
TOTAL
FOR AGAINST VOTES NON-VOTES
VOTES
------------- ----------- ----------- ---------- -----
- --------
<S> <C> <C> <C> <C> <C>
1. To approve a new
Advisory Agreement
between New England
Funds Management,
L.P. ("NEFM") and the
Fund, which would
increase the fee
payable by the Fund.. 3,959,534 354,066 290,793 0
4,604,393
============= =========== =========== ==========
2. To approve a proposed
Sub-Advisory
Agreement relating to
the Fund between NEFM
and Westpeak
Investment Adivsers,
L.P.................. 3,893,664 359,206 291,641 59,882
4,604,393
============= =========== =========== ==========
At a special shareholders' meeting held on December 28, 1995, shareholders of
the Growth Opportunities Fund voted for the following proposals:
<CAPTION>
VOTED VOTED ABSTAINED BROKER
TOTAL
FOR AGAINST VOTES NON-VOTES
VOTES
------------- ----------- ----------- ---------- -----
- --------
<S> <C> <C> <C> <C> <C>
1. To approve new
investment advisory
arrangements to be
effective upon the
merger of New England
Mutual Life Insurance
Company into
Metropolitan Life
Insurance Company,
such arrangements to
be substantially
identical to the
investment advisory
arrangements in
effect for the Fund
immediately prior to
such merger.......... 5,809,551.749 135,647.787 218,879.633
6,164,079.169
============= =========== ===========
2. To approve a new
Advisory Agreement
between the Fund and
New England Funds
Management, L.P.
("NEFM")............. 5,450,606.357 417,397.876 240,922.936 55,152.000
6,164,079.169
============= =========== =========== ==========
3. To approve a related
Sub-Advisory
Agreement between
NEFM and the Fund's
current sub-adviser.. 5,415,179.751 439,750.039 253,997.379 55,152.000
6,164,079.169
============= =========== =========== ==========
</TABLE>
<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>
[FN]
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.
<PAGE>
NEW ENGLAND FUNDS
Stock Funds
Growth Fund of Israel
International Equity Fund
Star Worldwide 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
Municipal 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>
Bulk Rate
U.S. Postage
Paid
Brockton, MA
Permit No. 770
[LOGO OF THE NEW ENGLAND FUND APPEARS HERE]
NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)
- ----------------------
399 Boylston Street
Boston, Massachusetts
02116
GP56
- ----------------------
QUALITY
TESTED SERVICE
1996
[DALBAR SEAL ARTWORK APPEARS HERE]
DALBAR
HONORS COMMITMENT TO:
INVESTORS
GR56
[RECYCLED LOGO] Printed on Recycled Paper
<PAGE>
<PAGE>
APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND
EDGAR-FILED
TEXTS.
(1) Rule lines for tables are omitted.
(2) Italic typefaces is displayed in normal type.
(3) Boldface type is displayed in capital letters.
(4) Headers (e.g. the names of the fund) and footers (e.g. page numbers and
"See accompanying notes to the financial statements")
are omitted.
(5) Because the printed page breaks are not reflected, certain tabular and
columnar headings and symbols are displayed differently in this filing.
(6) Bullet points, and similar graphic symbols are omitted.
(7) Page numbering is different.
