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[LOGO]
NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)
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SEMIANNUAL REPORT AND PERFORMANCE UPDATE
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NEW ENGLAND GROWTH
OPPORTUNITIES FUND
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JUNE 30, 1996
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<PAGE>
July 25, 1996
DEAR SHAREHOLDER,
New England Funds welcomes the opportunity to present you with the 1996
Semiannual Report for New England Growth Opportunities Fund, containing your
portfolio manager commentary and complete financial information.
ECONOMIC GROWTH IN THE FIRST HALF OF 1996
Moderate growth with low inflation was the economic story during the first
half of 1996. U.S. Gross Domestic Product (GDP), a bellwether of economic
growth, remained strong at 2.3% through June, just shy of what most economists
consider optimal growth. As a result, the Federal Reserve Board opted not to
tinker with interest rates through the first half of the year, save for a
quarter-point ease in short-term rates in late January. The relatively calm
economic waters had a stimulating effect on the domestic equity market, boosting
stocks 537 points to 5,654 at the end of June, as measured by the Dow Jones
Industrial Average. Bond yields did not fare as well, rising to 7.00% at the end
of June from 6.65% earlier in the year. Money market yields remained stable,
falling back only slightly during the past six months.
THE BENEFITS OF MAINTAINING A LONG-TERM FOCUS
But the market volatility of the first three weeks in July claimed 5.5% of
the Dow Jones Industrial Average's first-half gains. Again, we are reminded that
no bull market lasts forever. Long-term financial goals are key in times like
these and it's important to anticipate this type of market volatility and remain
committed to your financial plan.
It's also a good idea to ask your financial representative for help. A
financial representative can guide you through volatile markets and help you
meet your long-term financial goals. A recent study by Dalbar, Inc., a mutual
fund monitoring and analytical service, shows that, on average, mutual fund
investors who bought and held shares, with the assistance of a financial
representative, enjoyed the benefits of a long-term commitment. Consequently,
they benefitted from higher returns than direct investors and others who bought
and sold, although this does not occur in every case.
CELEBRATING THE BIRTHDAYS OF THREE NEW ENGLAND FUNDS
During the past two months, we've celebrated the birthdays of three of our
most popular funds: New England Growth Opportunities Fund; New England Strategic
Income Fund and New England Star Advisers Fund. Demonstrating the remarkable
scope and breadth of our funds, the Growth Opportunities Fund celebrated its
65th birthday in May while the fast-growing Strategic Income and Star Advisers
Funds marked their first and second birthdays, respectively. We're proud of all
of our funds, but take special pride in recognizing that, whether six months or
65-years-old, all New England Funds are designed to help investors achieve their
goals.
NEW ENGLAND FUNDS: THE PLACE "WHERE THE BEST MINDS MEET"(TM)
The longevity of our more seasoned funds and the potential for growth of our
newer ones illustrates the ongoing progress of New England Funds. Our unique
multiple-adviser approach brings together some of the best minds in the
investment business. The ability to attract top-notch investment advisers and
our multiple-adviser approach to fund management are the cornerstones of New
England Funds' investment philosophy and the essence of our corporate logo,
Where The Best Minds Meet(TM).
OUTLOOK FOR THE REST OF 1996
Going forward, we anticipate that the economy will continue to grow
moderately and that inflationary pressures will not be excessive. While we
estimate the GDP may rise somewhat from its current level of 2.3%, the Federal
Reserve should be reluctant to tighten the money supply by raising short-term
interest rates. We also believe that the equity markets will continue to be
volatile through the rest of the year.
We believe that you will find your portfolio manager commentary informative.
If you have any questions or comments, please contact your financial
representative or New England Funds directly at 800-225-5478.
Sincerely,
/S/Henry L.P. Schmelzer
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Henry L.P. Schmelzer, President
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NEW ENGLAND GROWTH OPPORTUNITIES FUND
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INVESTMENT RESULTS THROUGH JUNE 30, 1966
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 chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class A Shares for New Growth Opportunities Fund's since
6/30/86, compared to the S&P 500 Index(4). The data points for the graph are as
follows:]
--------------------------------------
A $10,000 INVESTMENT IN CLASS A SHARES
--------------------------------------
Growth Opportunities
Year NAV POP S&P 500
- ------- ------- ------- -------
6/30/86 $10,000 $9,425 $10,000
1987 $11,212 $10,567 $12,509
1988 $10,249 $9,660 $11,646
1989 $11,916 $11,231 $14,035
1990 $13,629 $12,845 $16,337
1991 $14,650 $13,807 $17,544
1992 $16,778 $15,813 $19,907
1993 $18,880 $17,795 $22,611
1994 $18,988 $17,896 $23,011
1995 $23,465 $22,116 $28,992
1996 $27,790 $26,192 $36,510
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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.
<PAGE>
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AVERAGE ANNUAL TOTAL RETURNS 6/30/96
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CLASS A (Inception 5/6/31) YTD 1 YEAR 3 YEARS 5 YEARS 10 Years
- ------------------------- --- ------ ------- ------- --------
Net Asset Value(1) 3.88% 18.45% 13.75% 13.66% 10.76%
With Max. Sales Charge(2) -2.11 11.62 11.52 12.32 10.11
Lipper Growth & Income Avg.(5) 9.24 22.13 14.48 14.36
SINCE
CLASS B (Inception 9/13/93) YTD 1 YEAR INCEPTION
- -------------------------- --- ------ ---------
Net Asset Value(1) 3.45% 17.65% 12.94%
With CDSC(3) -0.55 13.65 12.07
Standard & Poor's 500 Index(4) 10.08 25.93 17.32
Lipper Growth & Income Avg.(5) 9.24 22.13 n/a
SINCE
CLASS C (Inception 5/1/95) YTD 1 YEAR INCEPTION
- ------------------------- --- ------ ---------
Net Asset Value(1) 3.45% 17.57% 20.43%
Standard & Poor's 500 Index(4) 10.08 25.93 28.55
Lipper Growth & Income Avg.(5) 9.24 22.13 n/a
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(R) 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>
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 Index(4). 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.
[A chart in the form of a bar graph appears here, illustrating a $10,000
investment in Class A Shares New England Growth Opportunities Fund compared to a
$10,000 investment in the Standard & Poor's 500 Index(4) from May, 1931 through
June 30, 1996,the values of the Cumulative return are as follows:]
--------------------------------------------
GROWTH OPPORTUNITIES FUND -- CLASS A SHARES*
--------------------------------------------
A $10,000 INITIAL INVESTMENT COMPARED
TO THE STANDARD & POOR'S 500 INDEX(4)
MAY 1931 -- JUNE 30, 1996 CUMULATIVE RETURN
YOUR FUND S&P 500 INDEX(4)
--------- ----------------
$29,417,033 $7,962,709
* 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 since
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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Phote of
Gerald Scriver
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NEW ENGLAND
GROWTH OPPORTUNITIES FUND
Portfolio Manager: Gerald Scriver
Westpeak Investment Advisors, L.P.
The first six months of 1996 held few surprises for us in terms of the overall
economic environment and its effects on your fund. We anticipated rising
interest rates throughout 1996, as well as a rise in inflation; thus far, our
expectations have been accurate.
In the shadow of 1995's bull market (or rising market), both the stock market
and the economy have remained strong. However, we do not expect the current
growth rates to continue through the second half of this year. Therefore, we
have positioned the portfolio for the weaker market environment ahead by placing
a stronger emphasis on value stocks, which tend to outperform growth investments
in uncertain market environments.
How Your Fund Performed
For the first half of 1996 -- through June 30 -- New England Growth
Opportunities Fund's total return was 3.88% for Class A shares, at net asset
value. While the Fund underperformed its benchmark, the Standard & Poor's 500
Index (S&P 500) in the first six months of the year, its long-term track record
remains strong. As of June 30, 1996, a $10,000 investment in New England Growth
Opportunities Fund at inception (see chart at left) would have grown to
$29,417,033.
We believe the Fund's relative underperformance for the first six months of this
year was due, in part, to our own early anticipation of a changing market
environment -- one we believe will ultimately favor value stocks over growth
stocks -- and to investor reactions to rising interest rates.
How We Managed Your Fund
The momentum of the stock market this year has been driven by highly volatile,
smaller companies. Consistent with our strategy, we've focused the Fund's
investments on large, highly liquid companies with low price-to-earnings (P/E)
ratios. Low P/E stocks, such as Exxon, Sears and General Motors, carry
relatively low risk and have typically shown the potential to achieve consistent
growth over time.
While these large-capitalization stocks have been largely ignored during the
last six to eight months, we believe that they are about to come back into
favor, especially as interest rates rise and investors become more concerned
with the effects of these economic changes on small-capitalization ("small-cap")
investments. Recently, the NASDAQ* and Russell 2000** indexes, benchmarks for
small company stock performance, have become more volatile. This trend seems to
indicate that small-cap stocks may underperform in the second half of the year.
With this prospect in mind, over the past few months we have been shifting the
Fund's focus toward a value-based investment strategy, increasing our emphasis
on defensive, low P/E stocks to help offset the volatility of smaller company
stocks.
Currently, the Fund's portfolio is overweighted in the energy sector. This
allocation benefitted us in the first half of the year, as energy stocks
responded well to rising interest rates. We'll maintain this position in
anticipation of continued rising rates.
A Long-Term Outlook
While a changing economic landscape will most likely produce slower market
growth in the second half of the year, we feel that a bear (or falling) market
is unlikely. We have, however, positioned your Fund to take advantage of
long-term growth opportunities in the environment ahead and will continue to
pursue this objective while maintaining the conservative nature of the Fund.
* National Association of Securities Dealers Automated Quotations system.
NASDAQ is owned and operated by the National Association of Securities
Dealers, an industry watchdog group. The NASDAQ index lists stocks of large,
mid-sized and small-growth companies but specializes in small-cap issues.
** The Russell 2000 index represents the smallest two-thirds of the 3,000
largest U.S. companies, including a great many of the initial public
offerings of the last few years.
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TOP FIVE PORTFOLIO HOLDINGS 6/30/96*
PERCENTAGE
COMPANY OF NET ASSETS
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1. EXXON CORP. 4.30%
World`s leading oil company
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2. JOHNSON & JOHNSON 3.26%
Healthcare products manufacturer
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3. MOBIL CORP. 2.80%
International oil/gas exploration/development
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4. AMERITECH CORP. 2.79%
Regional telephone company
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5. AMOCO CORP. 2.74%
Domestic oil company
* Portfolio holdings are subject to change.
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[LOGO]
NEW ENGLAND FUNDS
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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JUNE 30, 1996
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PORTFOLIO COMPOSITION
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Investments as of June 30, 1996
(unaudited)
COMMON STOCKS -- 99.2% OF TOTAL NET ASSETS
SHARES DESCRIPTION VALUE (a)
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AEROSPACE--0.6%
10,600 United Technologies Corp. ........................ $ 1,219,000
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AIRLINES--0.9%
32,800 UAL Corp. (c) .................................... 1,763,000
------------
ALUMINUM--0.1%
4,600 Aluminum Company of America ...................... 263,925
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APPAREL & TEXTILES--1.6%
32,300 Nike, Inc., Class B .............................. 3,318,825
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AUTOMOTIVE & RELATED--5.5%
78,100 Chrysler Corp. ................................... 4,842,200
105,400 General Motors Corp. ............................. 5,520,325
14,500 Paccar, Inc. ..................................... 710,500
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11,073,025
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BANKS--5.1%
22,300 Bank of New York, Inc. ........................... 1,142,875
9,000 BankAmerica Corp. ................................ 681,750
21,900 BanPonce Corp. ................................... 985,500
27,500 Citicorp ......................................... 2,272,188
64,100 NationsBank Corp. ................................ 5,296,262
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10,378,575
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BUSINESS SERVICES--4.7%
19,800 Automatic Data Processing, Inc. .................. 764,775
82,800 Comdisco, Inc. ................................... 2,204,550
41,700 Gtech Holdings Corp. ............................. 1,235,362
20,300 Omnicom Group .................................... 943,950
76,200 PHH Corp. ........................................ 4,343,400
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9,492,037
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CHEMICALS--1.2%
42,700 Cabot Corp. ...................................... 1,046,150
109,500 Terra Industries, Inc. ........................... 1,355,063
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2,401,213
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COMPUTER SOFTWARE & SERVICES--1.0%
13,300 Compuware Corp. .................................. 525,350
6,700 Primark Corp. .................................... 218,588
17,600 Sterling Software, Inc. .......................... 1,355,200
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2,099,138
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COMPUTERS & BUSINESS EQUIPMENT--3.9%
25,900 Hewlett Packard Co. .............................. 2,580,287
12,600 International Business Machines Corp. ............ 1,247,400
43,800 Seagate Technology ............................... 1,971,000
2,600 Sun Microsystems, Inc. ........................... 153,075
74,600 Western Digital Corp. ............................ 1,948,925
------------
7,900,687
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CONSTRUCTION--0.2%
10,300 Centex Corp. ..................................... 320,588
------------
COSMETICS & TOILETRIES--3.3%
133,600 Johnson & Johnson ................................ 6,613,200
------------
DOMESTIC OIL--3.6%
76,800 Amoco Corp. ...................................... 5,558,400
1,200 NGC Corp. ........................................ 18,000
39,600 Phillips Petroleum Co. ........................... 1,658,250
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7,234,650
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DRUGS & HEALTH CARE--5.2%
12,000 Amgen, Inc. (c) .................................. 648,000
21,000 Bristol Myers Squibb Co. ......................... 1,890,000
40,200 Eli Lilly & Co. (c) .............................. 2,613,000
41,200 Merck & Co., Inc. ................................ 2,662,550
8,500 Rhone Poulenc Rorer, Inc. ........................ 570,562
33,700 Schering Plough Corp. ............................ 2,114,675
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10,498,787
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ELECTRIC UTILITIES--3.1%
10,700 Duke Power Co. ................................... 548,375
27,700 Entergy Corp. .................................... 785,988
67,500 Pinnacle West Capital Corp. ...................... 2,050,312
107,500 Unicom Corp. ..................................... 2,996,562
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6,381,237
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ELECTRONICS--5.4%
5,100 Harris Corp. Delaware ............................ 311,100
12,700 Honeywell, Inc. .................................. 692,150
25,700 Kemet Corp. ...................................... 514,000
94,000 KLA Instruments Corp. ............................ 2,185,500
66,700 Komag, Inc. ...................................... 1,759,213
57,600 Novellus Systems, Inc. ........................... 2,073,600
53,900 Raytheon Co. ..................................... 2,782,587
10,000 Tellabs, Inc. (c) ................................ 668,750
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10,986,900
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ENTERTAINMENT--0.0%
1,700 King World Productions, Inc. ..................... 61,838
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FINANCE--2.8%
63,525 Bear Stearns Co., Inc. ........................... 1,500,778
30,300 Green Tree Financial Corp. ....................... 946,875
127,100 Lehman Brothers Holdings, Inc. ................... 3,145,725
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5,593,378
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FOOD & BEVERAGES--4.7%
11,600 Campbell Soup Co. ................................ 817,800
62,600 Coca Cola Co. .................................... 3,059,575
17,800 CPC International, Inc. .......................... 1,281,600
17,400 H. J. Heinz Co. .................................. 528,525
8,400 Hershey Foods Corp. .............................. 616,350
93,100 IBP, Inc. ........................................ 2,571,887
21,600 Sara Lee Corp. ................................... 699,300
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9,575,037
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FOOD--RETAILERS/WHOLESALERS--0.3%
16,700 Kroger Co. (c) ................................... 659,650
------------
GAS & PIPELINE UTILITIES--3.1%
33,200 MCN Corp. ........................................ 809,250
58,400 Oneok, Inc. ...................................... 1,460,000
83,200 Williams Companies, Inc. ......................... 4,118,400
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6,387,650
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HEALTH CARE--1.4%
45,900 Abbott Labs ...................................... 1,996,650
10,500 Millipore Corp. .................................. 439,688
7,000 Pacificare Health Systems, Inc. .................. 474,250
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2,910,588
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HOTELS & RESTAURANTS--1.1%
20,200 Marriott International, Inc. ..................... 1,085,750
23,500 McDonalds Corp. .................................. 1,098,625
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2,184,375
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HOUSEHOLD PRODUCTS--2.6%
46,500 Clorox Co. ....................................... 4,121,063
18,000 Gillette Co. ..................................... 1,122,750
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5,243,813
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INSURANCE--2.9%
53,200 Loews Corp. ...................................... 4,196,150
79,950 Old Republic International ....................... 1,718,925
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5,915,075
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INTERNATIONAL OIL--7.2%
4,700 Chevron Corp. .................................... 277,300
100,500 Exxon Corp. ...................................... 8,730,937
50,700 Mobil Corp. ...................................... 5,684,738
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14,692,975
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LEISURE TIME--0.1%
8,000 Grand Casinos, Inc. .............................. 206,000
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METAL--1.4%
41,700 Asarco, Inc. ..................................... 1,151,963
25,800 Phelps Dodge Corp. ............................... 1,609,275
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2,761,238
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MISCELLANEOUS--0.1%
6,700 American Water Works, Inc. ....................... 269,675
------------
OIL--2.2%
25,600 Royal Dutch Petroleum Co. ........................ 3,936,000
15,800 Ultramar Corp. ................................... 458,200
------------
4,394,200
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OIL SERVICES--1.6%
28,400 Halliburton Co. .................................. 1,576,200
31,700 Sonat Offshore Drilling, Inc. .................... 1,600,850
------------
3,177,050
------------
PAPER--0.3%
16,100 Champion International Corp. ..................... 672,175
------------
PHOTOGRAPHY--0.5%
11,800 Eastman Kodak Co. ................................ 917,450
------------
PRODUCER OF GOODS--6.9%
30,000 Applied Materials, Inc. .......................... 915,000
18,100 Case Corp. ....................................... 868,800
28,000 Caterpillar, Inc. ................................ 1,897,000
45,600 Dover Corp. ...................................... 2,103,300
9,500 Harnischfeger Industries, Inc. ................... 315,875
49,500 Harsco Corp. ..................................... 3,328,875
40,300 Illinois Tool Works, Inc. ........................ 2,725,287
39,700 Lam Research Corp. ............................... 1,032,200
16,700 Varian Associates, Inc. .......................... 864,225
------------
14,050,562
------------
RETAIL--6.0%
34,700 Gap, Inc. ........................................ 1,114,738
45,900 May Department Stores Co. ........................ 2,008,125
94,100 Sears Roebuck and Co. ............................ 4,575,612
99,300 Staples, Inc. .................................... 1,936,350
12,200 Tiffany & Co. .................................... 890,600
30,200 TJX Companies, Inc. .............................. 1,019,250
28,800 Waban, Inc. ...................................... 687,600
------------
12,232,275
------------
SAVINGS & LOAN--0.2%
12,100 Standard Federal BanCorp. ........................ 465,850
------------
TELECOMMUNICATION--7.7%
95,200 Ameritech Corp. .................................. 5,652,500
82,700 Bell Atlantic Corp. .............................. 5,272,125
16,500 Bellsouth Corp. .................................. 699,187
20,200 GTE Corp. ........................................ 903,950
29,900 SBC Communications, Inc. ......................... 1,472,575
25,400 Southern N E Telecommunications Corp. ............ 1,066,800
14,000 Sprint Corp. ..................................... 588,000
------------
15,655,137
------------
TIRES & RUBBER--0.4%
14,800 Goodyear Tire and Rubber ......................... 714,100
------------
TOBACCO--0.3%
14,900 American Brands, Inc. ............................ 676,088
------------
Total Common Stock (Identified Cost $178,343,142) 201,360,966
------------
SHORT TERM INVESTMENT -- 0.5%
FACE
AMOUNT DESCRIPTION VALUE (a)
- ------------------------------------------------------------------------------
$ 969,000 Repurchase agreement with State Street Bank & Trust
Co. dated 06/28/96 at 4.75% to be repurchased at
$969,384 on 7/01/96. Collateralized by $1,015,000
U.S. Treasury Bill due 12/19/96, with a value of
$989,440. ......................................... $ 969,000
------------
Total Short Term Investment (Identified Cost
$969,000) ....................................... 969,000
------------
Total Investments--99.7% (Identified Cost
$179,312,142) (b) ............................... 202,329,966
Other assets less liabilities .................... 561,822
------------
Total Net Assets--100% ............................ $202,891,788
============
(a) See Note 1a.
(b) Federal Tax Information:
At June 30, 1996 the net unrealized appreciation on
investments based on cost of $179,312,142 for federal
income tax purposes was as follows:
Aggregate gross unrealized apppreciation for all
investments in which there is an excess of value
over tax cost ..................................... $ 28,758,510
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost
over value ........................................ (5,740,686)
------------
Net unrealized appreciation ....................... $ 23,017,824
============
(c) Non-income producing security.
See accompanying notes to financial statements.
<PAGE>
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STATEMENTS OF ASSETS & LIABILITIES
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June 30, 1996
(unaudited)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value .................................... $202,329,966
Cash .................................................... 436
Receivable for:
Fund shares sold ...................................... 405,499
Securities sold ....................................... 151,203
Dividends and interest ................................ 278,589
Prepaid registration expense ............................ 14,000
------------
203,179,693
LIABILITIES
Payable for:
Fund shares redeemed .................................. $ 67,387
Withholding taxes ..................................... 787
Dividends declared .................................... 35,169
Accrued expenses:
Management fees ....................................... 116,786
Deferred trustees' fees ............................... 4,999
Accounting and administrative ......................... 2,797
Other expenses ........................................ 59,980
---------
287,905
------------
NET ASSETS ................................................ $202,891,788
============
Net Assets consist of:
Capital paid in ....................................... $150,008,764
Undistributed net investment income ................... 29,644
Accumulated net realized gains ........................ 29,835,556
Unrealized appreciation on investments ................ 23,017,824
------------
NET ASSETS ................................................ $202,891,788
============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A shares
($158,849,925 divided by 10,674,692 shares of beneficial
interest) ............................................... $14.88
======
Offering price per share (100/94.25 of $14.88) ............ $15.79*
======
Net asset value and offering price of Class B shares
($39,306,317 divided by 2,640,101 shares of beneficial
interest) ............................................... $14.89**
======
Net asset value and offering price of Class C shares
($4,735,546 divided by 318,443 shares of beneficial
interest) ............................................... $14.87
======
Identified cost of investments ............................ $179,312,142
============
<FN>
*Based upon single purchases of less than $50,000.
Reduced sales charges apply for purchases in excess of this amount.
**Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charges.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
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STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1996
(unaudited)
INVESTMENT INCOME
Dividends $2,017,797(a)
Interest ........................................ 145,424
----------
2,163,221
Expenses
Management fees ............................... $694,103
Service fees--Class A ......................... 197,258
Service and distribution fees--Class B ........ 178,488
Service and distribution fees--Class C ........ 24,840
Trustees' fees and expenses ................... 10,589
Accounting and administrative ................. 21,668
Custodian ..................................... 46,665
Transfer agent ................................ 194,501
Audit and tax services ........................ 14,500
Legal ......................................... 9,410
Printing ...................................... 19,339
Registration .................................. 40,394
Miscellaneous ................................. 4,344
--------
Total expenses .................................. 1,456,099
----------
Net investment income ........................... 707,122
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain on Investments--net ............... 27,763,529
Unrealized appreciation (depreciation) on
Investments--net .............................. (21,355,308)
----------
Net gain on investment transactions ............. 6,408,221
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ........ $7,115,343
==========
(a) Net of foreign taxes of: $15,407
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
(unaudited)
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
1995 JUNE 30, 1996
------------ -------------
FROM OPERATIONS
Net investment income ...................... $ 1,655,576 $ 707,122
Net realized gain on investments ........... 21,443,541 27,763,529
Unrealized appreciation (depreciation) on
investments .............................. 16,043,612 (21,355,308)
------------ ------------
Increase in net assets from operations ..... 39,142,729 7,115,343
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A .................................. (1,549,436) (725,998)
Class B .................................. (74,015) (42,256)
Class C .................................. (4,516) (5,115)
Net realized gain on investments
Class A .................................. (17,435,536) 0
Class B .................................. (1,801,248) 0
Class C .................................. (120,627) 0
------------ ------------
(20,985,378) (773,369)
------------ ------------
Increase in net assets derived from capital
share transactions ....................... 57,002,658 12,124,087
------------ ------------
Total increase in net assets ............... 75,160,009 18,466,061
NET ASSETS
Beginning of the period .................... 109,265,718 184,425,727
------------ ------------
End of the period $184,425,727 $202,891,788
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period .................... $ 106,169 $ 95,891
============ ============
End of the period .......................... $ 95,891 $ 29,644
============ ============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<CAPTION>
CLASS A
------------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------------------------ JUNE 30,
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............. $ 9.54 $11.79 $12.20 $12.67 $12.41 $14.39
------ ------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income ............................ 0.26 0.23 0.21 0.22 0.18 0.07
Net Realized and Unrealized Gain (Loss)
on Investments ................................. 2.63 0.86 0.75 (0.10) 4.01 0.49
------ ------ ------ ------ ------ ------
Total From Investment Operations ................. 2.89 1.09 0.96 0.12 4.19 0.56
------ ------ ------ ------ ------ ------
Less Distributions
Dividends From Net Investment Income ............. (0.26) (0.23) (0.21) (0.21) (0.18) (0.07)
Distributions in Excess of Net Investment
Income ......................................... 0.00 0.00 (0.01) 0.00 0.00 0.00
Distributions From Net Realized Capital
Gains .......................................... (0.38) (0.45) (0.27) (0.17) (2.03) 0.00
------ ------ ------ ------ ------ ------
Total Distributions .............................. (0.64) (0.68) (0.49) (0.38) (2.21) (0.07)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period ................... $11.79 $12.20 $12.67 $12.41 $14.39 $14.88
====== ====== ====== ====== ====== ======
Total Return (%)(a) .............................. 30.6 9.3 8.0 1.0 35.1 3.9
Ratio of Operating Expenses to
Average Net Assets (%) ......................... 1.23 1.94 1.21 1.28 1.38 1.31(b)
Ratio of Net Investment Income to
Average Net Assets (%) ......................... 2.28 1.18 1.70 1.75 1.31 0.86(b)
Portfolio Turnover Rate (%) ...................... 12 10 4 6 69 136(b)
Average Commission Rate (c) ...................... -- -- -- -- -- $ 0.0371
Net Assets, End of Period (000) .................. $70,263 $90,945 $109,168 $104,081 $150,693 $158,850
<FN>
(a) A sales charge is not reflected in total return calculations. Periods less than one year are not annualized.
(b) Computed on an annualized basis.
(c) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share
for trades upon which commissions are charged. This rate generally does not reflect mark-ups, mark-downs, or spreads on shares
traded on a principal basis.
As of January 1, 1993 the Fund discontinued the use of equalization accounting.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<CAPTION>
CLASS B CLASS C
------------------------------------------------------- ------------------------
SEPTEMBER 13(a) SIX MONTHS MAY 1(a) SIX MONTHS
THROUGH YEAR ENDED YEAR ENDED ENDED THROUGH ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
1993 1994 1995 1996 1995 1996
--------------- ------------ ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $12.95 $12.66 $12.42 $14.40 $13.84 $14.39
------ ------ ------ ------ ------ ------
Income From Investment Operations
Net Investment Income ....................... 0.06 0.16 0.10 0.01 0.06 0.01
Net Realized and Unrealized Gain (Loss) on
Investments ............................... 0.01 (0.09) 4.01 0.50 2.58 0.49
------ ------ ------ ------ ------ ------
Total From Investment Operations ............ 0.07 0.07 4.11 0.51 2.64 0.50
------ ------ ------ ------ ------ ------
Less Distributions
Dividends From Net Investment Income ........ (0.03) (0.14) (0.10) (0.02) (0.06) (0.02)
Distributions in Excess of Investment Income (0.06) 0.00 0.00 0.00 0.00 0.00
Distributions From Net Realized Capital Gains (0.27) (0.17) (2.03) 0.00 (2.03) 0.00
------ ------ ------ ------ ------ ------
Total Distributions ......................... (0.36) (0.31) (2.13) (0.02) (2.09) (0.02)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period .............. $12.66 $12.42 $14.40 $14.89 $14.39 $14.87
====== ====== ====== ====== ====== ======
Total Return (%)(c) ......................... 0.6 0.6 34.3 3.5 20.2 3.5
Ratio of Operating Expenses to Average Net
Assets (%) ................................ 2.08(b) 1.93 2.11 2.06(b) 2.11(b) 2.06(b)
Ratio of Net Investment Income to Average Net
Assets (%) ................................ 0.71(b) 1.10 0.56 0.11(b) 0.56(b) 0.11(b)
Portfolio Turnover Rate (%) 4 6 69 136(b) 69 136(b)
Average Commission Rate (d) ................. -- -- -- $0.0371 -- $0.0371
Net Assets, End of Year (000) ............... $1,498 $5,185 $29,026 $39,306 $4,707 $4,736
<FN>
(a) Commencement of operations.
(b) Computed on an annualized basis.
(c) A contingent deferred sales charge in the case of Class B shares is not reflected in total return calculations. Periods less
than one year are not annualized.
(d) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate per share
for trades upon which commissions are charged. This rate generally does not reflect mark-ups, mark-downs, or spreads on shares
traded on a principal basis.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1996
(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 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 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 subadviser 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, 1996 were $151,736,770 and
$132,106,643, respectively.
3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
The Fund pays management fees to its investment adviser, New England Funds
Management L.P. ("NEFM") 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 and
0.60% of such assets in excess of $500 million. NEFM pays the Fund's
investment subadviser, Westpeak Investment Advisors, L.P. at the rate of 0.50%
of the first $25 million of the Fund's average daily net assets, 0.40% of the
next $75 million, 0.35% of the next $100 million and 0.30% of such assets in
excess of $200 million. Certain officers and directors of NEFM and Westpeak
Investment Advisors, L.P. are also officers or trustees of the Fund. NEFM and
Westpeak Investment Advisors, L.P. are wholly owned subsidiaries of New
England Investment Companies, L.P. ("NEIC"), which is a subsidiary of New
England Mutual Life Insurance Company. Fees earned by NEFM and Westpeak
Investment Advisors, L.P. under the management agreement in effect during the
six months ended June 30, 1996 are as follows:
FEES EARNED
-----------
$310,032 New England Funds Management, L.P.
$384,071 Westpeak Investment Advisors, L.P.
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 six months ended June 30, 1996, these expenses
amounted to $21,668 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 six months ended June 30, 1996, the Fund
paid New England Funds $144,668 as compensation for its services in that
capacity.
D. SERVICE AND DISTRIBUTION FEES. Pursuant to Rule 12b-1 under the 1940 Act,
the Trust has adopted a Service Plan relating to the Fund's Class A shares
(the "Class A Plan") and Service and Distribution Plans relating to the Fund's
Class B and Class C shares (the "Class B and Class C Plans").
Under the Class A Plan, the Fund pays New England Funds 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 shares, as reimbursement for expenses (including certain
payments to securities dealers, who may be affiliated with New England Funds)
incurred by the New England Funds in providing personal services to investors
in Class A shares and/or the maintenance of shareholder accounts. For the six
months ended June 30, 1996, the Fund paid New England Funds $197,258 in fees
under the Class A Plan.
Under the Class B and Class C 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 B and Class C shares, as compensation for
services provided and expenses (including certain payments to securities
dealers, who may be affiliated with New England Funds) incurred by New England
Funds in providing personal services to investors in Class B and Class C
shares and/or the maintenance of shareholder accounts. For the six months
ended June 30, 1996, the Fund paid New England Funds $44,622 and $6,210 in
service fees under the Class B and Class C Plans, respectively.
Also under the Class B and Class C Plan, the Fund pays New England Funds a
monthly distribution fee at the annual rate of 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 B and
Class C shares. For the six months ended June 30, 1996, the Fund paid New
England Funds $133,866 and $18,630 in distribution fees under the Class B and
Class C Plans, respectively.
Commissions (including contingent deferred sales charges) on Fund shares paid
to New England Funds by investors in shares of the Fund during the six months
ended June 30, 1996 amounted to $484,913.
E. TRUSTEES FEES AND EXPENSES. The Fund does not pay any compensation
directly to its officers or trustees who are directors, officers or employees
of NEFM, New England Funds, NEIC or their affiliates, other than registered
investment companies. Each other trustee is compensated by the Fund as
follows:
Annual Retainer $2,217
Meeting Fee $114/meeting
Committee Meeting Fee $68/meeting
Committee Chairman Retainer $87/year
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, 1996 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, 1995 JUNE 30, 1996
--------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS A ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold ........................................ 2,225,960 $ 31,708,352 1,089,636 $ 16,174,823
Shares issued in connection with the reinvestment of:
Dividends from net investment income ............. 84,290 1,188,168 38,945 580,568
Distributions from net realized gain ............. 1,061,665 14,664,607 0 0
--------- ------------ --------- ------------
3,371,915 47,561,127 1,128,581 16,755,391
Shares repurchased ................................. (1,286,544) (18,048,545) (922,830) (13,779,522)
--------- ------------ --------- ------------
Net increase ....................................... 2,085,371 29,512,582 205,751 2,975,869
--------- ------------ --------- ------------
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
--------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS B ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold ........................................ 1,584,901 $ 22,623,592 864,405 $ 12,873,298
Shares issued in connection with the reinvestment of:
Dividends from net investment income ............. 5,067 71,601 2,590 38,696
Distributions from net realized gain ............. 121,353 1,687,756 0 0
--------- ------------ --------- ------------
1,711,321 24,382,949 866,995 12,911,994
Shares repurchased ................................. (112,671) (1,588,699) (243,081) (3,633,849)
--------- ------------ --------- ------------
Net increase ....................................... 1,598,650 22,794,250 623,914 9,278,145
--------- ------------ --------- ------------
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
--------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
CLASS C ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold ........................................ 351,596 5,050,733 137,414 2,031,592
Shares issued in connection with the reinvestment of:
Dividends from net investment income ............. 303 4,318 353 5,276
Distributions from net realized gain ............. 8,237 116,832 0 0
--------- ------------ --------- ------------
360,136 5,171,883 137,767 2,036,868
Shares repurchased ................................. (33,071) (476,057) (146,389) (2,166,795)
--------- ------------ --------- ------------
Net increase (decrease) ............................ 327,065 4,695,826 (8,622) (129,927)
--------- ------------ --------- ------------
Increase derived from capital share transactions ... 4,011,086 $ 57,002,658 821,043 $ 12,124,087
========= ============ ========= ============
</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
retirememt 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
Years Growth of Monthly Investments
0 $0
5 $3,661
10 $9,040
15 $16,943
20 $28,555
25 $45,618
Monthly investments of $100
Years Growth of Monthly Investments
0 $0
5 $7,322
10 $18,079
15 $33,886
20 $57,111
25 $91,236
Monthly investments of $200
Years Growth of Monthly Investments
0 $0
5 $14,643
10 $36,158
15 $67,772
20 $114,222
25 $182,472
Monthly investments of $500
Years Growth of Monthly Investments
0 $0
5 $36,608
10 $90,396
15 $169,429
20 $285,555
25 $456,181
For illustrative purposes only. These figures represent hypothetical
accumulation at an 8% annual rate of return, and are not indicative of future
performance of any New England Fund. The value of a New England Fund will
fluctuate with changing market conditions.
This program cannot assure a profit nor protect against a loss in a declining
market. It does, however, ensure that you buy more shares when the price is low
and fewer shares when the price is high.
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>
- -------------------------------------------------------------------------------
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.
[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 at age 30 for 10 years:
Age Growth of Investments
30 $2,000
35 $15,431
40 $35,062
45 $90,943
55 $146,464
60 $235,882
65 $379,890
Investor B - Begins investing at age 40 for 25 years:
Age Growth of Investments
40 $2,000
45 $15,431
50 $37,062
55 $71,899
60 $128,005
65 $216,364
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.
<PAGE>
- -----------------------------------------------------------------------------
INFORMATION ON CALL
- -----------------------------------------------------------------------------
YOU CAN CALL NEW ENGLAND FUNDS DAY OR NIGHT
Do you like to keep on top of your New England Funds but can't always
call us during regular business hours? With Tele#Facts, New England Funds'
24-hours a day automated telephone system, you can call us any time that's
convenient for you -- day or night!
By calling 1-800-346-5984 from any Touch-Tone(R) telephone, you can:
o Check the current value of your New England Fund account
o Find out the current yield and total return on any New England Fund
o Buy, sell or exchange fund shares
Just remember to have these four items with you before calling:
1. YOUR PERSONAL IDENTIFICATION NUMBER which is the last four digits of your
Social Security number
2. THE FUND NUMBER -- two- or three-digit number listed on the Tele#Facts
wallet card
3. FUNCTION NUMBER -- listed on the Tele#Facts wallet card
4. ACCOUNT NUMBER -- listed on all your statements
You can get the information you need to use Tele#Facts from the back of your
statement. If you need another Tele#Facts wallet card or have questions about
getting started, please call us at 1-800-225-5478.
So go ahead and give Tele#Facts a try. We think you'll enjoy this easy-to-use
and convenient service from New England Funds!
<PAGE>
- -----------------------------------------------------------------------------
NEW ENGLAND FUNDS
- -----------------------------------------------------------------------------
STOCK FUNDS
Growth Fund
Star Advisers Fund
Capital Growth Fund
Value Fund
Growth Opportunities Fund
Balanced Fund
INTERNATIONAL STOCK FUNDS
Growth Fund of Israel
International Equity Fund
Star Worldwide 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.
VISIT OUR WORLD WIDE WEB SITE AT HTTP://WWW.MUTUALFUNDS.COM
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>
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NEW ENGLAND FUNDS BULK RATE
Where The Best Minds Meet(TM) U.S. POSTAGE
PAID
BROCKTON, MA
PERMIT NO. 770
--------------
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02116
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