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NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)
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SEMIANNUAL REPORT AND PERFORMANCE UPDATE
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NEW ENGLAND
STAR WORLDWIDE FUND
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JUNE 30, 1996
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July 25, 1996
DEAR SHAREHOLDER,
New England Funds welcomes the opportunity to present you with the 1996
Semiannual Report for New England Star Worldwide Fund, containing your portfolio
managers' commentaries 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 hike 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. Market declines frequently create new
opportunities to add to your mutual fund portfolio.
It's also a good idea to ask a 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, often with the assistance of a financial
representative, enjoyed the benefits of their long-term commitment.
Consequently, they benefitted from significantly higher returns than direct
investors and others who bought and sold, although this does not occur in every
case. Your financial representative can also help you allocate your assets among
different types of fund investment classes, including stock, bond, and money
market funds. This can increase your opportunity for gain and lessen the impact
of any asset class that may underperform.
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 mark 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, one area of commonality among all of the New England Funds is
our commitment to helping 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 fund 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 and
that higher inflation may appear on the horizon as a result. Rising inflationary
pressures are usually a consequence of economic growth. We estimate the GDP may
rise from 2.3% to 3% by year end. That, in turn, may spur the Federal Reserve to
tighten the money supply by raising short-term interest rates. If the Federal
Reserve fails to act, then the bond market may act independently and raise
yields on its own to stem excessive economic growth pushing bond prices lower.
We also believe that the equity market will continue to be volatile through the
rest of the year. As always, we recommend that you regularly review your asset
allocation program with your financial representative.
We believe that 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.
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 STAR WORLDWIDE FUND
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INVESTMENT RESULTS THROUGH
JUNE 30, 1996
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.
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TOTAL RETURNS FOR PERIOD ENDED 6/30/96
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CLASS A (Inception 12/29/95) SINCE INCEPTION
Net Asset Value(1) 11.92%
With Max. Sales Charge(2) 5.51
Lipper Global Average(5) 10.63
CLASS B (Inception 12/29/95) SINCE INCEPTION
Net Asset Value(1) 11.52%
With CDSC(3) 7.52
Lipper Global Average(5) 10.63
CLASS C (Inception 12/29/95) SINCE INCEPTION
Net Asset Value(1) 11.60%
Lipper Global Average(5) 10.63
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.
* Class Y shares are available only to certain institutional investors.
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 (MSC) 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. Class Y shares are not subject to a sales charge.
4 Morgan Stanley Capital International (MSCI) Europe Australasia Far East Index
(EAFE) is an arithmetical average (weighted by market value) of the
performance (in U.S. dollars) of 1,036 companies representing stock markets in
Europe, Australia, New Zealand and the Far East. The Index 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.
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NEW ENGLAND STAR WORLDWIDE FUND
A $10,000 INVESTMENT COMPARED TO MORGAN STANLEY EAFE INDEX(4)
CLASS A SHARES, INCEPTION 12/29/95
[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 Morgan Stanley EAFE Index(4).]
New England Star Worldwide Fund - Net Asset Value(1)
Date Amount
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Jun-96 $11,191
May-96 $11,136
Apr-96 $10,872
Mar-96 $10,527
Feb-96 $10,264
Jan-96 $10,088
29-Dec-95 $10,000
New England Star Worldwide Fund - With Maximum Sales Charge(2)
Date Amount
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Jun-96 $10,548
May-96 $10,495
Apr-96 $10,246
Mar-96 $ 9,922
Feb-96 $ 9,673
Jan-96 $ 9,508
29-Dec-95 $ 9,425
Morgan Stanley EAFE Index(4)
Date Amount
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Jun-96 $10,466
May-96 $10,405
Apr-96 $10,598
Mar-96 $10,296
Feb-96 $10,079
Jan-96 $10,043
29-Dec-95 $10,000
CLASS B SHARES, INCEPTION 12/29/95
[A Chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class B Shares compared to Morgan Stanley EAFE Index(4).]
New England Star Worldwide Fund - Net Asset Value(1)
Date Amount
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Jun-96 $11,153
May-96 $11,113
Apr-96 $10,841
Mar-96 $10,513
Feb-96 $10,256
Jan-96 $10,088
29-Dec-95 $10,000
New England Star Worldwide Fund - With Maximum Sales Charge(2)
Date Amount
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Jun-96 $10,753
May-96 $11,113
Apr-96 $10,841
Mar-96 $10,513
Feb-96 $10,256
Jan-96 $10,088
29-Dec-95 $10,000
Morgan Stanley EAFE Index(4)
Date Amount
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Jun-96 $10,466
May-96 $10,405
Apr-96 $10,598
Mar-96 $10,296
Feb-96 $10,079
Jan-96 $10,043
29-Dec-95 $10,000
CLASS C SHARES, INCEPTION 12/29/95
[A Chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class C Shares compared to Morgan Stanley EAFE Index(4).]
New England Star Worldwide Fund - Net Asset Value(1)
Date Amount
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Jun-96 $11,160
May-96 $11,120
Apr-96 $10,847
Mar-96 $10,519
Feb-96 $10,264
Jan-96 $10,096
29-Dec-95 $10,000
Morgan Stanley EAFE Index(4)
Date Amount
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Jun-96 $10,466
May-96 $10,405
Apr-96 $10,598
Mar-96 $10,296
Feb-96 $10,079
Jan-96 $10,043
29-Dec-95 $10,000
These illustrations represent past performance and cannot predict future
results. Investment return and principal value may vary, resulting in a gain or
loss on the sale of shares. All Index and Fund performance assumes reinvested
distributions. Class Y share performance will be greater than that shown based
on differences in inception date, fees and sales charges.
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NEW ENGLAND STAR WORLDWIDE FUND
SEMI-ANNUAL PERFORMANCE UPDATE
Although just six months young, New England Star Worldwide Fund has already made
a name for itself. As investors recognize the wisdom and convenience of
investing in a single fund that pursues worldwide growth through separate
strategies and styles, assets have grown to over $77 million, as of June 30,
1996. The Fund's sales success is testimony to the broad appeal of its
comprehensive "everywhere" approach.
We are pleased with the Fund's performance -- and think you will be too. More
importantly, we are most optimistic about its future.
How Your Fund Performed
For the first six months of the year, your Fund's net asset value returns were
11.92%, 11.52%, and 11.60% for Class A, B, and C shares, respectively.
The following pages contain important details about the investment activity of
each of the Fund's subadvisers over the past six months. As you read each
manager's comments, you'll gain important insights into their differing
investment strategies. And we think you'll come to appreciate even more how
combining multiple investment styles may increase your opportunities for
potential growth to meet your personal long-term financial goals.
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Founders
FOUNDERS ASSET MANAGEMENT
Michael Gerding
Declining interest rates, low inflation, and strong corporate profitability
characterized the international investment climate in the first half of 1996, as
most economies overseas began to improve. Here at home, the U.S. economy
continued to grow, inflation remained modest and corporate earnings generally
met investors' expectations.
Consistent strategy is important and my investment approach continues to be one
of individual stock selection, no matter what the economic picture. My goal is
to attach shareholder assets to a stream of steadily growing earnings and to
ride those earnings to long-term investment success. Therefore, I look at
companies that are growing their revenues and growing their earnings, and doing
it better than their industry peers.
Because we manage the portfolio bottom-up with no concern as to country
allocations, certain markets comprised a greater portion of the portfolio than
others. Despite the relative attractiveness of international markets during the
first six months of the year, the U.S. remained the largest country allocation,
next to Japan, in my segment of the portfolio. The United Kingdom and the
Netherlands, both overweight positions relative to the Morgan Stanley Capital
EAFE Index 4 (an unmanaged index that includes stocks traded on 16 exchanges in
Europe, Australia, and the Far East) also provided several opportunities.
The Founders portion of the Fund remained well-diversified. In my quest for
growth stocks, I will tend to own an eclectic mix of attractively priced
companies with strong earnings growth potential at any one time. As I have in
the past, I avoided certain industries -- banking, steelmaking, pulp and paper
production -- because historically I have not found good growth stocks in these
sectors.
I expect that international markets may continue to prosper, and perhaps to
outperform the U.S. market for the remainder of 1996. Overseas economies are
strengthening, interest rates are expected to remain flat or drop further, and
corporate earnings should continue to improve -- laying the groundwork for the
possibility of positive stock market performance. I remain relatively optimistic
on the U.S. market. Earnings growth, although it has slowed, continues, and
attractive investment opportunities are still available. The challenge will be
to search out those companies -- both here and abroad -- that offer the best
prospects for sustained profitability.
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Founders
JANUS CAPITAL CORPORATION
Helen Young Hayes
The economic environment over the past six months was characterized by little to
no growth in Europe, set against a backdrop of declining interest rates; slow
growth in the U.S., with volatile interest rates; and accelerating growth in
Japan, with relatively flat interest rates on average.
During this time period, I remained committed to a "bottom-up" investment
strategy -- building the portfolio stock by stock. Each company must meet my
basic criteria of attractive earnings growth, a strong business model, proven
management, and, finally, reasonable valuation -- I do not pursue growth at any
price. I believe that good companies share the same profile -- no matter where
they're located.
That said, during the first half of the year, I found attractive opportunities
in all corners of the globe, particularly in Japan, Sweden, Germany, and
Switzerland -- the top country allocations in the Janus segment of the Fund. In
Japan, companies across the board benefited from accelerating economic growth,
while a favorable dollar-yen relationship helped many of our export holdings to
deliver strong performance. In Sweden and Germany, I found numerous growth
stocks selling at reasonable valuations.
Near term, the U.S. market appears to be fairly valued -- equities in general
are neither overpriced nor cheap. I'm optimistic on the outlook for potential
growth in the Japanese market -- I expect that corporate earnings may continue
to rise, even in the face of interest rate changes. In Europe, inflation remains
under control and there is room for further interest rate cuts -- a scenario
which should prove favorable for equities. In Europe as elsewhere, I think
individual stock selection should remain the primary determinant of stock market
success.
Longer term, I'm quite bullish on international equities -- particularly
European stocks -- for two reasons. First of all, stocks are much less
efficiently analyzed overseas, leading to bigger pockets of undiscovered value.
Secondly, many European companies are gradually changing the way they do
business, focusing on shareholder value and price/earnings growth. This new
strategic business direction is exemplified by a surge in corporate stock
repurchase and management incentive programs, as well as by increased merger and
acquisition activity -- a trend which I think will prove to be quite positive
for markets in general and equities in particular.
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Founders
MONTGOMERY ASSET MANAGEMENT
Josephine Jimenez and Bryan Sudweeks
A decline in real interest rates, lower inflation, increased trading volume, and
a strong U.S. economy and dollar paved the way for a welcome economic recovery
in most emerging markets. Indeed, emerging markets -- specifically, those in
Asia, Latin America, the Middle East, Africa, and selected European countries --
were the fastest growing segment of the world economy, growing at an annual rate
of more than 6%, three times the expected 2.2% growth rate of the U.S in 1996.
Brazil, in particular, is growing rapidly, and offers some of the greatest
potential for sustained economic expansion. By far our largest country
allocation -- it comprises more than 17% of our segment of the Fund's portfolio
- -- Brazil is undergoing major structural changes that, in part, have been
responsible for the market's tremendous run-up so far this year -- more than 39%
year to date in U.S. dollar terms.
Mexico, the black sheep of emerging markets as recently as 1994, is now the
focus of renewed foreign interest. A rise in Gross Domestic Product (GDP) and
declining interest rates have captured the attention of foreign investors, while
lower inflation and improving corporate earnings should continue to hold it.
Mexico is our segment's third largest country allocation.
We remain optimistic on the long-term outlook for most emerging markets. The
combination of declining real interest rates, moderating inflation, expanding
worldwide economic growth, and increasing liquidity create the potential for an
investment climate unlike any we've seen in recent years. We are confident --
and excited -- about the long-term potential for strong returns in these
markets.
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Founders
OAKMARK/HARRIS ASSOCIATES
Robert Sanborn
Oakmark/Harris Associates manages two segments of the Star Worldwide Fund -- a
U.S. and an international segment. Robert Sanborn is manager of the domestic
portion.
Continued low inflation, stable interest rates, and slow economic growth helped
create an environment generally favorable to U.S. equities during the first six
months of 1996. However, my bottom-up stock selection process views economic
data as background only; no matter what the outlook, I concentrate on finding
individual issues that are out of market favor, yet have strong earnings
potential.
I found many such companies in the financial services sector, where a quarter of
this segment's assets were invested during the first six months of the year.
Mellon Bank is one of the Fund's top holdings. A large regional bank with a
national presence, Mellon Bank has a higher percentage of fee income and a
higher quality business relative to other banks, yet is still selling at a
"bargain basement" price.
Financial services issues overall, however, are out of market favor -- they're
priced low to reflect that sentiment -- because of expectations that the
industry is destined to repeat past failures. I believe otherwise. In fact, I
feel that heavy consolidation in the sector presents real potential for
investors. Consolidation is a potential win-win situation -- ultimately,
shareholders of both buyers and sellers may gain.
During the first half of the year, we also weighted consumer non-durables
heavily; with financial services stocks, they comprised more than 50% of the
portfolio. When I find industries and issues I like, I concentrate assets for
the greatest potential return. Near term, I don't believe that the economy will
change much -- I expect relatively modest growth and low interest rates. The
economy has been in this mode for some time now so I'm becoming more cautious.
I'm orienting the portfolio towards quality -- selecting companies that I
believe will be able to meet their earnings expectations and avoiding marginal
or extremely high-priced businesses.
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Founders
OAKMARK/HARRIS ASSOCIATES
David Herro and Michael Welsh
Oakmark/Harris Associates manages two segments of the Star Worldwide Fund -- a
U.S. and an international segment. David Herro and Michael Welsh are managers of
the overseas portion.
International markets, except for some European countries, were relatively
stagnant over the past six months. Mexico enjoyed a strong market rally, as did
several Latin American countries. Japan continues to be a cause of concern for
many investors, although corporate profits there have begun to rebound. In the
U.S., inflation fears linger; many experts worry that an economic downturn here
could have a ripple effect in other parts of the world.
Our investment strategy over the past six months was primarily one of individual
stock selection, which played a far greater role in determining Fund performance
than any economic factor.
When purchasing stocks for the Fund, we follow a highly disciplined process. We
search for companies that appear to be selling at large discounts to their fair
economic value. When they reach that value we sell them, regardless of the
market outlook. In fact, we often sell off holdings when markets are performing
well. We do so because in bull markets many issues become overpriced and no
longer offer value for our shareholders. Conversely, when markets are
underperforming -- when market sentiment is the most negative -- is often when
we find the greatest opportunity. Because we take a long-term perspective, we
frequently discover value in less-than-popular stocks. It's what a company can
do over the next three to five years -- not short-term fluctuations -- that most
concerns us.
As always, we maintained broad country and sector diversification to help
control risk. Close to half of our segment's assets were invested in Europe, a
third in Asia, and approximately 15% in Latin America. Holland represented the
largest country allocation in our portion of the Fund -- it comprised more than
10% of this segment -- followed by Australia and the United Kingdom, each of
which made up about 9%. Sectors we found attractive included financial services
in Australia and industrials in Sweden. Two Australian stocks in particular --
National Australia Bank and HIH Wintertur, (an insurance company) -- attracted
our attention. Both are reasonably priced companies, backed by strong,
shareholder-oriented management.
Looking ahead, we continue to believe in the long-term health of the U.S.
economy, the global economy, and the overall investment environment for equity
investors. Our research effort remains focused on individual opportunities --
good businesses selling at discounts to their growth rates. We will try to
capitalize on these situations and continue the performance momentum we have
established in the first half of the year.
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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 STAR WORLDWIDE FUND
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June 30, 1996
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NEW ENGLAND STAR WORLDWIDE FUND
PORTFOLIO COMPOSITION
Investments as of June 30, 1996
(unaudited)
<TABLE>
<CAPTION>
COMMON STOCK - 85.7% OF TOTAL INVESTMENTS
SHARES (a) DESCRIPTION VALUE (b)
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<S> <C> <C>
ARGENTINA - 2.5%
475,000 Alparagatas Sociedad Anonima Industrial Y Comercial ......... $ 356,393
3,600 Banco Frances Del Rio La Plata S.A. (ADR) (c) (d) ........... 103,500
66,900 CIADEA S.A. (c) ............................................. 465,141
32,100 Cresud ...................................................... 64,226
1,600 Disco S.A. (ADR) (d) ........................................ 35,400
1,100 Irsa (GDR) (g) .............................................. 37,125
14,700 Perez Companc S.A. .......................................... 96,323
16,800 Quilmes Industrial (ADR) (d) ................................ 172,200
14,000 Siderar S.A. (c) ............................................ 35,994
75 Telecom de Argentina (ADR) (d) .............................. 3,516
250 Telefonica de Argentina (ADR) (d) ........................... 7,406
23,650 YPF Sociedad Anonima (ADR) (d) .............................. 532,125
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1,909,349
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AUSTRALIA - 2.5%
50,200 Aristocrat Leisure, Ltd. .................................... 114,405
20,000 Corporate Express Australia (c) ............................. 36,149
246,744 HIH Winterthur International Holdings, Ltd. ................. 465,372
65,000 National Australia Bank, Ltd. ............................... 600,196
8,500 News Corp., Ltd. Preferred (ADR) (d) ........................ 171,063
16,450 News Corp., Ltd. Preferred .................................. 80,149
150 Tab Corp. Holdings .......................................... 678
28,600 Village Roadshow ............................................ 129,683
83,800 Wattyl ...................................................... 322,688
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1,920,383
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AUSTRIA - 0.7%
1,675 Austria Mikro Systeme ....................................... 156,476
478 Bohler-Uddeholm ............................................. 37,063
1,250 OMV Handels AG .............................................. 126,115
854 Wolford AG .................................................. 209,023
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528,677
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BELGIUM - 0.2%
858 Barco NV .................................................... 137,602
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BRAZIL - 4.2%
71,550,000 Banco Bradesco PN S.A. ...................................... 584,256
2,100 The Brazil Fund (c) ......................................... 50,138
7,600 Cemig (ADR) (c) (d) ......................................... 215,725
7,746,000 Cemig PN .................................................... 205,953
1,080,000 Electrobras PN .............................................. 308,664
8,000,000 Lojas Americanas PN (c) ..................................... 157,737
1,400,000 Petroleo Brasileiro ......................................... 172,177
727,037 Telecom de Rio Janeiro S.A. Preferred ....................... 81,812
13,575 Telecomunicacoes Brasileiras S.A. (ADR) (d) ................. 945,159
4,300,000 Unibanco PN (c) ............................................. 116,428
360,000,000 Usiminas .................................................... 380,004
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3,218,053
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CANADA - 0.1%
1,275 Canwest Global Communications ............................... 34,744
585 Potash Corp. Saskatchewan ................................... 38,756
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73,500
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CHILE - 1.1%
8,500 Banco de A Edward (ADR) (d) ................................. 178,500
3,000 Compania de Telefonos de Chile S.A. ......................... 294,375
675 Enersis S.A. (ADR) (d) ...................................... 20,925
6,000 Madeco (ADR) (d) ............................................ 168,750
5,850 Santa Isabel S.A. (ADR) (d) ................................. 162,337
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824,887
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CHINA - 0.4%
84,000 Guangdong Investment Co., Ltd. .............................. 53,173
3,300 Guangshen Railway, Ltd. (ADR) (c) (d) ....................... 63,112
7,900 Huaneng International Power Co. (ADR) (c) (d) ............... 141,212
58,000 Shangri-La Asia ............................................. 81,297
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338,794
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CZECH REPUBLIC - 0.8%
11,050 PIFCO Holdings PLC (c) ...................................... 219,289
3,070 SPT Telecommunications PT (c) ............................... 374,921
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594,210
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DENMARK - 0.9%
2,125 Copenhagen Airport .......................................... 210,378
1,428 ISS International Service Systems ........................... 31,931
10,500 Neurosearch ................................................. 403,260
273 Sophus Berendsen ord B ...................................... 36,542
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682,111
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FINLAND - 1.5%
2,815 Aamulehti Series 2 .......................................... 75,973
41 Cultor OY, Series 2 ......................................... 2,107
4,885 Kesko ....................................................... 72,564
1,600 Kone Corp. .................................................. 178,599
24,054 OY Tamro AB ................................................. 144,378
2,305 Raison Tehtaat .............................................. 137,854
1,490 Rauma OY .................................................... 29,693
3,924 Tietotehdas OY B Shares ..................................... 188,084
18,294 Valmet OY ................................................... 310,061
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1,139,313
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FRANCE - 2.7%
1,000 Accor ....................................................... 139,980
2,389 Axime Ex Segin .............................................. 334,412
146 Bouygues .................................................... 16,293
445 Chargeurs S.A. .............................................. 19,907
875 Dassault Systems S.A. (ADR) (d) ............................. 27,125
4,500 Genset (ADR) (d) ............................................ 83,813
2,200 Geophysique ................................................. 130,881
1,183 Grand Optical Photo Services ................................ 152,486
4,750 Groupe Legris Industries .................................... 221,635
500 Guilbert .................................................... 72,906
11,109 Lagardere Groupe ............................................ 286,602
4,675 Louis Vuitton (ADR) (d) ..................................... 221,478
1,070 Moulinex .................................................... 20,470
445 Pathe ....................................................... 104,510
80 Sidel S.A. .................................................. 20,359
7,000 Total Petroleum (ADR) (d) ................................... 259,875
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2,112,732
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GERMANY - 2.6%
3,481 Adidas ...................................................... 292,811
84 Escada AG Preferred ......................................... 14,668
96 Fresenius AG Preferred ...................................... 17,378
22 Gehe AG ..................................................... 14,787
8,450 Hoechst AG .................................................. 286,761
200 MLP Preferred ............................................... 210,457
2,196 Pliva (GDR) 144A (f) (g) .................................... 87,291
16 Porsche AG .................................................. 9,628
1,588 SAP-Vorzug AG Preferred ..................................... 235,720
2,525 Schwarz Pharma .............................................. 189,313
1,552 SGL Carbon AG ............................................... 181,688
2,500 Veba ........................................................ 132,966
800 Volkswagen Preferred ........................................ 219,665
149 Wella AG Preferred .......................................... 87,215
-------------
1,980,348
-------------
GREECE - 0.0%
2,530 Greek Progress Fund ......................................... 22,352
-------------
HONG KONG - 2.0%
2,875 Asia Satellite Telecom Holdings (ADR) (d) ................... 85,531
2,000 Citic Pacific, Ltd. ......................................... 8,087
9,500 Consolidated Electric Power Asia, Ltd. ...................... 15,709
6,600 HBSC Holdings, Ltd. ......................................... 99,757
14,000 Henderson Land Development .................................. 104,899
133,600 Hong Kong Aircraft Engineering Co., Ltd. .................... 401,276
29,000 Johnson Electric Holdings, Ltd. ............................. 65,187
324,000 Joyce Boutique (c) .......................................... 108,826
136,000 M.C.Packaging, Ltd. ......................................... 57,539
200 New World Infrastructure, Ltd. .............................. 426
125 Renaissance Hotel Group NV .................................. 2,688
2,014,000 Yue Yuen Industrial Holdings PLC, Ltd. ...................... 572,396
-------------
1,522,321
-------------
INDIA - 1.2%
5,800 Bajaj Auto (GDR) (c) (g) .................................... 217,500
2,000 Bajaj Auto (GDR) 144A (c) (f) (g) ........................... 76,500
700 East India Hotels, Ltd. (GDR) 144A (f) (g) .................. 14,306
8,500 Indian Hotels Co., Ltd. (GDR) 144A (c) (f) (g) .............. 243,865
2,192 Mahindra & Mahindra (GDR) (g) .............................. 23,564
17,750 Tata Engineering & Locomotive (GDR) (c) (g) ................. 319,500
3,225 Tata Engineering & Locomotive (GDR) 144A (c) (f) (g) ........ 58,050
-------------
953,285
-------------
INDONESIA - 2.2%
29,800 Asia Pulp & Paper Co., Ltd. (ADR) (c) (d) .................. 365,050
81,000 Bimantara Citra PT (c) ...................................... 101,794
27,000 Ciputra Development ......................................... 54,812
21,000 Hanjaya Mandala Sampoerna PT (c) ............................ 239,098
28,300 Mulia Industrindo PT ........................................ 41,948
625,000 PT Polysindo Eka Perkasa .................................... 295,381
625,000 PT Polysindo Eka Perkasa Rights ............................. 161,117
2,600 PT Telekom (ADR) (d) ........................................ 77,350
30,000 PT Telekom Indoneisa ........................................ 45,435
1,000 Semen Cibinong PT ........................................... 2,148
82,000 Semen Gresik PT ............................................. 238,690
2,900 Tambang Timah (GDR) (g) ..................................... 52,635
-------------
1,675,458
-------------
IRELAND - 0.4%
200,000 Fyffes ...................................................... 344,828
-------------
ISRAEL - 0.7%
50 Check Point Software Technolgies, Ltd. ...................... 1,063
10,000 Koor Industries, Ltd. (ADR) (d) ............................. 172,500
17,500 Scitex Corp., Ltd. (ADR) .................................... 301,875
1,700 Teva Pharmaceutical Industries, Ltd. (ADR) (d) .............. 64,387
-------------
539,825
-------------
ITALY - 1.7%
14,704 Banca Popolare di Milano .................................... 72,980
28,500 Danieli ..................................................... 101,437
1,050 ENI SPA WI (ADR) (d) ........................................ 52,500
11,000 Gildemeister Italiana ....................................... 40,947
2,975 Gucci (c) ................................................... 191,887
3,600 Industrie Natuzzi SPA (ADR) (d) ............................. 184,500
6,493 Marzotto & Figli SPA ........................................ 40,665
7,557 Mediolanum SPA .............................................. 75,262
343,406 Olivetti (c) ................................................ 185,467
15,611 Pagnossin SPA ............................................... 88,186
204,704 Parmalat Finanziaria SPA .................................... 275,389
-------------
1,309,220
-------------
JAPAN - 5.0%
10,000 Alpine Electronics .......................................... 187,446
400 Amway Japan, Ltd. ........................................... 20,116
75 Canon Inc. (ADR) (d) ........................................ 7,819
9,000 Canon, Inc. ................................................. 187,629
4,500 Credit Saison Co., Ltd. ..................................... 109,038
1,000 Daimaru, Inc. ............................................... 7,013
30 DDI Corp. ................................................... 262,241
3,000 Doutor Coffee ............................................... 139,898
10,250 Eisai Co. ................................................... 194,006
1,000 Hankyu Department Stores .................................... 13,167
150 Honda Motor (ADR) (d) ....................................... 7,650
5,000 Honda Motor Co. ............................................. 129,840
5,000 Hoya Corp. .................................................. 161,843
3,000 Isetan ...................................................... 45,536
6,000 Isuzu Motors ................................................ 34,344
1,000 Ito-Yokado Co., Ltd. ........................................ 60,440
25 Ito-Yokado Co., Ltd. (ADR) (d) .............................. 6,025
9 Japan Tobacco, Inc. ......................................... 69,126
4,000 Kobe Steel, Ltd. ............................................ 11,521
7,000 Kyocera Corp. ............................................... 496,045
10,000 Laox Co. .................................................... 239,565
1,000 Mitsubishi Estate Co., Ltd. ................................. 13,807
7,000 Mitsubishi Heavy Industry, Ltd. ............................. 60,998
4,000 NKK Corp. ................................................... 12,143
5 NTT Data Communications Systems Corp. ....................... 149,957
5,000 Omron Corp. ................................................. 106,524
6,000 Rohm ........................................................ 397,202
4,600 Sony Corp. .................................................. 303,260
25 Sony Corp. (ADR) (d) ........................................ 1,653
1,500 Square Co., Ltd. ............................................ 88,191
7,000 Sumitomo Metal .............................................. 60,742
2,000 Takeda Chemical ............................................. 35,477
4,000 Toyota Motors (ADR) (d) ..................................... 200,500
1,000 Yamaha Motor Co., Ltd. ...................................... 10,241
-------------
3,831,003
-------------
KOREA - 1.5%
11,000 Kepco (ADR) (c) (d) ......................................... 266,750
1,550 The Korea Fund .............................................. 32,744
30,700 Korea Mobile (ADR) (c) (d) .................................. 525,737
11,100 Pohang Iron & Steel (ADR) (d) ............................... 270,563
3,300 Samsung Electronics (GDR) 144A (c) (f) (g) .................. 80,025
-------------
1,175,819
-------------
LUXEMBOURG - 0.2%
100 Millicom International Cellular ............................. 4,763
5,000 Scandinavian Broadcasting Systems (c) ....................... 122,500
-------------
127,263
-------------
MALAYSIA - 1.7%
8,000 Arab Malaysian Finance ...................................... 34,957
5,000 Arab Malaysian Merchant Bank Holdings ....................... 70,154
35,000 Development & Commerical Bank ............................... 119,964
82,000 Development & Commerical Bank Warrants 97-99 BHD ............ 107,821
20,000 Edaran Otomobile Nasional BHD (c) ........................... 191,622
67,000 IOI Corp. BHD ............................................... 92,932
50,000 Magnum Corp. ................................................ 84,586
52,000 New Straits Times ........................................... 270,996
52,000 Petronas Danangam BHD ....................................... 223,051
23,000 Resorts World Berhad ........................................ 131,850
-------------
1,327,933
-------------
MEXICO - 2.9%
38,000 Cemex B ..................................................... 150,046
153,000 Cemex CPO ................................................... 548,662
485 Grupo Carso S.A. ............................................ 3,440
1,600 Grupo Casa Autrey S.A. (ADR) (d) ............................ 34,400
1,590 Grupo Financiero Banamex Accival S.A de C.V. L .............. 3,019
215,000 Grupo Financiero Banamex Accival S.A. de C.V. B ............. 446,724
13,400 Grupo Financiero Inbursa B .................................. 55,473
1,130,000 Grupo Herdez, S.A. de C.V. .................................. 379,894
150 Grupo Television S.A. (ADR) (d) ............................. 4,612
2,775 Moderna (ADR) (d) ........................................... 49,950
32,000 Moderna, Class A ............................................ 143,230
11,750 Telefonos de Mexico, S.A. de C.V. (ADR) (d) ................. 393,625
-------------
2,213,075
-------------
NETHERLANDS - 5.3%
6,800 Baan Co. N.V. (c) ........................................... 231,200
16,650 European Vinyls Corp. International N.V. .................... 517,414
11,536 Getronics NV ................................................ 255,679
3,376 Hunter Douglas NV ........................................... 230,609
5,000 KLM Royal Dutch Airlines .................................... 158,750
5,350 Macintosh ................................................... 133,005
35,250 N.V. Koninklijke Sphinx Gustavsberg ......................... 584,917
2,137 Nutricia Bedrijven NV ....................................... 226,167
3,899 Oce Van der Grinten N.V. .................................... 413,333
6,000 Philips Electronics N.V. .................................... 195,750
600 Qiagen NV ................................................... 9,075
652 Randstad Holdings ........................................... 48,169
15,928 Royal Pakhoed N.V. .......................................... 415,594
4,750 Toolex Alpha N V ............................................ 114,000
7,750 VNU ......................................................... 120,419
3,768 Wolters Kluwer .............................................. 428,388
-------------
4,082,469
-------------
NEW ZEALAND - 1.4%
229,300 Lion Nathan, Ltd. ........................................... 601,055
255,100 Sanford, Ltd. ............................................... 449,299
200 Tranz Rail Holdings, Ltd. (ADR) (d) ......................... 2,775
-------------
1,053,129
-------------
NORWAY - 0.5%
3,200 Kvaerner .................................................... 123,777
6,225 Kverneland .................................................. 153,488
8,063 Merkantildata ............................................... 100,646
350 Nycomed, A Shares ........................................... 5,043
-------------
382,954
-------------
PANAMA - 0.2%
3,425 Bladex ...................................................... 192,656
-------------
PERU - 0.3%
9,435 Credicorp, Ltd. ............................................. 187,526
3,100 Minas Buenaventura (ADR) (c) (d) ............................ 61,612
-------------
249,138
-------------
PHILIPPINES - 1.0%
271,000 Aboitiz Equity Venentures, Inc. ............................. 50,683
260,850 DMCI Holdings (c) ........................................... 186,677
11,000 Empire East Land Holdings ................................... 6,718
373,500 Filinvest Land, Inc. ........................................ 153,249
25,000 Fortune Cement Corp. ........................................ 13,120
209,000 HI Cement Corp. ............................................. 78,973
172,000 Metro Pacific Corp. ......................................... 51,206
800 Philippine Long Distance Telephone .......................... 48,022
1,900 Philippine Long Distance Telephone (ADR) (d) ................ 110,438
5,200 Philippine National Bank (c) ................................ 86,832
-------------
785,918
-------------
PORTUGAL - 1.1%
28,000 Banco Espirito Santo E Comercial de Lisboa, S.A. ............ 449,789
1,450 Capital Portugal Fund (c) ................................... 143,147
2,200 Portugal Telecom S.A. (ADR) (d) ............................. 57,750
7,900 Sonae Investimentos - Sociedade Gestora de Participacoes
Sociais S.A. .............................................. 205,451
-------------
856,137
-------------
SINGAPORE - 0.7%
138,000 Aztech ...................................................... 66,995
24,000 Far East Levingston Shipbuilding, Ltd. ...................... 132,672
62,000 Mandarin Oriental International, Ltd. ....................... 86,800
23,200 Singapore Airlines .......................................... 244,989
-------------
531,456
-------------
SOUTH AFRICA - 1.3%
2,600 Anglo America Gold Investment ............................... 225,617
3,100 Barlow, Ltd. Common ......................................... 32,803
836 DeBeers ..................................................... 28,362
91,300 Lonrho PLC .................................................. 258,118
14,000 Sappi, Ltd. ................................................. 154,766
20,924 Sasol, Ltd. ................................................. 226,959
1,750 South African Breweries, Ltd. ............................... 51,292
-------------
977,917
-------------
SPAIN - 1.1%
3,471 Argentaria Ord .............................................. 151,579
48,200 Grupo Uralita ............................................... 451,857
1,394 Prosegur Compania Seguridad ................................. 49,006
600 Repsol S.A. (ADR) (d) ....................................... 20,850
96 Sparbanken Sverige AB ....................................... 1,247
10,950 Telefonica .................................................. 201,883
-------------
876,422
-------------
SWEDEN - 3.6%
27,700 AB Volvo, Series B .......................................... 631,818
2,500 ABB AB, Series A ............................................ 265,480
2,080 Althin Medical AB, B Shares ................................. 48,700
13,958 Assa-Abloy AB ............................................... 202,409
337 Astra AB, Series A .......................................... 14,915
1,350 Astra AB, Series B .......................................... 58,934
46,800 Avesta Sheffield ............................................ 441,836
3,449 Bure Investment AB .......................................... 31,780
117 Ciba Geigy AG ............................................... 142,717
7,557 Dahl International AB ....................................... 109,016
2,252 Enator AB ................................................... 51,877
2,348 Frontec AB, B Shares ........................................ 28,906
3,846 Kinnevik Investment, Series B ............................... 116,773
4,100 Mo och Domsjo AB, Series B .................................. 105,286
2,367 Netcom Systems, B Shares .................................... 26,816
4,545 Nobel Porocure AB ........................................... 84,445
171 Nordbanken AB ............................................... 3,306
15,474 Securitas AB, B Shares ...................................... 324,903
1,729 Skand Enskilda Bank ......................................... 13,842
19,000 Swedish Match AB ............................................ 59,123
1 Tornet Fastighet ............................................ 8
361 WM Data AB, B Shares ........................................ 22,903
-------------
2,785,793
-------------
SWITZERLAND - 1.8%
574 Adia SA. .................................................... 144,166
155 Christ Aesch AG ............................................. 123,980
100 Disetronic Holdings AG ...................................... 187,170
18 Roche Holdings AG ........................................... 137,426
127 Sandoz AG ................................................... 145,366
1,075 Saurer, Ltd. ................................................ 406,715
195 SMH AG Neuenburg ............................................ 30,493
76 Sulzer AG ................................................... 48,876
47 Swissair .................................................... 45,526
300 Swisslog Holding AG ......................................... 88,786
-------------
1,358,504
-------------
TAIWAN - 1.1%
21,660 Advanced Semiconductor Engineering (GDR) (g) ................ 186,818
3,600 Advanced Semiconductor Engineering (GDR) 144A (f) (g) ....... 31,050
5,600 China Steel Corp. (GDR) (c) (g) ............................. 142,800
1,300 China Steel Corp. (GDR) 144A (c) (f) (g) .................... 33,150
3,000 Macronix International Co., Ltd. (ADR) (d) .................. 48,750
11,600 Taiwan Fund ................................................. 278,400
12,000 Yageo Corp. ................................................. 96,000
-------------
816,968
-------------
THAILAND - 1.7%
5,600 Ban Pu Coal Co., Ltd. ....................................... 161,481
36,400 Bangkok Bank Shareholder Equity Right 2 ..................... 344,140
48,000 Dhana Siam Finance and Securities Co., Ltd. ................. 266,614
18,000 Industrial Finance Corp. of Thailand (c) .................... 80,835
6,700 Phatra Thanakit Shareholder Equity Right 1 .................. 45,133
22,000 Phatra Thanakit Shareholder Equity Right 2 .................. 148,198
10,000 PTT Exploration and Production .............................. 146,543
2,700 Siam Cement Shareholder Equity Right 2 ...................... 124,231
-------------
1,317,175
-------------
TURKEY - 0.3%
199,300 Koc Holdings ................................................ 48,539
89,000 Migros Turk Tas ............................................. 78,032
109,101 Trakya Cam .................................................. 5,978
898,000 Turk Sise Ve Cam Fabrikalani (c) ............................ 71,079
798,000 Yapi Ve Kredi Bankasi AS .................................... 22,593
380,000 Yapi Ve Kredi Bankasi New ................................... 10,759
-------------
236,980
-------------
UNITED KINGDOM - 6.7%
2,100 British Airways (ADR) (d) ................................... 180,075
35,427 Capita Group PLC ............................................ 206,323
19,000 Carlton Comunications PLC ................................... 152,850
356,000 Cordiant PLC (c) ............................................ 608,169
14,200 Dixons Group ................................................ 116,220
820 Emap PLC .................................................... 9,016
4,062 Glaxo Wellcome PLC .......................................... 54,694
75,000 Guinness PLC ................................................ 545,116
14,111 Harvey Nichols PLC .......................................... 74,072
42,557 Hays PLC .................................................... 300,060
13,074 J.D. Wetherspoon PLC ........................................ 203,037
8,289 JBA Holdings PLC ............................................ 65,911
30,000 Ladbroke Group PLC .......................................... 83,165
16,369 Lloyds TSB Group PLC ........................................ 80,078
22,802 London International Group PLC .............................. 53,738
13,926 Misys PLC ................................................... 168,046
3,800 National Westminster Bank PLC (ADR) (d) ..................... 218,500
22,550 Next PLC Ord ................................................ 197,168
9,000 Nynex Cabecomm PLC (c) ...................................... 146,250
12,000 Orange PLC (ADR) (c) (d) .................................... 210,000
12,715 Pace Micro Technology ....................................... 37,124
33,000 Powerscreen International PLC (c) ........................... 234,726
107,449 Rentokil Group PLC .......................................... 681,673
3,200 Reuters Holdings PLC (ADR) (d) .............................. 232,000
6,246 Smithkline Beecham PLC ...................................... 66,786
700 Smithkline Beecham PLC (ADR) (d) ............................ 38,063
53,114 WPP Group PLC ............................................... 178,999
-------------
5,141,859
-------------
UNITED STATES - 17.9%
1,400 Alco Standard Corp. ......................................... 63,350
10,500 AMBAC, Inc. ................................................. 547,312
13,200 American Brands, Inc. ....................................... 598,950
1,025 Amre, Inc. (Rights) ......................................... 22,422
7,700 Anheuser-Busch Companies, Inc. .............................. 577,500
1,050 Associates First Capital Corp., Class A ..................... 39,506
13,300 Black & Decker Corp. ........................................ 513,712
550 Boeing Co. .................................................. 47,919
10,000 Boston Communications Group (c) ............................. 165,000
5,000 Cellular Communications International (c) ................... 168,750
575 Citicorp .................................................... 47,509
2,500 Columbia/HCA Healthcare Corp. ............................... 133,438
4,400 Corporate Express, Inc. (c) ................................. 176,000
4,075 Digital Microwave (c) ....................................... 67,747
10,500 Dun and Bradstreet Corp. .................................... 656,250
175 Electronic Data Systems Corp. New ........................... 9,406
1,875 Eli Lilly & Co. (c) ........................................ 121,875
25 Federal National Mortgage Association ....................... 838
5,000 Federated Department Stores, Inc. (c) ....................... 170,625
50 First Data Corp. ............................................ 3,981
3,000 First Pacific Co. ........................................... 4,612
10,200 First USA, Inc. ............................................. 561,000
14,800 Foundation Health Corp. (c) ................................. 530,950
4,830 Gaylord Entertainment, Class A .............................. 136,448
18,300 H. J. Heinz Co. ............................................. 555,862
225 HFS, Inc. (c) ............................................... 15,750
2,500 Idexx Laboratories (c) ...................................... 98,125
12,000 Interstate Bakeries ......................................... 321,000
1,000 John H Harland Co. (Rights) ................................. 24,625
8,700 Knight-Ridder, Inc. ......................................... 630,750
12,200 Kroger Co. (c) .............................................. 481,900
2,700 Lockheed Martin Corp. ....................................... 226,800
4,550 MCI Communications .......................................... 116,594
11,000 Mellon Bank Corp. ........................................... 627,000
1,125 MFS Communications, Inc. .................................... 42,328
13,600 Nabisco Holdings Corp. ...................................... 481,100
24,750 Old Republic International .................................. 532,125
425 Paging Network, Inc. (c) .................................... 10,200
50 Pfizer, Inc. ................................................ 3,569
375 Pharmacia & Upjohn, Inc. .................................... 16,641
6,000 Philip Morris Companies, Inc. ............................... 624,000
5,075 Quorum Health Group (c) ..................................... 133,853
10,000 Ralston Purina Co. .......................................... 641,250
5,550 Southwest Airlines .......................................... 161,644
2,300 Sports Authority (c) ........................................ 75,325
1,325 Sterling Commerce, Inc. (c) ................................. 49,191
400 Sun Guard Data Systems ...................................... 16,050
34,700 Tele-Communications, Inc. Class A (c) ....................... 628,937
13,600 Torchmark, Inc. ............................................. 595,000
2,350 Trescom International (c) ................................... 23,500
6,000 Trump Hotels & Casinos (c) .................................. 171,000
38,000 U.S. West Media Group (c) ................................... 693,500
1,450 Ucar International, Inc. .................................... 60,356
2,700 Verity (c) .................................................. 77,625
3,775 Warnaco Group A ............................................. 97,206
191 Wells Fargo & Co. ........................................... 45,625
3,825 Wolverine Worldwide ......................................... 124,313
-------------
13,767,844
-------------
Total Common Stock (Identified Cost $62,257,084) 65,915,660
<CAPTION>
BONDS AND NOTES - 0.4%
FACE
AMOUNT DESCRIPTION VALUE (b)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES - 0.4%
$ 200,000 Alfa S.A., Convertible Note 144A 8.000%, 9/15/00 (f) 215,440
85,000 Barlow International Investments Ltd.,
Convertible Bond 7.000%, 9/20/04 101,469
-------------
316,909
-------------
Total Bonds And Notes (Identified Cost $339,490) 316,909
-------------
<CAPTION>
SHORT TERM INVESTMENTS - 14.0%
FACE
AMOUNT DESCRIPTION VALUE (b)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
$ 1,500,000 Federal Home Loan Bank Note 5.52% 07/01/96 1,500,000
5,408,000 Repurchase agreement with State Street Bank & Trust Co. dated
06/28/96 at 4.750% to be repurchased at $5,410,141 on
7/01/96 collaterized by $5,665,000 U.S. Treasury Bill due
12/19/96, with a value of $5,522,344 5,408,000
3,825,000 United States Treasury Bills 4.20% 7/05/1996 3,824,103
-------------
Total Short Term Investments (Identified Cost $10,732,103) 10,732,103
-------------
Total Investments - 100.1% (Identified Cost $73,328,677) (h) 76,964,672
Other assets less liabilities (e) (41,100)
-------------
Total Net Assets - 100% $ 76,923,572
=============
See accompanying notes to financial statements.
<PAGE>
<CAPTION>
Forward Currency Contracts Outstanding
at June 30,1996
Local Aggregate Unrealized
Delivery Currency Face Total Appreciation/
Date Amount Value Value (Depreciation)
<S> <C> <C> <C> <C> <C>
Deutsch Mark (sold) 7/17/96 275,000 183,077 181,064 2,013
Deutsch Mark (sold) 10/1/96 425,000 289,984 281,099 8,885
Finnish Marka (sold) 10/1/96 675,000 146,564 146,456 108
French Franc (sold) 10/1/96 650,000 129,557 126,917 2,640
British Pounds (sold) 8/22/96 62,000 95,045 96,247 (1,202)
British Pounds (sold) 10/1/96 55,000 83,658 85,376 (1,718)
British Pounds (sold) 11/19/96 350,000 527,573 543,351 (15,778)
Japanese Yen (bought) 10/1/96 10,000,000 94,218 92,657 (1,561)
Japanese Yen (sold) 10/1/96 110,000,000 1,053,095 1,019,227 33,868
Japanese Yen (sold) 12/11/96 2,000,000 18,718 18,727 (9)
Swedish Krona (sold) 10/1/96 2,300,000 344,363 347,263 (2,900)
Swiss Franc (sold) 10/1/96 220,000 187,258 177,334 9,924
------------
$ 34,270
============
<FN>
(a) Ordinary shares unless otherwise noted.
(b) See Note 1a.
(c) Non-income producing security.
(d) An American Depository Receipt (ADR) is a certificate issued by a U.S. bank representing
the right to receive securities of the foreign issuer described. The values of ADRs are
significantly influenced by trading on exchanges not located in the United States or
Canada.
(e) Including deposits in foreign denominated currencies with a value of $624,980 and a cost
of $622,052.
(f) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
Securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
(g) Global Depository Receipt.
(h) Federal Tax Information: At June 30, 1996 the net unrealized appreciation on investments
based on cost of $73,328,677 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost. $ 4,799,178
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value. (1,163,183)
------------
Net unrealized appreciation $ 3,635,995
============
</TABLE>
Ten Largest Industry Holdings at June 30, 1996 (unaudited)
Finance 19.7% Consumer Durable Goods 4.1%
Consumer Basics 17.0% Basic Industry 4.1%
General Business 10.8% Consumer Non-Durable Goods 4.0%
Technology 5.5% Utilities 3.9%
Capital Goods 4.1% Energy 3.3%
See accompanying notes to financial statements.
<PAGE>
NEW ENGLAND STAR WORLDWIDE FUND
<TABLE>
Statement of Assets & Liabilities
June 30, 1996
(unaudited)
<S> <C> <C>
ASSETS
Investments at value $76,964,672
Cash 166,634
Foreign cash at value 624,980
Receivable for:
Fund shares sold 1,147,506
Securities sold 994,682
Open forward currency contracts - net 34,270
Dividends and interest 173,592
Foreign withholding taxes 9,694
Prepaid registration expense 23,996
Unamortized organization expense 59,105
------------
LIABILITIES 80,199,131
Payable for:
Securities purchased $3,139,837
Fund shares redeemed 7,040
Foreign withholding taxes 8,942
ACCRUED EXPENSES:
Management fees 9,596
Accounting and administrative 4,452
Other expenses 105,692
-----------
3,275,559
------------
NET ASSETS $76,923,572
============
Net Assets consist of:
Capital paid in $72,581,052
Undistributed net investment income (loss) (3,823)
Accumulated net realized gains 674,508
Unrealized appreciation on investments,
forward contracts and foreign currency 3,671,835
------------
NET ASSETS $76,923,572
============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A shares
($35,617,420 divided by 2,550,424 shares of beneficial interest) $13.97
=======
Offering price per share ( 100/94.25 of $13.97 ) $14.82*
=======
Net asset value and offering price of Class B shares
($31,114,794 divided by 2,235,087 shares of beneficial interest) $13.92**
=======
Net asset value and offering price of Class C shares
($10,191,358 divided by 731,514 shares of beneficial interest) $13.93
=======
Identified cost of investments $73,328,677
============
<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>
NEW ENGLAND STAR WORLDWIDE FUND
<TABLE>
Statement of Operations
Six Months Ended June 30, 1996
(unaudited)
INVESTMENT INCOME
<S> <C> <C>
Dividends $411,703 (a)
Interest 195,693
-----------
607,396
EXPENSES
Management fees $197,447
Service fees - A 22,432
Service and distribution fees - B 73,128
Service and distribution fees - C 25,188
Trustees' fees and expenses 5,488
Accounting and administrative 18,020
Custodian 159,608
Transfer agent 66,840
Audit and tax services 5,000
Legal 3,548
Printing 1,427
Registration 25,370
Amortization of organization expenses 5,795
Miscellaneous 1,928
---------
TOTAL EXPENSES 611,219
-----------
NET INVESTMENT LOSS (3,823)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FORWARD CURRENCY CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 708,472
Foreign currency transactions - net (33,964)
-----------
Total realized gain on investments
and foreign currency transactions 674,508
-----------
Unrealized appreciation on:
Investments - net 3,638,922
Foreign currency transactions - net 32,913
-----------
Total unrealized appreciation
on investments, forward currency contracts
and foreign currency transactions 3,671,835
-----------
Net gain on investment transactions 4,346,343
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $4,342,520
===========
<FN>
(a) Net of foreign taxes of: $36,376.
</FN>
<PAGE>
Statement of Changes in Net Assets
(unaudited)
Six Months
Ended
June 30,
1996
FROM OPERATIONS ------------
<S> <C>
Net investment income (loss) ($3,823)
Net realized gain on investments
and foreign currency transactions 674,508
Unrealized appreciation on investments,
and foreign currency transactions 3,671,835
------------
Increase in net assets from operations 4,342,520
------------
Increase in net assets
derived from capital share transactions 72,581,052
------------
Total increase in net assets 76,923,572
NET ASSETS
Beginning of the period 0
------------
End of the period $76,923,572
============
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)
Beginning of the period $0
============
End of the period ($3,823)
============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NEW ENGLAND STAR WORLDWIDE FUND
<TABLE>
<CAPTION>
Financial Highlights
(unaudited)
Class A Class B Class C
--------- --------- ---------
Six Months Six Months Six Months
Ended Ended Ended
June 30, June 30, June 30,
1996 1996 1996
--------- --------- ---------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 12.50 $ 12.50 $ 12.50
--------- --------- ---------
Income From Investment Operations
Net Investment Income (loss) 0.01 (0.01) (0.01)
Net Realized and Unrealized Gain
on Investments 1.46 1.43 1.44
--------- --------- ---------
Total From Investment Operations 1.47 1.42 1.43
--------- --------- ---------
Net Asset Value, End of Period $ 13.97 $ 13.92 $ 13.93
========= ========= =========
Total Return (%) (a) 11.8 11.4 11.4
Ratio of Operating Expenses to
Average Net Assets (%) 2.86 (b) 3.61 (b) 3.61 (b)
Ratio of Net Investment Income (loss)
to Average Net Assets (%) 0.32 (b) (0.43)(b) (0.43)(b)
Portfolio Turnover Rate (%) 39 (b) 39 (b) 39 (b)
Average Commission Rate (c) $0.0004 $0.0004 $0.0004
Net Assets, End of Period (000) $35,617 $31,115 $10,191
<FN>
(a) A sales charge in the case of Class A Shares and a contingent deferred sales charge in the case of Class B Shares are not
reflected in total return calculations. 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 on 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 I, a Massachusetts business
trust (the "Trust"), and is registered under the Investment Company Act of 1940,
as amended, (the "1940 Act") as an open-end management investment company. The
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 A, Class B and Class C shares on December 29, 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 front end or contingent deferred sales
charges 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 market value. All other securities and assets are valued at their
fair value as determined in good faith by New England Funds Management L.P.
under the supervision of the Fund's trustees.
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 for the Fund is increased by the
accretion of discount. In determining net gain or loss on securities sold, the
cost of securities has been determined on the identified cost basis.
C. FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are
maintained in U.S. dollars. The value of securities, currencies and other assets
and liabilities denominated in currencies other than U.S. dollars are translated
into U.S. dollars based upon foreign exchange rates prevailing at the end of the
period. Purchases and sales of investment securities, income and expenses are
translated on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from: sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the value
of assets and liabilities at period end, resulting from changes in the
exchange rate.
FORWARD FOREIGN CURRENCY CONTRACTS. The Fund may use foreign currency contracts
to facilitate transactions in foreign securities and to manage the Fund's
currency exposure. Contracts to buy generally are used to acquire exposure to
foreign currencies, while contracts to sell are used to hedge the Fund's
investments against currency fluctuation. Also, a contract to buy or sell can
offset a previous contract. These contracts involve market risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities. The U.S. dollar value of the currencies the Fund has committed to
buy or sell (if any) is shown in the portfolio composition under the caption
"Forward Currency Contracts Outstanding." This amount represents the aggregate
exposure to each currency the Fund has acquired or hedged through currency
contracts outstanding at period end. Losses may arise from changes in the value
of the foreign currency or if the counterparties do not perform under the
contracts' terms.
All contracts are "marked-to-market" daily at the applicable translation rates
and any gains or losses are recorded for financial statement purposes as
unrealized until settlement date. Risks may arise upon entering into these
contracts from the potential inability of counterparties to meet the terms of
their contracts and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
D. 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.
E. 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 are primarily due to differing treatments for organization
costs and foreign currency transactions for book and tax purposes. Permanent
book and tax basis differences will result in reclassification to capital
accounts.
F. 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. Each 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
portfolio's ability to dispose of the underlying securities.
G. ORGANIZATION EXPENSE. Costs incurred in fiscal 1996 in connection with the
Fund's organization and registration, amounting to approximately $64,900 in the
aggregate, were paid by the Fund and are being amortized by the Fund over 60
months.
2. PURCHASES AND SALES OF SECURITIES (excluding short-term investments) for the
Fund for the period June 30, 1996 were $69,058,123 and $7,159,595, respectively.
3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
The Fund pays management fees payable to its investment adviser, New England
Funds Management L.P. ("NEFM") at the annual rate of 1.05% of the Fund's average
daily net assets. NEFM pays the Fund's four investment subadvisers, Harris
Associates, L.P., Founders Asset Management, Inc., Janus Capital Corporation and
Montgomery Asset Management, L.P. an advisory fee as follows. Harris Associates,
L.P., Founders Asset Management, Inc. and Janus Capital Corporation at the
annual rate of 0.65% of the first $50 million of the average daily net assets of
each segment of the Fund that that subadviser manages, 0.60% of the next $50
million of such assets and 0.55% of such assets in excess of $100 million. NEFM
pays Montgomery Asset Management, L.P. at the annual rate of 0.90% of the first
$25 million of the average daily net assets of the segment of the Fund that
Montgomery Asset Management, L.P. manages, 0.70% of the next $25 million of such
assets and 0.55% of such assets in excess of $50 million. Montgomery Asset
Management, L.P. has agreed to waive 0.15% of the fee payable to it by NEFM
through June 30, 1996, but this waiver will not reduce the fees payable by the
Fund to NEFM. Certain officers and directors of NEFM and Harris Associates, L.P.
are also officers or trustees of the Fund. NEFM and Harris Associates, L.P. are
wholly owned subsidiaries of New England Investment Companies, L.P. which is a
subsidiary of New England Mutual Life Insurance Company. Fees earned by NEFM and
the subadvisers under the management agreement in effect during the period ended
June 30, 1996, are as follows:
FEES EARNED
-----------
$ 71,538 New England Funds Management, L.P.
48,604 Harris Associates, L.P.
24,693 Founders Asset Management, Inc.
25,021 Janus Capital Corporation
27,591 Montgomery Asset Management, L.P.
--------
$197,447
--------
B. ACCOUNTING AND ADMINISTRATIVE EXPENSE. New England Funds, L.P. ("New England
Funds"), the Fund's distributor, is a wholly owned subsidiary of the Manager and
performs certain accounting and administrative services for the Fund. The Fund
reimburses New England Funds for all or part of New England Funds' 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 period ended
June 30, 1996, these expenses amounted to $18,020 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 period ended June 30, 1996, the Fund paid
New England Funds $50,920 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 period
ended June 30, 1996, the Fund paid New England Funds $22,432 in fees under the
Class A Plan.
Under the Class B and Class C Plans, the Fund pays New England Funds monthly
service fees 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 shares and/or the
maintenance of shareholder accounts. For the period ended June 30 1996 the Fund
paid New England Funds $18,282 and $6,297 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 monthly
distribution fees 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 period ended June 30, 1996, the Fund paid New England Funds $54,846 and
$18,891 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 period ended
June 30, 1996 amounted to $795,862.
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 Harris
Associates, New England Funds, New England Investment Companies or their
affiliates, other than registered investment companies. Each other trustee is
compensated by the Fund as follows:
Annual Retainer $714
Meeting Fee $114/meeting
Committee Meeting Fee $68/meeting
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.
5. CAPITAL SHARE TRANSACTIONS. 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:
SIX MONTHS ENDED JUNE 30, 1996
------------------------------------
CLASS A SHARES AMOUNT
--------- -----------
Shares sold 2,755,954 $36,321,561
--------- -----------
2,755,954 36,321,561
Shares repurchased (205,530) (2,817,812)
--------- -----------
Net increase 2,550,424 33,503,749
--------- -----------
SIX MONTHS ENDED JUNE 30, 1996
------------------------------------
CLASS B SHARES AMOUNT
--------- -----------
Shares sold 2,259,717 $29,785,814
--------- -----------
2,259,717 29,785,814
Shares repurchased (24,630) (325,469)
--------- -----------
Net increase 2,235,087 29,460,345
--------- -----------
SIX MONTHS ENDED JUNE 30, 1996
------------------------------------
CLASS C SHARES AMOUNT
--------- -----------
Shares sold 757,544 $ 9,965,404
--------- -----------
757,544 9,965,404
Shares repurchased (26,030) (348,446)
--------- -----------
Net increase 731,514 9,616,958
--------- -----------
Increase derived from
capital shares transactions 5,517,025 $72,581,052
========= ===========
<PAGE>
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, or contact
New England Funds at 800-225-5478.
Visit our World Wide Web site at http://www.mutualfunds.com
New England Funds, L.P.
399 Boylston Street
Boston, MA 02116
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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----------------
---------------------
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02116
---------------------
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