NEW ENGLAND FUNDS TRUST I
N-30D, 1996-09-06
Previous: NEW ENGLAND FUNDS TRUST I, N-30D, 1996-09-06
Next: NEW ENGLAND FUNDS TRUST I, N-30D, 1996-09-06



<PAGE>
          [LOGO]
     NEW ENGLAND FUNDS
Where The Best Minds Meet(TM)

- --------------------------------------------------------------------------------
  SEMIANNUAL REPORT AND PERFORMANCE UPDATE
- --------------------------------------------------------------------------------


NEW ENGLAND
GROWTH FUND


JUNE 30, 1996
<PAGE>
                                                                   July 25, 1996

DEAR SHAREHOLDER,

   New England Funds welcomes the opportunity to present you with the 1996
Semiannual Report for New England Growth 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

      Henry L.P. Schmelzer, President
<PAGE>
- --------------------------------------------------------------------------------
                             NEW ENGLAND GROWTH FUND
- --------------------------------------------------------------------------------


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.


[A chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class A Shares, since 6/30/81, compared to the S&P 500 and
the Lipper Growth Fund Average. The data points from the graph are as follows:]

- --------------------------------------------------------------------------------
                A $10,000 INVESTMENT IN NEW ENGLAND GROWTH FUND
- --------------------------------------------------------------------------------

                        Growth      Growth                   Lipper
   Year                    NAV         POP     S&P 500    Grwth Avg
- -------                -------     -------     -------     -------
6/30/81                $10,000      $9,350     $10,000     $10,000
   1982                 $9,999      $9,349      $8,858      $8,742
   1983                $20,481     $19,150     $14,262     $14,921
   1984                $15,805     $14,778     $13,606     $12,732
   1985                $20,841     $19,486     $17,850     $15,739
   1986                $28,910     $27,031     $24,247     $20,936
   1987                $36,297     $33,937     $30,329     $23,968
   1988                $33,589     $31,406     $28,236     $22,470
   1989                $36,021     $33,679     $34,031     $26,054
   1990                $44,464     $41,574     $39,612     $29,623
   1991                $50,178     $46,916     $42,538     $31,122
   1992                $59,034     $55,197     $48,267     $34,863
   1993                $63,680     $59,541     $54,824     $40,466
   1994                $64,202     $60,029     $55,794     $40,858
   1995                $80,702     $75,457     $70,295     $49,953
   1996                $92,025     $86,043     $88,522     $61,043
- --------------------------------------------------------------------------------

  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. All Index and Fund
  performance assumes reinvested distributions.

<PAGE>

- --------------------------------------------------------------------------------
                      AVERAGE ANNUAL TOTAL RETURNS 6/30/96
- --------------------------------------------------------------------------------

  CLASS A                     1 YEAR             5 YEAR           10 YEAR

  Net Asset Value(1)          14.03%              12.90%           12.28%

  With Max. Sales Charge(2)    6.58               11.38            11.52

  Lipper Growth Average(4)    22.20               14.87            12.23

- --------------------------------------------------------------------------------
  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 6.5% at the time of
    purchase.

(3) Standard & Poor's 500 Index(R) (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.

(4) Lipper Growth Average is an average of the total return performance
    (calculated on the basis of net asset value) of 542 funds with similar
    investment objectives as calculated by Lipper Analytical Services, an
    independent mutual fund ranking service.
<PAGE>

- ----------------
  [Photo Of
Kenneth Heebner]
- ----------------

NEW ENGLAND GROWTH FUND
Portfolio Manager: G. Kenneth Heebner
Capital Growth Management

Economic Overview

Through the first half of 1996, a strong economy, low inflation and a stable
interest rate environment resulted in continued solid stock market performance.
Growth stocks were a principal beneficiary of these conditions, as they
continued to post gains, albeit less than in the second half of 1995.
Well-managed moderate growth companies, which the Fund favors, are proving to be
long-term, steady performers. Many such companies offer growth rates approaching
20%, yet still sell at deep discounts to equity market multiples.

How Your Fund Performed

Capitalizing on a business environment that emphasizes low labor and capital
costs and high productivity, New England Growth Fund returned 5.31% at Net Asset
Value (NAV) over the first half of the year. Returns were compromised somewhat
by late sell-offs in the stock market in June, due in part to inflationary fears
stemming from a fast-growing economy.

How Your Fund Was Managed

Throughout the first half of the year, we maintained
confidence in the growth of the economy. As a result,
we maintained substantial positions in airline and bank stocks, which continued
to increase in value over the six-month period.

The Fund's success over the years stems from our commitment to quality,
long-term investments in well-established companies that are reasonably priced.
We did not deviate from this portfolio selection approach through the first half
of 1996.

Virtually all of the stocks held in the Fund feature multiples on anticipated
earnings of slightly less than market multiples, so they are positioned nicely
to take full advantage of the stock market's outstanding growth potential.

Economic Outlook

Going forward, we anticipate continued moderate growth with relatively low
inflation, an environment conducive to investing in growth companies. We will
continue to avoid investing in companies with high price/earnings ratios
relative to high growth rates. Many investors, we believe, are displaying
enormous enthusiasm for growth without closely examining valuations.

We will continue investing in growth companies at reasonable prices and with a
long-term investment horizon in mind. While there may be periodic bursts of
volatility along the way, we feel that the companies we select using this
approach will continue to perform well over the long term.
<PAGE>

- --------------------------------------------------------------------------------
                      NET ASSET VALUE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
                               12/31/86 - 6/30/96
<TABLE>
<CAPTION>
                         1987    1988   1989   1990    1991    1992    1993    1994    1995    1996
<S>                      <C>     <C>    <C>    <C>     <C>     <C>     <C>     <C>     <C>     <C>
 
  N. E. Growth Fund     18.47%  1.45%  22.30%  5.10%  56.72%  -6.63%  11.29%  -7.05%  38.06%   5.31%

  Lipper Growth Avg.(1)  1.10% 13.96%  25.44% -5.48%  36.09%   7.79%  10.61%  -2.17%  30.79%  10.08%

  S&P 500(2)             5.21% 16.50%  31.59% -3.12%  30.34%   7.61%  10.06%   1.36%  37.44%  10.08%

  NOTES TO CHARTS AND PERFORMANCE UPDATE

<FN>
(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 6.5% at the time of
    purchase.

(3) Standard & Poor's 500 Index(R) (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.

(4) Lipper Growth Average is an average of the total return performance
    (calculated on the basis of net asset value) of 542 funds with similar
    investment objectives as calculated by Lipper Analytical Services, an
    independent mutual fund ranking service.
</FN>
</TABLE>
<PAGE>
                [LOGO]
          NEW ENGLAND FUNDS
     Where The Best Minds Meet(TM)

- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION, FINANCIAL STATEMENTS AND HIGHLIGHTS
- --------------------------------------------------------------------------------


NEW ENGLAND
GROWTH FUND





- -------------
JUNE 30, 1996
- -------------
<PAGE>
- --------------------------------------------------------------------------------
                              PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------

Investments as of June 30, 1996
(unaudited)

COMMON STOCK -- 99.7% OF TOTAL NET ASSETS

  SHARES     DESCRIPTION                                      VALUE (a)
- --------------------------------------------------------------------------
             AEROSPACE--1.9%
    270,000  Boeing Co.  .................................  $   23,523,750
                                                            --------------
             AIRLINES--12.5%
    400,000  AMR Corp. (c)  ..............................      36,400,000
  1,050,000  Northwest Airlines Corp. (c)  ...............      41,475,000
  1,340,000  UAL Corp. (c)  ..............................      72,025,000
                                                            --------------
                                                               149,900,000
                                                            --------------
             APPAREL & TEXTILES--5.3%
    620,000  Nike, Inc., Class B  ........................      63,705,000
                                                            --------------
             BANKS--MONEY CENTER--14.5%
  1,256,000  Chase Manhattan Corp.  ......................      88,705,000
  1,038,300  Citicorp  ...................................      85,789,537
                                                            --------------
                                                               174,494,537
                                                            --------------
             COMPUTER SOFTWARE & SERVICES--6.6%
    527,000  Computer Associates International, Inc.  ....      37,548,750
    344,000  Microsoft Corp. (c)  ........................      41,323,000
                                                            --------------
                                                                78,871,750
                                                            --------------
             ELECTRONIC COMPONENTS--5.2%
  1,095,000  Cisco Systems, Inc. (c)  ....................      62,004,375
                                                            --------------
             FOOD & BEVERAGES--6.1%
  2,076,000  PepsiCo, Inc.  ..............................      73,438,500
                                                            --------------
             FOOD--RETAILERS/WHOLESALERS--5.9%
    687,000  Philip Morris Companies, Inc.  ..............      71,448,000
                                                            --------------
             HOTELS & RESTAURANTS--5.1%
    541,000  Hilton Hotels Corp.  ........................      60,862,500
                                                            --------------
             INSURANCE--12.0%
  1,515,000  Allstate Corp.  .............................      69,121,875
    764,800  American International Group, Inc.  .........      75,428,400
                                                            --------------
                                                               144,550,275
                                                            --------------
             LIQUOR--1.1%
    175,000  Anheuser-Busch Companies, Inc.  .............      13,125,000
                                                            --------------
             LEISURE TIME--1.5%
    440,000  Circus Circus Enterprises, Inc. (c)  ........      18,040,000
                                                            --------------
             OIL SERVICES--11.1%
  1,240,000  Halliburton Co.  ............................      68,820,000
    775,000  Schlumberger, Ltd.  .........................      65,293,750
                                                            --------------
                                                               134,113,750
                                                            --------------
             PHOTOGRAPHY--1.4%
    220,000  Eastman Kodak Co.  ..........................      17,105,000
                                                            --------------
             RETAIL--9.3%
  4,070,000  Kmart Corp. (c)  ............................      50,366,250
  1,260,000  Sears Roebuck and Co.  ......................      61,267,500
                                                            --------------
                                                               111,633,750
                                                            --------------
             SOFTWARE--0.2%
     51,000  Oracle Systems Corp. (c)  ...................       2,011,313
                                                            --------------
             Total Common Stock (Identified Cost
               $1,031,113,236) ...........................   1,198,827,500
                                                            --------------

SHORT TERM INVESTMENT -- 0.5%

   FACE
  AMOUNT
- --------------------------------------------------------------------------
$ 6,125,000  American Express Credit Corp. 5.3900% 7/01/96       6,125,000
                                                            --------------
             Total Short Term Investment (Identified Cost
               $6,125,000) ...............................       6,125,000
                                                            --------------
             Total Investments--100.2% (Identified Cost
               $1,037,238,236) (b) .......................   1,204,952,500

             Other assets less liabilities  ..............      (2,549,836)
                                                            --------------
             Total Net Assets--100% ......................  $1,202,402,664
                                                            ==============

(a) See Note 1a.
(b) Federal Tax Information:
    At June 30, 1996 the net unrealized appreciation on
    investments based on cost of $1,037,238,236 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 .............................................    $190,254,290
    Aggregate gross unrealized depreciation for all
    investments in which there is an excess of tax cost
    over value ...........................................     (22,540,026)
                                                              ------------
    Net unrealized appreciation ..........................    $167,714,264
                                                              ============
(c) Non-income producing security.


                See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
                      STATEMENT OF ASSETS & LIABILITIES
- --------------------------------------------------------------------------------
June 30, 1996
(unaudited)

ASSETS
  Investments at value ........................                $1,204,952,500
  Cash ........................................                         4,087
  Receivable for:
    Fund shares sold ..........................                       310,824
    Securities sold ...........................                    19,291,277
    Dividends and interest ....................                     1,709,368
  Prepaid registration expense ................                         5,000
                                                               --------------
                                                                1,226,273,056

LIABILITIES
  Payable for:
    Securities purchased ......................   $21,494,450
    Fund shares redeemed ......................     1,445,801
    Withholding Taxes .........................         5,389
  Accrued expenses:
    Management fees ...........................       675,852
    Deferred trustees' fees ...................        64,251
    Accounting and administrative .............         3,513
    Other expenses ............................       181,136
                                                  -----------
                                                                   23,870,392
                                                               --------------
NET ASSETS ....................................                $1,202,402,664
                                                               ==============

  Net Assets consist of:
    Capital paid in ...........................                $  941,848,345
    Undistributed net investment income .......                     2,111,187
    Accumulated net realized gains ............                    90,728,868
    Unrealized appreciation on investments ....                   167,714,264
                                                               --------------
NET ASSETS ....................................                $1,202,402,664
                                                               ==============

Computation of net asset value and offering price:
  Net asset value and redemption price of Class
  A shares ($1,202,402,664 divided by
  108,243,783 shares of beneficial interest) ..                        $11.11
                                                                       ======
Offering price per share (100/93.50 of $11.11)                         $11.88*
                                                                       ======
Identified cost of investments ................                $1,037,238,236
                                                               ==============

 *Based upon single purchases of less than $25,000. Reduced sales charges
  apply for purchases in excess of this amount.


                See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
                           STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------

Six Months Ended June 30, 1996
(unaudited)

INVESTMENT INCOME
  Dividends ..................................                   $ 9,160,638
  Interest ...................................                       136,279
                                                                 -----------
                                                                   9,296,917
  Expenses
    Management fees ..........................   $4,152,905
    Service fees .............................    1,530,331
    Trustees' fees and expenses ..............       13,794
    Accounting and administrative ............       25,239
    Custodian ................................       89,671
    Transfer agent ...........................    1,198,450
    Audit and tax services ...................       23,000
    Legal ....................................       10,499
    Printing .................................       99,170
    Registration .............................       24,753
    Miscellaneous ............................       13,330
                                                 ----------
  Total expenses .............................                     7,181,142
                                                                 -----------
  Net investment income ......................                     2,115,775
                                                                 -----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
  Realized gain on investments--net ..........                    58,170,989
  Unrealized appreciation on investments--net                      3,570,896
                                                                 -----------
  Net gain on investment transactions ........                    61,741,885
                                                                 -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ...                   $63,857,660
                                                                 ===========


                See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
                      STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

(unaudited)
<TABLE>
<CAPTION>
                                                                                 SIX MONTHS
                                                            YEAR ENDED              ENDED
                                                           DECEMBER 31,           JUNE 30,
                                                               1995                 1996
                                                          --------------       --------------
<S>                                                       <C>                  <C>           
FROM OPERATIONS
  Net investment income ............................      $    4,737,773       $    2,115,775
  Net realized gain on investments .................         197,449,600           58,170,989
  Unrealized appreciation on investments ...........         150,392,410            3,570,896
                                                          --------------       --------------
  Increase in net assets from operations ...........         352,579,783           63,857,660
                                                          --------------       --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
  Net investment income ............................          (5,211,996)                   0
  Net realized gain on investments .................        (165,500,915)                   0
                                                          --------------       --------------
                                                            (170,712,911)                   0
                                                          --------------       --------------
  Proceeds from sale of shares .....................          83,764,307           44,979,349
  Net asset value of shares issued in connection
  with the reinvestment of:
    Dividends from net investment income ...........           5,040,619                    0
    Distributions from net realized gain ...........         162,025,252                    0
                                                          --------------       --------------
                                                             250,830,178           44,979,349
  Cost of shares redeemed ..........................        (220,016,896)        (107,544,736)
                                                          --------------       --------------
  Increase (decrease) in net assets derived from
    capital share
    transactions ...................................          30,813,282          (62,565,387)
                                                          --------------       --------------
  Total increase in net assets .....................         212,680,154            1,292,273
NET ASSETS
  Beginning of the period ..........................         988,430,237        1,201,110,391
                                                          --------------       --------------
  End of the period ................................      $1,201,110,391       $1,202,402,664
                                                          ==============       ==============
UNDISTRIBUTED NET INVESTMENT INCOME
  Beginning of the period ..........................            $757,268                   $0
                                                          ==============       ==============
  End of the period ................................                  $0           $2,111,187
                                                          ==============       ==============
NUMBER OF SHARES OF THE FUND:
Issued from the sale of shares .....................           8,243,398            4,081,577
Issued in connection with the reinvestment of:
  Dividends from net investment income .............             476,462                    0
  Distributions from net realized gain .............          15,260,562                    0
                                                          --------------       --------------
                                                              23,980,422            4,081,577
  Redeemed .........................................         (21,472,861)          (9,718,093)
                                                          --------------       --------------
  Net change .......................................           2,507,561           (5,636,516)
                                                          ==============       ==============
</TABLE>


                See accompanying notes to financial statements.
<PAGE>

<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
                                                      FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------------

(unaudited)
<CAPTION>
                                                                                                                       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 Year ...............       $ 8.85       $11.19       $10.08       $10.44       $ 8.87       $10.55
                                                         ------       ------       ------       ------       ------       ------

Income From Investment Operations
Net Investment Income ............................         0.10         0.09         0.02         0.11         0.05         0.02
Net Realized and Unrealized Gain (Loss)
  on Investments .................................         4.92        (0.83)        1.12        (0.84)        3.30         0.54
                                                         ------       ------       ------       ------       ------       ------
Total From Investment Operations .................         5.02        (0.74)        1.14        (0.73)        3.35         0.56
                                                         ------       ------       ------       ------       ------       ------

Less Distributions
Dividends From Net Investment Income .............        (0.10)       (0.09)       (0.01)       (0.11)       (0.05)        0.00
Distributions From Net Realized Capital
  Gains ..........................................        (2.57)       (0.28)       (0.77)       (0.73)       (1.62)        0.00
Distributions From Paid-in Capital ...............        (0.01)        0.00         0.00         0.00         0.00         0.00
                                                         ------       ------       ------       ------       ------       ------
Total Distributions ..............................        (2.68)       (0.37)       (0.78)       (0.84)       (1.67)        0.00
                                                         ------       ------       ------       ------       ------       ------
Net Asset Value, End of Year .....................       $11.19       $10.08       $10.44       $ 8.87       $10.55       $11.11
                                                         ======       ======       ======       ======       ======       ======
Total Return (%) (b) .............................        56.7         (6.6)        11.3         (7.1)        38.1          5.3
Ratio of Operating Expenses to
  Average Net Assets (%) .........................         1.14         1.15         1.18         1.19         1.20         1.17(a)
Ratio of Net Investment Income to
  Average Net Assets (%) .........................         0.89         0.89         0.16         1.05         0.42         0.34(a)
Portfolio Turnover Rate (%) ......................          186          218          145          141          235          260(a)
Average Commission Rate (c) ......................         --           --           --           --           --        $0.0607
Net Assets, End of Period (000,000) ..............       $  997       $1,174       $1,201         $988       $1,201       $1,202

(a) Computed on an annualized basis.
(b) A sales charge is not reflected in total return calculations. Periods less than one year are not annualized.
(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.
</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 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.

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. 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. Permanent book and tax basis differences will result in
reclassification to the capital accounts.

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 adviser is responsible for
determining that the value of the collateral is at all times at least equal to
the repurchase price. Repurchase agreements could involve certain risks in the
event of default or insolvency of the other party including possible delays or
restrictions upon the Fund's ability to dispose of the underlying securities.

2. PURCHASES AND SALES OF SECURITIES  (excluding short-term investments) for
the Fund for the six months ended June 30, 1996 were $1,592,812,905 and
$1,639,819,465 respectively.

3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES.  During the six
months ended June 30, 1996, the Fund incurred management fees payable to its
investment adviser, Capital Growth Management Limited Partnership ("Capital
Growth Management"). Certain officers and directors of the adviser and its
affiliated companies are also officers or trustees of the Fund. Capital Growth
Management is a subsidiary of New England Investment Companies, L.P., ("NEIC")
which is a majority owned subsidiary of New England Mutual Life Insurance
Company. The management agreement in effect during the six months ended June
30, 1996 provided for fees as set forth below:

EARNED              ANNUAL PERCENTAGE RATE     ANNUAL NET ASSET VALUE LEVELS
- ------              ----------------------     -----------------------------
$4,152,905          0.750%                     the first $200 million
                    0.700%                     the next $300 million
                    0.650%                     the excess over $500 million

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 Funds'
expenses of providing these services which include the following: (i) expenses
for personnel performing bookkeeping, accounting, internal auditing and
financial reporting functions and related 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 $25,239 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 $884,443 as compensation for its services in that
capacity.

D. SERVICE FEES. Pursuant to Rule 12b-1 under the 1940 Act, the Trust has
adopted a Service Plan relating to the Fund (the "Plan"). Under the 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 of the Fund, as reimbursement for 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 the Fund and/or the maintenance of shareholder accounts. For the
six months ended June 30, 1996, the Fund paid New England Funds $1,530,331 in
fees under the Plan. If the expenses of New England Funds that are otherwise
reimbursable under the Plan incurred in any year exceed the amounts payable by
the Fund under the Plan, the unreimbursed amount (together with unreimbursed
amounts from prior years) may be carried forward for reimbursement in future
years in which the Plan remains in effect. The amount of unreimbursed expenses
carried forward at June 30, 1996 is $2,030,882.

Commissions 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 $992,589.

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 Capital Growth Management, New England Funds, NEIC or their affiliates,
other than registered investment companies. Each other trustee is compensated
by the Fund as follows:

  Annual Retainer                      $2,628
  Meeting Fee                          $114/meeting
  Committee Meeting Fee                $68/meeting
  Committee Chairman Retainer          $566/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.
<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>

- -----------------------------------------------------------------------------
                               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>
           [LOGO]                                              --------------
      NEW ENGLAND FUNDS                                          BULK RATE
Where The Best Minds Meet(TM)                                   U.S. POSTAGE
                                                                    PAID
                                                                BROCKTON, MA
                                                               PERMIT NO. 770
                                                               --------------


- ---------------------
 399 Boylston Street

Boston, Massachusetts

        02116

- ---------------------


[LOGO: DALBAR SEAL]


     GF58-0896

[symbol] Printed on Recycled Paper



© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission