-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ar71OCVhz/qEOi3Ct7bXJhF2iPG84SR09PwyXgnoFu7mNxHnf2BuhXHhr41FqF6k C3bgW6r1NmqlM2rsGd4rSA== 0000915707-96-000041.txt : 19960314 0000915707-96-000041.hdr.sgml : 19960314 ACCESSION NUMBER: 0000915707-96-000041 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960312 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND FUNDS TRUST II CENTRAL INDEX KEY: 0000052136 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 041990692 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-00242 FILM NUMBER: 96533706 BUSINESS ADDRESS: STREET 1: 399 BOYLSTON ST STREET 2: 4TH FLOOR CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 8002831155 MAIL ADDRESS: STREET 1: 399 BOYLSTON STREET STREET 2: 4TH FLOOR CITY: BOSTON STATE: MA ZIP: 02116 FORMER COMPANY: FORMER CONFORMED NAME: INVESTMENT TRUST OF BOSTON FUNDS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WORLD INVESTMENT TRUST DATE OF NAME CHANGE: 19680529 N-30D 1 NEW ENGLAND GROWTH OPPORTUNITIES FUND [LOGO OF NEW ENGLAND FUNDS APPEARS HERE] Were the Best Minds Meet(TM) - ------------------------------------ Annual Report and Performance Update - ------------------------------------ NEW ENGLAND GROWTH OPPORTUNITIES FUND - ----------------- December 31, 1995 - ----------------- January 31, 1996 DEAR SHAREHOLDER, It's a real pleasure to present to you the 1995 Annual Report for New England Growth Opportunities Fund, containing your portfolio manager's commentary and complete financial information. FAVORABLE ECONOMIC CONDITIONS IN 1995 In 1995 subdued economic growth with little or no inflation created a very favorable backdrop for the bond and stock markets. Long term interest rates dipped on the positive inflation news, with the yield on the 30-year Treasury bond falling to a low of 5.95% at year end. The stock market, fueled by lower interest rates and solid corporate earnings growth, advanced 37.6%, as measured by the Standard & Poor's 500 Index,* for its best showing since 1958. In July and in December, the Federal Reserve Board lowered short term rates, signaling its belief that the economy was indeed on a path towards slow, non-inflationary growth. NEW ENGLAND FUNDS - WHERE THE BEST MINDS MEET Over this past year we launched our new corporate identity - Where the Best Minds Meet -which we believe reflects the essence of New England Funds. Our unique multiple adviser structure brings together some of the best investment minds in the business. As recent examples, consider New England Star Advisers Fund, managed by four prominent equity advisers, and New England Star Worldwide Fund, a global fund introduced this January which builds off the Star Advisers concept. In addition, last May we launched New England Strategic Income Fund, under the management of Dan Fuss of Loomis Sayles. One of the industry's most respected managers, Dan Fuss was named 1995's "Bond Fund Manager of the Year" by Morningstar(TM) for his past record of accomplishment in fund management at Loomis Sayles.** * Standard & Poor's 500 is an unmanaged index representing 500 major companies, the majority of which are listed on the New York Stock Exchange. ** Morningstar is a third party, independent mutual fund rating service. 1995 DALBAR AWARD FOR SERVICE EXCELLENCE Where the Best Minds Meet also refers to your financial adviser and all the people at New England Funds who provide you with quality service. We are proud to report that in recognition of our ongoing quality initiatives, New England Funds has been named a 1995 Quality Tested Service Seal Winner by DALBAR, an independent mutual fund service rating company. The coveted DALBAR award was given to only seven companies for "providing the highest tier of service excellence in the mutual fund industry." OUTLOOK FOR 1996 Looking ahead, we believe interest rates are likely to remain flat as the economy continues on its slow, steady, non-inflationary growth path. While this scenario is extremely positive for the long term, it is unlikely that 1996 will see a repeat of last year's stellar performance. At this time it's worth reiterating that long-term investors should not focus on one year's performance. Instead, we recommend that you review your asset allocation program with your financial adviser, then remain committed to that program to carry out its objectives. We believe you will find your portfolio manager's commentary informative. If you have any questions or comments, please contact your financial representative or New England Funds directly at 800-225-5478. Also, please contact New England Funds for a prospectus on any of the funds mentioned above. The prospectus details investment objectives and risks, as well as management fees and expenses. You should read it carefully before investing or sending money. Sincerely, /S/Peter S. Voss /S/Henry L.P. Schmelzer Peter S. Voss Henry L.P. Schmelzer Chairman President - -------------------------------------------------------------------------------- New England Growth Opportunities Fund - -------------------------------------------------------------------------------- INVESTMENT RESULTS THROUGH DECEMBER 31, 1995 Putting Performance into Perspective The graph comparing your Fund's performance to a benchmark index provides you with a general sense of how your Fund performed. To put this information in context, it may be helpful to understand the special differences between the two. Your Fund's total return for the period shown appears with and without sales charges and includes Fund expenses and management fees. A securities index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged; there are no expenses that affect the results. In addition, few investors could purchase all of the securities necessary to match the index. And, if they could, they would incur transaction costs and other expenses. A $10,000 INVESTMENT IN CLASS A SHARES A chart in the form of a line graph appears here, illustrating the growth of a $10,000 investment in Class A Shares compared to the Standard & Poor's 500 Index(4). The data points from the graph are as follows:
NEW ENGLAND GROWTH OPPORTUNITIES FUND--NET ASSET VALUE(1) Year Amount - ---- ------ 1995 $31,724 1994 $23,478 1993 $23,248 1992 $21,536 1991 $19,707 1990 $15,088 1989 $15,760 1988 $12,350 1987 $11,247 1986 $11,231 12/31/84 $10,000 NEW ENGLAND GROWTH OPPORTUNITIES FUND-- WITH MAXIMUM SALES CHARGE(2) Year Amount - ---- ------ 1995 $29,900 1994 $22,128 1993 $21,911 1992 $20,298 1991 $18,574 1990 $14,221 1989 $14,854 1988 $11,640 1987 $10,600 1986 $10,585 12/31/84 $ 9,425 STANDARD & POOR'S 500 INDEX(4) Year Amount - ---- ------ 1995 $39,860 1994 $29,002 1993 $28,613 1992 $25,997 1991 $24,159 1990 $18,535 1989 $19,132 1988 $14,539 1987 $12,480 1986 $11,862 12/31/84 $10,000 This illustration represents past performance of Class A shares and cannot predict future results. Investment return and principal value may vary, resulting in a gain or loss on the sale of shares. Class B and Class C share performance will be greater or less than that shown based on differences in inception date, fees and sales charges. All Index and Fund performance assumes reinvested distributions.
- -------------------------------------------------------------------------------- New England Growth Opportunities Fund - -------------------------------------------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS 12/31/95
CLASS A 1 YEAR 5 YEARS 10 YEARS Net Asset Value(1) 35.12% 16.02% 12.24% With Max. Sales Charge(2) 27.29 14.66 11.58 Lipper Growth & Income Avg.(5) 30.82 15.47 12.78 CLASS B (INCEPTION 9/13/93) 1 YEAR SINCE INCEPTION Net Asset Value(1) 34.34% 14.26% With CDSC(3) 30.34 13.16 Standard & Poor's 500(4) 37.44 16.50 Lipper Growth & Income Avg.(5) 30.82 13.33 CLASS C (INCEPTION 5/1/95) SINCE INCEPTION Net Asset Value(1) 20.15% Standard & Poor's 500(4) 21.88 Lipper Growth & Income Avg.(5) n/a
[FN] These returns represent past performance. Investment return and principal value will fluctuate so that shares, upon redemption, may be worth more or less than original cost. NOTES TO CHARTS AND PERFORMANCE UPDATE 1 Net Asset Value (NAV) performance assumes reinvestment of all distributions and does not reflect the payment of a sales charge at the time of purchase. 2 With Maximum Sales Charge performance assumes reinvestment of all distributions and reflects the maximum sales charge of 5.75% at the time of purchase of Class A shares. 3 With Contingent Deferred Sales Charge (CDSC) performance assumes a maximum 4% sales charge is applied to a redemption of Class B shares. The sales charge will decrease over time, declining to zero five years after the purchase of shares. 4 Standard & Poor's 500 Index (S&P 500) is an unmanaged index representing the performance of 500 major companies, most of which are listed on the New York Stock Exchange. The S&P 500 performance has not been adjusted for ongoing management, distribution and operating expenses and sales charges applicable to mutual fund investments. 5 Lipper Average is an average of the total return performance (calculated on the basis of net asset value) of funds with similar investment objectives as calculated by Lipper Analytical Services, an independent mutual fund ranking service. - -------------------------------------------------------------------------------- New England Growth Opportunities Fund - -------------------------------------------------------------------------------- REWARDING SHAREHOLDERS FOR MORE THAN 60 YEARS Through good times and bad, investors have come to depend on New England Growth Opportunities Fund. This Fund is designed to pursue long-term growth from investments in common stocks similar to those in the S&P 5004. Its focus on large, well-established companies has produced a long history of solid performance. Please see pages 1 and 2 for the Fund's most recent results. GROWTH OPPORTUNITIES FUND - CLASS A SHARES* A $10,000 INVESTMENT COMPARED TO THE STANDARD & POOR'S 500 INDEX(4) MAY 1931- DECEMBER 31, 1995 CUMULATIVE RETURN [A bar chart in appears here, illustrating the growth of an investment in Class A Shares* compared to the Standard & Poor's 500 Index(4) from May 1931 through December 31, 1995. The bar chart is as follows.] Your Fund $28,318,289 S&P 500 Index(4) $ 7,233,687 * This information represents past performance only and cannot predict future returns. Investment return and principal value will vary and may result in a gain or loss on sale. Results assume sales charge of 7.25% in effect in 1931 and reinvestment of all dividend and capital gains distributions for period through 12/31/95. Generally, this was a period of rising stock prices. Effective 10/1/90, the maximum sales charge was reduced to 5.75%. Five advisers have managed the Fund, with changes occurring in 1968, 1983, 1988, and 1995. - -------------------------------------------------------------------------------- New England Growth Opportunities Fund - -------------------------------------------------------------------------------- [PHOTO] NEW ENGLAND GROWTH OPPORTUNITIES FUND Portfolio Manager: Gerald Scriver Westpeak Investment Advisors, L.P.(R) The stock market delighted investors with a red-hot performance in 1995. The Dow Jones Industrial Average broke two historic milestones, charging through the 4,000 and 5,000 marks, and ended the year with the fourth best return in the post World War II era. Not surprisingly, it was also a banner year for stock mutual funds, which posted one of their strongest performances on record. How Your Fund Performed For the fiscal year ended December 31, 1995, New England Growth Opportunities Fund's total return was 35.1% for Class A shares, at net asset value. Your Fund's Class A share performance ranked 96 out of 438 in the Lipper Growth and Income Average,(1) placing it in the top 22% of its peer group. The Fund's 1995 results reflect the performance of Back Bay Advisors, managers until April 30, 1995, and of Westpeak Investment Advisors, which has managed the Fund since May 1, 1995. Both Back Bay and Westpeak are affiliates of New England Investment Companies, L.P. Emphasis on Controlling Risk After taking over the Fund in May, we restructured the portfolio to reflect our view that growth stocks were going to outperform value stocks, at least over the following quarter. Consequently, we put more technology stocks in the portfolio, benefiting the Fund handsomely. However, - -------------------------------------------------------------------------------- New England Growth Opportunities Fund - -------------------------------------------------------------------------------- by September we felt that technology stocks were becoming overvalued, so we began cutting back our exposure in that sector. We were somewhat underweighted in technology as of the end of the year. This timely movement away from the technology area significantly boosted your Fund's performance. The Fund was actually up 3.88% in the fourth quarter, while many other funds were down 10% or 15%. However, it's important to point out that we never overweighted the technology sector to the extent that many funds did, to reach 30% or 40% of assets. Such huge commitments carry too much potential volatility and are not consistent with our philosophy of controlling risk. Shift Toward Value Toward the end of the year we began moving away from growth stocks, because we believed they were overpriced. We've been shifting toward value, buying stocks in the telecommunications area, like Bell South, Southwest Bell and Ameritech. As of December 31, 1995 three of our top ten positions were in this area, where we can get higher dividend yields and lower price-to-earnings ratios. We've also been buying some electric utilities and oil stocks. We took a large position at year-end in Exxon, which is a value stock with a low price-to-earnings ratio and a high-dividend yield. In the current sluggish economic environment, where corporate profit growth is less certain, companies such as Exxon are good prospects, because they have learned, through relentless cost cutting, to prosper without price increases. Telephone and electric utilities have also benefited from belt-tightening and restructuring. - -------------------------------------------------------------------------------- New England Growth Opportunities Fund - -------------------------------------------------------------------------------- One of the areas that we've liked throughout the year has been banks, where we expect benefits to come via mergers and acquisitions and fiscal streamlining. Banks, of course, have also benefited from lower interest rates. Our three largest bank holdings at year-end were Citicorp, Bank of Boston and Bank of New York. These are high-quality banks and, we believe, solid value stocks. Cautious Outlook We don't expect the market's pace to continue in view of increasing signs of economic weakness and growing worries over corporate earnings. We think that the Federal Reserve Board will come through with another easing of short-term interest rates, but that may not be enough to stave off a stock market correction. With that in mind, we are positioning the portfolio more conservatively for the first quarter of 1996, emphasizing value. Value stocks tend to outperform growth stocks in uncertain environments, just as growth outperforms value in the stronger markets. Longer term, we believe that the fundamentals are favorable for the stock market, and your Fund is well positioned to benefit from the opportunities ahead. [FN] (1) Lipper Analytical Services is an independent mutual fund tracking organization; rankings vary over time and do not reflect the effects of sales charges. - -------------------------------------------------------------------------------- New England Growth Opportunities Fund - -------------------------------------------------------------------------------- TOP TEN PORTFOLIO HOLDINGS 12/31/95* COMPANY PERCENTAGE OF NET ASSETS 1. MERCK & CO. 2.9% Pharmaceutical company 2. ROYAL DUTCH PETROLEUM 2.8% Large oil and gas company. Owners of Shell 3. BELL SOUTH CORP. 2.8% Regional telephone company for Southern United States 4. EXXON CORP. 2.5% World's leading oil company 5. COCA-COLA CO. 2.4% Soft drink manufacturer and distributor 6. JOHNSON & JOHNSON 2.3% Healthcare products manufacturer 7. AMERITECH CORP. 2.3% Regional telephone company 8. SBC COMMUNICATIONS INC. 2.3% Regional telephone company 9. UNICOM CORP. 2.0% Holding company for Commonwealth Edison 10. SEARS ROEBUCK & CO. 2.0% Large retailer [FN] *Portfolio holdings are subject to change. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- [LOGO OF NEW ENGLAND FUNDS APPEARS HERE] Where the Best Minds Meet(TM) - -------------------------------------------------------------------------------- Portfolio Composition, Financial Statements and Highlights - -------------------------------------------------------------------------------- NEW ENGLAND GROWTH OPPORTUNITIES FUND - --------------------- December 31, 1995 - --------------------- - -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION - -------------------------------------------------------------------------------- Investments as of December 31, 1995 COMMON STOCK--95.1% OF TOTAL NET ASSETS
SHARES DESCRIPTION VALUE (A) - -------------------------------------------------------------------------------- AEROSPACE--2.1% 15,800 Allied Signal, Inc. .................................... $ 750,500 22,300 McDonnell Douglas Corp. ................................ 2,051,600 10,600 United Technologies Corp. .............................. 1,005,675 ------------ 3,807,775 ------------ AGRICULTURE & FOOD--4.6% 11,600 Campbell Soup Co. ...................................... 696,000 17,400 H. J. Heinz Co. ........................................ 576,375 8,400 Hershey Foods Corp. .................................... 546,000 42,800 IBP Inc. ............................................... 2,161,400 7,200 Kellogg Co. ............................................ 556,200 38,200 Pioneer Hi Bred International, Inc. .................... 2,124,875 21,600 Sara Lee Corp. ......................................... 688,500 7,600 Unilever NV ............................................ 1,069,700 ------------ 8,419,050 ------------ AIRLINES--1.6% 28,000 American Corporation Del ............................... 2,079,000 17,000 Northwest Airlines Corp. ............................... 867,000 ------------ 2,946,000 ------------ ALUMINIUM--1.7% 57,700 Aluminium Company America .............................. 3,050,888 ------------ BANKING--6.1% 13,687 Banc One Corp. ......................................... 516,684 37,100 Bank of Boston Corp. ................................... 1,715,875 33,600 Bank of New York, Inc. ................................. 1,638,000 9,000 BankAmerica Corp. ...................................... 582,750 27,500 Citicorp (c) ........................................... 1,849,376 5,400 Fleet Financial Group, Inc. ............................ 220,050 4,850 Mellon Bank Corp. ...................................... 260,687 10,600 J P Morgan & Co. ....................................... 850,650 20,300 NationsBank Corp. ...................................... 1,413,387 25,100 Union Bank of San Francisco ............................ 1,361,675 3,900 Wells Fargo & Co. ...................................... 842,400 ------------ 11,251,534 ------------ BEVERAGES--2.5% 61,900 Coca Cola Co. .......................................... 4,596,075 ------------ BUSINESS MANUFACTURERS--3.2% 6,000 Digital Equipment ...................................... 384,750 25,900 Hewlett Packard Co. .................................... 2,169,125 12,600 International Business Machines Corp. .................. 1,156,050 ------------------------------------------------------------------------------- - - PORTFOLIO COMPOSITION--Continued - -------------------------------------------------------------------------------- Investments as of December 31, 1995 COMMON STOCK--CONTINUED SHARES DESCRIPTION VALUE (A) - -------------------------------------------------------------------------------- BUSINESS MANUFACTURERS--CONTINUED 23,800 Pitney Bowes, Inc. ..................................... $ 1,118,600 2,600 Sun Micro Systems, Inc. ................................ 118,625 7,000 Xerox Corp. ............................................ 959,000 ------------ 5,906,150 ------------ CHEMICALS--2.9% 5,000 Air Products & Chemicals, Inc. ......................... 263,750 30,500 Cabot Corp. ............................................ 1,643,188 14,000 Dow Chemical Co. ....................................... 985,250 14,200 Du pont E I De Nemours & Co. ........................... 992,225 6,100 Monsanto Co. ........................................... 747,250 14,600 PPG Industries, Inc. ................................... 667,950 ------------ 5,299,613 ------------ COSMETICS--3.3% 51,200 Johnson & Johnson ...................................... 4,384,000 19,900 Procter & Gamble Co. ................................... 1,651,700 ------------ 6,035,700 ------------ DOMESTIC OIL RESOURCES--0.6% 6,600 Atlantic Richfield Co. ................................. 730,950 12,800 Phillips Petroleum Co. ................................. 436,800 ------------ 1,167,750 ------------ DRUGS & HEALTH CARE--6.6% 13,800 Amgen, Inc. (c) ........................................ 819,375 15,100 Bristol Myers Squibb Co. ............................... 1,296,712 40,200 Eli Lilly & Co. ........................................ 2,261,250 82,400 Merck & Co., Inc. ...................................... 5,417,800 14,200 Pfizer, Inc. ........................................... 894,600 28,000 Schering Plough Corp. .................................. 1,533,000 ------------ 12,222,737 ------------ ELECTRIC UTILITIES--4.6% 25,000 Central & South West Corp. ............................. 696,875 45,900 Consolidated Edison Co. NYC ............................ 1,468,800 10,700 Duke Power Co. ......................................... 506,912 15,000 FPL Group, Inc. ........................................ 695,625 24,600 Pacific Gas & Electric Co. ............................. 698,025 28,800 Southern Co. ........................................... 709,200 115,700 Unicom Co. ............................................. 3,789,176 ------------ 8,564,613 ------------ ------------------------------------------------------------------------------- - - PORTFOLIO COMPOSITION--Continued - -------------------------------------------------------------------------------- Investments as of December 31, 1995 COMMON STOCK--CONTINUED SHARES DESCRIPTION VALUE (A) - -------------------------------------------------------------------------------- ELECTRONICS--2.3% 5,100 Harris Corp. ........................................... $ 278,587 12,700 Honeywell, Inc. ........................................ 617,538 21,600 Intel Corp. ............................................ 1,225,800 19,600 Raytheon Co. ........................................... 926,100 6,900 Tektronix, Inc. ........................................ 338,962 5,600 Texas Instruments, Inc. ................................ 289,800 19,200 Vishay Intertechnology, Inc. ........................... 604,800 ------------ 4,281,587 ------------ FINANCIAL SERVICES--1.3% 5,152 Dean Witter Discover & Co. ............................. 242,144 5,500 Household International, Inc. .......................... 325,187 10,500 Merrill Lynch & Co., Inc. .............................. 535,500 7,300 Student Loan Marketing Association ..................... 480,887 13,867 Travelers Group Inc. ................................... 871,888 ------------ 2,455,606 ------------ GAS UTILITIES--1.3% 58,400 Oneok, Inc. ............................................ 1,335,900 13,800 Pacific Enterprises .................................... 389,850 13,900 Williams Companies, Inc. ............................... 609,863 ------------ 2,335,613 ------------ HEALTH CARE--4.2% 45,900 Abbott Laboratories .................................... 1,916,325 11,400 Baxter International, Inc. ............................. 477,375 25,900 Boston Scientific Corp. ................................ 1,269,100 64,100 Medtronic, Inc. ........................................ 3,581,588 10,800 St Jude Medicine, Inc. (c).............................. 464,400 ------------ 7,708,788 ------------ HOTELS & RESTAURANTS--1.0% 20,200 Marriot International, Inc. ............................ 772,650 23,500 McDonalds Corp. ........................................ 1,060,437 ------------ 1,833,087 ------------ HOUSING BUILDING MATERIALS--0.2% 10,300 Centex Corp. ........................................... 357,925 ------------ INSURANCE--LIFE--0.4% 7,700 American General Corp. ................................. 268,538 6,900 Transamerica Corp. ..................................... 502,838 ------------ 771,376 ------------ - -------------------------------------------------------------------------------- PORTFOLIO COMPOSITION--Continued - -------------------------------------------------------------------------------- Investments as of December 31, 1995 COMMON STOCK--CONTINUED SHARES DESCRIPTION VALUE (A) - -------------------------------------------------------------------------------- INSURANCE--OTHER--4.5% 7,100 Aflac, Inc. ............................................ $ 307,962 10,100 Allmerica Property & Casualty, Inc. .................... 272,700 33,350 American International Group, Inc. ..................... 3,084,876 8,200 Chubb Corp. ............................................ 793,350 12,200 Cigna Corp. ............................................ 1,259,650 2,800 General Re-insurance Corp. ............................. 434,000 21,000 Loews Corp. ............................................ 1,645,875 6,800 Safeco Corp. ........................................... 234,600 2,400 Transatlantic Holdings, Inc. ........................... 176,100 ------------ 8,209,113 ------------ INTERNATIONAL OIL--4.5% 4,700 Chevron Corp. .......................................... 246,750 57,900 Exxon Corp. ............................................ 4,639,237 30,500 Mobil Corp. ............................................ 3,416,000 ------------ 8,301,987 ------------ MEDIA--2.2% 75,500 Clear Channel Communication ............................ 3,331,437 12,800 Disney Walt Co. ........................................ 755,200 ------------ 4,086,637 ------------ METALS--0.1% 3,700 Phelps Dodge Corp. ..................................... 230,325 ------------ MORTGAGE--0.8% 10,800 Federal Home Loan Mortgage Corp. ....................... 901,800 25,300 Green Tree Financial Corp. ............................. 667,287 ------------ 1,569,087 ------------ MOTOR VEHICLES--1.2% 21,100 Chrysler Corp. ......................................... 1,168,412 37,300 Ford Motor Corp. ....................................... 1,081,700 ------------ 2,250,112 ------------ OIL REFINING DISTRIBUTORS--4.6% 44,800 Amoco Corp. ............................................ 3,220,000 37,900 Royal Dutch Petroleum Co. .............................. 5,348,636 ------------ 8,568,636 ------------ OIL SERVICE--0.8% 28,400 Halliburton Co. ........................................ 1,437,750 ------------ ------------------------------------------------------------------------------- - - PORTFOLIO COMPOSITION--Continued - -------------------------------------------------------------------------------- Investments as of December 31, 1995 COMMON STOCK--CONTINUED SHARES DESCRIPTION VALUE (A) - -------------------------------------------------------------------------------- PAPER--0.6% 16,100 Champion International Corp. ........................... $ 676,200 10,000 Weyerhaeuser Co. ....................................... 432,500 ------------ 1,108,700 ------------ PHOTOGRAPHY--0.4% 11,800 Eastman Kodak Co. ...................................... 790,600 ------------ PRODUCER OF GOODS--3.4% 14,900 American Brands, Inc. .................................. 664,912 9,300 Caterpillar, Inc. ...................................... 546,375 39,600 General Electric Co. ................................... 2,851,200 9,500 Harnischfeger Industries, Inc. ......................... 315,875 7,300 ITT Corp New ........................................... 386,900 7,300 ITT Industries, Inc. ................................... 175,200 12,500 Textron, Inc. .......................................... 843,750 10,200 Varian Associates, Inc. ................................ 487,050 ------------ 6,271,262 ------------ PROPERTY--0.1% 5,700 Pulte Corp. ............................................ 191,663 ------------ PUBLISHING--0.2% 3,400 McGraw Hill, Inc. ...................................... 296,225 ------------ RAILROADS & EQUIPMENT--3.0% 28,200 Burlington Northern Santa Fe ........................... 2,199,600 12,000 Conrail, Inc. .......................................... 840,000 44,600 CSX Corp. .............................................. 2,034,875 6,000 Norfolk Southern Corp. ................................. 476,250 ------------ 5,550,725 ------------ RETAILER--5.1% 3,800 Fastenal Co. ........................................... 160,550 15,000 Micro Warehouse, Inc. .................................. 648,750 95,200 Sears Roebuck & Co. .................................... 3,712,800 66,200 Staples, Inc. .......................................... 1,613,626 106,500 Walgreen Co. ........................................... 3,181,688 ------------ 9,317,414 ------------ SERVICES--0.4% 9,900 Automatic Data Processing .............................. 735,075 ------------ SOAPS--0.8% 18,000 Gillette Co. ........................................... 938,250 10,800 Premark International, Inc. ............................ 546,750 ------------ 1,485,000 ------------ ------------------------------------------------------------------------------- - - PORTFOLIO COMPOSITION--Continued - -------------------------------------------------------------------------------- Investments as of December 31, 1995 COMMON STOCK--CONTINUED SHARES DESCRIPTION VALUE (A) - ------------------------------------------------------------------------------- TELEPHONE--10.3% 72,900 Ameritech Corp. .................................. $ 4,301,100 39,600 Bell Atlantic Corp. .............................. 2,648,250 121,000 Bell South Corp. ................................. 5,263,500 48,000 Cincinnati Bell, Inc. ............................ 1,668,000 20,200 GTE Corp. ........................................ 888,800 74,100 SBC Communications, Inc. ......................... 4,260,750 ------------ 19,030,400 ------------ TIRES--0.4% 15,600 Goodyear Tire and Rubber ......................... 707,850 ------------ TOBACCO--1.0% 20,100 Philip Morris .................................... 1,819,050 ------------ THRIFT--0.2% 7,300 ITT Hartford Group ............................... 353,138 ------------ Total Common Stocks (Identified Cost $130,949,484)..................................... 175,322,616 ------------ SHORT-TERM INVESTMENT--7.5% FACE AMOUNT - ------------------------------------------------------------------------------- $13,860,000 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/95 at 5.000% to be repurchased at $13,860,000 on 1/2/96. Collaterized by $12,110,000 U.S. Treasury Notes 8.750% due 8/15/00, with a value of $14,138,340.. 13,860,000 ------------ Total Short Term Investment (Identified Cost $13,860,000)...................................... 13,860,000 ------------ Total Investments--102.6% (Identified Cost $144,809,484)..................................... 189,182,616 Cash, receivables and other assets................ 2,575,655 Liabilities....................................... (7,332,544) ------------ Total Net Assets--100.0%.......................... $184,425,727 ============ (a) See Note 1a. (b) Federal Tax Information: At December 31, 1995 the net unrealized appreciation on investments based on cost of $144,809,484 for federal income tax puroses was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost........... $ 45,496,927 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value........... (1,123,795) ------------ Net unrealized appreciation.................................. $ 44,373,132 ============ (c) Non-income producing security.
- -------------------------------------------------------------------------------- STATEMENT OF ASSETS & LIABILITIES - -------------------------------------------------------------------------------- December 31, 1995 ASSETS Investments at value................................ $189,182,616 Cash................................................ 876 Receivable for: Fund shares sold.................................... 2,237,789 Dividends and interest.............................. 322,278 Foreign taxes....................................... 712 Prepaid registration expense........................ 14,000 ------------ 191,758,271 LIABILITIES Payable for: Securities purchased................................ $6,677,864 Fund shares redeemed................................ 96,258 Dividends declared.................................. 375,334 Accrued expenses: Management fees..................................... 104,555 Deferred trustees' fees............................. 3,512 Accounting and administrative....................... 3,124 Other expenses...................................... 71,897 ---------- 7,332,544 ------------ NET ASSETS........................................... $184,425,727 ============ Net Assets consist of: Capital paid in..................................... $137,870,574 Undistributed net investment income................. 95,891 Accumulated net realized gains...................... 2,086,130 Unrealized appreciation on investments.............. 44,373,132 ------------ NET ASSETS........................................... $184,425,727 ============ Computation of net asset value and offering price: Net asset value and redemption price of Class A shares ($150,692,799 divided by 10,468,941 shares of beneficial interest)................................ $14.39 ====== Offering price per share (100/94.25 of $14.39)....... $15.27* ====== Net asset value and offering price of Class B shares ($29,026,128 divided by 2,016,187 shares of beneficial interest)................................ $14.40** ====== Net asset value and offering price of Class C shares ($4,706,800 divided by 327,065 shares of beneficial interest)........................................... $14.39 ====== Identified cost of investments....................... $144,809,484 ============ * Based upon single purchases of less than $50,000. Reduced sales charges apply for purchases in excess of these amounts. ** Redemption price per share is equal to net asset value less any applicable contingent deferred sales charges.
- -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------- Year Ended December 31, 1995 INVESTMENT INCOME Dividends............................................. $ 3,259,887(a) Interest.............................................. 313,571 ----------- 3,573,458 Expenses Management fees....................................... $856,469 Service fees--Class A................................. 340,216 Service and distribution fees--Class B................ 107,139 Service and distribution fees--Class C................ 5,588 Trustees' fees and expenses........................... 23,266 Accounting and administrative......................... 27,466 Custodian............................................. 106,769 Transfer agent........................................ 270,029 Audit and tax services................................ 23,000 Legal................................................. 33,645 Printing.............................................. 54,619 Registration.......................................... 45,774 Miscellaneous......................................... 23,902 -------- Total expenses........................................ 1,917,882 ----------- Net investment income................................. 1,655,576 ----------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Realized gain on Investments--net..................... 21,443,541 Unrealized appreciation on Investments--net........... 16,043,612 ----------- Net gain on investment transactions................... 37,487,153 ----------- NET INCREASE IN NET ASSETS FROM OPERATIONS............. $39,142,729 =========== (a) Net of foreign taxes of $12,488.
- -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 1994 1995 ------------ ------------ FROM OPERATIONS Net investment income............................. $ 1,921,190 $ 1,655,576 Net realized gain on investments.................. 1,492,900 21,443,541 Unrealized appreciation (depreciation) on investments..................................... (2,258,483) 16,043,612 ------------ ------------ Increase in net assets from operations............ 1,155,607 39,142,729 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income Class A........................................... (1,788,514) (1,549,436) Class B........................................... (40,153) (74,015) Class C........................................... 0 (4,516) Net realized gain on investments Class A........................................... (1,426,673) (17,435,536) Class B........................................... (69,789) (1,801,248) Class C........................................... 0 (120,627) ------------ ------------ (3,325,129) (20,985,378) ------------ ------------ Increase in net assets derived from capital share transactions.................................... 769,007 57,002,658 ------------ ------------ Total increase (decrease) in net assets........... (1,400,515) 75,160,009 NET ASSETS Beginning of the year............................. 110,666,233 109,265,718 ------------ ------------ End of the year................................... $109,265,718 $184,425,727 ============ ============ UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the year............................. $ 9,653 $ 106,169 ============ ============ End of the year................................... $ 106,169 $ 95,891 ============ ============
- -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - --------------------------------------------------------------------------------
CLASS A ---------------------------------------------- YEAR ENDED DECEMBER 31, ---------------------------------------------- 1991 1992 1993 1994 1995 ------- ------- -------- -------- -------- Net Asset Value, Beginning of Year.......................... $ 9.54 $ 11.79 $ 12.20 $ 12.67 $ 12.41 ------- ------- -------- -------- -------- Income From Investment Operations Net Investment Income.......... 0.26 0.23 0.21 0.22 0.18 Net Realized and Unrealized Gain (Loss) on Investments.... 2.63 0.86 0.75 (0.10) 4.01 ------- ------- -------- -------- -------- Total From Investment Operations.................... 2.89 1.09 0.96 0.12 4.19 ------- ------- -------- -------- -------- Less Distributions Dividends From Net Investment Income........................ (0.26) (0.23) (0.21) (0.21) (0.18) Distributions in Excess of Investment Income............. 0.00 0.00 (0.01) 0.00 0.00 Distributions From Net Realized Capital Gains................. (0.38) (0.45) (0.27) (0.17) (2.03) ------- ------- -------- -------- -------- Total Distributions............ (0.64) (0.68) (0.49) (0.38) (2.21) ------- ------- -------- -------- -------- Net Asset Value, End of Year... $ 11.79 $ 12.20 $ 12.67 $ 12.41 $ 14.39 ======= ======= ======== ======== ======== Total Return (%)(a)............ 30.6 9.3 8.0 1.0 35.1 Ratio of Operating Expenses to Average Net Assets (%)........ 1.23 1.94 1.21 1.28 1.38 Ratio of Net Investment Income to Average Net Assets (%)..... 2.28 1.18 1.70 1.75 1.31 Portfolio Turnover Rate (%).... 12 10 4 6 69 Net Assets, End of Year (000).. $70,263 $90,945 $109,168 $104,081 $150,693 (a) A sales charge of 5.75% (maximum) was not reflected in total return calculations. As of January 1, 1993 the Fund discontinued the use of equalization accounting.
- -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS--Continued - --------------------------------------------------------------------------------
CLASS B CLASS C ----------------------------------------- ------------ SEPTEMBER 13(A) YEAR YEAR MAY 1(A) THROUGH ENDED ENDED THROUGH DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1993 1994 1995 1995 --------------- ------------ ------------ ------------ Net Asset Value, Beginning of Period.... $12.95 $12.66 $ 12.42 $13.84 ------ ------ ------- ------ Income From Investment Operations Net Investment Income... 0.06 0.16 0.10 0.06 Net Realized and Unrealized Gain (Loss) on Investments......... 0.01 (0.09) 4.01 2.58 ------ ------ ------- ------ Total From Investment Operations............. 0.07 0.07 4.11 2.64 ------ ------ ------- ------ Less Distributions Dividends From Net Investment Income...... (0.03) (0.14) (0.10) (0.06) Distributions in Excess of Investment Income... (0.06) 0.00 0.00 0.00 Distributions From Net Realized Capital Gains. (0.27) (0.17) (2.03) (2.03) ------ ------ ------- ------ Total Distributions..... (0.36) (0.31) (2.13) (2.09) ------ ------ ------- ------ Net Asset Value, End of Period................. $12.66 $12.42 $ 14.40 $14.39 ====== ====== ======= ====== Total Return (%)(c)..... 0.6 0.6 34.3 20.2 Ratio of Operating Expenses to Average Net Assets (%)............. 2.08(b) 1.93 2.11 2.11(b) Ratio of Net Investment Income to Average Net Assets (%)............. 0.71(b) 1.10 0.56 0.56(b) Portfolio Turnover Rate (%).................... 4 6 69 69 Net Assets, End of Period (000)........... $1,498 $5,185 $29,026 $4,707 (a) Commencement of operations. (b) Computed on an annualized basis. (c)Periods less than one year are not annualized.
- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- December 31, 1995 1. The Fund is a series of New England Funds Trust II (the "Trust"), a Massachusetts business trust, registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company. The Declaration of Trust permits the Trustees to issue an unlimited number of shares of the Trust in multiple series (each such series of shares a "Fund"). The Fund offers Class A, Class B and Class C shares. The Fund commenced its public offering of Class B shares on September 13, 1993 and Class C Shares on May 1, 1995. Class A shares are sold with a maximum front end sales charge of 5.75%. Class B shares do not pay a front end sales charge, but pay a higher ongoing distribution fee than Class A shares for eight years (at which point they automatically convert to Class A shares), and are subject to a contingent deferred sales charge if those shares are redeemed within five years of purchase. Class C shares do not pay a front end or contingent deferred sales charge and do not convert to any other class of shares, but they do pay a higher ongoing distribution fee than Class A shares. Expenses of the Fund are borne pro-rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the Rule 12b-1 service and distribution fees applicable to such class), and votes as a class only with respect to its own Rule 12b-1 plan. Shares of each class would receive their pro-rata share of the net assets of the Fund, if the Fund were liquidated. In addition, the Trustees approve separate dividends on each class of shares. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles for investment companies. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. A. SECURITY VALUATION. Equity securities are valued on the basis of valuations furnished by a pricing service, authorized by the Board of Trustees which service provides the last reported sale price for securities listed on an applicable securities exchange or on the NASDAQ national market system, or, if no sale was reported and in the case of over-the-counter securities not so listed, the last reported bid price. Short-term obligations with a remaining maturity of less than sixty days are stated at amortized cost, which approximates value. B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME. Security transactions are accounted for on the trade date (the date the buy or sell is executed). Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Interest income is increased by the accretion of discount. In - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--Continued - -------------------------------------------------------------------------------- December 31, 1995 determining net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. C. FEDERAL INCOME TAXES. The Fund intends to meet the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute to its shareholders all of its income and any net realized capital gains, at least annually. Accordingly, no provision for federal income tax has been made. D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions are recorded on the ex-dividend date. The timing and characterization of certain income and capital gains distributions are determined in accordance with federal tax regulations which may differ from generally accepted accounting principles. These differences relate primarily to utilization of tax equalization. Permanent book and tax basis differences relating to shareholder distributions will result in reclassification to paid in capital. E. REPURCHASE AGREEMENTS. The Fund, through its custodian, receives delivery of the underlying securities collateralizing repurchase agreements. It is the Fund's policy that the market value of the collateral be at least equal to 100% of the repurchase price. The Fund's sub-adviser is responsible for determining that the value of the collateral is at all times at least equal to the repurchase price. Repurchase agreements could involve certain risks in the event of default or insolvency of the other party including possible delays or restrictions upon the Fund's ability to dispose of the underlying securities. 2. PURCHASES AND SALES OF SECURITIES (excluding short-term investments) for the Fund for the year ended December 31, 1995 were $120,695,295 and $88,204,593, respectively. 3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 1995 the Fund operated under two management fee contracts. Prior to May 1, 1995 Back Bay Advisors was the Fund's investment adviser. Effective May 1, 1995 New England Funds Management, L.P. ("NEFM") became the investment adviser to the Fund. Back Bay was paid at the annual rate of 0.500% of the Fund's average daily net assets. NEFM is compensated at the annual rate of 0.70% of the first $200 million of the Fund's average daily net assets 0.65% of the next $300 million of such assets and 0.60% of such assets in excess of $500 million. NEFM pays the Fund's investment subadviser, Westpeak Investment Advisors, L.P. ("Westpeak Advisors") at the rate of 0.35% of the first $200 million of the Fund's average daily net assets and 0.30% of such assets in excess of $200 million. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--Continued - -------------------------------------------------------------------------------- December 31, 1995 Certain officers and directors of Back Bay Advisors, NEFM, Westpeak Advisors and their affiliated companies are also officers or trustees of the Fund. Back Bay Advisors, NEFM and Westpeak Advisors are each wholly owned subsidiaries of New England Investment Companies, L.P. ("NEIC"), which is a majority owned subsidiary of New England Mutual Life Insurance Company. Fees earned by Back Bay Advisors, NEFM and Westpeak Advisors under the management agreements in effect during the year ended December 31, 1995 are as follows:
FEES EARNED ADVISOR PERIOD - ----------- ------- ------ $188,175 Back Bay Advisors, L.P. 1/1 - 4/30/95 283,805 New England Funds Management, L.P. 5/1 - 12/31/95 384,489 Westpeak Advisors, L.P. 5/1 - 12/31/95 - -------- $856,469 Total ========
B. ACCOUNTING AND ADMINISTRATIVE EXPENSE. New England Funds, L.P. ("New England Funds"), the Fund's distributor, is a wholly owned subsidiary of NEIC and performs certain accounting and administrative services for the Fund. The Fund reimburses New England Funds for all or part of New England Fund's expenses of providing these services which include the following: (i) expenses for personnel performing bookkeeping, accounting, internal auditing and financial reporting functions and clerical functions relating to the Fund, (ii) expenses for services required in connection with the preparation of registration statements and prospectuses, shareholder reports and notices, proxy solicitation material furnished to shareholders of the Fund or regulatory authorities and reports and questionnaires for SEC compliance, and (iii) registration, filing and other fees in connection with requirements of regulatory authorities. For the year ended December 31, 1995, these expenses amounted to $27,466 and are shown separately in the financial statements as accounting and administrative. C. TRANSFER AGENT FEES. New England Funds is the transfer and shareholder servicing agent for the Fund. For the year ended December 31, 1995, the Fund paid New England Funds $197,116 as compensation for its services in that capacity. D. SERVICES AND DISTRIBUTION FEES. Pursuant to Rule 12b-1 under the 1940 Act, the Trust has adopted Service and Distribution Plans relating to the Fund's Class A, Class B and Class C shares (the "Plans"). Under the Plans, the Fund pays New England Funds a monthly service fee at the annual rate of up to 0.25% of the average daily net assets attributable to the Fund's Class A, Class B and Class C shares, as compensation for services provided and expenses (including certain payments to securities dealers who may be affiliated with New England Funds) incurred by New England Funds in providing personal services - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--Continued - -------------------------------------------------------------------------------- December 31, 1995 to investors in Class A, Class B and Class C shares and/or the maintenance of shareholder accounts. For the year ended December 31, 1995, the Fund paid New England Funds $304,540, $26,785 and $1,397 in service fees under the Class A, Class B and Class C Plans. Also under the Plans, the Fund pays New England Funds monthly distribution fees at the annual rate of up to 0.10% of the average daily net assets attributable to the Fund's Class A shares and up to 0.75% of the average daily net assets attributable to the Fund's Class B and Class C shares, as compensation for services provided and expenses (including certain payments to securities dealers, who may be affiliated with New England Funds) incurred by New England Funds in connection with the marketing or sale of Class A, Class B shares and Class C shares, respectively. For the year ended December 31, 1995, the Fund paid New England Funds $35,676, $80,354 and $4,191 in distribution fees under the Class A, Class B and Class C Plans. Commissions (including contingent deferred sales charges) on Fund shares paid to New England Funds by investors in shares of the Fund during the year ended December 31, 1995 amounted to $954,690. E. TRUSTEES FEES AND EXPENSES. The Fund does not pay any compensation directly to its officers or trustees who are directors, officers or employees of Back Bay Advisors, New England Funds, NEIC or their affiliates, other than registered investment companies. Each other trustee is compensated by the Fund as follows: Annual Retainer $2,400 Meeting Fee $125/meeting Committee Meeting Fee $75/meeting Committee Chairman Retainer $125/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. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS--Continued - -------------------------------------------------------------------------------- December 31, 1995 4. CAPITAL SHARES. At December 31, 1995 there was an unlimited number of shares of beneficial interest authorized, divided into three classes, Class A, Class B and Class C capital stock. Transactions in capital shares were as follows:
YEAR ENDED YEAR ENDED DECEMBER 31, 1994 DECEMBER 31, 1995 ------------------------ ------------------------ CLASS A SHARES AMOUNT SHARES AMOUNT - ------- ---------- ------------ ---------- ------------ Shares sold................ 741,304 $ 9,328,786 2,225,960 $ 31,708,352 Shares issued in connection with the reinvestment of: Dividends from net investment income........ 108,264 1,344,727 84,290 1,188,168 Distributions from net realized gain............ 95,270 1,182,298 1,061,665 14,664,607 ---------- ------------ ---------- ------------ 944,838 11,855,811 3,371,915 47,561,127 Shares repurchased......... (1,175,898) (14,830,647) (1,286,544) (18,048,545) ---------- ------------ ---------- ------------ Net increase (decrease).... (231,060) (2,974,836) 2,085,371 29,512,582 ---------- ------------ ---------- ------------ YEAR ENDED YEAR ENDED DECEMBER 31, 1994 DECEMBER 31, 1995 ------------------------ ------------------------ CLASS B SHARES AMOUNT SHARES AMOUNT - ------- ---------- ------------ ---------- ------------ Shares sold................ 324,614 $ 4,082,014 1,584,901 $ 22,623,592 Shares issued in connection with the reinvestment of: Dividends from net investment income........ 3,181 39,511 5,067 71,601 Distributions from net realized gain............ 5,447 67,595 121,353 1,687,756 ---------- ------------ ---------- ------------ 333,242 4,189,120 1,711,321 24,382,949 Shares repurchased......... (34,082) (445,277) (112,671) (1,588,699) ---------- ------------ ---------- ------------ Net increase............... 299,160 3,743,843 1,598,650 22,794,250 ---------- ------------ ---------- ------------ YEAR ENDED DECEMBER 31, 1995 ------------------------ CLASS C SHARES AMOUNT - ------- ---------- ------------ Shares sold................ 351,596 $ 5,050,733 Shares issued in connection with the reinvestment of: Dividends from net investment income........ 303 4,318 Distributions from net realized gain............ 8,237 116,832 ---------- ------------ 360,136 5,171,883 Shares repurchased......... (33,071) (476,057) ---------- ------------ Net increase............... 327,065 4,695,826 ---------- ------------ ---------- ------------ Increase derived from capital shares transactions.............. 68,100 $ 769,007 4,011,086 $ 57,002,658 ========== ============ ========== ============
- -------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Board of Trustees of the New England Funds Trust II and the Shareholders of the NEW ENGLAND GROWTH OPPORTUNITIES FUND We have audited the accompanying statement of assets and liabilities of the New England Growth Opportunities Fund including the schedule of portfolio investments, as of December 31, 1995, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated herein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1995 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the New England Growth Opportunities Fund as of December 31, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated herein, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Boston, Massachusetts February 2, 1996 - -------------------------------------------------------------------------------- SHAREHOLDER MEETINGS - -------------------------------------------------------------------------------- December 31, 1995 At a special shareholders' meeting held on April 24, 1995, shareholders of the Growth Opportunities Fund voted for the following proposals:
VOTED VOTED ABSTAINED BROKER TOTAL FOR AGAINST VOTES NON-VOTES VOTES ------------- ----------- ----------- ---------- ----- - -------- 1. To approve a new Advisory Agreement between New England Funds Management, L.P. ("NEFM") and the Fund, which would increase the fee payable by the Fund.. 3,959,534 354,066 290,793 0 4,604,393 ============= =========== =========== ========== 2. To approve a proposed Sub-Advisory Agreement relating to the Fund between NEFM and Westpeak Investment Adivsers, L.P.................. 3,893,664 359,206 291,641 59,882 4,604,393 ============= =========== =========== ========== At a special shareholders' meeting held on December 28, 1995, shareholders of the Growth Opportunities Fund voted for the following proposals: VOTED VOTED ABSTAINED BROKER TOTAL FOR AGAINST VOTES NON-VOTES VOTES ------------- ----------- ----------- ---------- ----- - -------- 1. To approve new investment advisory arrangements to be effective upon the merger of New England Mutual Life Insurance Company into Metropolitan Life Insurance Company, such arrangements to be substantially identical to the investment advisory arrangements in effect for the Fund immediately prior to such merger.......... 5,809,551.749 135,647.787 218,879.633 6,164,079.169 ============= =========== =========== 2. To approve a new Advisory Agreement between the Fund and New England Funds Management, L.P. ("NEFM")............. 5,450,606.357 417,397.876 240,922.936 55,152.000 6,164,079.169 ============= =========== =========== ========== 3. To approve a related Sub-Advisory Agreement between NEFM and the Fund's current sub-adviser.. 5,415,179.751 439,750.039 253,997.379 55,152.000 6,164,079.169 ============= =========== =========== ==========
REGULAR INVESTING PAYS FIVE GOOD REASONS TO INVEST REGULARLY 1. It's an easy way to build assets 2. It's convenient and effortless 3. It requires a low minimum to get started 4. It can help you reach important long-term goals like retirement or college funding 5. It can help you benefit from the ups and downs of the market With Investment Builder, New England Funds' automatic investment program, you can invest as little as $50 a month in your New England Fund automatically - without even writing a check. And, as you can see from the chart below, your monthly investments can really add up over time. THE POWER OF MONTHLY INVESTING [A line graph appears here, illustrating the hypothetical accumulation of monthly investments at an 8% annual rate of return. The data points of the graph are as follows:] Monthly investments of $50
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
[FN] For illustrative purposes only. These figures represent hypothetical accumulation at an 8% annual rate of return, and are not indicative of future performance of any New England Fund. The value of a New England Fund will fluctuate with changing market conditions. This program cannot assure a profit nor protect against a loss in a declining market. It does, however, ensure that you buy more shares when the price is low and fewer shares when the price is high. You can start an Investment Builder program with your current New England Fund account, or with any of our other funds. To open an Investment Builder account today, call your financial representative or New England Funds at 1-800-225-5478. NEW ENGLAND FUNDS Stock Funds Growth Fund of Israel International Equity Fund Star Worldwide Fund Growth Fund Star Advisers Fund Capital Growth Fund Value Fund Growth Opportunities Fund Balanced Fund Bond Funds High Income Fund Strategic Income Fund Government Securities Fund Bond Income Fund Limited Term U.S. Government Fund Adjustable Rate U.S. Government Fund Tax Exempt Funds Municipal Income Fund Massachusetts Tax Free Income Fund Intermediate Term Tax Free Fund of California Intermediate Term Tax Free Fund of New York Money Market Funds Cash Management Trust - - Money Market Series - - U.S. Government Series Tax Exempt Money Market Trust To learn more, and for a free prospectus, contact your financial representative. New England Funds, L.P. 399 Boylston Street Boston, MA 02116 Toll Free 800-225-5478 This material is authorized for distribution to prospective investors when it is preceded or accompanied by the Fund's current prospectus, which contains information about distribution charges, management and other items of interest. Investors are advised to read the prospectus carefully before investing. Bulk Rate U.S. Postage Paid Brockton, MA Permit No. 770 [LOGO OF THE NEW ENGLAND FUND APPEARS HERE] NEW ENGLAND FUNDS Where The Best Minds Meet(TM) - ---------------------- 399 Boylston Street Boston, Massachusetts 02116 GP56 - ---------------------- QUALITY TESTED SERVICE 1996 [DALBAR SEAL ARTWORK APPEARS HERE] DALBAR HONORS COMMITMENT TO: INVESTORS GR56 [RECYCLED LOGO] Printed on Recycled Paper APPENDIX TO FORM N-30D FILINGS TO DESCRIBE DIFFERENCES BETWEEN PRINTED AND EDGAR-FILED TEXTS. (1) Rule lines for tables are omitted. (2) Italic typefaces is displayed in normal type. (3) Boldface type is displayed in capital letters. (4) Headers (e.g. the names of the fund) and footers (e.g. page numbers and "See accompanying notes to the financial statements") are omitted. (5) Because the printed page breaks are not reflected, certain tabular and columnar headings and symbols are displayed differently in this filing. (6) Bullet points, and similar graphic symbols are omitted. (7) Page numbering is different. -----END PRIVACY-ENHANCED MESSAGE-----