0000950109-95-003769.txt : 19950918
0000950109-95-003769.hdr.sgml : 19950918
ACCESSION NUMBER: 0000950109-95-003769
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950914
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NEW ENGLAND FUNDS TRUST I
CENTRAL INDEX KEY: 0000770540
STANDARD INDUSTRIAL CLASSIFICATION: []
STATE OF INCORPORATION: MA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: N-30D
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-04323
FILM NUMBER: 95573977
BUSINESS ADDRESS:
STREET 1: 399 BOYLSTON ST
CITY: BOSTON
STATE: MA
ZIP: 02116
BUSINESS PHONE: 8002831155
MAIL ADDRESS:
STREET 1: 399 BOYLSTON STREET
CITY: BOSTON
STATE: MA
ZIP: 02116
FORMER COMPANY:
FORMER CONFORMED NAME: NEW ENGLAND FUNDS
DATE OF NAME CHANGE: 19920703
FORMER COMPANY:
FORMER CONFORMED NAME: NEW ENGLAND GOVERNMENT SECURITIES FUND
DATE OF NAME CHANGE: 19861111
FORMER COMPANY:
FORMER CONFORMED NAME: NEW ENGLAND LIFE GOVERNMENT SECURITIES TRUST
DATE OF NAME CHANGE: 19860930
N-30D
1
SEMI ANNUAL REPORT
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[NEW ENGLAND FUNDS
LOGO APPEARS HERE]
New England Funds
Where The Best Minds Meet
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Semiannual Report and Performance Update
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New England
Star Advisers Fund [ARTWORK APPEARS HERE]
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June 30, 1995
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July 20, 1995
Dear Shareholder:
We have good news to present in this Semiannual Report for New England Star
Advisers Fund, which includes your Portfolio Manager's commentary and complete
financial information.
Market Overview
Investors who stayed the course in 1995 were amply rewarded. Major U.S.
stock market indices soared to record highs and the bond market staged a
spectacular comeback from its 1994 lows. Fueling the rally was clear evidence
that the economy had begun to slow down as a result of the interest rate hikes
engineered by the Federal Reserve Board to keep inflation in check. Indeed, with
declining housing starts and rising unemployment numbers reported in the first
half of 1995, expectations grew that the Fed's next move would be downward, to
prevent the slowing economy from slipping into recession.
The bond market surged at the prospect of lower rates, and the stock market
followed suit, with the Standard & Poor's 500/(R)/ Index gaining 20.14% during
the first half of the year. The large, blue-chip companies led the way, in part
because a weak U.S. dollar gave them a competitive advantage overseas and
contributed to surprisingly healthy earnings reports. Finally, on July 6, just
after this reporting period ended, the Fed lowered a key short-term rate by
0.25%, a relatively modest move, but a significant psychological change in
direction.
Your Financial Adviser -- A Trusted Ally
As a shareholder in New England Funds, you have a valuable ally you can
turn to at all times -- your financial adviser. This experienced
continued
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professional can help you design an asset allocation program suitable to your
goals and risk tolerance. Most important, during times of market volatility or
uncertainty, your adviser can help you avoid making costly mistakes, such as
trying to "time" the market. Investors who go it alone can overreact to short-
term market events, buying and selling on the basis of this week's headlines, or
chasing the latest "hot" investment. Such behavior can derail an otherwise
prudent investment program. But investors who work with a financial adviser
receive guidance throughout the market's ups and downs. Your adviser will help
you place short-term market swings in their proper perspective and keep you
focused on your long-term investment program.
Your adviser is just one of the experts whose talents we have tapped in our
effort to bring the best minds in the business to the task of managing your
money. These experts are a vital part of the investment process at New England
Funds, and we encourage you to take advantage of their skills to the fullest.
We invite you to read the accompanying management commentary and financial
highlights. If you have any questions or comments, please contact your financial
adviser or New England Funds directly at 800-225-5478. Once again, we appreciate
your continued confidence and investment in New England Funds.
Sincerely,
/s/ Peter S. Voss /s/ Henry L.P. Schmelzer
Peter S. Voss Henry L.P. Schmelzer
Chairman President
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New England Star Advisers Fund
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INVESTMENT RESULTS THROUGH JUNE 30, 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.
1
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New England Star Advisers Fund
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Total Returns for Period Ended 6/30/95
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Class A (Inception 7/7/94) Year to Date Since Inception
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Net Asset Value/1/ 15.17% 22.52%
With Max. Sales Charge/2/ 8.54 15.49
Standard & Poor's 500/4/ 20.14 25.99
Lipper Growth Average/5/ 17.47 21.17
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Class B (Inception 7/7/94) Year to Date Since Inception
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Net Asset Value/1/ 14.82% 21.70%
With CDSC/3/ 10.82 18.09
Standard & Poor's 500/4/ 20.14 25.99
Lipper Growth Average/5/ 17.47 21.17
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Class C (Inception 7/7/94) Year to Date Since Inception
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Net Asset Value/1/ 14.73% 21.66%
Standard & Poor's 500/4/ 20.14 25.99
Lipper Growth Average/5/ 17.47 21.17
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Class Y (Inception 11/15/94)* Year to Date Since Inception
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Net Asset Value/1/ 15.41% 12.92%
Standard & Poor's 500/4/ 20.14 12.92
Lipper Growth Average/5/ 17.47 n/a
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These returns represent past performance. Investment return and principal
value will fluctuate so that shares, upon redemption, may be worth more or
less than original cost.
* Class Y shares are available only to certain institutional investors.
Notes to Charts and Performance Update
/1/ Net Asset Value (NAV) performance assumes reinvestment of all distributions
and does not reflect the payment of a sales charge at the time of purchase.
/2/ With Maximum Sales Charge (MSC) performance assumes reinvestment of all
distributions and reflects the maximum sales charge of 5.75% at the time of
purchase of Class A shares.
/3/ With Contingent Deferred Sales Charge (CDSC) performance assumes a maximum
4% sales charge is applied to a redemption of Class B shares. The sales
charge will decrease over time, declining to zero five years after the
purchase of shares. Class Y shares are not subject to a sales charge.
/4/ 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.
2
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A $10,000 Investment Compared to Standard & Poor's 500
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A chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class A Shares, since New England Star Advisers Fund's
inception on 7/7/94, compared to Standard and Poor's 500 /4/. The data points
from the graph are as follows:
New England Star Advisers Fund - Net Asset Value/1/
Month Amount
----- -------
7/7/94 $10,000
7/94 $10,120
8/94 $10,600
9/94 $10,656
10/94 $10,960
11/94 $10,576
12/94 $10,637
1/95 $10,621
2/95 $10,958
3/95 $11,239
4/95 $11,423
5/95 $11,688
6/95 $12,250
New England Star Advisers Fund - With Maximum Sales Charge/2/
Month Amount
----- -------
7/7/94 $ 9,425
7/94 $ 9,538
8/94 $ 9,990
9/94 $10,043
10/94 $10,329
11/94 $ 9,968
12/94 $10,026
1/95 $10,011
2/95 $10,328
3/95 $10,592
4/95 $10,766
5/95 $11,016
6/95 $11,546
S&P 500/4/
Month Amount
----- -------
7/7/94 $10,000
7/94 $10,315
8/94 $10,703
9/94 $10,489
10/94 $10,708
11/94 $10,285
12/94 $10,488
1/95 $10,743
2/95 $11,130
3/95 $11,507
4/95 $11,829
5/95 $12,258
6/95 $12,601
A chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class B Shares, since New England Star Advisers Fund's
inception on 7/7/94, compared to Standard and Poor's 500 /4/. The data points
from the graph are as follows:
New England Star Advisers Fund - Net Asset Value/1/
Month Amount
----- -------
7/7/94 $10,000
7/94 $10,120
8/94 $10,592
9/94 $10,639
10/94 $10,935
11/94 $10,544
12/94 $10,599
1/95 $10,574
2/95 $10,911
3/95 $11,175
4/95 $11,351
5/95 $11,608
6/95 $12,168
New England Star Advisers Fund - With Maximum Sales Charge/2/
Month Amount
----- -------
7/7/94 $10,000
7/94 $10,120
8/94 $10,592
9/94 $10,639
10/94 $10,935
11/94 $10,544
12/94 $10,599
1/95 $10,574
2/95 $10,911
3/95 $11,175
4/95 $11,351
5/95 $11,608
6/95 $11,768
S&P 500/4/
Month Amount
----- -------
7/7/94 $10,000
7/94 $10,315
8/94 $10,703
9/94 $10,489
10/94 $10,708
11/94 $10,285
12/94 $10,488
1/95 $10,743
2/95 $11,130
3/95 $11,507
4/95 $11,829
5/95 $12,258
6/95 $12,601
A chart in the form of a line graph appears here, illustrating the growth of a
$10,000 investment in Class C Shares, since New England Star Advisers Fund's
inception on 7/7/94, compared to Standard and Poor's 500 /4/. The data points
from the graph are as follows:
New England Star Advisers Fund - Net Asset Value/1/
Month Amount
----- ------
7/7/94 $10,000
7/94 $10,120
8/94 $10,592
9/94 $10,639
10/94 $10,935
11/94 $10,544
12/94 $10,604
1/95 $10,579
2/95 $10,907
3/95 $11,180
4/95 $11,357
5/95 $11,613
6/95 $12,166
Standard and Poor's 500/4/
Month Amount
----- -------
7/7/94 $10,000
7/94 $10,315
8/94 $10,703
9/94 $10,489
10/94 $10,708
11/94 $10,285
12/94 $10,488
1/95 $10,743
2/95 $11,130
3/95 $11,507
4/95 $11,829
5/95 $12,258
6/95 $12,601
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New England Star Advisers Fund
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NEW ENGLAND STAR ADVISERS FUND
New England Star Advisers Fund recently celebrated an anniversary --
July 7 marked the Fund's first full year of operation. And what a year
it was. As investors recognized the wisdom and convenience of investing
in a single Fund that pursues growth through separate strategies and
varied styles, assets grew to over $340 million. We are pleased about
the Fund's first-year performance and sales success and, more
importantly, are most optimistic about its future.
How Your Fund Performed
For the first six months of the year, your Fund's net asset value return
through June 30 was 15.17% for Class A shares.
The following pages contain details about the investment activity of
each of the Star Advisers over the past six months. As you read, you'll
gain important insights into their differing investment strategies. And
we think you'll come to appreciate even more how combining multiple
styles can work together in pursuit of steadier performance and long-
term growth.
4
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New England Star Advisers Fund
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[PHOTO APPEARS HERE]
[LOGO APPEARS HERE]
BERGER ASSOCIATES
Rodney Linafelter, Berger Associates
During the first half of 1995, the focus of the market began to shift.
Value stocks, long the market's darlings, began gradually to relinquish
that coveted position to growth stocks. Typically, blue-chip stocks --
the steady, long-term performers -- are the first beneficiaries of such
a change in market emphasis. This has been the case once again in 1995
as large, well-established companies outperformed their smaller
counterparts. As this cycle becomes more entrenched, however, we are
beginning to see the market focus filter down to mid- and smaller-cap
stocks.
No matter what the market environment, however, I concentrate on finding
companies with the potential for steady, predictable, high earnings
growth over time. My process in a nutshell is this: I focus on the most
profitable, most successful companies because they tend to become the
most profitable, most successful investments.
As evidence of this, technology stocks continue to make up a major
portion of the portfolio. I'm very optimistic about the future of
technology -- I think the demand for high tech products will increase
dramatically as world economies become increasingly interdependent. In
the near term, however, I've grown a little cautious and have cut back
accordingly. Technology stocks, which at one time represented close to
one-third of my portion of the Fund, now represent about 24%.
5
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New England Star Advisers Fund
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During the first six months of the year, newcomers to the portfolio
included energy stocks, such as oil service companies. Positions were
also beefed up in consumer cyclicals (stocks of companies whose
performance moves from strong to weak and back again along with economic
cycles). I maintained a rather heavy position in cash -- approximately
18% -- which tended to drag performance a bit during the first six
months of the year. As new investment opportunities arise, however, I'm
gradually becoming more fully invested.
Over the coming months, the market may experience a bumpy ride. But I
think any correction will be short-lived and may present a tremendous
buying opportunity for investors. I remain optimistic on the long-term
outlook for the market as rising corporate earnings and relatively
stable interest rates provide a very constructive backdrop for the
equity markets.
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Largest Holdings, % of Fund's Net Assets
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. Viking Office Products, Inc., 0.4% Direct marketer of office products
. GTECH Holdings, 0.4% Computerized lottery systems
. IDEXX Laboratories, Inc., 0.4% Biomedical test products manufacturer
6
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New England Star Advisers Fund
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[PHOTO APPEARS HERE]
[LOGO APPEARS HERE]
FOUNDERS
Edward Keely, Founders Asset Management
In my portion of the Star Advisers Fund, I focus on high-quality growth
stocks from a universe of mid- to large-sized companies, as measured by
market capitalization (the total market value of a company's stock).
Lower interest rates, stable inflation and slow growth characterized the
economy during the first half of the year -- an environment which proved
favorable for the type of stocks in which I invest.
For the first six months of 1995, I remained committed to the investment
strategy that I established last year. I avoided major cyclicals
(companies in industries whose performance tracks the strength and
weakness of economic cycles), such as paper, automobiles and chemicals.
This strategy worked to the Fund's advantage as these issues, on the
whole, had mixed results in terms of stock performance. I continued to
search instead for solid growth stocks -- firms that have shown their
ability to grow regardless of economic activity -- and focused on
industries, such as technology, telecommunications and computer
software, that will benefit the most as our society's travel down the
"information superhighway" accelerates. Of these industries, I believe
that information technology is the most important area in which a
company -- and, therefore, your Fund -- can invest today. It is the
single most effective way for a company to create or gain a competitive
advantage -- which is what defines success in the marketplace.
7
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New England Star Advisers Fund
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My sector of the Fund remains well diversified. In my quest for seasoned
growth stocks, I don't limit my search to specific sectors or
industries. Rather, I look for attractively priced stocks with better
than average earnings growth and, most importantly, the potential for
positive earnings surprises. One noticeable change from last year is
that the Fund's exposure to healthcare stocks has been increased. Down
and out last year, many healthcare and related issues are responding
positively to a more favorable political and economic environment. I now
think they have the potential to be top performers.
I remain optimistic on the outlook for the market. Conditions are in
place for continued slow economic expansion, which is good news for
growth stocks. On the other hand, with the Federal Reserve Board
lowering interest rates the economy may pick up steam. As the scenario
develops, I will likely reposition some of the Fund's assets into
cyclical issues, which tend to perform better during periods of rapid
economic growth. In the meantime, I believe that 1995 will continue to
be the year of the growth stock.
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Largest Holdings, % of Fund's Net Assets
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. Intel Corp., 0.9% Semiconductor and memory circuits manufacturer
. SAP AG., 0.7% German software applications company
. IBM, 0.6% World's largest computer manufacturer
8
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New England Star Advisers Fund
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[PHOTO APPEARS HERE]
[LOGO APPEARS HERE]
Janus Capital Corporation
Warren Lammert, Janus Capital Corporation
The first half of 1995 was marked by substantial gains in the U.S.
markets and a strong economic outlook. The improving economic picture
that emerged during the first half of the year -- moderate, sustainable
growth with low inflation -- provided an excellent backdrop for the
broad market, small-cap securities included. A number of groups where we
are heavily invested moved substantially higher. Technology and
semiconductors were the standouts, but telecommunications, especially
wireless, also turned in good performance, as did financial services and
pharmaceuticals.
European interest rates began to soften a bit during the quarter, helped
by the downward movement in U.S. rates. Several markets put in
especially good performances, including Sweden, the United Kingdom,
Finland and Germany, all of which ended the quarter with near records.
Our European holdings also posted excellent gains. Nokia, the Finnish
cellular telephone and equipment provider, SAP, the large German
multinational network developer, and Astra, a fast-growing Swedish
pharmaceutical company, were all higher at quarter end.
After its record-shattering first half, the key to U.S. market
performance in the second half of the year will be the strength of the
economy and the course of interest rates. The question is whether the
weakness displayed in
9
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New England Star Advisers Fund
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the first half of 1995 is merely a dip in the economy's upward trend or
the beginning of sustained slower growth. By late June, automobile and
housing sales had begun to move higher again, but retail sales remained
slow. Consumer confidence, durable goods spending, and business
investment remain at historically high levels. I intend to monitor
economic strength closely as the year progresses.
Our research effort remains focused on individual opportunities -- good
businesses selling at discounts to their growth rates. I will try to
capitalize on these situations and continue the performance momentum we
have established in the first half of the year.
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Largest Holdings, % of Fund's Net Assets
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. Nokia AB, 1.5% Finnish manufacturer of cellular telephones
. SAP AG, 1.1% German software applications company
. First Data Corp., 1.1% Credit card processing service
10
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New England Star Advisers Fund
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[PHOTOS APPEAR HERE]
[LOGO APPEAR HERE]
Loomis, Sayles
& Company
Mary Champagne and Jeffrey Petherick
Loomis, Sayles & Company
During the early part of this year, large capitalization stocks were the
focus of interest, as investors flocked to the relative safety of the
biggest and most conservative companies. Despite a market that favored
these well-established, proven companies, the smaller cap stocks in our
portfolio held their own. In fact, although small caps lagged large caps
for much of the first half of the year, this gap has begun to narrow. As
the economy continues to slow, opportunity-minded stock market investors
have begun to move beyond the giants to small- and mid-sized companies,
in search of stocks that may deliver higher earnings growth.
On the growth side, we emphasized companies with strong fundamentals --
above-average profitability, skilled management with a clear growth
strategy, and most importantly, a clearly defined, attractive market
niche. Although we generally concentrate our search on companies with a
market capitalization of less than $500 million, we do have the
flexibility to move into somewhat larger companies -- an option that we
exercised during the first six months of the year. We kept up weightings
in technology and healthcare and recently broadened the portfolio to
include some retail and financial stocks, as well as some well-
positioned cyclicals.
11
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New England Star Advisers Fund
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On the value side, the Fund remains well diversified. Because we add
value through stock selection, rather than through sector bets, we're
typically not dramatically overweighted or underweighted in any
particular sector or industry. We are instead stock pickers, searching
for those issues that are out of favor, yet have strong earnings
potential. Stocks that met our demanding criteria included those in the
financial services, energy and technology sectors.
Looking ahead, our forecast is for slow economic growth with a possible
pickup in the economy towards the latter half of the year. In such an
environment, we expect the market to continue to perform well, and to
expand its breadth beyond the blue chips. In the months ahead, we
anticipate small cap stocks may be positioned to do well in a broadening
market. This is a position we hope to take advantage of now that the
Loomis, Sayles portion of the Fund will be managed in the small-cap
value style.
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Largest Holdings, % of Fund's Net Assets
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. InterVoice, Inc., 0.3% Phone voice response system manufacturer
. MediSense, Inc., 0.3% Blood glucose monitoring system manufacturer
. Thermedics, Inc., 0.3% Biomedical products manufacturer
12
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New England Star Advisers Fund
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INDUSTRY CONCENTRATIONS REFLECT DIFFERENT MARKET EXPECTATIONS
Diverse strategies and analytical styles focused on the same objective can lead
to very different portfolio compositions. Far from canceling each other out,
these individual strategies complement one another and lead to greater
diversification for better performance potential over time.
Top Industry Groups by Investment Adviser*
June 30, 1995
A bar chart appears here, illustrating the allocation of each investment
adviser's segment of New England Star Advisers Fund's investment portfolio by
top industry groups on June 30, 1995. The percentage of New England Star
Advisers Fund's total net assets in each top industry group as of June 30, 1995
is also depicted. The bar chart data is as follows:
Berger Founders Janus Loomis Star Advisers %
------ -------- ----- ------ ---------------
Consumer Goods & 25.19% 26.02% 24.51% 24.27% 24.08%
Services
General Business 16.53% 23.04% 35.68% 24.76% 21.75%
Technology 22.37% 46.67% 17.44% 13.52% 20.56%
Finance 18.57% 3.81% 46.74% 30.88% 6.51%
Capital Goods 32.11% 22.33% 18.61% 26.95% 4.49%
Basic Industries 7.25% 13.55% 39.07% 40.13% 4.32%
Energy 58.34% 3.61% 7.83% 30.23% 3.18%
Cash Equivalents 35.77% 20.66% 17.76% 25.81% 13.31%
* Portfolio composition is subject to change.
13
[LOGO OF NEW ENGLAND FUNDS APPEARS HERE]
NEW ENGLAND FUNDS
Where The Best Minds meet
Portfolio Composition, Financial Statements and Highlights
NEW ENGLAND
STAR ADVISERS
FUND
JUNE 30, 1995
PORTFOLIO COMPOSITION
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--88.4% OF TOTAL NET ASSETS
SHARES DESCRIPTION VALUE (A)
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BASIC INDUSTRIES
--4.3%
ALUMINUM--0.3%
50,900 Castech Aluminum Group, Inc. ....................... $ 909,838
CHEMICALS--1.4%
22,775 Du Pont E I De Nemours and Co. ..................... 1,565,781
12,800 IMC Global, Inc. (Rights) (c)....................... 692,800
30,300 Intertape Polymer Group, Inc. ...................... 712,050
12,400 Learonal, Inc. ..................................... 261,950
20,104 Potash Corp. Saskatchewan, Inc. .................... 1,123,311
87,518 Rentokil Group...................................... 375,853
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4,731,745
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CONTAINERS AND GLASS--0.1%
7,000 Crown Cork & Seal, Inc. ............................ 350,875
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ELECTRICAL EQUIPMENT--0.1%
10,000 American Electronic Components...................... 75,000
13,900 Gasonics International Corp. ....................... 396,150
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471,150
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GOLD--0.1%
7,000 Newmont Mining Corp. ............................... 293,125
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MINING--0.1%
11,400 Cleveland Cliffs, Inc. (Rights) (c)................. 438,900
------------
MISCELLANEOUS
--0.2%
6,000 APS Holding Corp. .................................. 158,250
15,100 Greenfield Inds., Inc. Delaware..................... 437,900
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596,150
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SHARES DESCRIPTION VALUE (A)
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NON-FERROUS METALS--0.6%
25,000 Engelhard Corp. .................................... $ 1,071,875
58,400 Johnstown America Industries, Inc. ................. 605,900
15,800 Wolverine Tube, Inc. ............................... 507,575
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2,185,350
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PAPER--0.6%
11,550 Boise Cascade Corp. (Rights) (c).................... 467,775
12,775 Bowater, Inc. ...................................... 573,278
34,700 Caraustar Inds., Inc. .............................. 624,600
14,500 James River Corp. .................................. 400,563
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2,066,216
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STEEL--0.8%
67,700 Cold Metal Prods, Inc. ............................. 465,438
45,100 Huntco, Inc. ....................................... 732,875
18,000 Quanex Corp. (Rights) (c)........................... 445,500
34,500 Republic Engineered Steels Inc. .................... 267,375
19,000 Steel Technologies, Inc. ........................... 218,500
82,300 UNR Industries, Inc. ............................... 606,962
------------
2,736,650
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Total Basic Industries.............................. 14,779,998
------------
CAPITAL GOODS
--4.5%
AGRICULTURAL MACHINERY--0.1%
10,600 Aptargroup, Inc. ................................... 340,525
------------
BUILDING CONSTRUCTION
--0.6%
9,500 W H Brady Co. ...................................... 646,000
71,700 Crossmann Communities, Inc. ........................ 734,925
39,050 NCI Building Systems, Inc. ......................... 654,088
------------
2,035,013
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See accompanying notes to financial statements.
2
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--CONTINUED
SHARES DESCRIPTION VALUE (A)
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ELECTRICAL EQUIPMENT--1.6%
55,450 Boston Scientific Corp. ............................ $ 1,767,469
3,000 Exide Corp. ........................................ 129,000
30,025 Gelman Sciences, Inc. .............................. 566,722
15,000 Millipore Corp. .................................... 1,012,500
35,300 Philips Electronics
N V................................................ 1,509,075
21,100 Scotsman Industries, Inc. .......................... 390,350
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5,375,116
------------
INDUSTRIAL MACHINERY
--1.0%
17,550 Applied Materials, Inc. ............................ 1,520,269
30,000 Thermo Electron Corp. .............................. 1,207,500
15,000 Tyco Industries, Ltd. .............................. 810,000
------------
3,537,769
------------
MISCELLANEOUS
--0.7%
32,000 Atmel Corp. ........................................ 1,772,000
20,000 Roper Industries.................................... 700,000
------------
2,472,000
------------
POLLUTION CONTROL
--0.5%
7,800 Corrpro Cos., Inc. ................................. 51,675
31,350 International Recovery Corp. ....................... 462,413
41,200 Thermo Fibertek, Inc. .............................. 818,850
7,200 United Waste Systems, Inc. ......................... 259,200
------------
1,592,138
------------
Total Capital Goods................................. 15,352,559
------------
CONSUMER BASICS
--14.8%
DRUGS AND HEALTH CARE--12.6%
26,500 American Medical Response........................... 742,000
23,000 Amerisource Health Corp. ........................... 524,688
15,175 Amgen, Inc. ........................................ 1,220,639
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
DRUGS AND HEALTH CARE--(CONTINUED)
127,312 Astra AB Series A.................................... $ 3,930,842
21,000 Astra AB Series B.................................... 632,504
9,000 Chiron Corp. ........................................ 585,000
55,000 Columbia / HCA Healthcare Corp. ..................... 2,378,750
35,150 Community Health Systems, Inc. ...................... 1,190,706
13,750 Conmed Corp. ........................................ 340,313
27,000 Coram Healthcare Corp. .............................. 381,375
12,275 Coventry Corp. ...................................... 173,384
47,500 Evergreen Healthcare, Inc. .......................... 587,813
24,900 Genesis Health Ventures, Inc. ....................... 737,663
42,700 Health Images, Inc. ................................. 261,538
27,975 Healthsource, Inc. .................................. 979,125
35,800 Healthsouth Rehabilitation........................... 622,025
23,100 Horizon Mental Health Management, Inc. .............. 291,638
19,675 Hospitality Franchise Systems, Inc. ................. 681,247
35,000 Humana, Inc. ........................................ 616,875
23,775 I Stat Corp. ........................................ 867,788
50,000 IDEXX Labs, Inc. .................................... 1,300,000
8,400 Invacare Corp. ...................................... 348,600
14,500 Johnson & Johnson.................................... 980,563
21,700 Lunar Corp. ......................................... 613,025
28,000 Luxottica Group S P A (ADR) (d)...................... 1,039,500
26,050 Manor Care, Inc. .................................... 758,706
56,100 Medisense, Inc. ..................................... 1,086,938
39,500 Medpartners, Inc. ................................... 760,375
17,500 Medtronic, Inc. ..................................... 1,349,688
16,600 Mentor Corp. Minnesota............................... 462,725
62,675 Merck & Co., Inc. ................................... 3,071,075
26,600 Mylan Labs, Inc. .................................... 817,950
17,500 Nellcor, Inc. ....................................... 787,500
13,150 Oxford Health Plans, Inc. ........................... 621,338
5,675 Pacificare Health Systems, Inc. ..................... 289,425
See accompanying notes to financial statements.
3
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--CONTINUED
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
DRUGS AND HEALTH CARE--(CONTINUED)
28,250 Pfizer, Inc. ....................................... $ 2,609,594
15,000 Physicians Health................................... 397,500
70,600 Regency Health Services............................. 741,300
4,525 Resmed, Inc. ....................................... 54,300
100 Roche Holdings AG................................... 644,376
25,500 Sierra Health Services, Inc. ....................... 624,750
33,400 Smithkline Beecham.................................. 302,283
32,325 Sofamor/Danek Group, Inc. .......................... 731,352
7,950 St. Jude Med., Inc. ................................ 398,493
24,200 Summit Care Corp. .................................. 441,650
28,000 Teva Pharmaceutical Industries, Ltd.
(ADR) (d).......................................... 1,050,000
50,600 Thermedics, Inc. ................................... 986,700
20,000 United Healthcare Corp. ............................ 827,500
66,850 Vidamedinc.......................................... 434,524
25,000 Watson Pharmaceuticals, Inc. ....................... 975,000
------------
43,252,643
------------
FOOD AND BEVERAGES--1.0%
15,625 Archer Daniels Midland Co. ......................... 291,016
31,333 Cultor OY........................................... 1,009,320
8,150 General Mills, Inc. ................................ 418,706
24,651 Huhtamaki OY........................................ 808,040
3,300 Kellogg Co. ........................................ 235,538
20,900 Universal Foods Corp. (Rights) (c).................. 676,637
------------
3,439,257
------------
HOUSEHOLD PRODUCTS--0.7%
30,000 Black & Decker Corp. ............................... 926,250
22,000 Gillette Co. ....................................... 981,750
34,450 United States Can Corp. ............................ 538,281
------------
2,446,281
------------
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
RETAIL GROCERY
--0.5%
32,700 National Conveniece Stores, Inc. ................... $ 412,837
32,125 Safeway, Inc. ...................................... 1,200,672
------------
1,613,509
------------
Total Consumer Basics............................... 50,751,690
------------
CONSUMER DURABLE GOODS--2.0%
AUTO PARTS--0.6%
26,056 Hahn Automotive Warehouse, Inc. .................... 254,046
30,000 Lear Seating Corp. ................................. 686,250
47,100 Masland Corp. ...................................... 606,412
33,900 Walbro Corp. ....................................... 610,200
------------
2,156,908
------------
AUTOMOBILES--0.7%
24,100 Durakon Industries, Inc. ........................... 367,525
55,000 Elsag Bailey Process Auto NV........................ 1,512,500
25,380 Volvo AB............................................ 483,439
------------
2,363,464
------------
HOUSEHOLD APPLIANCES &
HOME FURNISHINGS--0.5%
21,900 Harman International Industries, Inc. New........... 886,950
18,125 Singer Co. N V...................................... 468,984
19,757 Thorn Emi........................................... 409,156
------------
1,765,090
------------
MOBILE HOMES
--0.2%
24,275 Oakwood Homes Corp. ................................ 622,047
------------
Total Consumer
Durable Goods...................................... 6,907,509
------------
See accompanying notes to financial statements.
4
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--CONTINUED
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
CONSUMER NON-DURABLES--4.2%
APPAREL AND TEXTILES--0.3%
22,300 Jones Apparel Group, Inc. .......................... $ 666,213
13,000 Talbots, Inc. ...................................... 516,750
------------
1,182,963
------------
PHOTOGRAPHY--0.5%
70,000 Digital Biometrics, Inc. ........................... 752,500
21,000 Polaroid Corp. (Rights) (c)......................... 855,750
------------
1,608,250
------------
RETAIL TRADE--3.3%
40,000 Ann Taylor Stores Corp. ............................ 930,000
50,900 Cato Corp. New...................................... 413,563
41,000 Cole National Corp. ................................ 425,375
110,225 Federated Department Stores, Inc. .................. 2,838,293
30,000 Gap, Inc. .......................................... 1,046,250
49,000 Haverty Furniture Cos., Inc. ....................... 502,250
32,000 Home Depot, Inc. ................................... 1,300,000
30,950 Horizen Outlet Centers.............................. 719,588
30,000 Lillian Vernon Corp. ............................... 551,250
30,000 Limited The, Inc. .................................. 660,000
9,550 Lowes Cos., Inc. ................................... 285,306
13,500 Peoplesoft, Inc. ................................... 732,375
23,700 Sunglass Hut International, Inc. ................... 829,500
------------
11,233,750
------------
TOYS AND AMUSEMENTS
--0.1%
12,400 Coleman Co., Inc. .................................. 440,200
------------
Total Consumer
Non-Durables....................................... 14,465,163
CONSUMER SERVICES--3.0%
AIR TRAVEL--0.7%
27,500 Continental Airlines, Inc. ......................... 690,937
20,000 Delta Air Lines, Inc. .............................. 1,475,000
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
AIR TRAVEL
--(CONTINUED)
15,000 Singapore Airlines.................................. $ 138,462
------------
2,304,399
------------
HOTELS AND RESTAURANTS
--1.3%
25,125 Harrahs Entertainment, Inc. ........................ 550,485
8,600 La Quinta Inns, Inc. ............................... 232,200
25,000 Marriot International, Inc. ........................ 896,875
47,000 Mirage Resorts, Inc. ............................... 1,439,375
37,500 Promus Cos., Inc. .................................. 1,462,500
------------
4,581,435
------------
LEISURE TIME--0.7%
11,750 Carmike Cinemas, Inc. .............................. 284,938
18,700 Circus Circus Enterprises, Inc. .................... 659,175
56,950 Monaco Coach Corp. ................................. 911,200
35,800 Supertel Hospitality................................ 483,300
------------
2,338,613
------------
MISCELLANEOUS
--0.3%
30,000 Loewen Group, Inc. ................................. 1,068,750
------------
Total Consumer Services............................. 10,293,197
------------
ENERGY--3.2%
DOMESTIC OIL--0.4%
36,300 Cross Timbers Oil Co. .............................. 576,263
57,600 Lomak Petroleum, Inc. .............................. 439,200
10,000 Noble Affiliates, Inc. ............................. 255,000
------------
1,270,463
------------
GAS EXPLORATION
--1.0%
5,000 Apache Corp. ....................................... 136,875
36,600 Barrett Resources Corp. ............................ 850,950
40,700 Belden and Blake Corp. ............................. 661,375
See accompanying notes to financial statements.
5
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--CONTINUED
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
GAS EXPLORATION
--(CONTINUED)
50,000 BJ Services Co. .................................... $ 1,137,500
38,800 International Colin Energy Co. ..................... 203,700
26,900 Vintage Petroleum, Inc. ............................ 504,375
------------
3,494,775
------------
PETROLEUM SERVICES--1.8%
50,000 Dresser Inds., Inc. (Rights) (c).................... 1,112,500
28,000 Halliburton Co. .................................... 1,001,000
30,000 Petroleum Geo Services
(ADR) (d).......................................... 862,500
28,600 Production Operators Corp. ......................... 900,900
18,000 Schlumberger Ltd. .................................. 1,118,250
25,000 Western Atlas, Inc. ................................ 1,109,375
------------
6,104,525
------------
Total Energy........................................ 10,869,763
------------
FINANCE--6.5%
BANKS--0.3%
400 Chase Manhattan Corp. (Rights) (c).................. 18,800
28,275 First Bank Systems, Inc. ........................... 1,159,275
------------
1,178,075
------------
FINANCIAL SERVICES
--2.1%
29,700 Aames Financial Corp. .............................. 538,313
10,600 Advanta Corp. ...................................... 400,150
18,350 Commercial Federal Corp. ........................... 500,037
13,575 Federal Home Loan Mortgage Corp. ................... 933,281
26,500 Federal National Mortgage Association............... 2,500,938
18,000 First USA, Inc. .................................... 798,750
45,900 Imperial Credit Industries, Inc. ................... 568,013
14,850 Money Store, Inc. .................................. 531,816
8,225 North American Mortgage Co. ........................ 190,203
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
FINANCIAL SERVICES
--(CONTINUED)
85,000 Peregrine Investment................................ $ 120,835
5,577 Securitas AB........................................ 193,286
------------
7,275,622
------------
INSURANCE--2.4%
25,000 Aflac, Inc. ........................................ 1,093,750
29,800 Capital RE Corp. ................................... 774,800
2,400 General Re Corp. ................................... 321,300
5,325 Mercury General Corp. New........................... 183,047
27,800 Progressive Corp. Ohio.............................. 1,066,825
25,800 Protective Life Corp. (Rights) (c).................. 703,050
26,000 Reinsurance Group America, Inc. .................... 744,250
18,500 Triad Guaranty, Inc. ............................... 388,500
42,500 Unum Corp.
(Rights) (c)....................................... 1,992,187
60,000 USF&G Corp. ........................................ 975,000
------------
8,242,709
------------
INVESTMENT COMPANIES
--1.6%
27,100 Allied Group, Inc. ................................. 772,350
29,850 Eaton Vance Corp. .................................. 962,663
88,679 Kinnevik Investment Series B........................ 2,707,532
50,000 Waterhouse Investor Services, Inc. ................. 1,150,000
------------
5,592,545
------------
Total Finance....................................... 22,288,951
------------
GENERAL BUSINESS
--21.8%
BROADCASTING--2.1%
27,500 British Sky Broadcast Group PLC
(ADR) (d).......................................... 718,438
12,000 CBS, Inc. .......................................... 804,000
8,650 Central European Media Entertainment Ltd. .......... 128,669
15,000 Clear Channel Communications........................ 965,625
55,500 Infinity Broadcasting Corp. ........................ 1,852,312
See accompanying notes to financial statements.
6
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--CONTINUED
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
BROADCASTING
--(CONTINUED)
23,200 International Cabletel, Inc. ....................... $ 754,000
17,300 Sinclair Broadcast Group, Inc. ..................... 484,400
5,000 Tele Danmark
(ADR) (d).......................................... 140,000
13,500 Telecomunicacoes Brasileras
(ADR) (d).......................................... 455,625
19,000 Viacom, Inc. ....................................... 881,125
------------
7,184,194
------------
BUSINESS
SERVICES--10.4%
16,000 America Online, Inc. ............................... 704,000
14,900 Analysts International Corp. (Rights) (c)........... 387,400
3,217 ASM Lithography Holding N V......................... 115,410
20,850 Banta Corp. ........................................ 693,263
24,575 Boca Research, Inc. ................................ 663,525
16,600 Bolt Beranek and Newman, Inc. (Rights) (c).......... 454,425
16,475 Chipcom Corp. ...................................... 391,281
47,250 CUC International, Inc. ............................ 1,984,500
79,362 First Data Corp. ................................... 4,513,714
14,000 First Financial Management Corp. ................... 1,197,000
3,450 Fiserv, Inc. ....................................... 97,031
26,500 General Motors Corp. ............................... 1,152,750
30,050 Global Directmail Corp. ............................ 593,488
50,000 GTECH Holdings Corp. ............................... 1,462,500
35,000 Gymboree Corp. ..................................... 1,017,188
65,800 InterVoice, Inc. ................................... 1,151,500
5,925 Legent Corp. ....................................... 259,218
27,825 Manpower Inc. Wisconsin............................. 709,537
106,168 Nokia AB OY
Series A........................................... 6,214,470
2,000 Nokia Corp. ........................................ 119,020
23,500 Nokia Corp.
(ADR) (d).......................................... 1,401,187
6,800 Olsten Corp. ....................................... 222,700
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
BUSINESS SERVICES
--(CONTINUED)
5,155 Sap AG.............................................. $ 6,495,471
19,400 Sap AG (ADR) (d) (f)................................ 805,100
30,000 SPS Transaction Services, Inc. ..................... 1,038,750
10,800 Steris Corp. ....................................... 523,800
14,425 Stratacom, Inc. .................................... 703,219
9,100 Zilog, Inc. ........................................ 453,863
------------
35,525,310
------------
COMMUNICATION SERVICES--1.3%
39,600 Davel Communications Group.......................... 499,950
19,550 Millicom International Cellular S A ................ 579,169
71,100 Paging Network, Inc. ............................... 2,435,175
24,600 Pronet, Inc. ....................................... 504,300
21,400 Valassis Communications, Inc. ...................... 358,450
------------
4,377,044
------------
COMPUTERS AND BUSINESS EQUIPMENT--0.1%
7,375 ITI Technologies, Inc. ............................. 175,156
------------
MISCELLANEOUS
--4.3%
11,600 American Publishing Co. ............................ 124,700
43,050 American Standard Cos., Inc. Delaware............... 1,178,494
6,177 Assa Abloy.......................................... 32,282
38,500 Borders Group, Inc. ................................ 553,438
9,700 Bush Boake Allen, Inc. ............................. 294,638
1,100 Business Objects
S A (ADR) (d)...................................... 36,300
2,780 Catena.............................................. 16,058
13,950 Ciber, Inc. ........................................ 247,613
19,100 Cole Kenneth Productions, Inc. ..................... 637,463
29,600 Congoleum Corp. New................................. 395,900
67,700 Corvita Corp. ...................................... 355,425
See accompanying notes to financial statements.
7
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--CONTINUED
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
MISCELLANEOUS
--(CONTINUED)
10,800 Cytec Industries, Inc. ............................. $ 441,450
9,450 Daig Corp. ......................................... 172,463
39 Ddi Corp. .......................................... 312,902
8,424 Elkjop.............................................. 168,166
4,375 Ensco International, Inc. .......................... 69,453
27,400 Firefox Communications, Inc. ....................... 705,550
56,000 Giant Cement Holding, Inc. ......................... 686,000
36,900 Greenbrier Cos., Inc. .............................. 484,313
83,900 Griffon Corp. ...................................... 671,200
9,000 Mark VII, Inc. ..................................... 147,375
65,000 Mastec, Inc. ....................................... 853,125
39,150 McDermott J Ray
S A................................................ 866,193
39,116 Nordictel Holdings AB............................... 330,849
94,425 Numerex Corp. New York.............................. 1,062,281
9,000 PMI Group, Inc. .................................... 390,374
25,125 Softkey International, Inc. ........................ 800,859
28,675 United States Order, Inc. .......................... 422,955
79,921 Worldcom Inc. Georgia............................... 2,157,865
------------
14,615,684
------------
NEWSPAPERS--0.4%
66,375 News Corporation Ltd. (ADR) (d)..................... 1,501,734
------------
OFFICE FURNISHINGS &
SUPPLIES--1.5%
59,800 Office Max, Inc. ................................... 1,666,925
75,000 Staples, Inc. ...................................... 2,165,625
40,000 Viking Office Products, Inc. ....................... 1,465,000
------------
5,297,550
------------
PUBLISHING--0.6%
50,000 Citic Pacific Ltd. ................................. 125,682
10,600 Houghton Mifflin Co. ............................... 559,150
30,000 Time Warner, Inc. .................................. 1,233,750
------------
1,918,582
------------
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
REAL ESTATE--0.4%
37,600 Chateau Properties, Inc. ........................... $ 784,900
32,300 Liberty Property.................................... 633,888
------------
1,418,788
------------
TELECOMMUNICATION
SERVICES--0.7%
9,950 Comnet Cellular, Inc. .............................. 278,600
32,900 Heartland Wireless Communications, Inc. ............ 781,375
12,400 Highwaymaster Comm., Inc. .......................... 189,100
7,577 Korea Mobile Telecomm Corp. (GDR) (f)............... 269,969
40,000 New World Communications............................ 835,000
4,904 USA Mobile Communications Holding................... 85,820
------------
2,439,864
------------
Total General Business.............................. 74,453,906
------------
MISCELLANEOUS
--1.1%
CONGLOMERATES
--0.3%
4,000 Hunter Douglas NV................................... 174,250
1,561 Metra AB............................................ 66,519
15,511 Metra AB............................................ 682,760
------------
923,529
------------
MISCELLANEOUS
--0.8%
31,700 Inbrand Corp. ...................................... 515,125
83,238 Iro................................................. 841,412
15,000 New Envoy, Inc. .................................... 127,500
350,000 Rottneros Bruk AB................................... 553,561
23,692 Sensonor A/S........................................ 169,186
1,374 Sidel............................................... 481,198
4,777 Wetherspoon J D..................................... 40,992
------------
2,728,974
------------
Total Miscellaneous................................. 3,652,503
------------
See accompanying notes to financial statements.
8
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--CONTINUED
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
SHELTER--0.2%
FOREST PRODUCTS
--0.2%
925 Georgia Pacific Corp. .............................. $ 80,244
10,772 MO Och Domsjo AB.................................... 621,481
6,561 Stora Kopparbergs................................... 87,744
------------
789,469
------------
Total Shelter....................................... 789,469
------------
TECHNOLOGY--20.6%
AEROSPACE--0.6%
16,000 Boeing Co. ......................................... 1,002,000
15,000 Lockheed Martin Corp. .............................. 946,875
------------
1,948,875
------------
COMPUTERS AND BUSINESS EQUIPMENT--4.1%
12,000 3Com Corp.
(Rights) (c)....................................... 804,000
27,000 Apple Computer...................................... 1,253,813
40,000 Bay Networks, Inc. ................................. 1,655,000
22,900 Ceridian Corp. ..................................... 844,438
48,875 Cisco Systems, Inc. ................................ 2,471,241
44,525 Computer Horizons Corp. (Rights) (c)................ 712,400
36,900 Control Data Systems, Inc. ......................... 332,100
50,000 EMC Corp. Massachusetts............................. 1,212,500
37,950 Gilat Satellite Networks Ltd. ...................... 863,363
5,575 Hewlett Packard Co. ................................ 415,337
30,500 International Business Machines..................... 2,928,000
17,075 Keane Inc. ......................................... 424,741
------------
13,916,933
------------
ELECTRONICS--10.9%
15,000 Adaptec, Inc. ...................................... 555,000
49,300 Altera Corp. ....................................... 2,132,225
26,400 Amphenol Corp. ..................................... 768,900
23,375 Applied Digital Access, Inc. ....................... 303,875
3,675 Avid Technology, Inc. .............................. 137,813
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
ELECTRONICS
--(CONTINUED)
6,125 Bdm International, Inc. ............................. $ 124,797
27,700 Cable Design Technologies Corp. ..................... 595,550
2,575 California Microwave................................. 64,536
45,175 Comverse Technology, Inc. ........................... 801,856
45,000 Cypress Semiconductor Corp. ......................... 1,822,500
13,400 Cyrix Corp. ......................................... 323,275
17,500 Dallas Semiconductor Corp. .......................... 358,750
30,000 DSC Communications Corp. (Rights) (c)................ 1,395,000
85,000 Ericsson L M Telephone Co. (ADR) (d)................. 1,700,000
16,100 Exar Corp. .......................................... 474,950
18,175 Fulcrum Technologies, Inc. .......................... 399,850
49,000 General Instrument Corp. ............................ 1,880,375
97,675 Intel Corp. ......................................... 6,184,048
96,700 Intelcom Group, Inc. ................................ 864,256
5,000 Kyocera Corp. ....................................... 411,775
12,200 Lam Research Corp. .................................. 780,800
20,125 LSI Logic Corp. ..................................... 787,391
20,000 Maxim Integrated Products, Inc. ..................... 1,020,000
37,250 Microcom, Inc. ...................................... 558,750
17,275 Micron Technology Inc. .............................. 947,966
39,175 Motorola, Inc. ...................................... 2,629,622
14,925 National Semiconductor Corp. ........................ 414,169
21,500 Northern Telecom Ltd. ............................... 784,750
20,000 Picturetel Corp. .................................... 962,500
13,125 Pittway Corp. Delaware............................... 600,469
2,400 Samsung Electronics Ltd. (GDR) (f)................... 129,000
See accompanying notes to financial statements.
9
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
COMMON STOCKS--CONTINUED
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
ELECTRONICS
--(CONTINUED)
4,693 Samsung Electronics Ltd. (GDR) (f).................. $ 448,182
9 Samsung Electrs Limited (GDR) (f)................... 0
45,000 Sci Systems, Inc. .................................. 1,125,000
30,000 Scientific Atlanta, Inc. (Rights) (c)............... 660,000
17,500 Seer Technologies, Inc. ............................ 363,124
35,000 Sensormatic Electronics Corp. ...................... 1,242,500
17,000 Tektronix, Inc. .................................... 837,250
3,100 Tellabs, Inc. ...................................... 149,188
12,900 Thermo Volter Corp. ................................ 185,437
46,600 Union Switch & Signal............................... 585,413
18,650 VLSI Technology, Inc. .............................. 561,830
4,500 Xilinx, Inc.
(Rights) (c)....................................... 423,000
------------
37,495,672
------------
MISCELLANEOUS
--0.3%
4,000 Komag, Inc. ........................................ 208,000
4,300 United States Robotics Corp. ....................... 468,700
11,000 Uunet Technologies, Inc. ........................... 302,500
------------
979,200
------------
SOFTWARE--4.7%
8,000 Adflex Solutions, Inc. ............................. 196,000
17,300 Adobe Systems, Inc. ................................ 1,003,400
31,350 Computer Associates International, Inc. ............ 2,123,963
20,000 HBO and Co. (Rights) (c)............................ 1,090,000
48,000 Informix Corp. ..................................... 1,218,000
27,400 Micronics Computers, Inc. .......................... 113,024
33,000 Microsoft Corp. .................................... 2,982,375
65,000 Oracle Systems Corp. ............................... 2,510,624
15,000 Parametric Technology Corp. ........................ 746,250
SHARES DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
SOFTWARE
--(CONTINUED)
21,100 Pyxis Corp. ........................................ $ 477,388
30,000 Read Rite Corp. .................................... 802,500
13,750 Software Artistry, Inc. ............................ 305,938
35,000 Solectron Corp. .................................... 1,194,375
25,000 Spectrum Holobyte, Inc. ............................ 357,813
13,675 Sterling Software, Inc. ............................ 526,488
20,000 System Software Associates, Inc. ................... 400,000
------------
16,048,138
------------
Total Technology.................................... 70,388,818
------------
TRANSPORTATION
--0.3%
TRUCKING AND FREIGHT FORWARDING
--0.3%
45,000 Tidewater, Inc. .................................... 1,130,625
------------
UTILITIES--1.9%
GAS AND PIPELINE
UTILITIES--0.3%
30,000 Enron Corp. ........................................ 1,053,750
------------
TELEPHONE--1.6%
44,575 Airtouch Communications, Inc. ...................... 1,270,388
35,100 Centennial Cellular Corp. .......................... 587,925
16,475 Century Telephone Enterprises, Inc.
(Rights) (c)....................................... 467,478
161,156 Telecom Italia...................................... 436,808
10,450 Telephone and Data Systems, Inc. ................... 380,118
61,850 Vodafone Group PLC
(ADR) (d).......................................... 2,342,569
------------
5,485,286
------------
Total Utilities..................................... 6,539,036
------------
Total Common Stocks
(Identified Cost $265,166,742)..................... 302,663,187
------------
See accompanying notes to financial statements.
10
PORTFOLIO COMPOSITION--Continued
Investments as of June 30, 1995
(unaudited)
SHORT-TERM INVESTMENTS--13.3%
FACE
AMOUNT DESCRIPTION VALUE (A)
-------------------------------------------------------------------------------
COMMERCIAL
PAPER--5.2%
$ 3,757,913 Associates Corporation North America
6.0000% 7/03/95................................... $ 3,757,913
4,000,000 Chevron Oil Finance Co. 5.9000% 7/03/95............ 4,000,000
2,000,000 Chevron Oil Finance Co. 5.9800% 7/07/95............ 1,998,007
4,000,000 Exxon Asset Management 5.8000% 7/03/95............. 4,000,000
4,100,000 Ford Motor Credit Company 6.0500% 7/03/95.......... 4,098,622
------------
17,854,542
------------
REPURCHASE AGREEMENT 3.0%
10,310,000 Repurchase agreement with State Street Bank and
Trust Company dated 6/30/95 at 5.50% to be
repurchased at 10,314,725 on 7/3/95 collateralized
by U.S. Treasury Bond 6.50% due 4/30/99 valued at
9,556,655 and U.S. Treasury Bond 4.375% due
8/15/96 valued at 916,490......................... 10,310,000
------------
FACE
AMOUNT DESCRIPTION VALUE (A)
--------------------------------------------------------------------------------
U.S. GOVERNMENT
--5.1%
$ 2,000,000 Federal National
Mortgage Assn.
5.9000% 7/13/95................................... $ 1,996,067
11,150,000 U. S. Treasury Bills
5.5000% 7/13/95................................... 11,129,558
4,300,000 U. S. Treasury Bills
5.2900% 8/17/95................................... 4,270,303
------------
17,395,928
------------
TOTAL
SHORT-TERM INVESTMENTS
(Identified Cost $45,560,470)..................... 45,560,470
------------
Total Investments--
101.7% (Identified
Cost $310,727,212)................................ 348,223,656
Cash, receivables and other assets................. 8,241,676
Liabilities........................................ (14,171,661)
------------
Total Net
Assets--100%...................................... $342,293,671
============
See accompanying notes to financial statements.
11
PORTFOLIO COMPOSITION--Continued
FORWARD CURRENCY CONTRACTS OUTSTANDING
at June 30, 1995
LOCAL UNREALIZED
DELIVERY CURRENCY AGGREGATE TOTAL APPRECIATION/
DATE AMOUNT FACE VALUE VALUE (DEPRECIATION)
-------- ---------- ---------- ---------- --------------
Swiss Franc (sold)...... 8/16/95 176,070 $ 147,147 $ 153,497 $ (6,350)
Swiss Franc (sold)...... 9/25/95 398,000 350,632 348,014 2,618
Deutsch Mark (sold)..... 7/12/95 2,339,375 1,701,570 1,692,066 9,504
Deutsch Mark (sold)..... 8/10/95 735,900 541,115 533,051 8,064
Deutsch Mark (sold)..... 8/16/95 953,035 661,389 690,483 (29,098)
Finnish Marka (sold).... 7/11/95 7,756,200 1,805,111 1,815,992 (10,881)
Finnish Marka (sold).... 7/12/95 259,880 60,512 60,846 (334)
Finnish Marka (sold).... 8/10/95 11,199,000 2,664,122 2,621,981 42,141
Finnish Marka (sold).... 8/16/95 3,744,891 848,947 876,772 (27,825)
Finnish Marka (sold).... 9/26/95 2,024,000 474,538 473,774 764
French Franc (sold)..... 9/25/95 1,816,000 371,363 373,500 (2,137)
British Pounds (sold)... 8/29/95 597,000 938,585 948,402 (9,817)
British Pounds (sold)... 9/25/95 697,000 1,118,401 1,106,512 11,889
Japanese Yen (sold)..... 7/21/95 20,404,000 256,254 241,457 14,797
Swedish Krona (sold).... 7/11/95 9,571,300 1,291,761 1,315,171 (23,410)
Swedish Krona (sold).... 7/12/95 10,800,000 1,465,898 1,483,883 (17,985)
Swedish Krona (sold).... 7/25/95 15,130,652 2,024,655 2,076,704 (52,049)
Swedish Krona (sold).... 7/31/95 6,423,578 874,468 881,216 (6,748)
Swedish Krona (sold).... 9/25/95 156,000 21,394 21,293 101
--------
$(96,756)
========
(a) See Note 1a.
(b) Federal Tax Information: At June 30, 1995 the net
unrealized appreciation on investments based on
cost of $310,727,212 for federal income tax pur-
poses was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost................. $42,895,232
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value................. (5,398,788)
-----------
Net unrealized appreciation..................................... $37,496,444
===========
At December 31, 1994, the fund had a capital loss
carryforward of approximately $1,302,000 which ex-
pires December 31, 2002. This may be available to
offset future realized capital gains, if any, to the
extent provided by regulations.
(c) Non-income producing security.
(d) An American Depository Receipt (ADR) is a
certificate issued by a U.S. bank representing the
right to receive securities of the foreign issuer
described. The values of ADRs are significantly
influenced by trading on exchanges not located in
the United States or Canada.
(e) Including deposits in foreign denominated currencies
with a value of $33,866 and a cost of $33,551.
(f) Securities exempt from registration under rule 144A
of the Securities Act of 1933. These securities may
be resold in transactions exempt from registration,
normally to qualified institutional buyers.
See accompanying notes to financial statements.
12
STATEMENT OF ASSETS & LIABILITIES
June 30, 1995
(unaudited)
ASSETS
Investments at value............................... $348,223,656
Cash............................................... 80,323
Foreign Cash at value (cost $33,551)............... 33,866
Receivable for:
Fund shares sold.................................. 2,610,013
Securities sold................................... 5,225,131
Accrued dividends and Interest.................... 150,003
Foreign withholding taxes......................... 9,885
Unamortized organization expense................... 132,455
------------
356,465,332
LIABILITIES
Payable for:
Fund shares redeemed.............................. $ 754,037
Securities purchased.............................. 12,884,489
Open Forward Currency Contracts--net.............. 96,756
Dividends declared................................ 1,209
Foreign withholding tax........................... 5,669
Accrued expenses:
Management fees................................... 282,530
Deferred trustees' fees........................... 953
Accounting and administrative..................... 4,019
Other expenses.................................... 141,999
-----------
14,171,661
------------
NET ASSETS.......................................... $342,293,671
============
Net Assets consist of:
Capital paid in................................... $300,372,953
Accumulated net investment loss................... (617,347)
Accumulated net realized gains.................... 5,137,917
Unrealized appreciation on investments, forward
contacts and foreign currency................... 37,400,148
------------
NET ASSETS.......................................... $342,293,671
============
Computation of net asset value and offering price:
Net asset value and redemption price of Class A
shares ($163,092,056 divided by 10,685,940 shares
of beneficial interest)........................... $15.26
======
Offering price per share (100/94.25 of $15.26)...... $16.19*
======
Net asset value and offering price of Class B shares
($144,824,756 divided by 9,534,499 shares of
beneficial interest).............................. $15.19**
======
Net asset value and offering price of Class C shares
($32,472,842 divided by 2,137,046 shares of
beneficial interest).............................. $15.20
======
Net asset value and offering price of Class Y shares
($1,904,017 divided by 124,604 shares of
beneficial interest).............................. $15.28
======
Identified cost of investments...................... $310,727,212
============
* 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.
See accompanying notes to financial statements.
13
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995
(unaudited)
INVESTMENT INCOME
Dividends.......................................... $ 904,219
Interest........................................... 1,420,511
-----------
2,324,730
Expenses
Management fees................................... $ 1,342,403
Service fees--Class A............................. 156,315
Service and distribution fees--Class B............ 521,475
Service and distribution fees--Class C............ 126,954
Trustees' fees and expenses....................... 12,288
Accounting and administrative..................... 26,852
Custodian......................................... 212,819
Transfer agent.................................... 365,925
Audit and tax services............................ 20,000
Legal............................................. 14,067
Printing.......................................... 44,152
Registration...................................... 77,406
Amortization of organization expenses............. 16,449
Miscellaneous..................................... 4,972
-----------
Total expenses..................................... 2,942,077
-----------
Net investment loss................................ (617,347)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FORWARD CURRENCY CONTRACTS AND FOREIGN CURRENCY
TRANSACTIONS
Realized gain (loss) on:
Investments--net.................................. 7,033,357
Foreign currency transactions--net................ (359,792)
-----------
Total realized gain on investments and foreign
currency transactions........................... 6,673,565
-----------
Unrealized appreciation (depreciation) on:
Investments--net.................................. 32,603,195
Foreign currency transactions--net................ (279,894)
-----------
Total unrealized appreciation on investments,
forward currency contracts and foreign currency
transactions.................................... 32,323,301
-----------
Net gain on investment transactions................ 38,996,866
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.......... $38,379,519
===========
See accompanying notes to financial statements.
14
STATEMENT OF CHANGES IN NET ASSETS
(unaudited)
JULY 7, (A)
THROUGH SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
1994 1995
------------ ----------------
FROM OPERATIONS
Net investment income (loss).................... $ 382,549 $ (617,347)
Net realized gain (loss) on investments......... (1,540,733) 6,673,565
Unrealized appreciation on investments.......... 5,076,847 32,323,301
------------ ------------
Increase in net assets from operations.......... 3,918,663 38,379,519
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income
Class A........................................ (282,197) 0
Class B........................................ (90,894) 0
Class C........................................ (19,726) 0
Class Y........................................ (748) 0
Paid-in capital
Class A........................................ (34,557) 0
Class B........................................ (11,131) 0
Class C........................................ (2,415) 0
Class Y........................................ (92) 0
------------ ------------
(441,760) 0
------------ ------------
Increase in net assets derived from capital
share transactions............................ 180,921,938 119,515,311
------------ ------------
Total increase in net assets.................... 184,398,841 157,894,830
NET ASSETS
Beginning of the period......................... 0 184,398,841
------------ ------------
End of the period............................... $184,398,841 $342,293,671
============ ============
OVERDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period......................... $ 0 $ 0
============ ============
End of the period............................... $ 0 $ (617,347)
============ ============
(a) Commencement of operations.
See accompanying notes to financial statements.
15
FINANCIAL HIGHLIGHTS
CLASS A CLASS B CLASS C CLASS Y
JULY 7, SIX JULY 7, SIX JULY 7, SIX NOVEMBER 15,
1994 (A) MONTHS 1994 (A) MONTHS 1994 (A) MONTHS (A)
THROUGH ENDED THROUGH ENDED THROUGH ENDED THROUGH
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1994 1995 1994 1995 1994 1995 1994
------------ -------- ------------ -------- ------------ -------- ------------
Net Asset Value,
Beginning of Period... $ 12.50 $ 13.25 $ 12.50 $ 13.23 $ 12.50 $ 13.24 $13.59
------- -------- ------- -------- ------- ------- ------
Income From Investment
Operations
Net Investment Income... 0.05 (0.01) 0.02 (0.05) 0.02 (0.05) 0.06
Net Realized and
Unrealized Gain (Loss)
on Investments........ 0.75 2.02 0.73 2.01 0.74 2.01 (0.35)
------- -------- ------- -------- ------- ------- ------
Total From Investment
Operations............ 0.80 2.01 0.75 1.96 0.76 1.96 (0.29)
------- -------- ------- -------- ------- ------- ------
Less Distributions
Distributions From Net
Investment Income..... (0.05) 0.00 (0.02) 0.00 (0.02) 0.00 (0.06)
------- -------- ------- -------- ------- ------- ------
Total Distributions..... (0.05) 0.00 (0.02) 0.00 (0.02) 0.00 (0.06)
------- -------- ------- -------- ------- ------- ------
Net Asset Value,
End of Period......... $ 13.25 $ 15.26 $ 13.23 $ 15.19 $ 13.24 $ 15.20 $13.24
======= ======== ======= ======== ======= ======= ======
Total Return (%) (c).... 6.4 15.2 6.0 14.8 6.0 14.7 (2.1)
Ratio of Operating
Expenses to Average
Net Assets (%) (d).... 1.94 (b) 1.92 (b) 2.69 (b) 2.67 (b) 2.69 (b) 2.67 (b) 1.79 (b)
Ratio of Net Investment
Income to Average Net
Assets (%)............ 1.06 (b) (0.48)(b) 0.31 (b) (1.23)(b) 0.31 (b) (1.23)(b) 2.26 (b)
Portfolio Turnover
Rate (%).............. 100 135 (b) 100 135 (b) 100 135 (b) 100
Net Assets,
End of Period (000)... $91,218 $163,092 $72,889 $144,825 $20,096 $32,473 $ 196
SIX
MONTHS
ENDED
JUNE 30,
1995
-----------
Net Asset Value,
Beginning of Period... $13.24
-----------
Income From Investment
Operations
Net Investment Income... (0.01)
Net Realized and
Unrealized Gain (Loss)
on Investments........ 2.05
-----------
Total From Investment
Operations............ 2.04
-----------
Less Distributions
Distributions From Net
Investment Income..... 0.00
-----------
Total Distributions..... 0.00
-----------
Net Asset Value,
End of Period......... $15.28
===========
Total Return (%) (c).... 15.4
Ratio of Operating
Expenses to Average
Net Assets (%) (d).... 1.66 (b)
Ratio of Net Investment
Income to Average Net
Assets (%)............ (0.23)(b)
Portfolio Turnover
Rate (%).............. 135 (b)
Net Assets,
End of Period (000)... $1,904
(a) Commencement of operations.
(b) Computed on an annualized basis.
(c) A sales charge of 5.75% maximum was not reflected in Class A total return
calculations. Periods less than one year are not annualized.
(d) The Manager agreed to voluntarily reduce the management fee to an annual
rate of 1.00%, and the Advisers agreed to reduce their advisory fee to the
annual rate of 0.50%, until December 31, 1994. The ratio of operating
expenses to average net assets for Class A, B, C, and Y without giving
effect to the voluntary expense limitations would have been 1.98%, 2.75%,
2.75% and 1.90% respectively for the period ended December 31, 1994.
See accompanying notes to financial statements.
16
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
(unaudited)
1. The Fund is a Series of New England Funds Trust I, a Massachusetts business
trust (the "Trust"), and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company. The Declaration of Trust permits the Trustees to issue an unlimited
number of shares of the Trust in multiple series (each such series of shares a
"Fund").
The Fund offers Class A, Class B, Class C and Class Y shares. The Fund
commenced its public offering of Class A, Class B and Class C shares on July 7,
1994. Class Y shares commenced operations November 15, 1994. 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, and are subject to a contingent deferred sales charge if those shares
are redeemed within five years of purchase. Class C shares do not pay front end
or contingent deferred sales charges and do not convert to any other class of
shares, but they do pay a higher ongoing distribution fee than Class A shares.
Class Y shares do not pay a front end sales charge, a contingent deferred sales
charge or distribution fees. They are intended for institutional investors with
a minimum of $1,000,000 to invest. 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 attributable to their class, if the Fund were liquidated. In
addition, the Trustees declare 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.
A. SECURITY VALUATION. Equity securities are valued on the basis of valuations
furnished by a pricing service, authorized by the Board of Trustees, which
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 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.
17
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995
(unaudited)
C. FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are
maintained in U.S. dollars. The value of securities, currencies and other
assets and liabilities denominated in currencies other than U.S. dollars are
translated into U.S. dollars based upon foreign exchange rates prevailing at
the end of the period. Purchases and sales of investment securities, income and
expenses are translated on the respective dates of such transactions.
Since the values of investment securities are presented at the foreign exchange
rates prevailing at the end of the period, it is not practical to isolate that
portion of the results of operations arising from changes in exchange rates
from fluctuations arising from changes in market prices of the investment
securities.
Reported net realized foreign exchange gains or losses arise from: sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currency, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities including investments in securities at fiscal
year end, resulting from changes in the exchange rate.
FORWARD FOREIGN CURRENCY CONTRACTS. The Fund may use foreign currency contracts
to facilitate transactions in foreign securities and to manage the Funds'
currency exposure. Contracts to buy generally are used to acquire exposure to
foreign currencies, while contracts to sell are used to hedge the Funds'
investments against currency fluctuations. Also, a contract to buy or sell can
offset a previous contract. These contracts involve market risk in excess of
the unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities. The U.S. dollar value of the currencies the Fund has committed to
buy or sell is shown in the schedule of investments under the caption "Forward
Foreign Currency Contracts." This amount represents the aggregate exposure to
each currency each fund has acquired or hedged through currency contracts at
period end. Losses may arise from changes in the value of the foreign currency
or if the counterparties do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined using
forward currency exchange rates supplied by a quotation service. Purchases and
sales of forward foreign currency contracts having the same settlement date and
broker are offset and any realized gain (loss) is recognized on the date of
offset; otherwise, gain (loss) is recognized on settlement date. Contracts that
have been offset with different counterparties are reflected as both a contract
to buy and a contract to sell in the schedule of investments under the caption
"Forward Foreign Currency Contracts."
18
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995
(unaudited)
D. FEDERAL INCOME TAXES. The Fund intends to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies, and to
distribute to its shareholders all of its income and any net realized capital
gains, at least annually. Accordingly, no provision for federal income tax has
been made.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions are
recorded on the ex-dividend date. The timing and characterization of certain
income and capital gains distributions are determined in accordance with
federal tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
organization costs and foreign currency transactions for book and tax purposes.
Permanent book and tax basis differences will result in reclassification to
capital accounts.
F. REPURCHASE AGREEMENTS. The Fund, through its custodian, receives delivery of
the underlying securities collateralizing repurchase agreements. It is the
Fund's policy that the market value of the collateral be at least equal to 100%
of the repurchase price. Each adviser is responsible for determining that the
value of the collateral is at all times at least equal to the repurchase price.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party including possible delays or restrictions upon
the portfolio's ability to dispose of the underlying securities.
G. ORGANIZATION EXPENSE. Costs incurred in fiscal 1994 in connection with the
Fund's organization and registration, amounting to approximately $165,000 in
the aggregate, were paid by the Fund and are being amortized by the Fund over
60 months.
2. PURCHASES AND SALES OF SECURITIES (excluding short-term investments) for the
Fund for the six months ended June 30, 1995 were $269,393,104 and $139,244,586,
respectively.
Transactions in forward currency contracts for the Star Advisers Fund for the
six months ended June 30, 1995 are summarized as follows:
SALES OF
CONTRACTS
------------------
AGGREGATE FACE
VALUE OF CONTRACTS
Open at December 31, 1994................................ $ 5,222,139
Contracts opened......................................... 28,229,662
Contracts closed......................................... (15,833,942)
-----------
Open at June 30, 1995.................................... $17,617,859
===========
3A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES. The Fund pays
management fees to its manager, New England Investment Companies, L.P. (the
"Manager") at the annual rate of 1.05% of the Fund's average daily net assets.
The
19
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995
(unaudited)
Manager pays the Fund's four investment advisers, Berger Associates, Inc.,
Founders Asset Management, Inc., Janus Capital Corporation and Loomis, Sayles &
Company, L.P. (the "Advisers") at the rate of 0.55% of the first $50 million of
the average daily net assets of the segment of the Fund that Adviser manages
and 0.50% of such assets in excess of $50 million. Certain officers and
directors of the Manager and Loomis, Sayles are also officers or trustees of
the Fund. Loomis, Sayles is a wholly owned subsidiary of the Manager, which is
a majority owned subsidiary of New England Mutual Life Insurance Company.
Fees earned by the Manager and each Adviser under the management agreement in
effect during the six months ended June 30, 1995 are as follows:
FEES EARNED
-----------
$ 653,927 New England Investment Companies, L.P.
169,439 Berger Associates, Inc.
173,774 Founders Asset Management, Inc.
178,079 Janus Capital Corporation
167,184 Loomis, Sayles & Company, L.P.
----------
$1,342,403
==========
B. ACCOUNTING AND ADMINISTRATIVE EXPENSE. New England Funds, L.P. ("New England
Funds"), the Fund's distributor, is a wholly owned subsidiary of the Manager
and performs certain accounting and administrative services for the Fund. The
Fund reimburses New England Funds for all or part of New England Funds'
expenses of providing these services which include the following: (i) expenses
for personnel performing bookkeeping, accounting, internal auditing and
financial reporting functions and clerical functions relating to the Fund, (ii)
expenses for services required in connection with the preparation of
registration statements and prospectuses, shareholder reports and notices,
proxy solicitation material furnished to shareholders of the Fund or regulatory
authorities and reports and questionnaires for SEC compliance, and (iii)
registration, filing and other fees in connection with requirements of
regulatory authorities. For the six months ended June 30, 1995 these expenses
amounted to $26,852 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 to the Fund. For the six months ended June 30, 1995, the Fund
paid New England Funds $269,926 as compensation for its services in that
capacity.
D. SERVICE AND DISTRIBUTION FEES. Pursuant to Rule 12b-1 under the 1940 Act,
the Trust has adopted a Service Plan relating to the Fund's Class A shares (the
"Class A Plan") and Service and Distribution Plans relating to the Fund's Class
B and Class C shares (the "Class B and Class C Plans").
20
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995
(unaudited)
Under the Class A Plan, the Fund pays New England Funds a monthly service fee
at the annual rate of up to 0.25% of the average daily net assets attributable
to the Fund's Class A shares, as reimbursement for expenses (including certain
payments to securities dealers, who may be affiliated with New England Funds)
incurred by the New England Funds in providing personal services to investors
in Class A shares and/or for the maintenance of shareholder accounts. For the
six months ended June 30, 1995, the Fund paid New England Funds $156,315 in
fees under the Class A Plan.
Under the Class B and Class C Plans, the Fund pays New England Funds monthly
service fees at the annual rate of up to 0.25% of the average daily net assets
attributable to the Fund's Class B and Class C shares, as compensation for
services provided and expenses (including certain payments to securities
dealers, who may be affiliated with New England Funds) incurred by New England
Funds in providing personal services to investors in Class B shares and/or the
maintenance of shareholder accounts. For the six months ended June 30, 1995,
the Fund paid New England Funds $130,369 and $31,739 in service fees under the
Class B and Class C Plans respectively.
Also under the Class B and Class C Plan, the Fund pays New England Funds
monthly distribution fees at the annual rate of up to 0.75% of the average
daily net assets attributable to the Fund's Class B and Class C shares, as
compensation for services provided and expenses (including certain payments to
securities dealers, who may be affiliated with New England Funds) incurred by
New England Funds in connection with the marketing or sale of Class B and Class
C shares. For the six months ended June 30, 1995, the Fund paid New England
Funds $391,106 and $95,216 in distribution fees under the Class B and Class C
Plans respectively.
Commissions (including contingent deferred sales charges) on Fund shares paid
to New England Funds by investors in shares of the Fund during the six months
ended June 30, 1995 amounted to $1,606,953.
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 Loomis,
Sayles, New England Funds, New England Investment Companies or their
affiliates, other than registered investment companies. Each other trustee is
compensated by the Fund as follows:
Annual Retainer $2,400
Meeting Fee $125/meeting
Committee Meeting Fee $75/meeting
Committee Chairman Retainer $125/year
21
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995
(unaudited)
A deferred compensation plan is available to the trustees on a voluntary basis.
Each participating trustee will receive an amount equal to the value that such
deferred compensation would have had, had it been invested in the Fund on the
normal payment date.
4. CAPITAL SHARE TRANSACTIONS. At June 30, 1995 there was an unlimited number
of shares of beneficial interest authorized. Divided into four classes, Class
A, Class B, Class C and Class Y capital stock. Transactions in capital shares
were as follows:
FOR PERIOD ENDED SIX MONTHS
JULY 7, (A) THROUGH ENDED
DECEMBER 31, 1994 JUNE 30, 1995
---------------------- -----------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
------- --------- ----------- --------- ------------
Shares sold.................. 7,055,843 $91,678,940 4,654,980 $ 65,059,945
Shares issued in connection
with the reinvestment of:
Dividends from net
investment income......... 22,963 302,422 0 0
--------- ----------- --------- ------------
7,078,806 91,981,362 4,654,980 65,059,945
Shares repurchased........... (194,900) (2,569,369) (852,946) (12,098,587)
--------- ----------- --------- ------------
Net increase................. 6,883,906 $89,411,993 3,802,034 $ 52,961,358
========= =========== ========= ============
FOR PERIOD ENDED SIX MONTHS
JULY 7, (A) THROUGH ENDED
DECEMBER 31, 1994 JUNE 30, 1995
---------------------- -----------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
------- --------- ----------- --------- ------------
Shares sold.................. 5,594,561 $72,768,453 4,316,997 $ 60,431,880
Shares issued in connection
with the reinvestment of:
Dividends from net
investment income......... 7,373 97,026 0 0
--------- ----------- --------- ------------
5,601,934 72,865,479 4,316,997 60,431,880
Shares repurchased........... (93,876) (1,217,228) (290,556) (4,082,296)
--------- ----------- --------- ------------
Net increase................. 5,508,058 $71,648,251 4,026,441 $ 56,349,584
========= =========== ========= ============
22
NOTES TO FINANCIAL STATEMENTS--Continued
June 30, 1995
(unaudited)
FOR PERIOD ENDED SIX MONTHS
JULY 7, (A) THROUGH ENDED
DECEMBER 31, 1994 JUNE 30, 1995
-------------------------- -----------------------
CLASS C SHARES AMOUNT SHARES AMOUNT
------- ------------ ------------- --------- ------------
Shares sold.............. 1,579,105 $ 20,467,118 879,292 $ 12,310,533
Shares issued in
connection with the
reinvestment of:
Dividends from net
investment income..... 1,572 20,688 0 0
----------- ------------- --------- ------------
1,580,677 20,487,806 879,292 12,310,533
Shares repurchased....... (62,704) (827,121) (260,219) (3,648,743)
----------- ------------- --------- ------------
Net increase............. 1,517,973 $ 19,660,685 619,073 $ 8,661,790
=========== ============= ========= ============
FOR PERIOD ENDED SIX MONTHS
NOVEMBER 15, (A) THROUGH ENDED
DECEMBER 31, 1994 JUNE 30, 1995
-------------------------- -----------------------
CLASS Y SHARES AMOUNT SHARES AMOUNT
------- ------------ ------------- --------- ------------
Shares sold.............. 14,720 $ 200,196 118,784 $ 1,678,712
Shares issued in
connection with the
reinvestment of:
Dividends from net
investment income..... 64 839 0 0
----------- ------------- --------- ------------
14,784 201,035 118,784 1,678,712
Shares repurchased....... (2) (26) (8,962) (136,133)
----------- ------------- --------- ------------
Net increase............. 14,782 $ 201,009 109,822 $ 1,542,579
=========== ============= ========= ============
Increase derived from
capital shares
transactions........... 13,924,719 $ 180,921,938 8,557,370 $119,515,311
=========== ============= ========= ============
(a)Commencement of Operations.
23
As a New England Funds stock fund shareholder, it's important that you're kept
up-to-date on all changes to the stock funds prospectus. Since there's been a
change in management for New England Star Advisers Fund, we've included a copy
of the supplement to the prospectus below.
NEW ENGLAND FUNDS TRUST I
NEW ENGLAND STAR ADVISERS FUND
Supplement dated July 13, 1995
to New England Star Advisers Fund Prospectus
dated May 1, 1995
and New England Stock Funds Prospectus dated
May 1, 1995
The following information reflects changes in the investment management and
policies of the Loomis, Sayles & Company, L.P. ("Loomis Sayles") segment of New
England Star Advisers Fund (the "Fund"):
[_] Jeffrey C. Petherick, Vice President of Loomis Sayles and New England
Funds Trust I, and Mary Champagne, Vice President of Loomis Sayles, have
day-to-day management responsibility for the segment of the Fund that is
allocated to Loomis Sayles. Mr. Petherick has co-managed the Loomis
Sayles segment of the Fund since the Fund's inception. Mr. Petherick was
an investment manager at Masco Corporation prior to joining Loomis
Sayles in 1990. Ms. Champagne has co-managed the Loomis Sayles segment
of the Fund since July 1995. Prior to joining Loomis Sayles in 1993, Ms.
Champagne served as a portfolio manager at NBD Bank for 10 years.
[_] Loomis Sayles manages its segment of the portfolio by investing
primarily in stocks of small cap companies with good earnings growth
potential, that Loomis Sayles believes are undervalued by the market.
Typically, such companies range in size from $100 million to $500
million in market capitalization, have better than average growth rates
at below average price/earnings ratios and have strong balance sheets
and cash flow. Loomis Sayles seeks to build a core small cap portfolio
of solid growth companies' stock, with a smaller emphasis on special
situations and turnarounds (companies that have experienced significant
business problems but which Loomis Sayles believes have favorable
prospects for recovery), as well as unrecognized stocks.
24
--------------------------------------------------------------------------------
New England Star Advisers Fund
--------------------------------------------------------------------------------
Stock Funds
International Equity 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
Tax Exempt 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.
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New England Funds
Where The Best Minds Meet
--------------------------------
399 Boylston Street
Boston, Massachusetts
02116
--------------------------------
95-0754 (SA58)
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