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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-08495
(Investment Company Act file number)
GARTMORE MUTUAL FUNDS
(Exact name of registrant as specified in charter)
1200 RIVER ROAD, CONSHOHOCKEN, PENNSYLVANIA 19428
(Address of principal executive offices) (Zip code)
ELIZABETH A. DAVIN, ESQ.
NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(Name and address of agent for service)
Registrant's telephone number, including area code: (484) 530-1300
Date of fiscal year end: OCTOBER 31, 2003
Date of reporting period: APRIL 30, 2003
Form N-CSR is to be used by management investment companies to file reports
with the Securities and Exchange Commission (the "Commission") not later than
ten (10) days after the transmission to stockholders of any report that is
required to be transmitted to stockholders under Rule 30e-1 under the Investment
Company Act of 1940, as amended (17 CFR 270.30e-1) (the "1940 Act"). The
Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is
not required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, D.C. 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. 3507.
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ITEM 1. REPORTS TO STOCKHOLDERS.
Include a copy of the report transmitted to stockholders pursuant to Rule
30e-1 under the 1940 Act (17 CFR 270.30e-1).
[LOGO]
SEMIANNUAL REPORT
April 30, 2003
CORE EQUITY SERIES
Gartmore Growth Fund
Gartmore Large Cap Value Fund
Gartmore Nationwide Fund
(formerly the Gartmore Total Return Fund)
Gartmore Mid Cap Growth Fund
CORE ASSET ALLOCATION SERIES
Gartmore Investor Destinations Aggressive Fund
Gartmore Investor Destinations Moderately Aggressive Fund
Gartmore Investor Destinations Moderate Fund
Gartmore Investor Destinations Moderately Conservative Fund
Gartmore Investor Destinations Conservative Fund
CORE FIXED INCOME SERIES
Gartmore Bond Fund
Gartmore Government Bond Fund
Gartmore Tax-Free Income Fund
Gartmore Money Market Fund
Gartmore Morley Enhanced Income Fund
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GARTMORE GLOBAL INVESTMENTS
THE NEXT GENERATION OF ASSET MANAGEMENT
At Gartmore Global Investments, we look beyond traditional approaches, offering
sophisticated solutions designed not only to manage the heightened risks of
today's markets but also to capitalize on them, delivering new sources of
growth.
LEADING-EDGE SKILLS AND RESOURCES
We are a global asset manager with nearly $70 billion1 under management and a
professional staff on three continents. With our worldwide reach and deep
experience in both alternative and traditional investments, we are uniquely
positioned to pursue opportunities wherever they arise, in all market climates.
- - Alternative investment strategies: Solutions for every need and market We
offer a broadly diversified range of mutual funds, separate accounts and
alternative investments, designed to help clients manage risk and make
money, no matter which way markets move.
- - Time-tested management disciplines: Helping to ensure that the best ideas
rise to the top Our disciplined investment process ensures that our clients
benefit from our best thinking-by putting ideas and people into creative
conflict through systematic checks and balances.
- - Progressive approaches: Building portfolios for markets that don't stand
still Our investment offerings are engineered to serve as building blocks
within new asset allocation strategies adapted to today's market realities.
We're committed to providing guidance and tools to help our clients
incorporate these new approaches into their own investment strategies.
Gartmore Global investments is a member of Gartmore Group.
The following asset management affiliates of Nationwide do business under the
trade name "Gartmore Group":
Gartmore Capital Management Ltd3 Gartmore Fund Managers Ltd3 Gartmore Global
Partners2,3 Gartmore Investment Ltd3 Gartmore Japan Ltd3
Gartmore Morley Capital Management, Inc.2 Gartmore Mutual Fund Capital Trust2,4
NorthPointe Capital LLC2 Gartmore SA Capital Trust2,4
Additional information can be found online:
WWW.GARTMOREFUNDS.COM
1. As of April 30, 2003.
2. These are SEC-registered investment advisers based in the United States.
3. These advisers are subsidiaries of Gartmore Investment Management plc,
which ultimately reports to Nationwide.
4. Together, these advisers do business as Gartmore Global Investments.
Gartmore Global Investments is the investment adviser to Gartmore Funds. "Look
Beyond." and the Family of Funds Diagram are service marks of Gartmore Global
Investments, Inc. Nationwide is a registered service mark of Nationwide Mutual
Insurance Company.
Securities offered through Gartmore Distribution Services,
Inc., Member NASD.
This report is for the information of shareholders of Gartmore Funds. For more
complete information, including all sales charges and expenses, please ask your
representative for a prospectus. Please read it carefully before you invest or
send money.
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Look BEYOND with Gartmore Funds.
TAKING DIVERSIFICATION TO THE NEXT LEVEL
- - CORE Series
Broad market portfolios featuring growth, value and blend styles as well as
balanced and fixed income funds designed to form the foundation of an asset
allocation program.
- - INTERNATIONAL Series
International growth and emerging markets portfolios designed to capture
overseas investment opportunities.
- - SECTOR Series
Global sector portfolios focused on specific industries, including
financial services, health sciences, technology and utilities.
- - LEADERSHIP Series
Concentrated stock portfolios specializing in major world markets that
feature the best ideas of our global investment team.
- - CONCEPT Series
Opportunistic portfolios that can vary significantly in style, market cap,
risk and asset class.
CONTENTS
2 MESSAGE TO SHAREHOLDERS
4 INVESTMENT HIGHLIGHTS
CORE EQUITY SERIES
6 Gartmore Growth Fund
9 Gartmore Large Cap Value Fund
12 Gartmore Nationwide Fund
16 Gartmore Mid Cap Growth Fund
CORE ASSET ALLOCATION SERIES
27 Gartmore Investor Destinations Aggressive Fund
29 Gartmore Investor Destinations Moderately
Aggressive Fund
31 Gartmore Investor Destinations Moderate Fund
33 Gartmore Investor Destinations Moderately
Conservative Fund
35 Gartmore Investor Destinations Conservative Fund
CORE FIXED INCOME SERIES
46 Gartmore Bond Fund
50 Gartmore Government Bond Fund
52 Gartmore Tax-Free Income Fund
57 Gartmore Money Market Fund
62 Gartmore Morley Enhanced Income Fund
76 NOTES TO FINANCIAL STATEMENTS
+ ABOUT PERFORMANCE
The performance of the funds, as reflected on pages 6, 12, 46, 50, 52 and
57, includes performance of their respective predecessor funds prior to
reorganization. In addition, the performance of the Class A, Class B and
Class C shares prior to such date has been restated for sales charges but
not for fees applicable to such classes. The reorganization of the funds
took place May 11, 1998. The Gartmore Mutual Funds were preceded by funds
of the Nationwide Mutual Funds, and the Nationwide Investing Foundation or
Nationwide Investing Foundation II. Inception-to-date class-specific total
returns can be found in the Financial Highlights, which begins on pages 23
and 71.
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MESSAGE TO SHAREHOLDERS
April 30, 2003
DEAR FELLOW SHAREHOLDERS,
The stock market's recent positive turn has provided some bright news in what
has been a painful three-year cycle of negative returns and searing market
volatility. We don't know when we'll see calmer days, but we're positioning
ourselves to thrive amid any future market conditions.
Given the recent turbulent investment environment, a number of our competitors
have been forced to significantly cut costs and valuable resources. While we've
had to make challenging resource allocation decisions, we've avoided major cuts.
Gartmore Global Investments has prospered during the lengthy bear market with
what we believe is a winning formula:
- - A strong investment management team and well-managed processes
- - A focus on delivering enhanced risk-adjusted performance
- - A diverse product line designed to help meet our clients' varying needs
- - A burgeoning distribution network geared to ensure that our asset-gathering
initiatives succeed
This letter is dedicated to sharing with you Gartmore Global Investments'
successes and ongoing strategies. Our success as a firm directly affects our
ability to deliver quality products and services to you, the shareholders of the
Gartmore Funds. The primary driver of our success is our employees, the firm's
greatest single resource. By maintaining financial stability and continuing to
grow our asset base and revenues, we can retain the best employees. Our people
help to ensure that we continue to bring you quality mutual fund products and
services.
RECENT SUCCESSES
ATTRACTIVE STABLE-VALUE AND ASSET ALLOCATION FUNDS One product that has garnered
a great deal of interest from investors, advisors and the press is our
stable-value product, the Gartmore Morley Capital Accumulation Fund. This Fund's
assets (all share classes) have grown from $142 million as of Oct. 31, 2002, to
$411 million as of April 30, 2003, nearly a threefold increase. In view of the
volatile equity markets and low bond yields, this product can offer lower
volatility than that offered by many equity and fixed-income products.
In the immediate future, the Fed may cut interest rates to ensure that the
economic recovery takes hold and to ward off deflation. However, in the long
run, we believe interest rates will rise. In this environment, bond funds will
likely face a loss in principal value. However, stable-value funds are designed
to help preserve principal during periods of rising interest rates.
[PHOTO]
D. BRUCE JOHNSTON
President and CEO
Gartmore Global Investments
The past six months also have seen renewed investor interest in asset
allocation, which has driven a surge in assets into the Gartmore Investor
Destinations Funds, our series of five asset allocation funds. These Funds offer
risk levels ranging from conservative to aggressive, and give investors a choice
of well-diversified portfolios designed to provide the desired balance of risk
and return.1
Upon achieving their three-year histories on March 31, 2003, the Gartmore
Investor Destinations Funds were eligible for rating by Morningstar. The Funds
received the following ratings:2
GARTMORE MORNINGSTAR NUMBER OF
INVESTOR RATING AS OF MORNINGSTAR FUNDS
DESTINATIONS APRIL 30, CATEGORY IN EACH
FUND 2003 NAME CATEGORY
- ----------------------------------------------------------------------
Aggressive ***** U.S. Large-Cap Growth 481
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Moderately Aggressive ***** U.S. Large-Cap Growth 481
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Conservative **** Domestic Hybrid 396
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Moderately Conservative *** Domestic Hybrid 396
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Moderate ** Domestic Hybrid 396
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NOTE: Morningstar ratings are for the three-year period ended April 30, 2003
We continue to believe that asset allocation is one of the most important
concepts for investors to consider as they pursue their investment objectives.
Well-developed asset allocation plans can help match investors' goals and return
expectations with their risk levels and financial objectives.
INVESTMENT PERFORMANCE
Young Chin, Gartmore Global Investments' Global Chief Investment
Officer-Equities, discusses investment highlights in his letter in the next
section.
ONGOING STRATEGIES FOR FUTURE SUCCESSES
In addition to our relentless focus on performance, at Gartmore Global
Investments we also are concentrating on introducing new products and
distributing them to a wider audience.
2
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PRODUCT DIVERSITY
We create and maintain a lineup of high-quality products that help meet
investors' needs as market conditions change. This means developing both core
(traditional) products and specialty, or more innovative, products.
CORE PRODUCTS such as the Gartmore Nationwide Fund and the Gartmore Growth Fund
are managed to adhere closely to their style mandates. The intended result is
performance in line with or slightly above that of their benchmarks and peers.
SPECIALTY PRODUCTS such as the Gartmore Global Health Sciences Fund (sector
fund) and the Gartmore U.S. Growth Leaders Fund (focus fund) offer clients
innovative ways to meet their investment objectives. Sector funds constrain
their investment universe to one particular sector of the economy, while focus
funds limit the number of stocks in a portfolio. We believe that sector funds
can provide shareholders with greater diversification and the opportunity for
potential outperformance. Focus funds add extra return potential to a portfolio,
but they also come with greater risk.
In addition, Gartmore Global Investments recently has developed a number of
innovative investment vehicles that are meant to appeal to both risk-averse and
risk-tolerant investors. First, the Gartmore Nationwide Principal Protected Fund
offers investors the ability to protect their principal while still
participating in the equity market.3 The Fund seeks to provide investors with
some of the upside earnings potential available in rising equity markets, but
endeavors to provide a hedge against a falling equity marketplace.
Another specialty product is the Gartmore Long-Short Equity Plus Fund, designed
to outperform the S&P 500 Index through hedging strategies.4 This fund employs a
combination of long and short positions to obtain a market-neutral exposure. It
attempts to deliver above-market returns by buying stocks that are likely to
outperform their peers and shorting stocks that may underperform their peers.
DISTRIBUTION
Another key strength has been our expanded distribution capabilities. Broadening
our channels has helped us offer our products to you in many ways through your
trusted financial advisor. In addition, greater distribution can help grow
assets and permit us greater leverage in negotiating with our service providers,
which could result in lower fund family expenses.
To further enhance our distribution efforts, Wilson (Bill) Santos joined
Gartmore Global Investments in January 2003 as Executive Vice President of
Distribution reporting to me. Bill manages our retail distribution efforts,
including sales, marketing and product development. He is well known in the
asset management industry and brings with him a wealth of experience.
OUTLOOK
As investors ourselves, we know how disconcerting the market's poor performance
and wild volatility can be. We thank you for placing your confidence in us and
for allowing us to help you achieve your financial goals.
We remain focused on our three key themes-investment performance, product
diversity and distribution. We will keep you updated on our progress in upcoming
shareholder reports.
[SIGNATURE]
D. BRUCE JOHNSTON
President and CEO, Gartmore Global Investments
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1. By investing in the Gartmore Investor Destinations Funds, you receive asset
allocation services that you would not receive if you invested in the
underlying funds directly. However, because you are investing indirectly in
other funds through a Gartmore Investor Destinations Fund, you are paying a
proportionate share of the applicable expenses of the underlying funds
(including management fees, as well as the expenses of the Gartmore
Investor Destinations Fund).
2. For each fund with at least a three-year history, Morningstar calculates a
Morningstar RatingTM based on a Morningstar Risk-Adjusted Return measure
that accounts for variation in a fund's monthly performance (including the
effects of sales charges, loads and redemption fees), placing more emphasis
on downward variations and rewarding consistent performance. The top 10% of
funds in each category receive 5 stars, the next 22.5% receive 4 stars, the
next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10%
receive 1 star. (Each share class is counted as a fraction of one fund
within this scale and rated separately, which may cause slight variations
in the distribution percentages.) The Overall Morningstar Rating for a fund
is derived from a weighted average of the performance figures associated
with its three-, five- and 10-year (if applicable) Morningstar Rating
metrics.
Morningstar Rating is for the A share class only; other classes may have
different performance characteristics. Fund ratings are subject to change
monthly. Despite high ratings, the funds may have experienced periods of
negative performance.
3. Purchases can only be made during the offering period. When the investment
is held for the entire seven-year period, provided no shares are redeemed
and all dividends and distributions are automatically reinvested, the fund
will be worth at least the initial investment at the end of the offering
period less any sales charges or redemptions and extraordinary expenses.
Unless held in a tax-deferred account, U.S. income taxes are due yearly on
the interest and dividends earned by the Fund's investments, even if you
reinvest your dividends. If the investment is made through a retirement
account, taxes on dividends will generally not be due until they are
distributed from the account.
4. The Gartmore Long-Short Equity Plus Fund invests at least 80% of its net
assets in long and short positions. The Fund's investment process offers
the potential for consistent excess returns over those of the S&P 500
Index, the Fund's benchmark. The Fund's investment process combines
positions in S&P 500 Index instruments such as index futures and index
swaps with a primarily market-neutral exposure in individual long and short
positions in equity securities. The Fund is speculative and involves a high
degree of risk. The Fund may be leveraged, and performance can be volatile.
An investor could lose all or a substantial amount of his or her
investment. The Fund's high fees and expenses may offset the Fund's trading
profit.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Investors cannot invest
directly in market indexes.
Performance returns assume reinvestment of all distributions. The investment
return and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
Investing in mutual funds involves market risk, including possible loss of
principal. There is no assurance that the investment objective of any fund will
be achieved.
Funds that concentrate on specific sectors or a relatively small number of
securities may be subject to greater volatility than a more diversified
investment.
A plan of regular investing does not assure a profit or protect against a loss
in declining markets. You should consider your financial ability to continue
your purchase through periods of fluctuating price levels.
Securities offered through GARTMORE DISTRIBUTION SERVICES, INC., Member NASD.
For more information about Gartmore Funds, including all charges and expenses,
please call 800-848-0920 or download a prospectus at www.gartmorefunds.com.
Please read it carefully before investing any money.
3
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INVESTMENT HIGHLIGHTS
APRIL 30, 2003
Taking a look back at the past six months, we find that the markets were again
volatile. As an example, in November 2002 and April 2003, the S&P 500 Index rose
5.88% and 8.23%, respectively, but it fell during the middle months and posted
only a slight gain in March.
During the second half of the period, in particular, the market experienced
extreme daily swings, reacting to each bit of news about the war in Iraq.
Amid such volatility, you may be considering taking steps to reduce the amount
of risk in your investment portfolio. We also are focused on risk.
MISSION: TO PROVIDE SUPERIOR RISK-ADJUSTED RETURNS Our main goal during the
lengthy bear market has been to provide our investors with funds that have the
potential to deliver consistent and superior risk-adjusted performance as
compared to their appropriate benchmarks and stated peer groups.
PROCESS: EMPLOY A COMBINATION OF FUNDAMENTAL AND QUANTITATIVE TECHNIQUES
During the past several years, we have made many enhancements to our flagship
fund, the Gartmore Nationwide Fund (formerly the Gartmore Total Return Fund),
with good results. Now we are in the process of implementing those changes to
more of our funds, as described below.
In September 2000, we added a new manager to the Gartmore Nationwide Fund and
also added the research services of Gartmore's analyst team. It is our
philosophy, where it is appropriate, to EMPLOY A TEAM-ORIENTED INVESTMENT
MANAGEMENT APPROACH to ensure that adequate personnel resources are devoted to
our funds.
We also supplemented the Fund's fundamental research efforts with quantitative
processes. Today, we balance taking advantage of good investment opportunities
that can contribute to solid investment results with our additional goal of
delivering positive investment results consistently. The addition of
quantitative processes has helped us accomplish both of these objectives. Our
goal is to enhance all of our proprietary funds to TAKE ADVANTAGE OF BOTH
FUNDAMENTAL RESEARCH AND QUANTITATIVE PROCESSES.
[PHOTO]
YOUNG CHIN, Global Chief Investment Officer-Equities Gartmore Global Investments
We continue to focus on each fund's overall construction to ensure that we are
comfortable with the degree to which each portfolio deviates from its benchmark.
We strive to add value largely through superior stock selection. Our goal is to
maintain well-diversified portfolios that can outperform their benchmarks
through many individual stock ideas.
Our quantitative research efforts also CONCENTRATE ON OBTAINING HIGHER-QUALITY
DATA AND INTERPRETING THIS DATA BETTER THAN OUR COMPETITORS. For instance,
instead of using standard earnings estimate numbers, we focus on those estimates
of only the best Wall Street analysts. We also employ techniques that help us
avoid investing in companies that could be on the verge of bankruptcies (such as
Enron Corp. and WorldCom Group).
The Gartmore Nationwide Fund continues to employ fundamental research, but our
research team for the Fund is now global, with analysts located around the
world. Our analysts perform in-depth global industry and company analysis. We
constantly search for short-term stock catalysts such as better-than-expected
earnings, anticipated mergers and management changes.
Good stock picking alone is not enough to beat an index or outperform a fund's
peer group. To accomplish these goals, we are bringing together a variety of
resources that involve rigorous, bottom-up fundamental research on companies,
industries and countries as well as sophisticated portfolio analysis and
risk-control techniques.
4
2003 SEMIANNUAL REPORT
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PERFORMANCE: SUCCESS STORIES
GARTMORE NATIONWIDE FUND: As of April 30, 2003, the Fund's three-year annualized
performance (Class A) outstripped its benchmark on a relative basis by 3.27%
(-9.70% versus -12.97%, respectively). This Fund also outperformed the vast
majority of its peers (87%) with a 13th percentile Lipper ranking (93 out of 755
funds) in the large-cap core fund universe.1
GARTMORE GLOBAL HEALTH SCIENCES FUND: The Fund (Class A) was ranked ahead of 94%
of its peers (6th percentile, or eight out of 145 funds) in the
Health/Biotechnology category of Lipper Funds for the two-year period ended
April 30, 2003 (Fund inception date: Dec. 18, 2000).
GARTMORE U.S. GROWTH LEADERS FUND: This focus or concentrated Fund (Class A)
outperformed 97% of its peers, (10 out of 354 funds) according to Lipper, for
multi-cap managers for the two-year period ended April 30, 2003. The Fund
invests in a limited number of stocks, all with the ability to drive returns. It
is diversified by stock capitalization (size) and invests in only the managers'
best ideas.
GARTMORE MICRO CAP EQUITY FUND and GARTMORE MID CAP GROWTH FUND: We introduced
these two funds in 2002. For the six months ended April 30, 2003, the Gartmore
Micro Cap Equity Fund (Class A) outperformed 98% of its peers (ranked in the 2nd
percentile, or six out of 480 small-cap core funds), and it returned 18.98%
versus 19.89% for its benchmark, the Wilshire Micro Cap Index. For the same
period, the Gartmore Mid Cap Growth Fund (Class A) returned 10.14%,
outperforming the 8.20% return of its benchmark, the Russell Midcap Growth
Index. This Fund ranked in the 6th percentile, or 28 out of 521 mid-cap growth
core funds.
GARTMORE GOVERNMENT BOND FUND: For the three-year period ended April 30, 2003,
this Fund produced a 10.00% annualized total return. In its category, as defined
by Lipper (intermediate U.S. government bond funds), the Fund outperformed 89%
of its peers, ranking in the 11th percentile, or nine out of 85 funds.
RECOGNITION: BARRON'S
Our efforts were validated by Barron's seventh annual firm survey, reported on
Feb. 3, 2003, which evaluated
and ranked firms based on the performance of an organization's entire product
line. We came in at 11th on the list of 81 firms. Barron's recognized us along
with a small number of other firms that share "a belief in diversification and
thus boast a stable of equity, international, balanced and bond-investment
products."2
OUTLOOK: IMPROVING CONDITIONS
To help investors achieve their goals, we continually strive to provide products
that conform to various risk levels. We are proud of the results we have been
able to achieve within such a difficult market environment. We look forward to
improved economic and market conditions as well as consistent fund performance
and the continued introduction of innovative products to the marketplace.
- -------------
1. Ranked by Lipper, Inc., based on annualized total returns. This Fund was
ranked in the top 32% of 996 funds, 6% of 883 funds and 13% of 755 funds
for the one- two- and three-year periods, respectively.
2. The Barron's/Lipper fund-family survey uses a weighted-average ranking
system to assess firm-wide performance. Each firm's family of funds is
weighted by asset size, while the overall ranking weights the five fund
categories in proportion to their overall importance within Lipper's
universe.
There are more than 81 fund families vying for your dollars, but only that
number met our criteria for inclusion in the Barron's/Lipper Survey. To
make the cut, a fund complex must include one or more money market funds,
at least three U.S. stock funds, at least one foreign stock portfolio and
one balanced or asset allocation fund that invests in both bonds and
stocks. Families also must offer at least two taxable bond funds and at
least one municipal bond fund. The performance of money market, sector and
single-state muni-bond funds don't figure in our rankings.
[In 2002] U.S. stock funds accounted for 54.34% of a family's ranking.
International equity funds accounted for 9.95%; balanced funds about 9.24%;
taxable bond funds, 21.1%; and muni funds, 5.33%. As a result, expertise in
managing a stock portfolio weighs most heavily in the overall ranking.
However, expertise in bonds helped out more this year. The weightings
reflect the distribution of assets across all mutual funds that are at
least one year old. To calculate the results, Lipper ranks each fund's
return versus those of others in the same category, placing the best
performers in the 1st percentile. Next, all the funds in a given family
that fit a particular broad asset-class category (say, tax-exempt funds)
are averaged together on an asset-weighted basis. The bigger the fund, the
greater its impact on a family's ranking in that category. Then, each
family's percentile rankings in the broad categories are combined in the
weightings listed above. The lower the figure, the higher the family ranks
on our final list.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Investing involves market risk, including the possible loss of principal. There
is no guarantee that the objective of any fund will be achieved. For more
information about these mutual funds, including all charges and expenses, please
download a prospectus at www.gartmorefunds.com or call 800-848-0920. Please read
it carefully before investing any money. Gartmore Global Investments is the
investment adviser to Gartmore Funds.
Securities offered through GARTMORE DISTRIBUTION SERVICES, INC.,
Member NASD.
5
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For example, as of April 30, 2003, the Fund's three-year annualized performance
(Class A) outstripped its benchmark on a relative basis by 3.27% (-9.70% versus
- -12.97%, respectively). The Fund also outperformed the vast majority of its
peers (87%) with a 13th percentile Lipper ranking (93 out of 755 funds) in the
large-cap core fund universe.2
GARTMORE GLOBAL HEALTH SCIENCES FUND: This Fund (Class A) was ranked ahead of
94% of its peers (6th percentile, or eight out of 145 funds) in the
Health/Biotechnology category of Lipper Funds for the two-year period ended
April 30, 2003 (Fund inception date: Dec. 18, 2000).
GARTMORE U.S. GROWTH LEADERS FUND: This focus or concentrated Fund (Class A)
outperformed 97% of its peers, (10 out of 354 funds) according to Lipper, for
multi-cap managers for the two-year period ended April 30, 2003. The Fund
invests in a limited number of stocks, all with the ability to drive returns. It
is diversified by stock capitalization (size) and invests in only the managers'
best ideas.
GARTMORE MICRO CAP EQUITY FUND and GARTMORE MID CAP GROWTH FUND: We introduced
these two funds in 2002. The Fund outperformed 98% of its peers (ranked in the
2nd percentile, or six out of 480 small-cap core funds). For the six months
ended April 30, 2003, the Gartmore Micro Cap Equity Fund (Class A) returned
18.98% versus 19.89% for its benchmark, the Wilshire Micro Cap Index.
For the same period, the Gartmore Mid Cap Growth Fund (Class A) returned 10.14%,
outperforming the 8.20% return of its benchmark, the Russell Midcap Growth
Index. The Fund ranked in the 6th percentile, or 28 out of 521 mid-cap growth
core funds.
GARTMORE GOVERNMENT BOND FUND: For the three-year period ended April 30, 2003,
this Fund produced a 10% annualized total return. Against its peer group, as
defined by Lipper (intermediate U.S. government bond funds), the Fund
outperformed 89% of its peers, ranking in the 11th percentile, or nine out of 85
funds.
RECOGNITION: BARRON'S
Our efforts were validated by Barron's seventh annual firm survey, reported on
Feb. 3, 2003, which evaluated and ranked firms based on the performance of an
organization's entire product line. We came in at 11th on the list of 81 firms.
Barron's recognized us along with a small number of other firms that share "a
belief in diversification and thus boast a stable of equity, international,
balanced and bond-investment products."4
OUTLOOK: IMPROVING CONDITIONS
To help investors achieve their goals, we continually strive to provide products
that conform to various risk levels.
We are proud of the results we have been able to achieve within such a difficult
market environment. We look forward to improved economic and market conditions
as well as consistent fund performance and the continued introduction of
innovative products to the marketplace.
- ---------------
1. For each fund with at least a three-year history, Morningstar calculates a
Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that
accounts for variation in a fund's monthly performance (including the
effects of sales charges, loads and redemption fees), placing more emphasis
on downward variations and rewarding consistent performance. The top 10% of
funds in each category receive 5 stars, the next 22.5% receive 4 stars, the
next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10%
receive 1 star. (Each share class is counted as a fraction of one fund
within this scale and rated separately, which may cause slight variations
in the distribution percentages.) The Overall Morningstar Rating for a fund
is derived from a weighted average of the performance figures associated
with its three-, five- and 10-year (if applicable) Morningstar Rating
metrics. THE GARTMORE NATIONWIDE FUND RECEIVED 4 STARS DURING THE FIRST
QUARTER AND WAS RATED AGAINST 1,141 U.S. LARGE BLEND EQUITY FUNDS IN THE
PAST THREE YEARS. Past performance does not guarantee future results.
Morningstar Rating is for the A share class only; other classes may have
different performance characteristics. Fund ratings are subject to change
monthly. Despite high ratings, the funds may have experienced periods of
negative performance.
2. Ranked by Lipper, Inc., based on annualized total returns. This Fund was
ranked in the top 32% of 996 funds, 6% of 883 funds and 13% of 755 funds
for the one- two- and three-year periods, respectively.
3. Source: FactSet Research Systems, Inc. (from March 1995 through March
2003).
4. The Barron's/Lipper fund-family survey uses a weighted-average ranking
system to assess firm-wide performance. Each firm's family of funds is
weighted by asset size, while the overall ranking weights the five fund
categories in proportion to their overall importance within Lipper's
universe.
There are more than 81 fund families vying for your dollars, but only that
number met our criteria for inclusion in the Barron's/Lipper Survey. To make the
cut, a fund complex must include one or more money market funds, at least three
U.S. stock funds, at least one foreign stock portfolio and one balanced or asset
allocation fund that invests in both bonds and stocks. Families also must offer
at least two taxable bond funds and at least one municipal bond fund. The
performance of money market, sector and single-state muni-bond funds don't
figure in our rankings.
[In 2002] U.S. stock funds accounted for 54.34% of a family's ranking.
International equity funds accounted for 9.95%; balanced funds about 9.24%;
taxable bond funds, 21.1%; and muni funds, 5.33%. As a result, expertise in
managing a stock portfolio weighs most heavily in the overall ranking. However,
expertise in bonds helped out more this year. The weightings reflect the
distribution of assets across all mutual funds that are at least one year old.
To calculate the results, Lipper ranks each fund's return versus those of others
in the same category, placing the best performers in the 1st percentile. Next,
all the funds in a given family that fit a particular broad asset-class category
(say, tax-exempt funds) are averaged together on an asset-weighted basis. The
bigger the fund, the greater its impact on a family's ranking in that category.
Then, each family's percentile rankings in the broad categories are combined in
the weightings listed above. The lower the figure, the higher the family ranks
on our final list.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
Investing involves market risk, including the possible loss of principal. For
more information about these mutual funds, including all charges and expenses,
please download a prospectus at www.gartmorefunds.com or call 800-848-0920.
Please read it carefully before investing. Gartmore Global Investments is the
investment adviser to Gartmore Funds. Securities offered through Gartmore
Distribution Services, Inc., Member NASD. There is no guarantee that the
objective of any fund will be achieved.
2003 SEMIANNUAL REPORT 5
- --------------------------------------------------------------------------------
GARTMORE GROWTH FUND
Class A Shares symbol: NMFAX
Class B Shares symbol: NMFBX
Class C Shares symbol: GCGRX
Class D Shares symbol: MUIGX
Institutional Service Class symbol: GWISX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 4.22%* versus
4.28% for its benchmark, the Russell 1000 Growth Index.
For broader comparison, the average return for this Fund's peer category
(Large-Cap Growth) was 2.77%, according to Lipper, an independent company that
provides mutual fund data and analysis.
WHAT MARKET/ECONOMIC AND PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
The markets experienced two very different environments. Much of the period was
characterized by losses driven by concerns about earnings and the
then-intensifying situation in Iraq; however, stocks rebounded in April as the
war progressed smoothly and consumer confidence recovered.
The Fund performed well both on an absolute basis and in comparison to its
Lipper competitors. Its two largest sectors, health care and information
technology (which make up more than 50% of Fund holdings), were the areas that
contributed most to performance, adding 3.62% to total return. The Fund
outperformed in both sectors, thanks to strong individual stock selection.
Specifically, technology holding Cisco Systems, Inc. and pharmaceutical company
Wyeth added to its performance (contributing 0.76% and 0.25%, respectively).
The Fund slightly underperformed its benchmark, however, because its returns
fell shy of those of the Index in several smaller market sectors. For example,
the Fund's telecommunications services holdings finished in negative territory
while those of the Index finished with a gain. Although this sector only made up
0.49% of the portfolio, an underperformance in several small areas combined to
contribute to the Fund's finishing just behind its benchmark.
DESCRIBE THE FUND'S TOP HOLDINGS AND ANY SIGNIFICANT TRANSACTIONS MADE DURING
THE PERIOD.
The Fund's biggest position is drugmaker Pfizer Inc. (representing 5.97%).
Pfizer is among the largest of pharmaceutical companies and has a strong
management team. Software company Microsoft Corp. (4.55%) is another top
holding. Microsoft has outperformed most large companies during the bear market
by maintaining strong sales gains. We believe it is positioned to outperform
when technology spending resumes.
The Fund sold home improvement retailer The Home Depot, Inc. Home Depot is
facing declining sales and earnings losses. It also has lowered the bar on its
earnings and sales expectations, while Lowe's Companies, Inc., the company's
main competitor (representing more than 2.00% of the Fund) is increasing its
market share.
HOW IS THE FUND POSITIONED?
We expect the market to remain volatile as the economy's direction becomes
clearer. However, the Fund is positioned to benefit from upward market
movements. Therefore, we remain overweight in the information technology and
financials sectors (by 4.8% and 1.57%, respectively), both of which should
benefit from a market turnaround. We also have increased the Fund's allocation
toward the consumer discretionary sector, because we believe this area will
benefit from a slight increase in consumer spending. On the whole, the Fund
remains broadly diversified across all market sectors and industries to manage
market volatility.
PORTFOLIO MANAGER: Christopher Baggini, CFA
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $276,473,446
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. 5 YR. 10 YR.
- -------------------------------------------------------------------
Class A1 . . . . . . . . . . . w/o SC2 -18.08% -14.17% 1.45%
w/SC3 -22.81% -15.18% 0.86%
- -------------------------------------------------------------------
Class B1 . . . . . . . . . . . w/o SC2 -18.55% -15.19% 0.85%
w/SC4 -22.62% -15.40% 0.85%
- -------------------------------------------------------------------
Class C1 . . . . . . . . . . . w/o SC2 -18.69% -14.50% 1.26%
w/SC5 -20.35% -14.67% 1.16%
- -------------------------------------------------------------------
Class D. . . . . . . . . . . . w/o SC2 -17.93% -13.99% 1.56%
w/SC6 -21.66% -14.78% 1.09%
- -------------------------------------------------------------------
Institutional Service Class1,7 -17.90% -13.95% 1.58%
- -------------------------------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 These returns include performance based on Class D shares, which was
achieved prior to the creation of Class A and Class B (5/11/98), Class C
(3/1/01) and Institutional Service Class (1/2/02) shares. These returns
have been restated for sales charges but not for fees applicable to these
classes of shares, which include a 0.25% (Class A) or 1.00% (Class B and
Class C) 12b-1 fee. Had Class A, Class B or Class C been in existence for
the time periods presented, the performance for such classes would have
been lower as a result of their additional expenses. Had Institutional
Service Class been in existence for the time periods presented, the
performance of such class would have been similar assuming similar
expenses.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
6 A 4.50% front-end sales charge was deducted.
7 Not subject to any sales charges.
+ See legend on first page of this report.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
See legend on first page of this report.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
RUSSELL 1000
DATE CLASS D GROWTH CPI
- -------------------------------------------
4/30/1993. 9,550 10,000 10,000
10/31/1993 10,372 10,731 10,275
10/31/1994 10,967 11,311 10,543
10/31/1995 13,271 14,617 10,839
10/31/1996 14,911 17,840 11,164
10/31/1997 19,700 23,276 11,396
10/31/1998 22,839 29,012 11,566
10/31/1999 26,737 38,948 11,862
10/31/2000 25,072 42,583 12,271
10/31/2001 13,270 25,573 12,532
10/31/2002 10,701 20,556 12,786
4/30/2003. 11,148 21,436 13,079
Comparative performance of $10,000 invested in Class D shares of the Gartmore
Growth Fund, the Russell 1000 Growth Index (Russell 1000 Growth)(a), and the
Consumer Price Index (CPI)(b) over a 10-year period ended 4/30/03. Unlike the
Fund, the returns for these indices do not reflect any fees, expenses, or sales
charges.
(a) The Russell 1000 Growth is an unmanaged index of the growth securities of
large U.S. companies included in the Russell 1000 Index.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
6 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE GROWTH FUND
COMMON STOCKS (100.1%)
SHARES OR
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------
AEROSPACE/DEFENSE (1.1%)
Lockheed Martin Corp.. . . . . . . . . . . . . 60,000 $ 3,003,000
-----------
- -----------------------------------------------------------------------------
AIRLINES (0.5%)
JetBlue Airways Corp. (b). . . . . . . . . . . 48,000 1,508,640
-----------
- -----------------------------------------------------------------------------
AUTOMOTIVE (1.3%)
Advance Auto Parts, Inc. (b) . . . . . . . . . 44,400 2,208,456
Harley-Davidson, Inc.. . . . . . . . . . . . . 32,500 1,444,300
-----------
3,652,756
-----------
- -----------------------------------------------------------------------------
BANKS (1.1%)
North Fork Bancorporation, Inc.. . . . . . . . 43,500 1,407,660
Wells Fargo & Co.. . . . . . . . . . . . . . . 31,650 1,527,429
-----------
2,935,089
-----------
- -----------------------------------------------------------------------------
BROADCAST MEDIA/CABLE TELEVISION (4.6%)
AOL Time Warner, Inc. (b). . . . . . . . . . . 238,700 3,265,416
Clear Channel Communications, Inc. (b) . . . . 106,300 4,157,393
Fox Entertainment Group, Inc. (b). . . . . . . 59,000 1,498,600
Viacom, Inc. Class B (b) . . . . . . . . . . . 86,000 3,733,260
-----------
12,654,669
-----------
- -----------------------------------------------------------------------------
BUSINESS SERVICES (2.1%)
Aramark Corp. (b). . . . . . . . . . . . . . . 68,000 1,561,280
First Data Corp. . . . . . . . . . . . . . . . 72,800 2,855,944
Fiserv, Inc. (b) . . . . . . . . . . . . . . . 50,000 1,472,000
-----------
5,889,224
-----------
- -----------------------------------------------------------------------------
CAPITAL GOODS (4.8%)
General Electric Co. . . . . . . . . . . . . . 451,900 13,308,455
-----------
- -----------------------------------------------------------------------------
CHEMICALS (0.5%)
Praxair, Inc.. . . . . . . . . . . . . . . . . 23,000 1,335,840
-----------
- -----------------------------------------------------------------------------
COMPUTER EQUIPMENT (6.0%)
Cisco Systems, Inc. (b). . . . . . . . . . . . 385,000 5,790,400
Dell Computer Corp. (b). . . . . . . . . . . . 220,000 6,360,200
EMC Corp. (b). . . . . . . . . . . . . . . . . 340,000 3,090,600
International Business Machines Corp.. . . . . 14,000 1,188,600
-----------
16,429,800
-----------
- -----------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (9.8%)
Affiliated Computer Services, Inc. Class A (b) 42,000 2,003,400
Cognos, Inc. (b) . . . . . . . . . . . . . . . 72,000 1,954,080
Mercury Interactive Corp. (b). . . . . . . . . 70,000 2,375,800
Microsoft Corp.. . . . . . . . . . . . . . . . 484,000 12,375,880
Oracle Corp. (b) . . . . . . . . . . . . . . . 265,000 3,148,200
SAP AG ADR . . . . . . . . . . . . . . . . . . 58,500 1,492,335
Symantec Corp. (b) . . . . . . . . . . . . . . 82,800 3,639,060
-----------
26,988,755
-----------
- -----------------------------------------------------------------------------
SHARES OR
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------
CONSUMER PRODUCTS (1.9%)
Alberto-Culver Co. Class B . . . . . . . 27,100 $ 1,335,488
The Procter & Gamble Co. . . . . . . . . 43,990 3,952,502
-----------
5,287,990
-----------
- -----------------------------------------------------------------------
CRUISE LINES (0.2%)
Carnival Corp. . . . . . . . . . . . . . 22,600 623,534
-----------
- -----------------------------------------------------------------------
DRUGS (10.0%)
Abbott Laboratories. . . . . . . . . . . 65,000 2,640,950
Biovail Corp. (b). . . . . . . . . . . . 31,000 1,120,650
Medicis Pharmaceutical Corp. Class A (b) 13,000 749,320
Pfizer, Inc. . . . . . . . . . . . . . . 530,160 16,302,420
Teva Pharmaceutical Industries Ltd.. . . 50,000 2,335,000
Wyeth. . . . . . . . . . . . . . . . . . 98,300 4,278,999
-----------
27,427,339
-----------
- -----------------------------------------------------------------------
FINANCIAL SERVICES (5.8%)
American Express Co. . . . . . . . . . . 77,100 2,919,006
Capital One Financial Corp.. . . . . . . 52,500 2,198,175
Citigroup, Inc.. . . . . . . . . . . . . 115,000 4,513,750
Legg Mason, Inc. . . . . . . . . . . . . 50,000 2,715,000
MBNA Corp. . . . . . . . . . . . . . . . 77,500 1,464,750
Morgan Stanley . . . . . . . . . . . . . 45,600 2,040,600
-----------
15,851,281
-----------
- -----------------------------------------------------------------------
FOOD & BEVERAGE (4.4%)
Coca-Cola Co.. . . . . . . . . . . . . . 105,900 4,278,360
Kellogg Co.. . . . . . . . . . . . . . . 25,000 818,500
PepsiCo, Inc.. . . . . . . . . . . . . . 140,000 6,059,200
Sysco Corp.. . . . . . . . . . . . . . . 34,000 976,820
-----------
12,132,880
-----------
- -----------------------------------------------------------------------
HEALTHCARE (2.8%)
Cardinal Health, Inc.. . . . . . . . . . 20,000 1,105,600
Express Scripts, Inc. (b). . . . . . . . 36,000 2,122,560
St. Jude Medical, Inc. (b) . . . . . . . 40,000 2,098,400
UnitedHealth Group, Inc. . . . . . . . . 17,500 1,612,275
WellPoint Health Networks, Inc. (b). . . 8,800 668,272
-----------
7,607,107
-----------
- -----------------------------------------------------------------------
INSURANCE (1.8%)
American International Group, Inc. . . . 84,000 4,867,800
-----------
- -----------------------------------------------------------------------
MANUFACTURING (1.2%)
3M Co. . . . . . . . . . . . . . . . . . 10,200 1,285,608
Danaher Corp.. . . . . . . . . . . . . . 29,900 2,062,502
-----------
3,348,110
-----------
- -----------------------------------------------------------------------
2003 SEMIANNUAL REPORT 7
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
April 30, 2003 (Unaudited)
GARTMORE GROWTH FUND (Continued)
COMMON STOCKS (CONTINUED)
SHARES OR
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------
MEDICAL PRODUCTS (12.1%)
Amgen, Inc. (b). . . . . . . . . . . . . 110,000 $ 6,744,100
Boston Scientific Corp. (b). . . . . . . 75,000 3,228,750
Genzyme Corp. (b). . . . . . . . . . . . 52,500 2,114,700
Johnson & Johnson. . . . . . . . . . . . 184,400 10,392,784
Medtronic, Inc.. . . . . . . . . . . . . 50,000 2,387,000
Merck & Co., Inc.. . . . . . . . . . . . 109,600 6,376,528
Zimmer Holdings, Inc. (b). . . . . . . . 40,000 1,876,000
-----------
33,119,862
-----------
- -----------------------------------------------------------------------
MORTGAGE/ASSET BACKED OBLIGATIONS (2.4%)
Fannie Mae . . . . . . . . . . . . . . . 71,500 5,175,885
Freddie Mac. . . . . . . . . . . . . . . 24,600 1,424,340
-----------
6,600,225
-----------
- -----------------------------------------------------------------------
OIL & GAS (1.3%)
Apache Corp. . . . . . . . . . . . . . . 21,340 1,221,715
Murphy Oil Corp. . . . . . . . . . . . . 55,000 2,290,750
-----------
3,512,465
-----------
- -----------------------------------------------------------------------
RESTAURANTS (1.1%)
Applebee's International, Inc. . . . . . 40,000 1,096,000
Brinker International, Inc. (b). . . . . 57,200 1,816,100
-----------
2,912,100
-----------
- -----------------------------------------------------------------------
RETAIL (11.8%)
Abercrombie & Fitch Co. (b). . . . . . . 48,000 1,578,240
Home Depot, Inc. . . . . . . . . . . . . 142,500 4,008,525
Kohl's Corp. (b) . . . . . . . . . . . . 49,000 2,783,200
Lowe's Companies, Inc. . . . . . . . . . 140,000 6,144,600
Target Corp. . . . . . . . . . . . . . . 164,000 5,484,160
The Gap, Inc.. . . . . . . . . . . . . . 313,500 5,213,505
Wal-Mart Stores, Inc.. . . . . . . . . . 102,597 5,778,263
Williams-Sonoma, Inc. (b). . . . . . . . 54,000 1,397,520
-----------
32,388,013
-----------
- -----------------------------------------------------------------------
SEMICONDUCTORS (8.2%)
Agere Systems, Inc. Class A (b). . . . . 1,000,000 1,790,000
Analog Devices, Inc. (b) . . . . . . . . 62,600 2,073,312
Applied Materials, Inc. (b). . . . . . . 123,000 1,795,800
Emulex Corp. (b) . . . . . . . . . . . . 141,000 2,889,090
Intel Corp.. . . . . . . . . . . . . . . 508,600 9,358,240
KLA-Tencor Corp. (b) . . . . . . . . . . 33,000 1,353,000
Maxim Integrated Products, Inc.. . . . . 45,300 1,779,837
Novellus Systems, Inc. (b) . . . . . . . 50,000 1,402,000
-----------
22,441,279
-----------
- -----------------------------------------------------------------------
SHARES OR
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------
TELECOMMUNICATIONS (3.3%)
AT&T Wireless Services, Inc. (b) 305,000 $ 1,970,300
Juniper Networks, Inc. (b) . . . 64,000 654,080
Nokia Corp.. . . . . . . . . . . 200,000 3,314,000
Qualcomm, Inc. . . . . . . . . . 52,500 1,674,225
Verizon Communications, Inc. . . 40,600 1,517,628
------------
9,130,233
------------
TOTAL COMMON STOCKS 274,956,446
------------
INSURANCE (0.6%)
Allstate Corp., 1.34%, 05/01/03 (c). . . $ 1,517,000 1,517,000
------------
TOTAL COMMERCIAL PAPER 1,517,000
------------
276,473,446
------------
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.7)% (1,946,687)
------------
NET ASSETS - 100.0% $274,526,759
============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Denotes a non-income producing security.
(c) Retricted securities issued pursuant to Section 4(2) to the Securities Act
of 1993.These securities were deemed liquid pursuant to procedures approved
by the Board of Trustees.
ADR American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
8 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE LARGE CAP VALUE FUND
Class A Shares symbol: NPVAX
Class B Shares symbol: NLVBX
Class C Shares symbol: NLVAX
Institutional Service Class symbol: NLVIX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 3.24%* versus
5.25% for its benchmark, the Russell 1000 Value Index.
For broader comparison, the average return for this Fund's peer category
(Multi-Cap Value Funds) was 5.41%, according to Lipper, an independent company
that provides mutual fund data and analysis.
WHAT MARKET/ECONOMIC AND PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
The fourth quarter of 2002 closed out one of the toughest years in the stock
market's history. The S&P 500 Index had its worst year since 1974, falling
22.1%. The 15.5% decline of the Russell 1000 Value Index during 2002 was its
poorest annual performance since its inception in 1979. By the first quarter of
2003, news from the war in Iraq was driving performance. Investor uncertainty
led to volatile market movements during the first three months of the year, with
gains in early January, losses in February and a positive spurt to end March.
During the period, we maintained our focus on names with attractive valuations,
strong fundamentals and improving profitability.
DESCRIBE THE FUND'S TOP HOLDINGS AND ANY SIGNIFICANT TRANSACTIONS MADE DURING
THE PERIOD.
The Fund's top holdings were Exxon Mobil Corp., Bank of America Corp. and
Citigroup, Inc. Exxon Mobil, the dominant international oil company, has
maintained its industry-leading position through its continued financial
prowess, management strength and diversity of businesses. Bank of America is a
bank and financial holding company that is able to take advantage of an
improving market as well as generate earnings growth in a slow economy.
Citigroup, a diversified financial services holding company, generated stable
returns, driven by a strong consumer segment and improved trading results.
HOW IS THE FUND POSITIONED?
We have positioned the Fund to participate in a market that favors securities
that are trading below their intrinsic value and experiencing improving
fundamentals. Most of the uncertainty regarding the war in Iraq is behind us,
but geopolitics will continue to be a major factor for the financial markets.
The world is filled with uncertainty due to the continued threats of terrorism,
the difficult issues in dealing with a post-conflict Iraq, continued tensions
with North Korea and now SARS, the potential world health crisis. Nevertheless,
we believe that accommodative fiscal and monetary policy should begin to spur
the economy's recovery and send the stock market to higher levels. While we have
positioned the Fund for brighter days ahead, we remain vigilant, keeping a
watchful eye on potential threats to recovery.
PORTFOLIO MANAGER: NorthPointe Capital, LLC - Subadviser
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $24,491,570
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. INCEPTION1
- ---------------------------------------
Class A. w/o SC2 -13.49% -0.44%
w/SC3 -18.47% -1.74%
- ---------------------------------------
Class B. w/o SC2 -13.97% -1.25%
w/SC4 -18.25% -1.66%
- ---------------------------------------
Class C5 w/o SC2 -13.89% -1.20%
w/SC6 -15.57% -1.42%
- ---------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 Fund commenced operations on November 2, 1998.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 These returns include performance based on Class B shares, which was
achieved prior to the creation of Class C shares (3/1/01). These returns
have been restated for sales charges but not for fees applicable to Class C
shares. Had Class C been in existence for the time periods presented, the
performance of Class C shares would have been similar assuming similar
expenses.
6 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
RUSSELL
DATE CLASS A 1000 VALUE CPI
- -------------------------------------------
11/2/1998. 9,425 10,000 10,000
10/31/1999 9,789 11,653 10,256
10/31/2000 10,581 12,295 10,610
10/31/2001 9,727 10,837 10,835
10/31/2002 8,951 9,751 11,055
4/30/2003. 9,241 10,263 11,309
Comparative performance of $10,000 invested in Class A shares of the Gartmore
Large Cap Value Fund, the Russell 1000 Value Index (Russell 1000 Value)(a), and
the Consumer Price Index (CPI)(b) since inception. Unlike the Fund, the returns
for these indices do not reflect any fees, expenses, or sales charges.
(a) The Russell 1000 Value is an unmanaged index of the value securities of
large U.S. companies included in the Russell 1000 Index.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
2003 SEMIANNUAL REPORT 9
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE LARGE CAP VALUE FUND
COMMON STOCKS (99.7%)
SHARES VALUE
- ---------------------------------------------------------
AEROSPACE & DEFENSE (2.6%)
Raytheon Co.. . . . . . . . . . . . . 10,800 $ 323,244
United Technologies Corp. . . . . . . 5,200 321,412
----------
644,656
----------
- ---------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.8%)
Fed Ex Corp.. . . . . . . . . . . . . 3,100 185,628
----------
- ---------------------------------------------------------
AUTOMOBILES (1.2%)
General Motors Corp.. . . . . . . . . 8,300 299,215
----------
- ---------------------------------------------------------
BANKS (14.7%)
Bank of America Corp. . . . . . . . . 12,400 918,220
Bank One Corp.. . . . . . . . . . . . 7,000 252,350
Banknorth Group, Inc. . . . . . . . . 9,600 229,248
GreenPoint Financial Corp.. . . . . . 5,500 262,680
Provident Financial Group . . . . . . 6,500 153,725
U.S. Bancorp. . . . . . . . . . . . . 11,000 243,650
UnionBanCal Corp. . . . . . . . . . . 4,800 193,920
Wachovia Corp.. . . . . . . . . . . . 11,300 431,773
Washington Mutual, Inc. . . . . . . . 12,400 489,800
Wells Fargo Co. . . . . . . . . . . . 9,500 458,470
----------
3,633,836
----------
- ---------------------------------------------------------
BEVERAGES (0.8%)
Constellation Brands, Inc. (b). . . . 7,000 187,670
----------
- ---------------------------------------------------------
CHEMICALS (2.1%)
Air Products & Chemicals, Inc.. . . . 6,700 288,569
Valspar Corp. . . . . . . . . . . . . 5,100 220,269
----------
508,838
----------
- ---------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (1.0%)
H&R Block, Inc. . . . . . . . . . . . 6,400 247,168
----------
- ---------------------------------------------------------
COMPUTERS & PERIPHERALS (4.7%)
Hewlett-Packard Co. . . . . . . . . . 20,400 332,520
International Business Machines . . . 7,200 611,280
Storage Technology Corp. (b). . . . . 8,400 207,648
----------
1,151,448
----------
- ---------------------------------------------------------
DIVERSIFIED FINANCIALS (10.3%)
American Express Co.. . . . . . . . . 5,600 212,016
Bear Stearns Cos., Inc. . . . . . . . 3,500 233,940
Citigroup, Inc. . . . . . . . . . . . 23,960 940,430
Countrywide Credit Industries, Inc. . 4,300 290,680
Goldman Sachs Group, Inc. . . . . . . 1,400 106,260
J.P. Morgan Chase & Co. . . . . . . . 11,200 328,720
Merrill Lynch & Co., Inc. . . . . . . 4,300 176,515
Morgan Stanley Dean Witter & Co.. . . 5,700 255,075
----------
2,543,636
----------
- ---------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------------------
DIVERSIFIED MATERIALS & PROCESSING (1.0%)
Engelhard Corp.. . . . . . . . . . . . . . . . 10,400 $ 255,320
-----------
- ------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (5.8%)
Bellsouth Corp.. . . . . . . . . . . . . . . . 6,800 173,332
SBC Communications, Inc. . . . . . . . . . . . 12,500 292,000
Sprint Corp. . . . . . . . . . . . . . . . . . 18,800 216,388
Verizon Communications, Inc. . . . . . . . . . 19,700 736,386
-----------
1,418,106
-----------
- ------------------------------------------------------------------
DRUGS & PHARMACEUTICALS (0.9%)
Eli Lilly & Co.. . . . . . . . . . . . . . . . 3,600 229,752
-----------
- ------------------------------------------------------------------
ELECTRIC UTILITIES (4.2%)
Duke Power Co. . . . . . . . . . . . . . . . . 5,800 102,022
Edison International (b) . . . . . . . . . . . 16,200 236,358
Entergy Corp.. . . . . . . . . . . . . . . . . 5,700 265,677
Exelon Corp. . . . . . . . . . . . . . . . . . 5,600 297,024
Wisconsin Energy Corp. . . . . . . . . . . . . 5,300 139,549
-----------
1,040,630
-----------
- ------------------------------------------------------------------
FOOD & DRUG RETAILING (0.7%)
Kroger Co. (b) . . . . . . . . . . . . . . . . 12,100 173,030
-----------
- ------------------------------------------------------------------
FOOD PRODUCTS (0.8%)
Sara Lee Corp. . . . . . . . . . . . . . . . . 11,400 191,292
-----------
- ------------------------------------------------------------------
GAS UTILITIES (0.8%)
Sempra Energy. . . . . . . . . . . . . . . . . 7,500 201,300
-----------
- ------------------------------------------------------------------
HEALTHCARE EQUIPMENT & SUPPLIES (0.6%)
DENTSPLY International, Inc. . . . . . . . . . 3,800 142,310
-----------
- ------------------------------------------------------------------
HEALTHCARE SERVICES (0.8%)
Humana, Inc. (b) . . . . . . . . . . . . . . . 17,100 188,955
-----------
- ------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.0%)
Outback Steakhouse, Inc. . . . . . . . . . . . 6,700 239,458
-----------
- ------------------------------------------------------------------
HOUSEHOLD PRODUCTS (1.0%)
Procter & Gamble Co. . . . . . . . . . . . . . 2,700 242,595
-----------
- ------------------------------------------------------------------
IDENTIFICATION CONTROL & FILTER DEVICES (0.7%)
American Power Conversion Corp. (b). . . . . . 11,700 182,286
-----------
- ------------------------------------------------------------------
10 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SHARES VALUE
- --------------------------------------------------------------
INSURANCE (6.8%)
Allstate Corp. (The) . . . . . . . . . . . 9,900 $ 374,121
American International Group, Inc. . . . . 5,950 344,803
Fidelity National Financial, Inc.. . . . . 5,870 201,928
Old Republic International Corp. . . . . . 5,600 171,360
Prudential Financial, Inc. . . . . . . . . 4,100 131,077
Torchmark Corp.. . . . . . . . . . . . . . 4,500 174,375
Travelers Property Casualty Corp. Class B. 16,084 261,365
----------
1,659,029
- --------------------------------------------------------------
MACHINERY (1.6%)
Deere & Co.. . . . . . . . . . . . . . . . 4,300 189,329
Paccar, Inc. . . . . . . . . . . . . . . . 3,500 204,435
----------
393,764
----------
- --------------------------------------------------------------
MEDIA (7.2%)
AOL Time Warner, Inc. (b). . . . . . . . . 23,800 325,584
Comcast Corp Class A (b) . . . . . . . . . 4,943 157,731
Gannett Co., Inc.. . . . . . . . . . . . . 3,700 280,164
Liberty Media Corp. (b). . . . . . . . . . 24,400 268,400
McGraw-Hill Cos., Inc. (The) . . . . . . . 2,600 151,814
Viacom, Inc. Class B (b) . . . . . . . . . 6,300 273,483
Walt Disney Co. (The). . . . . . . . . . . 17,200 320,952
----------
1,778,128
----------
- --------------------------------------------------------------
METALS & MINING (0.8%)
Nucor Corp.. . . . . . . . . . . . . . . . 4,700 191,995
----------
- --------------------------------------------------------------
MILLINERY (0.8%)
Archer-Daniels-Midland Co. . . . . . . . . 17,800 197,224
----------
- --------------------------------------------------------------
MULTI-SECTOR COMPANIES (1.5%)
Fortune Brands, Inc. . . . . . . . . . . . 4,200 203,280
Textron, Inc.. . . . . . . . . . . . . . . 5,600 165,144
----------
368,424
----------
- --------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER (0.8%)
Questar Corp.. . . . . . . . . . . . . . . 6,900 208,380
----------
- --------------------------------------------------------------
MULTILINE RETAIL (1.3%)
Federated Department Stores, Inc. (b). . . 6,000 183,720
Sears, Roebuck & Co. . . . . . . . . . . . 4,400 124,696
----------
308,416
----------
- --------------------------------------------------------------
OIL & GAS (10.3%)
Amerada Hess Corp. . . . . . . . . . . . . 3,300 148,995
ChevronTexaco Corp.. . . . . . . . . . . . 8,100 508,761
ConocoPhillips . . . . . . . . . . . . . . 6,700 337,010
Exxon Mobil Corp.. . . . . . . . . . . . . 37,600 1,323,520
Marathon Oil Corp. . . . . . . . . . . . . 10,000 227,700
----------
2,545,986
----------
- --------------------------------------------------------------
SHARES VALUE
- ---------------------------------------------------------------------
PAPER & FOREST PRODUCTS (1.1%)
Georgia Pacific Corp.. . . . . . . . . . . . . . 17,200 $ 265,568
-----------
- ---------------------------------------------------------------------
PERSONAL PRODUCTS (0.8%)
Avon Products, Inc.. . . . . . . . . . . . . . . 3,400 197,778
-----------
- ---------------------------------------------------------------------
PHARMACEUTICALS (1.9%)
Merck & Co., Inc.. . . . . . . . . . . . . . . . 8,100 471,258
-----------
- ---------------------------------------------------------------------
REAL ESTATE (1.7%)
General Growth Properties, Inc.. . . . . . . . . 2,400 133,488
Prologis Trust . . . . . . . . . . . . . . . . . 5,500 141,570
Simon Property Group, Inc. . . . . . . . . . . . 3,600 132,192
-----------
407,250
-----------
- ---------------------------------------------------------------------
RETAIL (0.6%)
Circuit City Stores-Circuit City Group . . . . . 24,200 138,666
-----------
- ---------------------------------------------------------------------
ROAD & RAIL (1.1%)
Union Pacific Corp.. . . . . . . . . . . . . . . 4,700 279,744
-----------
- ---------------------------------------------------------------------
SAVINGS & LOANS (0.9%)
Sovereign Bancorp, Inc.. . . . . . . . . . . . . 14,300 220,935
-----------
- ---------------------------------------------------------------------
SEMICONDUCTORS (0.4%)
Linear Technology Corp.. . . . . . . . . . . . . 2,900 99,963
-----------
- ---------------------------------------------------------------------
SOAPS & HOUSEHOLD CHEMICALS (0.6%)
Dial Corp. . . . . . . . . . . . . . . . . . . . 6,700 139,561
-----------
- ---------------------------------------------------------------------
TELECOMMUNICATIONS (1.7%)
CenturyTel, Inc. . . . . . . . . . . . . . . . . 7,200 212,040
Comverse Technology, Inc. (b). . . . . . . . . . 15,200 198,664
-----------
410,704
-----------
- ---------------------------------------------------------------------
TEXTILES (0.5%)
Liz Claiborne, Inc.. . . . . . . . . . . . . . . 3,600 117,108
-----------
- ---------------------------------------------------------------------
TOBACCO (0.8%)
Altria Group, Inc. . . . . . . . . . . . . . . . 6,000 184,560
-----------
- ---------------------------------------------------------------------
TOTAL COMMON STOCKS 24,491,570
-----------
- ---------------------------------------------------------------------
TOTAL INVESTMENTS (COST $24,887,915) (A) - 99.7% 24,491,570
-----------
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.3% 70,231
-----------
NET ASSETS - 100.0% $24,561,801
===========
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Denotes a non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 11
- --------------------------------------------------------------------------------
GARTMORE NATIONWIDE FUND
Class A Shares symbol: NWFA
Class B Shares symbol: NWFB
Class C Shares symbol: GTRC
Class D Shares symbol: MUIFX
Institutional Service Class symbol: GTISX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 4.33%* versus
4.47% for its benchmark, the S&P 500 Index.
For broader comparison, the average return for this Fund's peer category
(Large-Core) was 2.96%, according to Lipper, an independent company that
provides mutual fund data and analysis.
WHAT MARKET/ECONOMIC AND PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
Despite weak economic growth and a jobless recovery, markets rebounded in April
because of better-than-expected first-quarter profits and the successful
resolution of the conflict in Iraq. Improved capital spending numbers during the
first quarter of 2003 (for information processing equipment and software) also
boosted investor sentiment.
The Fund's positioning for an economic recovery helped returns, because the Fund
was overweight in the top-performing sectors, including industrials, information
technology and materials. Stock selection brought better results than those of
the Index in the industrial, health-care and utility sectors.
However, stock selection within the financial and consumer discretionary sectors
detracted from Fund performance, primarily due to underperformers such as MBNA
Corp. and Maytag Corp. Both positions fell as a result of investor fears about
reduced consumer spending.
DESCRIBE THE FUND'S TOP HOLDINGS AND ANY SIGNIFICANT TRANSACTIONS MADE DURING
THE PERIOD.
Top holdings included Microsoft Corp., Pfizer Inc., General Electric Co.,
Johnson & Johnson and Citigroup, Inc. General Electric surged because of
positive sentiment about a number of its businesses, while Citigroup posted
strong first-quarter profits stemming from robust consumer loan activity and
fewer bad loans. Microsoft Corp fell due to concerns about weak tech spending,
while Pfizer and Johnson & Johnson both experienced acquisition-related concerns
during the period. Pfizer purchased Pharmacia Corp., and Johnson & Johnson
purchased Scios, Inc., a 30-year-old biotechnology company. We expect both
purchases to make positive contributions the long term.
We added new positions to the tech sector, including Unisys Corp. and Taiwan
Semiconductor Manufacturing Co. Ltd., as well as new stocks in the health-care
tor, such as Amgen, Inc. We sold consumer discretionary stocks such as Maytag
Corp. and The Black & Decker Corp., based on slowing sales. We sold MBNA Corp.
based on our concerns about consumer credit quality.
HOW IS THE FUND POSITIONED?
Now that the conflict in Iraq has ended, investors are once again focusing on
long-term economic fundamentals and corporate profits, which we believe will
show improvement during the year.
We have increased the Fund's allocation to its larger-cap holdings to take
advantage of the weakening dollar, which helps U.S. export activity. We also
have increased weighting to information technology stocks, based on our
expectation that these stocks will gain from greater capital spending. We have
shifted the composition of the Fund's financial holdings away from
consumer-related financial companies to those companies that have more exposure
to commercial lending activity.
PORTFOLIO MANAGERS: William Miller and Simon Melluish
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $1,600,885,624
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30. 2003)
1 YR. 5 YR. 10 YR.
- ------------------------------------------------------------------
Class A1 . . . . . . . . . . . w/o SC2 -13.96% -3.87% 9.04%
w/SC3 -18.92% -5.00% 8.40%
- ------------------------------------------------------------------
Class B1 . . . . . . . . . . . w/o SC2 -14.56% -4.67% 8.59%
w/SC4 -18.83% -4.91% 8.59%
- ------------------------------------------------------------------
Class C1 . . . . . . . . . . . w/o SC2 -14.55% -4.11% 8.91%
w/SC5 -16.24% -4.30% 8.80%
- ------------------------------------------------------------------
Class D. . . . . . . . . . . . w/o SC2 -13.69% -3.71% 9.14%
w/SC6 -17.59% -4.59% 8.64%
- ------------------------------------------------------------------
Institutional Service Class1,7 -13.68% -3.70% 9.14%
- ------------------------------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 These returns include performance based on Class D shares, which was
achieved prior to the creation of Class A and Class B (5/11/98), Class C
(3/1/01) and Institutional Service Class (1/2/02) shares. These returns
have been restated for sales charges but not for fees applicable to these
classes of shares, which include a 0.25% (Class A) or 1.00% (Class B and
Class C) 12b-1 fee. Had Class A, Class B or Class C been in existence for
the time periods presented, the performance for such classes would have
been lower as a result of their additional expenses. Had Institutional
Service Class been in existence for the time periods presented, the
performance of such class would have been similar assuming similar
expenses.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
6 A 4.50% front-end sales charge was deducted.
7 Not subject to any sales charges.
+ See legend on first page of this report.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
DATE CLASS D S&P 500 INDEX CPI
- --------------------------------------------
4/30/1993 9,550 10,000 10,000
10/31/1993 10,137 11,487 10,275
10/31/1994 10,632 11,939 10,543
10/31/1995 12,677 15,082 10,839
10/31/1996 15,986 18,712 11,164
10/31/1997 22,409 24,732 11,396
10/31/1998 28,174 30,173 11,566
10/31/1999 31,067 37,918 11,862
10/31/2000 31,502 40,228 12,271
10/31/2001 24,187 30,210 12,532
10/31/2002 21,907 25,646 12,786
4/30/2003 22,895 26,794 13,079
Comparative performance of $10,000 invested in Class D shares of the Gartmore
Nationwide Fund, S&P 500 Index (S&P 500)(a), and the Consumer Price Index
(CPI)(b) over a 10-year period ended 4/30/03. Unlike the Fund, the returns for
these indices do not reflect any fees, expense, or sales charges.
(a) The S&P 500 is a capitalization-weighted index of 500 stocks designed to
measure performance of the broad domestic economy through changes in the
aggregate market value of these 500 stocks which represent all major
industries.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
12 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE NATIONWIDE FUND
COMMON STOCKS (98.1%)
SHARES OR
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------------------
AEROSPACE/DEFENSE (0.6%)
The Boeing Co. . . . . . . . . . . . . . . . . 375,697 $ 10,249,014
------------
- ------------------------------------------------------------------------------
BANKS (6.8%)
Bank of America Corp.. . . . . . . . . . . . . 175,500 12,995,775
J.P. Morgan Chase & Co.. . . . . . . . . . . . 394,051 11,565,397
Mellon Financial Corp. . . . . . . . . . . . . 559,927 14,810,069
Merrill Lynch & Co., Inc.. . . . . . . . . . . 193,420 7,939,891
The Bank of New York Co., Inc. . . . . . . . . 347,600 9,194,020
U.S. Bancorp . . . . . . . . . . . . . . . . . 1,015,130 22,485,130
Wachovia Corp. . . . . . . . . . . . . . . . . 243,500 9,304,135
Wells Fargo & Co.. . . . . . . . . . . . . . . 386,004 18,628,553
------------
106,922,970
------------
- ------------------------------------------------------------------------------
BROADCAST MEDIA/CABLE TELEVISION (4.0%)
AOL Time Warner, Inc. (b). . . . . . . . . . . 1,183,559 16,191,087
Clear Channel Communications, Inc. (b) . . . . 598,471 23,406,201
Viacom, Inc. Class B (b) . . . . . . . . . . . 548,317 23,802,441
------------
63,399,729
------------
- ------------------------------------------------------------------------------
CAPITAL GOODS (5.7%)
Dover Corp.. . . . . . . . . . . . . . . . . . 266,500 7,659,210
Eaton Corp.. . . . . . . . . . . . . . . . . . 192,587 15,805,615
General Electric Co. . . . . . . . . . . . . . 1,382,813 40,723,843
Paccar, Inc. . . . . . . . . . . . . . . . . . 220,969 12,906,799
Pall Corp. . . . . . . . . . . . . . . . . . . 570,673 12,052,614
------------
89,148,081
------------
- ------------------------------------------------------------------------------
CHEMICALS (1.6%)
Air Products & Chemicals, Inc. . . . . . . . . 110,911 4,776,937
Dow Chemical Co. . . . . . . . . . . . . . . . 251,071 8,194,958
E.I. du Pont de Nemours & Co.. . . . . . . . . 161,465 6,867,106
Ecolab, Inc. . . . . . . . . . . . . . . . . . 92,111 4,705,951
------------
24,544,952
------------
- ------------------------------------------------------------------------------
COMPUTER EQUIPMENT (3.8%)
Cisco Systems, Inc. (b). . . . . . . . . . . . 1,053,437 15,843,692
Dell Computer Corp. (b). . . . . . . . . . . . 530,150 15,326,637
Hewlett-Packard Co.. . . . . . . . . . . . . . 1,729,967 28,198,462
------------
59,368,791
------------
- ------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (8.1%)
Affiliated Computer Services, Inc. Class A (b) 254,591 12,143,991
Automatic Data Processing, Inc.. . . . . . . . 124,300 4,180,209
BMC Software, Inc. (b) . . . . . . . . . . . . 227,360 3,392,211
Microsoft Corp.. . . . . . . . . . . . . . . . 2,118,324 54,165,544
Oracle Corp. (b) . . . . . . . . . . . . . . . 830,000 9,860,400
Sun Microsystems, Inc. (b) . . . . . . . . . . 3,656,494 12,066,430
Symantec Corp. (b) . . . . . . . . . . . . . . 321,968 14,150,494
Unisys Corp. (b) . . . . . . . . . . . . . . . 1,800,400 18,724,160
------------
128,683,439
------------
- ------------------------------------------------------------------------------
CONGLOMERATES (0.7%)
Ingersoll-Rand Co. . . . . . . . . . . . . . . 260,295 11,473,804
------------
- ------------------------------------------------------------------------------
CONSTRUCTION & BUILDING MATERIALS (1.6%)
Centex Corp. . . . . . . . . . . . . . . . . . 193,760 12,792,035
Masco Corp.. . . . . . . . . . . . . . . . . . 606,008 12,768,589
------------
25,560,624
------------
- ------------------------------------------------------------------------------
CONSUMER PRODUCTS (3.7%)
Black & Decker Corp. . . . . . . . . . . . . . 250,910 10,350,038
Colgate-Palmolive Co.. . . . . . . . . . . . . 78,600 4,493,562
Fortune Brands, Inc. . . . . . . . . . . . . . 181,200 8,770,080
Maytag Corp. . . . . . . . . . . . . . . . . . 228,482 4,761,565
The Gillette Co. . . . . . . . . . . . . . . . 146,500 4,460,925
The Procter & Gamble Co. . . . . . . . . . . . 289,825 26,040,776
------------
58,876,946
------------
- ------------------------------------------------------------------------------
CRUISE LINES (0.2%)
Carnival Corp. . . . . . . . . . . . . . . . . 126,600 3,492,894
------------
- ------------------------------------------------------------------------------
DRUGS (4.5%)
Abbott Laboratories. . . . . . . . . . . . . . 97,100 3,945,173
Medimmune, Inc. (b). . . . . . . . . . . . . . 32,000 1,128,640
Pfizer, Inc. . . . . . . . . . . . . . . . . . 1,458,648 44,853,426
Wyeth. . . . . . . . . . . . . . . . . . . . . 485,600 21,138,168
------------
71,065,407
------------
- ------------------------------------------------------------------------------
ELECTRONICS (0.5%)
Cooper Industries, Ltd.. . . . . . . . . . . . 232,900 8,640,590
------------
- ------------------------------------------------------------------------------
FINANCIAL SERVICES (5.1%)
American Express Co. . . . . . . . . . . . . . 168,300 6,371,838
Citigroup, Inc.. . . . . . . . . . . . . . . . 828,216 32,507,478
FleetBoston Financial Corp.. . . . . . . . . . 436,700 11,581,284
Goldman Sachs Group, Inc.. . . . . . . . . . . 132,803 10,079,748
John Hancock Financial Services, Inc.. . . . . 137,300 3,984,446
Morgan Stanley . . . . . . . . . . . . . . . . 179,032 8,011,682
Washington Mutual, Inc.. . . . . . . . . . . . 196,100 7,745,950
------------
80,282,426
------------
- ------------------------------------------------------------------------------
FOOD & BEVERAGE (5.4%)
Altria Group, Inc. . . . . . . . . . . . . . . 386,500 11,888,740
Anheuser-Busch Cos., Inc.. . . . . . . . . . . 326,000 16,260,880
Coca-Cola Co.. . . . . . . . . . . . . . . . . 175,019 7,070,768
General Mills, Inc.. . . . . . . . . . . . . . 94,000 4,240,340
Kraft Foods, Inc. Class A. . . . . . . . . . . 103,300 3,191,970
PepsiCo, Inc.. . . . . . . . . . . . . . . . . 568,935 24,623,506
Sysco Corp.. . . . . . . . . . . . . . . . . . 299,900 8,616,127
Wrigley Co.. . . . . . . . . . . . . . . . . . 149,800 8,495,158
------------
84,387,489
------------
- ------------------------------------------------------------------------------
2003 SEMIANNUAL REPORT 13
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
April 30, 2003 (Unaudited)
GARTMORE NATIONWIDE FUND (Continued)
COMMON STOCKS (CONTINUED)
SHARES OR
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (0.4%)
SAP AG ADR . . . . . . . . . . . . . . . . . 240,300 $ 6,130,053
------------
- ---------------------------------------------------------------------------
HEALTHCARE (3.1%)
Guidant Corp. (b). . . . . . . . . . . . . . 92,302 3,598,855
HCA, Inc.. . . . . . . . . . . . . . . . . . 239,238 7,679,540
Manor Care, Inc. (b) . . . . . . . . . . . . 578,140 11,244,823
St. Jude Medical, Inc. (b) . . . . . . . . . 307,757 16,144,932
WellPoint Health Networks, Inc. (b). . . . . 130,200 9,887,388
------------
48,555,538
------------
- ---------------------------------------------------------------------------
INSURANCE (2.7%)
American International Group, Inc. . . . . . 409,175 23,711,691
Chubb Corp.. . . . . . . . . . . . . . . . . 181,300 9,588,957
MetLife, Inc.. . . . . . . . . . . . . . . . 303,260 8,712,660
------------
42,013,308
------------
- ---------------------------------------------------------------------------
LEISURE PRODUCTS (1.1%)
Brunswick Corp.. . . . . . . . . . . . . . . 781,090 17,051,195
------------
- ---------------------------------------------------------------------------
MANUFACTURING (2.6%)
3M Co. . . . . . . . . . . . . . . . . . . . 111,910 14,105,136
Illinois Tool Works, Inc.. . . . . . . . . . 311,573 19,934,441
Nucor Corp.. . . . . . . . . . . . . . . . . 166,606 6,805,855
------------
40,845,432
------------
- ---------------------------------------------------------------------------
MEDICAL PRODUCTS (7.0%)
Amgen, Inc. (b). . . . . . . . . . . . . . . 390,940 23,968,531
Boston Scientific Corp. (b). . . . . . . . . 163,960 7,058,478
Johnson & Johnson. . . . . . . . . . . . . . 596,153 33,599,184
Medtronic, Inc.. . . . . . . . . . . . . . . 255,800 12,211,892
Merck & Co., Inc.. . . . . . . . . . . . . . 468,400 27,251,512
PerkinElmer, Inc.. . . . . . . . . . . . . . 853,373 8,465,460
------------
112,555,057
------------
- ---------------------------------------------------------------------------
METALS & MINING (0.9%)
Alcoa, Inc.. . . . . . . . . . . . . . . . . 402,816 9,236,571
Phelps Dodge Corp. (b) . . . . . . . . . . . 143,944 4,489,613
------------
13,726,184
------------
- ---------------------------------------------------------------------------
MORTGAGE (1.8%)
Fannie Mae . . . . . . . . . . . . . . . . . 385,773 27,926,107
------------
- ---------------------------------------------------------------------------
OIL & GAS (4.4%)
ChevronTexaco Corp.. . . . . . . . . . . . . 182,837 11,483,992
ConocoPhillips . . . . . . . . . . . . . . . 132,400 6,659,720
Exxon Mobil Corp.. . . . . . . . . . . . . . 854,818 30,089,593
Nabors Industries Ltd. (b) . . . . . . . . . 76,000 2,979,200
Noble Corp. (b). . . . . . . . . . . . . . . 112,800 3,491,160
Royal Dutch Petroleum Co.. . . . . . . . . . 132,660 5,423,141
Sunoco, Inc. . . . . . . . . . . . . . . . . 244,031 9,080,394
------------
69,207,200
------------
- ---------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (1.2%)
International Paper Co.. . . . . . . . . . . 269,432 9,632,194
Weyerhaeuser Co. . . . . . . . . . . . . . . 194,425 9,641,536
------------
19,273,730
------------
- ---------------------------------------------------------------------------
PRINTING & PUBLISHING (1.0%)
Gannett Co., Inc.. . . . . . . . . . . . . . 204,904 15,515,331
------------
- ---------------------------------------------------------------------------
RAILROADS (2.0%)
CSX Corp.. . . . . . . . . . . . . . . . . . 241,300 7,716,774
Norfolk Southern Corp. . . . . . . . . . . . 1,112,900 23,604,609
------------
31,321,383
------------
- ---------------------------------------------------------------------------
RESTAURANTS (0.2%)
Wendy's International, Inc.. . . . . . . . . 126,600 3,676,464
------------
- ---------------------------------------------------------------------------
RETAIL (5.0%)
AutoZone, Inc. (b) . . . . . . . . . . . . . 100,757 8,142,173
Costco Wholesale Corp. (b) . . . . . . . . . 141,900 4,913,997
Home Depot, Inc. . . . . . . . . . . . . . . 460,300 12,948,239
Kohl's Corp. (b) . . . . . . . . . . . . . . 194,666 11,057,029
Staples, Inc. (b). . . . . . . . . . . . . . 395,654 7,533,252
Target Corp. . . . . . . . . . . . . . . . . 475,425 15,898,212
Tiffany & Co.. . . . . . . . . . . . . . . . 305,200 8,466,248
Wal-Mart Stores, Inc.. . . . . . . . . . . . 170,800 9,619,456
------------
78,578,606
------------
- ---------------------------------------------------------------------------
SEMICONDUCTORS (4.1%)
Applied Materials, Inc. (b). . . . . . . . . 1,133,014 16,542,004
Intel Corp.. . . . . . . . . . . . . . . . . 1,579,981 29,071,651
STMicroelectronics NV ADR. . . . . . . . . . 192,670 3,967,075
Taiwan Semiconductor Manufacturing Co. Ltd.
ADR (b). . . . . . . . . . . . . . . . . . . 943,604 7,897,965
Texas Instruments, Inc.. . . . . . . . . . . 362,818 6,708,505
------------
64,187,200
------------
- ---------------------------------------------------------------------------
TECHNOLOGY (0.4%)
United Technologies Corp.. . . . . . . . . . 103,161 6,376,381
------------
- ---------------------------------------------------------------------------
14 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
SHARES OR
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------
TELECOMMUNICATIONS (4.7%)
AT&T Corp. . . . . . . . . . . . 225,297 $ 3,841,314
AT&T Wireless Services, Inc. (b) 891,005 5,755,892
Bellsouth Corp.. . . . . . . . . 840,178 21,416,137
SBC Communications, Inc. . . . . 730,292 17,059,621
Verizon Communications, Inc. . . 692,994 25,904,116
-------------
73,977,080
-------------
- ------------------------------------------------------------------
UTILITIES (2.7%)
Cinergy Corp.. . . . . . . . . . 201,761 6,888,121
Dominion Resources, Inc. . . . . 338,542 20,034,915
Entergy Corp.. . . . . . . . . . 168,136 7,836,819
Southern Co. . . . . . . . . . . 269,907 7,851,595
-------------
42,611,450
-------------
- ------------------------------------------------------------------
WASTE DISPOSAL (0.5%)
Waste Management, Inc. . . . . . 348,424 7,567,769
-------------
TOTAL COMMON STOCKS 1,547,192,624
=============
COMMERCIAL PAPER (3.4%)
SHARES OR
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------
FURNITURE (2.2%)
Johnson Controls, Inc., 1.33%,
05/01/03 (c). . . . . . . . . . . . $ 34,000,000 $ 34,000,000
-------------
- ------------------------------------------------------------------
INSURANCE (1.2%)
Allstate Corp., 1.34%,
05/01/03 (c). . . . . . . . . . . . 19,693,000 19,693,000
-------------
TOTAL COMMERCIAL PAPER 53,693,000
-------------
TOTAL INVESTMENTS
(COST $1,643,996,848) (A) - 101.5% 1,600,885,624
LIABILITIES IN EXCESS OF
OTHER ASSETS - (1.5)% (23,884,237)
-------------
NET ASSETS - 100.0% $1,577,001,387
==============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Denotes a non-income producing security.
(c) Restricted securities issued pursuant to section 4(2) to the Securities Act
of 1933. These securities were deemed liquid pursuant to procedures
approved by the Board of Trustees.
ADR American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 15
- --------------------------------------------------------------------------------
GARTMORE MID CAP GROWTH FUND
Class A Shares symbol: GMCA
Institutional Class symbol: GMCGX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund outperformed, returning
10.04%* versus 8.19% for its benchmark, the Russell Midcap Growth Index.
For broader comparison, the average return for this Fund's peer category
(Mid-Cap Growth Funds) was 4.04%, according to Lipper, an independent company
that provides mutual fund data and analysis.
WHAT MARKET/ECONOMIC AND PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
We can segment the behavior of the market during the past six months into three
parts. The first segment, which began on November 1, 2002, was a continuation of
the bear-market rally that began in October. The market was oversold and
consequently experienced a relief rally that lasted into early December. The
Russell Mid Cap Growth Index gained 7.20% between October 30 and December 2.
The second segment began in early December 2002 and lasted until early March
2003. News from the Middle East dominated during this period. The market never
likes uncertainty, and the Russell Mid Cap Growth Index sold off, losing 12.4%
between Oct. 30, 2002, and March 12, 2003.
We are still in the third segment, which began on March 12; through April 30,
2003, the Index had gained 14.60%. For this war-related rally to be sustainable,
the corporate profit picture needs to improve.
DESCRIBE THE FUND'S TOP HOLDINGS AND ANY SIGNIFICANT TRANSACTIONS MADE DURING
THE PERIOD.
Stock selection in the consumer discretionary, financials and information
technology sectors helped performance. In relation to the Index, we slightly
underweighted consumer discretionary (19.0% versus 21.4%) and information
technology (21.5% versus 22.9%), and overweighted financials (11.9% versus
5.6%).
Our top four contributing stocks were Comverse Technology, Inc., a company that
designs and manufactures multimedia systems and software; Coach, Inc., a
retailer of handbags and accessories; Rent-a-Center, Inc., a rent-to-own
retailer of consumer goods; and ADC Telecommunications, Inc., a supplier of
broadband equipment. Our bottom four contributing stocks were Armor Holdings,
Inc.; Investors Financial Services Corp.; Enzon Pharmaceuticals, Inc.; and
Intuit, Inc.
HOW IS THE FUND POSITIONED?
We do not plan to make significant sector bets. Rather, we rely on stock
selection to determine the Fund's risk/reward profile. Our current goal is to
create a portfolio that is well suited for an uncertain market. We seek
high-quality, reasonably priced growth stocks of companies with strong balance
sheets and sustainable competitive advantages. We avoid bottom-fishing, because
those stocks may perform well in the early stage of a rally but are subject to
above-average volatility. In general, we have been able to avoid "blow-ups"
(companies whose stocks drop dramatically after failing to meet expectations).
Our ability to minimize risks rather than maximize rewards has contributed to
the Fund's positive results.
PORTFOLIO MANAGER: Robert D. Glise, CFA
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $1,127,206
APRIL 30, 2003
AGGREGATE TOTAL RETURN
(For Period Ended April 30. 2003)
INCEPTION1
- -------------------------------------------
Class A2 . . . . . . w/o SC3 12.90%
w/SC4 6.41%
- -------------------------------------------
Institutional Class5 13.00%
1 Fund commenced operations on October 1, 2002.
2 These returns include performance based on Institutional Class shares,
which was achieved prior to the creation of Class A (3/5/03) shares. These
returns have been restated for sales charges but not for fees applicable to
Class A shares, which include a 0.25% (Class A) 12b-1 fee. Had Class A been
in existence for the time periods presented, the performance would have
been lower as a result of the additional expenses.
3 These returns do not reflect the effects of sales charges (SC).
4 A 5.75% front-end sales charge was deducted.
5 Not subject to any sales charges.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
RUSSELL MID
Date Institutional Class CAP GROWTH CPI
- -----------------------------------------------------------
10/1/2002. 10,000 10,000 10,000
10/31/2002 10,260 10,775 10,017
4/30/2003. 11,300 11,657 10,247
Comparative performance of $10,000 invested in the Institutional Class shares of
the
Gartmore Mid Cap Growth Fund, Russell Mid Cap Growth Index (Russell Mid Cap
Growth)(a) and the Consumer Price Index (CPI)(b) since inception. Unlike the
Fund, the returns for these indices do not reflect any fees, expenses, or sales
charges.
(a) The Russell Mid Cap Growth is an unmanaged index of companies with higher
forecasted growth values. The stocks are also members of the Russell 1000
Growth Index.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
16 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE MID CAP GROWTH FUND
COMMON STOCKS (90.6%)
SHARES VALUE
- ------------------------------------------------------------------
AIRLINES (1.3%)
Ryanair Holdings PLC-SP ADR (b). . . . . . . . . 400 $ 15,868
--------
- ------------------------------------------------------------------
AUTO PARTS & EQUIPMENT (1.2%)
American Axle & Manufacturing Holdings, Inc. (b) 600 14,952
--------
- ------------------------------------------------------------------
BANKS (3.7%)
GreenPoint Financial Corp. . . . . . . . . . . . 300 14,328
New York Community Bancorp, Inc. . . . . . . . . 900 31,248
--------
45,576
--------
- ------------------------------------------------------------------
BIOTECHNOLOGY (1.1%)
Gilead Sciences, Inc. (b). . . . . . . . . . . . 300 13,842
--------
- ------------------------------------------------------------------
BUSINESS SERVICES (1.1%)
Manpower, Inc. . . . . . . . . . . . . . . . . . 400 13,152
--------
- ------------------------------------------------------------------
COMMUNICATION EQUIPMENT (3.6%)
L-3 Communications Holdings, Inc. (b). . . . . . 1,000 44,400
--------
- ------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (15.2%)
Affiliated Computer Services, Inc. (b) . . . . . 300 14,310
Check Point Software Technologies Ltd. (b) . . . 1,000 15,730
Citrix Systems, Inc. (b) . . . . . . . . . . . . 700 13,272
Electronic Arts, Inc. (b). . . . . . . . . . . . 300 17,781
Factset Research Systems, Inc. . . . . . . . . . 400 13,920
Fiserv, Inc. (b) . . . . . . . . . . . . . . . . 500 14,720
Intuit, Inc. (b) . . . . . . . . . . . . . . . . 200 7,756
Lexmark International Group, Inc. Class A (b). . 300 22,354
Mercury Interactive Corp. (b). . . . . . . . . . 400 13,576
Network Appliance, Inc. (b). . . . . . . . . . . 1,400 18,592
Renanissance Learning, Inc. (b). . . . . . . . . 100 1,905
SanDisk Corp. (b). . . . . . . . . . . . . . . . 700 16,940
VERITAS Software Corp. (b) . . . . . . . . . . . 900 19,809
--------
190,665
--------
- ------------------------------------------------------------------
CONSTRUCTION (1.1%)
Horton (D.R.), Inc.. . . . . . . . . . . . . . . 600 14,220
--------
- ------------------------------------------------------------------
CONSUMER PRODUCTS (6.2%)
Apollo Group, Inc. (b) . . . . . . . . . . . . . 300 16,260
Choicepoint, Inc. (b). . . . . . . . . . . . . . 300 10,584
Church & Dwight, Inc.. . . . . . . . . . . . . . 300 9,441
Education Management Corp. (b) . . . . . . . . . 500 24,410
Fossil, Inc. (b) . . . . . . . . . . . . . . . . 600 10,968
Mohawk Industries Co. (b). . . . . . . . . . . . 100 5,547
--------
77,210
--------
- ------------------------------------------------------------------
ELECTRIC COMPANIES (2.3%)
American Power Conversion Corp. (b). . . . . . . 700 10,906
Calpine Corp. (b). . . . . . . . . . . . . . . . 3,200 17,184
--------
28,090
--------
- ------------------------------------------------------------------
ELECTRONICS (2.5%)
Cree, Inc. (b) . . . . . . . . . . . . . . . . . 600 11,970
Garmin Ltd (b) . . . . . . . . . . . . . . . . . 400 16,952
Microchip Technology, Inc. . . . . . . . . . . . 100 2,079
--------
31,001
--------
- ------------------------------------------------------------------
FINANCIAL SERVICES (3.4%)
Countrywide Credit Industries, Inc.. . . . . . . 400 27,040
Investors Financial Services Corp. . . . . . . . 700 15,267
--------
42,307
--------
- ------------------------------------------------------------------
FOOD & BEVERAGE (3.6%)
Constellation Brands, Inc. (b) . . . . . . . . . 1,000 26,810
Whole Foods Market, Inc. (b) . . . . . . . . . . 300 17,808
--------
44,618
--------
- ------------------------------------------------------------------
GAMING (1.1%)
GTECH Holdings Corp. (b) . . . . . . . . . . . . 400 13,468
--------
- ------------------------------------------------------------------
GAMING & LEISURE (3.0%)
International Game Technology (b). . . . . . . . 200 17,260
Penn National Gaming, Inc. (b) . . . . . . . . . 1,000 19,530
--------
36,790
--------
- ------------------------------------------------------------------
HEALTHCARE (6.5%)
Express Scripts, Inc. (b). . . . . . . . . . . . 400 23,584
Health Management Associates, Inc. Class A . . . 1,200 20,472
Lincare Holdings, Inc. (b) . . . . . . . . . . . 400 12,148
Omnicare, Inc. . . . . . . . . . . . . . . . . . 900 23,868
--------
80,072
--------
- ------------------------------------------------------------------
INSURANCE (3.9%)
ACE Ltd. . . . . . . . . . . . . . . . . . . . . 500 16,540
Brown & Brown, Inc.. . . . . . . . . . . . . . . 300 10,731
Everest Re Group Ltd.. . . . . . . . . . . . . . 300 20,895
--------
48,166
--------
- ------------------------------------------------------------------
MEDICAL - DRUGS (5.6%)
American Pharmaceuticals Partners, Inc. (b). . . 600 14,010
AmerisourceBergen Corp.. . . . . . . . . . . . . 400 23,140
Enzon Pharmaceuticals, Inc. (b). . . . . . . . . 700 9,604
Teva Pharmaceutical Industries Ltd.. . . . . . . 500 23,350
--------
70,104
--------
- ------------------------------------------------------------------
OIL & GAS (9.7%)
Apache Corp. . . . . . . . . . . . . . . . . . . 520 29,770
B.J. Services Co. (b). . . . . . . . . . . . . . 400 14,604
EOG Resources, Inc.. . . . . . . . . . . . . . . 300 11,214
Kinder Morgan, Inc.. . . . . . . . . . . . . . . 400 18,808
Patterson-UTI Energy, Inc. (b) . . . . . . . . . 400 13,236
Pioneer Natural Resources Co. (b). . . . . . . . 900 21,528
XTO Energy, Inc. . . . . . . . . . . . . . . . . 666 12,987
--------
122,147
--------
- ------------------------------------------------------------------
2003 SEMIANNUAL REPORT 17
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
April 30, 2003 (Unaudited)
GARTMORE MID CAP GROWTH FUND (Continued)
COMMON STOCKS (CONTINUED)
SHARES VALUE
- ----------------------------------------------------------------
RENTAL - AUTO & EQUIPMENT (2.1%)
Rent-A-Center, Inc. (b) . . . . . . . . . . . 400 $ 25,680
--------
- -----------------------------------------------------------------
RESTAURANTS (1.0%)
Brinker International, Inc. (b) . . . . . . . 400 12,700
--------
- -----------------------------------------------------------------
RETAIL (6.0%)
Coach, Inc. (b) . . . . . . . . . . . . . . . 500 21,755
Regis Corp. . . . . . . . . . . . . . . . . . 900 25,497
Staples, Inc. (b) . . . . . . . . . . . . . . 900 17,136
Williams Sonoma, Inc. (b) . . . . . . . . . . 400 10,352
--------
74,740
--------
- -----------------------------------------------------------------
SEMICONDUCTORS (3.0%)
KLA-Tencor Corp. (b). . . . . . . . . . . . . 200 8,200
Marvel Technology Group Ltd. (b). . . . . . . 700 16,155
QLogic Corp. (b). . . . . . . . . . . . . . . 300 13,197
--------
37,552
--------
- -----------------------------------------------------------------
TELECOMMUNICATIONS (2.4%)
ADC Telecommunications, Inc. (b). . . . . . . 5,400 12,895
Comverse Technology, Inc. (b) . . . . . . . . 1,300 16,991
--------
29,886
--------
TOTAL COMMON STOCKS 1,127,206
---------
TOTAL INVESTMENTS (COST $989,808) (A) - 90.6% 1,127,206
OTHER ASSETS IN EXCESS OF LIABILITIES - 9.4% 116,823
---------
NET ASSETS - 100.0% $1,244,029
==========
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Denotes a non-income producing security.
ADR American Depositary Receipt
SEE NOTES TO FINANCIAL STATEMENTS.
18 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 2003 (Unaudited)
GARTMORE
GARTMORE GARTMORE LARGE CAP GARTMORE MID CAP
GROWTH FUND VALUE FUND NATIONWIDE FUND GROWTH FUND
- --------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $259,701,604;
24,887,915; $1,643,996,848
and $989,808; respectively) . . . . . . . . . $ 276,473,446 $24,491,570 $1,600,885,624 $1,127,206
Cash. . . . . . . . . . . . . . . . . . . . . - 3,854 704 73,549
Interest and dividends receivable . . . . . . 70,850 29,096 1,758,432 169
Receivable for capital shares issued. . . . . - - 14,000 -
Receivable for investments sold . . . . . . . 2,239,090 738,306 1,008,535 -
Receivable from adviser . . . . . . . . . . . - 1,989 - 5,807
Prepaid expenses and other assets . . . . . . 25,255 14,019 96,662 38,943
----------------------------------------------------------
Total Assets. . . . . . . . . . . . . . . . . 278,808,641 25,278,834 1,603,763,957 1,245,674
----------------------------------------------------------
LIABILITIES:
Payable to custodian. . . . . . . . . . . . . 2,109 - - -
Payable for investments purchased . . . . . . 3,927,536 686,841 25,271,120 -
Accrued expenses and other payables
Investment advisory fees. . . . . . . . . . . 131,692 14,758 712,406 733
Fund administration and transfer agent fees . 130,960 4,843 417,414 827
Distribution fees . . . . . . . . . . . . . . 3,771 5,342 100,882 22
Administrative servicing fees . . . . . . . . 2,691 2,849 72,610 -
Other . . . . . . . . . . . . . . . . . . . . 83,123 2,400 188,138 63
----------------------------------------------------------
Total Liabilities . . . . . . . . . . . . . . 4,281,882 717,033 26,762,570 1,645
----------------------------------------------------------
NET ASSETS. . . . . . . . . . . . . . . . . . $ 274,526,759 $24,561,801 $1,577,001,387 $1,244,029
==========================================================
REPRESENTED BY:
Capital . . . . . . . . . . . . . . . . . . . $ 597,325,780 $28,517,745 $1,826,446,040 $1,099,429
Accumulated net investment income (loss). . . 114,738 4,221 785,983 (3,990)
Accumulated net realized gains (losses)
on investment transactions. . . . . . . . . . (339,685,601) (3,563,820) (207,119,412) 11,192
Net unrealized appreciation (depreciation)
on investments. . . . . . . . . . . . . . . . 16,771,842 (396,345) (43,111,224) 137,398
----------------------------------------------------------
NET ASSETS. . . . . . . . . . . . . . . . . . $ 274,526,759 $24,561,801 $1,577,001,387 $1,244,029
==========================================================
NET ASSETS:
Class A Shares. . . . . . . . . . . . . . . . $ 5,341,581 $23,829,828 $ 390,155,243 $ 114,260
Class B Shares. . . . . . . . . . . . . . . . 3,319,699 597,179 31,232,333 -
Class C Shares. . . . . . . . . . . . . . . . 76,857 134,794 340,142 -
Class D Shares. . . . . . . . . . . . . . . . 203,399,010 - 1,106,244,600 -
Institutional Service Class Shares. . . . . . 62,389,612 - 49,029,069 -
Institutional Class Shares. . . . . . . . . . - - - 1,129,769
----------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . $ 274,526,759 $24,561,801 $1,577,001,387 $1,244,029
==========================================================
SHARES OUTSTANDING (unlimited number
of shares authorized):
Class A Shares. . . . . . . . . . . . . . . . 1,081,691 2,652,429 24,933,892 10,121
Class B Shares. . . . . . . . . . . . . . . . 720,604 67,321 2,041,038 -
Class C Shares. . . . . . . . . . . . . . . . 16,670 15,219 22,234 -
Class D Shares. . . . . . . . . . . . . . . . 40,733,759 - 71,163,460 -
Institutional Service Class Shares. . . . . . 12,473,640 - 3,154,689 -
Institutional Class Shares. . . . . . . . . . - - - 100,000
----------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . 55,026,364 2,734,969 101,315,313 110,121
==========================================================
NET ASSET VALUE:
Class A Shares. . . . . . . . . . . . . . . . $ 4.94 $ 8.98 $ 15.65 $ 11.29
Class B Shares (a). . . . . . . . . . . . . . $ 4.61 $ 8.87 $ 15.30 $ -
Class C Shares (b). . . . . . . . . . . . . . $ 4.61 $ 8.86 $ 15.30 $ -
Class D Shares. . . . . . . . . . . . . . . . $ 4.99 $ - $ 15.55 $ -
Institutional Service Class Shares. . . . . . $ 5.00 $ - $ 15.54 $ -
Institutional Class Shares. . . . . . . . . . $ - $ - $ - $ 11.30
MAXIMUM OFFERING PRICE PER SHARE
(100%/(100%-maximum sales charge) of net
asset value adjusted to the nearest cent):
Class A Shares. . . . . . . . . . . . . . . . $ 5.24 $ 9.53 $ 16.60 $ 11.98
Class C Shares. . . . . . . . . . . . . . . . $ 4.66 $ 8.95 $ 15.45 $ -
Class D Shares. . . . . . . . . . . . . . . . $ 5.23 $ - $ 16.28 $ -
----------------------------------------------------------
Maximum Sales Charge - Class A Shares . . . . 5.75% 5.75% 5.75% 5.75%
==========================================================
Maximum Sales Charge - Class C Shares . . . . 1.00% 1.00% 1.00% -
==========================================================
Maximum Sales Charge - Class D Shares . . . . 4.50% - 4.50% -
==========================================================
(a) For Class B shares, the redemption price per share varies by length of time
shares are held.
(b) For Class C shares, the redemption price per share is reduced by 1.00% for
shares held less than one year. See notes to financial statements.
2003 SEMIANNUAL REPORT 19
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 2003 (Unaudited)
GARTMORE GARTMORE GARTMORE GARTMORE
GROWTH LARGE CAP NATIONWIDE MID CAP
FUND VALUE FUND FUND GROWTH
FUND
- --------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income . . . . . . . . . . . . $ 9,482 $ 1,485 $ 107,577 $ 191
Dividend income . . . . . . . . . . . . 1,261,048 307,942 14,779,082 1,539
---------------------------------------------------
Total Income. . . . . . . . . . . . . . 1,270,530 309,427 14,886,659 1,730
---------------------------------------------------
EXPENSES:
Investment advisory fees. . . . . . . . 790,915 93,317 4,311,248 3,994
Fund administration and
transfer agent fees . . . . . . . . . . 227,204 21,664 1,296,580 5,165
Distribution fees Class A . . . . . . . 6,094 30,301 438,708 41
Distribution fees Class B . . . . . . . 15,849 2,793 150,833 -
Distribution fees Class C . . . . . . . 300 426 1,113 -
Administrative servicing fees Class A . 635 17,558 158,558 -
Administrative servicing fees Class D . 12,170 - 293,789 -
Professional fees . . . . . . . . . . . 14,365 1,377 82,763 1,360
Registration and filing fees. . . . . . 21,428 15,306 57,506 15,469
Other . . . . . . . . . . . . . . . . . 66,832 3,710 223,699 85
---------------------------------------------------
Total expenses before
reimbursed expenses . . . . . . . . . . 1,155,792 186,452 7,014,797 26,114
Expenses reimbursed . . . . . . . . . . - (10,958) - (20,394)
---------------------------------------------------
Total Expenses. . . . . . . . . . . . . 1,155,792 175,494 7,014,797 5,720
---------------------------------------------------
NET INVESTMENT INCOME (LOSS). . . . . . 114,738 133,933 7,871,862 (3,990)
---------------------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized gains (losses) on
investment transactions. . . . . . . . (9,668,370) (2,258,675) (489,062) 24,244
Net change in unrealized appreciation/
depreciation on investments . . . . . . 20,699,723 2,707,646 59,461,186 97,612
---------------------------------------------------
Net realized/unrealized gains (losses)
on investments. . . . . . . . . . . . . 11,031,353 448,971 58,972,124 121,856
---------------------------------------------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . $11,146,091 $ 582,904 $66,843,986 $117,866
===================================================
See notes to financial statements.
20 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
GARTMORE GROWTH FUND. GARTMORE LARGE CAP VALUE FUND
--------------------------------------------------------------
SIX MONTHS. . . YEAR SIX MONTHS YEAR
ENDED. . . ENDED ENDED ENDED
APRIL 30,. OCTOBER 31, APRIL 30, OCTOBER 31,
2003. 2002 2003 2002
(UNAUDITED) (UNAUDITED)
--------------------------------------------------------------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss). . . . . . . . . . $ 114,738 $ (411,311) $ 133,933 $ 217,993
Net realized gains (losses) on
investment transactions . . . . . . . . . . . . (9,668,370) (72,904,296) (2,258,675) (1,094,117)
Net change in unrealized appreciation/
depreciation on investments . . . . . . . . . . 20,699,723 4,862,766 2,707,646 (1,196,437)
---------------------------------------------------------
Change in net assets resulting from operations. 11,146,091 (68,452,841) 582,904 (2,072,561)
---------------------------------------------------------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . . . . - - (149,733) (226,935)
Net realized gains on investments . . . . . . . - - - (1,135,583)
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . . . . - - (1,640) (1,498)
Net realized gains on investments . . . . . . . - - - (22,528)
DISTRIBUTIONS TO CLASS C
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . . . . - - (234) (230)
Net realized gains on investments . . . . . . . - - - (2,825)
DISTRIBUTIONS TO INSTITUTIONAL SERVICE
CLASS SHAREHOLDERS FROM:
Net realized gains on investments . . . . . . . - - - (4) (a)
---------------------------------------------------------
Change in net assets from
shareholder distributions . . . . . . . . . . . - - (151,607) (1,389,603)
---------------------------------------------------------
Change in net assets from capital transactions. (11,461,829) (52,215,855) (106,993) (778,225)
---------------------------------------------------------
Change in net assets. . . . . . . . . . . . . . (315,738) (120,668,696) 324,304 (4,240,389)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . 274,842,497 395,511,193 24,237,497 28,477,886
---------------------------------------------------------
End of period . . . . . . . . . . . . . . . . . $274,526,759 $ 274,842,497 $24,561,801 $24,237,497
=========================================================
(a) On March 5, 2002 Institutional Service Class Shares were liquidated in
their entirety. Information presented represents operations through March
5, 2002.
See notes to financial statements.
2003 SEMIANNUAL REPORT 21
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
GARTMORE GARTMORE MID CAP
NATIONWIDE FUND GROWTH FUND
------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002 (A)
(UNAUDITED) (UNAUDITED)
-----------------------------------------------------------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss). . . . . . $ 7,871,862 $ 12,215,485 $ (3,990) $ (571)
Net realized gains (losses) on
nvestment transactions. . . . . . . . . (489,062) (88,487,948) 24,244 (13,052)
Net change in unrealized appreciation/
depreciation on investments . . . . . . 59,461,186 (105,116,094) 97,612 39,786
----------------------------------------------------------
Change in net assets resulting
from operations . . . . . . . . . . . . 66,843,986 (181,388,557) 117,866 26,163
----------------------------------------------------------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . (1,398,628) (1,461,372) - -
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . (20,408) (698) - -
DISTRIBUTIONS TO CLASS C
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . (165) (15) - -
DISTRIBUTIONS TO CLASS D
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . (5,922,699) (10,028,891) - -
DISTRIBUTIONS TO INSTITUTIONAL SERVICE
CLASS SHAREHOLDERS FROM:
Net investment income . . . . . . . . . (270,902) (329,908) (b) - -
----------------------------------------------------------
Change in net assets from
shareholder distributions . . . . . . . (7,612,802) (11,820,884) - -
----------------------------------------------------------
Change in net assets from
capital transactions. . . . . . . . . . (49,829,086) 116,935,564 100,000 1,000,000
----------------------------------------------------------
Change in net assets. . . . . . . . . . 9,402,098 (76,273,877) 217,866 1,026,163
NET ASSETS:
Beginning of period . . . . . . . . . . 1,567,599,289 1,643,873,166 1,026,163 -
----------------------------------------------------------
End of period . . . . . . . . . . . . . $1,577,001,387 $1,567,599,289 $1,244,029 $1,026,163
==========================================================
(a) For the period from October 1, 2002 (commencement of operations) through
October 31, 2002.
(b) For the period from January 2, 2002 (commencement of operations) through
October 31, 2002.
See notes to financial statements.
22 Semiannual Report 2003
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE GROWTH FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
---------------------------------------------------------------------------------
NET
REALIZED
AND
UNREALIZED
NET GAINS TOTAL
ASSET VALUE, NET (LOSSES) FROM NET NET
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT REALIZED
OF PERIOD INCOME (LOSS) INVESTMENTS ACTIVITIES INCOME GAINS
- --------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 1998 (c) . $ 16.51 (0.02) (0.47) (0.49) - -
Year Ended October 31, 1999 . . . . $ 16.02 0.01 2.64 2.65 (0.01) (0.31)
Year Ended October 31, 2000 . . . . $ 18.35 (0.08) (0.84) (0.92) - (2.44)
Year Ended October 31, 2001 . . . . $ 14.99 (0.05) (5.85) (5.90) - (3.20)
Year Ended October 31, 2002 . . . . $ 5.89 (0.02) (1.13) (1.15) - -
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 4.74 - 0.20 0.20 - -
CLASS B SHARES
Period Ended October 31, 1998 (c) . $ 16.51 (0.04) (0.49) (0.53) - -
Year Ended October 31, 1999 . . . . $ 15.98 (0.06) 2.59 2.53 - (0.31)
Year Ended October 31, 2000 . . . . $ 18.20 (0.15) (0.90) (1.05) - (2.44)
Year Ended October 31, 2001 . . . . $ 14.71 (0.10) (5.87) (5.97) - (3.20)
Year Ended October 31, 2002 . . . . $ 5.54 (0.06) (1.04) (1.10) - -
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 4.44 (0.02) 0.19 0.17 - -
CLASS C SHARES
Period Ended October 31, 2001 (d) . $ 7.11 (0.03) (1.53) (1.56) - -
Year Ended October 31, 2002 . . . . $ 5.55 (0.06) (1.05) (1.11) - -
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 4.44 (0.02) 0.19 0.17 - -
CLASS D SHARES
Year Ended October 31, 1998 (c) . . $ 16.32 0.03 2.32 2.35 (0.04) (2.61)
Year Ended October 31, 1999 . . . . $ 16.02 0.03 2.65 2.68 (0.03) (0.31)
Year Ended October 31, 2000 . . . . $ 18.36 (0.05) (0.84) (0.89) - (2.44)
Year Ended October 31, 2001 . . . . $ 15.03 (0.03) (5.86) (5.89) - (3.20)
Year Ended October 31, 2002 . . . . $ 5.94 (0.01) (1.14) (1.15) - -
Six Months Ended April 30, 2003
(Unaudited). . . . . . . . . . . . $ 4.79 - 0.20 0.20 - -
INSTITUTIONAL SERVICE CLASS SHARES
Period Ended October 31, 2002 (e) . $ 6.59 (0.01) (1.79) (1.80) - -
Six Months Ended April 30, 2003
(Unaudited). . . . . . . . . . . . $ 4.79 - 0.21 0.21 - -
DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------
RATIO OF
RATIO NET
NET NET OF INVESTMENT
ASSET, ASSETS EXPENSES INCOME
VALUE, AT END TO (LOSS)
END TOTAL OF AVERAGE TO AVERAGE PORTFOLIO
TOTAL OF RETURN PERIOD NET NET TURNOVER
DISTRIBUTIONS PERIOD (A) (000S) ASSETS ASSETS (B)
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 1998 (c) . - $ 16.02 (2.97%)(f)$ 2,830 1.11% (g) (0.38%) (g) 38.61%
Year Ended October 31, 1999 . . . . (0.32) $ 18.35 16.85% $ 7,654 1.04% (0.02%) 35.18%
Year Ended October 31, 2000 . . . . (2.44) $ 14.99 (6.43%) $ 9,234 1.04% (0.52%) 163.52%
Year Ended October 31, 2001 . . . . (3.20) $ 5.89 (47.33%) $ 5,268 1.33% (0.60%) 210.72%
Year Ended October 31, 2002 . . . . - $ 4.74 (19.52%) $ 4,828 1.17% (0.34%) 241.95%
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . - $ 4.94 4.22% (f) $ 5,342 1.13% (g) (0.17%) (g) 130.22%
CLASS B SHARES
Period Ended October 31, 1998 (c) . - $ 15.98 (3.21%) (f) $ 1,557 1.88% (g) (1.16%) (g) 38.61%
Year Ended October 31, 1999 . . . . (0.31) $ 18.20 16.12% $ 6,210 1.79% (0.76%) 35.18%
Year Ended October 31, 2000 . . . . (2.44) $ 14.71 (7.30%) $ 8,180 1.80% (1.28%) 163.52%
Year Ended October 31, 2001 . . . . (3.20) $ 5.54 (49.10%) $ 4,288 2.12% (1.36%) 210.72%
Year Ended October 31, 2002 . . . . - $ 4.44 (19.86%) $ 3,299 1.90% (1.08%) 241.95%
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . - $ 4.61 3.83% (f) $ 3,320 1.85% (g) (0.89%) (g) 130.22%
CLASS C SHARES
Period Ended October 31, 2001 (d) . - $ 5.55 (21.94%) (f) $ 58 2.27% (g) (1.41%) (g) 210.72%
Year Ended October 31, 2002 . . . . - $ 4.44 (20.00%) $ 52 1.90% (1.08%) 241.95%
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . - $ 4.61 3.83% (f) $ 77 1.85% (g) (0.92%) (g) 130.22%
CLASS D SHARES
Year Ended October 31, 1998 (c) . . (2.65) $ 16.02 15.94% $ 914,178 0.73% 0.19% 38.61%
Year Ended October 31, 1999 . . . . (0.34) $ 18.36 17.07% $ 1,014,687 0.80% 0.19% 35.18%
Year Ended October 31, 2000 . . . . (2.44) $ 15.03 (6.23%) $ 834,816 0.83% (0.30%) 163.52%
Year Ended October 31, 2001 . . . . (3.20) $ 5.94 (47.07%) $ 385,898 1.10% (0.38%) 210.72%
Year Ended October 31, 2002 . . . . - $ 4.79 (19.36%) $ 207,357 0.93% (0.10%) 241.95%
Six Months Ended April 30, 2003
(Unaudited). . . . . . . . . . . . - $ 4.99 4.18% (f) $ 203,399 0.86% (g) 0.10% (g) 130.22%
INSTITUTIONAL SERVICE CLASS SHARES
Period Ended October 31, 2002 (e) . - $ 4.79 (27.31%) (f) $ 59,307 0.88% (g) (0.11%) (g) 241.95%
Six Months Ended April 30, 2003
(Unaudited). . . . . . . . . . . . - $ 5.00 4.38% (f) $ 62,390 0.85% (g) 0.11% (g) 130.22%
- ---------------------------------------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(c) Shares first offered to public on May 11, 1998. Upon a trust Reorganization
on May 11, 1998, the existing shares of the Fund were renamed Class D.
(d) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(e) For the period from January 2, 2002 (commencement of operations) through
October 31, 2002.
(f) Not annualized.
(g) Annualized.
See notes to financial statements.
2003 SEMIANNUAL REPORT 23
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE LARGE CAP VALUE FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
---------------------------------------------------------------------------------------------------
NET
REALIZED
AND NET
NET UNREALIZED ASSET
ASSET NET GAINS TOTAL VALUE,
VALUE, INVESTMENT (LOSSES) FROM NET NET END
BEGINNING INCOME ON INVESTMENT INVESTMENT REALIZED TOTAL OF
OF PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended
October 31, 1999 (d). . . . $ 10.00 0.07 0.32 0.39 (0.07) - (0.07) $ 10.32
Year Ended October 31, 2000. $ 10.32 0.15 0.67 0.82 (0.14) (0.04) (0.18) $ 10.96
Year Ended October 31, 2001. $ 10.96 0.10 (0.98) (0.88) (0.10) - (0.10) $ 9.98
Year Ended October 31, 2002. $ 9.98 0.08 (0.82) (0.74) (0.08) (0.41) (0.49) $ 8.75
Six Months Ended
April 30, 2003
(Unaudited). . . . . . . . . $ 8.75 0.04 0.24 0.28 (0.05) - (0.05) $ 8.98
CLASS B SHARES
Period Ended
October 31, 1999 (d) . . . . $ 10.00 (0.02) 0.27 0.25 (0.01) - (0.01) $ 10.24
Year Ended October 31, 2000. $ 10.24 0.07 0.68 0.75 (0.11) (0.04) (0.15) $ 10.84
Year Ended
October 31, 2001 (e) . . . . $ 10.84 0.02 (0.98) (0.96) (0.02) - (0.02) $ 9.86
Year Ended
October 31, 2002 . . . . . . $ 9.86 0.01 (0.80) (0.79) (0.02) (0.41) (0.43 $ 8.64
Six Months Ended
April 30, 2003
(Unaudited). . . . . . . . . $ 8.64 0.01 0.24 0.25 (0.02) - (0.02) $ 8.87
CLASS C SHARES
Period Ended
October 31, 2001 (f) . . . . $ 11.21 0.02 (1.34) (1.32) (0.04) - (0.04) $ 9.85
Year Ended
October 31, 2002 . . . . . . $ 9.85 0.01 (0.79) (0.78) (0.03) (0.41) (0.44) $ 8.63
Six Months Ended
April 30, 2003
(Unaudited). . . . . . . . . $ 8.63 0.02 0.24 0.26 (0.03) - (0.03) $ 8.86
INSTITUTIONAL SERVICE
CLASS SHARES
Period Ended
October 31, 1999 (d) . . . . $ 10.00 0.08 0.33 0.41 (0.06) - (0.06) $ 10.35
Year Ended October 31, 2000. $ 10.35 0.16 0.67 0.83 (0.16) (0.04) (0.20) $ 10.98
Year Ended October 31, 2001. $ 10.98 0.12 (0.98) (0.86) (0.09) - (0.09) $ 10.03
Year Ended
October 31, 2002 (g). . . . $ 10.03 0.06 1.04 1.10 (0.03) (0.41) (0.44) $ 10.69
DISTRIBUTIONS RATIOS / SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------
RATIO
RATIO RATIO OF
OF OF NET
NET EXPENSES INVESTMENT
NET RATIO INVESTMENT (PRIOR INCOME
ASSETS OF INCOME TO (LOSS)
AT EXPENSES (LOSS) REIMBURSE- PRIOR TO
END TO TO MENTS) REIMBURSE-
TOTAL OF AVERAGE AVERAGE TO MENTS) TO PORTFOLIO
RETURN PERIOD NET NET AVERAGE AVERAGE TURNOVER
(A) (000S) ASSETS ASSETS NET ASSETS (B) NET ASSETS (B) (C)
- -------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended
October 31, 1999 (d). . . . 3.86% (h) $ 25,883 1.15% (i) 0.85% (i) 1.87% (i) 0.13% (i) 120.94%
Year Ended October 31, 2000. 8.09% $ 30,726 1.15% 1.47% 1.77% 0.85% 88.41%
Year Ended October 31, 2001. (8.07%) $ 27,824 1.15% 0.96% 1.64% 0.47% 156.09%
Year Ended October 31, 2002. (7.98%) $ 23,581 1.36% 0.81% 1.48% 0.69% 91.03%
Six Months Ended
April 30, 2003
(Unaudited). . . . . . . . . 3.24% (h) $ 23,830 1.39% (i) 1.09% (i) 1.48% (i) 1.00% (i) 53.02%
CLASS B SHARES
Period Ended
October 31, 1999 (d) . . . . 2.50% (h) $ 155 1.90% (i) 0.13% (i) 5.34% (i) (3.31%) (i) 120.94%
Year Ended October 31, 2000. 7.42% $ 408 1.90% 0.70% 3.56% (0.96%) 88.41%
Year Ended
October 31, 2001 (e) . . . . (8.84%) $ 528 1.90% 0.21% 3.24% (1.13%) 156.09%
Year Ended
October 31, 2002 . . . . . . (8.53%) $ 576 2.02% 0.14% 2.17% (0.01%) 91.03%
Six Months Ended
April 30, 2003
(Unaudited). . . . . . . . . 2.96% (h) $ 597 2.00% (i) 0.46% (i) 2.09% (i) 0.37% (i) 53.02%
CLASS C SHARES
Period Ended
October 31, 2001 (f) . . . . (11.82%) (h) $ 58 1.90% (i) 0.11% (i) 3.94% (i) (1.93%) (i) 156.09%
Year Ended
October 31, 2002 . . . . . . (8.50%) $ 80 2.03% 0.13% 2.15% 0.01% 91.03%
Six Months Ended
April 30, 2003
(Unaudited). . . . . . . . . 2.97% (h) $ 135 2.00% (i) 0.41% (i) 2.09% (i) 0.32% (i) 53.02%
INSTITUTIONAL SERVICE
CLASS SHARES
Period Ended
October 31, 1999 (d) . . . . 4.05% (h) $ 755 1.00% (i) 0.77% (i) 4.21% (i) (2.44%) (i) 120.94%
Year Ended October 31, 2000. 8.20% $ 1,645 1.00% 1.56% 1.64% 0.92% 88.41%
Year Ended October 31, 2001. (7.86%) $ 68 1.00% 1.03% 1.44% 0.59% 156.09%
Year Ended
October 31, 2002 (g). . . . 11.26% (h) $ - 0.97% (i) 1.62% (i) 1.39% (i) 1.20% (i) 37.27%
- ------------------------------------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) For the period from November 2, 1998 (commencement of operations) through
October 31, 1999.
(e) Net investment income (loss) is based on average shares outstanding during
the period.
(f) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(g) On March 5, 2002 Institutional Service Class Shares were liquidated in
their entirety. Information presented represents operations through March
5, 2002.
(h) Not annualized.
(i) Annualized.
See notes to financial statements.
24 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE NATIONWIDE FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
------------------------------------------------------------------------------------------
NET
REALIZED
NET AND
ASSET UNREALIZED
VALUE, NET GAINS TOTAL
BEGINNING INVESTMENT (LOSSES) FROM NET NET
OF INCOME ON INVESTMENT INVESTMENT REALIZED TOTAL
PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 1998 (c) . $ 29.94 0.06 0.38 0.44 (0.08) - (0.08)
Year Ended October 31, 1999 . . . . $ 30.30 0.17 2.84 3.01 (0.11) (0.49) (0.60)
Year Ended October 31, 2000 . . . . $ 32.71 0.16 0.14 0.30 (0.17) (2.04) (2.21)
Year Ended October 31, 2001 . . . . $ 30.80 0.08 (5.66) (5.58) (0.10) (8.37) (8.47)
Year Ended October 31, 2002 . . . . $ 16.75 0.07 (1.68) (1.61) (0.08) - (0.08)
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 15.06 0.06 0.59 0.65 (0.06) - (0.06)
CLASS B SHARES
Period Ended October 31, 1998 (c) . $ 29.94 - 0.27 0.27 (0.03) - (0.03)
Year Ended October 31, 1999 . . . . $ 30.18 (0.03) 2.79 2.76 - (0.49) (0.49)
Year Ended October 31, 2000 . . . . $ 32.45 (0.06) 0.13 0.07 - (2.04) (2.04)
Year Ended October 31, 2001 . . . . $ 30.48 (0.06) (5.65) (5.71) - (8.37) (8.37)
Year Ended October 31, 2002 . . . . $ 16.40 (0.03) (1.65) (1.68) - - -
Six Months Ended April 30, 2003
(Unaudited). . . . . . . . . . . . $ 14.72 0.02 0.57 0.59 (0.01) - (0.01)
CLASS C SHARES
Period Ended October 31, 2001 (d) . $ 19.12 (0.03) (2.68) (2.71) (0.01) - (0.01)
Year Ended October 31, 2002 . . . . $ 16.40 (0.03) (1.65) (1.68) - - -
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 14.72 0.01 0.58 0.59 (0.01) - (0.01)
CLASS D SHARES
Year Ended October 31, 1998 (c) . . $ 26.57 0.30 6.23 6.53 (0.30) (2.54) (2.84)
Year Ended October 31, 1999 . . . . $ 30.26 0.25 2.82 3.07 (0.24) (0.49) (0.73)
Year Ended October 31, 2000 . . . . $ 32.60 0.23 0.12 0.35 (0.24) (2.04) (2.28)
Year Ended October 31, 2001 . . . . $ 30.67 0.13 (5.65) (5.52) (0.14) (8.37) (8.51)
Year Ended October 31, 2002 . . . . $ 16.64 0.13 (1.69) (1.56) (0.12) - (0.12)
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 14.96 0.08 0.59 0.67 (0.08) - (0.08)
INSTITUTIONAL SERVICE CLASS SHARES
Period Ended October 31, 2002 (e) . $ 18.18 0.11 (3.24) (3.13) (0.10) - (0.10)
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 14.95 0.09 0.59 0.68 (0.09) - (0.09)
DISTRIBUTIONS RATIOS / SUPPLEMENTAL DATA
--------------------------------------------------------------------
RATIO
OF
NET
NET RATIO INVESTMENT
NET ASSETS OF INCOME
ASSET AT EXPENSES (LOSS)
VALUE, END TO TO
END TOTAL OF AVERAGE AVERAGE PORTFOLIO
END RETURN PERIOD NET NET TURNOVER
PERIOD (A) (000S) ASSETS ASSETS (B)
- -----------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended October 31, 1998 (c) . $ 30.30 1.48% (f) $ 19,746 1.00% (g) 0.54% (g) 13.47%
Year Ended October 31, 1999 . . . . $ 32.71 10.05% $ 54,223 0.96% 0.53% 13.88%
Year Ended October 31, 2000 . . . . $ 30.80 1.25% $ 54,537 0.98% 0.54% 90.01%
Year Ended October 31, 2001 . . . . $ 16.75 (23.34%) $ 149,086 1.15% 0.32% 71.36%
Year Ended October 31, 2002 . . . . $ 15.06 (9.64%) $ 362,435 1.14% 0.46% 25.51%
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 15.65 4.33% (f) $ 390,155 1.13% (g) 0.83% (g) 41.46%
CLASS B SHARES
Period Ended October 31, 1998 (c) . $ 30.18 0.90% (f) $ 13,493 1.75% (g) (0.20%) (g) 13.47%
Year Ended October 31, 1999 . . . . $ 32.45 9.22% $ 44,994 1.72% (0.21%) 13.88%
Year Ended October 31, 2000 . . . . $ 30.48 0.48% $ 47,293 1.73% (0.20%) 90.01%
Year Ended October 31, 2001 . . . . $ 16.40 (24.19%) $ 36,241 1.85% (0.30%) 71.36%
Year Ended October 31, 2002 . . . . $ 14.72 (10.24%) $ 31,267 1.80% (0.18%) 25.51%
Six Months Ended April 30, 2003
(Unaudited). . . . . . . . . . . . $ 15.30 4.01% (f) $ 31,232 1.79% (g) 0.18% (g) 41.46%
CLASS C SHARES
Period Ended October 31, 2001 (d) . $ 16.40 (14.16%) (f) $ 175 1.89% (g) (0.45%) (g) 71.36%
Year Ended October 31, 2002 . . . . $ 14.72 (10.24%) $ 212 1.80% (0.20%) 25.51%
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 15.30 4.02% (f) $ 340 1.79% (g) 0.16% (g) 41.46%
CLASS D SHARES
Year Ended October 31, 1998 (c) . . $ 30.26 25.73% $ 2,172,101 0.66% 1.00% 13.47%
Year Ended October 31, 1999 . . . . $ 32.60 10.27% $ 2,443,493 0.73% 0.78% 13.88%
Year Ended October 31, 2000 . . . . $ 30.67 1.40% $ 2,085,243 0.78% 0.74% 90.01%
Year Ended October 31, 2001 . . . . $ 16.64 (23.22%) $ 1,458,371 0.89% 0.64% 71.36%
Year Ended October 31, 2002 . . . . $ 14.96 (9.43%) $ 1,125,402 0.86% 0.77% 25.51%
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 15.55 4.51% (f) $ 1,106,245 0.84% (g) 1.13% (g) 41.46%
INSTITUTIONAL SERVICE CLASS SHARES
Period Ended October 31, 2002 (e) . $ 14.95 (17.27%) (f) $ 48,283 0.80% (g) 0.75% (g) 25.51%
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . . $ 15.54 4.54% (f) $ 49,029 0.79% (g) 1.18% (g) 41.46%
- -----------------------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(c) Shares first offered to public on May 11, 1998. Upon a trust Reorganization
on May 11, 1998, the existing shares of the Fund were renamed Class D
(d) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(e) For the period from January 2, 2002 (commencement of operations) through
October 31, 2002.
(f) Not annualized.
(g) Annualized.
See notes to financial statements.
2003 SEMIANNUAL REPORT 25
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE MID CAP GROWTH FUND
INVESTMENT ACTIVITIES
--------------------------------------------------------------------------------------------
NET
REALIZED NET RATIO
NET AND NET ASSETS OF
ASSET UNREALIZED ASSET AT EXPENSES
VALUE, NET GAINS TOTAL VALUE, END TO
BEGINNING INVESTMENT (LOSSES) FROM END TOTAL OF AVERAGE
OF INCOME ON INVESTMENT OF RETURN PERIOD NET
PERIOD (LOSS) INVESTMENTS ACTIVITIES PERIOD (A) (000S) ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended April 30, 2003
(Unaudited) (d) . . . . . . . . . $ 9.88 (0.02) 1.43 1.41 $ 11.29 14.27% (f) $ 114 1.40% (g)
INSTITUTIONAL CLASS SHARES
Period Ended October 31, 2002 (e) $ 10.00 (0.01) 0.27 0.26 $ 10.26 2.60% (f) $ 1,026 1.15% (g)
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . $ 10.26 (0.04) 1.08 1.04 $ 11.30 10.14% (f) $ 1,130 1.15% (g)
RATIOS / SUPPLEMENTAL DATA
------------------------------------------------------
RATIO RATIO OF RATIO
OF EXPENSES OF NET
NET (PRIOR INVESTMENT
INVESTMENT TO INCOME
INCOME REIMBURSE- (LOSS)
(LOSS) MENTS) (PRIOR TO
TO TO REIMBURSE-
AVERAGE AVERAGE MENTS) PORTFOLIO
NET NET ASSETS TO AVERAGE TURNOVER
ASSETS (B) NET ASSETS (B) (C)
- ---------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended April 30, 2003
(Unaudited) (d) . . . . . . . . . (1.19%) (g) 7.17% (g) (6.95%) (g) 44.77%
INSTITUTIONAL CLASS SHARES
Period Ended October 31, 2002 (e) (0.69%) (g) 20.62% (g) (20.16%) (g) 3.74%
Six Months Ended April 30, 2003
(Unaudited) . . . . . . . . . . . (0.82%) (g) 4.92% (g) (4.59%) (g) 44.77%
- ---------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) For the period from March 5, 2003 (commencement of operations) through
April 30, 2003.
(e) For the period from October 1, 2002 (commencement of operations) through
October 31, 2002.
(f) Not annualized.
(g) Annualized.
See notes to financial statements.
26 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE INVESTOR DESTINATIONS AGGRESSIVE FUND
Class A Shares symbol: NDAAX
Class B Shares symbol: NDABX
Class C Shares symbol: NDACX
Service Class symbol: NDASX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 3.35%* versus
3.99% for its composite benchmark. The benchmark consists of 40% S&P 500 Index,
30% Morgan Stanley Capital International Europe, Australasia and Far East (MSCI
EAFE) Index, 15% S&P MidCap 400 Index, 5% Lehman Brothers Aggregate Bond Index
and 10% Russell 2000 Index.
For broader comparison, the average return for this Fund's peer category (Global
Funds) was 1.81%, according to Lipper, an independent company that provides
mutual fund data and analysis.
WHAT MARKET/ECONOMIC FACTORS INFLUENCED PERFORMANCE?
Despite the market's strong performance at the end of 2002, the new year began
with looming global economic uncertainty characterized by slow growth, a weak
job market and stagnant profits. Although these recovery-stifling factors
lingered through April, a few bits of encouraging data about the U.S. economy
began to surface-fourth-quarter GDP was revised upward and capital spending
increased. Amid these mixed economic signals, the war in Iraq clearly dominated
investor sentiment. With the end of combat activity at hand, global markets
rallied to end soundly in positive territory for the six-month period.
The Federal Open Market Committee met in January and again in mid-March. Each
time, it decided to keep the target federal funds rate unchanged at 1.25%. With
raw candor, the Fed admitted that uncertainty was making it difficult to assess
the risks involved in balancing its two goals-price stability and sustainable
economic growth. Interest rates traded within a fairly tight range but finished
lower across the yield curve, which steepened during the period as short-term
interest rates fell more than longer-term rates.
While international equities collectively underperformed domestic equities, 16
of the 21 countries in the EAFE Index posted positive returns. The dollar
continued to be weak, helping overseas returns.
WHAT PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
The Fund's 65% allocation to domestic equities contributed solidly to the Fund's
positive return. The underlying Nationwide Small Cap Index Fund outperformed the
more heavily weighted Nationwide Mid Cap Market Index Fund and the Nationwide
S&P 500 Index Fund components. The Fund's 30% allocation to the Nationwide
International Index Fund, which turned in a positive but relatively weak
performance, was a drag on the overall return of the Fund.
The Fund's fixed-income component, which comprised only 5% of its total
holdings, produced a positive return for the period. The Nationwide Bond Index
Fund component's holdings in high-quality corporate bonds turned in the best
sector performance due to tightening credit spreads, while mortgage-backed
securities turned in positive but weak returns due to the mortgage refinancing
frenzy.
WHAT IS THE OUTLOOK FOR THIS FUND?
The Fund will continue to pursue its primary goal of maximizing total investment
return by seeking growth of capital. The Fund will remain weighted toward stock
investments, both U.S. and international.
PORTFOLIO MANAGER: The Fund is managed by a team of portfolio managers and
research analysts from Gartmore Mutual Fund Capital Trust.
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $77,338,732
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. INCEPTION1
- ----------------------------------------------
Class A. . . . w/o SC2 -15.42% -12.12%
w/SC3 -20.31% -13.79%
- ----------------------------------------------
Class B. . . . w/o SC2 -15.89% -12.69%
w/SC4 -20.07% -13.54%
- ----------------------------------------------
Class C5 . . . w/o SC2 -15.88% -12.69%
w/SC6 -17.56% -12.97%
- ----------------------------------------------
Service Class7 -15.46% -12.11%
- ----------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 Fund commenced operations on March 31, 2000.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 These returns include performance based on Class B shares, which was
achieved prior to the first public sale of Class C shares (10/14/02). These
returns have been restated for sales charges but not for fees applicable to
Class C shares. Had Class C been in existence for the time periods
presented, the performance of Class C shares would have been similar
assuming similar expenses.
6 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
7 Not subject to any sales charges.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
DATE CLASS A COMPOSITE* LB AGGREGATE BOND S&P 500 MSCI EAFE S&P MIDCAP 400 RUSSELL 2000 CPI
- ---------------------------------------------------------------------------------------------------------------------
3/31/2000. 9,425 10,000 10,000 10,000 10,000 10,000 10,000 10,000
10/31/2000 8,822 9,449 10,550 9,599 8,633 10,477 9,294 10,169
10/31/2001 7,011 7,559 12,085 7,209 6,503 9,173 8,114 10,386
10/31/2002 6,123 6,701 12,797 6,120 5,662 8,735 7,175 10,596
4/30/2003. 6,328 6,971 13,349 6,394 5,777 9,082 7,717 10,839
Comparative performance of $10,000 invested in Class A shares of the Gartmore
Investor Destinations Aggressive Fund, Lehman Brothers Aggregate Bond Index (LB
Aggregate Bond) (a), S&P 500 Index (S&P 500)(b), Morgan Stanley Capital
International - Europe, Australasia, and Far East Index (MSCI EAFE) (c), the S&P
MidCap 400 Index (d), the Russell 2000 Index (Russell 2000)(e), the Aggressive
Composite Index (Composite)(h), and the Consumer Price Index (CPI) (g) since
inception. Unlike the Fund, the returns for these indices do not reflect any
fees, expenses, or sales charges.
For an explanation of the indices, please refer to page 28.
2003 SEMIANNUAL REPORT 27
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE INVESTOR DESTINATIONS AGGRESSIVE FUND
MUTUAL FUNDS (100.0%)
SHARES VALUE
- --------------------------------------------------------------------------
EQUITY FUNDS (95.1%)
Nationwide International Index Fund,
Institutional Class (b) . . . . . . . . . . . . . 4,347,490 $23,172,121
Nationwide Mid Cap Market Index Fund,
Institutional Class (b) . . . . . . . . . . . . . 1,224,795 11,709,044
Nationwide S&P 500 Index Fund,
Institutional Class (b) . . . . . . . . . . . . . 3,901,755 30,862,879
Nationwide Small Cap Index Fund,
Institutional Class (b) . . . . . . . . . . . . . 1,000,037 7,810,288
------------
73,554,332
------------
FIXED INCOME FUNDS (4.9%)
Nationwide Bond Index Fund,
Institutional Class (b) . . . . . . . . . . . . . 339,408 3,784,400
------------
TOTAL MUTUAL FUNDS 77,338,732
------------
TOTAL INVESTMENTS (COST $75,725,250) (A) - 100.0% 77,338,732
LIABILITIES IN EXCESS OF OTHER ASSETS - 0.0% (2,310)
------------
NET ASSETS - 100.0% $77,336,422
============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Investment in affiliate.
SEE NOTES TO FINANCIAL STATEMENTS.
- --------------------------------------
(a) The LB Aggregate Bond consists of investment grade debt issues that have at
least $100 million par amount outstanding and at least one year to final
maturity.
(b) The S&P 500 is a capitalization-weighted index of 500 stocks designed to
measure performance of the broad domestic economy through changes in the
aggregate market value of these 500 stocks which represent all major
industries.
(c) The MSCI EAFE is an unmanaged index generally representative of the
performance of international stock markets.
(d) The S&P MidCap 400 Index consists of 400 stocks designed to measure
performance of the mid cap company economy through changes in the aggregate
market value of these 400 stocks which represent all major industries.
(e) The Russell 2000 is comprised of approximately 2000 companies with small
market capitalizations relative to the market capitalizations of other U.S.
companies.
(f) The Citigroup 3-Month T Bill Index is an average of the last 3-month
treasury bill issues (excluding the current month-end bill).
(g) The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
(h) The Aggressive Composite is a combination of 40% S&P 500, 30% MSCI EAFE,
15% S&P MidCap 400 Index, 10% Russell 2000, and 5% LB Aggregate Bond.
(i) The Moderately Aggressive Composite is a combination of 35% S&P 500, 25%
MSCI EAFE, 15% S&P MidCap 400 Index, 15% LB Aggregate Bond, 5% Russell
2000, and 5% Citigroup 3-Month T Bill Index.
(j) The Moderate Composite is a combination of 30% S&P 500, 25% LB Aggregate
Bond, 15% MSCI EAFE, 15% Citigroup 3-Month T Bill Index, 10% S&P MidCap 400
Index, and 5% Russell 2000.
(k) The Moderately Conservative Composite is a combination of 35% LB Aggregate
Bond, 25% Citigroup 3-Month T Bill Index, 20% S&P 500, 10% MSCI EAFE, and
10% S&P MidCap 400 Index.
(l) The Conservative Composite is a combination of 45% Citigroup 3-Month T Bill
Index, 35% LB Aggregate Bond, 10% S&P 500, 5% MSCI EAFE, and 5% S&P MidCap
400 Index.
28 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE INVESTOR DESTINATIONS MODERATELY AGGRESSIVE FUND
Class A Shares symbol: NDMAX
Class B Shares symbol: NDMBX
Class C Shares symbol: NDMCX
Service Class symbol: NDMSX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 3.38%* versus
3.81% for its composite benchmark. The benchmark consists of 35% S&P 500 Index,
25% Morgan Stanley Capital International Europe, Australasia and Far East (MSCI
EAFE) Index, 15% Lehman Brothers Aggregate Bond Index, 15% S&P MidCap 400 Index,
5% Citigroup 3-Month T-Bill Index and 5% Russell 2000 Index.
For broader comparison, the average return for this Fund's peer category (Global
Flexible Portfolio Funds) was 4.72%, according to Lipper, an independent company
that provides mutual fund data and analysis.
WHAT MARKET/ECONOMIC FACTORS INFLUENCED PERFORMANCE?
Despite the market's strong performance at the end of 2002, the new year began
with looming global economic uncertainty characterized by slow growth, a weak
job market and stagnant profits. Although these recovery-stifling factors
lingered through April, a few bits of encouraging data about the U.S. economy
began to surface-fourth-quarter GDP was revised upward and capital spending
increased. Amid these mixed economic signals, the war in Iraq clearly dominated
investor sentiment. With the end of combat activity at hand, global markets
rallied to end soundly in positive territory for the six-month period.
The Federal Open Market Committee met in January and again in mid-March. Each
time, it decided to keep the target federal funds rate unchanged at 1.25%. With
raw candor, the Fed admitted that uncertainty was making it difficult to assess
the risks involved in balancing its two goals-price stability and sustainable
economic growth. Interest rates traded within a fairly tight range but finished
lower across the yield curve, which steepened during the period as short-term
interest rates fell more than longer-term rates.
While international equities collectively underperformed domestic equities, 16
of the 21 countries in the EAFE Index posted positive returns. The dollar
continued to be weak, helping overseas returns.
WHAT PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
The Fund's 55% allocation to domestic equities contributed solidly to the Fund's
positive return. The underlying Nationwide Small Cap Index Fund outperformed the
more heavily weighted Nationwide Mid Cap Market Index Fund and the Nationwide
S&P 500 Index Fund components. The Fund's 25% allocation to the Nationwide
International Index Fund, which turned in a positive but relatively weak
performance, was a drag on the overall return of the Fund.
The Fund's fixed-income components, which comprised 20% of its total holdings,
produced a positive return for the period and helped the Fund's overall
performance. The Nationwide Bond Index Fund component's holdings in high-quality
corporate bonds turned in the best sector performance due to tightening credit
spreads, while mortgage-backed securities turned in positive but weak returns
due to the mortgage refinancing frenzy. The managed component of the Fund's
short-term holdings, the Gartmore Morley Enhanced Income Fund, was able to
achieve a yield advantage over its benchmark, while maintaining a relatively
stable value through its duration hedging strategy.
WHAT IS THE OUTLOOK FOR THIS FUND?
The Fund will continue to pursue its primary goal of maximizing total investment
return by seeking growth of capital, but also income. The Fund will remain
weighted toward stock investments while including some bonds and short-term
investments to reduce volatility.
PORTFOLIO MANAGER: The Fund is managed by a team of portfolio managers and
research analysts from Gartmore Mutual Fund Capital Trust.
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $137,899,240
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. INCEPTION1
- ----------------------------------------------
Class A. . . . w/o SC2 -11.67% -8.90%
w/SC3 -16.78% -10.64%
- ----------------------------------------------
Class B. . . . w/o SC2 -12.32% -9.55%
w/SC4 -16.65% -10.42%
- ----------------------------------------------
Class C5 . . . w/o SC2 -12.17% -9.50%
w/SC6 -13.87% -9.79%
- ----------------------------------------------
Service Class7 -11.75% -8.91%
- ----------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 Fund commenced operations on March 31, 2000.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 These returns include performance based on Class B shares, which was
achieved prior to the first public sale of Class C shares (10/15/02). These
returns have been restated for sales charges but not for fees applicable to
Class C shares. Had Class C been in existence for the time periods
presented, the performance of Class C shares would have been similar
assuming similar expenses.
6 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
7 Not subject to any sales charges.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
DATE CLASS A COMPOSITE* LB AGGREGATE BOND S&P 500 MSCI EAFE S&P MIDCAP 400 RUSSELL 2000
- -------------------------------------------------------------------------------------------------------------
3/31/2000. 9,425 10,000 10,000 10,000 10,000 10,000 10,000
10/31/2000 9,040 9,643 10,550 9,599 8,633 10,477 9,294
10/31/2001 7,579 8,136 12,085 7,209 6,503 9,173 8,114
10/31/2002 6,838 7,433 12,797 6,120 5,662 8,735 7,175
4/30/2003. 7,069 7,720 13,349 6,394 5,777 9,082 7,717
DATE SALOMON BROTHERS 3-MONTH T BILL CPI
- ---------------------------------------------------
3/31/2000. 10,000 10,000
10/31/2000 10,348 10,169
10/31/2001 10,841 10,386
10/31/2002 11,041 10,596
4/30/2003. 11,112 10,839
Comparative performance of $10,000 invested in Class A shares of the Gartmore
Investor Destinations Moderately Aggressive Fund, Lehman Brothers Aggregate Bond
Index (LB Aggregate Bond)(a), S&P 500 Index (S&P 500)(b), Morgan Stanley Capital
International -Europe, Australasia, and Far East Index (MSCI EAFE)(c), the S&P
MidCap 400 Index(d), the Russell 2000 Index (Russell 2000)(e), the Citigroup
3-Month T Bill Index(f), the Moderately Aggressive Composite Index
(Composite)(i), and the Consumer Price Index (CPI)(g) since inception. Unlike
the Fund, the returns for these indices do not reflect any fees, expenses, or
sales charges.
For an explanation of the indices, please refer to page 28.
2003 SEMIANNUAL REPORT 29
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE INVESTOR DESTINATIONS MODERATELY AGRESSIVE FUND
MUTUAL FUNDS (97.6%)
SHARES OR
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
EQUITY FUNDS (80.4%)
Nationwide International Index Fund,
Institutional Class (b). . . . . . . . 6,484,820 $ 34,564,092
Nationwide Mid Cap Market Index Fund,
Institutional Class (b). . . . . . . . 2,191,754 20,953,165
Nationwide S&P 500 Index Fund,
Institutional Class (b). . . . . . . . 6,109,740 48,328,040
Nationwide Small Cap Index Fund,
Institutional Class (b). . . . . . . . 894,786 6,988,281
------------
110,833,578
------------
FIXED INCOME FUNDS (17.2%)
Gartmore Morley Enhanced Income Fund,
Institutional Class (b). . . . . . . . 357,727 3,369,789
Nationwide Bond Index Fund,
Institutional Class (b). . . . . . . . 1,822,775 20,323,945
------------
23,693,734
------------
TOTAL MUTUAL FUNDS 134,527,312
------------
Nationwide Fixed Contract,
3.80% (b) (c). . . . . . . . . . $ $3,371,928 $ 3,371,928
------------
TOTAL FIXED CONTRACT 3,371,928
------------
TOTAL INVESTMENTS
(COST $144,295,107) (A) - 100.0% 137,899,240
OTHER ASSETS IN EXCESS OF
LIABILITIES - 0.0% 38,734
------------
NET ASSETS - 100.0% S137,937,974
============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Investment in affiliate.
(c) The Nationwide Fixed Contract rate changes quarterly. Security is
restricted. The security has been deemed liquid pursuant to procedures
approved by the Board of Trustees.
SEE NOTES TO FINANCIAL STATEMENTS.
30 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE INVESTOR DESTINATIONS MODERATE FUND
Class A Shares symbol: NADMX
Class B Shares symbol: NBDMX
Class C Shares symbol: NCDMX
Service Class symbol: NSDMX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 3.22%* versus
3.70% for its composite benchmark. The benchmark consists of 30% S&P 500 Index,
25% Lehman Brothers Aggregate Bond Index, 15% Morgan Stanley Capital
International Europe, Australasia and Far East Index (MSCI EAFE), 15% Citigroup
3-Month T-Bill Index, 10% S&P MidCap 400 Index and 5% Russell 2000 Index.
For broader comparison, the average return for this Fund's peer category
(Balanced Funds) was 4.25%, according to Lipper, an independent company that
provides mutual fund data and analysis.
WHAT MARKET/ECONOMIC FACTORS INFLUENCED PERFORMANCE?
Despite the market's strong performance at the end of 2002, the new year began
with looming global economic uncertainty characterized by slow growth, a weak
job market and stagnant profits. Although these recovery-stifling factors
lingered through April, a few bits of encouraging data about the U.S. economy
began to surface-fourth-quarter GDP was revised upward and capital spending
increased. Amid these mixed economic signals, the war in Iraq clearly dominated
investor sentiment. With the end of combat activity at hand, global markets
rallied to end soundly in positive territory for the six-month period.
The Federal Open Market Committee met in January and again in mid-March. Each
time, it decided to keep the target federal funds rate unchanged at 1.25%. With
raw candor, the Fed admitted that uncertainty was making it difficult to assess
the risks involved in balancing its two goals-price stability and sustainable
economic growth. Interest rates traded within a fairly tight range but finished
lower across the yield curve, which steepened during the period as short-term
interest rates fell more than longer-term rates.
While international equities collectively underperformed domestic equities, 16
of the 21 countries in the EAFE Index posted positive returns. The dollar
continued to be weak, helping overseas returns.
WHAT PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
The Fund's 45% allocation to domestic equities contributed solidly to the Fund's
positive return. The underlying Nationwide Small Cap Index Fund outperformed the
more heavily weighted Nationwide Mid Cap Market Index Fund and the Nationwide
S&P 500 Index Fund components. The Fund's 15% allocation to the Nationwide
International Index Fund, which turned in a positive but relatively weak
performance, was a drag on the overall return of the Fund.
The Fund's fixed-income components, which comprised 40% of its total holdings,
produced a positive return for the period and helped the Fund's overall
performance. The Nationwide Bond Index Fund component's holdings in high-quality
corporate bonds turned in the best sector performance due to tightening credit
spreads, while mortgage-backed securities produced positive but weak returns due
to the mortgage refinancing frenzy. The managed component of the Fund's
short-term holdings, the Gartmore Morley Enhanced Income Fund, was able to
achieve a yield advantage over its benchmark, while maintaining a relatively
stable value through its duration hedging strategy.
WHAT IS THE OUTLOOK FOR THIS FUND?
The Fund will continue to pursue its primary goal of maximizing total investment
return by seeking growth of capital and income. The Fund will remain weighted
toward stock investments while including a substantial portion in bonds and
short-term investments to add income and reduce volatility.
PORTFOLIO MANAGER: The Fund is managed by a team of portfolio managers and
research analysts from Gartmore Mutual Fund Capital Trust.
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $178,144,348
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. INCEPTION1
- ----------------------------------------------
Class A. . . . w/o SC2 -7.08% -4.86%
w/SC3 -12.38% -6.67%
- ----------------------------------------------
Class B. . . . w/o SC2 -7.70% -5.51%
w/SC4 -12.24% -6.40%
- ----------------------------------------------
Class C5 . . . w/o SC2 -7.77% -5.53%
w/SC6 -9.59% -5.84%
- ----------------------------------------------
Service Class7 -7.18% -4.83%
- ----------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 Fund commenced operations on March 31, 2000.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 These returns include performance based on Class B shares, which was
achieved prior to the first public sale of Class C shares (9/9/02). These
returns have been restated for sales charges but not for fees applicable to
Class C shares. Had Class C been in existence for the time periods
presented, the performance of Class C shares would have been similar
assuming similar expenses.
6 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
7 Not subject to any sales charges.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
DATE CLASS A COMPOSITE* LB AGGREGATE BOND S&P 500 MSCI EAFE S&P MIDCAP 400 RUSSELL 2000
- -------------------------------------------------------------------------------------------------------------
3/31/2000. 9,425 10,000 10,000 10,000 10,000 10,000 10,000
10/31/2000 9,311 9,870 10,550 9,599 8,633 10,477 9,294
10/31/2001 8,341 8,922 12,085 7,209 6,503 9,173 8,114
10/31/2002 7,830 8,428 12,797 6,120 5,662 8,735 7,175
4/30/2003. 8,083 8,747 13,349 6,394 5,777 9,082 7,717
DATE SALOMON BROTHERS 3-MONTH T BILL CPI
- ---------------------------------------------------
3/31/2000. 10,000 10,000
10/31/2000 10,348 10,169
10/31/2001 10,841 10,386
10/31/2002 11,041 10,596
4/30/2003. 11,112 10,839
Comparative performance of $10,000 invested in Class A shares of the Gartmore
Investor Destinations Moderate Fund, Lehman Brothers Aggregate Bond Index (LB
Aggregate Bond) (a), S&P 500 Index (S&P 500) (b), Morgan Stanley Capital
International - Europe, Australasia, and Far East Index (MSCI EAFE) (c), the S&P
MidCap 400 Index (d), the Russell 2000 Index (Russell 2000) (e), the Citigroup
3-Month T Bill Index (f), the Moderate Composite Index (Composite) (j), and the
Consumer Price Index (CPI) (g) since inception. Unlike the Fund, the returns for
these indices do not reflect any fees, expenses, or sales charges.
For an explanation of the indices, please refer to page 28.
2003 SEMIANNUAL REPORT 31
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE INVESTOR DESTINATIONS MODERATE FUND
MUTUAL FUNDS (92.5%)
SHARES OR
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------
EQUITY FUNDS (60.5%)
Nationwide International Index Fund,
Institutional Class (b). . . . . . . . 5,051,142 $ 26,922,588
Nationwide Mid Cap Market Index Fund,
Institutional Class (b). . . . . . . . 1,897,296 18,138,150
Nationwide S&P 500 Index Fund,
Institutional Class (b). . . . . . . . 6,799,575 53,784,639
Nationwide Small Cap Index Fund,
Institutional Class (b). . . . . . . . 1,161,853 9,074,075
------------
107,919,452
------------
FIXED INCOME FUNDS (32.0%)
Gartmore Morley Enhanced Income Fund,
Institutional Class (b). . . . . . . . 1,393,068 13,122,702
Nationwide Bond Index Fund,
Institutional Class (b). . . . . . . . 3,943,605 43,971,198
------------
57,093,900
------------
TOTAL MUTUAL FUNDS 165,013,352
------------
FIXED CONTRACT (7.4%)
Nationwide Fixed Contract,
3.80% (b) (c). . . . . . . . . . . . . $ 13,130,996 13,130,996
------------
TOTAL FIXED CONTRACT 13,130,996
------------
TOTAL INVESTMENTS
(COST $182,267,340) (A) - 99.9%. . . . 178,144,348
OTHER ASSETS IN EXCESS OF
LIABILITIES - 0.1% 158,244
------------
ASSETS - 100.0% $178,302,592
============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Investment in affiliate.
(c) The Nationwide Fixed Contract rate changes quarterly. Security is
restricted. The security has been deemed liquid pursuant to procedures
approved by the Board of Trustees.
SEE NOTES TO FINANCIAL STATEMENTS.
32 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE INVESTOR DESTINATIONS MODERATELY CONSERVATIVE FUND
Class A Shares symbol: NADCX
Class B Shares symbol: NBDCX
Class C Shares symbol: NCDCX
Service Class symbol: NSDCX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 2.92%* versus
3.26% for its composite benchmark. The benchmark consists of 35% Lehman Brothers
Aggregate Bond Index, 25% Citigroup 3-Month T-Bill Index, 20% S&P 500 Index, 10%
Morgan Stanley Capital International Europe, Australasia and Far East (MSCI
EAFE) Index, and 10% S&P MidCap 400 Index.
For broader comparison, the average return for this Fund's peer category (Income
Funds) was 5.55%, according to Lipper, an independent company that provides
mutual fund data and analysis.
WHAT MARKET/ECONOMIC FACTORS INFLUENCED PERFORMANCE?
Despite the market's strong performance at the end of 2002, the new year began
with looming global economic uncertainty characterized by slow growth, a weak
job market and stagnant profits. Although these recovery-stifling factors
lingered through April, a few bits of encouraging data about the U.S. economy
began to surface-fourth-quarter GDP was revised upward and capital spending
increased. Amid these mixed economic signals, the war in Iraq clearly dominated
investor sentiment. With the end of combat activity at hand, global markets
rallied to end soundly in positive territory for the six-month period.
The Federal Open Market Committee met in January and again in mid-March. Each
time, it decided to keep the target federal funds rate unchanged at 1.25%. With
raw candor, the Fed admitted that uncertainty was making it difficult to assess
the risks involved in balancing its two goals-price stability and sustainable
economic growth. Interest rates traded within a fairly tight range but finished
lower across the yield curve, which steepened during the period as short-term
interest rates fell more than longer-term rates.
While international equities collectively underperformed domestic equities, 16
of the 21 countries in the EAFE Index posted positive returns. The dollar
continued to be weak, helping overseas returns.
WHAT PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
The Fund's 30% allocation to domestic equities contributed solidly to the Fund's
positive return. The Nationwide Mid Cap Market Index Fund and the Nationwide S&P
500 Index Fund components produced strong returns. The Fund's 10% allocation to
the Nationwide International Index Fund, which turned in a positive but
relatively weak performance, was a drag on the overall return of the Fund.
The Fund's fixed-income components, which comprised 60% of its total holdings,
produced a positive return for the period and helped the Fund's overall
performance. The Nationwide Bond Index Fund component's holdings in high-quality
corporate bonds turned in the best sector performance due to tightening credit
spreads, while mortgage-backed securities produced positive but weak returns due
to the mortgage refinancing frenzy. The managed component of the Fund's
short-term holdings, the Gartmore Morley Enhanced Income Fund, was able to
achieve a yield advantage over its benchmark, while maintaining a relatively
stable value through its duration hedging strategy.
WHAT IS THE OUTLOOK FOR THIS FUND?
The Fund will continue to pursue its primary goal of maximizing total investment
return by seeking income and, secondarily, long-term growth of capital. The Fund
will remain weighted toward bonds and short-term investments while including
substantial stock investments for long-term growth.
PORTFOLIO MANAGER: The Fund is managed by a team of portfolio managers and
research analysts from Gartmore Mutual Fund Capital Trust.
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $57,458,996
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. INCEPTION1
- ---------------------------------------------
Class A. . . . w/o SC2 -2.56% -1.23%
w/SC3 -8.17% -3.10%
- ---------------------------------------------
Class B. . . . w/o SC2 -3.12% -1.83%
w/SC4 -7.86% -2.74%
- ---------------------------------------------
Class C5 . . . w/o SC2 -3.09% -1.82%
w/SC6 -4.95% -2.14%
- ---------------------------------------------
Service Class7 -2.65% -1.20%
- ---------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 Fund commenced operations on March 31, 2000.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 These returns include performance based on Class B shares, which was
achieved prior to the first public sale of Class C shares (9/12/02). These
returns have been restated for sales charges but not for fees applicable to
Class C shares. Had Class C been in existence for the time periods
presented, the performance of Class C shares would have been similar
assuming similar expenses.
6 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
7 Not subject to any sales charges.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
DATE CLASS A COMPOSITE* LB AGGREGATE BOND S&P 500 MSCI EAFE S&P MIDCAP 400 SALOMON BROTHERS 3-MONTH T BILL
- -------------------------------------------------------------------------------------------------------------------------------
3/31/2000. 9,425 10,000 10,000 10,000 10,000 10,000 10,000
10/31/2000 9,435 10,105 10,550 9,599 8,633 10,477 10,348
10/31/2001 9,051 9,770 12,085 7,209 6,503 9,173 10,841
10/31/2002 8,816 9,570 12,797 6,120 5,662 8,735 11,041
4/30/2003. 9,073 9,890 13,349 6,394 5,777 9,082 11,112
DATE CPI
- ----------------
3/31/2000. 10,000
10/31/2000 10,169
10/31/2001 10,386
10/31/2002 10,596
4/30/2003. 10,839
Comparative performance of $10,000 invested in Class A shares of the Gartmore
Investor Destinations Moderately Conservative Fund, Lehman Brothers Aggregate
Bond Index (LB Aggregate Bond)(a), S&P 500 Index (S&P 500)(b), Morgan Stanley
Capital International -Europe, Australasia, and Far East Index (MSCI EAFE)(c),
the S&P MidCap 400 Index(d), the Citigroup 3-Month T Bill Index(f), the
Moderately Conservative Composite Index (Composite)(k), and the Consumer Price
Index (CPI)(g) since inception. Unlike the Fund, the returns for these indices
do not reflect any fees, expenses, or sales charges.
For an explanation of the indices, please refer to page 28.
2003 SEMIANNUAL REPORT 33
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE INVESTOR DESTINATIONS MODERATELY CONSERVATIVE FUND
MUTUAL FUNDS (87.5%)
SHARES OR
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
EQUITY FUNDS (40.5%)
Nationwide International Index
Fund, Institutional
Class (b). . . . . . . . . . . . . . . 1,091,626 $ 5,818,369
Nationwide Mid Cap Market Index Fund,
Institutional Class (b). . . . . . . . 614,976 5,879,174
Nationwide S&P 500 Index Fund,
Institutional Class (b). . . . . . . . 1,469,428 11,623,179
-----------
23,320,722
-----------
FIXED INCOME FUNDS (47.0%)
Gartmore Morley Enhanced Income Fund,
Institutional Class (b). . . . . . . . 752,604 7,089,530
Nationwide Bond Index Fund,
Institutional Class (b). . . . . . . . 1,789,679 19,954,919
-----------
27,044,449
-----------
TOTAL MUTUAL FUNDS 50,365,171
-----------
FIXED CONTRACT (12.3%)
Nationwide Fixed Contract,
3.80% (b) (c). . . . . . . . . . . . . $ 7,093,825 7,093,825
-----------
TOTAL FIXED CONTRACT 7,093,825
-----------
TOTAL INVESTMENTS
(COST $57,616,231) (A) - 99.8% . . . . 57,458,996
OTHER ASSETS IN EXCESS
OF LIABILITIES - 0.2% 93,252
-----------
NET ASSETS - 100.0% $57,552,248
===========
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Investment in affiliate.
(c) The Nationwide Fixed Contract rate changes quarterly. Security is
restricted. The security has been deemed liquid pursuant to procedures
approved by the Board of Trustees.
SEE NOTES TO FINANCIAL STATEMENTS.
34 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE INVESTOR DESTINATIONS CONSERVATIVE FUND
Class A Shares symbol: NDCAX
Class B Shares symbol: NDCBX
Class C Shares symbol: NDCCX
Service Class symbol: NDCSX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund outperformed, returning
2.67%* versus 2.61% for its composite benchmark. The benchmark consists of 45%
Citigroup 3-Month T-Bill Index, 35% Lehman Brothers Aggregate Bond Index, 10%
S&P 500 Index, 5% Morgan Stanley Capital International Europe, Australasia and
Far East (MSCI EAFE) Index, and 5% S&P MidCap 400 Index.
For broader comparison, the average return for this Fund's peer category (Income
Funds) was 5.55%, according to Lipper, an independent company that provides
mutual fund data and analysis.
WHAT MARKET/ECONOMIC FACTORS INFLUENCED PERFORMANCE?
Despite the market's strong performance at the end of 2002, the new year began
with looming global economic uncertainty characterized by slow growth, a weak
job market and stagnant profits. Although these recovery-stifling factors
lingered through April, a few bits of encouraging data about the U.S. economy
began to surface-fourth-quarter GDP was revised upward and capital spending
increased. Amid these mixed economic signals, the war in Iraq clearly dominated
investor sentiment. With the end of combat activity at hand, global markets
rallied to end soundly in positive territory for the six-month period.
The Federal Open Market Committee met in January and again in mid-March. Each
time, it decided to keep the target federal funds rate unchanged at 1.25%. With
raw candor, the Fed admitted that uncertainty was making it difficult to assess
the risks involved in balancing its two goals-price stability and sustainable
economic growth. Interest rates traded within a fairly tight range but finished
lower across the yield curve, which steepened during the period as short-term
interest rates fell more than longer-term rates.
While international equities collectively underperformed domestic equities, 16
of the 21 countries in the EAFE Index posted positive returns. The dollar
continued to be weak, helping overseas returns.
WHAT PORTFOLIO-SPECIFIC FACTORS AFFECTED PERFORMANCE?
The Fund's fixed-income components, which comprised 80% of its total holdings,
produced a positive return for the period, contributing strongly to overall
performance. The Nationwide Bond Index Fund component's holdings in high-quality
corporate bonds turned in the best sector performance due to tightening credit
spreads, while mortgage-backed securities produced positive but weak returns due
to the mortgage refinancing frenzy. The managed component of the Fund's
short-term holdings, the Gartmore Morley Enhanced Income Fund, was able to
achieve a yield advantage over its benchmark, while maintaining a relatively
stable value through its duration hedging strategy.
The Fund's conservative allocation of 15% to domestic equities also contributed
to the Fund's positive return. The Nationwide Mid Cap Market Index Fund and the
Nationwide S&P 500 Index Fund components turned in strong performances. The
Fund's 5% allocation to the Nationwide International Index Fund, which turned in
a positive but relatively weak performance, was a slight drag on the overall
return of the Fund.
WHAT IS THE OUTLOOK FOR THIS FUND?
The Fund will continue to pursue its primary goal of maximizing total investment
return by seeking income and, secondarily, long-term growth of capital. The Fund
will remain weighted toward bonds and short-term investments while including
some stock investments for long-term growth.
PORTFOLIO MANAGER: The Fund is managed by a team of portfolio managers and
research analysts from Gartmore Mutual Fund Capital Trust.
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $44,662,723
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. INCEPTION1
- ---------------------------------------------
Class A. . . . w/o SC2 1.34% 2.05%
w/SC3 -4.51% 0.11%
- ---------------------------------------------
Class B. . . . w/o SC2 0.63% 1.37%
w/SC4 -4.27% 0.46%
- ---------------------------------------------
Class C5 . . . w/o SC2 0.57% 1.35%
w/SC6 -1.42% 1.03%
- ---------------------------------------------
Service Class7 1.17% 2.04%
- ---------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 Fund commenced operations on March 31, 2000.
2 These returns do not reflect the effects of sales charges (SC).
3 A 5.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 These returns include performance based on Class B shares, which was
achieved prior to the first public sale of Class C shares (9/4/02). These
returns have been restated for sales charges but not for fees applicable to
Class C shares. Had Class C been in existence for the time periods
presented, the performance of Class C shares would have been similar
assuming similar expenses.
6 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
7 Not subject to any sales charges.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
LB S&P
AGGREGATE S&P MSCI MIDCAP
DATE CLASS A COMPOSITE* BOND 500 EAFE 400 SALOMON BROTHERS 3-MONTH T BILL CPI
- -------------------------------------------------------------------------------------------------------------------
3/31/2000. 9,425 10,000 10,000 10,000 10,000 10,000 10,000 10,000
10/31/2000 9,565 10,263 10,550 9,599 8,633 10,477 10,348 10,169
10/31/2001 9,729 10,500 12,085 7,209 6,503 9,173 10,841 10,386
10/31/2002 9,773 10,568 12,797 6,120 5,662 8,735 11,041 10,596
4/30/2003. 10,034 10,849 13,349 6,394 5,777 9,082 11,112 10,839
Comparative performance of $10,000 invested in Class A shares of the Gartmore
Investor Destinations Conservative Fund, Lehman Brothers Aggregate Bond Index
(LB Aggregate Bond)(a), S&P 500 Index (S&P 500)(b), Morgan Stanley Capital
International - Europe, Australasia, and Far East Index (MSCI EAFE)(c), the S&P
MidCap 400 Index(d), the Citigroup 3-Month T Bill Index(f), the Conservative
Composite Index (Composite)(l), and the Consumer Price Index (CPI)(g) since
inception. Unlike the Fund, the returns for these indices do not reflect any
fees, expenses, or sales charges.
For an explanation of the indices, please refer to page 28.
2003 SEMIANNUAL REPORT 35
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE INVESTOR DESTINATIONS CONSERVATIVE FUND
MUTUAL FUNDS (77.5%)
SHARES OR
PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
EQUITY FUNDS (20.4%)
Nationwide International Index Fund,
Institutional Class (b). . . . . . . . 426,557 $ 2,273,547
Nationwide Mid Cap Market Index Fund,
Institutional Class (b). . . . . . . . 240,320 2,297,457
Nationwide S&P 500 Index Fund,
Institutional Class (b). . . . . . . . 574,194 4,541,875
-----------
9,112,879
-----------
FIXED INCOME FUNDS (57.1%)
Gartmore Morley Enhanced Income Fund,
Institutional Class (b). . . . . . . . 1,058,816 9,974,048
Nationwide Bond Index Fund,
Institutional Class (b). . . . . . . . 1,398,742 15,595,971
-----------
25,570,019
-----------
TOTAL MUTUAL FUNDS 34,682,898
-----------
FIXED CONTRACT (22.3%)
Nationwide Fixed Contract,
3.80% (b) (c). . . . . . . . . . . . . $ 9,979,825 $ 9,979,825
-----------
TOTAL FIXED CONTRACT 9,979,825
-----------
TOTAL INVESTMENTS
(COST $44,197,755) (A) - 99.8%. . . . 44,662,723
OTHER ASSETS IN EXCESS OF
LIABILITIES - 0.2% 89,139
-----------
NET ASSETS - 100.0% $ 44,751,862
============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Investment in affiliate.
(c) The Nationwide Fixed Contract rate changes quarterly. Security is
restricted. The security has been deemed liquid pursuant to procedures
approved by the Board of Trustees.
SEE NOTES TO FINANCIAL STATEMENTS.
36 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 2003 (Unaudited)
GARTMORE GARTMORE
GARTMORE . . INVESTOR GARTMORE INVESTOR GARTMORE
INVESTOR . . DESTINATIONS INVESTOR DESTINATIONS INVESTOR
DESTINATIONS MODERATELY DESTINATIONS MODERATELY DESTINATIONS
AGGRESSIVE . AGGRESSIVE MODERATE CONSERVATIVE CONSERVATIVE
FUND . . . . FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in affiliated securities
at value (cost $75,725,250;
144,295,107; $182,267,340;
57,616,231 and
44,197,755; respectively) . . . . . . $ 77,338,732 $137,899,240 $178,144,348 $57,458,996 $44,662,723
Interest and dividends receivable. . . 9,102 71,987 172,235 79,201 71,395
Receivable for capital shares issued . - - 35,530 20,284 20,003
Receivable from adviser. . . . . . . . - - - 371 869
Prepaid expenses and other assets. . . 24,144 29,307 34,106 19,774 18,255
-----------------------------------------------------------------------
Total Assets . . . . . . . . . . . . . 77,371,978 138,000,534 178,386,219 57,578,626 44,773,245
-----------------------------------------------------------------------
LIABILITIES:
Accrued expenses and other
payables
Investment advisory fees . . . . . . . 7,840 13,803 18,214 5,861 4,620
Distribution fees. . . . . . . . . . . 15,319 27,423 36,345 11,860 9,724
Administrative servicing fees. . . . . 8,815 15,298 20,193 6,288 4,913
Other. . . . . . . . . . . . . . . . . 3,582 6,036 8,875 2,369 2,126
-----------------------------------------------------------------------
Total Liabilities. . . . . . . . . . . 35,556 62,560 83,627 26,378 21,383
-----------------------------------------------------------------------
NET ASSETS . . . . . . . . . . . . . . $ 77,336,422 $137,937,974 $178,302,592 $57,552,248 $44,751,862
=======================================================================
REPRESENTED BY:
Capital. . . . . . . . . . . . . . . . $ 86,474,055 $148,466,040 $187,879,046 $59,099,779 $45,054,201
Accumulated net investment
income (loss) . . . . . . . . . . . . (34,680) 30,249 186,542 103,821 115,199
Accumulated net realized
gains (losses)
on investment transactions . . . . . . (10,716,435) (4,162,448) (5,640,004) (1,494,117) (882,506)
Net unrealized appreciation
(depreciation) on investments. . . . . 1,613,482 (6,395,867) (4,122,992) (157,235) 464,968
-----------------------------------------------------------------------
NET ASSETS . . . . . . . . . . . . . . $ 77,336,422 $137,937,974 $178,302,592 $57,552,248 $44,751,862
=======================================================================
NET ASSETS:
Class A Shares . . . . . . . . . . . . $ 600,396 $ 2,720,920 $ 3,304,429 $ 2,579,215 $ 1,472,783
Class B Shares . . . . . . . . . . . . 205,281 606,787 1,220,874 431,350 551,673
Class C Shares . . . . . . . . . . . . 289,423 1,448,723 1,284,110 630,466 934,690
Service Class Shares . . . . . . . . . 76,241,322 133,161,544 172,493,179 53,911,217 41,792,716
-----------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . $ 77,336,422 $137,937,974 $178,302,592 $57,552,248 $44,751,862
=======================================================================
SHARE OUTSTANDING
(unlimited number
of shares authorized):
Class A Shares . . . . . . . . . . . . 91,886 377,041 407,330 291,492 153,096
Class B Shares . . . . . . . . . . . . 31,641 84,763 151,109 48,672 57,330
Class C Shares . . . . . . . . . . . . 44,625 202,322 159,184 71,224 97,341
Service Class Shares . . . . . . . . . 11,651,426 18,474,770 21,307,941 6,075,600 4,337,936
-----------------------------------------------------------------------
Total. . . . . . . . . . . . . . . . . 11,819,578 19,138,896 22,025,564 6,486,988 4,645,703
=======================================================================
NET ASSET VALUE:
Class A Shares . . . . . . . . . . . . $ 6.53 $ 7.22 $ 8.11 $ 8.85 $ 9.62
Class B Shares (a) . . . . . . . . . . $ 6.49 $ 7.16 $ 8.08 $ 8.86 $ 9.62
Class C Shares (b) . . . . . . . . . . $ 6.49 $ 7.16 $ 8.07 $ 8.85 $ 9.60
Service Class Shares . . . . . . . . . $ 6.54 $ 7.21 $ 8.10 $ 8.87 $ 9.63
MAXIMUM OFFERING PRICE
PER SHARE
(100%/(100%-maximum
sales charge)
of net asset value adjusted to
the nearest cent):
Class A Shares . . . . . . . . . . . . $ 6.93 $ 7.66 $ 8.60 $ 9.39 $ 10.21
Class C Shares . . . . . . . . . . . . $ 6.56 $ 7.23 $ 8.15 $ 8.94 $ 9.70
-----------------------------------------------------------------------
Maximum Sales Charge -
Class A Shares . . . . . . . . . . . . 5.75% 5.75% 5.75% 5.75% 5.75%
=======================================================================
Maximum Sales Charge -
Class C Shares . . . . . . . . . . . . 1.00% 1.00% 1.00% 1.00% 1.00%
=======================================================================
(a) For Class B shares, the redemption price per share varies by the length of
time shares held.
(b) For Class C shares, the redemption price per share is reduced by 1.00% for
shares held less than one year. See notes to financial statements.
2003 SEMIANNUAL REPORT 37
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 2003 (Unaudited)
GARTMORE GARTMORE
GARTMORE INVESTOR GARTMORE INVESTOR GARTMORE
INVESTOR DESTINATIONS INVESTOR DESTINATIONS INVESTOR
DESTINATIONS MODERATELY DESTINATIONS MODERATELY DESTINATIONS
AGGRESSIVE AGGRESSIVE MODERATE CONSERVATIVE CONSERVATIVE
FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
INVESTMENT
INCOME:
Dividend income
from affiliates . . . . . . . $ 536,338 $ 1,092,563 $ 1,667,924 $ 583,163 $ 473,377
Interest income
from affiliates . . . . . . . - 63,274 251,649 129,270 182,813
------------------------------------------------------------------------------
Total Income. . . . . . . . . 536,338 1,155,837 1,919,573 712,433 656,190
------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees. . . 41,458 71,535 95,764 29,704 23,695
Distribution fees Class A . . 494 2,113 2,250 1,722 1,483
Distribution fees Class B . . 491 1,408 2,795 1,314 1,437
Distribution fees Class C . . 719 1,993 3,379 1,905 2,694
Distribution fees
Service Class . . . . . . . . 78,931 134,604 180,370 54,598 43,052
Administrative servicing
ees Class A . . . . . . . . . 9 83 3 8 1
Administrative
servicing fees
Service Class . . . . . . . . 47,359 80,763 108,222 32,759 25,831
Registration and
filing fees . . . . . . . . . 13,683 14,823 16,658 9,965 10,898
Other . . . . . . . . . . . . 11,819 18,579 23,846 9,292 7,789
------------------------------------------------------------------------------
Total expenses before
reimbursed expenses . . . . . 194,963 325,901 433,287 141,267 116,880
Expenses reimbursed . . . . . - - - (999) (3,779)
------------------------------------------------------------------------------
Total Expenses. . . . . . . . 194,963 325,901 433,287 140,268 113,101
------------------------------------------------------------------------------
NET INVESTMENT
INCOME (LOSS) . . . . . . . . 341,375 829,936 1,486,286 572,165 543,089
------------------------------------------------------------------------------
REALIZED/UNREALIZED
GAINS (LOSSES)
FROM INVESTMENTS:
Realized gains
(losses) on investment
transactions with affiliates. (7,985,787) (988,472) (1,375,771) (540,255) (389,167)
Realized gain
distributions
from underlying Funds . . . . 242 1,249 2,757 1,166 951
------------------------------------------------------------------------------
Net realized
gains (losses)
on investment
transactions . . . . . . . . (7,985,545) (987,223) (1,373,014) (539,089) (388,216)
Net change in
unrealized
appreciation/
depreciation
on investments. . . . . . . . 10,305,180 4,530,747 5,346,206 1,522,959 856,593
------------------------------------------------------------------------------
Net realized/unrealized
gains (losses)
on investments. . . . . . . . 2,319,635 3,543,524 3,973,192 983,870 468,377
------------------------------------------------------------------------------
CHANGE IN
NET ASSETS
RESULTING FROM
OPERATIONS. . . . . . . . . . $ 2,661,010 $ 4,373,460 $ 5,459,478 $ 1,556,035 $ 1,011,466
==============================================================================
See notes to financial statements.
38 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
GARTMORE INVESTOR. . . . GARTMORE INVESTOR DESTINATIONS G ARTMORE INVESTOR
DESTINATIONS AGGRESSIVE FUND MODERATELY AGGRESSIVE FUND DESTINATIONS MODERATE FUND
---------------------------------------------------------------------------------------
SIX SIX SIX
MONTHS MONTHS MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR
APRIL 30, ENDED APRIL 30, ENDED APRIL 30, ENDED
2003 OCTOBER 31, 2003 OCTOBER 31, 2003 OCTOBER 31,
(UNAUDITED) 2002 (UNAUDITED) 2002 (UNAUDITED) 2002
- ------------------------------------------------------------------------------------------------------------------
FROM
INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment
income (loss). . . . . . . $ 341,375 $ 404,055 $ 829,936 $ 984,851 $ 1,486,286 $ 1,980,391
Net realized gains
(losses) on
investment
transactions . . . . . . . (7,985,545) (684,733) (987,223) (1,074,322) (1,373,014) (2,213,664)
Net change in
Unrealized
appreciation/
depreciation on
investments. . . . . . . . 10,305,180 (7,508,930) 4,530,747 (9,859,530) 5,346,206 (8,030,348)
----------------------------------------------------------------------------------------
Change in net
assets resulting
from operations. . . . . . 2,661,010 (7,789,608) 4,373,460 (9,949,001) 5,459,478 (8,263,621)
----------------------------------------------------------------------------------------
DISTRIBUTIONS TO
CLASS A
SHAREHOLDERS
FROM:
Net investment
income . . . . . . . . . . (2,843) (743) (14,262) (4,778) (19,240) (6,214)
DISTRIBUTIONS TO
CLASS B
SHAREHOLDERS
FROM:
Net investment
income . . . . . . . . . . (432) (19) (1,448) (438) (4,335) (296)
DISTRIBUTIONS TO
CLASS C
SHAREHOLDERS
FROM:
Net investment
income . . . . . . . . . . (672) - (2,460) - (5,519) (410)
DISTRIBUTIONS TO
SERVICE CLASS
SHAREHOLDERS
FROM:
Net investment
income . . . . . . . . . . (372,108) (429,255) (801,474) (973,254) (1,414,127) (1,907,824)
----------------------------------------------------------------------------------------
Change in net
assets from
shareholder distributions. (376,055) (430,017) (819,644) (978,470) (1,443,221) (1,914,744)
----------------------------------------------------------------------------------------
Change in net
assets from capital
transactions . . . . . . . 19,785,950 36,807,012 42,655,738 65,970,340 48,559,199 77,659,591
----------------------------------------------------------------------------------------
Change in net
assets . . . . . . . . . . 22,070,905 28,587,387 46,209,554 55,042,869 52,575,456 67,481,226
NET ASSETS:
Beginning of
period . . . . . . . . . . 55,265,517 26,678,130 91,728,420 36,685,551 125,727,136 58,245,910
----------------------------------------------------------------------------------------
End of period. . . . . . . $77,336,422 $ 55,265,517 $137,937,974 $ 91,728,420 $178,302,592 $125,727,136
========================================================================================
See notes to financial statements.
2003 SEMIANNUAL REPORT 39
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
MODERATELY CONSERVATIVE FUND CONSERVATIVE FUND
----------------------------------------------------------
SIX SIX
MONTHS YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2003 2002 2003 2002
(UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income (loss). . $ 572,165 $ 789,580 $ 543,089 $ 716,452
Net realized gains (losses)
on investment transactions. . . (539,089) (424,658) (388,216) (437,721)
Net change in unrealized
appreciation/depreciation
on investments. . . . . . . . . 1,522,959 (1,641,906) 856,593 (284,555)
--------------------------------------------------------
Change in net assets resulting
from operations . . . . . . . . 1,556,035 (1,276,984) 1,011,466 (5,824)
--------------------------------------------------------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS FROM:
Net investment income . . . . . (19,651) (6,680) (18,670) (7,795)
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS FROM:
Net investment income . . . . . (2,740) (607) (3,833) (289)
DISTRIBUTIONS TO CLASS C
SHAREHOLDERS FROM:
Net investment income . . . . . (4,510) (615) (7,530) (534)
DISTRIBUTIONS TO SERVICE CLASS
SHAREHOLDERS FROM:
Net investment income . . . . . (524,438) (732,325) (493,784) (650,280)
--------------------------------------------------------
Change in net assets from
shareholder distributions . . . (551,339) (740,227) (523,817) (658,898)
--------------------------------------------------------
Change in net assets
from capital transactions . . . 18,551,394 25,221,885 14,734,416 18,715,312
--------------------------------------------------------
Change in net assets. . . . . . 19,556,090 23,204,674 15,222,065 18,050,590
NET ASSETS:
Beginning of period . . . . . . 37,996,158 14,791,484 29,529,797 11,479,207
--------------------------------------------------------
End of period . . . . . . . . . $57,552,248 $ 37,996,158 $44,751,862 $ 29,529,797
========================================================
See notes to financial statements.
40 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE INVESTOR DESTINATIONS AGGRESSIVE FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-------------------------------------------------------------------------------------------
NET
REALIZED
NET AND
ASSET UNREALIZED
VALUE, NET GAINS TOTAL
BEGINNING INVESTMENT (LOSSES) FROM NET RETURN
OF INCOME ON INVESTMENT INVESTMENT OF TOTAL
PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME CAPITAL DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000 (d). . . . . . . $ 10.00 0.02 (0.65) (0.63) - - -
Year Ended
October 31, 2001. . . . . . . . . $ 9.37 0.09 (2.01) (1.92) (0.07) (0.02) (0.09)
Year Ended
October 31, 2002. . . . . . . . . $ 7.36 0.07 (1.00) (0.93) (0.07) - (0.07)
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . . . . . . . $ 6.36 0.04 0.17 0.21 (0.04) - (0.04)
CLASS B
SHARES
Period Ended
October 31, 2000
(d) (e) . . . . . . . . . . . . . $ 10.00 (0.02) (0.65) (0.67) - - -
Year Ended
October 31, 2001. . . . . . . . . $ 9.33 0.04 (2.00) (1.96) (0.05) (0.01) (0.06)
Year Ended
October 31, 2002. . . . . . . . . $ 7.31 0.02 (0.99) (0.97) (0.02) - (0.02)
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . . . . . . . $ 6.32 0.02 0.18 0.20 (0.03) - (0.03)
CLASS C
SHARES
Period Ended October 31, 2001 (f) $ 8.44 (0.03) (1.05) (1.08) - - -
Year Ended
October 31, 2002. . . . . . . . . $ 7.36 - (1.04) (1.04) - - -
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . . . . . . . $ 6.32 0.02 0.18 0.20 (0.03) - (0.03)
SERVICE CLASS
SHARES
Period Ended
October 31, 2000 (d) (e). . . . . $ 10.00 (0.01) (0.62) (0.63) - - -
Year Ended
October 31, 2001. . . . . . . . . $ 9.37 0.10 (2.01) (1.91) (0.08) (0.02) (0.10)
Year Ended
October 31, 2002 . . . . . . . . $ 7.36 0.07 (0.99) (0.92) (0.07) - (0.07)
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . . . . . . . $ 6.37 0.04 0.17 0.21 (0.04) - (0.04)
RATIOS / SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------
RATIO
OF
NET
RATIO INVESTMENT
OF INCOME
RATIO EXPENSES (LOSS)
OF (PRIOR (PRIOR
NET TO TO
NET RATIO INVESTMENT REIMBURSE- REIMBURSE-
NET ASSETS OF INCOME MENTS) MENTS)
ASSET AT EXPENSES (LOSS) TO TO
VALUE, END TO TO AVERAGE AVERAGE
END TOTAL OF AVERAGE AVERAGE NET NET PORTFOLIO
OF RETURN PERIOD NET NET ASSETS ASSETS TURNOVER
PERIOD (A) (000S) ASSETS ASSETS (B) (B) (C)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000 (d). . . . . . . $ 9.37 (6.30%) (g) $ 9 0.71% (h) 0.34% (h) 394.30% (h) (393.25%) (h) 253.64%
Year Ended
October 31, 2001. . . . . . . . . $ 7.36 (20.53%) $ 7 0.71% 1.09% 3.71% (1.91%) 190.23%
Year Ended
October 31, 2002. . . . . . . . . $ 6.36 (12.67%) $ 247 0.50% 1.42% 0.50% 1.42% 26.33%
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . . . . . . . $ 6.53 3.35% (g) $ 600 0.46% (h) 1.30% (h) (i) (i) 54.70%
CLASS B
SHARES
Period Ended
October 31, 2000
(d) (e) . . . . . . . . . . . . . $ 9.33 (6.70%) (g) $ 9 1.31% (h) (0.28%) (h) 393.40% (h) (393.37%) (h) 253.64%
Year Ended
October 31, 2001. . . . . . . . . $ 7.31 (21.12%) $ 7 1.31% 0.50% 4.47% (2.66%) 190.23%
Year Ended
October 31, 2002. . . . . . . . . $ 6.32 (13.30%) $ 48 1.24% 0.04% 1.27% 0.01% 26.33%
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . . . . . . . $ 6.49 3.12% (g) $ 205 1.21% (h) 0.50% (h) (i) (i) 54.70%
CLASS C
SHARES
Period Ended October 31, 2001 (f) $ 7.36 (12.80%) (g) $ - 1.31% (h) (0.62%) (h) 125.82% (h) (125.13%) (h) 190.23%
Year Ended
October 31, 2002. . . . . . . . . $ 6.32 (13.30%) $ 48 1.24% (0.96%) 1.48% (1.20%) 26.33%
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . . . . . . . $ 6.49 3.13% (g) $ 289 1.21% (h) 0.56% (h) (i) (i) 54.70%
SERVICE CLASS
SHARES
Period Ended
October 31, 2000 (d) (e). . . . . $ 9.37 (6.30%) (g) $ 1,410 0.61% (h) (0.11%) (h) 56.64% (h) (56.14%) (h) 253.64%
Year Ended
October 31, 2001. . . . . . . . . $ 7.36 (20.55%) $ 26,663 0.61% 0.38% 1.62% (0.63%) 190.23%
Year Ended
October 31, 2002 . . . . . . . . $ 6.37 (12.64%) $ 54,923 0.61% 0.91% 0.67% 0.85% 26.33%
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . . . . . . . $ 6.54 3.25% (g) $ 76,241 0.61% (h) 1.07% (h) .(i) (i) 54.70%
- ----------------------------------------------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) For the period from March 31, 2000 (commencement of operations) through
October 31, 2000.
(e) Net investment income (loss) is based on average shares outstanding during
the period.
(f) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(g) Not annualized.
(h) Annualized.
(i) There were no fee reductions in this period.
See notes to financial statements.
2003 SEMIANNUAL REPORT 41
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE INVESTOR DESTINATIONS MODERATELY AGGRESSIVE FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-----------------------------------------------------------------------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED ASSE
VALUE, NET GAINS TOTAL VALUE,
BEGINNING INVESTMENT (LOSSES FROM NET END TOTAL
OF INCOME ON INVESTMENT INVESTMENT TOTAL OF RETURN
PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME DISTRIBUTIOS PERIOD (A)
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000 (d). $ 10.00 0.06 (0.47) (0.41) - - $ 9.59 (4.08%) (g)
Year Ended
October 31, 2001. . . $ 9.59 0.17 (1.71) (1.54) (0.13) (0.13) $ 7.92 (16.16%)
Year Ended
October 31, 2002. . . $ 7.92 0.10 (0.87) (0.77) (0.11) (0.11) $ 7.04 (9.78%)
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . $ 7.04 0.06 0.18 0.24 (0.06) (0.06) $ 7.22 3.38% (g)
CLASS B
SHARES
Period Ended
October 31, 2000 (d). $ 10.00 0.03 (0.47) (0.44) - - $ 9.56 (4.40%) (g)
Year Ended
October 31, 2001. . . $ 9.56 0.12 (1.71) (1.59) (0.09) (0.09) $ 7.88 (16.75%)
Year Ended
October 31, 2002. . . $ 7.88 0.06 (0.88) (0.82) (0.07) (0.07) $ 6.99 (10.46%)
Six Months
Ended April 30, 2003
(Unaudited) . . . . . $ 6.99 0.04 0.17 0.21 (0.04) (0.04) $ 7.16 2.96% (g)
CLASS C
SHARES
Period Ended
October 31, 2001 (f). $ 8.83 (0.04) (0.88) (0.92) - - $ 7.91 (10.42%) (g)
Year Ended
October 31, 2002. . . $ 7.91 - (0.91) (0.91) - - $ 7.00 (10.33%)
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . $ 7.00 0.05 0.16 0.21 (0.05) (0.05) $ 7.16 2.99% (g)
SERVICE CLASS
SHARES
Period Ended
October 31, 2000
(d) (e) . . . . . . . $ 10.00 0.07 (0.47) (0.40) (0.01) (0.01) $ 9.59 (4.04%) (g)
Year Ended
October 31, 2001. . . $ 9.59 0.15 (1.67) (1.52) (0.16) (0.16) $ 7.91 (16.05%)
Year Ended
October 31, 2002. . . $ 7.91 0.11 (0.88) (0.77) (0.11) (0.11) $ 7.03 (9.88%)
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . $ 7.03 0.05 0.18 0.23 (0.05) (0.05) $ 7.21 3.30% (g)
RATIOS / SUPPLEMENTAL DATA
------------------------------------------------------------------------------
RATIO
OF
NET
RATIO INVESTMENT
OF INCOME
RATIO EXPENSES (LOSS)
OF (PRIOR (PRIOR
NET TO TO
NET RATIO INVESTMENT REIMBURSE- REIMBURSE-
ASSETS OF INCOME MENTS) MENTS)
AT EXPENSES (LOSS) TO TO
END T TO AVERAGE AVERAGE
OF AVERAGE AVERAGE NET NET PORTFOLIO
PERIOD NET NET ASSETS ASSETS TURNOVER
(000S) ASSETS ASSETS (B) (B) (C)
- -------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000 (d). $ 10 0.71% (h) 1.10%(h) 396.10% (h) (394.29%) (h) 270.89%
Year Ended
October 31, 2001. . . $ 8 0.71% 1.44% 3.28% (1.13%) 226.13%
Year Ended
October 31, 2002. . . $ 1,072 0.49% 1.69% 0.49% 1.69% 28.41%
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . $ 2,721 0.45% (h) 1.68% (h) (i) (i) 6.74%
CLASS B
SHARES
Period Ended
October 31, 2000 (d). $ 10 1.31% (h) 0.49%(h) 397.48% (h) (395.68%) (h) 270.89%
Year Ended
October 31, 2001. . . $ 8 1.31% 1.32% 4.04% (1.41%) 226.13%
Year Ended
October 31, 2002. . . $ 130 1.25% 1.39% 1.26% 1.38% 28.41%
Six Months
Ended April 30, 2003
(Unaudited) . . . . . $ 607 1.19% (h) 0.84%(h) (i) (i) 6.74%
CLASS C
SHARES
Period Ended
October 31, 2001 (f). $ - 1.31% (h) (0.68%) (h) 124.67% (h) (124.04%) (h) 226.13%
Year Ended
October 31, 2002. . . $ 15 1.25% (0.21%) 3.34% (2.30%) 28.41%
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . $ 1,449 1.19% (h) 0.88% (h) (i) (i) 6.74%
SERVICE CLASS
SHARES
Period Ended
October 31, 2000
(d) (e) . . . . . . . $ 998 0.61% (h) 1.23% (h) 66.76% (h) (64.92%) (h) 270.89%
Year Ended
October 31, 2001. . . $ 36,670 0.61% 1.15% 1.44% 0.32% 226.13%
Year Ended
October 31, 2002. . . $ 90,512 0.61% 1.46% 0.65% 1.42% 28.41%
Six Months
Ended
April 30, 2003
(Unaudited) . . . . . $ 133,162 0.59% (h) 1.51% (h) (i) (i) 6.74%
- ------------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) For the period from March 31, 2000 (commencement of operations) through
October 31, 2000.
(e) Net investment income (loss) is based on average shares outstanding during
the period.
(f) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(g) Not annualized.
(h) Annualized.
(i) There were no fee reductions in this period.
See notes to financial statements.
42 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE INVESTOR DESTINATIONS MODERATE FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-----------------------------------------------------------------------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED ASSET
VALUE, NET GAINS TOTAL VALUE,
BEGINNING INVESTMENT (LOSSES) FROM NET END TOTAL
OF INCOME ON INVESTMENT INVESTMENT TOTAL OF RETURN
PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME DISTRIBUTIONS PERIOD (A)
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000
(d) (e) . . . . . . . . . $ 10.00 0.11 (0.23) (0.12) (0.07) (0.07) $ 9.81 (1.21%) (g)
Year Ended
October 31, 2001 (e) . . . $ 9.81 0.22 (1.23) (1.01) (0.16) (0.16) $ 8.64 (10.41%)
Year Ended
October 31, 2002 . . . . . $ 8.64 0.17 (0.69) (0.52) (0.18) (0.18) $ 7.94 (6.12%)
Six Months
Ended
April 30, 2003 (Unaudited) $ 7.94 0.07 0.18 0.25 (0.08) (0.08) $ 8.11 3.22% (g)
CLASS B
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . . . . $ 10.00 0.08 (0.24) (0.16) (0.03) (0.03) $ 9.81 (1.61%) (g)
Year Ended
October 31, 2001 . . . . . $ 9.81 0.19 (1.25) (1.06) (0.11) (0.11) $ 8.64 (10.84%)
Year Ended
October 31, 2002 . . . . . $ 8.64 0.11 (0.71) (0.60) (0.12) (0.12) $ 7.92 (6.96%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . . $ 7.92 0.06 0.17 0.23 (0.07) (0.07) $ 8.08 2.87% (g)
CLASS C
SHARES
Period Ended
October 31, 2001 (f) . . . $ 9.32 (0.04) (0.62) (0.66) - - $ 8.66 (7.08%) (g)
Year Ended
October 31, 2002 . . . . . $ 8.66 0.04 (0.75) (0.71) (0.05) (0.05) $ 7.90 (7.13%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . . $ 7.90 0.05 0.18 0.23 (0.06) (0.06) $ 8.07 2.99% (g)
SERVICE CLASS
SHARES
Period Ended
October 31, 2000
(d) (e) . . . . . . . . . $ 10.00 0.11 (0.22) (0.11) (0.07) (0.07) $ 9.82 (1.10%) (g)
Year Ended
October 31, 2001 . . . . . $ 9.82 0.19 (1.19) (1.00) (0.19) (0.19) $ 8.63 (10.26%)
Year Ended
October 31, 2002 . . . . . $ 8.63 0.17 (0.71) (0.54) (0.17) (0.17) $ 7.92 (6.35%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . . $ 7.92 0.08 0.18 0.26 (0.08) (0.08) $ 8.10 3.26% (g)
RATIOS / SUPPLEMENTAL DATA
-------------------------------------------------------------------------
RATIO
OF
NET
RATIO INVESTMENT
OF INCOME
RATIO EXPENSES (LOSS)
OF (PRIOR (PRIOR
NET TO TO
NET RATIO INVESTMENT REIMBURSE- REIMBURSE-
ASSETS OF INCOME MENTS) MENTS)
AT EXPENSES (LOSS) TO TO
END TO TO AVERAGE AVERAGE
OF AVERAGE AVERAGE NET NET PORTFOLIO
PERIOD NET NET ASSETS ASSETS TURNOVER
(000S) ASSETS ASSETS (B) (B) (C)
- ------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000
(d) (e) . . . . . . . . . $ 10 0.71% (h) 1.97% (h) 392.91% (h) (390.23%) (h) 366.93%
Year Ended
October 31, 2001 (e) . . . $ 9 0.71% 2.40% 2.39% 0.72% 258.23%
Year Ended
October 31, 2002 . . . . . $ 1,186 0.48% 2.37% 0.48% 2.37% 34.36%
Six Months
Ended
April 30, 2003 (Unaudited) $ 3,304 0.44% (h) 2.18% (h) (i) (i) 11.30%
CLASS B
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . . . . $ 10 1.31% (h) 1.35% (h) 393.51% (h) (390.85%) (h) 366.93%
Year Ended
October 31, 2001 . . . . . $ 9 1.31% 2.11% 4.08% (0.66%) 258.23%
Year Ended
October 31, 2002 . . . . . $ 161 1.23% 1.33% 1.24% 1.32% 34.36%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . . $ 1,221 1.19% (h) 1.39% (h) (i) (i) 11.30%
CLASS C
SHARES
Period Ended
October 31, 2001 (f) . . . $ - 1.31% (h) (0.67%) (h) 123.09% (h) (122.45%) (h) 258.23%
Year Ended
October 31, 2002 . . . . . $ 416 1.23% 1.89% 1.29% 1.83% 34.36%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . . $ 1,284 1.19% (h) 1.43% (h) (i) (i) 11.30%
SERVICE CLASS
SHARES
Period Ended
October 31, 2000
(d) (e) . . . . . . . . . $ 871 0.61% (h) 2.04% (h) 114.83% (h) (112.80%) (h) 366.93%
Year Ended
October 31, 2001 . . . . . $ 58,228 0.61% 2.06% 0.97% 1.70% 258.23%
Year Ended
October 31, 2002 . . . . . $ 123,963 0.61% 2.13% 0.65% 2.09% 34.36%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . . $ 172,493 0.58% (h) 2.02% (h) (i) (i) 11.30%
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing among the classes of shares.
(d) For the period from March 31, 2000 (commencement of operations) through
October 31, 2000.
(e) Net investment income (loss) is based on average shares outstanding during
the period.
(f) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(g) Not annualized.
(h) Annualized.
(i) There were no fee reductions in this period.
See notes to financial statements.
2003 SEMIANNUAL REPORT 43
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE INVESTOR DESTINATIONS MODERATELY CONSERVATIVE FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
---------------------------------------------------------------------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED ASSET
VALUE, NET GAINS TOTAL VALUE,
BEGINNING INVESTMENT (LOSSES) FROM NET END TOTAL
OF INCOME ON INVESTMENT INVESTMENT TOTAL OF RETURN
PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME DISTRIBUTIONS PERIOD (A)
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . $ 10.00 0.18 (0.17) 0.01 (0.12) (0.12) $ 9.89 0.10% (g)
Year Ended
October 31, 2001 (e) $ 9.89 0.35 (0.75) (0.40) (0.30) (0.30) $ 9.19 (4.06%)
Year Ended
October 31, 2002 (e) $ 9.19 0.26 (0.49) (0.23) (0.25) (0.25) $ 8.71 (2.60%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . $ 8.71 0.09 0.16 0.25 (0.11) (0.11) $ 8.85 2.92% (g)
CLASS B
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . $ 10.00 0.14 (0.17) (0.03) (0.08) (0.08) $ 9.89 (0.26%) (g)
Year Ended
October 31, 2001 . . $ 9.89 0.29 (0.75) (0.46) (0.23) (0.23) $ 9.20 (4.67%)
Year Ended
October 31, 2002 (e) $ 9.20 0.20 (0.49) (0.29) (0.19) (0.19) $ 8.72 (3.22%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . $ 8.72 0.07 0.16 0.23 (0.09) (0.09) $ 8.86 2.64% (g)
CLASS C
SHARES
Period Ended
October 31, 2001 (f) $ 9.64 (0.04) (0.38) (0.42) - - $ 9.22 (4.36%) (g)
Year Ended
October 31, 2002 . . $ 9.22 - (0.44) (0.44) (0.06) (0.06) $ 8.72 (3.14%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . $ 8.72 0.06 0.16 0.22 (0.09) (0.09) $ 8.85 2.59% (g)
SERVICE CLASS
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . $ 10.00 0.16 (0.14) 0.02 (0.12) (0.12) $ 9.90 0.18% (g)
Year Ended
October 31, 2001 . . $ 9.90 0.31 (0.70) (0.39) (0.31) (0.31) $ 9.20 (3.99%)
Year Ended
October 31, 2002 (e) $ 9.20 0.26 (0.50) (0.24) (0.24) (0.24) $ 8.72 (2.70%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . $ 8.72 0.10 0.15 0.25 (0.10) (0.10) $ 8.87 2.94% (g)
RATIOS / SUPPLEMENTAL DATA
--------------------------------------------------------------------------
RATIO
OF
NET
RATIO INVESTMENT
OF INCOME
RATIO EXPENSES (LOSS)
OF (PRIOR (PRIOR
NET TO TO
NET RATIO INVESTMENT REIMBURSE- REIMBURSE-
ASSETS OF INCOME MENTS) MENTS)
AT EXPENSES (LOSS) TO TO
END TO TO AVERAGE AVERAGE
OF AVERAGE AVERAGE NET NET PORTFOLIO
PERIOD NET NET ASSETS ASSETS TURNOVER
(000S) ASSETS ASSETS (B) (B) (C)
- -----------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . $ 10 0.71% (h) 3.02% (h) 438.49% (h) (434.76%) (h) 425.17%
Year Ended
October 31, 2001 (e) $ 10 0.71% 3.66% 3.81% 0.56% 235.84%
Year Ended
October 31, 2002 (e) $ 898 0.50% 2.99% 0.51% 2.98% 49.00%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . $ 2,579 0.47% (h) 2.73% (h) (i) (i) 17.81%
CLASS B
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . $ 10 1.31% (h) 2.44% (h) 439.61% (h) (435.86%) (h) 425.17%
Year Ended
October 31, 2001 . . $ 10 1.31% 3.14% 4.52% (0.07%) 235.84%
Year Ended
October 31, 2002 (e) $ 83 1.27% 2.24% 1.29% 2.22% 49.00%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . $ 431 1.21% (h) 1.92% (h) (i) (i) 17.81%
CLASS C
SHARES
Period Ended
October 31, 2001 (f) $ - 1.31% (h) (0.79%) (h) 122.29% (h) (121.77%) (h) 235.84%
Year Ended
October 31, 2002 . . $ 88 1.27% 2.48% 1.33% 2.42% 49.00%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . $ 630 1.22% (h) 1.97% (h) (i) (i) 17.81%
SERVICE CLASS
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . $ 2,231 0.61% (h) 2.85% (h) 32.84% (h) (29.38%) (h) 425.17%
Year Ended
October 31, 2001 . . $ 14,772 0.61% 3.34% 2.50% 1.45% 235.84%
Year Ended
October 31, 2002 (e) $ 36,927 0.61% 2.82% 0.69% 2.74% 49.00%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . $ 53,911 0.61% (h) 2.50% (h) 0.61% (h) 2.50% (h) 17.81%
- ----------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) For the period from March 31, 2000 (commencement of operations) through
October 31, 2000.
(e) Net investment income (loss) is based on average shares outstanding during
the period.
(f) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(g) Not annualized.
(h) Annualized.
(i) There were no fee reductions in this period.
See notes to financial statements.
44 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE INVESTOR DESTINATIONS CONSERVATIVE FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED ASSET
VALUE, NET GAINS TOTAL VALUE,
BEGINNING INVESTMENT (LOSSES) FROM NET END TOTAL
OF INCOME ON INVESTMENT INVESTMENT TOTAL OF RETURN
PERIOD (LOSS) INVESTMENTS ACTIVITIES INCOME DISTRIBUTIONS PERIOD (A)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . . . $ 10.00 0.23 (0.08) 0.15 (0.16) (0.16) $ 9.99 1.49% (g)
Year Ended
October 31, 2001 . . . . $ 9.99 0.45 (0.28) 0.17 (0.38) (0.38) $ 9.78 1.71%
Year Ended
October 31, 2002 . . . . $ 9.78 0.28 (0.24) 0.04 (0.31) (0.31) $ 9.51 0.45%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . $ 9.51 0.13 0.12 0.25 (0.14) (0.14) $ 9.62 2.67% (g)
CLASS B
SHARES
Period Ended
October 31, 2000 (d) (e) $ 10.00 0.19 (0.08) 0.11 (0.12) (0.12) $ 9.99 1.12% (g)
Year Ended
October 31, 2001 . . . . $ 9.99 0.38 (0.28) 0.10 (0.30) (0.30) $ 9.79 1.04%
Year Ended
October 31, 2002 . . . . $ 9.79 0.24 (0.25) (0.01) (0.25) (0.25) $ 9.53 (0.15%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . $ 9.53 0.09 0.12 0.21 (0.12) (0.12) $ 9.62 2.24% (g)
CLASS C
SHARES
Period Ended
October 31, 2001 (f) . . $ 9.97 (0.05) (0.13) (0.18) - - $ 9.79 (1.81%) (g)
Year Ended
October 31, 2002 . . . . $ 9.79 0.05 (0.25) (0.20) (0.08) (0.08) $ 9.51 (0.21%)
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . $ 9.51 0.09 0.12 0.21 (0.12) (0.12) $ 9.60 2.22% (g)
SERVICE CLASS
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . . . $ 10.00 0.24 (0.09) 0.15 (0.15) (0.15) $ 10.00 1.57% (g)
Year Ended
October 31, 2001 . . . . $ 10.00 0.41 (0.24) 0.17 (0.38) (0.38) $ 9.79 1.75%
Year Ended
October 31, 2002 . . . . $ 9.79 0.31 (0.26) 0.05 (0.31) (0.31) $ 9.53 0.48%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . $ 9.53 0.14 0.10 0.24 (0.14) (0.14) $ 9.63 2.49% (g)
RATIOS / SUPPLEMENTAL DATA
-------------------------------------------------------------------------
RATIO
OF
NET
RATIO INVESTMENT
OF INCOME
RATIO EXPENSES (LOSS)
OF (PRIOR (PRIOR
NET TO TO
NET RATIO INVESTMENT REIMBURSE- REIMBURSE-
ASSETS OF INCOME MENTS) MENTS)
AT EXPENSES (LOSS) TO TO
END TO TO AVERAGE AVERAGE
OF AVERAGE AVERAGE NET NET PORTFOLIO
PERIOD NET NET ASSETS ASSETS TURNOVER
- -------------------------------------------------------------------------------------------------
(000S) ASSETS ASSETS (B) (B) (C)
CLASS A
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . . . $ 10 0.71% (h) 3.86% (h) 441.97% (h) (437.40%) (h) 449.16%
Year Ended
October 31, 2001 . . . . $ 10 0.71% 4.45% 6.91% (1.75%) 176.59%
Year Ended
October 31, 2002 . . . . $ 802 0.50% 3.62% 0.50% 3.62% 46.89%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . $ 1,473 0.48% (h) 3.13% (h) (i) (i) 31.05%
CLASS B
SHARES
Period Ended
October 31, 2000 (d) (e) $ 10 1.31% (h) 3.26% (h) 443.13% (h) (438.56%) (h) 449.16%
Year Ended
October 31, 2001 . . . . $ 10 1.31% 3.82% 7.70% (2.57%) 176.59%
Year Ended
October 31, 2002 . . . . $ 75 1.27% 2.77% 1.33% 2.71% 46.89%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . $ 552 1.23% (h) 2.35% (h) (i) (i) 31.05%
CLASS C
SHARES
Period Ended
October 31, 2001 (f) . . $ - 1.31% (h) (0.90%) (h) 121.18% (h) (120.77%) (h) 176.59%
Year Ended
October 31, 2002 . . . . $ 400 1.27% 2.75% 1.29% 2.73% 46.89%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . $ 935 1.23% (h) 2.36% (h) (i) (i) 31.05%
SERVICE CLASS
SHARES
Period Ended
October 31, 2000
(d) (e). . . . . . . . . $ 492 0.61% (h) 4.32% (h) 154.74% (h) (149.81%) (h) 449.16%
Year Ended
October 31, 2001 . . . . $ 11,459 0.61% 4.17% 2.58% 2.20% 176.59%
Year Ended
October 31, 2002 . . . . $ 28,253 0.61% 3.49% 0.72% 3.38% 46.89%
Six Months
Ended
April 30, 2003
(Unaudited). . . . . . . $ 41,793 0.61% (h) 2.99% (h) 0.63% (h) 2.97% (h) 31.05%
- --------------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) For the period from March 31, 2000 (commencement of operations) through
October 31, 2000.
(e) Net investment income (loss) is based on average shares outstanding during
the period.
(f) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(g) Not annualized.
(h) Annualized.
(i) There were no fee reductions in this period.
See notes to financial statements.
2003 SEMIANNUAL REPORT 45
- --------------------------------------------------------------------------------
GARTMORE BOND FUND
Class A Shares symbol: NBDAX
Class B Shares symbol: NBDBX
Class C Shares symbol: NBNCX
Class D Shares symbol: MUIBX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 5.47%* versus
5.52% for its benchmark, the Lehman Brothers Government/Credit Bond Index
For broader comparison, the average return for this Fund's peer category
(Corporate Debt Funds, A Rated) was 5.34%, according to Lipper, an independent
company that provides mutual fund data and analysis.
WHAT MACROECONOMIC FACTORS INFLUENCED PERFORMANCE?
Despite a slowing economic recovery and the war in Iraq, corporate bond spreads
(their yield differential as compared to Treasury securities) generally
tightened during the past six months. This helped the Fund's performance due to
its emphasis on the corporate bond sector. We expect that the economy will
continue to recover gradually, but we believe the rate of recovery will continue
to be slower than normal. We expect inflation to remain low, which should
support long interest rates in the future. We closely aligned the Fund's
duration with the Index's duration during the period; therefore, duration did
not significantly affect relative performance.
WHAT PORTFOLIO ATTRIBUTES AFFECTED PERFORMANCE?
As corporate bond spreads tightened overall, the number of credits that
experienced dramatic spread widening dropped considerably. In fact, one of the
Fund's top-performing bonds, US West (Qwest), recovered from a spread widening
that occurred last year. Another top performer was an America West bond that is
secured by airplanes. The market indiscriminately sold airplane-backed bonds due
to the bankruptcy filings of US Airways Group, Inc. and United Airlines (UAL
Corp.), enabling us to purchase these securities cheaply. Although American
Airlines (AMR Corp.) was our worst-performing credit, the bonds have improved
recently due to labor concessions that have enabled American Airlines to avoid a
bankruptcy filing.
HOW IS THE FUND POSITIONED?
Although the spreads on corporate bonds have tightened considerably during the
period, we believe they are still generous and should enable a well-diversified
portfolio of corporate bonds to generate strong risk-adjusted returns during a
one- to two-year time horizon. Therefore, we plan to selectively add to our
corporate bond exposure in the coming months.
The Federal Reserve has eased aggressively, and the war with Iraq appears to be
over. These conditions should help the economy regain positive momentum. A
stronger economy generally lowers default risk, which typically causes corporate
bond spreads to tighten. The Fund is positioned to take advantage of anticipated
additional tightening. We will continue to align the Fund's duration with its
benchmark, although we will trim the Fund's duration if economic strength
increases the probability that interest rates will rise.
We will maintain adequate diversification within the portfolio to mitigate
exposure to credit-specific risk. We believe the Fund continues to be positioned
to perform on a relative basis if the economy recovers and corporate bond
spreads tighten.
PORTFOLIO MANAGER: Thomas S. Leggett, CFA
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $153,231,249
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. 5 YR. 10 YR.
- ------------------------------------------
Class A1 w/o SC2 10.74% 6.24% 6.24%
w/SC3 5.48% 5.20% 5.73%
- ------------------------------------------
Class B1 w/o SC2 10.15% 5.62% 5.93%
w/SC4 5.15% 5.30% 5.93%
- ------------------------------------------
Class C1 w/o SC2 10.14% 6.05% 6.15%
w/SC5 8.08% 5.83% 6.04%
- ------------------------------------------
Class D. w/o SC2 11.00% 6.48% 6.37%
w/SC6 6.06% 5.51% 5.88%
- ------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 These returns include performance based on Class D shares, which was
achieved prior to the creation of Class A and Class B (5/11/98) and Class C
(3/1/01) shares. These returns have been restated for sales charges but not
for fees applicable to these classes of shares, which include a 0.25%
(Class A) or 1.00% (Class B and Class C) 12b-1 fee. Had Class A, Class B or
Class C been in existence for the time periods presented, the performance
for such classes would have been lower as a result of their additional
expenses.
2 These returns do not reflect the effects of sales charges (SC).
3 A 4.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
6 A 4.50% front-end sales charge was deducted.
+ See legend on first page of this report.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
CLASS
DATE D LBG/CBI CPI
- -------------------------------------
4/30/1993. 9,550 10,000 10,000
10/31/1993 10,109 11,366 10,275
10/31/1994 9,120 10,839 10,543
10/31/1995 10,982 12,590 10,839
10/31/1996 11,536 13,269 11,164
10/31/1997 12,497 14,438 11,396
10/31/1998 13,635 15,921 11,566
10/31/1999 13,466 15,815 11,862
10/31/2000 13,866 16,940 12,271
10/31/2001 16,116 19,536 12,532
10/31/2002 16,772 20,605 12,786
4/30/2003. 17,711 21,743 13,079
Comparative performance of $10,000 invested in Class D shares of the Gartmore
Bond Fund, the Lehman Brothers Government/Credit Bond Index (LBG/CBI)(a), and
the Consumer Price Index (CPI)(b) over a 10-year period ended 4/30/03. Unlike
the Fund, the returns for these indices do not reflect any fees, expenses, or
sales charges.
(a) The LBG/CBI consists of U.S. Government and corporate bonds with maturities
of one year or more and outstanding par value of at least $100 million. All
returns are market value-weighted inclusive of accrued interest.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
46 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE BOND FUND
COMMERCIAL MORTGAGE BACKED SECURITIES (5.9%)
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------
COMMERCIAL SERVICES (5.9%)
Commercial Mortgage, Series
2001-J1A,
Class B, 6.61%, 02/16/34, (b). . . . . . . $1,000,000 $ 1,099,609
Heller Financial Commercial
Mortgage Asset,
6.85%, 05/15/31. . . . . . . . . . . . . . 2,000,000 2,303,264
JP Morgan Chase Commercial
Mortgage Securities,
6.26%, 04/15/33. . . . . . . . . . . . . . 2,000,000 2,253,504
Merrill Lynch Mortgage
Investors, Inc.,
7.56%, 09/15/09. . . . . . . . . . . . . . 2,000,000 2,337,280
Nomura Asset Securities Corp.,
6.69%,
03/17/28 . . . . . . . . . . . . . . . . . 1,000,000 1,154,499
------------
TOTAL COMMERCIAL MORTGAGE
BACKED SECURITIES 9,148,156
------------
CORPORATE BONDS (58.5%)
AIR FREIGHT/COURIERS (0.7%)
Federal Express Corp.,
7.63%, 01/01/15 . . . . . . . . . . . . . 1,000,000 1,067,300
------------
- -------------------------------------------------------------------
AIRLINES (2.1%)
America West Airlines, 8.54%,
01/02/06, Series 1999-1 Class C. . . . . . 2,005,147 1,481,422
American Airlines, Inc.,
10.33%, 03/04/05 . . . . . . . . . . . . . 1,500,000 705,000
Southwest Airlines Co.,
5.50%, 11/01/06, Series A2 . . . . . . . . 1,000,000 1,072,409
------------
3,258,831
------------
- -------------------------------------------------------------------
ALUMINUM (0.7%)
Alcan, Inc., 6.45%, 03/15/11 . . . . . . . 1,000,000 1,133,186
------------
- -------------------------------------------------------------------
ASSET BACKED SECURITIES (2.8%)
Chase Funding Mortgage Loan,
6.24%, 01/25/13. . . . . . . . . . . . . . 1,500,000 1,620,254
Ramp 2002-RSI-AI5,
5.91%, 01/25/32. . . . . . . . . . . . . . 1,566,000 1,668,009
SSB RV Trust, 6.30%, 04/15/16. . . . . . . 1,000,000 1,074,754
------------
4,363,017
------------
- -------------------------------------------------------------------
AUTO-CARS/LIGHT TRUCKS (0.7%)
Daimlerchrysler, Inc.,
7.30%, 01/15/12. . . . . . . . . . . . . . 1,000,000 1,137,037
------------
- -------------------------------------------------------------------
BANKS (0.7%)
Mercantile Safe Deposit & Trust,
5.70%, 11/15/11. . . . . . . . . . . . . . 1,000,000 1,071,031
------------
- -------------------------------------------------------------------
BREWERY (0.7%)
Anheuser Busch,
6.00%, 04/15/11 . . . . . . . . . . . . . 950,000 1,060,486
------------
- -------------------------------------------------------------------
CHEMICALS (1.9%)
Air Products & Chemicals, 6.25%, 06/15/03. 2,000,000 2,010,766
Witco Corp., 6.13%, 02/01/06 . . . . . . . 1,000,000 985,000
------------
2,995,766
------------
- -------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
CONSTRUCTION &
BUILDING MATERIALS (2.0%)
Armstrong Holdings, Inc.,
6.35%, 08/15/03, (c) . . . . . . . . . . . $2,000,000 $ 822,500
Masco Corp., 6.75%, 03/15/06 . . . . . . . 1,000,000 1,110,678
Vulcan Materials Co., 6.00%,
04/01/09. . . . . . . . . . . . . . . . . 1,000,000 1,103,607
------------
3,036,785
------------
- -------------------------------------------------------------------
CONSUMER NON-CYCLICAL (0.7%)
Kimberly Clark Corp.,
7.88%, 02/01/23. . . . . . . . . . . . . . 1,000,000 1,045,890
------------
- -------------------------------------------------------------------
CONTAINERS (0.7%)
Bemis Co., Inc., 6.70%, 07/01/05 . . . . . 1,000,000 1,091,573
------------
- -------------------------------------------------------------------
ELECTRONICS (0.7%)
Texas Instruments, Inc., 6.13%, 02/01/06 . 1,000,000 1,097,338
------------
- -------------------------------------------------------------------
FINANCIAL / MISCELLANEOUS (6.7%)
Block Financial Corp.,
8.50%, 04/15/07 . . . . . . . . . . . . . 1,000,000 1,145,786
------------
- -------------------------------------------------------------------
Countrywide Financial,
3.50%, 12/19/05. . . . . . . . . . . . . . 1,000,000 1,024,051
Deere & Co., 5.88%, 04/06/06 . . . . . . . 1,000,000 1,089,322
Ford Motor Credit Co.,
7.38%, 02/01/11. . . . . . . . . . . . . . 1,000,000 1,013,749
General Motors Acceptance Corp.,
6.88%, 09/15/11. . . . . . . . . . . . . . 1,000,000 1,019,186
Heller Financial, Inc.,
7.38%, 11/01/09 . . . . . . . . . . . . . 1,375,000 1,617,515
Household Finance Co.,
6.75%, 05/15/11. . . . . . . . . . . . . . 1,000,000 1,126,771
International Lease Finance Corp.,
5.75%, 10/15/06. . . . . . . . . . . . . . 1,000,000 1,062,146
Lehman Brothers Holdings, Inc.
11.63%, 05/15/05 . . . . . . . . . . . . . 1,000,000 1,179,855
------------
10,278,381
------------
- -------------------------------------------------------------------
FOOD & RELATED (3.3%)
Heinz (H.J.) Co.,
6.63%, 07/15/11, (b). . . . . . . . . . . 1,000,000 1,139,797
Mccormick & Co., Inc.,
6.40%, 02/01/06. . . . . . . . . . . . . . 1,000,000 1,072,729
Tyson Foods, Inc.,
8.25%, 10/01/11. . . . . . . . . . . . . . 1,000,000 1,159,955
Whitman Corp.,
7.29%, 09/15/26. . . . . . . . . . . . . . 1,500,000 1,676,636
------------
5,049,117
------------
- -------------------------------------------------------------------
HEALTHCARE (2.9%)
Cardinal Health, Inc.,
6.00% 01/15/06. . . . . . . . . . . . . . 1,000,000 1,098,779
Kaiser Foundation Hospitals,
9.55%, 07/15/05. . . . . . . . . . . . . . 2,000,000 2,283,804
McKesson HBOC, Inc.,
6.30%, 03/01/05. . . . . . . . . . . . . . 1,000,000 1,047,739
------------
4,430,322
------------
- -------------------------------------------------------------------
HOME FURNISHINGS (0.7%)
Leggett & Platt, Inc.,
7.65% 02/15/05 . . . . . . . . . . . . . . 1,000,000 1,081,265
------------
- -------------------------------------------------------------------
HOTELS/MOTELS (0.7%)
Marriott International, Inc.,
7.00%, 01/15/08. . . . . . . . . . . . . . 1,000,000 1,103,336
------------
- -------------------------------------------------------------------
INSURANCE (0.8%)
AMBAC, Inc., 9.38%, 08/01/11 . . . . . . . 1,000,000 1,269,954
------------
- -------------------------------------------------------------------
2003 SEMIANNUAL REPORT 47
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
April 30, 2003 (Unaudited)
GARTMORE BOND FUND (Continued)
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------
MACHINERY & CAPITAL GOODS (2.6%)
Clark Equipment Co.,
8.00%, 05/01/23 . . . . . . . . . . . . . . $1,000,000 $ 1,099,861
Dover Corp., 6.25%, 06/01/08. . . . . . . . 1,650,000 1,876,954
Precision Castparts Corp., 8.75%, 03/15/05. 1,000,000 1,074,924
-----------
4,051,739
-----------
- --------------------------------------------------------------------
MEDICAL EQUIPMENT &
SUPPLIES (2.9%)
Bard (C.R.) Inc., 6.70%, 12/01/26 . . . . . 1,000,000 1,104,973
Becton, Dickinson & Co.,
8.70%, 01/15/25. . . . . . . . . . . . . . 2,000,000 2,283,464
Guidant Corp., 6.15%, 02/15/06. . . . . . . 1,000,000 1,082,983
-----------
4,471,420
-----------
- --------------------------------------------------------------------
MOTOR VEHICLE PARTS &
ACCESSORIES (1.3%)
Eaton Corp., 8.88%, 06/15/19. . . . . . . . 1,500,000 1,963,919
-----------
- --------------------------------------------------------------------
NATURAL GAS (3.5%)
Columbia Energy Group,
6.80%, 11/28/05 . . . . . . . . . . . . . . 2,000,000 2,196,232
ONEOK, Inc., 7.75%, 08/15/06. . . . . . . . 2,000,000 2,223,522
PG&E Gas Transmission,
7.10%, 06/01/05 . . . . . . . . . . . . . . 1,000,000 977,500
-----------
5,397,254
-----------
- --------------------------------------------------------------------
NUCLEAR ENERGY (0.8%)
USEC, Inc., 6.63%, 01/20/06 . . . . . . . . 1,500,000 1,307,627
-----------
- --------------------------------------------------------------------
OFFICE FURNITURE (0.7%)
Herman Miller, Inc.,
7.13%, 03/15/11 . . . . . . . . . . . . . . 1,000,000 1,043,849
-----------
- --------------------------------------------------------------------
OIL & GAS (2.6%)
Chevrontexaco Corp.,
8.63%, 06/30/10 . . . . . . . . . . . . . . 1,000,000 1,265,982
Kinder Morgan, Inc.,
6.50%, 09/01/12 . . . . . . . . . . . . . . 1,500,000 1,670,625
Sempra Energy, 6.95%, 12/01/05. . . . . . . 1,000,000 1,105,145
-----------
4,041,752
-----------
- --------------------------------------------------------------------
PAPER & FOREST PRODUCTS (2.2%)
Temple-Inland, Inc., 7.88%, 05/01/12. . . . 1,000,000 1,162,028
Willamette Industries, Inc
7.35%, 07/01/26 . . . . . . . . . . . . . . 2,000,000 2,182,022
-----------
3,344,050
-----------
- --------------------------------------------------------------------
PHARMACEUTICALS (0.7%)
American Home Products Corp.,
6.25%, 03/15/06 . . . . . . . . . . . . . . 1,000,000 1,105,590
-----------
- --------------------------------------------------------------------
PUBLISHING & PRINTING (0.8%)
Times Mirror Co., 7.45%, 10/15/09 . . . . . 1,000,000 1,202,246
-----------
- --------------------------------------------------------------------
RETAIL (3.6%)
Lowe's Cos., 8.25%, 06/01/10. . . . . . . . 1,000,000 1,236,788
May Department Stores Co.,
8.30%, 07/15/26. . . . . . . . . . . . . . 2,000,000 2,271,264
Penney (J.C.) Co., Inc.,
6.88%, 10/15/15 . . . . . . . . . . . . . . 1,000,000 955,000
Target Corp., 6.35%,
6.35%, 01/15/11. . . . . . . . . . . . . . 1,000,000 1,133,773
-----------
5,596,825
-----------
- --------------------------------------------------------------------
TELECOMMUNICATIONS (1.3%)
US West Communications, Inc.,
6.88%, 09/15/33 . . . . . . . . . . . . . . 1,750,000 1,505,000
WorldCom, Inc., 7.38%, 01/15/11 (c) . . . . 1,750,000 494,375
-----------
1,999,375
-----------
- --------------------------------------------------------------------
TEXTILE APPAREL
MANUFACTURERS (0.8%)
V.F. Corp., 8.50%, 10/01/10 . . . . . . . . 1,000,000 1,231,082
-----------
- --------------------------------------------------------------------
TOBACCO & TOBACCO
PRODUCTS (0.6%)
885,750 864,226
-----------
- --------------------------------------------------------------------
UTILITIES (4.6%)
Baltimore Gas & Electric,
7.50%, 01/15/07 . . . . . . . . . . . . . . 1,200,000 1,371,370
Consolidated Edison Co.,
8.13%, 05/01/10 . . . . . . . . . . . . . . 1,000,000 1,249,913
Interstate P&L Co.,
7.25%, 10/01/06 . . . . . . . . . . . . . . 1,000,000 1,102,468
South Carolina Electric & Gas,
6.13%, 03/01/09 . . . . . . . . . . . . . . 2,000,000 2,264,940
Southwestern Electric Power Co.,
7.00%, 09/01/07 . . . . . . . . . . . . . . 1,000,000 1,126,661
-----------
7,115,352
-----------
- --------------------------------------------------------------------
TOTAL CORPORATE BONDS 90,306,921
-----------
U.S. GOVERNMENT
OBLIGATIONS (25.9%)
FEDERAL HOME LOAN MORTGAGE
CORPORATION (1.5%)
6.63%, 06/30/14 . . . . . . . . . . . . . . 2,000,000 2,370,252
-----------
- --------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (8.4%)
7.13%, 09/01/07, Pool #323286 . . . . . . . 1,830,704 2,016,512
7.30%, 05/25/10, Series 00-T5 . . . . . . . 3,000,000 3,621,400
6.62%, 06/01/16, Pool #383661 . . . . . . . 1,961,564 2,280,183
6.85%, 05/17/20, Series 97-M6 . . . . . . . 1,804,192 1,971,722
7.00%, 09/25/24, Series 01-36 . . . . . . . 3,000,000 3,119,451
-----------
13,009,268
-----------
- --------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (3.4%)
Series 2002-60, Class PE,
6.00%, 07/20/31 . . . . . . . . . . . . . . 5,000,000 5,240,048
-----------
- --------------------------------------------------------------------
U.S.TREASURY BONDS (12.6%)
10.38%, 11/15/12. . . . . . . . . . . . . . 3,000,000 3,975,000
8.13%, 08/15/19 . . . . . . . . . . . . . . 4,000,000 5,610,624
5.50%, 08/15/28 . . . . . . . . . . . . . . 9,000,000 9,783,980
-----------
19,369,604
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS 39,989,172
-----------
48 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (8.9%)
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------
Allstate Corp., 1.34%, 05/01/03 (d). $ 4,172,000 $ 4,172,000
Johnson Controls Inc.,
1.33%, 05/01/03 (d). . . . . . . . . 4,000,000 4,000,000
National City Credit Corp.,
1.28%, 05/01/03 . . . . . . . . . . 4,615,000 4,615,000
Scripps, E.W. Company,
1.33%, 05/01/03. . . . . . . . . . . 1,000,000 1,000,000
-------------
TOTAL COMMERCIAL PAPER 13,787,000
-------------
TOTAL INVESTMENTS (COST
141,671,273) (A) - 99.2%. . . . . . 153,231,249
OTHER ASSETS IN EXCESS OF
LIABILITIES - 0.8% 1,300,074
-------------
NET ASSETS - 100.0% $154,531,323
=============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Represents a restricted security acquired and eligible for resale under
rule 144A, which limits the resale to certain qualified buyers. These
securities were deemed liquid pursuant to procedures approved by the Board
of Trustees.
(c) Defaulted security with respect to interest payments.
(d) Restricted securities issued pursuant to Section 4(2) of the Securities Act
of 1933. These securities were deemed liquid pursuant to procedures
approved by the Board of Trustees.
SEE NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 49
- --------------------------------------------------------------------------------
GARTMORE GOVERNMENT BOND FUND
Class A Shares symbol: NUSAX
Class B Shares symbol: NIBBX
Class C Shares symbol: NGVCX
Class D Shares symbol: NAUGX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 2.60%* versus
3.02% for its benchmark, the Merrill Lynch Government Master Index.
For broader comparison, the average return for this Fund's peer category
(Intermediate U.S. Government Bond Funds) was 2.29%, according to Lipper, an
independent company that provides mutual fund data and analysis.
WHAT MACROECONOMIC FACTORS INFLUENCED PERFORMANCE?
Volatility was the dominant theme for the period, as the bond market experienced
wild swings between lower and higher rates. The volatility resulted from a tug
of war between economic fundamentals and the latest developments on the
geopolitical front. The participants in this tug of war differed in their views,
with some believing that the economy and the profit picture were still subdued,
and others believing that the war in Iraq was responsible for the poor economic
picture. We expect large current account and fiscal deficits to restrain the
economy in the future. The net result of this volatility, however, was
essentially no change in interest rates.
WHAT PORTFOLIO ATTRIBUTES AFFECTED PERFORMANCE?
The best-performing sector in the Fund was MBS (mortgage-backed securities),
because they had a substantial additional yield over U.S. Treasury securities.
This yield differential has created favorable risk/reward characteristics in the
sector, prompting an increase in the Fund's weighting in this area to 45% of
holdings. Agency securities also performed well as investors searched for
additional yield, given the low level of interest rates. U.S. Treasury notes and
bonds comprised the Fund's worst-performing sector, but they have good relative
value beyond 10 years.
HOW IS THE FUND POSITIONED?
We have positioned the Fund to take advantage of shorter-maturity bonds. If the
economy continues to struggles and the Federal Reserve needs to lower interest
rates again, securities with maturities of less than five years should
outperform those with longer maturities. This is known as a steep yield curve
environment. Interest rates are expected to remain range-bound during the coming
quarter. In this type of environment, we believe the best strategy for
outperformance is to maintain as much safe yield as possible. Therefore, we plan
to maintain a large weighting in MBSs and callable Agency notes. The Fund will
begin to sell longer-maturity non-callable Agency notes in favor of U.S.
Treasury bonds, given the strong performance of the Agency sector.
PORTFOLIO MANAGER: Gary R. Hunt, CFA
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $245,416,653
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. 5 YR. 10 YR.
- ------------------------------------------
Class A1 w/o SC2 10.04% 7.18% 6.86%
w/SC3 4.81% 6.15% 6.34%
Class B1 w/o SC2 9.54% 6.54% 6.54%
w/SC4 4.54% 6.23% 6.54%
Class C1 w/o SC2 9.54% 6.94% 6.74%
w/SC5 7.41% 6.73% 6.63%
Class D. w/o SC2 10.25% 7.42% 6.98%
w/SC6 5.30% 6.43% 6.49%
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 These returns include performance based on Class D shares, which was
achieved prior to the creation of Class A and Class B (5/11/98) and Class C
(3/1/01) shares. These returns have been restated for sales charges but not
for fees applicable to these classes of shares, which include a 0.25%
(Class A) or 1.00% (Class B and Class C) 12b-1 fee. Had Class A, Class B or
Class C been in existence for the time periods presented, the performance
for such classes would have been lower as a result of their additional
expenses.
2 These returns do not reflect the effects of sales charges (SC).
3 A 4.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
6 A 4.50% front-end sales charge was deducted.
+ See legend on first page of this report.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
DATE CLASS D MLGMI CPI
- -----------------------------------
4/30/1993. 9,550 10,000 10,000
10/31/1993 9,968 11,300 10,275
10/31/1994 9,552 10,811 10,543
10/31/1995 11,126 12,477 10,839
10/31/1996 11,713 13,107 11,164
10/31/1997 12,751 14,244 11,396
10/31/1998 13,903 15,859 11,566
10/31/1999 13,774 15,669 11,862
10/31/2000 14,838 16,922 12,271
10/31/2001 17,128 19,451 12,532
10/31/2002 18,260 20,681 12,786
4/30/2003. 18,761 21,306 13,079
Comparative performance of $10,000 invested in Class D shares of the Gartmore
Government Bond Fund, the Merrill Lynch Government Master Index (MLGMI)(a), and
the Consumer Price Index (CPI)(b) over a 10-year period ended 4/30/03. Unlike
the Fund, the returns for these indices do not reflect any fees, expenses, or
sales charges.
(a) The MLGMI consists of U.S. Treasury notes and bonds with one or more years
remaining to final maturity and at least $1 billion in face value
outstanding, and U.S. Agencies with one or more years remaining to final
maturity and at least $100 million in face value outstanding.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
50 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE GOVERNMENT BOND FUND
U.S. GOVERNMENT SPONSORED AND AGENCY OBLIGATIONS (99.3%)
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK (0.5%)
7.16%, 05/15/06. . . . . . . . . . . . . . . . . . $ 1,000,000 $ 1,143,429
------------
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK (1.7%)
5.70%, 06/07/06. . . . . . . . . . . . . . . . . . 3,000,000 3,124,962
6.02%, 01/09/08. . . . . . . . . . . . . . . . . . 1,000,000 1,134,797
------------
4,259,759
------------
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION (29.0%)
2.35%, 10/08/04. . . . . . . . . . . . . . . . . . 5,000,000 5,025,975
6.75%, 05/30/06. . . . . . . . . . . . . . . . . . 5,000,000 5,687,295
5.50%, 04/01/07, Pool #M90718. . . . . . . . . . . 2,124,297 2,205,452
7.25%, 06/15/07, REMIC,
Series 1313-G . . . . . . . . . . . . . . . . . . 455,255 455,050
5.50%, 12/01/08, Pool #M80710. . . . . . . . . . . 7,444,840 7,718,124
5.50%, 02/15/10, REMIC,
Series 2124-GC . . . . . . . . . . . . . . . . . . 4,292,759 4,336,034
6.00%, 06/15/11, REMIC,
Series 1858-H. . . . . . . . . . . . . . . . . . . 1,594,233 1,602,120
5.50%, 01/15/16, REMIC,
Series 2438-LD . . . . . . . . . . . . . . . . . . 5,133,000 5,395,390
6.00%, 04/15/16, REMIC,
Series 2303-VU . . . . . . . . . . . . . . . . . . 3,013,000 3,153,353
6.00%, 03/15/19, REMIC,
Series 2517-VH. . . . . . . . . . . . . . . . . . 4,207,500 4,504,341
6.00%, 02/15/21, REMIC,
Series 2503-VD. . . . . . . . . . . . . . . . . . 4,000,000 4,239,769
3.50%, 12/15/21, REMIC,
Series 1629-HA . . . . . . . . . . . . . . . . . . 935,201 947,988
7.00%, 05/15/22, REMIC,
Series 1424-PJ . . . . . . . . . . . . . . . . . . 1,156,933 1,177,104
6.50%, 09/15/23, REMIC,
Series 1584-L. . . . . . . . . . . . . . . . . . . 2,000,000 2,154,302
6.25%, 12/15/23, REMIC,
Series 1628-KZ . . . . . . . . . . . . . . . . . . 4,204,834 4,534,164
6.50%, 03/15/24, REMIC,
Series 1684-I . . . . . . . . . . . . . . . . . . 2,000,000 2,153,629
6.25%, 01/15/27, REMIC,
Series 2020-D. . . . . . . . . . . . . . . . . . . 1,111,813 1,133,693
6.00%, 01/15/28, REMIC,
Series 2114-PR . . . . . . . . . . . . . . . . . . 1,393,500 1,463,151
6.50%, 04/15/30, REMIC,
Series 2369-ZH . . . . . . . . . . . . . . . . . . 3,306,364 3,462,276
6.50%, 07/15/30, REMIC,
Series 2388-BE . . . . . . . . . . . . . . . . . . 1,810,000 1,906,005
6.50%, 03/15/31, REMIC,
Series 2296-H. . . . . . . . . . . . . . . . . . . 1,955,830 2,069,951
6.50%, 03/15/31, REMIC,
Series 2296-G. . . . . . . . . . . . . . . . . . . 1,261,344 1,312,768
6.00%, 09/15/31, REMIC,
Series 2419-UA . . . . . . . . . . . . . . . . . . 5,000,000 5,235,106
------------
71,873,040
------------
- ------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (34.9%)
2.10%, 09/30/05. . . . . . . . . . . . . . . . . . 1,520,000 1,526,843
2.75%, 12/16/05. . . . . . . . . . . . . . . . . . 10,000,000 10,065,999
6.31%, 01/01/06, Pool #73341 . . . . . . . . . . . 867,929 939,675
2.75%, 09/12/06. . . . . . . . . . . . . . . . . . 5,000,000 5,044,760
5.15%, 05/03/07. . . . . . . . . . . . . . . . . . 10,000,000 10,669,969
7.41%, 10/01/07, Pool #382684. . . . . . . . . . . 1,000,000 1,086,563
6.10%, 07/01/08, Pool #380488. . . . . . . . . . . 939,307 1,043,236
6.00%, 08/25/08, REMIC,
Series 94-34-C . . . . . . . . . . . . . . . . . . 1,500,000 1,542,587
6.00%, 11/25/08, REMIC,
Series 94-48-E . . . . . . . . . . . . . . . . . . 1,992,018 2,096,790
7.42%, 11/01/11, Pool #73731 . . . . . . . . . . . 6,398,311 7,296,467
6.50%, 04/25/13, REMIC,
Series 99-19-TD. . . . . . . . . . . . . . . . . . 3,000,000 3,172,291
6.30%, 05/01/13, Pool #380311. . . . . . . . . . . 1,883,535 2,107,034
6.00%, 03/25/14, REMIC,
Series 1999-8-QD . . . . . . . . . . . . . . . . . 5,000,000 5,353,412
6.30%, 04/01/14, Pool #381570. . . . . . . . . . . 1,052,382 1,190,278
7.90%, 08/01/15, Pool #381190. . . . . . . . . . . 1,633,586 2,008,330
7.11%, 10/01/15, Pool #383142. . . . . . . . . . . 3,031,983 3,492,647
6.68%, 05/01/16, Pool #383452. . . . . . . . . . . 2,141,764 2,421,549
7.18%, 02/01/17, Pool #73942 . . . . . . . . . . . 2,020,833 2,363,230
6.00%, 04/25/18, REMIC,
Series 2002-27-VB . . . . . . . . . . . . . . . . 4,000,000 4,217,764
9.25%, 10/25/18, REMIC
Series 88-25-B . . . . . . . . . . . . . . . . . . 54,614 61,745
8.50%, 01/25/20, REMIC,
Series 90-7-B. . . . . . . . . . . . . . . . . . . 241,236 266,438
6.85%, 05/17/20, Series 1997-M6-C. . . . . . . . . 2,787,476 3,046,311
7.50%, 02/25/23, REMIC,
Series 93-16-Z . . . . . . . . . . . . . . . . . . 880,569 951,688
6.00%, 08/17/26, REMIC,
Series 1997-26-SB . . . . . . . . . . . . . . . . 5,000,000 5,263,227
6.50%, 09/25/30, REMIC,
Series 2001-58-QG. . . . . . . . . . . . . . . . . 2,000,000 2,132,717
6.27%, 02/25/35, REMIC 98-M4-D . . . . . . . . . . 2,500,000 2,792,132
6.30%, 10/17/38, REMIC,
Series 1998-73 MZ. . . . . . . . . . . . . . . . . 3,938,887 4,210,206
------------
86,363,888
------------
- ------------------------------------------------------------------------------
FOREIGN GOVERNMENT (1.2%)
Turkey Trust GTC, 0.00%,
05/15/05, Series T-1. . . . . . . . . . . . . . . 3,000,000 2,883,039
------------
- ------------------------------------------------------------------------------
HOUSING & URBAN
DEVELOPMENT (1.4%)
7.08%, 08/01/16, Series 97-A . . . . . . . . . . . 3,000,000 3,438,585
------------
- ------------------------------------------------------------------------------
PRIVATE EXPORT FUNDING (0.2%)
7.89%, 02/15/05, Series 1994-A . . . . . . . . . . 500,000 527,485
------------
- ------------------------------------------------------------------------------
RESOLUTION FUNDING CORP.
STRIPS (5.0%)
4.66%, 01/15/14. . . . . . . . . . . . . . . . . . 20,000,000 12,281,960
------------
- ------------------------------------------------------------------------------
U.S.TREASURY BONDS (18.3%)
11.25%, 02/15/15 . . . . . . . . . . . . . . . . . 19,000,000 31,621,643
7.25%, 05/15/16. . . . . . . . . . . . . . . . . . 5,000,000 6,447,850
7.50%, 11/15/16. . . . . . . . . . . . . . . . . . 1,000,000 1,316,875
6.25%, 08/15/23. . . . . . . . . . . . . . . . . . 5,000,000 5,921,875
------------
45,308,243
------------
- ------------------------------------------------------------------------------
U.S.TREASURY NOTES (2.4%)
10.00%, 05/15/10 . . . . . . . . . . . . . . . . . 5,000,000 5,829,100
------------
- ------------------------------------------------------------------------------
U.S.TREASURY STRIPS (4.7%)
0.93%, 05/15/11. . . . . . . . . . . . . . . . . . 7,500,000 6,960,855
1.11%, 11/15/11. . . . . . . . . . . . . . . . . . 5,000,000 4,547,270
------------
11,508,125
------------
- ------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SPONSORED
AND AGENCY OBLIGATIONS. . . . . . . . . . . . . . 245,416,653
------------
TOTAL INVESTMENTS (COST
236,666,743) (A) - 99.3% 245,416,653
OTHER ASSETS IN EXCESS OF
LIABILITIES - 0.7% 1,648,042
------------
NET ASSETS - 100.0% $247,064,695
============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
REMIC Real Estate Mortgage Investment Conduit
STRIPS Separate Trading of Registered Interest and
Principal Securities
SEE NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 51
- --------------------------------------------------------------------------------
GARTMORE TAX-FREE INCOME FUND
Class A Shares symbol: NTFAX
Class B Shares symbol: NTFBX
Class C Shares symbol: NTFCX
Class D Shares symbol: NATFX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 2.83%* versus
3.59% for its benchmark, the Lehman Brothers Municipal Bond Index.
For broader comparison, the average return for this Fund's peer category
(General Municipal Debt Funds) was 3.32%, according to Lipper, an independent
company that provides mutual fund data and analysis.
WHAT MACROECONOMIC FACTORS INFLUENCED PERFORMANCE?
Several factors continued to influence the municipal bond market: increased
supply, lower interest rates and volatile financial markets. Concerns over slow
economic growth, the conflict in Iraq and corporate governance added to the
market's volatility. The Federal Open Market Committee left its target for the
federal funds rate unchanged at 1.25% because the economy showed no definitive
sign of sustainable growth.
Issuance surged as cash-starved states raised much-needed additional budget
financing. They were eager to do so, given the lowest interest rates on
tax-exempt debt in 35 years. The unprecedented level of new issuance was met by
considerable demand. During the period, states issued more bonds backed by the
1998 Master Settlement agreement with tobacco product manufacturers.
However, these bonds began to perform poorly as future issuance threatened to
dwarf demand. The tobacco bond sector was hurt further when an Illinois judge
ordered Altria Group, Inc. (parent company of Philip Morris USA Inc.) to pay
$10.1 billion in a lawsuit over "light" cigarettes. Altria was required to post
$6.8 billion in bonds in order to appeal the decision. Moody's and Standard &
Poor's downgraded all outstanding tobacco bonds to single A, which subsequently
led states to cancel or postpone any scheduled deals. These bonds remained on a
negative credit watch.
WHAT PORTFOLIO ATTRIBUTES AFFECTED PERFORMANCE?
In the Index, long-dated securities maturing in 20 years provided the best
return during the period with 4.39%, while securities maturing in three years
performed the worst, producing a return of 1.46%. Higher-quality municipal
assets also outperformed, as evidenced by the following returns: AAAs, 2.13%;
AAs, 1.90%; and As, 0.60%. Tobacco bonds were largely responsible for the poor
performance of the A-rated bonds; tobacco bonds make up about 7.67% of the
Fund's assets.
HOW IS THE FUND POSITIONED?
Interest rates are at record lows. As states continue to require funds to reduce
expected budget deficits, supply should continue to increase. Therefore, we
believe that concern is still warranted regarding the direction of interest
rates and the market's ability and willingness to continue to absorb new
issuance. Consequently, we will defensively deploy any new cash investments in
the intermediate area of the yield curve.
PORTFOLIO MANAGER: Alpha Benson
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $201,872,882
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. 5 YR. 10 YR.
- ------------------------------------------
Class A1 w/o SC2 7.37% 5.09% 5.24%
w/SC3 2.30% 4.07% 4.73%
Class B1 w/o SC2 6.54% 4.46% 4.92%
w/SC4 1.54% 4.12% 4.92%
Class C1 w/o SC2 6.66% 4.81% 5.10%
w/SC5 4.64% 4.60% 4.99%
Class D. w/o SC2 7.65% 5.36% 5.37%
w/SC6 2.85% 4.38% 4.88%
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 These returns include performance based on Class D shares, which was
achieved prior to the creation of Class A and Class B (5/11/98) and Class C
(3/1/01) shares. These returns have been restated for sales charges but not
for fees applicable to these classes of shares, which include a 0.25%
(Class A) or 1.00% (Class B and Class C) 12b-1 fee. Had Class A, Class B or
Class C been in existence for the time periods presented, the performance
for such classes would have been lower as a result of their additional
expenses.
2 These returns do not reflect the effects of sales charges (SC).
3 A 4.75% front-end sales charge was deducted.
4 A 5.00% contingent deferred sales charge (CDSC) was deducted. The CDSC
declines to 0% after 6 years.
5 A 1.00% front-end sales charge was deducted. A CDSC of 1.00% was also
deducted from the one year return because it is charged when you sell Class
C shares within the first year after purchase.
6 A 4.50% front-end sales charge was deducted.
+ See legend on first page of this report.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
DATE CLASS D LBMBI CPI
- --------------------------------------------
4/30/1993. 9,550 10,000 10,000
10/31/1993 10,181 11,407 10,275
10/31/1994 9,294 10,910 10,543
10/31/1995 10,656 12,530 10,839
10/31/1996 11,222 13,245 11,164
10/31/1997 12,089 14,371 11,396
10/31/1998 12,946 15,524 11,566
10/31/1999 12,531 15,248 11,862
10/31/2000 13,555 16,546 12,271
10/31/2001 14,909 18,277 12,532
10/31/2002 15,645 19,349 12,786
4/30/2003. 16,109 20,043 13,079
Comparative performance of $10,000 invested in Class D shares of the Gartmore
Tax-Free Income Fund, the Lehman Brothers Municipal Bond Index (LBMBI)(a), and
the Consumer Price Index (CPI)(b) over a 10-year period ended 4/30/03. Unlike
the Fund, the returns for these indices do not reflect any fees, expenses, or
sales charges.
(a) The LBMBI consists of investment-grade tax-exempt bonds and includes
securities with at least one year to maturity and at least $100 million in
par value outstanding.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
52 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE TAX-FREE INCOME FUND
MUNICIPAL BONDS (97.6%)
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------
ALABAMA (7.9%)
Alabama 21st Century Authority
Tobacco Settlement Revenue
Bonds, 5.75%, 2015. . . . . . . . . . . . . . . . . . . . . $2,500,000 $ 2,327,175
Alabama 21st Century Authority
Tobacco Settlement Revenue
Bonds, 5.50%, 2021. . . . . . . . . . . . . . . . . . . . . 4,000,000 3,340,040
Alabama Housing Finance Authority
Single-Family Mortgage Revenue
Bonds,
(Collateralized Home Mortgage
Revenue Bond
Program), Series 1996-D,
6.00%, 2016 . . . . . . . . . . . . . . . . . . . . . . . . 1,680,000 1,766,537
Auburn University Alabama
General Fee
Revenue Bonds, 5.50%, 2018. . . . . . . . . . . . . . . . . 1,685,000 1,854,511
Birmingham, Alabama General
Obligation
Unlimited Tax Parking Warrants,
Series 1995-A, 5.90%, 2018. . . . . . . . . . . . . . . . . 1,100,000 1,204,423
Birmingham, Alabama Water &
Sewer
Revenue Warrants
Series 1998-A, 4.75%, 2029. . . . . . . . . . . . . . . . . 1,750,000 1,727,233
Jefferson County, Alabama Sewer
Capital Improvement Revenue
Warrants,
Series A, 5.13%, 2029 . . . . . . . . . . . . . . . . . . . 4,000,000 4,122,279
-----------
16,342,198
-----------
- ------------------------------------------------------------------------------------
ARIZONA (0.9%)
Mesa, Arizona Industrial
Development Authority
Revenue Bonds, (Discovery
Health Systems),
Series A, 5.63%, 2029 . . . . . . . . . . . . . . . . . . . 1,800,000 1,923,156
-----------
- ------------------------------------------------------------------------------------
COLORADO (1.8%)
Denver, Colorado City & County
Airport Revenue Bonds,
Series B, 5.50%, 2025 . . . . . . . . . . . . . . . . . . . 3,500,000 3,686,165
-----------
- ------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA (1.3%)
District of Columbia General Obligation
Unlimited Bonds, Series A, 5.50%, 2029. . . . . . . . . . . 1,775,000 1,845,095
District of Columbia Prerefunded
General Obligation
Unlimited, Series A, 5.50%, 2029. . . . . . . . . . . . . . 725,000 837,085
-----------
2,682,180
-----------
- ------------------------------------------------------------------------------------
FLORIDA (3.1%)
Florida State Board of Education
Capital Outlay
(Public Education), Series D,
5.20%, 2019 . . . . . . . . . . . . . . . . . . . . . . . . 3,630,000 3,677,081
Florida State Board of Education
Capital Outlay
(Public Education), Series D,
5.75%, 2022 . . . . . . . . . . . . . . . . . . . . . . . . 1,050,000 1,179,854
Jacksonville, Florida Electric Authority
Revenue Bonds,
(St. John's River), Series 9, 5.25%, 2021 . . . . . . . . . 1,520,000 1,528,375
-----------
6,385,310
-----------
- ------------------------------------------------------------------------------------
GEORGIA (3.4%)
Atlanta, Georgia Airport General Obligation
Refunding Revenue Bonds, Series A, 5.50%, 2026. . . . . . . 1,000,000 1,060,720
Georgia Local Government Certificates of Participation
Grantor Trust, Series 1998-A, 4.75%, 2028 . . . . . . . . . 1,000,000 1,008,980
Georgia Municipal Electric Power Authority
Revenue Bonds, Prerefunded Series V, 6.60%, 2018. . . . . . 465,000 592,098
Georgia Municipal Electric Power Authority
Revenue Bonds, Unrefunded Series V, 6.60%, 2018 . . . . . . 2,285,000 2,880,517
Georgia Private College & Universities Authority,
Refunding Revenue Bonds, (Mercer University
Project), Series A, 5.25%, 2025 . . . . . . . . . . . . . . 1,500,000 1,482,465
-----------
7,024,780
-----------
- ------------------------------------------------------------------------------------
ILLINOIS (10.8%)
Chicago, Illinois Project General Obligation Limited,
Series A, 5.38%, 2024 . . . . . . . . . . . . . . . . . . . 2,930,000 3,068,765
Chicago Park District, Illinois General Obligation
Unlimited Tax Park Bonds,
Series 1996, 5.60%, 2021. . . . . . . . . . . . . . . . . . 3,050,000 3,283,813
Illinois Development Finance Authority
Hospital Revenue Bonds, (Adventist Health
Systems/Sunbelt Obligation), 5.50%, 2020. . . . . . . . . . 1,750,000 1,774,150
Illinois Development Finance Authority
Hospital Revenue Bonds, (Adventist Health
Systems/Sunbelt Obligation), 5.65%, 2024. . . . . . . . . . 3,000,000 3,043,170
Illinois State Building, Illinois Sales Tax Revenue Bonds,
Series V, 6.38%, 2017 . . . . . . . . . . . . . . . . . . . 2,500,000 2,809,150
Illinois State General Obligation Unlimited
Revenue Bonds, 5.25%, 2023. . . . . . . . . . . . . . . . . 3,425,000 3,597,825
Illinois State General Obligation Unlimited Tax Bonds,
Series 1994, 5.80%, 2019. . . . . . . . . . . . . . . . . . 3,000,000 3,186,930
Metropolitan Pier & Exposition Authority,
Illinois Dedicated State Tax Revenue Bonds,
(McCormick Place Expansion Project), 5.50%, 2024. . . . . . 1,500,000 1,599,495
-----------
22,363,298
-----------
- ------------------------------------------------------------------------------------
INDIANA (4.2%)
Ball State University Student Fee Revenue Bonds,
Series J, 6.20%, 2020 . . . . . . . . . . . . . . . . . . . 1,000,000 1,166,410
Indiana State Toll Road Commission East-West
Toll Road Revenue Bonds,
Series 1980, 9.00%, 2015. . . . . . . . . . . . . . . . . . 5,335,000 7,587,384
-----------
8,753,794
-----------
- ------------------------------------------------------------------------------------
KANSAS (0.8%)
Wichita, Kansas Hospital Revenue Refunding Bonds,
(Facilities Improvements Series 11), 6.75%, 2019. . . . . . 1,500,000 1,650,885
-----------
2003 SEMIANNUAL REPORT 53
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
April 30, 2003 (Unaudited)
GARTMORE TAX-FREE INCOME FUND (Continued)
MUNICIPAL BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
KENTUCKY (1.6%)
Jefferson County, Kentucky Jewish
Hospital
Healthcare Services Health Facilities
Revenue Bonds,
(Jewish Hospital, Inc.), Series 1995,
6.50%, 2015 $3,250,000 $3,315,000
----------
- ------------------------------------------------------------------------------
LOUISIANA (1.5%)
Tobacco Settlement Financing Corp.
(Louisiana Revenue Asset Backed),
Series 2001B, 5.88%, 2039. . . . . . . . . 4,000,000 3,128,840
----------
- ------------------------------------------------------------------------------
MASSACHUSETTS (2.6%)
Massachusetts Bay Transportation
Authority
Revenue Bonds, (General
Transportation System),
Series A, 5.38%, 2019. . . . . . . . . . . 2,000,000 2,130,220
Massachusetts State Consumer Loan
General Obligation Limited, Series C,
5.50%, 2015. . . . . . . . . . . . . . . . 1,500,000 1,727,190
Massachusetts State Prerefunded
Consumer Loan
General Obligation Limited, Series B,
5.25%, 2021. . . . . . . . . . . . . . . . 95,000 107,829
Massachusetts State Unrefunded
Consumer Loan
General Obligation Limited, Series B,
5.25%, 2021. . . . . . . . . . . . . . . . 1,405,000 1,505,626
----------
5,470,865
----------
- ------------------------------------------------------------------------------
MICHIGAN (3.9%)
Michigan State General Obligation
Unlimited Tax Bonds,
(Environmental Protection Program),
Series 1992, 6.25%, 2012 . . . . . . . . . 3,500,000 4,186,805
Michigan State Hospital Finance
Authority Refunding
Revenue Bonds, (Henry Ford Health),
6.00%, 2024. . . . . . . . . . . . . . . . 1,500,000 1,562,265
Michigan State Hospital Finance Authority
Revenue Bonds, (Ascension Health
Credit),
Series A, 5.75%, 2018. . . . . . . . . . . 2,000,000 2,371,680
----------
8,120,750
----------
- ------------------------------------------------------------------------------
MINNESOTA (1.5%)
Minnesota State Housing Finance Agency
Single-Family Mortgage Revenue Bonds,
Series 1994-K, 6.40%, 2015 . . . . . . . . 1,425,000 1,467,622
St. Louis Park, Minnesota Independent
School District
Number 283 General Obligation
Unlimited Tax Bonds,
5.75%, 2018. . . . . . . . . . . . . . . . 1,500,000 1,676,265
----------
3,143,887
----------
- ------------------------------------------------------------------------------
MISSOURI (1.0%)
Jackson County, Missouri Special
Obligation
Revenue Bonds, Series A,
5.50%, 2012. . . . . . . . . . . . . . . . 1,415,000 1,644,202
Missouri State Environmental
Improvement & Energy
Resource Authority, State Revolving
Fund-Multiple,
Series A, Refunded Portion,
6.55%, 2014. . . . . . . . . . . . . . . . 365,000 371,690
----------
2,015,892
----------
- ------------------------------------------------------------------------------
NEVADA (0.6%)
University of Nevada Community
College
Revenue Bonds, 5.38%, 2020. . . . . . 1,200,000 1,276,404
----------
- ------------------------------------------------------------------------------
NEW JERSEY (2.3%)
New Jersey State Transportation
Trust Fund Authority,
Transportation Systems Revenue
Bonds,
Series A, 5.75%, 2017 . . . . . . . . 1,000,000 1,188,400
New Jersey State Transportation
Trust Fund Authority,
Transportation Systems Revenue
Bonds,
Series B, 6.00%, 2015 . . . . . . . . 2,000,000 2,400,160
New Jersey State Turnpike Authority
Revenue Bonds,
Series 1991-C, 6.50%, 2016. . . . . . 1,000,000 1,217,170
----------
4,805,730
----------
- ------------------------------------------------------------------------------
NEW MEXICO (0.8%)
Bernalillo County, New Mexico Gross
Receipts
Tax Revenue Bonds, 5.25%, 2026. . . . 1,500,000 1,558,365
----------
- ------------------------------------------------------------------------------
NEW YORK (1.1%)
New York State Local Government
Assistance
Corporation Revenue Refunding
Bonds,
Series 1993-E, 6.00%, 2014. . . . . . 1,000,000 1,188,710
New York, New York City Transitional
Finance Authority
Future Tax Secured Revenue Bonds,
5.75%, 2019 . . . . . . . . . . . . . 205,000 230,227
New York, New York City Transitional
Finance Authority
Future Tax Secured Revenue Bonds,
5.75%, 2019 . . . . . . . . . . . . . 795,000 941,264
----------
2,360,201
----------
- ------------------------------------------------------------------------------
NORTH CAROLINA (3.0%)
North Carolina Housing Finance
Agency,
Single-Family Revenue Bonds,
Series A,
6.25%, 2017 . . . . . . . . . . . . . 1,485,000 1,543,969
North Carolina Medical Care
Commission
Hospital Revenue Bonds,
(Firsthealth of the Carolinas),
4.75%, 2026 . . . . . . . . . . . . . 2,500,000 2,465,775
North Carolina Medical Care
Commission
Hospital Revenue Bonds,
(Gaston Health Care), 5.00%, 2029 . . 2,300,000 2,267,800
----------
6,277,544
----------
54 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
MUNCIPAL BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------
OHIO (5.5%)
Allen County, Ohio Special Obligation
Revenue Bonds, 5.25%, 2015 . . . . . . . . . . . $3,180,000 $ 3,537,655
Cleveland, Ohio Waterworks
Revenue Bonds,
Series K, 5.25%, 2020. . . . . . . . . . . . . . 1,000,000 1,071,230
Franklin County, Ohio Hospital
Refunding & Improvement
Revenue Bonds, (The Children's
Hospital Project),
Series 1996-A, 5.75%, 2020 . . . . . . . . . . . 1,100,000 1,136,751
Hamilton, Ohio City School
District General
Obligation Bonds, Series A, 5.50%,
2019 . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,086,920
Montgomery County, Ohio Hospital
Revenue Bonds,
(Kettering Medical Center),
6.75%, 2018. . . . . . . . . . . . . . . . . . . 2,500,000 2,679,375
Ohio State Building, Ohio Sales Tax
Revenue Bonds,
5.00%, 2017. . . . . . . . . . . . . . . . . . . 1,655,000 1,785,728
-----------
11,297,659
-----------
- -------------------------------------------------------------------------
PENNSYLVANIA (0.5%)
Pennsylvania State University
General Obligation
Unlimited Bonds, 5.25%, 2016 . . . . . . . . . . 1,000,000 1,112,300
-----------
- -------------------------------------------------------------------------
SOUTH CAROLINA (5.5%)
South Carolina State Housing
Finance & Development
Authority Homeownership Mortgage
Purchase Bonds,
Series 1994-A, 6.38%, 2016 . . . . . . . . . . . 2,025,000 2,105,150
South Carolina State Housing
Finance & Development
Authority Multi-Family Revenue Refunding Bonds,
Series 1992-A, 6.88%, 2023 . . . . . . . . . . . 1,500,000 1,512,900
South Carolina State Public Service
Authority
Revenue Bonds, Series A,
5.50%, 2022. . . . . . . . . . . . . . . . . . . 1,000,000 1,076,850
South Carolina Transportation
Infrastructure
Revenue Bonds, 5.50%, 2030 . . . . . . . . . . . 1,000,000 1,064,790
South Carolina Transportation
Infrastructure
Revenue Bonds, Series A,
5.38%, 2024. . . . . . . . . . . . . . . . . . . 3,000,000 3,156,029
Spartanburg, South Carolina
Water System
Revenue Bonds, Series 1996,
6.10%, 2021. . . . . . . . . . . . . . . . . . . 1,000,000 1,133,400
Tobacco Settlement Revenue
Management
Revenue Bonds, Series B,
6.00%, 2022. . . . . . . . . . . . . . . . . . . 1,385,000 1,245,517
-----------
11,294,636
-----------
- -------------------------------------------------------------------------
TENNESSEE (2.9%)
Nashville & Davidson County,
Tennessee Health &
Educational Facilities Revenue Bonds,
(Meharry Medical College
New Collateralized),
Series 1979, 7.88%, 2004 . . . . . . . . . . . . 470,000 493,970
Shelby County, Tennessee
Educational & Housing
Facilities Board Revenue Bonds,
(St. Judes Children's Research),
5.38%, 2024. . . . . . . . . . . . . . . . . . . 4,200,000 4,324,866
Shelby County, Tennessee Health
Educational &
Housing Facilities Board Revenue
Bonds,
(St. Judes Children's Research),
6.00%, 2014. . . . . . . . . . . . . . . . . . . 1,000,000 1,102,190
-----------
5,921,026
-----------
- -------------------------------------------------------------------------
TEXAS (17.4%)
Beaumont Independent School District,
Texas General Obligation Unlimited
Tax School
Building Bonds, Series 1996,
5.00%, 2016. . . . . . . . . . . . . . . . . . . 2,325,000 2,428,346
Collin County, Texas Permanent
Improvement
General Obligation Limited Tax
Bonds,
Series A, 5.50%, 2019. . . . . . . . . . . . . . 1,300,000 1,398,696
Comal, Texas Independent
School District
General Obligation Unlimited
Tax School
Building and Refunding Bonds,
5.63%, 2019 . . . . . . . . . . . . . . . . . . 2,000,000 2,217,180
Fort Bend Independent
School District,
Texas General Obligation
Unlimited Tax Bonds,
Series 1996, 5.00%, 2018 . . . . . . . . . . . . 2,300,000 2,418,611
Fort Worth, Texas General
Obligation
Limited Tax Bonds, 5.63%, 2017 . . . . . . . . . 1,350,000 1,470,393
Harris County, Texas Health
Facilities Development
Corporation Revenue School
Health Care Systems,
Series B, 5.75%, 2027. . . . . . . . . . . . . . 5,325,000 6,231,315
Houston, Texas Independent
School District
General Obligation Limited Tax
School House
Refunding Bonds, Series 1997,
5.38%, 2017. . . . . . . . . . . . . . . . . . . 1,500,000 1,620,135
Houston, Texas Independent
School District
General Obligation Limited Tax
School House
Refunding Bonds, Series A,
4.75%, 2026. . . . . . . . . . . . . . . . . . . 2,000,000 1,997,360
Leander, Texas Independent
School District
General Obligation Unlimited
Refunding Bonds,
5.00%, 2022. . . . . . . . . . . . . . . . . . . 1,000,000 1,032,430
Lower Colorado River Authority,
Texas Junior Lien Refunding
Revenue Bonds,
Escrowed Series 1992, 6.00%, 2017. . . . . . . . 1,245,000 1,518,228
Montgomery County, Texas General
Obligation Limited, 5.25%, 2019. . . . . . . . . 1,000,000 1,065,590
San Antonio, Texas Water
Revenue Bonds, 5.00%, 2025 . . . . . . . . . . . 1,000,000 1,021,340
Socorro, Texas Independent
School District
General Obligation Unlimited Tax
Bonds,
Series A, 5.75%, 2014. . . . . . . . . . . . . . 1,000,000 1,120,260
Spring Branch, Texas Independent
School District
General Obligation Limited,
5.20%, 2020. . . . . . . . . . . . . . . . . . . 1,500,000 1,585,080
Texas State Water Development
General Obligation
Unlimited Tax Bonds, Series 1994, 6.90%, 2017. . 2,415,000 2,564,513
United Independent School District
General Obligation
Unlimited Tax Bonds, 5.38%, 2025 . . . . . . . . 1,000,000 1,047,740
Weatherford, Texas Independent
School District
General Obligation Unlimited Tax
School Building
and Refunding Bonds, Series 1994,
6.50%, 2015. . . . . . . . . . . . . . . . . . . 2,655,000 2,894,322
Wichita Falls, Texas Water and
Sewer Revenue Bonds
(Priority Lien), 5.38%, 2019 . . . . . . . . . . 2,000,000 2,153,820
-----------
35,785,359
-----------
2003 SEMIANNUAL REPORT 55
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
April 30, 2003 (Unaudited)
GARTMORE TAX-FREE INCOME FUND (Continued)
MUNICIPAL BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------
UTAH (0.5%)
Utah State Housing Finance Agency
Multi-Family
Housing Refunding Revenue Bonds,
(Cottonwoods ApartmentProject),
Issue 1995, 6.30%, 2015. . . . . . . . . $1,000,000 $ 1,045,280
-------------
- ------------------------------------------------------------------
VERMONT (1.1%)
Vermont Educational & Health Buildings
Financing Agency Revenue Bonds,
(Fletcher Allen Health), Series A,
6.00%, 2023 . . . . . . . . . . . . . . 2,000,000 2,296,800
-------------
- ------------------------------------------------------------------
VIRGINIA (5.0%)
Fairfax County, Virginia Water
Authority Refunding
Revenue Bonds, Series 1992,
6.00%, 2022. . . . . . . . . . . . . . . 940,000 1,071,149
Henrico County, Virginia Water &
Sewer System
Refunding Revenue Bonds,Series
1994, 5.88%, 2014. . . . . . . . . . . . 1,205,000 1,276,963
Virginia College Building Authority
Educational Facilities
Revenue Bonds, 5.00%, 2018 . . . . . . . 3,955,000 4,212,035
Virginia Commonwealth
Transportation Board
Revenue Bonds, 5.00%, 2018 . . . . . . . 1,435,000 1,529,796
Virginia State Public School Authority
Revenue Bonds, Series A,
6.20%, 2013. . . . . . . . . . . . . . . 2,000,000 2,149,760
-------------
10,239,703
-------------
- ------------------------------------------------------------------
WASHINGTON (3.8%)
Seattle, Washington Municipal Light
& Power
Revenue Improvement & Refunding
Revenue Bonds, 5.13%, 2026 . . . . . . . 1,000,000 1,028,870
Seattle, Washington Water Systems
Revenue Bonds,
5.38%, 2029. . . . . . . . . . . . . . . 2,000,000 2,071,620
Washington State Motor Vehicle
Fuel Tax
General Obligation Unlimited Tax
Bonds,
Series 1997-D, 5.38%, 2022 . . . . . . . 3,500,000 3,633,000
Washington State Motor Vehicle
Fuel Tax
General Obligation Unlimited Tax
Bonds,
Series C, 5.80%, 2017. . . . . . . . . . 1,000,000 1,134,200
-------------
7,867,690
-------------
- ------------------------------------------------------------------
WISCONSIN (1.3%)
Wisconsin State General Obligation
Unlimited,
Series C, 5.55%, 2021. . . . . . . . . . 1,000,000 1,085,450
Wisconsin State Transportation
Revenue Bonds,
Series A, 5.50%, 2016. . . . . . . . . . 1,500,000 1,641,735
-------------
2,727,185
-------------
TOTAL MUNICIPAL BONDS 201,872,882
-------------
TOTAL INVESTMENTS (COST
188,052,731) (A) - 97.6% 201,872,882
OTHER ASSETS IN EXCESS OF
LIABILITIES - 2.4% 4,876,231
-------------
NET ASSETS - 100.0% $206,749,113
=============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
Distribution of investments, as a percentage of net assets in securities at
value, is as follows:
INDUSTRY PERCENT VALUE
- ---------------------------------------------------------------
Airports Flying Fields. . . . . . . . . 3.8% $ 7,904,745
Air, Water, and Solid Waste . . . . . . 1.0% 2,153,820
Colleges and Universities . . . . . . . 3.0% 6,070,009
Educational Services. . . . . . . . . . 0.5% 1,120,260
Electric and Other Services . . . . . . 0.7% 1,528,375
Elementary and Secondary Schools. . . . 6.6% 13,641,942
Environmental Quality . . . . . . . . . 0.2% 371,690
Facilities Support Services . . . . . . 1.4% 2,807,068
Finance, Taxation, and Money. . . . . . 5.3% 10,945,531
General Building Contract . . . . . . . 2.0% 4,212,035
General Obligation. . . . . . . . . . . 24.9% 51,509,107
Heath Services. . . . . . . . . . . . . 8.6% 17,764,141
Hospitals . . . . . . . . . . . . . . . 10.1% 20,875,007
Multi-Family Housing. . . . . . . . . . 1.2% 2,558,180
Regulation, Administration of
Transportation. . . . . . . . . . . . . 0.8% 1,641,735
Regulation, Administration of Utilities 0.5% 1,028,870
Single Family Housing . . . . . . . . . 3.3% 6,883,277
Tobacco and Tobacco Products. . . . . . 4.9% 10,041,572
Transportation Services . . . . . . . . 9.8% 20,273,951
Water, Sewer, and Utility . . . . . . . 9.0% 18,541,567
Total . . . . . . . . . . . . . . . . . 97.6% $201,872,882
SEE NOTES TO FINANCIAL STATEMENTS.
56 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE MONEY MARKET FUND
Prime Shares symbol: MIFXX
Institutional Class symbol: GMIX
Service Class symbol: NWSXX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 0.42%* versus
1.38% for its benchmark, the U.S. inflation rate as measured by the Consumer
Price Index (unadjusted).
For broader comparison, the average return for this Fund's peer category
(Institutional Money Market Funds) was 0.50%, according to Lipper, an
independent company that provides mutual fund data and analysis.
WHAT MACROECONOMIC FACTORS INFLUENCED PERFORMANCE?
The Federal Reserve lowered its target federal funds rate from 1.75% to 1.25% on
Nov. 6, 2002, and the rate remained at that level through April 30, 2003.
Speculation about the strength of the U.S. economy, the timing and direction of
the Fed's next change in its target federal funds rate, and whether or not the
United States would go to war to liberate Iraq were factors that fueled anxiety
for consumers and companies. With the U.S. unemployment rate at about 6%,
consumers have been cautious. The airline industry continues to struggle under
its debt load and because of a large drop in passengers. Many companies are
concerned about present and future earnings.
WHAT PORTFOLIO ATTRIBUTES AFFECTED PERFORMANCE?
The Fund added several high-quality asset-backed commercial paper issuers to its
Approved Issuers List: Stanfield Victoria Funding; CC USA, Inc.; Kitty Hawk
Funding Corp.; and Three Rivers Funding Corp. Asset-backed commercial paper has
been providing three to five additional basis points of return over traditional
commercial paper. As of April 30, 2003, the Fund held 28.7% of total assets in
asset-backed commercial paper and 14.9% of total assets in floating-rate notes.
The interest rate on floating-rate notes adjusts at regularly scheduled
intervals (varying from monthly to quarterly, depending on the terms of the
note) to reflect current rates of return. These investments allowed the Fund to
extend its weighted average maturity without locking in fixed interest rates.
With interest rates at historic lows, floating-rate notes allow us to retain the
ability to capitalize quickly on rising interest rates when economic conditions
improve.
HOW IS THE FUND POSITIONED?
Although many analysts expect interest rates to remain at or near current levels
during the next six months, the Federal Open Market Committee might decrease the
target federal funds rate. The Fed recently stated that the risks of faster or
slower growth "are roughly equal."
We will take advantage of opportunities to extend the weighted average maturity
of the Fund whenever possible.We will prudently consider the credit and
liquidity risks of all investment decisions. Changes to the federal accounting
standards for asset-backed commercial paper programs may affect some currently
approved issuers. This risk is being very carefully assessed and monitored by
the Fund's research analysts and portfolio managers.
PORTFOLIO MANAGER: Patricia A. Mynster
* Performance of Prime shares assuming all distributions are reinvested.
PORTFOLIO MARKET VALUE $1,855,575,312
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. 5 YR. 10 YR.
- ----------------------------------------------------
Institutional Class Shares1 1.10% 3.77% 4.16%
Service Class Shares1 . . . 0.92% 3.65% 4.10%
Prime Shares. . . . . . . . 1.00% 3.74% 4.15%
THERE IS NO SALES CHARGE ON THE SHARES OF THE MONEY MARKET FUND. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
1 These returns include performance based on Prime shares, which was achieved
prior to the creation of the Service Class shares (1/4/99) and
Institutional Class shares (12/13/01). These returns have not been restated
for fees applicable to the Service Class shares, which include a 0.15%
12b-1 fee. Had the Service Class shares been in existence for the time
periods presented, the performance would have been lower as a result of the
additional expense. In addition, these returns do not reflect the
Institutional Class Shares' lower estimated expenses.
+ See legend on first page of this report.
AN INVESTMENT IN THE MONEY MARKET FUND IS NEITHER INSURED NOT GUARANTEED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE
VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY
INVESTING IN THE FUND.
DATE PRIME SHARES IMONEYNET-FIRST TIER RETAIL CPI
- -----------------------------------------------------------------------
4/30/1993. 10,000 10,000 10,000
10/31/1993 10,128 10,132 10,275
10/31/1994 10,467 10,474 10,543
10/31/1995 11,040 11,040 10,839
10/31/1996 11,597 11,592 11,164
10/31/1997 12,185 12,178 11,396
10/31/1998 12,813 12,802 11,566
10/31/1999 13,404 13,386 11,862
10/31/2000 14,174 14,148 12,271
10/31/2001 14,772 14,765 12,532
10/31/2002 14,953 14,976 12,786
4/30/2003. 15,015 15,038 13,079
2003 SEMIANNUAL REPORT 57
Comparative performance of $10,000 invested in Prime Shares of the Gartmore
Money Market Fund, IMoneyNet-First Tier Retail (a), and the Consumer Price Index
(CPI)(b) over a 10-year period ended 04/30/03. Unlike the Fund, the returns for
these indices do not reflect any fees or expenses.
(a) The IMoneyNet-First Tier Retail is an average of non-governmental retail
money market mutual funds that do not invest in any second tier securities.
Portfolio holdings of first tier money market mutual funds include U.S
treasury, U.S. other, repurchase agreements, time deposits, domestic bank
obligations, foreign bank obligations, first tier commercial paper,
floating rate notes, and asset-backed commercial paper.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE MONEY MARKET FUND
COMMERCIAL PAPER (72.1%)
SHARES OR
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------
ASSET BACKED AUTO
RECEIVABLE (2.4%)
FCAR OWNER TRUST I (1.1%)
1.33%, 05/12/03, Series I . . . . $ 20,000,000 $ 19,991,872
------------
NEW CENTER ASSET TRUST (1.3%)
1.28%, 05/09/03 . . . . . . . . . 23,000,000 22,993,458
------------
42,985,330
------------
- ------------------------------------------------------------------
ASSET BACKED SECURITIES (17.1%)
CC USA, INC. (1.7%)
1.25%, 06/09/03 (b) . . . . . . . 3,500,000 3,495,260
1.20%, 06/12/03 (b) . . . . . . . 12,650,000 12,632,290
1.27%, 06/16/03 (b) . . . . . . . 15,000,000 14,975,659
------------
31,103,209
------------
GIRO FUNDING CORP. (3.1%)
1.26%, 05/13/03 (b) . . . . . . . 31,088,000 31,074,943
1.20%, 06/16/03 (b) . . . . . . . 25,000,000 24,961,667
------------
56,036,610
------------
GREYHAWK FUNDING LLC (2.5%)
1.26%, 05/12/03 (b) . . . . . . . 30,000,000 29,988,450
1.27%, 05/20/03 (b) . . . . . . . 15,152,000 15,141,844
------------
45,130,294
------------
K2 (USA) LLC (1.3%)
1.21%, 05/19/03 (b) . . . . . . . 12,500,000 12,492,437
1.24%, 07/07/03 (b) . . . . . . . 11,500,000 11,473,461
------------
23,965,898
------------
PREMIER ASSET COLLATERALIZED
ENTITY LLC (2.0%)
1.28%, 05/01/03 (b) . . . . . . . 14,400,000 14,400,000
1.26%, 07/07/03 (b) . . . . . . . 6,800,000 6,784,054
1.25%, 08/25/03 (b) . . . . . . . 15,000,000 14,939,583
------------
36,123,637
------------
SIGMA FINANCE, INC. (2.8%)
1.27%, 06/04/03 (b) . . . . . . . 10,000,000 9,988,006
1.23%, 07/08/03 (b) . . . . . . . 40,000,000 39,905,933
------------
49,893,939
------------
STANFIELD VICTORIA FUNDING (3.5%)
1.35%, 05/01/03 (b) . . . . . . . 10,000,000 10,000,000
1.28%, 05/15/03 (b) . . . . . . . 1,085,000 1,084,455
1.25%, 05/22/03 (b) . . . . . . . 6,000,000 5,995,625
1.25%, 06/10/03 (b) . . . . . . . 4,537,000 4,530,699
1.25%, 06/16/03 (b) . . . . . . . 1,250,000 1,248,003
1.25%, 07/11/03 (b) . . . . . . . 19,000,000 18,953,160
1.26%, 07/28/03 (b) . . . . . . . 24,000,000 23,926,079
------------
65,738,021
------------
ASSET BACKED SECURITIES
(contInued)
THREE PILLARS FUNDING (0.2%)
1.27%, 05/06/03 (b) . . . . . . . $ 1,106,000 $ 1,105,805
1.26%, 05/14/03 (b) . . . . . . . 2,002,000 2,001,089
3,106,894
------------
311,098,502
------------
- ------------------------------------------------------------------
ASSET BACKED TRADE &
TERM RECEIVABLES (9.8%)
DELAWARE FUNDING CORP. (0.6%)
1.25%, 05/13/03 (b) . . . . . . . 10,000,000 9,995,833
------------
FALCON ASSET SECURITIZATION
CORP. (2.6%)
1.25%, 05/07/03 (b) . . . . . . . 1,250,000 1,249,740
1.25%, 05/14/03 (b) . . . . . . . 17,187,000 17,179,242
1.26%, 06/02/03 (b) . . . . . . . 28,171,000 28,139,448
------------
46,568,430
------------
GOLDEN FUNDING CORP. (3.3%)
1.28%, 05/07/03 (b) . . . . . . . 40,168,000 40,159,432
1.22%, 05/12/03 (b) . . . . . . . 12,692,000 12,687,061
1.29%, 06/12/03 (b) . . . . . . . 4,477,000 4,470,262
1.26%, 06/13/03 (b) . . . . . . . 5,000,000 4,992,475
------------
62,309,230
------------
KITTY HAWK FUNDING CORP. (0.5%)
1.26%, 05/19/03 (b) . . . . . . . 5,593,000 5,589,477
1.26%, 05/22/03 (b) . . . . . . . 2,809,000 2,806,935
------------
8,396,412
------------
OLD LINE FUNDING CORP. (B) (1.4%)
1.23%, 05/08/03 (b) . . . . . . . 4,370,000 4,368,938
1.26%, 05/19/03 (b) . . . . . . . 1,646,000 1,644,963
1.24%, 05/27/03 (b) . . . . . . . 18,932,000 18,915,045
1.27%, 06/13/03 (b) . . . . . . . 1,050,000 1,048,407
------------
25,977,353
------------
VARIABLE FUNDING CAPITAL
CORP. (1.4%)
1.25%, 07/11/03 (b) . . . . . . . 25,000,000 24,938,368
------------
178,185,626
------------
- ------------------------------------------------------------------
BANKS - DOMESTIC (4.4%)
CITICORP (2.2%)
1.24%, 06/23/03 . . . . . . . . . 22,234,000 22,193,412
1.24%, 07/25/03 . . . . . . . . . 18,653,000 18,598,388
------------
40,791,800
------------
NATIONAL CITY CREDIT CORP. (1.7%)
1.25%, 05/12/03 . . . . . . . . . 15,000,000 14,994,293
1.24%, 06/10/03 . . . . . . . . . 15,000,000 14,979,417
------------
29,973,710
------------
WELLS FARGO & CO. (0.5%)
1.23%, 05/09/03 . . . . . . . . . 8,230,000 8,227,750
------------
78,993,260
------------
58 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
COMMERCIAL PAPER (CONTINUED)
SHARES OR
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------
BANKS - FOREIGN (12.2%)
HBOS TREASURY SERVICES (3.7%)
1.27%, 05/02/03 . . . . . . . . . $ 16,000,000 $ 15,999,435
1.20%, 05/06/03 . . . . . . . . . 5,000,000 4,999,167
1.22%, 05/07/03 . . . . . . . . . 4,470,000 4,469,091
1.25%, 05/21/03 . . . . . . . . . 5,000,000 4,996,528
1.20%, 05/27/03 . . . . . . . . . 2,723,000 2,720,640
1.31%, 06/27/03 . . . . . . . . . 15,000,000 14,968,888
1.30%, 07/14/03 . . . . . . . . . 20,000,000 19,946,760
------------
68,100,509
------------
NATEXIS BANQUES POPULAIRES U.S.
FINANCE CO., LLC.
(0.1%)
1.27%, 08/25/03 . . . . . . . . . 1,000,000 995,908
------------
NORTHERN ROCK PLC (2.7%)
1.20%, 05/14/03 . . . . . . . . . 30,000,000 29,987,000
1.38%, 06/02/03 . . . . . . . . . 20,000,000 19,975,467
------------
49,962,467
------------
RABOBANK NEDERLAND NV (0.6%)
1.33%, 05/01/03 . . . . . . . . . 10,000,000 10,000,000
------------
SOCIETE GENERAL NORTH
AMERICANA (3.3%)
1.26%, 05/06/03 . . . . . . . . . 41,866,000 41,858,673
1.23%, 07/01/03 . . . . . . . . . 15,000,000 14,968,865
1.21%, 07/10/03 . . . . . . . . . 5,000,000 4,988,236
------------
61,815,774
------------
UBS FINANCE LLC (0.1%)
1.25%, 05/21/03 . . . . . . . . . 1,374,000 1,373,046
------------
WESTDEUTSCHE LANDESBANK
GIRO (0.3%)
1.34%, 01/27/04 (b) . . . . . . . 5,000,000 4,949,564
------------
WESTPAC CAPITAL CORP. (1.4%)
1.38%, 05/22/03 . . . . . . . . . 20,000,000 19,983,900
1.22%, 07/09/03 . . . . . . . . . 5,000,000 4,988,308
24,972,208
------------
222,169,476
------------
- ------------------------------------------------------------------
BROKER / DEALERS (4.1%)
BEAR STEARNS COS., INC. (1.9%)
1.28%, 05/05/03 (b) . . . . . . . 10,000,000 9,998,578
1.27%, 05/14/03 (b) . . . . . . . 5,000,000 4,997,707
1.23%, 06/05/03 (b) . . . . . . . 15,000,000 14,982,062
1.25%, 07/25/03 (b) . . . . . . . 5,000,000 4,985,243
------------
34,963,590
------------
GOLDMAN SACHS GROUP, INC.
(2.2%)
1.22%, 05/23/03 . . . . . . . . . 30,000,000 29,977,633
1.26%, 08/01/03 . . . . . . . . . 8,984,000 8,955,072
38,932,705
------------
73,896,295
------------
BUILDING SOCIETY (7.4%)
NATIONWIDE BUILDING SOCIETY
(3.9%)
1.29%, 05/07/03 . . . . . . . . . $ 18,000,000 $ 17,996,117
1.23%, 05/30/03 . . . . . . . . . 13,000,000 12,987,119
1.29%, 06/06/03 . . . . . . . . . 20,000,000 19,974,301
1.20%, 10/03/03 . . . . . . . . . 20,000,000 19,897,333
------------
70,854,870
------------
YORKSHIRE BUILDING SOCIETY (3.5%)
1.20%, 06/13/03 . . . . . . . . . 17,000,000 16,975,203
1.23%, 07/11/03 . . . . . . . . . 32,749,000 32,669,879
1.24%, 07/14/03 . . . . . . . . . 8,110,000 8,089,329
1.25%, 07/15/03 . . . . . . . . . 5,000,000 4,987,031
62,721,442
------------
133,576,312
------------
- ------------------------------------------------------------------
DIVERSIFIED FINANCE (2.7%)
GENERAL ELECTRIC CAPITAL CORP
(1.5%)
1.36%, 05/05/03 . . . . . . . . . 5,000,000 4,999,244
1.34%, 05/19/03 . . . . . . . . . 15,000,000 14,990,226
1.26%, 06/25/03 . . . . . . . . . 5,000,000 4,990,375
1.28%, 10/02/03 . . . . . . . . . 1,736,000 1,726,494
------------
26,706,339
------------
GENERAL ELECTRIC FINANCIAL
ASSURANCE CORP.
(1.2%)
1.29%, 05/01/03 (b) . . . . . . . 6,000,000 6,000,000
1.24%, 05/13/03 (b) . . . . . . . 15,856,000 15,849,446
21,849,446
------------
48,555,785
------------
- ------------------------------------------------------------------
FINANCE (5.2%)
ALLIANZ FINANCE CORP. (4.4%)
1.27%, 06/04/03 (b) . . . . . . . 56,228,000 56,160,823
1.28%, 06/09/03 (b) . . . . . . . 23,000,000 22,968,107
------------
79,128,930
------------
ING US FUNDING (0.8%)
1.38%, 06/04/03 . . . . . . . . . 15,000,000 14,980,450
------------
94,109,380
------------
- ------------------------------------------------------------------
FINANCE - CONSUMER
SALES (2.8%)
AMERICAN EXPRESS CREDIT
CORP. (0.3%)
1.24%, 07/24/03 . . . . . . . . . 5,000,000 4,985,533
------------
AMERICAN GENERAL FINANCE
CORP. (2.0%)
1.24%, 05/02/03 . . . . . . . . . 21,217,000 21,216,269
1.21%, 06/26/03 . . . . . . . . . 15,917,000 15,887,041
------------
37,103,310
------------
HARLEY-DAVIDSON FUNDING
CORP. (0.5%)
1.25%, 06/16/03 (b) . . . . . . . 8,439,000 8,425,521
------------
50,514,364
------------
2003 SEMIANNUAL REPORT 59
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
April 30, 2003 (Unaudited)
GARTMORE MONEY MARKET FUND (Continued)
COMMERCIAL PAPER (CONTINUED)
SHARES OR
PRINCIPAL AMOUNT VALUE
- ------------------------------------------------------------------
FOOD & BEVERAGE (0.6%)
KRAFT FOODS, INC. (0.6%)
1.13%, 05/27/03 . . . . . . . . . $ 10,011,000 $ 10,002,830
------------
- ------------------------------------------------------------------
INSURANCE (1.3%)
ING AMERICA INSURANCE
HOLDINGS (0.4%)
1.22%, 06/09/03 . . . . . . . . . 7,468,000 7,458,130
------------
MARSH & MCLENNAN CO. (0.9%)
1.23%, 06/05/03 (b) . . . . . . . 15,341,000 15,322,655
------------
22,780,785
------------
- ------------------------------------------------------------------
OIL & GAS (0.6%)
CHEVRON U.K. INVESTMENT
PLC (0.6%)
1.24%, 06/03/03 (b) . . . . . . . 10,000,000 9,988,633
------------
- ------------------------------------------------------------------
PRINTING & PUBLISHING (0.7%)
E.W. SCRIPPS CO. (0.7%)
1.25%, 07/23/03 (b) . . . . . . . 12,755,000 12,718,241
------------
- ------------------------------------------------------------------
TOBACCO (0.8%)
PHILIP MORRIS CO., INC. (0.8%)
1.30%, 05/09/03 . . . . . . . . . 15,000,000 14,995,667
------------
TOTAL COMMERCIAL PAPER 1,304,570,486
-------------
FLOATING RATE NOTES (14.2%)
ASSET BACKED (7.0%)
CC USA INC (1.1%)
1.30%, 05/20/03 (b) . . . . . . . 20,000,000 20,000,000
-------------
K2 (USA) LLC (2.0%)
1.29%, 05/27/03 (b) . . . . . . . 5,000,000 5,000,000
1.28%, 05/01/03 (b) . . . . . . . 30,000,000 30,000,000
-------------
35,000,000
-------------
NORTHLAKE CDO CLASS I-
MM (1.1%)
1.46%, 06/06/03 (b) . . . . . . . 20,000,000 20,000,000
-------------
PREMIER ASSET COLLATERALIZED
ENTITY LLC (1.7%)
1.29%, 05/15/03 (b) . . . . . . . 30,000,000 30,000,000
-------------
SIGMA FINANCE, INC. (0.8%)
1.28%, 05/27/03 (b) . . . . . . . 14,000,000 13,999,899
-------------
STANFIELD VICTORIA FUNDING (0.3%)
1.30%, 05/17/03 (b) . . . . . . . 6,000,000 6,000,000
-------------
124,999,899
-------------
FLOATING RATE NOTES (CONTINUED)
BANKS - DOMESTIC (0.7%)
WELLS FARGO & CO. (0.7%)
1.29%, 05/02/03 . . . . . . . . . 13,000,000 13,000,000
-------------
- ------------------------------------------------------------------
BANKS - FOREIGN (1.8%)
HBOS TREASURY SERVICES (1.0%)
1.33%, 05/20/03 . . . . . . . . . 18,000,000 18,000,000
-------------
NORTHERN ROCK PLC (0.8%)
1.30%, 07/16/03 . . . . . . . . . 5,000,000 5,000,000
1.33%, 05/16/03 . . . . . . . . . 10,000,000 10,000,000
15,000,000
-------------
33,000,000
-------------
- ------------------------------------------------------------------
BROKER / DEALERS (2.3%)
GOLDMAN SACHS GROUP,
INC. (1.2%)
1.46%, 05/01/03 . . . . . . . . . 21,000,000 21,000,000
-------------
MORGAN STANLEY DEAN WITTER
& CO. (1.1%)
1.37%, 05/01/03 . . . . . . . . . 20,000,000 20,000,000
-------------
41,000,000
-------------
- ------------------------------------------------------------------
FINANCE - AUTO (1.0%)
AMERICAN HONDA FINANCE
CORP. (1.0%)
1.30%, 05/20/03 . . . . . . . . . 5,000,000 5,000,000
1.30%, 05/20/03 . . . . . . . . . 13,000,000 13,000,000
-------------
18,000,000
-------------
- ------------------------------------------------------------------
FINANCIAL SERVICES -
DIVERSIFIED (1.4%)
GENERAL ELECTRIC CAPITAL
CORP. (1.4%)
1.34%, 05/09/03 . . . . . . . . . 19,000,000 19,000,000
1.35%, 05/17/03 . . . . . . . . . 7,000,000 7,000,000
-------------
26,000,000
-------------
TOTAL FLOATING RATE NOTES 255,999,899
-------------
U.S. GOVERNMENT SPONSORED & AGENCY OBLIGATIONS (7.9%)
FEDERAL HOME LOAN
BANK (3.6%)
1.47%, 03/05/04, Callable . 10,000,000 10,000,000
1.25%, 04/08/04, Callable . 5,000,000 5,000,000
1.38%, 05/11/04, Callable . 10,000,000 10,000,000
1.40%, 05/12/04, Callable . 15,000,000 15,000,000
1.40%, 05/28/04, Callable . 24,500,000 24,500,000
-------------
64,500,000
-------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION (0.3%)
1.29%, 01/29/04 . . . . . . 5,000,000 4,951,088
-------------
60 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
U.S. GOVERNMENT SPONSORED & AGENCY OBLIGATIONS (CONTINUED)
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (4.0%)
2.42%, 05/02/03. . . . . . . . . . $ 10,000,000 $ 9,999,328
2.10%, 05/30/03. . . . . . . . . . 6,000,000 5,989,971
1.42%, 02/20/04, Callable. . . . . 13,000,000 13,000,000
1.26%, 04/08/04, Callable. . . . . 20,000,000 19,999,999
1.45%, 04/19/04. . . . . . . . . . 20,000,000 20,000,000
1.40%, 04/28/04, Callable. . . . . 5,000,000 5,000,000
------------
73,989,298
------------
TOTAL U.S. GOVERNMENT SPONSORED & AGENCY
OBLIGATIONS. . . . . . . . . . . . 143,440,386
------------
YANKEE CERTIFICATES OF DEPOSIT (3.0%)
BANKS - FOREIGN (3.0%)
BARCLAYS US FUNDING
CORP. (2.7%)
2.10%, 07/14/03. . . . . . . . . . 50,000,000 50,000,000
------------
WESTDEUTSCHE LANDESBANK
GIRO (0.3%)
2.56%, 05/16/03 (b). . . . . . . . 5,000,000 5,000,000
------------
TOTAL YANKEE CERTIFICATES
OF DEPOSIT 55,000,000
------------
BANK NOTES (1.9%)
BANKS - DOMESTIC (1.6%)
BANK ONE CAPITA
MARKETS (1.6%)
1.25%, 08/14/03. . . . . . . . . . 30,000,000 30,000,000
------------
- ----------------------------------------------------------------
FINANCE - AUTO (0.3%)
CAPITAL ONE PRIME
AUTO (0.3%)
1.26%, 03/15/04. . . . . . . . . . 5,000,000 5,000,000
------------
TOTAL BANK NOTES 35,000,000
------------
TAXABLE MUNICIPAL BONDS (1.6%)
ELECTRIC UTILITY (1.4%)
SOUTH CAROLINA PUBLIC
SERVICE AUTHORITY (1.4%)
1.29%, 05/05/03. . . . . . . . . . 10,000,000 9,998,567
1.23%, 06/13/03. . . . . . . . . . 16,390,000 16,365,920
------------
26,364,487
------------
- ----------------------------------------------------------------
GOVERNMENTAL
FINANCING (0.2%)
SUNSHINE STATE GOVERNMENTAL
FINANCING COMMISSION (0.2%)
1.31%, 06/13/03. . . . . . . . . . 1,296,000 1,293,972
1.30%, 07/25/03. . . . . . . . . . 2,218,000 2,211,192
------------
3,505,164
------------
TOTAL TAXABLE MUNICIPAL BONDS 29,869,651
------------
CERTIFICATES OF DEPOSIT (1.1%)
BANKS - FOREIGN (1.1%)
WESTDEUTSCHE LANDESBANK
GIRO (1.1%)
1.31%, 07/13/03 (b) (c). . . . . . $ 20,000,000 $ 20,000,000
------------
TOTAL CERTIFICATES OF DEPOSIT. . . 20,000,000
------------
CORPORATE BONDS (0.6%)
FINANCIAL SERVICES (0.6%)
WELLS FARGO & CO. (0.6%)
7.20%, 05/01/03. . . . . . . . . . 10,000,000 10,000,000
------------
TOTAL CORPORATE BONDS 10,000,000
------------
MONEY MARKET (0.1%)
MANAGEMENT INVESTMENT,
OPEN-END - MUTUAL FUNDS (0.1%)
AIM Liquid Assets Portfolio -
Institutional Class 1,694,890. 1,694,890
------------
TOTAL MONEY MARKET . . . . . . . . 1,694,890
-------------
TOTAL INVESTMENTS
(COST $1,855,575,312) (A) - 102.5% 1,855,575,312
LIABILITIES IN EXCESS OF OTHER
ASSETS - (2.5)%. . . . . . . . . . (44,671,294)
-------------
NET ASSETS - 100.0%. . . . . . . . $1,810,904,018
==============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
(b) Rule 144A, Section 4(2) or other security, which is restricted as to
resale. These securities were deemed liquid pursuant to procedures approved
by the Board of Trustees.
(c) Variable rate security. The rate reflected in the Statement of Investments
is the rate in effect on April 30, 2003. The maturity date represents the
next reset date for the security.
SEE NOTES TO FINANCIAL STATEMENTS.
2003 SEMIANNUAL REPORT 61
- --------------------------------------------------------------------------------
GARTMORE MORLEY ENHANCED INCOME FUND
Class A Shares symbol: NMEA
Institutional Class symbol: NMEIX
Institutional Service Class symbol: NMESX
HOW DID THE FUND PERFORM?
For the six-month period ended April 30, 2003, the Fund returned 1.53%* versus
1.43% for its benchmark, the Lipper Ultra Short Bond Index.
For broader comparison, the average return for this Fund's peer category
(Corporate Debt Funds, BBB Rated) was 7.98%, according to Lipper, an independent
company that provides mutual fund data and analysis.
WHAT MACROECONOMIC FACTORS INFLUENCED PERFORMANCE?
The interest rates at the short end of the yield curve (the two-year to
three-year sector) dropped approximately 25 basis points, adding a significant
element of capital gains to the Fund's total return. Our holdings in relatively
higher-yielding assets, such as U.S. Agency mortgage-backed securities and
asset-backed securities with an average maturity of three to five years, also
helped performance. These assets contributed both an income advantage and price
appreciation from narrowing spreads.
The Fund's holdings remain focused on the highest-quality tier of credits, which
helped it avoid the credit problems that affected the market in this current
weak economic environment. Our hedging strategy, which employs futures contracts
to reduce the volatility of the Fund's net asset value, continues to reduce
potential total return performance. The hedging strategy permits the purchase of
longer-maturity assets by reducing their net interest rate exposure such that
the Fund maintains its duration below two years.
WHAT PORTFOLIO ATTRIBUTES AFFECTED PERFORMANCE?
The Fund's holdings were composed predominantly of U.S. agency mortgage-backed
securities, AAA-rated asset-backed securities, and AAA-rated commercial
mortgage-backed securities, all of which contributed positively to performance.
Mortgage-backed securities are subject to prepayment risks that can produce
short-term swings in their market value. Nevertheless, we anticipate that the
relative yield advantage of these types of securities will enhance medium-term
and long-term performance.
The Fund (all share classes combined) grew significantly during the past six
months, a period during which interest rate levels available for new purchases
were near historical lows. This detracted from performance.
HOW IS THE FUND POSITIONED?
We believe we have positioned the Fund to outperform its benchmark, based on the
Fund's relative yield advantage and the high credit quality of its holdings. We
have increased the Fund's exposure to certain sectors, such as commercial
mortgage-backed securities and asset-backed securities, which enhanced the
Fund's yield and maintained its relative cash flow stability. We believe this
positions the Fund to perform well even in volatile interest-rate environments.
Given that the Federal Reserve will likely continue its neutral-to-accommodative
monetary policy, we expect the Fund's potential performance advantage to remain
constant or increase.
PORTFOLIO MANAGER: Perpetua M. Phillips and Parker D. Bridgeport
* Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $104,419,071
APRIL 30, 2003
AVERAGE ANNUAL TOTAL RETURN
(For Periods Ended April 30, 2003)
1 YR. INCEPTION1
- -----------------------------------------------------------
Class A. . . . . . . . . . . w/o SC2 2.00% 3.07%
w/SC3 -1.79% 1.90%
Institutional Class4 . . . . 2.32% 3.49%
Institutional Service Class4 2.06% 3.25%
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
1 Fund commenced operations on December 29, 1999.
2 These returns do not reflect the effects of sales charges (SC).
3 A 3.75% front-end sales charge was deducted.
4 Not subject to any sales charges.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
DATE CLASS A LIPPER ULTRA SHORT FUND INDEX CPI
- -------------------------------------------------------------------
12/29/1999 9,625 10,000 10,000
10/31/2000 9,996 10,540 10,339
10/31/2001 10,322 11,260 10,559
10/31/2002 10,487 11,498 10,772
4/30/2003. 10,647 11,663 11,020
Comparative performance of $10,000 invested in Class A shares of the Gartmore
Morley Enhanced Income Fund, Lipper Ultra Short Fund Index (a), and the Consumer
Price Index (CPI) (b) since inception. Unlike the Fund, the returns for these
indices do not reflect any fees, expenses, or sales charges.
(a) The Lipper Ultra Short Fund Index consists of Funds with at least 65% of
their assets in investment grade debt instruments and maintains a portfolio
with average maturity between 91 days and 365 days.
(b)The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
62 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
April 30, 2003 (Unaudited)
GARTMORE MORLEY ENHANCED INCOME FUND
U.S. GOVERNMENT AGENCIES - MORTGAGES (38.3%)
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION (6.7%)
6.50%, 06/01/14, Pool #E00678. . . . . . . . $ 874,802 $ 924,194
6.00%, 07/01/16, Pool #E00991. . . . . . . . 1,314,518 1,373,653
5.00%, 08/01/17, Pool #E90983. . . . . . . . 2,216,575 2,292,151
4.50%, 09/01/17, Pool #E91523. . . . . . . . 1,901,259 1,932,377
5.00%, 09/01/17, Pool #E91316. . . . . . . . 911,703 942,788
------------
7,465,163
------------
- ---------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (31.6%)
6.50%, 02/01/09, Pool #190255. . . . . . . . 681,175 726,240
5.00%, 04/01/09, Pool #254325. . . . . . . . 711,699 735,607
5.50%, 04/01/09, Pool #254256. . . . . . . . 609,126 631,322
5.00%, 05/01/09, Pool #254349. . . . . . . . 1,450,744 1,499,478
5.00%, 08/01/09, Pool #254437. . . . . . . . 1,604,932 1,658,845
6.00%, 06/01/16, Pool #253845. . . . . . . . 1,352,418 1,417,780
6.00%, 12/01/16, Pool #254089. . . . . . . . 2,160,838 2,265,271
6.00%, 01/01/17, Pool #545415. . . . . . . . 1,822,309 1,910,381
5.50%, 02/01/17, Pool #625178. . . . . . . . 3,024,395 3,148,223
5.50%, 02/01/17, Pool #254195. . . . . . . . 3,145,815 3,274,615
5.00%, 03/01/17, Pool #619092. . . . . . . . 2,154,351 2,229,323
5.00%, 03/01/17, Pool #634766. . . . . . . . 2,600,571 2,688,237
5.00%, 09/01/17, Pool #545901. . . . . . . . 5,518,372 5,704,400
4.50%, 02/01/18, Pool #683124. . . . . . . . 1,967,108 1,997,141
4.50%, 04/01/18, Pool #695871. . . . . . . . 5,000,000 5,076,340
------------
34,963,203
------------
TOTAL U.S. GOVERNMENT AGENCIES -
MORTGAGES 42,428,366
------------
COMMERCIAL MORTGAGE BACKED
SECURITIES (23.7%)
Bear Stearns Commercial Mortgage
Securities, Inc.,
Series 2001-TOP4, Class A1,
5.06%, 11/15/16 . . . . . . . . . . . . . . 1,910,100 2,027,540
Bear Stearns Commercial Mortgage
Securities,
Series 2001-TOP2, Class A1,
6.08%, 02/15/35. . . . . . . . . . . . . . . 933,814 1,019,363
Chase Commercial Mortgage
Securities,
Series 1998-2, Class A2,
6.39%, 11/18/30. . . . . . . . . . . . . . . 2,000,000 2,261,664
Chase Commercial Mortgage
Securities Corp.,
Series 1998-2, Class A1,
6.03%, 11/18/30. . . . . . . . . . . . . . . 733,487 792,035
Federal National Mortgage Association,
3.50%, 03/25/33, Series 2003-14,
Class AN . . . . . . . . . . . . . . . . . . 3,454,196 3,447,541
First Union - Lehman Brothers -
Bank of America,
Serie1998-C2, Class A2,
6.56%, 11/18/35 . . . . . . . . . . . . . . 2,000,000 2,271,333
J.P. Morgan Chase Commercial
Mortgage Securities
Corp., Series 2001-CIB3, Class A2,
6.04%, 11/15/35 . . . . . . . . . . . . . . 1,000,000 1,111,640
LB-UBS Commercial Mortgage Trust,
Series 2002-C7,
Class A1, 3.17%, 12/15/26. . . . . . . . . . 1,900,406 1,936,385
Morgan Stanley Dean Witter Capital I,
Series 2001-TOP1,
Class A3, 6.46%, 02/15/33. . . . . . . . . . 2,450,000 2,757,267
Morgan Stanley Dean Witter,
Series 2001-TOP3,
Class A1, 5.31%, 07/15/33. . . . . . . . . . 1,506,821 1,595,638
Morgan Stanley Dean Witter,
Series 2001-TOP5,
Class A1, 5.02%, 10/15/35. . . . . . . . . . 2,579,416 2,729,006
Morgan Stanley Dean Witter,
Series 2002-HQ,
Class A1, 4.59%, 04/15/34. . . . . . . . . . 789,737 817,200
Morgan Stanley Dean Witter,
Series 2002-IQ2,
Class A1, 4.09%, 12/15/35. . . . . . . . . . 884,355 919,934
Prudential Commercial Mortgage
Trust of America,
Series 2003-PWR1, 3.67%, 02/11/36. . . . . . 2,492,093 2,491,129
------------
TOTAL COMMERCIAL MORTGAGE
BACKED SECURITIES 26,177,675
------------
ASSET BACKED MORTGAGES (21.4%)
Chase Funding Mortgage Loan,
Series 2002-1,
5.04%, 12/25/23. . . . . . . . . . . . . . . 1,000,000 1,049,010
Chase Funding Mortgage Loan,
Series 2002-4,
Class 1A2, 2.81%, 10/25/17 . . . . . . . . . 1,000,000 1,007,936
Chase Funding Mortgage Loan,
Series 2003-1,
Class 1A2, 2.55%, 12/25/17 . . . . . . . . . 2,000,000 2,011,236
Countrywide Securities, Series
2002-SC1,
Class A2, 3.33%, 06/25/17. . . . . . . . . . 2,000,000 2,020,290
Equity One, Inc., Series 2003-2,
Class AF-2,
2.41%, 09/25/33. . . . . . . . . . . . . . . 3,000,000 3,008,906
Fannie Mae Grantor Trust,
Series 2003-T3,
Class 2A2, 2.31%, 12/25/23 . . . . . . . . . 4,000,000 4,006,874
FHLMC Structured Pass Through
Securities,
Series T-47, Class A3,
2.47%, 08/27/07. . . . . . . . . . . . . . . 2,000,000 2,008,150
FHLMC Structured Pass Through
Securities,
Series T-50, Class A7,
3.55%, 10/27/31. . . . . . . . . . . . . . . 2,000,000 1,944,309
Residential Asset Mortgage
Products, Inc.,
Series 2002-RS6, Class AI3,
3.82%, 01/25/28 . . . . . . . . . . . . . . 2,500,000 2,564,393
Residential Asset Securities Corp.,
Series 2002-KS8,
Class A3, 3.69%, 03/25/27. . . . . . . . . . 2,000,000 2,045,437
Residential Funding Mortgage
Securities,
Series 2002-HS3, Class 1A2, 3.03%, 08/25/17. 2,000,000 2,013,182
------------
TOTAL ASSET BACKED MORTGAGES 23,679,723
------------
U.S. GOVERNMENT AGENCIES (8.4%)
FEDERAL HOME LOAN MORTGAGE
CORPORATION (1.9%)
5.13%, 02/13/07. . . . . . . . . . . . . . . 2,000,000 2,061,464
------------
- ---------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (6.5%)
2.88%, 10/15/05. . . . . . . . . . . . . . . 5,000,000 5,121,535
6.40%, 05/14/09. . . . . . . . . . . . . . . 2,000,000 2,091,110
------------
7,212,645
------------
TOTAL U.S. GOVERNMENT AGENCIES 9,274,109
------------
2003 SEMIANNUAL REPORT 63
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Continued)
April 30, 2003 (Unaudited)
GARTMORE MORLEY ENHANCED INCOME FUND (Continued)
CORPORATE BONDS (1.9%)
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------
FINANCIAL SERVICES (1.3%)
Associates Corporation NA,
5.50%, 02/15/04. . . . . . . . . . . $ 750,000 $ 774,419
Norwest Financial, Inc.,
7.20%, 04/01/04. . . . . . . . . . . 700,000 736,669
------------
1,511,088
------------
- --------------------------------------------------------------
SECURITY BROKERS & DEALERS (0.6%)
Morgan Stanley Dean Witter,
7.13%, 08/15/03. . . . . . . . . . . 600,000 609,545
------------
TOTAL CORPORATE BONDS 2,120,633
------------
COLLATERIZED MORTGAGE
OBLIGATIONS (0.7%)
Washington Mutual, Series 2001-AR4,
Class A4, 4.65%, 12/25/31. . . . . . 733,096 738,565
------------
TOTAL COLLATERIZED MORTGAGE
OBLIGATIONS 738,565
------------
TOTAL INVESTMENTS
(COST $102,563,971) (A) - 94.4% 104,419,071
OTHER ASSETS IN EXCESS
OF LIABILITIES - 5.6% 6,204,901
------------
NET ASSETS - 100.0% $110,623,972
============
(a) See notes to financial statements for unrealized appreciation
(depreciation) of securities.
FHLMC Federal Home Loan Mortage Corporation
At April 30, 2003, the Fund's open short futures contracts were as follows:
MARKET
VALUE
COVERED UNREALIZED
NUMBER OF SHORT BY APPRECIATION
CONTRACTS CONTRACTS* EXPIRATION CONTRACTS (DEPRECIATION)
- -------------------------------------------------------------------
240 U.S. Treasury
5 Year Note . 6/21/03 $27,300,000 $ (188,750)
50 U.S. Treasury
2 Year Note . 6/26/03 10,795,313 (53,437)
---------------
$ (242,187)
===============
* Cash pledged as collateral.
SEE NOTES TO FINANCIAL STATEMENTS.
64 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 2003 (Unaudited)
GARTMORE GARTMORE
GARTMORE GOVERNMENT TAX-FREE
BOND FUND BOND FUND INCOME FUND
- ----------------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $141,671,273;
236,666,743 and $188,052,731;
respectively) . . . . . . . . . . . . . . . $153,231,249 $245,416,653 $201,872,882
Cash. . . . . . . . . . . . . . . . . . . . 1,252 381,526 1,883,604
Interest and dividends receivable . . . . . 2,036,226 2,232,904 3,433,506
Receivable for investments sold . . . . . . - - 461,747
Prepaid expenses and other assets . . . . . 21,747 27,783 19,749
------------------------------------------
Total Assets. . . . . . . . . . . . . . . . 155,290,474 248,058,866 207,671,488
------------------------------------------
LIABILITIES:
Distributions payable . . . . . . . . . . . 629,819 791,134 751,839
Accrued expenses and other payables
Investment advisory fees. . . . . . . . . . 63,156 101,860 84,694
Fund administration and transfer
agent fees. . . . . . . . . . . . . . . . . 35,271 43,388 41,985
Distribution fees . . . . . . . . . . . . . 4,607 17,496 6,530
Administrative servicing fees . . . . . . . 7,942 21,451 257
Other . . . . . . . . . . . . . . . . . . . 18,356 18,842 37,070
------------------------------------------
Total Liabilities . . . . . . . . . . . . . 759,151 994,171 922,375
------------------------------------------
NET ASSETS. . . . . . . . . . . . . . . . . $154,531,323 $247,064,695 $206,749,113
==========================================
REPRESENTED BY:
Capital . . . . . . . . . . . . . . . . . . $152,969,867 $233,681,914 $193,543,592
Accumulated net investment
income (loss). . . . . . . . . . . . . . . (2,181) 18,332 (156,388)
Accumulated net realized gains
(losses) on investment transactions . . . . (9,996,339) 4,614,539 (458,242)
Net unrealized appreciation
(depreciation) on investments . . . . . . . 11,559,976 8,749,910 13,820,151
------------------------------------------
NET ASSETS. . . . . . . . . . . . . . . . . $154,531,323 $247,064,695 $206,749,113
==========================================
NET ASSETS:
Class A Shares. . . . . . . . . . . . . . . $ 9,201,405 $ 58,141,297 $ 6,919,504
Class B Shares. . . . . . . . . . . . . . . 3,730,882 6,212,753 6,861,737
Class C Shares. . . . . . . . . . . . . . . 238,903 1,808,798 553,823
Class D Shares. . . . . . . . . . . . . . . 141,360,133 180,901,847 192,414,049
------------------------------------------
Total . . . . . . . . . . . . . . . . . . . $154,531,323 $247,064,695 $206,749,113
==========================================
SHARES OUTSTANDING (unlimited number
of shares authorized):
Class A Shares. . . . . . . . . . . . . . . 948,056 5,364,557 654,312
Class B Shares. . . . . . . . . . . . . . . 384,291 573,673 648,897
Class C Shares. . . . . . . . . . . . . . . 24,581 167,030 52,458
Class D Shares. . . . . . . . . . . . . . . 14,542,810 16,683,204 18,192,926
------------------------------------------
Total . . . . . . . . . . . . . . . . . . . 15,899,738 22,788,464 19,548,593
==========================================
NET ASSET VALUE:
Class A Shares. . . . . . . . . . . . . . . $ 9.71 $ 10.84 $ 10.58
Class B Shares (a). . . . . . . . . . . . . $ 9.71 $ 10.83 $ 10.57
Class C Shares (b). . . . . . . . . . . . . $ 9.72 $ 10.83 $ 10.56
Class D Shares. . . . . . . . . . . . . . . $ 9.72 $ 10.84 $ 10.58
MAXIMUM OFFERING PRICE PER SHARE
(100%/(100%-maximum sales charge)
of net asset value adjusted
to the nearest cent):
Class A Shares. . . . . . . . . . . . . . . $ 10.19 $ 11.38 $ 11.11
Class C Shares. . . . . . . . . . . . . . . $ 9.82 $ 10.94 $ 10.67
Class D Shares. . . . . . . . . . . . . . . $ 10.18 $ 11.35 $ 11.08
Maximum Sales Charge - Class A Shares . . . 4.75% 4.75% 4.75%
==========================================
Maximum Sales Charge - Class C Shares . . . 1.00% 1.00% 1.00%
==========================================
Maximum Sales Charge - Class D Shares . . . 4.50% 4.50% 4.50%
==========================================
- ---------------------------------------------------------------------------------------
(a) For Class B shares, the redemption price per share varies by length of time
shares are held.
(b) For Class C shares, the redemption price per share is reduced by 1.00% for
shares held less than one year.
See notes to financial statements.
2003 SEMIANNUAL REPORT 65
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 2003 (Unaudited)
GARTMORE GARTMORE
MONEY MORLEY
MARKET ENHANCED
FUND INCOME FUND
- --------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value (cost $1,855,575,312 and $102,563,971;
respectively). . . . . . . . . . . . . . . . . . . . . . . . . . . $1,855,575,312 $104,419,071
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,551 6,226,642
Interest and dividends receivable. . . . . . . . . . . . . . . . . 1,831,269 454,364
Receivable from adviser. . . . . . . . . . . . . . . . . . . . . . 832 10,541
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . 89,956 18,883
-----------------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,857,498,920 111,129,501
-----------------------------
LIABILITIES:
Distributions payable. . . . . . . . . . . . . . . . . . . . . . . 1,115,266 318,083
Payable for investments purchased. . . . . . . . . . . . . . . . . 44,397,333 -
Payable for variation margin on futures contracts. . . . . . . . . - 135,156
Accrued expenses and other payables
Investment advisory fees . . . . . . . . . . . . . . . . . . . . . 590,727 29,892
Fund administration and transfer agent fees. . . . . . . . . . . . 334,448 13,422
Distribution fees. . . . . . . . . . . . . . . . . . . . . . . . . 925 523
Administrative servicing fees. . . . . . . . . . . . . . . . . . . 26,302 2,099
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129,901 6,354
-----------------------------
Total Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 46,594,902 505,529
-----------------------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,810,904,018 $110,623,972
=============================
REPRESENTED BY:
Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,810,913,263 $112,284,085
Accumulated net investment income (loss) . . . . . . . . . . . . . - (3,958)
Accumulated net realized gains (losses) on investment
and futures transactions . . . . . . . . . . . . . . . . . . . . . (9,245) (3,269,068)
Unrealized appreciation (depreciation) on investments and futures. - 1,612,913
-----------------------------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,810,904,018 $110,623,972
=============================
NET ASSETS:
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 2,576,442
Institutional Class Shares . . . . . . . . . . . . . . . . . . . . 1,265,662,043 98,554,208
Institutional Service Class Shares . . . . . . . . . . . . . . . . - 9,493,322
Service Class Shares . . . . . . . . . . . . . . . . . . . . . . . 9,773,070 -
Prime Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 535,468,905 -
-----------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,810,904,018 $110,623,972
=============================
SHARES OUTSTANDING (unlimited number of shares authorized):
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . - 273,442
Institutional Class Shares . . . . . . . . . . . . . . . . . . . . 1,265,719,505 10,458,083
Institutional Service Class Shares . . . . . . . . . . . . . . . . - 1,006,945
Service Class Shares . . . . . . . . . . . . . . . . . . . . . . . 9,772,026 -
Prime Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 535,690,162 -
-----------------------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,811,181,693 11,738,470
=============================
NET ASSET VALUE:
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 9.42
Institutional Class Shares . . . . . . . . . . . . . . . . . . . . $ 1.00 $ 9.42
Institutional Service Class Shares . . . . . . . . . . . . . . . . $ - $ 9.43
Service Class Shares . . . . . . . . . . . . . . . . . . . . . . . $ 1.00 $ -
Prime Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.00 $ -
MAXIMUM OFFERING PRICE PER SHARE (100%/(100%-maximum
sales charge) of net asset value adjusted to the nearest cent):
Class A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 9.79
-----------------------------
Maximum Sales Charge - Class A Shares. . . . . . . . . . . . . . . - 3.75%
=============================
- ---------------------------------------------------------------------------------------
See notes to financial statements.
66 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 2003 (Unaudited)
GARTMORE GARTMORE
GARTMORE GOVERNMENT TAX-FREE
BOND FUND BOND FUND INCOME FUND
- --------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income. . . . . . . . . . . . . . . $4,411,054 $ 5,858,382 $ 5,461,016
--------------------------------------
Total Income . . . . . . . . . . . . . . . . 4,411,054 5,858,382 5,461,016
--------------------------------------
EXPENSES:
Investment advisory fees . . . . . . . . . . 372,653 603,305 516,554
Fund administration and transfer agent fees. 131,658 197,174 177,050
Distribution fees Class A. . . . . . . . . . 10,552 70,119 8,801
Distribution fees Class B. . . . . . . . . . 15,256 25,851 27,661
Distribution fees Class C. . . . . . . . . . 1,051 5,227 2,077
Administrative servicing fees Class A. . . . 3,017 37,744 654
Administrative servicing fees Class D. . . . 43,985 89,404 -
Other. . . . . . . . . . . . . . . . . . . . 47,791 59,666 48,834
--------------------------------------
Total Expenses . . . . . . . . . . . . . . . 625,963 1,088,490 781,631
--------------------------------------
NET INVESTMENT INCOME. . . . . . . . . . . . 3,785,091 4,769,892 4,679,385
--------------------------------------
REALIZED/UNREALIZED GAINS
(LOSSES) FROM INVESTMENTS:
Net realized gains (losses) on
investment transactions . . . . . . . . . . 595,910 4,614,539 (97,976)
Net change in unrealized appreciation/
depreciation on investments. . . . . . . . . 3,741,768 (2,798,272) 1,369,537
--------------------------------------
Net realized/unrealized gains (losses)
on investments. . . . . . . . . . . . . . . 4,337,678 1,816,267 1,271,561
--------------------------------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . $8,122,769 $ 6,586,159 $ 5,950,946
======================================
- --------------------------------------------------------------------------------
See notes to financial statements.
2003 SEMIANNUAL REPORT 67
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 2003 (Unaudited)
GARTMORE
GARTMORE MORLEY
MONEY ENHANCED
MARKET FUND INCOME FUND
- ----------------------------------------------------------------------------------------
Interest income. . . . . . . . . . . . . . . . . . . . . . $ 13,185,880 $ 1,862,450
Dividend income. . . . . . . . . . . . . . . . . . . . . . 331,970 -
---------------------------
Total Income . . . . . . . . . . . . . . . . . . . . . . . 13,517,850 1,862,450
---------------------------
EXPENSES:
Investment advisory fees . . . . . . . . . . . . . . . . . 3,556,531 154,516
Fund administration and transfer agent fees. . . . . . . . 1,440,315 69,343
Distribution fees Class A. . . . . . . . . . . . . . . . . - 2,147
Distribution fees Service Class. . . . . . . . . . . . . . 80,023 -
Administrative servicing fees Class A. . . . . . . . . . . - 670
Administrative servicing fees Institutional Service Class. - 11,937
Administrative servicing fees Service Class. . . . . . . . 106,698 -
Adminitsrative servicing fees Prime Shares . . . . . . . . 238,184 -
Registration and filing fees . . . . . . . . . . . . . . . 17,446 15,380
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 287,155 11,566
---------------------------
Total expenses before reimbursed expenses. . . . . . . . . 5,726,352 265,559
Expenses reimbursed. . . . . . . . . . . . . . . . . . . . (79,668) (52,140)
---------------------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . 5,646,684 213,419
---------------------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . 7,871,166 1,649,031
---------------------------
REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) on investment transactions . . 758 57,845
Net realized gains (losses) on futures transactions. . . . - (797,581)
---------------------------
Net realized gains (losses) on investment and
futures transactions . . . . . . . . . . . . . . . . . . . 758 (739,736)
Net change in unrealized appreciation/depreciation
on investments and futures. . . . . . . . . . . . . . . . - 588,460
---------------------------
Net realized/unrealized gains (losses) on
investments and futures . . . . . . . . . . . . . . . . . 758 (151,276)
---------------------------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . $ 7,871,924 $ 1,497,755
===========================
- --------------------------------------------------------------------------------
See notes to financial statements.
68 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
GARTMORE BOND FUND GARTMORE GOVERNMENT GARTMORE TAX-FREE
BOND FUND INCOME FUND
-------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR
APRIL 30, ENDED APRIL 30, ENDED APRIL 30, ENDED
2003 OCTOBER 31, 2003 OCTOBER 31, 2003 OCTOBER 31,
(UNAUDITED) 2002 (UNAUDITED) 2002 (UNAUDITED) 2002
- --------------------------------------------------------------------------------------------------------------------------------
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income. . . . . . . $ 3,785,091 $ 7,666,317 $ 4,769,892 $ 8,669,914 $ 4,679,385 $ 9,888,340
Net realized gains (losses)
on investment transactions . . . . 595,910 (1,539,939) 4,614,539 4,187,857 (97,976) 532,201
Net change in unrealized
appreciation/
depreciation on investments. . . . 3,741,768 (766,974) (2,798,272) 105,146 1,369,537 (377,237)
---------------------------------------------------------------------------------------------
Change in net assets resulting
from operations. . . . . . . . . . 8,122,769 5,359,404 6,586,159 12,962,917 5,950,946 10,043,304
---------------------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS FROM:
Net investment income. . . . . . . (205,531) (316,216) (1,050,331) (2,388,866) (151,306) (305,916)
Net realized gains on
investments . . . . . . . . . . . - - (965,450) (1,104,523) - -
DISTRIBUTIONS TO CLASS B
SHAREHOLDERS FROM:
Net investment income. . . . . . . (77,901) (157,976) (99,799) (185,186) (120,942) (237,059)
Net realized gains on
investments . . . . . . . . . . . - - (106,430) (77,302) - -
DISTRIBUTIONS TO CLASS C
SHAREHOLDERS FROM:
Net investment income. . . . . . . (5,358) (9,858) (19,900) (24,927) (9,083) (6,207)
Net realized gains on
investments . . . . . . . . . . . - - (18,390) (8,685) - -
DISTRIBUTIONS TO CLASS D
SHAREHOLDERS FROM:
Net investment income. . . . . . . (3,501,529) (7,180,777) (3,580,260) (6,106,620) (4,398,054) (9,339,235)
Net realized gains on investments. - - (3,061,885) (2,345,282) - -
---------------------------------------------------------------------------------------------
Change in net assets from
shareholder distributions. . . . . (3,790,319) (7,664,827) (8,902,445) (12,241,391) (4,679,385) (9,888,417)
---------------------------------------------------------------------------------------------
Change in net assets from capital
transactions . . . . . . . . . . . 2,779,953 9,818,473 12,226,506 50,506,500 (4,375,143) (4,788,079)
---------------------------------------------------------------------------------------------
Change in net assets . . . . . . . 7,112,403 7,513,050 9,910,220 51,228,026 (3,103,582) (4,633,192)
NET ASSETS:
Beginning of period. . . . . . . . 147,418,920 139,905,870 237,154,475 185,926,449 209,852,695 214,485,887
---------------------------------------------------------------------------------------------
End of period. . . . . . . . . . . $ 154,531,323 $147,418,920 $247,064,695 $237,154,475 $206,749,113 $209,852,695
=============================================================================================
See notes to financial statements.
2003 SEMIANNUAL REPORT 69
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
GARTMORE MONEY GARTMORE MORLEY
MARKET FUND ENHANCED INCOME FUND
-------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
APRIL 30, 2003 ENDED APRIL 30, 2003 ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
-------------------------------------------------------------------------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income . . . . . . . . . . $ 7,871,166 $ 21,385,857 $ 1,649,031 $ 1,726,614
Net realized gains (losses) on investment
and futures transactions. . . . . . . . . 758 (7,994) (739,736) (1,820,453)
Net change in unrealized appreciation/
depreciation on investments and futures . - - 588,460 805,214
-------------------------------------------------------------------------
Change in net assets resulting
from operations. . . . . . . . . . . . . 7,871,924 21,377,863 1,497,755 711,375
-------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS A
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . - - (29,896) (45,549)
DISTRIBUTIONS TO INSTITUTIONAL
CLASS SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . (4,605,678) (14,468) (a) (1,459,491) (1,206,773)
DISTRIBUTIONS TO INSTITUTIONAL
SERVICE CLASS SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . - - (170,614) (474,059)
DISTRIBUTIONS TO SERVICE
CLASS SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . (506,965) (6,027,295) - -
DISTRIBUTIONS TO PRIME
SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . (2,847,480) (15,341,186) - -
-------------------------------------------------------------------------
Change in net assets from
shareholder distributions. . . . . . . . (7,960,123) (21,382,949) (1,660,001) (1,726,381)
-------------------------------------------------------------------------
Change in net assets from
capital transactions. . . . . . . . . . . (2,520,219) (13,130,790) 41,299,516 48,135,468
-------------------------------------------------------------------------
Change in net assets. . . . . . . . . . . (2,608,418) (13,135,876) 41,137,270 47,120,462
NET ASSETS:
Beginning of period . . . . . . . . . . . 1,813,512,436 1,826,648,312 69,486,702 22,366,240
-------------------------------------------------------------------------
End of period . . . . . . . . . . . . . . $ 1,810,904,018 $ 1,813,512,436 $ 110,623,972 $ 69,486,702
=========================================================================
(a) For the period from December 13, 2001 (commencement of operations) through
October 31, 2002.
See notes to financial statements.
70 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE BOND FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-----------------------------------------------------------------------------------------------------------
NET
REALIZED
AND
UNREALIZED NET
NET GAINS TOTAL ASSET VALUE,
ASSET VALUE, NET (LOSSES) FROM NET END TOTAL
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT TOTAL OF RETURN
OF PERIOD INCOME INVESTMENTS ACTIVITIES INCOME DISTRIBUTIONS PERIOD (A)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended
October 31, 1998 (c). $ 9.52 0.26 0.23 0.49 (0.26) (0.26) $ 9.75 5.18% (e)
Year Ended
October 31, 1999. . . $ 9.75 0.53 (0.68) (0.15) (0.53) (0.53) $ 9.07 (1.58%)
Year Ended
October 31, 2000. . . $ 9.07 0.57 (0.32) 0.25 (0.57) (0.57) $ 8.75 2.87%
Year Ended
October 31, 2001. . . $ 8.75 0.52 0.84 1.36 (0.53) (0.53) $ 9.58 16.01%
Year Ended
October 31, 2002. . . $ 9.58 0.50 (0.15) 0.35 (0.50) (0.50) $ 9.43 3.84%
Six Months Ended
April 30, 2003
(Unaudited) . . . . . $ 9.43 0.23 0.28 0.51 (0.23) (0.23) $ 9.71 5.47% (e)
CLASS B SHARES
Period Ended
October 31, 1998 (c) $ 9.52 0.23 0.23 0.46 (0.23) (0.23) $ 9.75 4.85% (e)
Year Ended
October 31, 1999. . . $ 9.75 0.47 (0.67) (0.20) (0.47) (0.47) $ 9.08 (2.07%)
Year Ended
October 31, 2000. . . $ 9.08 0.52 (0.33) 0.19 (0.52) (0.52) $ 8.75 2.15%
Year Ended
October 31, 2001. . . $ 8.75 0.47 0.84 1.31 (0.48) (0.48) $ 9.58 15.33%
Year Ended
October 31, 2002. . . $ 9.58 0.45 (0.15) 0.30 (0.45) (0.45) $ 9.43 3.26%
Six Months Ended
April 30, 2003
(Unaudited) . . . . . $ 9.43 0.21 0.28 0.49 (0.21) (0.21) $ 9.71 5.20% (e)
CLASS C SHARES
Period Ended
October 31, 2001 (d). $ 9.19 0.25 0.40 0.65 (0.25) (0.25) $ 9.59 7.25% (e)
Year Ended
October 31, 2002. . . $ 9.59 0.45 (0.15) 0.30 (0.45) (0.45) $ 9.44 3.26%
Six Months Ended
April 30, 2003
(Unaudited). . . . . $ 9.44 0.21 0.28 0.49 (0.21) (0.21) $ 9.72 5.19% (e)
CLASS D SHARES
Year Ended
October 31, 1998 (c) $ 9.49 0.57 0.27 0.84 (0.57) (0.57) $ 9.76 9.11%
Year Ended
October 31, 1999 . . $ 9.76 0.55 (0.67) (0.12) (0.55) (0.55) $ 9.09 (1.24%)
Year Ended
October 31, 2000. . . $ 9.09 0.59 (0.33) 0.26 (0.59) (0.59) $ 8.76 2.97%
Year Ended
October 31, 2001. . . $ 8.76 0.54 0.84 1.38 (0.55) (0.55) $ 9.59 16.23%
Year Ended
October 31, 2002. . . $ 9.59 0.52 (0.15) 0.37 (0.52) (0.52) $ 9.44 4.07%
Six Months Ended
April 30, 2003
(Unaudited) . . . . . $ 9.44 0.24 0.28 0.52 (0.24) (0.24) $ 9.72 5.60% (e)
RATIOS / SUPPLEMENTAL DATA
----------------------------------------------
RATIO
RATIO OF NET
NET OF INVESTMENT
ASSETS EXPENSES INCOME
AT END TO TO
OF AVERAGE AVERAGE PORTFOLIO
PERIOD NET NET TURNOVER
(000S) ASSETS ASSETS (B)
- --------------------------------------------------------------------
CLASS A SHARES
Period Ended
October 31, 1998 (c). $ 1,365 1.17% (f) 5.48% (f) 70.31%
Year Ended
October 31, 1999. . . $ 3,186 1.08% 5.67% 64.26%
Year Ended
October 31, 2000. . . $ 3,458 1.05% 6.42% 72.80%
Year Ended
October 31, 2001. . . $ 4,775 1.14% 5.71% 42.47%
Year Ended
October 31, 2002. . . $ 7,551 1.06% 5.34% 27.66%
Six Months Ended
April 30, 2003
(Unaudited) . . . . . $ 9,201 1.06% (f) 4.86% (f) 8.01%
CLASS B SHARES
Period Ended
October 31, 1998 (c) $ 490 1.81% (f) 4.93% (f) 70.31%
Year Ended
October 31, 1999. . . $ 1,662 1.68% 5.07% 64.26%
Year Ended
October 31, 2000. . . $ 1,707 1.64% 5.83% 72.80%
Year Ended
October 31, 2001. . . $ 2,935 1.72% 5.10% 42.47%
Year Ended
October 31, 2002. . . $ 3,548 1.62% 4.79% 27.66%
Six Months Ended
April 30, 2003
(Unaudited) . . . . . $ 3,731 1.59% (f) 4.33% (f) 8.01%
CLASS C SHARES
Period Ended
October 31, 2001 (d). $ 162 1.74% (f) 4.77% (f) 42.47%
Year Ended
October 31, 2002. . . $ 272 1.62% 4.78% 27.66%
Six Months Ended
April 30, 2003
(Unaudited). . . . . $ 239 1.59% (f) 4.33% (f) 8.01%
CLASS D SHARES
Year Ended
October 31, 1998 (c) $ 134,822 0.78% 5.93% 70.31%
Year Ended
October 31, 1999 . . $ 125,451 0.83% 5.86% 64.26%
Year Ended
October 31, 2000. . . $ 108,413 0.83% 6.62% 72.80%
Year Ended
October 31, 2001. . . $ 132,034 0.92% 5.94% 42.47%
Year Ended
October 31, 2002. . . $ 136,049 0.83% 5.58% 27.66%
Six Months Ended
April 30, 2003
(Unaudited) . . . . . $ 141,360 0.80% (f) 5.11% (f) 8.01%
- --------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(c) Shares first offered to the public on May 11, 1998. Upon a Trust
Reorganization on May 11, 1998, the existing shares of the Fund were
renamed Class D.
(d) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(e) Not annualized.
(f) Annualized
See notes to financial statements.
2003 SEMIANNUAL REPORT 71
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE GOVERNMENT BOND FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
------------------------------------------------------------------------------------------------------------
NET
REALIZED AND
NET UNREALIZED NET
ASSET VALUE, GAINS TOTAL ASSET VALUE,
BEGINNING NET (LOSSES) FROM NET NET END
OF INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL OF
PERIOD INCOME INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS PERIOD
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended
October 31,
1998 (d). . . . $ 10.24 0.26 0.32 0.58 (0.26) - (0.26) $ 10.56
Year Ended
October 31,
1999. . . . . . $ 10.56 0.51 (0.62) (0.11) (0.51) (0.05) (0.56) $ 9.89
Year Ended
October 31,
2000. . . . . . $ 9.89 0.57 0.13 0.70 (0.57) (0.02) (0.59) $ 10.00
Year Ended
October 31,
2001. . . . . . $ 10.00 0.53 0.95 1.48 (0.53) - (0.53) $ 10.95
Year Ended
October 31,
2002. . . . . . $ 10.95 0.45 0.20 0.65 (0.45) (0.20) (0.65) $ 10.95
Six Months
Ended
April 30, 2003
(Unaudited) . . $ 10.95 0.20 0.08 0.28 (0.20) (0.19) (0.39) $ 10.84
CLASS B SHARES
Period Ended
October 31,
1998 (d). . . . $ 10.24 0.23 0.31 0.54 (0.23) - (0.23) $ 10.55
Year Ended
October 31,
1999. . . . . . $ 10.55 0.45 (0.61) (0.16) (0.45) (0.05) (0.50) $ 9.89
Year Ended
October 31,
2000. . . . . . $ 9.89 0.51 0.13 0.64 (0.51) (0.02) (0.53) $ 10.00
Year Ended
October 31,
2001. . . . . . $ 10.00 0.47 0.94 1.41 (0.47) - (0.47) $ 10.94
Year Ended
October 31,
2002. . . . . . $ 10.94 0.40 0.19 0.59 (0.40) (0.20) (0.60) $ 10.93
Six Months
Ended
April 30, 2003
(Unaudited) . . $ 10.93 0.18 0.09 0.27 (0.18) (0.19) (0.37) $ 10.83
CLASS C SHARES
Period Ended
October 31,
2001 (e). . . . $ 10.47 0.24 0.47 0.71 (0.24) - (0.24) $ 10.94
Year Ended
October 31, .
2002. . . . . . $ 10.94 0.40 0.19 0.59 (0.40) (0.20) (0.60) $ 10.93
Six Months
Ended
April 30, 2003
(Unaudited) . . $ 10.93 0.18 0.09 0.27 (0.18) (0.19) (0.37) $ 10.83
CLASS D SHARES
Year Ended
October 31,
1998 (d). . . . $ 10.31 0.56 0.34 0.90 (0.56) (0.08) (0.64) $ 10.57
Year Ended
October 31,
1999. . . . . . $ 10.57 0.53 (0.63) (0.10) (0.53) (0.05) (0.58) $ 9.89
Year Ended
October 31,
2000. . . . . . $ 9.89 0.59 0.14 0.73 (0.59) (0.02) (0.61) $ 10.01
Year Ended
October 31,
2001. . . . . . $ 10.01 0.55 0.95 1.50 (0.55) - (0.55) $ 10.96
Year Ended
October 31,
2002. . . . . . $ 10.96 0.48 0.19 0.67 (0.48) (0.20) (0.68) $ 10.95
Six Months
Ended
April 30, 2003
(Unaudited) . . $ 10.95 0.22 0.08 0.30 (0.22) (0.19) (0.41) $ 10.84
RATIOS / SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------
RATIO
OF
RATIO NET
OF INVESTMENT
EXPENSES INCOME
RATIO (PRIOR (PRIOR
OF TO TO
NET NET REIMBURSE- REIMBURSE-
ASSETS RATIO INVESTMENT MENTS) MENTS)
AT OF INCOME TO TO
END EXPENSES TO AVERAGE AVERAGE
TOTAL OF TO AVERAGE AVERAGE NET NET PORTFOLIO
RETURN PERIOD NET NET ASSETS ASSETS TURNOVER
(A) (000S) ASSETS ASSETS (B) (B) (C)
- -----------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended
October 31,
1998 (d). . . . 5.69% (g) $ 332 1.04% (h) 5.10% (h) 1.17% (h) 4.97% (h) 59.52%
Year Ended
October 31,
1999. . . . . . (1.05%) $ 49,601 0.99% 5.13% 1.15% 4.97% 51.86%
Year Ended
October 31,
2000. . . . . . 7.40% $ 54,796 0.99% 5.84% 1.05% 5.78% 107.86%
Year Ended
October 31,
2001. . . . . . 15.21% $ 57,336 0.99% 5.12% 1.20% 4.91% 159.68%
Year Ended
October 31,
2002. . . . . . 6.42% $ 55,510 1.07% 4.28% 1.11% 4.24% 99.42%
Six Months
Ended
April 30, 2003
(Unaudited) . . 2.60% (g) $ 58,141 1.10% (h) 3.76% (h) (f) (f) 52.43%
CLASS B SHARES
Period Ended
October 31,
1998 (d). . . . 5.29% (g) $ 297 1.64% (h) 4.59% (h) 1.86% (h) 4.37% (h) 59.52%
Year Ended
October 31,
1999. . . . . . (1.57%) $ 1,148 1.64% 4.44% 1.65% 4.43% 51.86%
Year Ended
October 31,
2000. . . . . . 6.72% $ 1,129 1.63% 5.19% 1.63% 5.19% 107.86%
Year Ended
October 31,
2001. . . . . . 14.41% $ 4,024 1.64% 4.27% 1.68% 4.23% 159.68%
Year Ended
October 31,
2002. . . . . . 5.80% $ 6,067 1.58% 3.74% 1.58% 3.74% 99.42%
Six Months
Ended
April 30, 2003
(Unaudited) . . 2.46% (g) $ 6,213 1.56% (h) 3.30% (h) (f) (f) 52.43%
CLASS C SHARES
Period Ended
October 31,
2001 (e). . . . 6.89% (g) $ 449 1.64% (h) 4.20% (h) 1.73% (h) 4.11% (h) 159.68%
Year Ended
October 31,
2002. . . . . . 5.80% $ 941 1.58% 3.72% 1.58% 3.72% 99.42%
Six Months
Ended
April 30, 2003
(Unaudited) . . 2.46% (g) $ 1,809 1.56% (h) 3.26% (h) (f) (f) 52.43%
CLASS D SHARES
Year Ended
October 31,
1998 (d). . . . 9.03% $ 50,849 0.92% 5.43% 1.03% 5.32% 59.52%
Year Ended
October 31,
1999. . . . . . (0.93%) $ 52,260 0.79% 5.24% 0.81% 5.22% 51.86%
Year Ended
October 31,
2000. . . . . . 7.73% $ 55,812 0.78% 6.03% 0.78% 6.03% 107.86%
Year Ended
October 31,
2001. . . . . . 15.43% $ 124,117 0.79% 5.24% 0.90% 5.13% 159.68%
Year Ended
October 31,
2002. . . . . . 6.61% $ 174,637 0.81% 4.52% 0.81% 4.52% 99.42%
Six Months
Ended
April 30, 2003
(Unaudited) . . 2.75% (g) $ 180,902 0.81% (h) 4.04% (h) (f) (f) 52.43%
- ------------------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) Shares first offered to the public on May 11, 1998. Upon a Trust
reorganization on May 11, 1998, the existing shares of the Fund were
renamed Class D.
(e) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(f) There were no fee reductions in this period.
(g) Not annualized.
(h) Annualized.
See notes to financial statements.
72 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE TAX-FREE INCOME FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
------------------------------------------------------------------------------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED ASSET
VALUE, GAINS TOTAL VALUE,
BEGINNING NET (LOSSES) FROM NET NET END TOTAL
OF INVESTMENT ON INVESTMENT INVESTMENT REALIZED TOTAL OF RETURN
PERIOD INCOME INVESTMENTS ACTIVITIES INCOME GAINS DISTRIBUTIONS PERIOD (A)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
Period Ended
October 31,
1998 (d). . . . . $ 10.48 0.23 0.17 0.40 (0.23) - (0.23) $ 10.65 3.86% (g)
Year Ended
October 31,
1999. . . . . . . $ 10.65 0.49 (0.82) (0.33) (0.49) (0.04) (0.53) $ 9.79 (3.26%)
Year Ended
October 31,
2000. . . . . . . $ 9.79 0.50 0.25 0.75 (0.50) - (0.50) $ 10.04 7.90%
Year Ended
October 31, 2001. $ 10.04 0.46 0.49 0.95 (0.48) - (0.48) $ 10.51 9.70%
Year Ended
October 31,
2002. . . . . . . $ 10.51 0.47 - 0.47 (0.47) - (0.47) $ 10.51 4.57%
Six Months
Ended April 30,
2003
(Unaudited) . . . $ 10.51 0.22 0.07 0.29 (0.22) - (0.22) $ 10.58 2.83% (g)
CLASS B SHARES
Period Ended
October 31,
1998 (d). . . . . $ 10.48 0.20 0.18 0.38 (0.20) - (0.20) $ 10.66 3.66% (g)
Year Ended
October 31,
1999. . . . . . . $ 10.66 0.42 (0.83) (0.41) (0.43) (0.04) (0.47) $ 9.78 (4.02%)
Year Ended
October 31,
2000. . . . . . . $ 9.78 0.44 0.25 0.69 (0.44) - (0.44) $ 10.03 7.27%
Year Ended
October 31,
2001. . . . . . . $ 10.03 0.40 0.49 0.89 (0.42) - (0.42) $ 10.50 9.06%
Year Ended
October 31,
2002. . . . . . . $ 10.50 0.40 0.01 0.41 (0.40) - (0.40) $ 10.51 4.05%
Six Months Ended
April 30, 2003
(Unaudited) . . . $ 10.51 0.19 0.06 0.25 (0.19) - (0.19) $ 10.57 2.44% (g)
CLASS C SHARES
Period Ended
October 31,
2001 (e). . . . . $ 10.32 0.22 0.16 0.38 (0.22) - (0.22) $ 10.48 3.73% (g)
Year Ended
October 31,
2002 . . . . . . $ 10.48 0.41 - 0.41 (0.40) - (0.40) $ 10.49 4.06%
Six Months
Ended April 30,
2003
(Unaudited) . . . $ 10.49 0.18 0.08 0.26 (0.19) - (0.19) $ 10.56 2.54% (g)
CLASS D SHARES
Year Ended
October 31,
1998 (d). . . . . $ 10.51 0.50 0.23 0.73 (0.50) (0.08) (0.58) $ 10.66 7.09%
Year Ended
October 31,
1999. . . . . . . $ 10.66 0.51 (0.84) (0.33) (0.51) (0.04) (0.55) $ 9.78 (3.21%)
Year Ended
October 31,
2000. . . . . . . $ 9.78 0.53 0.25 0.78 (0.53) - (0.53) $ 10.03 8.18%
Year Ended
October 31,
2001. . . . . . . $ 10.03 0.49 0.49 0.98 (0.51) - (0.51) $ 10.50 9.99%
Year Ended
October 31,
2002. . . . . . . $ 10.50 0.49 0.01 0.50 (0.49) - (0.49) $ 10.51 4.94%
Six Months
Ended April 30,
2003
(Unaudited) . . . $ 10.51 0.24 0.07 0.31 (0.24) - (0.24) $ 10.58 2.96% (g)
RATIOS / SUPPLEMENTAL DATA
--------------------------------------------------------------------------
RATIO
OF
RATIO NET
OF INVESTMENT
EXPENSES INCOME
RATIO (PRIOR (PRIOR
OF TO TO
NET RATIO NET REIMBURSE- REIMBURSE-
ASSETS OF INVESTMENT MENTS) MENTS)
AT EXPENSES INCOME TO TO
END TO TO AVERAGE AVERAGE
OF AVERAGE AVERAGE NET NET PORTFOLIO
PERIOD NET NET ASSETS ASSETS TURNOVER
- -----------------------------------------------------------------------------------------
(000S) ASSETS ASSETS (B) (B) (C)
CLASS A SHARES
Period Ended
October 31,
1998 (d). . . . . $ 601 1.06% (h) 4.50% (h) (f) (f) 28.88%
Year Ended
October 31,
1999. . . . . . . $ 2,383 0.96% 4.73% (f) (f) 42.26%
Year Ended
October 31,
2000. . . . . . . $ 3,792 0.94% 5.09% (f) (f) 7.08%
Year Ended
October 31, 2001. $ 5,837 1.00% 4.56% (f) (f) 7.29%
Year Ended
October 31,
2002. . . . . . . $ 7,586 0.99% 4.48% (f) (f) 27.77%
Six Months
Ended April 30,
2003
(Unaudited) . . . $ 6,920 0.99% (h) 4.30% (h) (f) (f) 7.15%
CLASS B SHARES
Period Ended
October 31,
1998 (d). . . . . $ 1,477 1.66% (h) 3.94% (h) (f) (f) 28.88%
Year Ended
October 31,
1999. . . . . . . $ 3,746 1.56% 4.12% (f) (f) 42.26%
Year Ended
October 31,
2000. . . . . . . $ 4,601 1.55% 4.50% (f) (f) 7.08%
Year Ended
October 31,
2001. . . . . . . $ 5,592 1.60% 3.96% (f) (f) 7.29%
Year Ended
October 31,
2002. . . . . . . $ 6,445 1.58% 3.88% (f) (f) 27.77%
Six Months Ended
April 30, 2003
(Unaudited) . . . $ 6,862 1.57% (h) 3.72% (h) (f) (f) 7.15%
CLASS C SHARES
Period Ended
October 31,
2001 (e). . . . . $ 115 1.62% (h) 3.98% (h) (f) (f) 7.29%
Year Ended
October 31,
2002 . . . . . . $ 221 1.59% 3.87% (f) (f) 27.77%
Six Months
Ended April 30,
2003
(Unaudited) . . . $ 554 1.57% (h) 3.72% (h) (f) (f) 7.15%
CLASS D SHARES
Year Ended
October 31,
1998 (d). . . . . $ 263,662 0.85% 4.73% 0.93% 4.65% 28.88%
Year Ended
October 31,
1999. . . . . . . $ 226,270 0.71% 4.93% 0.71% 4.93% 42.26%
Year Ended
October 31,
2000. . . . . . . $ 204,337 0.70% 5.35% 0.70% 5.35% 7.08%
Year Ended
October 31,
2001. . . . . . . $ 202,942 0.75% 4.82% (f) (f) 7.29%
Year Ended
October 31,
2002. . . . . . . $ 195,601 0.73% 4.74% (f) (f) 27.77%
Six Months
Ended April 30,
2003
(Unaudited) . . . $ 192,414 0.72% (h) 4.57% (h) (f) (f) 7.15%
- ------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) Shares first offered to the public on May 11, 1998. Upon a Trust
reorganization on May 11, 1998, the existing shares of the Fund were
renamed Class D.
(e) For the period from March 1, 2001 (commencement of operations) through
October 31, 2001.
(f) There were no fee reductions in this period.
(g) Not annualized.
(h) Annualized.
See notes to financial statements.
2003 SEMIANNUAL REPORT 73
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Outstanding
GARTMORE MONEY MARKET FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-----------------------------------------------------------------------------------------------------------
NET RATIO
NET NET ASSETS OF
ASSET ASSET AT EXPENSES
VALUE, TOTAL VALUE, END TO
BEGINNING NET FROM NET END OF AVERAGE
OF INVESTMENT INVESTMENT INVESTMENT TOTAL OF TOTAL PERIOD NET
PERIOD INCOME ACTIVITIES INCOME DISTRIBUTIONS PERIOD RETURN (000S) ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS SHARES
Period Ended
October 31,
2002 (b) . . . . $ 1.00 0.01 0.01 (0.01) (0.01) $ 1.00 1.12% (f) $ 8,606 0.59% (g)
Six Months
Ended April 30,
2003
(Unaudited). . . $ 1.00 - - - - $ 1.00 0.46% (f) $ 1,265,662 0.58% (g)
SERVICE
CLASS SHARES
Period Ended
October 31,
1999 (c). . . . $ 1.00 0.04 0.04 (0.04) (0.04) $ 1.00 3.69% (f) $ 22,295 0.64% (g)
Year Ended
October 31,
2000. . . . . . $ 1.00 0.06 0.06 (0.06) (0.06) $ 1.00 5.64% $ 256,221 0.75%
Year Ended
October 31,
2001. . . . . . $ 1.00 0.04 0.04 (0.04) (0.04) $ 1.00 4.15% $ 440,874 0.75%
Year Ended
October 31,
2002. . . . . . $ 1.00 0.01 0.01 (0.01) (0.01) $ 1.00 1.11% $ 627,365 0.80%
Six Months
Ended April 30,
2003
(Unaudited) . . $ 1.00 - - - - $ 1.00 0.37% (f) $ 9,773 0.75% (g)
PRIME SHARES
Year Ended
October 31,
1998. . . . . . $ 1.00 0.05 0.05 (0.05) (0.05) $ 1.00 5.15% $ 1,048,689 0.59%
Year Ended
October 31,
1999 (d). . . . $ 1.00 0.05 0.05 (0.05) (0.05) $ 1.00 4.61% $ 1,345,342 0.61%
Year Ended
October 31,
2000. . . . . . $ 1.00 0.06 0.06 (0.06) (0.06) $ 1.00 5.74% $ 1,241,194 0.65%
Year Ended
October 31,
2001. . . . . . $ 1.00 0.04 0.04 (0.04) (0.04) $ 1.00 4.22% $ 1,385,774 0.68%
Year Ended
October 31,
2002. . . . . . $ 1.00 0.01 0.01 (0.01) (0.01) $ 1.00 1.23% $ 1,177,541 0.70%
Six Months
Ended April 30,
2003
(Unaudited). . . $ 1.00 - - - - $ 1.00 0.42% (f) $ 535,469 0.65% (g)
RATIOS / SUPPLEMENTAL DATA
------------------------------------
RATIO
OF
RATIO NET
OF INVESTMENT
EXPENSES INCOME
RATIO (PRIOR (PRIOR
OF TO TO
NET REIMBURSE- REIMBURSE-
INVESTMENT MENTS) MENTS)
INCOME TO TO
TO AVERAGE AVERAGE
AVERAGE NET NET
NET ASSETS ASSETS
ASSETS (A) (A)
- ----------------------------------------------------------
INSTITUTIONAL
CLASS SHARES
Period Ended
October 31,
2002 (b) . . . . 1.25% (g) (e) (e)
Six Months
Ended April 30,
2003
(Unaudited). . . 0.85% (g) (e) (e)
SERVICE
CLASS SHARES
Period Ended
October 31,
1999 (c). . . . 4.74% (g) 0.79% (g) 4.59% (g)
Year Ended
October 31,
2000. . . . . . 5.68% 0.86% 5.57%
Year Ended
October 31,
2001. . . . . . 3.85% 0.91% 3.69%
Year Ended
October 31,
2002. . . . . . 1.09% 0.96% 0.93%
Six Months
Ended April 30,
2003
(Unaudited) . . 0.98% (g) 0.90% (g) 0.83% (g)
PRIME SHARES
Year Ended
October 31,
1998. . . . . . 4.96% 0.64% 4.91%
Year Ended
October 31,
1999 (d). . . . 4.52% 0.61% 4.52%
Year Ended
October 31,
2000. . . . . . 5.58% 0.65% 5.58%
Year Ended
October 31,
2001. . . . . . 4.10% (e) (e)
Year Ended
October 31,
2002. . . . . . 1.22% (e) (e)
Six Months
Ended April 30,
2003
(Unaudited). . . 0.87% (g) (e) (e)
- --------------------------------------------------------
(a) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated.
(b) For the period from December 13, 2001 (commencement of operations) through
October 31, 2002.
(c) For the period from January 4, 1999 (commencement of operations) through
October 31, 1999.
(d) As of January 4, 1999, the existing shares of the Fund were renamed Prime
Shares.
(e) There were no fee reductions in this period.
(f) Not annualized.
(g) Annualized.
See notes to financial statements.
74 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GARTMORE MORLEY ENHANCED INCOME FUND
INVESTMENT ACTIVITIES DISTRIBUTIONS
---------------------------------------------------------------------------------------------------
NET
REALIZED
NET AND NET
ASSET UNREALIZED ASSET
VALUE, GAINS TOTAL VALUE,
BEGINNING NET (LOSSES) FROM NET END TOTAL
OF INVESTMENT ON INVESTMENT INVESTMENT TOTAL OF RETURN
PERIOD INCOME INVESTMENTS ACTIVITIES INCOME DISTRIBUTIONS PERIOD (A)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period EndedOctober 31 2000 (d) $ 10.00 0.48 (0.10) 0.38 (0.48) (0.48) $ 9.90 3.86% (e)
Year Ended
October 31,2001 . . . . . . . . $ 9.90 0.52 (0.20) 0.32 (0.52) (0.52) $ 9.70 3.26%
Year Ended
October 31,
2002. . . . . . . . . . . . . . $ 9.70 0.41 (0.26) 0.15 (0.41) (0.41) $ 9.44 1.60%
Six Months
Ended April 30,
2003
(Unaudited) . . . . . . . . . . $ 9.44 0.16 (0.02) 0.14 (0.16) (0.16) $ 9.42 1.53% (e)
INSTITUTIONAL
CLASS SHARES
Period Ended
October 31,
2000 (d). . . . . . . . . . . . $ 10.00 0.51 (0.11) 0.40 (0.51) (0.51) $ 9.89 4.16% (e)
Year Ended
October 31,
2001. . . . . . . . . . . . . . $ 9.89 0.56 (0.19) 0.37 (0.56) (0.56) $ 9.70 3.83%
Year Ended
October 31,
2002. . . . . . . . . . . . . . $ 9.70 0.45 (0.26) 0.19 (0.45) (0.45) $ 9.44 1.96%
Six Months
Ended April 30,
2003
(Unaudited). . . . . . . . . . $ 9.44 0.18 (0.02) 0.16 (0.18) (0.18) $ 9.42 1.69% (e)
INSTITUTIONAL
SERVICE
CLASS SHARES
Period Ended
October 31,
2000 (d). . . . . . . . . . . . $ 10.00 0.49 (0.10) 0.39 (0.49) (0.49) $ 9.90 4.02% (e)
Year Ended
October 31,
2001. . . . . . . . . . . . . . $ 9.90 0.54 (0.19) 0.35 (0.54) (0.54) $ 9.71 3.57%
Year Ended
October 31,
2002. . . . . . . . . . . . . . $ 9.71 0.42 (0.27) 0.15 (0.42) (0.42) $ 9.44 1.60%
Six Months
Ended April 30,
2003
(Unaudited) . . . . . . . . . . $ 9.44 0.17 (0.01) 0.16 (0.17) (0.17) $ 9.43 1.67% (e)
RATIOS / SUPPLEMENTAL DATA
-----------------------------------------------------------------------------
RATIO
OF
RATIO NET
OF INVESTMENT
EXPENSES INCOME
RATIO (PRIOR (PRIOR
OF TO TO
NET RATIO NET REIMBURSE- REIMBURSE-
ASSETS OF INVESTMENT MENTS) MENTS)
AT EXPENSES INCOME TO TO
END TO TO AVERAGE AVERAGE
OF AVERAGE AVERAGE NET NET PORTFOLIO
PERIOD NET NET ASSETS ASSETS TURNOVER
(000S) ASSETS ASSETS (B) (B) (C)
- --------------------------------------------------------------------------------------------------------
CLASS A
SHARES
Period EndedOctober 31 2000 (d) $ 368 0.90% (f) 5.90% (f) 2.63% (f) 4.17% (f) 4.42%
Year Ended
October 31,2001 . . . . . . . . $ 629 0.90% 5.18% 1.51% 4.57% 46.50%
Year Ended
October 31,
2002. . . . . . . . . . . . . . $ 1,691 0.79% 4.28% 0.95% 4.12% 32.97%
Six Months
Ended April 30,
2003
(Unaudited) . . . . . . . . . . $ 2,576 0.78% (f) 3.45% (f) 0.90% (f) 3.33% (f) 17.73%
INSTITUTIONAL
CLASS SHARES
Period Ended
October 31,
2000 (d). . . . . . . . . . . . $ 497 0.45% (f) 6.44% (f) 2.13% (f) 4.76% (f) 4.42%
Year Ended
October 31,
2001. . . . . . . . . . . . . . $ 10,144 0.45% 5.39% 0.98% 4.86% 46.50%
Year Ended
October 31,
2002. . . . . . . . . . . . . . $ 57,703 0.45% 4.57% 0.64% 4.38% 32.97%
Six Months
Ended April 30,
2003
(Unaudited). . . . . . . . . . $ 98,554 0.45% (f) 3.76% (f) 0.57% (f) 3.65% (f) 17.73%
INSTITUTIONAL
SERVICE
CLASS SHARES
Period Ended
October 31,
2000 (d). . . . . . . . . . . . $ 11,614 0.70% (f) 5.96% (f) 1.73% (f) 4.93% (f) 4.42%
Year Ended
October 31,
2001. . . . . . . . . . . . . . $ 11,593 0.70% 5.45% 1.44% 4.71% 46.50%
Year Ended
October 31,
2002. . . . . . . . . . . . . . $ 10,093 0.70% 4.41% 0.90% 4.21% 32.97%
Six Months
Ended April 30,
2003
(Unaudited) . . . . . . . . . . $ 9,493 0.70% (f) 3.55% (f) 0.82% (f) 3.43% (f) 17.73%
- -------------------------------------------------------------------------------------------------------
(a) Excludes sales charge.
(b) During the period certain fees were waived and/or reimbursed. If such
waivers/reimbursements had not occurred, the ratios would have been as
indicated
(c) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing among the classes of shares.
(d) For the period from December 29, 1999 (commencement of operations) through
October 31, 2000.
(e) Not annualized.
(f) Annualized.
See notes to financial statements.
2003 SEMIANNUAL REPORT 75
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
1. ORGANIZATION
Gartmore Mutual Funds (the "Trust") is an open-end management investment
company. Prior to January 25, 2002 the Trust was named Nationwide Mutual Funds.
The Trust was created under the laws of Ohio as an Ohio business trust pursuant
to a Declaration of Trust dated as of October 30, 1997, as subsequently amended,
and is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Trust operates thirty-seven (37) separate series, or mutual
funds, each with its own investment objectives and strategies. This report
contains the financial statements and financial highlights of the funds listed
below (individually a "Fund", collectively the "Funds"):
- Gartmore Growth Fund ("Growth")
- Gartmore Large Cap Value Fund ("Large Cap Value")
- Gartmore Nationwide Fund ("Nationwide") (formerly Gartmore Total
Return Fund)
- Gartmore Mid Cap Growth Fund ("Mid Cap Growth")
- Gartmore Investor Destinations Aggressive Fund ("Aggressive")
- Gartmore Investor Destinations Moderately Aggressive Fund ("Moderately
Aggressive")
- Gartmore Investor Destinations Moderate Fund ("Moderate")
- Gartmore Investor Destinations Moderately Conservative Fund
("Moderately Conservative")
- Gartmore Investor Destinations Conservative Fund ("Conservative")
- Gartmore Bond Fund ("Bond")
- Gartmore Government Bond Fund ("Government Bond")
- Gartmore Tax-Free Income Fund ("Tax-Free Income") - Gartmore Money
Market Fund ("Money Market")
- Gartmore Morley Enhanced Income Fund ("Morley Enhanced Income")
The Aggressive, Moderately Aggressive, Moderate, Moderately Conservative and
Conservative Funds (the "Investor Destinations Funds") are constructed as "fund
of funds" which means that they pursue their investment objectives primarily by
allocating their investments among other mutual funds (the "Underlying Funds").
The Underlying Funds typically invest, either directly or indirectly, in stocks,
bonds, and other securities. The Investor Destinations Funds, except for the
Aggressive Fund, may also invest in a non-registered fixed interest contract
issued by Nationwide Life Insurance Company up to each Fund's designated limit.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP"). The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
(A) SECURITY VALUATION
Securities for which market quotations are readily available are valued at
current market value as of Valuation Time. Valuation Time is as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m.
Eastern time). Equity securities are valued at the last quoted sale price
or, if there is no sale price, the last quoted bid price provided by an
independent pricing service approved by the Board of Trustees. Prices are
taken from the primary market or exchange in which each security trades.
Debt and other fixed income securities (other than short-term obligations)
are valued at the last quoted bid price and/or by using a combination of
daily quotes and matrix evaluations provided by an independent pricing
service, the use of which has been approved by the Funds' Board of
Trustees. Short-term debt securities such as commercial paper and U.S.
Treasury Bills, having a remaining maturity of 60 days or less at the time
of purchase are considered to be "short-term" and are valued at amortized
cost which approximates market value.
76 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
Securities for which market quotations are not readily available, or for which
an independent pricing service does not provide a value or provides a value that
does not represent fair value in the judgement of the Funds' investment adviser
or designee, are valued at fair value under procedures approved by the Fund's
Board of Trustees.
Investments of the Money Market Fund are valued at amortized cost, which
approximates market value. Under the amor tized cost method, premium or
discount, if any, is amortized or accreted, respectively, on a constant
(straight-line) basis to the maturity of the security.
Shares of the Underlying Funds in which the Investor Destinations Funds invest
are valued at their respective net asset values as reported by the Underlying
Funds. The securities in the Underlying Funds are generally valued as of the
close of business of the regular session of trading on the New York Stock
Exchange. Underlying Funds generally value securities and assets at value. Under
most circumstances, the fixed interest contract is valued at par value each day,
which is deemed to be fair value. The par value is calculated each day by the
summation of the following factors: prior day's par value, prior day's interest
accrued (par multiplied by guaranteed fixed rate), and current day net purchase
or redemption.
(B) REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements with an entity which is a
member of the Federal Reserve System or which is a "primary dealer" (as
designated by the Federal Reserve Bank of New York) in U.S. Government
obligations. The repurchase price generally equals the price paid by a Fund
plus interest negotiated on the basis of current short-term rates, which
may be more or less than the rate on the underlying portfolio securities.
The seller under a repurchase agreement is required to maintain the value
of the collateral held pursuant to the agreement at a market value equal to
or greater than the repurchase price (including accrued interest).
Collateral subject to repurchase agreements is held by the Funds'
custodian, or another qualified sub-custodian or in the Federal
Reserve/Treasury book-entry system.
(C) FUTURES CONTRACTS
Certain Funds may invest in financial futures contracts ("futures contracts")
for the purpose of hedging their existing port folio securities or
securities they intend to purchase against fluctuations in value caused by
changes in prevailing market interest rates or prices. Futures contracts
may also be entered into for non-hedging purposes. Upon entering into a
futures contract, these Funds are required to pledge to the broker an
amount of cash and/or other assets equal to a certain percentage of the
contract amount (initial margin deposit). Subsequent payments, known as
"variation margin'', are made each day, depending on the daily fluctuations
in the fair value/market value of the underlying security. A gain or loss
equal to the daily variation margin is recognized on a daily basis.
A "sale" of a futures contract means a contractual obligation to deliver
the securities or foreign currency called for by the contract at a fixed
price at a specified time in the future. A "purchase'' of a futures
contract means a contractual obligation to acquire the securities or
foreign currency at a fixed price at a specified time in the future.
Should market conditions change unexpectedly, the Funds may not achieve the
anticipated benefits of the futures contracts and may realize a loss. The
use of futures transactions for hedging purposes involves the risk of
imperfect correlation in movements in the price of futures contracts,
interest rates and the value of the underlying hedged assets.
(D) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date the security is
purchased or sold ("trade date''). Securities gains and losses are
calculated on the identified cost basis. Interest income is recognized on
the accrual basis and includes, where applicable, the amortization or
accretion of premium or discount. Dividend income is recorded on the
ex-dividend date. Interest income for the fixed contract is accrued daily
and reinvested the following day.
2003 SEMIANNUAL REPORT 77
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2003 (Unaudited)
(E) FEDERAL INCOME TAXES
It is the policy of each Fund to qualify or continue to qualify as a
regulated investment company by complying with the provisions available to
certain investment companies, as defined in applicable sections of the
Internal Revenue Code, and to make distributions of net investment income
and net realized capital gains sufficient to relieve it from all, or
substantially all, federal income taxes.
As of April 30, 2003, the tax cost of securities and the breakdown of
unrealized appreciation (depreciation) for each Fund was as follows:
TAX NET UNREALIZED
COST OF UNREALIZED UNREALIZED APPRECIATION
FUND SECURITIES APPRECIATION DEPRECIATION (DEPRECIATION)
- ----------------------------------------------------------------------------------------
Growth. . . . . . . . . $ 259,701,604 $ 25,880,094 $ (9,108,252) $ 16,771,842
Large Cap Value . . . . 24,887,915 1,674,346 (2,070,691) (396,345)
Nationwide. . . . . . . 1,643,996,848 167,624,958 (210,736,182) (43,111,224)
Mid Cap Growth. . . . . 989,808 165,617 (28,220) 137,397
Aggressive. . . . . . . 75,725,250 2,889,262 (1,275,780) 1,613,482
Moderately Aggressive . 144,295,107 2,865,892 (9,261,759) (6,395,867)
Moderate. . . . . . . . 182,267,340 3,805,628 (7,928,620) (4,122,992)
Moderately Conservative 57,616,231 1,167,196 (1,324,431) (157,235)
Conservative. . . . . . 44,197,755 624,916 (159,948) 464,968
Bond. . . . . . . . . . 141,671,273 12,738,162 (1,178,186) 11,559,976
Government Bond . . . . 236,666,743 8,782,231 (32,321) 8,749,910
Tax-Free Income . . . . 188,052,731 15,327,080 (1,506,929) 13,820,151
Morley Enhanced Income. 102,563,971 1,939,708 (326,795) 1,612,913
(F) DISTRIBUTIONS TO SHAREHOLDERS
Net investment income, if any, is declared and paid quarterly for the
Growth, Large Cap Value, Nationwide, Mid Cap Growth and Investor
Destinations Funds and is declared daily and paid monthly for all other
Funds. For all Funds, distributable net realized capital gains, if any, are
declared and distributed at least annually.
Dividends and distributions to shareholders are determined in accordance
with federal income tax regulations, which may differ from GAAP. These
"book/tax" differences are considered either permanent or temporary in
nature. In accordance with AICPA (American Institute of Certified Public
Accountants) Statement of Position 93-2, permanent differences (i.e.,
reclassification of market discounts, gain/loss, paydowns and
distributions) are reclassified within the capital accounts based on their
nature for federal income tax purposes; temporary differences do not
require reclassification. These reclassifications have no effect upon the
net asset value of the respective Funds. To the extent distributions exceed
current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-capital.
(G) EXPENSES
Expenses directly attributable to a Fund are charged to that Fund. Expenses
not directly attributable to a Fund are allocated proportionately among
various or all funds within the Trust in relation to the net assets of each
fund or on another reasonable basis. Once expenses are charged to a Fund,
they are allocated to the classes based on relative net assets of each
class for the Growth, Large Cap Value, Nationwide, Mid Cap Growth and
Investor Destinations Funds and based on total settled shares outstanding
of each class for all other Funds. Expenses specific to a class (such as
12b-1 and administrative services fees) are charged to that class.
(H) CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of the Funds were as follows:
78 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
GROWTH LARGE CAP VALUE
-------------------------------------------------------------------------
SIX
MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
APRIL 30, 2003 ENDED APRIL 30, 2003 ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- -------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES
Proceeds from shares issued $ 712,792 $ 18,058,034 $ 8,319,134 $ 13,195,433
Dividends reinvested. . . . - - 149,555 1,359,853
Cost of shares redeemed . . (409,405) (17,330,213) (8,630,075) (15,432,880)
--------------------------------------------------------------------------
303,387 727,821 (161,386) (877,594)
--------------------------------------------------------------------------
CLASS B SHARES
Proceeds from shares issued 231,239 559,387 45,422 182,522
Dividends reinvested. . . . - - 1,621 23,885
Cost of shares redeemed . . (331,444) (677,053) (43,463) (70,909)
--------------------------------------------------------------------------
(100,205) (117,666) 3,580 135,498
--------------------------------------------------------------------------
CLASS C SHARES
Proceeds from shares issued 24,711 14,920 53,518 52,618
Dividends reinvested. . . . - - 218 3,049
Cost of shares redeemed . . (2,869) (7,325) (2,923) (20,634)
--------------------------------------------------------------------------
21,842 7,595 50,813 35,033
--------------------------------------------------------------------------
CLASS D SHARES
Proceeds from shares issued 7,726,008 17,384,874 - -
Dividends reinvested. . . . - - - -
Cost of shares redeemed . . (19,919,848) (153,516,021) - -
--------------------------------------------------------------------------
(12,193,840) (136,131,147) - -
--------------------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS SHARES
Proceeds from shares issued 4,742,631 97,189,179 (a) - 2,934(b)
Dividends reinvested. . . . - - - 4(b)
Cost of shares redeemed . . (4,235,644) (13,891,637) (a) - (74,100) (b)
--------------------------------------------------------------------------
506,987 83,297,542 - (71,162)
--------------------------------------------------------------------------
Change in net assets from
capital transactions. . . . $ (11,461,829) (52,215,855) $ (106,993) $ (778,225)
==========================================================================
SHARE TRANSACTIONS:
CLASS A SHARES
Issued. . . . . . . . . . . 150,973 2,865,722 947,518 1,358,232
Reinvested. . . . . . . . . - - 17,112 134,470
Redeemed. . . . . . . . . . (87,943) (2,741,759) (1,006,931) (1,585,305)
--------------------------------------------------------------------------
63,030 123,963 (42,301) (92,603)
--------------------------------------------------------------------------
CLASS B SHARES
Issued. . . . . . . . . . . 52,840 100,737 5,399 18,342
Reinvested. . . . . . . . . - - 188 2,381
Redeemed. . . . . . . . . . (75,893) (130,408) (5,010) (7,545)
--------------------------------------------------------------------------
(23,053) (29,671) 577 13,178
--------------------------------------------------------------------------
CLASS C SHARES
Issued. . . . . . . . . . . 5,673 2,680 6,273 5,185
Reinvested. . . . . . . . . - - 25 304
Redeemed. . . . . . . . . . (639) (1,411) (358) (2,058)
--------------------------------------------------------------------------
5,034 1,269 5,940 3,431
--------------------------------------------------------------------------
CLASS D SHARES
Issued. . . . . . . . . . . 1,624,550 2,944,617 - -
Reinvested. . . . . . . . . - - - -
Redeemed. . . . . . . . . . (4,211,946) (24,598,993) - -
--------------------------------------------------------------------------
(2,587,396) (21,654,376) - -
--------------------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS SHARES
Issued. . . . . . . . . . . 1,000,913 14,931,915 (a) - 281(b)
Reinvested. . . . . . . . . - - - -(b)
Redeemed. . . . . . . . . . (897,640) (2,561,548) (a) - (7,045) (b)
--------------------------------------------------------------------------
103,273 12,370,367 - (6,764)
--------------------------------------------------------------------------
Total change in shares. . . (2,439,112) (9,188,448) (35,784) (82,758)
==========================================================================
- --------------------------------------------------------------------------------
(a) For the period from January 2, 2002 (commencement of operations) thourgh
October 31, 2002.
(b) On March 5, 2002 Institutional Service Class Shares were liquidated in
their entirety. Information presented represents operations through March
5, 2002.
2003 SEMIANNUAL REPORT 79
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2003 (Unaudited)
NATIONWIDE MID CAP GROWTH
----------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED PERIOD
APRIL 30, 2003 ENDED APRIL 30, 2003 ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002 (A)
- ---------------------------------------------------------------------------------------------------------
Proceeds from shares issued $ 117,292,100 $ 472,153,322 $ 100,000 (b) $ -
Dividends reinvested. . . . 1,171,653 1,351,046 - -
Cost of shares redeemed . . (105,901,676) (203,418,294) - -
------------------------------------------------------------------------------
12,562,077 270,086,074 100,000 -
------------------------------------------------------------------------------
Proceeds from shares issued 1,483,209 4,410,411 - -
Dividends reinvested. . . . 20,214 6,206 - -
Cost of shares redeemed . . (2,712,560) (5,627,040) - -
------------------------------------------------------------------------------
(1,209,137) (1,210,423) - -
------------------------------------------------------------------------------
Proceeds from shares issued 129,819 131,080 - -
Dividends reinvested. . . . 152 14 - -
Cost of shares redeemed . . (14,479) (65,805) - -
------------------------------------------------------------------------------
115,492 65,289 - -
------------------------------------------------------------------------------
Proceeds from shares issued 23,409,501 76,070,956 - -
Dividends reinvested. . . . 5,620,281 9,516,783 - -
Cost of shares redeemed . . (89,268,688) (297,074,331) - -
------------------------------------------------------------------------------
(60,238,906) (211,486,592) - -
------------------------------------------------------------------------------
Proceeds from shares issued 2,856,035 70,730,621 (c) -
Dividends reinvested. . . . 270,902 329,908 (c) - -
Cost of shares redeemed . . (4,185,549) (11,579,313) (c) - -
------------------------------------------------------------------------------
(1,058,612) 59,481,216 - -
------------------------------------------------------------------------------
Proceeds from shares issued - - - 1,000,000
------------------------------------------------------------------------------
- - - 1,000,000
------------------------------------------------------------------------------
Change in net assets from
capital transactions. . . . $ (49,829,086) $ 116,935,564 $ 100,000 $ 1,000,000
==============================================================================
Issued. . . . . . . . . . . 7,906,761 28,254,201 10,121 -
Reinvested. . . . . . . . . 77,711 82,528 - -
Redeemed. . . . . . . . . . (7,122,917) (13,162,631) - -
------------------------------------------------------------------------------
861,555 15,174,098 10,121 -
------------------------------------------------------------------------------
Issued. . . . . . . . . . . 100,617 257,143 - -
Reinvested. . . . . . . . . 1,376 442 - -
Redeemed. . . . . . . . . . (184,553) (343,701) - -
------------------------------------------------------------------------------
(82,560) (86,116) - -
------------------------------------------------------------------------------
Issued. . . . . . . . . . . 8,764 7,513 - -
Reinvested. . . . . . . . . 10 1 - -
Redeemed. . . . . . . . . . (948) (3,773) - -
------------------------------------------------------------------------------
7,826 3,741 - -
------------------------------------------------------------------------------
Issued. . . . . . . . . . . 1,567,213 4,498,907 - -
Reinvested. . . . . . . . . 375,620 570,233 - -
Redeemed. . . . . . . . . . (6,017,807) (17,482,851) - -
------------------------------------------------------------------------------
(4,074,974) (12,413,711) - -
------------------------------------------------------------------------------
Issued. . . . . . . . . . . 193,299 3,909,508 (c) - -
Reinvested. . . . . . . . . 18,109 20,381 (c) - -
Redeemed. . . . . . . . . . (285,346) (701,262) (c) - -
------------------------------------------------------------------------------
(73,938) 3,228,627 - -
------------------------------------------------------------------------------
Issued. . . . . . . . . . . - - - 100,000
------------------------------------------------------------------------------
- - - 100,000
------------------------------------------------------------------------------
Total change in shares. . . (3,362,091) 5,906,639 10,121 100,000
==============================================================================
- --------------------------------------------------------------------------------
(a) For the period from October 1, 2002 (commencement of operations) through
October 31, 2002.
(b) For the period from March 5, 2003 (commencement of operations) through
April 30, 2003.
(c) For the period from January 2, 2002 (commencement of operations) through
October 31, 2002.
80 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
MODERATELY
AGGRESSIVE AGGRESSIVE MODERATE
-----------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR
APRIL 30, ENDED APRIL 30, ENDED APRIL 30, ENDED
2003 OCTOBER 31, 2003 OCTOBER 31, 2003 OCTOBER 31,
(UNAUDITED) 2002 (UNAUDITED) 2002 (UNAUDITED) 2002
- ------------------------------------------------------------------------------------------------------------------------
Proceeds from shares issued . . . $ 445,339 $ 256,507 $ 1,651,746 $ 1,234,047 $ 2,165,466 $ 1,217,745
Dividends reinvested. . . . . . . 2,838 743 11,954 4,432 18,488 6,172
Cost of shares redeemed . . . . . (116,662) (8,127) (80,397) (126,142) (151,846) (19,636)
-------------------------------------------------------------------------------------
331,515 249,123 1,583,303 1,112,337 2,032,108 1,204,281
-------------------------------------------------------------------------------------
CLASS B SHARES
Proceeds from shares issued . . . 163,968 41,210 469,221 120,956 1,051,964 151,167
Dividends reinvested. . . . . . . 399 19 1,423 438 4,390 296
Cost of shares redeemed . . . . . (12,730) - (6,889) - (28,950) -
-------------------------------------------------------------------------------------
151,637 41,229 463,755 121,394 1,027,404 151,463
-------------------------------------------------------------------------------------
CLASS C SHARES
Proceeds from shares issued . . . 233,798 47,955 1,393,864 15,135 842,838 416,140
Dividends reinvested. . . . . . . 672 - 2,378 - 5,299 410
Cost of shares redeemed . . . . . (20) - (7,910) - (6,936) -
-------------------------------------------------------------------------------------
234,450 47,955 1,388,332 15,135 841,201 416,550
-------------------------------------------------------------------------------------
SERVICE CLASS SHARES
Proceeds from shares issued . . . 22,155,833 42,740,449 43,002,621 71,636,499 51,011,036 88,685,946
Dividends reinvested. . . . . . . 372,108 429,255 801,474 973,254 1,414,066 1,907,824
Cost of shares redeemed . . . . . (3,459,593) (6,700,999) (4,583,747) (7,888,279) (7,766,616) (14,706,473)
-------------------------------------------------------------------------------------
19,068,348 36,468,705 39,220,348 64,721,474 44,658,486 75,887,297
-------------------------------------------------------------------------------------
Change in net assets from capital
transactions. . . . . . . . . . . $19,785,950 36,807,012 $42,655,738 $ 65,970,340 $48,559,199 $ 77,659,591
=====================================================================================
SHARE TRANSACTIONS:
CLASS A SHARES
Issued. . . . . . . . . . . . . . 71,408 38,597 234,561 167,202 274,920 150,134
Reinvested. . . . . . . . . . . . 449 118 1,705 625 2,334 783
Redeemed. . . . . . . . . . . . . (18,774) (923) (11,336) (16,731) (19,341) (2,524)
-------------------------------------------------------------------------------------
53,083 37,792 224,930 151,096 257,913 148,393
-------------------------------------------------------------------------------------
CLASS B SHARES
Issued. . . . . . . . . . . . . . 26,100 6,586 67,001 17,488 133,883 19,343
Reinvested. . . . . . . . . . . . 64 3 204 65 556 37
Redeemed. . . . . . . . . . . . . (2,119) - (1,005) - (3,725) -
-------------------------------------------------------------------------------------
24,045 6,589 66,200 17,553 130,714 19,380
-------------------------------------------------------------------------------------
CLASS C SHARES
Issued. . . . . . . . . . . . . . 36,892 7,626 200,752 2,183 106,707 52,650
Reinvested. . . . . . . . . . . . 107 - 342 - 672 54
Redeemed. . . . . . . . . . . . . (3) - (958) - (902) -
-------------------------------------------------------------------------------------
36,996 7,626 200,136 2,183 106,477 52,704
-------------------------------------------------------------------------------------
SERVICE CLASS SHARES
Issued. . . . . . . . . . . . . . 3,514,211 5,857,493 6,153,517 9,120,646 6,460,212 10,419,546
Reinvested. . . . . . . . . . . . 58,817 61,664 114,422 129,022 178,784 228,307
Redeemed. . . . . . . . . . . . . (546,878) (914,170) (659,481) (1,018,618) (985,341) (1,741,821)
-------------------------------------------------------------------------------------
3,026,150 5,004,987 5,608,458 8,231,050 5,653,655 8,906,032
-------------------------------------------------------------------------------------
Total change in shares. . . . . . 3,140,274 5,056,994 6,099,724 8,401,882 6,148,759 9,126,509
=====================================================================================
2003 SEMIANNUAL REPORT 81
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2003 (Unaudited)
MODERATELY CONSERVATIVE CONSERVATIVE
-------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
APRIL 30, 2003 ENDED APRIL 30, 2003 ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- -------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES
Proceeds from shares issued $ 1,902,529 $ 990,745 $ 750,048 $ 820,653
Dividends reinvested. . . . 17,428 6,548 18,670 7,795
Cost of shares redeemed . . (299,093) (98,131) (113,758) (30,104)
---------------------------------------------------------------------------
1,620,864 899,162 654,960 798,344
---------------------------------------------------------------------------
CLASS B SHARES
Proceeds from shares issued 488,884 75,059 491,773 64,204
Dividends reinvested. . . . 2,128 607 3,834 289
Cost of shares redeemed . . (149,561) (149) (25,328) -
---------------------------------------------------------------------------
341,451 75,517 470,279 64,493
---------------------------------------------------------------------------
CLASS C SHARES
Proceeds from shares issued 530,726 87,136 646,074 397,660
Dividends reinvested. . . . 4,276 615 7,527 534
Cost of shares redeemed . . (1,338) - (127,553) -
---------------------------------------------------------------------------
533,664 87,751 526,048 398,194
---------------------------------------------------------------------------
SERVICE CLASS SHARES
Proceeds from shares issued 18,729,983 34,516,849 17,196,431 26,654,901
Dividends reinvested. . . . 524,438 732,325 493,784 650,280
Cost of shares redeemed . . (3,199,006) (11,089,719) (4,607,086) (9,850,900)
---------------------------------------------------------------------------
16,055,415 24,159,455 13,083,129 17,454,281
---------------------------------------------------------------------------
Change in net assets from
capital transactions. . . . $ 18,551,394 $ 25,221,885 $ 14,734,416 $ 18,715,312
===========================================================================
SHARE TRANSACTIONS:
CLASS A SHARES
Issued. . . . . . . . . . . 220,588 112,749 78,790 85,556
Reinvested. . . . . . . . . 2,006 762 1,964 823
Redeemed. . . . . . . . . . (34,252) (11,406) (11,982) (3,110)
---------------------------------------------------------------------------
188,342 102,105 68,772 83,269
---------------------------------------------------------------------------
CLASS B SHARES
Issued. . . . . . . . . . . 55,949 8,481 51,709 6,791
Reinvested. . . . . . . . . 244 71 403 30
Redeemed. . . . . . . . . . (17,089) (17) (2,647) -
---------------------------------------------------------------------------
39,104 8,535 49,465 6,821
---------------------------------------------------------------------------
CLASS C SHARES
Issued. . . . . . . . . . . 60,837 9,977 67,945 41,973
Reinvested. . . . . . . . . 491 72 792 57
Redeemed. . . . . . . . . . (156) - (13,429) -
---------------------------------------------------------------------------
61,172 10,049 55,308 42,030
---------------------------------------------------------------------------
SERVICE CLASS SHARES
Issued. . . . . . . . . . . 2,149,813 3,773,596 1,803,034 2,753,385
Reinvested. . . . . . . . . 60,171 81,570 51,831 67,661
Redeemed. . . . . . . . . . (367,096) (1,228,295) (483,132) (1,025,815)
---------------------------------------------------------------------------
1,842,888 2,626,871 1,371,733 1,795,231
---------------------------------------------------------------------------
Total change in shares. . . 2,131,506 2,747,560 1,545,278 1,927,351
===========================================================================
82 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
BOND GOVERNMENT BOND TAX-FREE INCOME
-----------------------------------------------------------------------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 30, 2003 OCTOBER 31, APRIL 30, 2003 OCTOBER 31, APRIL 30, 2003 OCTOBER 31,
(UNAUDIITED) 2002 (UNAUDITED) 2002 (UNAUDITED) 2002
- ---------------------------------------------------------------------------------------------------------------------------
CAPITAL
TRANSACTIONS:
CLASS A SHARES
Proceeds from
shares issued . . . . . . $ 6,276,728 $ 16,332,426 $ 18,153,495 $ 34,772,139 $ 3,596,484 $ 13,511,653
Dividends
reinvested . . . . . . . 190,392 295,433 2,018,088 3,494,128 118,860 236,686
Cost of shares
redeemed. . . . . . . . . (5,063,248) (13,788,295) (17,028,842) (39,985,321) (4,427,372) (12,072,989)
--------------------------------------------------------------------------------------------------
1,403,872 2,839,564 3,142,741 (1,719,054) (712,028) 1,675,350
--------------------------------------------------------------------------------------------------
CLASS B SHARES
Proceeds from
shares issued . . . . . . 279,629 1,158,381 813,003 2,605,953 1,117,574 1,443,276
Dividends
reinvested. . . . . . . . 65,500 127,414 192,980 232,182 84,140 165,797
Cost of shares
redeemed. . . . . . . . . (267,768) (634,222) (799,913) (871,930) (825,720) (775,285)
--------------------------------------------------------------------------------------------------
77,361 651,573 206,070 1,966,205 375,994 833,788
--------------------------------------------------------------------------------------------------
CLASS C SHARES
Proceeds from
shares issued . . . . . . 20,596 195,745 1,134,711 508,038 333,250 112,660
Dividends
reinvested . . . . . . . 5,147 8,873 31,865 30,235 7,186 3,921
Cost of shares
redeemed. . . . . . . . . (66,126) (92,106) (289,179) (64,488) (13,010) (11,500)
--------------------------------------------------------------------------------------------------
(40,383) 112,512 877,397 473,785 327,426 105,081
--------------------------------------------------------------------------------------------------
CLASS D SHARES
Proceeds from
shares issued . . . . . . 11,486,224 30,575,661 35,396,185 76,227,019 3,333,233 6,006,734
Dividends
reinvested. . . . . . . . 3,186,700 6,415,693 6,221,077 7,335,032 3,299,316 6,854,256
Cost of shares
redeemed. . . . . . . . . (13,333,821) (30,776,530) (33,616,964) (33,776,487) (10,999,084) (20,263,288)
--------------------------------------------------------------------------------------------------
1,339,103 6,214,824 8,000,298 49,785,564 (4,366,535) (7,402,298)
--------------------------------------------------------------------------------------------------
Change in net
assets
from capital transactions $ 2,779,953 $ 9,818,473 $ 12,226,506 $ 50,506,500 $ (4,375,143) $ (4,788,079)
==================================================================================================
SHARE TRANSACTIONS:
CLASS A SHARES
Issued. . . . . . . . . . 657,676 1,744,826 1,682,486 3,273,713 341,330 1,304,786
Reinvested. . . . . . . . 19,943 31,616 186,193 332,417 11,279 22,774
Redeemed. . . . . . . . . (530,412) (1,474,257) (1,575,835) (3,770,023) (420,094) (1,161,169)
--------------------------------------------------------------------------------------------------
147,207 302,185 292,844 (163,893) (67,485) 166,391
--------------------------------------------------------------------------------------------------
CLASS B SHARES
Issued. . . . . . . . . . 29,216 124,351 75,159 247,277 106,157 139,572
Reinvested. . . . . . . . 6,860 13,642 17,821 22,081 7,985 15,952
Redeemed. . . . . . . . . (27,952) (68,245) (74,207) (82,250) (78,395) (74,811)
--------------------------------------------------------------------------------------------------
8,124 69,748 18,773 187,108 35,747 80,713
--------------------------------------------------------------------------------------------------
CLASS C SHARES
Issued. . . . . . . . . . 2,159 20,705 104,909 48,336 31,935 10,799
Reinvested. . . . . . . . 539 949 2,943 2,874 682 377
Redeemed. . . . . . . . . (6,930) (9,709) (26,855) (6,198) (1,240) (1,101)
--------------------------------------------------------------------------------------------------
(4,232) 11,945 80,997 45,012 31,377 10,075
--------------------------------------------------------------------------------------------------
CLASS D SHARES
Issued. . . . . . . . . . 1,197,989 3,260,273 3,272,019 7,139,123 316,731 577,715
Reinvested. . . . . . . . 333,409 685,884 573,770 696,158 313,112 659,426
Redeemed. . . . . . . . . (1,396,977) (3,307,152) (3,110,999) (3,215,998) (1,044,153) (1,953,922)
--------------------------------------------------------------------------------------------------
134,421 639,005 734,790 4,619,283 (414,310) (716,781)
--------------------------------------------------------------------------------------------------
Total change
in shares . . . . . . . . 285,520 1,022,883 1,127,404 4,687,510 (414,671) (459,602)
==================================================================================================
2003 SEMIANNUAL REPORT 83
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2003 (Unaudited)
MONEY MARKET MORLEY ENHANCED INCOME
-------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
APRIL 30, 2003 ENDED APRIL 30, 2003 ENDED
(UNAUDITED) OCTOBER 31, 2002 (UNAUDITED) OCTOBER 31, 2002
- -------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
CLASS A SHARES
Proceeds from shares issued $ - $ - $ 1,556,806 $ 1,944,782
Dividends reinvested. . . . - - 28,183 41,664
Cost of shares redeemed . . - - (697,620) (895,587)
-------------------------------------------------------------------------
- - 887,369 1,090,859
-------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
Proceeds from shares issued 1,781,073,499 8,843,917) (a) 48,497,228 57,027,979
Dividends reinvested. . . . 3,805,137 9,466) (a) 1,366,786 1,055,432
Cost of shares redeemed . . (527,765,388) (247,125) (a) (8,866,151) (9,833,639)
-------------------------------------------------------------------------
1,257,113,248 8,606,258 40,997,863 48,249,772
-------------------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS SHARES
Proceeds from shares issued - - 1,115,066 2,744,863
Dividends reinvested. . . . - - 176,720 486,226
Cost of shares redeemed . . - - (1,877,502) (4,436,252)
-------------------------------------------------------------------------
- - (585,716) (1,205,163)
-------------------------------------------------------------------------
SERVICE CLASS SHARES
Proceeds from shares issued 236,319,777 1,720,705,520 - -
Dividends reinvested. . . . 1,003,612 6,312,827 - -
Cost of shares redeemed . . (854,884,822) (1,540,591,382) - -
-------------------------------------------------------------------------
(617,561,433) 186,426,965 - -
-------------------------------------------------------------------------
PRIME SHARES
Proceeds from shares issued 526,411,629 1,245,358,007 - -
Dividends reinvested. . . . 3,565,662 16,316,572 - -
Cost of shares redeemed . . (1,172,049,325) (1,469,838,592) - -
-------------------------------------------------------------------------
(642,072,034) (208,164,013) - -
-------------------------------------------------------------------------
Change in net assets from
capital transactions. . . . $ (2,520,219) $ (13,130,790) $ 41,299,516 $ 48,135,468
==========================================================================
SHARE TRANSACTIONS:
CLASS A SHARES
Issued. . . . . . . . . . . - - 165,128 203,714
Reinvested. . . . . . . . . - - 2,987 4,360
Redeemed. . . . . . . . . . - - (73,894) (93,657)
-------------------------------------------------------------------------
- - 94,221 114,417
-------------------------------------------------------------------------
INSTITUTIONAL
CLASS SHARES
Issued. . . . . . . . . . . 1,781,073,498 8,843,917) (a) 5,140,553 5,991,510
Reinvested. . . . . . . . . 3,805,137 9,466) (a) 144,795 110,681
Redeemed. . . . . . . . . . (527,765,388) (247,125) (a) (940,577) (1,034,460)
-------------------------------------------------------------------------
1,257,113,247 8,606,258 4,344,771 5,067,731
-------------------------------------------------------------------------
INSTITUTIONAL SERVICE
CLASS SHARES
Issued. . . . . . . . . . . - - 118,165 287,352
Reinvested. . . . . . . . . - - 18,713 50,719
Redeemed. . . . . . . . . . - - (198,794) (463,641)
-------------------------------------------------------------------------
- - (61,916) (125,570)
-------------------------------------------------------------------------
SERVICE CLASS SHARES
Issued. . . . . . . . . . . 236,319,777 1,720,705,520 - -
Reinvested. . . . . . . . . 1,003,612 6,312,827 - -
Redeemed. . . . . . . . . . (854,884,821) (1,540,591,382) - -
-------------------------------------------------------------------------
(617,561,432) 186,426,965 - -
-------------------------------------------------------------------------
PRIME SHARES
Issued. . . . . . . . . . . 526,411,619 1,245,357,867 - -
Reinvested. . . . . . . . . 3,565,661 16,316,572 - -
Redeemed. . . . . . . . . . (1,172,049,318) (1,469,838,592) - -
-------------------------------------------------------------------------
(642,072,038) (208,164,153) - -
-------------------------------------------------------------------------
Total change in shares. . . (2,520,223) (13,130,930) 4,377,076 5,056,578
==========================================================================
(a) For the period from December 13, 2001 (commencement of operations) through
October 31, 2002.
84 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
3. TRANSACTIONS WITH AFFILIATES
Under the terms of the Investment Advisory Agreements, Gartmore Mutual Fund
Capital Trust ("GMF") or Gartmore Morley Capital Management, Inc. ("GMCM")
manages the investment of the assets and supervises the daily business affairs
of their respective Funds (as shown in the table below). GMF is a wholly owned
subsidiary of Gartmore Global Investments, Inc. ("GGI"), a holding company. GGI
is a wholly owned subsidiary of Gartmore Global Asset Management Trust
("GGAMT"). GGAMT is a wholly owned subsidiary of Nationwide Corporation. All
of the common stock of Nationwide Corporation is held by Nationwide Mutual
Insurance Company (95.3%) and Nationwide Mutual Fire Insurance Company (4.7%),
each of which is a mutual company owned by its policyholders. GMCM is a
wholly-owned subsidiary of Gartmore Morley Financial Services, Inc., an indirect
subsidiary of GGI. GMF also provides investment management evaluation services
in initially selecting and monitoring on an ongoing basis the performance of the
subadviser, if applicable, for the Funds it advises. The subadvisers manage each
of their respective Fund's investments and have the responsibility for making
all investment decisions for the applicable Funds. The adviser and subadviser,
if applicable, for each Fund is as follows:
FUND ADVISER SUBADVISER
- --------------------------------------------------------------
Growth. . . . . . . . . GMF n/a
Large Cap Value . . . . GMF NorthPointe Capital, LLC(a)
Nationwide. . . . . . . GMF n/a
Mid Cap Growth. . . . . GMF n/a
Aggressive. . . . . . . GMF n/a
Moderately Aggressive . GMF n/a
Moderate. . . . . . . . GMF n/a
Moderately Conservative GMF n/a
Conservative. . . . . . GMF n/a
Bond. . . . . . . . . . GMF n/a
Government Bond . . . . GMF n/a
Tax-Free Income . . . . GMF n/a
Money Market. . . . . . GMF n/a
Morley Enhanced Income. GMCM n/a
(a) Affiliate of GMF.
2003 SEMIANNUAL REPORT 85
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2003 (Unaudited)
Under the terms of the Investment Advisory Agreements, each Fund pays GMF or
GMCM, as applicable, an investment advisory fee based on that Fund's average
daily net assets. From such fees, pursuant to the subadvisory agreements, the
adviser pays fees to the subadviser. Additional information regarding the
investment advisory fees and subadvisory fees for GMF, GMCM and the subadvisers,
where applicable, is as follows for the six months ended April 30, 2003:
FUND FEE SCHEDULE FEES RETAINED SUBADVISER
- -------------------------------------------------------------------------------------
Growth and Nationwide . . . Up to $250 million 0.60% 0.60% .-
On the next $750 million 0.575% 0.575% .-
On the next $1 billion 0.55% 0.55% .-
On the next $3 billion 0.525% 0.525% .-
On $5 billion and more 0.50% 0.50% .-
Large Cap Value . . . . . . Up to $100 million 0.75% 0.40% 0.35%
On $100 million and more 0.70% 0.40% 0.30%
Mid Cap Growth. . . . . . . All Assets 0.75% 0.75% .-
Investor Destinations Funds All Assets 0.13% 0.13% .-
Bond, Government Bond . . . Up to $250 million 0.50% 0.50% .-
and Tax-Free Income . . . . On the next $750 million 0.475% 0.475% .-
On the next $1 billion 0.45% 0.45% .-
On the next $3 billion 0.425% 0.425% .-
On $5 billion and more 0.40% 0.40% .-
Money Market. . . . . . . . Up to $1 billion 0.40% 0.40% .-
On the next $1 billion 0.38% 0.38% .-
On the next $3 billion 0.36% 0.36% .-
On $5 billion and more 0.34% 0.34% .-
Morley Enhanced Income. . . All Assets 0.35% 0.35% .-
Effective July 1, 2002, GMF or GMCM, where applicable, and the Funds have
entered into written contracts ("Expense Limitation Agreements") limiting
operating expenses (excluding any taxes, interest, brokerage fees, extraordinary
expenses, Rule 12b-1 fees and administrative services fees) from exceeding the
amounts listed in the table below. The expense limitations for the Investor
Destinations Funds do not exclude Rule 12b-1 fees and administrative services
fees. These Expense Limitation Agreements will remain in effect until at least
February 29, 2004.
EXPENSE CAPS
----------------------------------------------------------------------------------------
INSTITUTIONAL
INSTITUTIONAL SERVICE SERVICE
CLASS A CLASS B CLASS C CLASS D CLASS CLASS CLASS PRIME
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
FUND
- --------------------------------------------------------------------------------------------------------------------------
Large Cap Value . . . . . . . . 1.00% 1.00% 1.00% n/a n/a n/a n/a n/a
Mid Cap Growth. . . . . . . . . 1.15% n/a n/a n/a 1.15% n/a n/a n/a
Investor Destinations Funds (a) 0.71% 1.31% 1.31% n/a n/a n/a 0.61% n/a
Government Bond . . . . . . . . 0.79% 0.79% 0.79% 0.79% n/a n/a n/a n/a
Money Market (b). . . . . . . . n/a n/a n/a n/a 0.59% n/a 0.59% 0.59%
Morley Enhanced Income. . . . . 0.45% n/a n/a n/a 0.45% 0.45% n/a n/a
(a) The Expense Limitation Agreement for these Funds also states that the
expense ratio for each class will not exceed 4.00% through March 1, 2011.
(b) GMF has also agreed contractually to limit expenses of the Service class to
0.75% including Rule 12b-1 fees and administrative services fees, until at
least February 29, 2004.
86 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
Prior to July 1, 2002, GMF or GMCM, where applicable, and the Funds had entered
into Expense Limitation Agreements limiting operating expenses (excluding any
taxes, interest, brokerage fees, extraordinary expenses, Rule 12b-1 fees and
administrative services fees) from exceeding the amounts listed in the table
below. The expense limitations for the Investor Destinations Funds did not
exclude any taxes, interest, brokerage fees, extraordinary expenses, Rule 12b-1
fees and administrative services fees.
EXPENSE CAPS
--------------------------------------------------------------------------------
INSTITUTIONAL
INSTITUTIONAL SERVICE SERVICE
CLASS A CLASS B CLASS C CLASS D CLASS CLASS CLASS
SHARES SHARES SHARES SHARES SHARES SHARES SHARES
FUND
- ---------------------------------------------------------------------------------------------------------------
Large Cap Value(a) . . . . . . 1.15% 1.90% 1.90% n/a n/a 1.00% n/a
Investor Destinations Funds(b) 0.71% 1.31% 1.31% n/a n/a n/a 0.61%
Government Bond(a) . . . . . . 0.99% 1.64% 1.64% 0.79% n/a n/a n/a
Morley Enhanced Income(a). . . 0.90% n/a n/a n/a 0.45% 0.70% n/a
(a) Prior to March 1, 2002 these expense limitations included Rule 12b-1 and
administrative services fees.
(b) The Expense Limitation Agreement for these Funds also states that the
expense ratio for each class will not exceed 4.00% through February 28,
2011.
GMF or GMCM may request and receive reimbursement from certain Funds of the
advisory fees waived and other expenses reimbursed by them pursuant to the
Expense Limitation Agreements at a later date not to exceed five years from
commencement of operations (three years from the fiscal year in which the
corresponding reimbursement was made for the Mid Cap Growth and Money Market
Funds) if the Fund has reached a sufficient asset size to permit reimbursement
to be made without causing the total annual operating expense ratio of the Fund
to exceed the limits set forth above. No reimbursement will be made unless: (i)
the Fund's assets exceed $100 million; (ii) the total annual expense ratio of
the Class making such reimbursement is less than the limit set forth above; and
(iii) the payment of such reimbursement is approved by the Board of Trustees on
a quarterly basis. Except as provided for in the Expense Limitation Agreements,
reimbursement of amounts previously waived or assumed by GMF or GMCM is not
permitted. As of the six months ended April 30, 2003, the cumulative potential
reimbursements were as follows:
FUND AMOUNT EXPIRES
- ----------------------------------------------------
Large Cap Value . . . . $528,074 November 2, 2003
Mid Cap Growth. . . . . 36,424 October 1, 2005
Aggressive. . . . . . . 234,335 March 31, 2005
Moderately Aggressive . 238,401 March 31, 2005
Moderate. . . . . . . . 216,958 March 31, 2005
Moderately Conservative 241,363 March 31, 2005
Conservative. . . . . . 238,580 March 31, 2005
Money Market. . . . . . 192,958 October 31, 2005
Morley Enhanced Income. 336,874 December 29, 2004
2003 SEMIANNUAL REPORT 87
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2003 (Unaudited)
Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act,
Gartmore Distribution Services, Inc. ("GDSI"), the Funds' Distributor, is
compensated by the Funds for expenses associated with the distribution of
certain classes of shares of the Funds. Prior to October 1, 2002 Nationwide
Securities, Inc. ("NSI") served as the Funds' Distributor. These fees are based
on average daily net assets of the respective class of the Funds at an annual
rate not to exceed the following:
SERVICE
CLASS A CLASS B CLASS C CLASS
FUND SHARES SHARES SHARES SHARES
- ------------------------------------------------------------------
Growth. . . . . . . . . . . 0.25% 1.00% 1.00% n/a
Large Cap Value . . . . . . 0.25% 1.00% 1.00% n/a
Nationwide. . . . . . . . . 0.25% 1.00% 1.00% n/a
Mid Cap Growth. . . . . . . 0.25% n/a n/a n/a
Investor Destinations Funds 0.25% 1.00% 1.00% 0.25%
Bond. . . . . . . . . . . . 0.25% 0.85% 0.85% n/a
Government Bond . . . . . . 0.25% 0.85% 0.85% n/a
Tax-Free Income . . . . . . 0.25% 0.85% 0.85% n/a
Money Market. . . . . . . . n/a n/a n/a 0.15%
Morley Enhanced Income. . . 0.25% n/a n/a n/a
Pursuant to an Underwriting Agreement, GDSI (NSI prior to October 1, 2002)
serves as principal underwriter of the Funds in the continuous distribution of
their shares and receives commissions in the form of a front-end sales charge on
the Class A, Class C and Class D shares. Such fees are deducted from and are not
included in proceeds from sales of Class A, Class C and Class D shares. From
such fees, GDSI pays sales commissions, salaries, and other expenses in
connection with generating new sales of Class A, Class C and Class D shares of
the Funds. GDSI also receives fees for services as principal underwriter for
Class B shares of the Funds. Such fees are contingent deferred sales charges
("CDSCs") ranging from 1% to 5% imposed on redemptions of Class B shares which
may cause the current value of a shareholder's account to fall below the total
purchase payments. The CDSC, if applicable, will be imposed on redemptions made
within 6 years of the purchase. In addition, Class C shares also have a CDSC
fee of 1% imposed on redemptions of Class C shares made within one year of
purchase. For the six months ended April 30, 2003, GDSI received commissions of
$654,862 from front-end sales charges of Class A, Class C and Class D shares and
from CDSC fees from Class B and Class C shares of the Funds, of which $443,745
was reallowed to affiliated broker-dealers of the Funds.
The Mid Cap Growth Fund will assess a 1.50% redemption fee on all classes of
shares that are purchased and are sold or exchanged within 90 days of purchase.
The redemption fee is paid directly to the Fund and is designed to offset
brokerage commissions, market impact and other costs associated with short-term
trading of Fund shares. For purposes of determining whether the redemption fee
applies, the shares that were held the longest will be redeemed first. This
redemption fee is in addition to any CDSCs that may be applicable at the time of
sale. The redemption fee may not apply in certain circumstances, such as
redemptions or exchanges of shares held in certain omnibus accounts or
retirement plans that cannot implement the redemption fee. The fee does not
apply to shares purchased through reinvested dividends or capital gains.
88 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
Under the terms of a Fund Administration Agreement, Gartmore SA Capital Trust
("GSA") provides for various administrative and accounting services. Gartmore
Investors Services, Inc. ("GISI"), an indirect subsidiary of GSA, serves as
Transfer Agent and Dividend Disbursing Agent for each of the Funds. Effective
December 1, 2001, the fees for the services provided under both agreements are
combined and calculated based on the Trust's average daily net assets according
to the fee schedule below. The fees are then allocated proportionately among
all funds within the Trust in relation to the average daily net assets of each
fund and are paid to GSA. GSA pays GISI from these fees for its services.
COMBINED FEE SCHEDULE*
- --------------------------------------------
Up to $1 billion . . . . . . . . . . . 0.25%
1 billion and more up to $3 billion . 0.18%
3 billion and more up to $4 billion . 0.14%
4 billion and more up to $5 billion . 0.07%
5 billion and more up to $10 billion. 0.04%
10 billion and more up to $12 billion 0.02%
12 billion or more. . . . . . . . . . 0.01%
* The assets of the Investor Destinations Funds are excluded from the Trust
asset level amount in order to calculate this asset based fee. The Investor
Destinations Funds do not pay any part of this fee.
Prior to December 1, 2001, the fees for the Fund Administration Agreement for
each Fund were calculated based on the fee schedule below:
FUND ADMINISTRATION
FUND FEE SCHEDULE(A)
- ----------------------------------------------------------------------
Growth, Nationwide, Bond, Government Up to $250 million 0.07%
Bond, Money Market, Morley Enhanced. On the next $750 million 0.05%
Income and Tax-Free Income . . . . . On $1 billion and more 0.04%
Large Cap Value. . . . . . . . . . . Up to $250 million 0.10%
On the next $750 million 0.06%
On $1 billion and more 0.04%
Investor Destinations Funds. . . . . Up to $250 million 0.07%
On $250 million and more 0.05%
(a) The Fund Administration fee was subject to a minimum of $75,000 per Fund
per year for the Large Cap Value Fund, Investor Destinations Funds and
Morley Enhanced Income Fund.
Prior to December 1, 2001, GISI received fees at $20 per account for Class A,
Class B, Class C and Class D shares, $30 per account for Prime Shares, and 0.01%
of the average daily net assets of the Institutional Class, Institutional
Service Class and Service Class shares of each of the applicable Funds.
GSA and GISI have entered into agreements with BISYS Fund Services Ohio, Inc. to
provide sub-administration and sub-transfer agency services, respectively, to
the Funds.
Under the terms of an Administrative Services Plan, the Funds may pay fees to
servicing organizations, such as broker-dealers, including Nationwide Financial
Services, and financial institutions, which agree to provide administrative
support services to the shareholders of certain classes. These services include,
but are not limited, to the following: establishing and maintaining shareholder
accounts, processing purchase and redemption transactions, arranging bank wires,
performing shareholder sub-accounting, answering inquiries regarding the Funds,
and other such services. These fees are based on an annual rate of up to 0.25%
of the average daily net assets of the Class A, Class D, Prime Shares, Service
Class and Institutional Service Class of shares of each of the applicable Funds.
2003 SEMIANNUAL REPORT 89
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2003 (Unaudited)
4. BANK LOANS
Prior to April 7, 2003, the Trust had an unsecured bank line of credit of
$50,000,000. Borrowings under this arrangement bear interest at the Federal
Funds rate plus 0.50%. These interest costs are included in custodian fees in
the Statements of Operations. No compensation balances were required under the
terms of the line of credit. For the period from April 7, 2003 to April 30,
2003, the Trust did not maintain an unsecured bank line of credit. There were no
unsecured bank loans outstanding as of April 30, 2003.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the six
months ended April 30, 2003, are summarized as follows:
FUND PURCHASES SALES
- ---------------------------------------------------
Growth. . . . . . . . . $346,657,886 $356,710,472
Large Cap Value . . . . 13,211,811 13,292,527
Nationwide. . . . . . . 624,435,465 675,433,335
Mid Cap Growth. . . . . 458,906 451,044
Aggressive. . . . . . . 54,951,796 35,257,760
Moderately Aggressive . 48,628,366 7,279,878
Moderate. . . . . . . . 59,973,692 15,315,513
Moderately Conservative 23,163,536 7,060,686
Conservative. . . . . . 19,827,002 8,541,504
Bond. . . . . . . . . . 11,067,683 12,173,437
Government Bond . . . . 136,934,332 125,243,608
Tax-Free Income . . . . 14,667,829 20,356,095
Morley Enhanced Income. 51,825,490 14,979,032
90 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
MANAGEMENT INFORMATION (Unaudited)
TRUSTEES WHO ARE NOT INTERESTED PERSONS (AS DEFINED IN THE 1940 ACT) OF THE
FUNDS APRIL 30, 2003
NUMBER
TERM OF OF PORTFOLIOS
OFFICE IN FUND
NAME, POSITION(S) WITH TRUST - PRINCIPAL OCCUPATION(S) COMPLEX OTHER
ADDRESS, HELD LENGTH OF DURING PAST OVERSEEN DIRECTORSHIPS
AND AGE WITH FUND TIME SERVED1 5 YEARS BY TRUSTEE HELD BY TRUSTEE2
- -----------------------------------------------------------------------------------------------------------------
Mr. Allen is Chairman,
Chief Executive Officer
Charles E. Allen And President of Graimark
8162 E. Jefferson Realty Advisors, Inc. (real
Ave., #15B estate development,
Detroit, MI 48214 Since investment and asset
Age 55 . . . . . . . Trustee July 2000 management). 82 None
- ----------------------------------------------------------------------------------------------------------------
Ms. Cholmondeley is Vice
President and General
Manager of Special Products
at Sappi Fine Paper
North America. Prior to 1998,
Paula H.J. she held various posi-
Cholmondeley tions with Owens Corning,
c/o Sappi Fine Paper including Vice President
225 Franklin Street and General Manager of the
Boston, MA 02110 Since Residential Insulation
Age 55 . . . . . . . Trustee July 2000 Division (1997 to 1998). 82 None
- ----------------------------------------------------------------------------------------------------------------
C. Brent DeVore
111 N. West Street
Westerville, OH
43081 Since Dr. DeVore is President
Age 62 . . . . . . . Trustee May 1998 of Otterbein College. 82 None
- ----------------------------------------------------------------------------------------------------------------
Since 1999, Mr. Duncan
has worked as an
Robert M. Duncan arbitration and mediation
1397 Haddon Road consultant. From 1996
Columbus, OH to 1999, he was
43209 Since Commissioner of the Ohio
Age 76 . . . . . . . Trustee April 1987 Elections Commission. 82 None
- ----------------------------------------------------------------------------------------------------------------
Retired; Ms. Hennigar is
the former Chairman of
OppenheimerFunds Services
and Shareholder Services
Inc. Ms. Hennigar held this
Barbara L. Hennigar position from October 1999
6363 So. Sicily Way to June, 2000. Prior to that,
Aurora, CO she served as President and
80016 Since Chief Executive Officer of
Age 67 . . . . . . . Trustee July 2000 OppenheimerFunds Services. 82 None
- ----------------------------------------------------------------------------------------------------------------
Thomas J. Kerr, IV
4890 Smoketalk Lane
Westerville, OH Dr. Kerr is President
43081 Since Emeritus of Kendall
Age 69 . . . . . . . Trustee October 1971 College. 82 None
- ----------------------------------------------------------------------------------------------------------------
Mr. Kridler is the President
and Chief Executive
Officer of the Columbus
Foundation (a foundation
which manages
over 1,000 individual
endowment funds). Prior
to January 31, 2002,
Mr. Kridler was the
President of the Columbus
Association for the
Douglas F. Kridler Performing Arts and
2355 Brixton Road Chairman of the
Columbus, OH Since Greater Columbus
43221 Septembe Convention and Visitors
Age 47 . . . . . . . Trustee 1997 Bureau. 82 None
- ----------------------------------------------------------------------------------------------------------------
Since July 2000, Mr. Lipson
is the Chairman of LGVI,
LLC (a private equity firm
that develops technology
based solutions for the
investment advisory/
asset management
industry). Prior to this,
Mr. Lipson was the fore-
mer Chairman & CEO of
Northstar Holdings, Inc.
From November 1993 to
December 1999, a former
Trustee of the Northstar
Mark L. Lipson Funds from November 1993
1620 26th Street to July 2000, and a SVP
Suite 300 of Reliastar Financial
Santa Monica, CA Corporation from
90272 Since November 1993 to
Age 53 . . . . . . . Trustee March 2003 December 1999. 82 None
- ----------------------------------------------------------------------------------------------------------------
2003 SEMIANNUAL REPORT 91
- --------------------------------------------------------------------------------
MANAGEMENT INFORMATION (Unaudited)
TRUSTEES WHO ARE NOT INTERESTED PERSONS (AS DEFINED IN THE 1940 ACT) OF THE
FUNDS APRIL 30, 2003 (CONTINUED)
NUMBER
TERM OF OF PORTFOLIOS
OFFICE IN FUND
NAME, POSITION(S) WITH TRUST - PRINCIPAL OCCUPATION(S) COMPLEX
ADDRESS, HELD LENGTH OF DURING PAST OVERSEEN
AND AGE WITH FUND TIME SERVED1 5 YEARS BY TRUSTEE OTHER
DIRECTORSHIPS
HELD BY TRUSTEE2
- -------------------------------------------------------------------------------------------------------------------------
David C. Wetmore
26 Turnbridge Drive
Long Cove Plantation
Hilton Head, SC Mr. Wetmore is the Managing
29928 Since Director of Updata
Age 54 . . . . . . . Trustee May 1995 Capital, Inc., a venture capital firm. 82(3) None
- -------------------------------------------------------------------------------------------------------------
92 SEMIANNUAL REPORT 2003
- --------------------------------------------------------------------------------
TRUSTEES AND OFFICERS WHO ARE INTERESTED PERSONS (AS DEFINED IN THE 1940 ACT) OF
THE FUNDS APRIL 30, 2003
NUMBER
TERM OF OF
OFFICE PORTFOLIOS
WITH TRUST - IN FUND OTHER
NAME, POSITION(S) LENGTH OF PRINCIPAL OCCUPATION(S) COMPLEX DIRECTORSHIPS
ADDRESS, HELD TIME DURING PAST OVERSEEN HELD BY
AND AGE WITH FUND SERVED1 5 YEARS BY TRUSTEE TRUSTEE2
- ---------------------------------------------------------------------------------------------------------------------
Mr. Hondros is President
and Chief Executive Officer
of Gartmore Distribution
Services, Inc. ("GDSI")*,
Gartmore Investors
Services, Inc.*,
Gartmore Morley Capital
Management, Inc.*,
Gartmore Morley
Financial Services,
Inc.,* NorthPointe Capital,
LLC*, GGAMT*, GGI*, GMF*,
and GSA* and a Director of
Nationwide Securities, Inc.*
as well as several entities
within Nationwide Financial
Services, Inc.* Prior to that,
Mr. Hondros served as
President and Chief
Operations Officer of
Pilgrim Baxter and
Associates, Ltd., an investment management
firm, and its affiliated
investment management
Paul J. Hondros arm, Pilgrim Baxter Value
Gartmore Global Investors, Inc. and as
Investments, Inc. Executive Vice
1200 River Road President to the PBHG
Conshohocken, Funds, PBHG Insurance
PA 19428. . . . . . . Trustee and Since Series Funds and PBHG
Age 54. . . . . . . . Chairman July 2000 Adviser Funds. 82(3) None
- ----------------------------------------------------------------------------------------------------------------
Mr. Shisler is President
and Chief Executive
Officer of
K&B Transport, Inc., a
trucking firm, Chairman
of the Board for Nationwide
Arden L. Shisler Mutual Insurance Company*
1356 North Wenger Rd. Since and a Director of
Dalton, OH 44618 February Nationwide Financial
Age 61. . . . . . . . Trustee 2000 Services, Inc.* 82 None
- ----------------------------------------------------------------------------------------------------------------
Mr. Holland is Senior
Vice President - Chief
Administrative
Officer for GGI*, GMF*,
GSA* and GDSI.* From
July 2000 to March 2002
he was Senior Vice
Gerald J. Holland President -Operations for
Gartmore Global GGI, GMF and GSA. Prior
Investments, Inc. to July 2000, he was
1200 River Road Vice President for First
Conshohocken, PA Data Investor Services, an
19428 Since investment company
Age 51. . . . . . . . Treasurer March 2001 service provider. 82 None
- ----------------------------------------------------------------------------------------------------------------
Eric E. Miller Mr. Miller is Senior Vice
Gartmore Global President, Chief Counsel
Investments, Inc. For GGI*, GMF*, and GSA*.
1200 River Road Prior to August 2002, he
Conshohocken, PA Since was a Partner with
19428 December Stradley Ronon Stevens &
Age 49. . . . . . . . Secretary 2002 Young, LLP. 82 None
- ----------------------------------------------------------------------------------------------------------------
1 The term of office length is until a director resigns or reaches a
mandatory retirement age of 70. The Trust adopted a five-year
implementation period for any Trustee 65 or older as of the adoption of
this policy.
2 Directorships held in (1) any other investment companies registered under
the 1940 Act, (2) any company with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or (3) any company subject to the requirements of
Section 15(d) of the Exchange Act.
3 Mr. Wetmore serves as an independent member, and Mr. Hondros serves as a
member, of the Administrative Committee for The AlphaGen Caelum Fund LLC,
The AlphaGen Caelum Fund LDC, The Healthcare Fund LLC and The Healthcare
Fund LDC, four hedge funds managed by Gartmore SA Capital Trust ("GSA").
* This position is held with an affiliated person or principal underwriter of
the Funds.
2003 SEMIANNUAL REPORT 93
- --------------------------------------------------------------------------------
Asset allocation is widely regarded as the key strategy for investment success.
That's because diversifying your investments among various asset classes helps
to mitigate risk potential and can increase the return potential of your overall
portfolio. In fact, studies have shown that more than 90% of the variability of
returns associated with an overall portfolio across time is driven by the power
of asset allocation.*
At Gartmore Funds, we offer you a full menu of
specialized funds and solid core funds that can serve as the building blocks you
need for diversified asset allocation strategies and powerful performance
potential.
SECTOR SERIES
Gartmore Global Financial Services Fund
Gartmore Global Health Sciences Fund
Gartmore Global Technology and Communications Fund1,2
Gartmore Global Utilities Fund1,2
LEADERSHIP SERIES
Gartmore Nationwide Leaders Fund1
Gartmore U.S. Growth Leaders Fund1
Gartmore Worldwide Leaders Fund1,2
INTERNATIONAL SERIES
Gartmore Emerging Markets Fund2
Gartmore International Growth Fund2
Gartmore International Small Cap Growth Fund2,3
CONCEPT SERIES
Gartmore High Yield Bond Fund4
Gartmore Micro Cap Equity Fund3
Gartmore Millennium Growth Fund
Gartmore Value Opportunities Fund3
CORE EQUITY SERIES
Gartmore Growth Fund
Gartmore Large Cap Value Fund
Gartmore Mid Cap Growth Fund
Gartmore Total Return Fund
CORE ASSET ALLOCATION SERIES
Gartmore Investor Destinations Aggressive Fund
Gartmore Investor Destinations Moderately Aggressive Fund
Gartmore Investor Destinations Moderate Fund
Gartmore Investor Destinations Moderately Conservative Fund
Gartmore Investor Destinations Conservative Fund
CORE FIXED INCOME SERIES
Gartmore Bond Fund
Gartmore Government Bond Fund5
Gartmore Money Market Fund6
Gartmore Morley Enhanced Income Fund
Gartmore Tax-Free Income Fund7
[GRAPHIC OMITTED]
The above chart is not intended to indicate the future risk or return levels for
these fund categories.
1. Funds that concentrate on specific sectors or a relatively small number of
securities may be subject to greater volatility than a more diversified
investment.
2. International investing involves additional risks, including currency
fluctuations, political instability and foreign regulations, all of which
are magnified in emerging markets.
3. Small-cap stocks have higher risks than the stocks of larger, more
established companies and have significant short-term price volatility.
4. High-yield funds are typically subject to greater risk and price volatility
than funds that invest in higher-rated debt securities.
5. While the fund invests primarily in securities of the U.S. government and
its agencies, the fund's value is not guaranteed by these entities.
6. An investment in a money market fund is not insured or guaranteed by the
FDIC or any other government agency. Although the money market fund seeks
to preserve the value of your investment at $1.00 per share, it is possible
to lose money by investing in the money market fund.
7. For some investors, income from the fund may be subject to state and local
taxes, and the Federal Alternative Minimum Tax.
* Sources: Ibbotson and Kaplan, "Does Asset Allocation Policy Explain 40, 90,
or 100 Percent of Performance?", Financial Analysts Journal
(January/February 2000); Brinson Hood Beebower Study (1991).
1200 River Road, Suite 1000
Conshohocken, PA 19428
888-223-2116
WWW.GARTMOREFUNDS.COM
Gartmore Funds Shareholder Services:
800-848-0920
GG-0092 6/03
ITEM 2. CODE OF ETHICS.
Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer, or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or a
third party. If the registrant has not adopted such a code of ethics,
explain why it has not done so.
THIS DISCLOSURE IS NOT APPLICABLE. THIS DISCLOSURE IS EFFECTIVE
ONLY FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR AFTER JULY 15,
2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of directors has determined
that the registrant either:
(i) Has at least one audit committee financial expert serving on
its audit committee; or
(ii) Does not have an audit committee financial expert serving on
its audit committee.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit
committee financial expert and whether that person is
"independent." In order to be considered "independent" for
purposes of this Item, a member of an audit committee may not,
other than in his or her capacity as a member of the audit
committee, the board of directors, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or
other compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as
defined in Section 2(a)(19) of the 1940 Act (15 U.S.C.
80a-2(a)(19)).
(3) If the registrant provides the disclosure required by paragraph
(a)(1)(ii) of this Item, it must explain why it does not have an
audit committee financial expert.
THIS DISCLOSURE IS NOT APPLICABLE. THIS DISCLOSURE IS EFFECTIVE
ONLY FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR AFTER JULY 15,
2003.
- --------------------------------------------------------------------------------
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for
each of the last two fiscal years for professional services rendered
by the principal accountant for the audit of the registrant's annual
financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or
engagements for those fiscal years.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees
billed in each of the last two fiscal years for assurance and related
services by the principal accountant that are reasonably related to
the performance of the audit of the registrant's financial statements
and are not reported under paragraph (a) of this Item. Registrants
shall describe the nature of the services comprising the fees
disclosed under this category.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in
each of the last two fiscal years for professional services rendered
by the principal accountant for tax compliance, tax advice, and tax
planning. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed
in each of the last two fiscal years for products and services
provided by the principal accountant, other than the services reported
in paragraphs (a) through (c) of this Item. Registrants shall describe
the nature of the services comprising the fees disclosed under this
category.
(e) (1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation
S-X.
(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by the
audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X.
(f) If greater than 50 percent, disclose the percentage of hours expended
on the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with
or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant for each of the last
two fiscal years of the registrant.
(h) Disclose whether the registrant's audit committee of the board of
directors has considered whether the provision of nonaudit services
that were rendered to the registrant's investment adviser (not
including any subadviser whose role is primarily portfolio management
and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii)
of Rule 2-01 of Regulation S-X is compatible with maintaining the
principal accountant's independence.
THIS DISCLOSURE IS NOT APPLICABLE. THIS DISCLOSURE IS EFFECTIVE
ONLY FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR AFTER DECEMBER
15, 2003.
ITEMS 5-6. [RESERVED]
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ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report
on this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940, as amended (15 U.S.C. 80a-2(a)(3)), and
the rules thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
THIS DISCLOSURE IS NOT APPLICABLE TO THE REGISTRANT, WHICH IS AN OPEN-END
MANAGEMENT INVESTMENT COMPANY.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive
officer or officers and principal financial officer or officers, or
persons performing similar functions, about the effectiveness of the
registrant's disclosure controls and procedures (as defined in Rule
30a-2(c) under the Act (17 CFR 270.30a-2(c))) based on their
evaluation of these controls and procedures as of a date within 90
days of the filing date of the report that includes the disclosure
required by this paragraph.
THE CERTIFYING OFFICERS, WHOSE CERTIFICATIONS ARE INCLUDED
HEREWITH, HAVE EVALUATED THE REGISTRANT'S DISCLOSURE CONTROLS AND
PROCEDURES WITHIN NINETY (90) DAYS OF THE FILING DATE OF THIS
REPORT. THIS EVALUATION BY THE CERTIFYING OFFICERS: (A) DID NOT
IDENTIFY ANY INSTANCES WHERE THE REGISTRANT'S DISCLOSURE CONTROLS
AND PROCEDURES WERE DEEMED TO BE INADEQUATELY DESIGNED; AND (B)
INDICATED THAT THE REGISTRANT'S DISCLOSURE CONTROLS AND
PROCEDURES ARE OPERATING EFFECTIVELY TO ENSURE THAT:
i. MATERIAL INFORMATION RELATING TO THE REGISTRANT,
INCLUDING THE REGISTRANT'S CONSOLIDATED SUBSIDIARIES,
IS MADE KNOWN TO THESE ENTITIES BY OTHERS WITHIN THOSE
ENTITIES, PARTICULARLY DURING THE PERIOD IN WHICH THIS
REPORT IS BEING PREPARED; AND
ii. INFORMATION THAT IS REQUIRED TO BE DISCLOSED BY THE
REGISTRANT IN THE REPORTS THAT THE REGISTRANT FILES OR
SUBMITS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "1934 ACT"), IS RECORDED, PROCESSED,
SUMMARIZED, AND REPORTED WITHIN THE TIME PERIODS
SPECIFIED IN THE SECURITIES AND EXCHANGE COMMISSION'S
RULES AND FORMS.
(b) There were no significant changes in the registrant's internal
controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
THERE ARE NO SIGNIFICANT DEFICIENCIES OR MATERIAL WEAKNESSES IN
THE REGISTRANT'S INTERNAL CONTROLS AS OF THE DATE OF THE MOST
RECENT EVALUATION OF THESE INTERNAL CONTROLS, AND THERE HAVE BEEN
NO SIGNIFICANT CHANGES IN THE REGISTRANT'S INTERNAL CONTROLS OR
IN OTHER FACTORS THAT COULD SIGNIFICANTLY AFFECT THESE CONTROLS
SUBSEQUENT TO THE DATE OF THEIR MOST RECENT EVALUATION.
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ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Exhibit A: Any code of ethics, or amendment thereto, that is the
subject of the disclosure required by Item 2, to the extent that the
registrant intends to satisfy the Item 2 requirements through filing
of an exhibit.
THIS DISCLOSURE IS NOT APPLICABLE. THIS DISCLOSURE IS EFFECTIVE
ONLY FOR ANNUAL REPORTS WITH PERIODS ENDING ON OR AFTER JULY 15,
2003.
(b) Exhibit B: A separate certification for each principal executive
officer and principal financial officer of the registrant as required
by Rule 30a-2 under the Act (17 CFR 270.30a-2).
SEE ATTACHED SEPARATE CERTIFICATION FOR EACH OF THE PRINCIPAL
EXECUTIVE OFFICER AND THE PRINCIPAL FINANCIAL OFFICER OF THE
REGISTRANT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: GARTMORE MUTUAL FUNDS
By: /s/ GERALD J. HOLLAND
Name: Gerald J. Holland
Title: Treasurer
Date: 7/2/03
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ PAUL J. HONDROS
Name: Paul J. Hondros
Title: President & Chairman of the Board
Date: 7/2/03
By: /s/ GERALD J. HOLLAND
Name: Gerald J. Holland
Title: Treasurer
Date: 7/2/03
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