UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-7345
CDC Nvest Funds Trust III
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(Exact name of registrant as specified in charter)
399 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
John E. Pelletier, Esq.
CDC IXIS Asset Management Distributors, L.P.
399 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 449-2801
Date of fiscal year end: December 31, 2003
Date of reporting period: June 30, 2003
Item 1. Reports to Stockholders.
The Registrant's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
[LOGO] CDC Nvest Funds(SM)
CDC IXIS Asset Management Distributors
[GRAHIC]
Equity Funds
Semiannual Report
June 30, 2003
CDC Nvest Capital Growth Fund
Westpeak Global Advisors
CDC Nvest Growth and Income Fund
Harris Associates
CDC Nvest International Equity Fund
Loomis, Sayles & Company
CDC Nvest Large Cap Growth Fund
Vaughan, Nelson, Scarborough & McCullough
CDC Nvest Select Fund
Harris Associates
CDC Nvest Targeted Equity Fund
Capital Growth Management Limited Partnership
TABLE OF CONTENTS
Management Discussion ....................................................Page 1
Risks of the CDC Nvest Equity Funds .....................................Page 13
Schedule of Investments .................................................Page 14
Financial Statements ....................................................Page 25
CDC Nvest Capital Growth Fund
Portfolio Profile
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Objective:
Seeks long-term growth of capital
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Strategy:
Invests primarily in common stocks of large- and mid-cap companies in any
industry
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Inception Date:
August 3, 1992
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Manager:
Westpeak Global
Advisors, L.P.
Team Management
Symbols:
Class A NEFCX
Class B NECBX
Class C NECGX
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Net Asset Value Per Share:
(June 30, 2003)
Class A $9.66
Class B 8.49
Class C 8.47
Management Discussion
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The first half of 2003 included a solid rebound for stock prices that began in
March, as investors became more confident that the military campaign in Iraq
would be swift and successful. For the six months ended June 30, 2003, CDC Nvest
Capital Growth Fund's total return was 12.59% based on the net asset value of
Class A shares. The fund trailed its benchmark, the Russell 1000 Growth Index,
which returned 13.09%, and was near the middle of its Morningstar Large Growth
category, which averaged a return of 12.70%.
Large tech stocks rally
Despite lingering uncertainties, investors seem ready to put their money back to
work. The star performers in the recent rally included large-cap technology
companies whose stock prices had been particularly hard hit during the past few
years. Some stocks enjoyed a rally of a magnitude not seen since the technology
bubble days of 1999.
Leading companies in computer hardware and software as well as semiconductors
were among the fund's largest holdings as of June 30 because we believe they are
due for a sustained rally. Individual stocks that performed well during the
period included Intel and Cisco, both among the fund's largest holdings. Intel's
performance was disappointing last year, but we held the stock and it has proven
to be one of the most rewarding stocks in the semiconductor industry. Cisco
Systems, also among the fund's largest holdings, has had six straight quarters
of positive earnings, giving investors increasing confidence in the stock. Among
the fund's financial services holdings, Capital One Financial has been a strong
performer; we believe it is still modestly priced relative to its earnings, and
we have been adding to the fund's holdings in the stock.
Not all tech giants were leaders in the rally. One of the fund's largest
holdings, Microsoft, gained only modestly during the first half of 2003.
However, we believe some of the products Microsoft has in its pipeline will
support strong earnings growth.
Sector strategy also favors healthcare companies
We continue to hold Johnson & Johnson, one of the world's largest, most
diversified healthcare companies. The company's major presence in the drug and
medical industries makes it attractive at this stage in the economic cycle.
Varian Medical Systems also looks healthy because of the quality of its
earnings; it has enjoyed strong profit growth in the past several quarters from
its x-ray and oncology products.
Portfolio sales reflected strategy adjustments
We wanted to trim the fund's holdings in financial services, so we took losses
in American Express and Freddie Mac, and sold MBNA on strength. Both Capital One
and MBNA are leading financial companies that participated in the rally this
spring, although the former was the better performer of the two. We also sold Nu
Skin Enterprises at a loss. This home-products company's costs were higher than
anticipated, flattening earnings. We sold Oracle on strength following a run up
in the price of the stock and we increased the fund's energy holdings slightly.
However, we decreased the fund's position in consumer discretionary stocks,
taking profits in Wal-Mart and Nike. In general, we continue to hold relatively
modest positions in consumer stocks at this stage in the economic cycle.
Earnings are expected to drive the market
While it remains to be seen whether the Federal Reserve Board's rate cuts will
help to reinvigorate the economy, we believe the staying power of this spring's
stock-price rally hinges on corporate earnings. Consequently, we have structured
CDC Nvest Capital Growth Fund's portfolio to benefit more from corporate
spending than from consumer activity.
1
CDC Nvest Capital Growth Fund
Investment Results through June 30, 2003
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Performance in Perspective
The charts comparing CDC Nvest Capital Growth Fund's performance to a benchmark
index provide you with a general sense of how the fund performed. To put this
information in context, it may be helpful to understand the differences between
the two. The fund's total return for the period shown below appears with and
without sales charges and includes fund expenses and management fees. A
securities index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the results.
It is not possible to invest directly in an index. In addition, few investors
could purchase all of the securities necessary to match the index and would
incur transaction costs and other expenses even if they could.
Growth of a $10,000 Investment in Class A Shares
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June 30, 1993 through June 30, 2003
Russell
1000
Growth
Class A Class A Index/4/
@ N.A.V/1/ @ M.S.C./2/ ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ---------- ---------- ----------
6/30/1993 10,000 9,425 10,000
9,768 9,206 9,821
10,157 9,573 10,224
10,382 9,785 10,149
10,443 9,843 10,431
10,164 9,579 10,361
10,473 9,871 10,539
10,802 10,181 10,784
10,521 9,916 10,586
9,959 9,386 10,075
9,945 9,373 10,121
9,904 9,334 10,274
6/30/1994 9,479 8,934 9,970
9,842 9,276 10,311
10,260 9,671 10,885
10,089 9,509 10,738
10,528 9,923 10,990
10,069 9,490 10,638
10,302 9,709 10,816
10,384 9,787 11,047
10,796 10,175 11,510
11,152 10,511 11,846
11,324 10,673 12,105
11,639 10,970 12,526
6/30/1995 12,414 11,700 13,010
12,970 12,224 13,550
13,203 12,444 13,565
13,649 12,864 14,190
13,432 12,660 14,200
13,758 12,967 14,752
13,470 12,696 14,837
13,719 12,930 15,333
14,077 13,268 15,613
13,945 13,144 15,633
14,641 13,799 16,045
15,080 14,212 16,605
6/30/1996 14,875 14,019 16,628
13,850 13,054 15,654
14,377 13,550 16,058
15,570 14,675 17,227
15,562 14,667 17,331
16,338 15,398 18,632
15,766 14,860 18,267
16,658 15,700 19,548
16,200 15,268 19,416
14,989 14,127 18,365
15,635 14,736 19,585
17,010 16,032 20,998
6/30/1997 17,485 16,479 21,839
18,712 17,636 23,770
17,853 16,826 22,379
18,392 17,334 23,480
17,649 16,634 22,612
18,111 17,069 23,573
18,483 17,420 23,837
18,631 17,560 24,549
19,910 18,765 26,396
20,799 19,603 27,448
21,169 19,952 27,828
20,660 19,472 27,039
6/30/1998 21,735 20,485 28,695
21,531 20,293 28,505
18,112 17,071 24,227
19,199 18,095 26,088
20,601 19,417 28,184
21,838 20,583 30,328
23,857 22,485 33,063
25,057 23,616 35,004
23,649 22,289 33,405
24,169 22,779 35,165
24,641 23,225 35,210
24,191 22,800 34,128
6/30/1999 25,472 24,008 36,518
24,907 23,474 35,357
25,126 23,681 35,935
24,759 23,336 35,180
26,484 24,961 37,837
27,271 25,703 39,878
29,757 28,046 44,026
28,079 26,464 41,962
29,250 27,568 44,013
31,594 29,777 47,163
30,656 28,894 44,919
29,224 27,544 42,657
6/30/2000 31,151 29,360 45,890
30,344 28,599 43,977
32,717 30,835 47,959
29,695 27,987 43,422
28,665 27,017 41,368
24,798 23,372 35,270
23,948 22,571 34,154
25,095 23,652 36,513
21,687 20,440 30,314
19,665 18,534 27,016
22,324 21,041 30,432
22,070 20,801 29,984
6/30/2001 21,724 20,475 29,290
20,578 19,394 28,558
18,921 17,833 26,223
16,978 16,002 23,605
17,759 16,737 24,843
19,303 18,194 27,230
19,049 17,954 27,178
18,969 17,878 26,698
18,282 17,231 25,590
18,905 17,818 26,475
17,851 16,825 24,315
17,468 16,463 23,726
6/30/2002 16,031 15,109 21,532
14,786 13,935 20,348
14,801 13,950 20,409
13,237 12,476 18,292
14,195 13,378 19,970
14,658 13,815 21,054
13,700 12,912 19,600
13,348 12,581 19,124
13,412 12,641 19,037
13,684 12,897 19,391
14,482 13,649 20,825
15,280 14,402 21,864
6/30/2003 15,424 14,537 22,165
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Average Annual Total Returns --June 30, 2003
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Since
6 Months 1 Year 5 Years 10 Years Inception
-------- ------ ------- -------- ---------
Class A (Inception 8/3/92)
Net Asset Value/1/ 12.59% -3.78% -6.63% 4.43% --
With Maximum Sales Charge/2/ 6.15 -9.30 -7.73 3.82 --
Class B (Inception 9/13/93)
Net Asset Value/1/ 12.30 -4.50 -7.34 -- 3.61%
With CDSC/3/ 7.30 -9.27 -7.54 -- 3.61
Class C (Inception 12/30/94)
Net Asset Value/1/ 12.04 -4.62 -7.38 -- 4.00
With Maximum Sales Charge and CDSC/3/ 9.87 -6.52 -7.57 -- 3.88
- ------------------------------------------------------------------------------------------
Since Since
Class B Class C
Comparative Performance 6 Months 1 Year 5 Years 10 Years Incept./7/ Incept./7/
- ----------------------- -------- ------ ------- -------- ---------- ----------
Russell 1000 Growth Index/4/ 13.09% 2.94% -5.03% 8.28% 8.34% 8.81%
Morningstar Large Growth Fund Avg./5/ 12.70 -0.46 -3.74 7.41 6.86 7.91
Lipper Large Cap Growth Funds Avg./6/ 12.25 -0.76 -4.49 6.72 6.23 7.22
All returns represent past performance and do not guarantee future results.
Share price and return will vary and you may have a gain or loss when you sell
your shares. All results include reinvestment of dividends and capital gains.
Current returns may be higher or lower than those shown.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
Portfolio Facts
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% of Net Assets
as of
------------------
Fund Composition 6/30/03 12/31/02
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Common Stocks 99.2 99.5
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Short Term Investments and Other 0.8 0.5
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/03 12/31/02
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Microsoft Corp. 7.6 6.4
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Intel Corp. 6.1 4.0
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Pfizer, Inc. 4.9 4.8
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Cisco Systems, Inc. 4.7 4.4
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General Electric Co. 4.6 4.6
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Merck & Co., Inc. 4.6 2.9
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Procter & Gamble Co. 4.2 4.1
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Dell Computer Corp. 4.1 4.6
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Capital One Financial Corp. 3.5 0.6
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Texas Instruments, Inc. 2.7 1.1
% of Net Assets
as of
------------------
Five Largest Industries 6/30/03 12/31/02
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Pharmaceuticals 16.1 10.3
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Semiconductors 10.3 6.8
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Software 10.1 9.5
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Financial Services 8.7 8.0
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Computers 7.5 7.1
Portfolio holdings and asset allocations will vary.
See page 13 for information on the possible risks associated with an investment
in this fund.
Notes to Charts
/1/ Does not include a sales charge.
/2/ Includes maximum sales charge of 5.75%.
/3/ Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares. Class C share
performance assumes a 1.00% sales charge and a 1.00% CDSC applied when you
sell shares within one year of purchase.
/4/ Russell 1000 Growth Index is an unmanaged index measuring the performance
of the largest 1000 U.S. growth companies within the Russell 3000.
/5/ Morningstar Large Growth Fund Average is the average performance without
sales charges of funds with similar investment objectives as calculated by
Morningstar, Inc.
/6/ Lipper Large Cap Growth Funds Average is the average performance without
sales charges of funds with similar investment objectives as calculated by
Lipper Inc.
/7/ The since-inception performance comparisons shown for each Class of fund
shares are calculated as follows: Class B from 9/30/93; Class C from
12/31/94.
2
CDC Nvest Growth and Income Fund
Portfolio Profile
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Objective:
Seeks long-term capital growth and income
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Strategy:
Invests primarily in common stock of large- and mid-cap companies in any
industry
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Inception Date:
May 6, 1931
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Manager:
Robert M. Levy
Edward S. Loeb
Michael J. Mangan
Harris Associates L.P.
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Symbols:
Class A NEFOX
Class B NEGBX
Class C NECOX
Class Y NEOYX
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Net AssetValue
Per Share:
(June 30, 2003)
Class A $10.83
Class B 10.34
Class C 10.31
Class Y 11.07
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Management Discussion
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Despite war concerns and downbeat headlines, the U.S. economy expanded slightly
and corporate profits generally met expectations during the first half of 2003.
Stock prices began to recover in March and by the end of June the major averages
had risen substantially from their earlier lows.
For the six months ended June 30, 2003, Class A shares of CDC Nvest Growth and
Income Fund provided a total return of 14.97% at net asset value. The fund's
results were significantly ahead of its benchmarks, the Russell 1000 Value
Index, which returned 11.57%, and the Standard & Poor's 500 Index, which
returned 11.76%. It was also near the top of its Morningstar peer group of Large
Blend Funds, which averaged 10.88% for the period.
Consumer discretionary stocks were strong performers
Anticipation of a recovery in business travel helped boost shares of Cendant,
which owns car rental companies Avis and Budget, as well as an airline
reservations system. Profits at Coldwell Banker, Cendant's real estate division,
have expanded thanks to the strong housing market. We purchased shares of
McDonald's and Home Depot when their valuations fell; both later rebounded. Home
Depot's shares began to recover as management corrected ill-timed changes that
had disrupted operations at many stores. Meanwhile, McDonald's announced a major
shift away from growth by expanding the number of its stores to growing revenues
within each location. This revised strategy encouraged investors and pushed
shares higher. Liberty Media, which owns the Discovery Channel and other cable
programming businesses, also performed well. And Comcast met or exceeded
investor expectations after acquiring AT&T's cable business.
Healthcare and finance were also positive
Sales of Guidant's arterial stents and other cardiac devices rose sharply and
the price of its stock followed. Drug makers Bristol-Myers Squibb and Merck both
rose in a strengthening pharmaceutical sector. Among financial companies,
Washington Mutual, a leading thrift, continued to deliver solid earnings growth.
Kraft and Safeway slumped, Duke and interpublic were mixed
Relative to its benchmark, the fund was overweight in consumer staples
companies, which held the fund back during the first half of 2003. As investors
gained confidence in the economy, they began selling relatively stable stocks
like Kraft Foods in order to seek more rapid growth. That shift also had a
negative impact on Safeway, which has also been experiencing intense competition
from Wal-Mart - a negative for many supermarket chains. As values fell, we
added to both Kraft and Safeway.
Like many utilities, Duke Energy suffered in the post-Enron fallout. Its stock
price fell early in the year and then recovered. Interpublic, a leading
advertising agency, continued to experience sluggish advertising sales and
grappled with problems related to an acquisition. However, shares began to
recover late in the period.
Cheap stocks are harder to find
The market has had a significant run since spring and it would not be surprising
to see a cooling-off period. However, this might be healthy because it might
allow earnings to catch up to stock valuations.
Currently, bargain stocks are harder to find than they were a few months ago,
but market volatility has a tendency to create opportunities over time provided
economic direction remains positive. We strive to take advantage of those
opportunities. Many growth companies that once were too pricey for disciplined
value investors - companies with good balance sheets and better-than-average
prospects - now fit well into the strict parameters we favor. This strategy has
benefited CDC Nvest Growth and Income Fund thus far, and we are optimistic that
it will continue to do so.
3
CDC Nvest Growth and Income Fund
Investment Results through June 30, 2003
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Performance in Perspective
The charts comparing CDC Nvest Growth and Income Fund's performance to a
benchmark index provide you with a general sense of how the fund performed. To
put this information in context, it may be helpful to understand the differences
between the two. The fund's total return for the period shown below appears with
and without sales charges and includes fund expenses and management fees. A
securities index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unman aged and does not have expenses that affect the
results. It is not possible to invest directly in an index. In addition, few
investors could purchase all of the securities necessary to match the index and
would incur transaction costs and other expenses even if they could.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
June 30,1993 through June 30, 2003
Russell S&P
1000 500
Class A Class A Value/4/ Index/5/
@ N.A.V/1/ @ M.S.C./2/ ---------- ----------
Month Cumulative Cumulative Cumulative Cumulative
End Value Value Value Value
- ---------- ---------- ---------- ---------- ----------
6/30/1993 10,000 9,425 10,000 10,000
9,952 9,380 10,110 9,960
10,342 9,748 10,475 10,338
10,239 9,650 10,493 10,258
10,423 9,824 10,484 10,471
10,271 9,680 10,266 10,371
10,386 9,789 10,462 10,496
10,763 10,144 10,856 10,853
10,443 9,843 10,485 10,558
10,007 9,432 10,095 10,098
10,090 9,510 10,288 10,228
10,287 9,696 10,407 10,395
6/30/1994 10,057 9,479 10,158 10,141
10,355 9,759 10,474 10,474
10,794 10,173 10,775 10,903
10,537 9,931 10,418 10,636
10,704 10,088 10,564 10,875
10,338 9,743 10,138 10,479
10,489 9,886 10,256 10,635
10,751 10,133 10,571 10,911
11,106 10,467 10,990 11,336
11,415 10,758 11,231 11,670
11,763 11,086 11,587 12,014
12,144 11,446 12,073 12,494
6/30/1995 12,428 11,714 12,237 12,784
12,863 12,123 12,663 13,208
12,982 12,235 12,842 13,241
13,552 12,773 13,306 13,800
13,418 12,647 13,174 13,751
13,867 13,069 13,841 14,355
14,172 13,357 14,189 14,631
14,616 13,775 14,631 15,129
14,694 13,849 14,742 15,269
14,768 13,919 14,993 15,416
14,817 13,965 15,050 15,644
15,044 14,179 15,238 16,047
6/30/1996 14,722 13,875 15,251 16,108
13,990 13,185 14,674 15,397
14,326 13,502 15,094 15,721
15,059 14,193 15,694 16,606
15,523 14,630 16,301 17,064
16,902 15,930 17,483 18,354
16,611 15,656 17,260 17,990
17,437 16,434 18,097 19,114
17,652 16,637 18,363 19,264
16,885 15,914 17,702 18,473
17,773 16,751 18,446 19,575
18,913 17,825 19,476 20,767
6/30/1997 19,840 18,699 20,312 21,698
21,090 19,877 21,840 23,424
20,489 19,311 21,062 22,112
21,754 20,503 22,335 23,323
20,800 19,604 21,711 22,544
21,697 20,449 22,671 23,588
22,164 20,890 23,333 23,993
22,295 21,013 23,003 24,258
24,085 22,700 24,551 26,008
25,442 23,979 26,053 27,339
25,573 24,102 26,227 27,615
25,226 23,775 25,838 27,140
6/30/1998 26,280 24,769 26,169 28,242
25,876 24,388 25,707 27,942
21,963 20,700 21,882 23,902
23,056 21,730 23,138 25,433
24,722 23,300 24,930 27,502
25,843 24,357 26,091 29,169
27,468 25,888 26,979 30,849
28,263 26,638 27,195 32,139
27,584 25,998 26,811 31,141
27,965 26,357 27,366 32,386
29,623 27,919 29,922 33,641
29,490 27,794 29,593 32,846
6/30/1999 30,410 28,662 30,452 34,669
29,513 27,816 29,561 33,587
29,114 27,440 28,463 33,420
27,934 26,327 27,469 32,504
29,052 27,382 29,050 34,561
29,137 27,462 28,823 35,264
30,063 28,334 28,962 37,341
28,494 26,856 28,017 35,465
27,533 25,950 25,935 34,793
29,769 28,057 29,100 38,197
29,278 27,595 28,761 37,048
28,376 26,745 29,064 36,288
6/30/2000 28,749 27,096 27,736 37,182
28,573 26,930 28,083 36,601
30,491 28,738 29,646 38,874
29,097 27,424 29,918 36,822
29,177 27,500 30,652 36,666
27,440 25,862 29,515 33,776
27,864 26,262 30,993 33,941
27,884 26,281 31,113 35,145
26,227 24,719 30,247 31,941
24,752 23,329 29,179 29,917
26,773 25,234 30,609 32,242
26,814 25,272 31,297 32,458
6/30/2001 25,884 24,396 30,603 31,668
24,995 23,558 30,538 31,356
23,459 22,111 29,315 29,393
21,500 20,263 27,251 27,020
22,267 20,987 27,017 27,535
23,843 22,472 28,588 29,647
23,803 22,434 29,261 29,907
23,682 22,320 29,035 29,470
23,056 21,730 29,082 28,902
23,682 22,320 30,458 29,989
23,015 21,692 29,413 28,171
22,914 21,596 29,561 27,963
6/30/2002 21,540 20,301 27,864 25,972
20,166 19,006 25,273 23,947
20,671 19,482 25,464 24,104
17,882 16,854 22,633 21,485
18,549 17,483 24,310 23,376
19,802 18,663 25,841 24,751
19,034 17,940 24,719 23,297
18,569 17,502 24,120 22,687
17,983 16,949 23,477 22,347
18,206 17,159 23,516 22,564
19,923 18,778 25,586 24,422
21,419 20,187 27,238 25,709
6/30/2003 21,883 20,625 27,578 26,037
-------- ---------- ---------- ----------
Average Annual Total Returns -- June 30, 2003
- --------------------------------------------------------------------------------
Since
6 Months 1 Year 5 Years 10 Years Inception
-------- ------ ------- -------- ---------
Class A (Inception 5/6/31)
Net Asset Value/1/ 14.97% 1.60% -3.60% 8.15% --
With Maximum Sales Charge/2/ 8.41 -4.24 -4.73 7.50 --
Class B (Inception 9/13/93)
Net Asset Value/1/ 14.63 0.88 -4.30 -- 7.26
With CDSC/3/ 9.63 -4.12 -4.57 -- 7.26
Class C (Inception 5/1/95)
Net Asset Value/1/ 14.43 0.68 -4.35 -- 7.11
With Maximum Sales Charge and CDSC/3/ 12.31 -1.28 -4.54 -- 6.98
Class Y (Inception 11/18/98)
Net Asset Value/1/ 15.43 2.22 -- -- -2.71
- ------------------------------------------------------------------------------------------
Since Since Since
Class B Class C Class Y
Comparative Performance 6 Months 1 Year 5 Years 10 Years Incept./8/ Incept./8/ Incept./8/
- ----------------------- -------- ------ ------- -------- ---------- ---------- ----------
Russell 1000 Value Index/4/,/9/ 11.57% -1.02% 1.05% 10.68% 10.42% 10.76% 1.22%
S&P 500Index/5/ 11.76 0.25 -1.61 10.04 10.02 9.51 -2.45
Morningstar Large Blend Avg./6/ 10.88 -1.23 -1.90 8.45 8.25 8.40 -2.19
Lipper Large Cap Core Funds Average/7/ 10.38 -1.94 -2.71 8.13 7.92 7.44 -3.25
All returns represents past performance and do not guarantee future results.
Share price and return will vary and you may have a gain or loss when you sell
your shares. All results include reinvestment of dividends and capital gains.
Current returns may be higher or lower than those shown. Class Y shares are
available to certain institutional investors only.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
Portfolio Facts
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Fund Composition 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Common Stocks 94.5 94.4
- --------------------------------------------------------------------------------
Short Term Investments
and Other 5.5 5.6
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Washington Mutual, Inc. 4.6 4.4
- --------------------------------------------------------------------------------
Liberty Media Corp. 4.5 4.1
- --------------------------------------------------------------------------------
Home Depot, Inc. 4.0 2.2
- --------------------------------------------------------------------------------
AOL Time Warner, Inc. 3.8 2.9
- --------------------------------------------------------------------------------
McDonald's Corp. 3.5 2.3
- --------------------------------------------------------------------------------
Cendant Corp. 3.1 2.5
- --------------------------------------------------------------------------------
Walt Disney Co. (The) 3.1 2.8
- --------------------------------------------------------------------------------
Gap (The), Inc. 3.0 3.5
- --------------------------------------------------------------------------------
Kraft Foods, Inc. 3.0 2.7
- --------------------------------------------------------------------------------
Waste Management, Inc. 3.0 2.2
% of Net Assets
as of
------------------
Five Largest Industries 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Media - Broadcasting
& Publishing 12.0 11.8
- --------------------------------------------------------------------------------
Beverages, Food & Tobacco 10.3 10.0
- --------------------------------------------------------------------------------
Banking 7.3 7.0
- --------------------------------------------------------------------------------
Pharmaceuticals 5.8 5.0
- --------------------------------------------------------------------------------
Food Retailers 4.7 5.6
Portfolio holdings and asset allocations will vary.
See page 13 for information on the possible risks associated with an investment
in this fund.
Notes to Charts
/1/ Does not include a sales charge.
/2/ Includes the maximum sales charge of 5.75%.
/3/ Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares. Class C share
performance assumes a 1.00% sales charge and a 1.00% CDSC applied when you
sell shares within one year of purchase.
/4/ Russell 1000 Value Index is an unmanaged index of the largest 1000 U.S.
companies within the Russell 3000.
/5/ S&P 500 Index is an unmanaged index of U.S. common stock performance.
/6/ Morningstar Large Blend Average is an average performance of funds with
similar investment objectives as calculated without sales charges by
Morningstar, Inc.
/7/ Lipper Large Cap Core Funds Average is the average performance of mutual
funds with a similar current investment style or objective as calculated
without sales charges by Lipper Inc.
/8/ The since-inception performance comparisons shown for each Class of fund
shares are calculated as follows: Class B from 9/30/93; Class C from
5/31/95 and Class Y from 11/30/98.
/9/ The Russell 1000 Value Index replaced the S&P 500 Index as the Fund's
comparative index because CDC IXIS Advisors believes it is more
representative of the types of stocks in which the Fund can invest.
4
CDC Nvest International Equity Fund
Portfolio Profile
- --------------------------------------------------------------------------------
Objective:
Seeks total return from long-term capital growth and dividend income
- --------------------------------------------------------------------------------
Strategy:
Invests primarily in equity investments of companies organized or headquartered
out- side of the United States
- --------------------------------------------------------------------------------
Inception Date:
May 21, 1992
- --------------------------------------------------------------------------------
Managers:
Alexander Muromcew
John Tribolet
Eswar Menon
Loomis, Sayles &
Company, L.P.
- --------------------------------------------------------------------------------
Symbols:
Class A NEFIX
Class B NEIBX
Class C NECIX
Class Y NEIYX
- --------------------------------------------------------------------------------
Net AssetValue
Per Share:
(June 30, 2003)
Class A $10.90
Class B 10.29
Class C 10.26
Class Y 11.38
Management Discussion
- --------------------------------------------------------------------------------
All the world's major equity markets declined in the first quarter of 2003, but
the second quarter produced the best quarterly returns in nearly five years. For
the six months ended June 30, the total return on Class A shares of CDC Nvest
International Equity Fund was 8.57% at net asset value, while the total return
on its benchmark, the MSCI EAFE Index, was 9.85% for the period. The average
return on the funds in Morningstar's Foreign Stock Fund category was 9.41% for
the period. Broad diversification and good stock selection enabled the fund to
do well in absolute terms, although its relatively slim positions in technology
and finance, and its emphasis on materials, held the fund back.
European and tech stocks led a second-quarter rally
While the threat of military conflict in Iraq overshadowed positive economic
news during the first quarter, the start of military activities and mounting
expectations that the conflict would be brief and successful triggered a market
rebound in the second quarter. European markets (especially France and Germany)
led the first quarter's slide, while European and Asian markets led on the
upside in the second quarter, followed by the U.S. market. Currency played a
primary role in non-U.S. performance for the six-month period, as the U.S.
dollar continued to weaken against the euro - Europe's new unified currency.
Consumer, financial and energy selections were positive
The fund's emphasis on the consumer discretionary sector was beneficial -
notably its positions in the auto industry (including Autoliv and Nissan) and
hotels (Hilton). Kingfisher, an international retailer of home consumer goods,
was one of the fund's top performers during the period. Media giant Sony also
contributed. Good selections in finance helped to compensate for the fund's
relative underweight in this sector. Anglo Irish Bank, Spain's Banco Popolare
and Toronto Dominion Bank did well. One of the fund's best performers was
Deutsche Bank AG, which we bought on the rebound after negative news had sent
the stock price down. Energy selections also helped, including Japan's JGC Corp,
Canada's Encana and Russia's Lukoil.
Telecom was mixed, materials and industrials detracted
Although many formerly downtrodden telecommunications stocks rebounded during
the second-quarter rally, the fund's exposure to this sector was relatively
light and some of the stocks we selected did not do well. For example, Telenor
ASA is a Norwegian telecommunications company with strong fundamentals and
profit growth, but the price performance of the stock did not reflect this. By
contrast, Nokia was one of our star performers from a price standpoint, even
though the company's bottom line reflected mixed results.
The fund's emphasis on materials (including metals and mining, chemicals and
construction materials) was negative, but we believe many companies in this
sector are steady growers. Stocks of such firms as Siam Cement, BASF Chemicals
and Anglo American may not be glamorous, but we think they could help balance
out volatility in tech and telecom.
Earnings gains reflect cost savings, not growth
Although equity markets worldwide have responded enthusiastically to improving
earnings reports, the majority of these results reflect expense reductions
rather than revenue growth. Economic activity that began to accelerate late last
year was snuffed out when many companies put off capital investment until the
conflict in Iraq was resolved.
Earnings estimates for the second half of 2003 have been in line with
expectations, as many companies had already pared down their forecasts. We
believe the Japanese and European governments need to follow the U.S. example
and stimulate their economies by cutting interest rates and taxes. If this
occurs, we believe fundamentals for companies around the world should improve.
5
CDC Nvest International Equity Fund
Investment Results through June 30, 2003
- --------------------------------------------------------------------------------
Performance In Perspective
The charts comparing CDC Nvest International Equity Fund's performance to a
benchmark index provide you with a general sense of how the fund performed. To
put this information in context, it may be helpful to understand the differences
between the two. The fund's total return for the period shown below appears with
and without sales charges and includes fund expenses and management fees. A
securities index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the results.
It is not possible to invest directly in an index. In addition, few investors
could purchase all of the securities necessary to match the index and would
incur transaction costs and other expenses even if they could.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
June 30, 1993 through June 30, 2003
MSCI
Class A Class A EAFE/4/
@ N.A.V/1/ @ M.S.C./2/ ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ---------- ---------- ----------
6/30/1993 10,000 9,425 10,000
10,424 9,825 10,352
10,942 10,313 10,914
10,726 10,109 10,670
10,971 10,340 11,001
10,309 9,716 10,042
10,976 10,345 10,770
11,774 11,097 11,682
11,604 10,937 11,652
11,309 10,658 11,153
11,737 11,062 11,629
11,715 11,041 11,564
6/30/1994 11,915 11,229 11,730
12,011 11,320 11,846
12,336 11,627 12,129
11,937 11,250 11,750
12,351 11,641 12,144
11,759 11,083 11,563
11,860 11,178 11,638
11,294 10,645 11,193
11,363 10,710 11,164
11,753 11,077 11,864
12,059 11,366 12,313
12,021 11,330 12,169
6/30/1995 11,922 11,236 11,959
12,587 11,864 12,707
12,151 11,452 12,225
12,281 11,575 12,467
11,845 11,164 12,135
12,143 11,445 12,476
12,546 11,825 12,982
12,460 11,744 13,038
12,515 11,795 13,086
12,818 12,081 13,367
13,293 12,528 13,759
13,207 12,448 13,509
6/30/1996 13,308 12,543 13,588
12,849 12,110 13,194
12,880 12,140 13,227
13,054 12,303 13,582
12,824 12,086 13,446
13,133 12,378 13,984
12,956 12,211 13,808
12,169 11,470 13,328
12,336 11,627 13,549
12,320 11,612 13,601
12,154 11,455 13,677
12,781 12,046 14,570
6/30/1997 13,321 12,555 15,377
13,758 12,967 15,629
12,551 11,829 14,465
13,407 12,636 15,278
12,189 11,488 14,107
11,925 11,239 13,967
11,976 11,287 14,092
12,427 11,713 14,740
13,134 12,379 15,689
13,799 13,005 16,175
13,807 13,013 16,307
13,492 12,716 16,232
6/30/1998 12,998 12,250 16,358
13,143 12,387 16,528
11,380 10,725 14,484
11,106 10,467 14,043
11,791 11,113 15,511
12,442 11,727 16,310
12,777 12,043 16,957
12,759 12,026 16,911
12,186 11,485 16,512
12,410 11,696 17,205
12,947 12,203 17,906
12,526 11,806 16,988
6/30/1999 13,064 12,313 17,654
13,646 12,862 18,183
13,826 13,031 18,253
14,369 13,543 18,441
15,553 14,659 19,136
19,159 18,057 19,805
23,968 22,590 21,586
22,788 21,478 20,218
26,942 25,393 20,767
24,771 23,347 21,576
21,741 20,491 20,444
20,108 18,952 19,949
6/30/2000 20,910 19,708 20,734
19,617 18,489 19,868
20,212 19,049 20,045
19,233 18,127 19,073
17,592 16,581 18,626
16,456 15,510 17,932
17,124 16,140 18,573
17,093 16,110 18,564
15,486 14,595 17,174
14,157 13,343 16,037
14,940 14,081 17,162
14,724 13,877 16,570
6/30/2001 14,466 13,634 15,898
14,044 13,236 15,610
13,642 12,857 15,218
12,519 11,799 13,680
12,807 12,071 14,030
12,952 12,207 14,548
13,106 12,353 14,635
12,426 11,712 13,858
12,529 11,809 13,956
13,013 12,265 14,786
12,828 12,090 14,825
12,962 12,217 15,026
6/30/2002 12,385 11,673 14,433
11,190 10,546 13,009
11,087 10,449 12,983
9,953 9,381 11,592
10,314 9,721 12,216
10,829 10,206 12,772
10,345 9,750 12,343
9,871 9,303 11,829
9,871 9,303 11,559
9,685 9,129 11,340
10,407 9,808 12,465
11,056 10,420 13,231
6/30/2003 11,231 10,585 13,559
------ ------ ------
Average Annual Total Returns -- June 30, 2003
- --------------------------------------------------------------------------------
Since
6 Months 1 Year 5 Years/7/ 10 Years/7/ Inception/7/
-------- ------ ---------- ----------- ------------
Class A (Inception 5/21/92)
Net Asset Value/1/ 8.57% -9.32% -2.88% 1.17% --
With Maximum Sales Charge/2/ 2.35 -14.51 -4.02 0.57 --
Class B (Inception 9/13/93)
Net Asset Value/1/ 8.20 -9.97 -3.63 -- -0.43%
With CDSC/3/ 3.20 -14.48 -3.95 -- -0.43
Class C (Inception 12/30/94)
Net Asset Value/1/ 8.11 -10.00 -3.73 -- -1.40
With Maximum Sales Charge and CDSC/3/ 6.00 -11.83 -3.93 -- -1.52
Class Y (Inception 9/9/93)
Net Asset Value/1/ 9.11 -8.52 -2.23 -- 0.99
- ---------------------------------------------------------------------------------------------------
Since Since Since
Class B Class C Class Y
Comparative Performance 6 Months 1 Year 5 Years 10 Years Incept./8/ Incept./8/ Incept./8/
- ----------------------- -------- ------ ------- -------- ---------- ---------- ----------
MSCI EAFE/4/ 9.85% -6.06% -3.68% 3.09% 2.49% 1.81% 2.49%
Morningstar Foreign Stock Fund Avg./5/ 9.41 -7.41 -3.26 4.41 3.50 2.86 3.50
Lipper International Funds Average/6/ 8.60 -7.98 -3.79 4.17 3.32 2.55 3.32
All returns represent past performance and do not guarantee future results.
Share price and return will vary and you may have a gain or loss when you sell
your shares. All results include reinvestment of dividends and capital gains.
Current returns may be higher or lower than those shown. Class Y shares are
available to certain institutional investors only.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
Portfolio Facts
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Fund Composition 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Common Stocks 96.1 95.7
- --------------------------------------------------------------------------------
Short Term Investments
and Other 3.9 4.3
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Vodafone Group PLC 3.1 2.6
- --------------------------------------------------------------------------------
Royal Bank of Scotland Group PLC 2.7 2.1
- --------------------------------------------------------------------------------
Anglo Irish Bank Corp., 144A 2.4 2.2
- --------------------------------------------------------------------------------
Novartis AG 2.3 0.8
- --------------------------------------------------------------------------------
GlaxoSmithKline PLC 1.9 1.0
- --------------------------------------------------------------------------------
Kingfisher PLC 1.9 1.6
- --------------------------------------------------------------------------------
Eni SpA 1.4 1.7
- --------------------------------------------------------------------------------
Imperial Tobacco Group PLC 1.4 0.7
- --------------------------------------------------------------------------------
Banco Popolare di Verona e
Novara Scrl 1.4 1.5
- --------------------------------------------------------------------------------
BP PLC 1.4 1.2
% of Net Assets
as of
------------------
Five Largest Countries 6/30/03 12/31/02
- --------------------------------------------------------------------------------
United Kingdom 23.1 21.6
- --------------------------------------------------------------------------------
Japan 16.8 12.0
- --------------------------------------------------------------------------------
Switzerland 7.3 8.5
- --------------------------------------------------------------------------------
Italy 6.1 6.8
- --------------------------------------------------------------------------------
Canada 5.3 5.0
Portfolio holdings and asset allocations will vary.
See page 13 for information on the possible risks associated with an investment
in this fund.
Notes to Charts
/1/ Does not include a sales charge.
/2/ Includes the maximum sales charge of 5.75%.
/3/ Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares. Class C share
performance assumes a 1.00% sales charge and a 1.00% CDSC applied when you
sell shares within one year of purchase.
/4/ The Morgan Stanley Capital International (MSCI) Europe Australasia Far East
Index (EAFE) is an unmanaged index of common stocks traded outside the U.S.
/5/ Morningstar Foreign Stock Fund Average is the average performance without
sales charges of funds with similar investment objectives as calculated by
Morningstar, Inc.
/6/ Lipper International Funds Average is the average performance without sales
charges of funds with similar investment objectives as calculated by Lipper
Inc.
/7/ Fund performance has been increased by expense waivers for the periods
indicated, without which performance would have been lower.
/8/ The since-inception performance comparisons shown for each Class of fund
shares are calculated as follows: Class B from 9/30/93; Class C from
12/31/94; Class Y from 9/30/93.
6
CDC Nvest Large Cap Growth Fund
Portfolio Profile
- --------------------------------------------------------------------------------
Objective:
Seeks long-term growth of capital by investing in securities of companies with
large market capitalizations that the subadviser believes have
better-than-average long term-growth potential
- --------------------------------------------------------------------------------
Strategy:
Invests substantially in companies that have market capitalizations within the
range of the Russell 1000 Index
- --------------------------------------------------------------------------------
Inception Date:
September 1, 1998
- --------------------------------------------------------------------------------
Manager:
William R. Berger
Curt Rohrman
Vaughan, Nelson, Scarborough & McCullough, L.P. (VNSM)
- --------------------------------------------------------------------------------
Symbols:
Class A NRLAX
Class B NRLBX
Class C NRLCX
Class Y NRLYX
- --------------------------------------------------------------------------------
Net Asset Value Per Share:
(June 30, 2003)
Class A $ 9.94
Class B 9.69
Class C 9.69
Class Y 10.06
Management Discussion
- --------------------------------------------------------------------------------
It remains to be seen whether the market rally that began in the spring can
survive the uncertainties that remain on the horizon, but it gave a much-needed
lift to large-cap growth stocks. For the six months ended June 30, 2003, CDC
Nvest Large Cap Growth Fund's total return was 12.06% based on the net asset
value of Class A shares. The fund lagged its benchmark, the Russell 1000 Growth
Index, which returned 13.09%, and was close to the middle of its Morningstar
Large Growth category, which averaged 12.70%.
Defense, Hospitals, and One Consumer Services Stock Were Disappointing
Northrop Grumman, a leader in defense electronics, appeared well positioned for
growth stemming from the war on terrorism, but defense stocks were left behind
in the rally this spring. However, we still favor Northrop, partly because we do
not believe the need for military vigilance is over, and partly because defense
companies are usually big cash-flow generators. Although current income is not a
consideration for this fund, strong earnings and cash flows provide the
potential for future dividend growth.
Hospital management company HCA benefited the fund in the past, but subsequently
proved disappointing. We pared back the position. A new position, Cox
Communications, has not worked as well as we had expected. We believe Cox may be
one of the strongest cable companies in terms of being able to deliver voice,
video and data, but our decision to buy this stock may have been premature.
Technology Stocks Led the Rally
Semiconductors, computers and networking companies led the recent rally.
Companies that did well for the fund included Analog Devices, a semiconductor
company active in wireless technology; Intel, a leader in microchip technology
for desktop computers; and Cisco, a world leader in networking. We have also
been adding to the fund's Microsoft holdings, based on our outlook for new
products the company has in its pipeline.
Although medical technology stocks lagged, Boston Scientific is a recent
addition to the portfolio that has performed well. The company develops, makes
and markets medical devices for use in cardiovascular and endosurgery
procedures. Traditional pharmaceutical companies develop chemicals that
alleviate pain or depression, but when their patents expire, these products face
competition from generic drugs. Companies like Johnson & Johnson and Merck -
multinationals with a broad array of products on the market and in development -
are still attractive and still in the portfolio. Firms like Boston Scientific
that are developing biologically based compounds designed to get at the cause of
cancer, rheumatoid arthritis and other major illnesses do not face competition
from generic subsitutes, but they must strive to get the best product to market
at the best price.
Dividend Growth May Reflect Success
Dividends are not normally associated with a fund seeking potential capital
growth, and this fund's dividend income is below that of its benchmark. However,
strong earnings growth creates the potential for successful companies to pay out
a rising stream of dividends in the future. This potential may become
increasingly important, both because of the new tax treatment of dividends and
as a result of demographics. Aging investors may be attracted to companies that
can increase their dividend over time, as profits increase, without curtailing
future growth.
Spotlight is On Multinationals
CDC Nvest Large Cap Growth Fund currently emphasizes large-cap, multinational
companies that we believe will lead in an economic recovery, especially as
Eastern Europe, Asia and South America become increasingly important customers
of American technology.
7
CDC Nvest Large Cap Growth Fund
Investment Results through June 30, 2003
- --------------------------------------------------------------------------------
Performance In Perspective
The charts comparing CDC Nvest Large Cap Growth Fund's performance to a
benchmark index provide you with a general sense of how the fund performed. To
put this information in context, it may be helpful to understand the differences
between the two. The fund's total return for the period shown below appears with
and without sales charges and includes fund expenses and management fees. A
securities index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the results.
It is not possible to invest directly in an index. In addition, few investors
could purchase all of the securities necessary to match the index and would
incur transaction costs and other expenses even if they could.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
September 1, 1998 (inception) through June 30, 2003
Russell
1000
Class A Class A Growth/4/
@ N.A.V/1/ @ M.S.C./2/ ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ---------- ---------- ----------
9/1/1998 10,000 9,425 10,000
10,320 9,727 10,000
11,130 10,490 10,804
12,100 11,404 11,626
13,762 12,971 12,674
15,763 14,856 13,418
14,572 13,735 12,805
15,473 14,583 13,479
15,713 14,809 13,497
14,742 13,895 13,082
15,463 14,574 13,998
15,153 14,281 13,553
14,983 14,121 13,775
15,413 14,527 13,485
16,213 15,281 14,504
17,773 16,751 15,286
12/31/1999 21,274 20,051 16,876
20,284 19,118 16,085
22,544 21,248 16,871
24,075 22,691 18,079
21,584 20,343 17,218
20,674 19,485 16,351
6/30/2000 21,444 20,211 17,591
20,874 19,674 16,857
22,925 21,606 18,384
21,674 20,428 16,645
20,744 19,551 15,857
18,544 17,477 13,520
12/31/2000 19,316 18,206 13,092
19,898 18,754 13,996
17,604 16,592 11,620
15,656 14,755 10,356
16,937 15,963 11,665
16,948 15,973 11,494
6/30/2001 16,183 15,253 11,228
16,151 15,222 10,947
14,924 14,065 10,052
13,341 12,574 9,048
13,911 13,111 9,523
15,128 14,258 10,438
12/31/2001 14,902 14,045 10,418
14,299 13,477 10,234
13,588 12,807 9,809
13,868 13,071 10,149
12,458 11,741 9,320
12,027 11,335 9,095
6/30/2002 11,101 10,463 8,254
10,304 9,712 7,800
10,164 9,580 7,823
8,904 8,392 7,012
9,744 9,184 7,655
10,250 9,661 8,071
12/31/2002 9,550 9,001 7,513
9,314 8,778 7,331
9,335 8,798 7,297
9,314 8,778 7,433
10,067 9,488 7,982
10,519 9,915 8,381
6/30/2003 10,702 10,087 8,496
------ ------ ------
Average Annual Total Returns -- June 30, 2003
- --------------------------------------------------------------------------------
Since
6 Months/7/ 1 Year/7/ Inception/7/
----------- --------- ------------
Class A (Inception 9/1/98)
Net Asset Value/1/ 12.06% -3.59% 1.42%
With Maximum Sales Charge/2/ 5.63 -9.14 0.18
Class B (Inception 10/29/99)
Net Asset Value/1/ 11.64 -4.34 -11.30
With CDSC/3/ 6.64 -9.13 -11.98
Class C (Inception 10/29/99)
Net Asset Value/1/ 11.64 -4.34 -11.30
With Maximum Sales Charge and CDSC/3/ 9.50 -6.23 -11.54
Class Y (Inception 10/29/99)
Net Asset Value/1/ 12.15 -3.36 -10.41
- ------------------------------------------------------------------------------
Since Since
Class A Class B, C, Y
Comparative Performance 6 Months 1 Year Inception/8/ Inception/8/
- ----------------------- -------- ------ ------------ -------------
Russell 1000 Growth Index/4/ 13.09% 2.94% -3.37% -13.57%
Morningstar Large Growth Fund Avg./5/ 12.70% -0.46 1.42 -11.35
Lipper Large Cap Growth Funds Avg./6/ 10.38% -1.94 -0.41 -8.24
All returns represent past performance and do not guarantee future results.
Share price and return will vary and you may have a gain or loss when you sell
your shares. All results include reinvestment of dividends and capital gains.
Current returns may be higher or lower than those shown. Class Y shares are
available only to certain institutional investors. The fund's performance
history includes periods from the predecessor fund.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
Portfolio Facts
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Fund Composition 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Common Stocks 100.1 98.2
- --------------------------------------------------------------------------------
Short Term Investments and Other 0.1 1.8
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/03 12/31/02
- --------------------------------------------------------------------------------
General Electric Co. 5.6 --
- --------------------------------------------------------------------------------
Microsoft Corp. 4.8 4.3
- --------------------------------------------------------------------------------
Pfizer, Inc. 4.6 4.9
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 4.3 5.3
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 3.4 3.7
- --------------------------------------------------------------------------------
Intel Corp. 3.2 3.5
- --------------------------------------------------------------------------------
Amgen, Inc. 3.2 2.8
- --------------------------------------------------------------------------------
Goldman Sachs Group, Inc. 3.0 1.8
- --------------------------------------------------------------------------------
Dell Computer Corp. 2.8 2.0
- --------------------------------------------------------------------------------
Northrop Grumman Corp. 2.5 3.5
% of Net Assets
as of
-------------------
Five Largest Industries 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Semiconductors 10.7 5.4
- --------------------------------------------------------------------------------
Pharmaceuticals 10.0 13.3
- --------------------------------------------------------------------------------
Retailers 9.4 6.3
- --------------------------------------------------------------------------------
Financial Services 6.7 6.5
- --------------------------------------------------------------------------------
Electrical Equipment 6.0 4.3
Portfolio holdings and asset allocations will vary.
See page 13 for information on the possible risks associated with an invest-
ment in this fund.
Notes to Charts
/1/ Does not include a sales charge.
/2/ Includes the maximum sales charge of 5.75%. Until 10/29/99, the fund had
only one class of shares and was offered without a sales charge. Historical
performance has been recalculated to include a sales charge.
/3/ Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares. Class C share
performance assumes a 1.00% sales charge and a 1.00% CDSC applied when you
sell shares within one year of purchase.
/4/ Russell 1000 Growth Index is an unmanaged index measuring the performance
of the largest 1000 U.S. companies within the Russell 3000.
/5/ Morningstar Large Growth Fund Average is the average performance without
sales charges of funds with similar investment objectives as calculated by
Morningstar, Inc.
/6/ Lipper Large Cap Growth Funds Average is the average performance without
sales charges of funds with similar investment objectives as calculated by
Lipper Inc.
/7/ Fund performance has been increased by expense waivers, without which
performance would have been lower.
/8/ The since-inception performance comparisons shown for each Class of fund
shares are calculated as follows: Class A from 9/30/98; Class B, C and Y
from 10/31/99.
8
CDC Nvest Select Fund
Portfolio Profile
- --------------------------------------------------------------------------------
Objective:
Seeks long-term capital appreciation
- --------------------------------------------------------------------------------
Strategy:
Focuses on 15 to 20 stocks of mid- to large-cap U.S. companies
- --------------------------------------------------------------------------------
Inception Date:
March 15, 2001
- --------------------------------------------------------------------------------
Managers:
William C. Nygren
Floyd J. Bellman
Harris Associates L.P.
- --------------------------------------------------------------------------------
Symbols:
Class A NRSAX
Class B NRSBX
Class C NRSCX
- --------------------------------------------------------------------------------
Net Asset Value Per Share:
(June 30, 2003)
Class A $10.34
Class B 10.17
Class C 10.17
Management Discussion
- --------------------------------------------------------------------------------
Uncertainty about the war in Iraq and the sluggish economic recovery kept
investors on the sidelines early in 2003. However, as combat operations wound
down, investor sentiment grew more positive and the equity markets entered a
rally that lasted from March through the end of June.
For the six months ended June 30, 2003, the total return on CDC Nvest Select
Fund was 11.90% based on the net asset value of Class A shares. The return on
its benchmark, Standard and Poor's 500 Index, was 11.76% for the period, while
the average return on Morningstar's Large Value category was 10.74%.
Financial and economically sensitive issues were positive
Washington Mutual, the nation's largest thrift, is the fund's largest holding.
The housing boom provided vigorous growth for its mortgage business. And we
believe mortgage-servicing fees and other predictable income should help
stabilize the bank's earnings if interest rates rise, providing excellent
potential going forward.
Slow growth put pressure on economically sensitive issues early in the year,
creating opportunities that fit our value-focused investment style. Hotel
operator, Marriott International, got a new lease on life as bookings began to
recover with the economy. Shares of power tool maker Black & Decker got back to
business along with other building-related companies, as new products boosted
earnings and the price of its shares.
We took advantage of weakness among retailers to purchase shares of TJX. This
niche company caters to bargain hunters by buying excess inventory from
full-price retailers and reselling it through its Marshall's and T.J. Maxx
chains.
Media, energy and healthcare issues also contributed
Our purchase of AOL Time Warner proved timely, as shares rebounded late in the
period. Liberty Media, which owns programming and media companies, also moved
higher. Shares of newspaper publisher Knight Ridder rose modestly as advertising
spending recovered. Rising natural gas prices lifted the shares of Burlington
Resources. Healthcare companies' earnings tend to be independent of economic
cycles, and consistent earnings helped both Guidant and Omnicare perform well.
FDA approvals for new products also pumped new vigor into pharmaceutical giant
Bristol-Myers Squibb.
Company-specific problems and weak sectors hurt results
Valassis Communications, which produces inserts for newspapers, is fighting to
maintain market share, faced with stiff competition and sluggish advertising
revenues. We believe this well-run company will meet its challenges and it
remains a fund holding.
General weakness in the telecommunications sector hurt results at Sprint,
although we continue to hold it because shares trade at a discount to our
revised assessment of the company's intrinsic value. Shaky consumer confidence,
the slow economy and bad weather depressed shares of many retailers, including
J.C. Penney, a fund holding.
We sold Waste Management and Electronic Data Systems, using the proceeds to
invest in retail and technology companies that seemed more promising. An example
is SunGard Data Systems, which provides technology systems for financial-service
companies.
Managers see good potential for value investors
After the stock-price rally in the second quarter, we would not be surprised if
the market slipped back. However, shares of many quality growth companies that
once sold at high prices now meet our value standards. We believe the rally
injected much-needed vitality into the stock market, and investor sentiment now
seems to be balanced - neither extremely negative nor overly optimistic.
9
CDC Nvest Select Fund
Investment Results through June 30, 2003
- --------------------------------------------------------------------------------
Performance in Perspective
The charts comparing CDC Nvest Select Fund's performance to a benchmark index
provide you with a general sense of how the fund performed. To put this
information in context, it may be helpful to understand the differences between
the two. The fund's total return for the period shown below appears with and
without sales charges and includes fund expenses and management fees. A
securities index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the results.
It is not possible to invest directly in an index. In addition, few investors
could purchase all of the securities necessary to match the index and would
incur transaction costs and other expenses even if they could.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
March 15, 2001 (inception) through June 30, 2003
S&P
500
Class A Class A Index /4/
@ N.A.V/1/ @ M.S.C./2/ ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ----------- ---------- ----------
3/15/2001 10,000 9,425 10,000
10,090 9,510 10,000
10,420 9,821 10,777
10,690 10,075 10,849
6/30/2001 10,990 10,358 10,585
11,310 10,660 10,481
10,870 10,245 9,825
10,240 9,651 9,032
10,000 9,425 9,204
10,680 10,066 9,910
12/31/2001 10,960 10,330 9,997
10,890 10,264 9,851
10,600 9,990 9,661
10,910 10,283 10,024
10,860 10,235 9,416
10,930 10,301 9,347
6/30/2002 10,080 9,500 8,681
9,620 9,067 8,005
9,960 9,387 8,057
8,570 8,077 7,181
8,970 8,454 7,813
9,470 8,925 8,273
12/31/2002 9,240 8,709 7,787
9,010 8,492 7,583
8,890 8,379 7,469
8,990 8,473 7,542
9,510 8,963 8,163
10,120 9,538 8,593
6/30/2003 10,340 9,745 8,703
Average Annual Total Returns -- June 30, 2003
- ------------------------------------------------------------------------------------
6 Months/7/ 1 Year/7/ Since Inception/7/
----------- --------- ------------------
Class A (Inception 3/15/01)
Net Asset Value/1/ 11.90% 2.58% 1.47%
With Maximum Sales Charge/2/ 5.51 -3.27 -1.12
Class B (Inception 3/15/01)
Net Asset Value/1/ 11.51 1.90 0.74
With CDSC/3/ 6.51 -3.10 -0.57
Class C (Inception 3/15/01)
Net Asset Value/1/ 11.51 1.80 0.74
With Maximum Sales Charge and CDSC/3/ 9.43 -0.20 0.30
- ------------------------------------------------------------------------------------
Since
Class A, B, C
Comparative Performance 6 Months 1 Year Inception/8/
- ----------------------- -------- ------ -------------
S&P 500 Index/4/ 11.76% 0.25% -5.99%
Morningstar Large Value Fund Avg./5/ 10.74 -2.34 1.09
Lipper Multi Cap Value Funds Avg./6/ 12.33 -0.50 -2.50
All returns represent past performance and do not guarantee future results.
Share price and return will vary and you may have a gain or loss when you sell
your shares. All results include reinvestment of dividends and capital gains.
Current returns may be higher or lower than those shown.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
Portfolio Facts
- --------------------------------------------------------------------------------
% of Net Assets
as of
-------------------
Fund Composition 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Common Stocks 91.2 93.0
- --------------------------------------------------------------------------------
Short Term Investments and Other 8.8 7.1
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Washington Mutual, Inc. 17.6 16.6
- --------------------------------------------------------------------------------
H&R Block, Inc. 7.9 7.4
- --------------------------------------------------------------------------------
Yum! Brands, Inc. 5.2 2.0
- --------------------------------------------------------------------------------
Knight-Ridder, Inc. 4.6 4.9
- --------------------------------------------------------------------------------
Guidant Corp. 4.6 3.7
- --------------------------------------------------------------------------------
First Data Corp. 4.5 5.1
- --------------------------------------------------------------------------------
AOL Time Warner, Inc. 4.2 4.1
- --------------------------------------------------------------------------------
Kroger Co. (The) 4.1 4.4
- --------------------------------------------------------------------------------
Sprint Corp. 4.1 3.6
- --------------------------------------------------------------------------------
Burlington Resources, Inc. 4.0 5.2
% of Net Assets
as of
------------------
Five Largest Industries 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Banking 17.6 16.6
- --------------------------------------------------------------------------------
Media - Broadcasting & Publishing 12.6 13.5
- --------------------------------------------------------------------------------
Commercial Services 9.8 11.7
- --------------------------------------------------------------------------------
Pharmaceuticals 7.0 --
- --------------------------------------------------------------------------------
Software 6.8 7.8
Portfolio holdings and asset allocations will vary.
See page 13 for information on the possible risks associated with an investment
in this fund.
Notes to Charts
/1/ Does not include a sales charge.
/2/ Includes the maximum sales charge of 5.75%.
/3/ Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares. Class C share
performance assumes a 1.00% sales charge and a 1.00% CDSC applied when you
sell shares within one year of purchase.
/4/ S&P 500 Index is an unmanaged index of U.S. common stock performance
/5/ Morningstar Large Value Fund Average is the average performance without
sales charges of funds with similar investment objectives as calculated by
Morningstar, Inc.
/6/ Lipper Multi Cap Value Funds Average is the average performance without
sales charges of funds with similar investment objectives as calculated by
Lipper Inc.
/7/ Fund performance has been increased by expense waivers, without which
performance would have been lower.
/8/ The since-inception performance comparisons shown are calculated from
3/31/01.
10
CDC Nvest Targeted Equity Fund
Portfolio Profile
- --------------------------------------------------------------------------------
Objective:
Seeks long-term growth of capital through investments in equity securities of
companies whose earnings are expected to grow at a faster rate than the overall
U.S. economy
- --------------------------------------------------------------------------------
Strategy:
Invests primarily in a focused portfolio of common stocks of large-cap companies
- --------------------------------------------------------------------------------
Inception Date:
November 27, 1968
- --------------------------------------------------------------------------------
Manager:
G. Kenneth Heebner
Capital Growth
Management Limited
Partnership
- --------------------------------------------------------------------------------
Symbols:
Class A NEFGX
Class B NEBGX
Class C NEGCX
Class Y NEGYX
- --------------------------------------------------------------------------------
Net Asset Value
Management Discussion
- --------------------------------------------------------------------------------
Strongly positive results from stocks of homebuilding companies helped CDC Nvest
Targeted Equity Fund perform significantly better than its benchmark during the
six months ended June 30, 2003. Financial services stocks were also positive.
The fund's total return was 19.42% for the period based on the net asset value
of Class A shares, while the Standard & Poor's 500 Index returned 11.76%. The
fund was also near the top of its Morningstar Large Blend category, which had an
average return of 10.88% for the period.
Strategy focused on consumer-led growth
Amid uncertainties associated with the conflict in Iraq, the economy hesitated
during the first quarter, although signs of renewed economic growth began to
surface in the second quarter. Economic reports have indicated growing consumer
confidence, increased spending and improving financial conditions. We remained
fully invested throughout the first half of 2003, positioning the fund to
benefit from consumer-led growth. Our focus was on homebuilding, which was the
largest concentration in the portfolio and the most significant driver of
performance, along with financial issues.
Manager champions homebuilding stocks
Homebuilding stocks continue to satisfy our emphasis on earnings. Larger
homebuilders, in particular, benefit from geographical diversification and
financial strength, and are gaining market share. These national companies have
access to public debt markets, and many of the firms are investment-grade - a
valuable attribute when competing with smaller companies to acquire increasingly
scarce parcels of developable land. In many cases, large publicly traded
homebuilders are also able to grow earnings by purchasing weaker competitors or
buying back their own stock.
Our largest holding in this industry is Lennar, a giant company that has been
gaining market share through acquisitions and selective participation in the
vibrant California market. Other notable contributors to the fund's performance
include Centex, KB Homes and Pulte Homes.
Financial issues and some technology stocks were positive
Declining interest rates and higher trading volume have benefited Citigroup, a
leading global financial services company, and Lehman Brothers, a major
brokerage firm. A surge of refinancings drove up the stock price of Countrywide
Financial Corp., a leading mortgage originator, while First Data, a nationwide
credit card processor that also owns Western Union, benefited from active
financial transfers by individuals and businesses.
Some technology stocks were also positive, including Dell Computer, a global
leader in personal computers. However, Analog Devices - a recent acquisition and
one of the best-positioned semiconductor companies - declined in value after we
purchased the stock. In general, the fund has avoided technology stocks in
recent years, but we believe opportunities are beginning to emerge in this area.
Healthcare and auto parts holdings were eliminated
During the period, we eliminated the fund's one remaining healthcare company,
HCA, a national hospital management firm, as this sector continued to experience
disappointing earnings. We also sold auto parts retailer AutoZone at a loss.
Despite excellent earnings progress, the stock underperformed.
Tax cuts and low interest rates may facilitate growth
While prices of many stocks still seem high, we focused CDC Nvest Targeted
Equity Fund on those stocks that may provide the best opportunities based on our
outlook for modest, non-inflationary growth, as fiscal and monetary stimuli
gradually take effect.
11
CDC Nvest Targeted Equity Fund
- --------------------------------------------------------------------------------
Investment Results through June 30, 2003
- --------------------------------------------------------------------------------
Performance in Perspective
The charts comparing CDC Nvest Targeted Equity Fund's performance to a benchmark
index provide you with a general sense of how the fund performed. To put this
information in context, it may be helpful to understand the differences
between the two. The fund's total return for the period shown below appears
with and without sales charges and includes fund expenses and management fees. A
securities index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the results.
It is not possible to invest directly in an index. In addition, few investors
could purchase all of the securities necessary to match the index, and would
incur transaction costs and other expenses even if they could.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
June 30, 1993 through June 30, 2003
S&P
500
Class A Class A Index/4/
@ N.A.V/1/ @ M.S.C./2/ ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ----------- ---------- ----------
6/30/1993 10,000 9,425 10,000
9,943 9,371 9,960
10,229 9,641 10,338
10,410 9,811 10,258
10,810 10,189 10,471
10,553 9,946 10,371
10,694 10,079 10,496
11,319 10,668 10,853
10,919 10,291 10,558
10,264 9,674 10,098
10,274 9,683 10,228
10,469 9,867 10,395
6/30/1994 10,082 9,503 10,141
10,433 9,833 10,474
10,701 10,085 10,903
10,350 9,755 10,636
10,391 9,794 10,875
9,794 9,230 10,479
9,940 9,368 10,635
9,704 9,146 10,911
10,175 9,590 11,336
10,489 9,886 11,670
11,139 10,498 12,014
11,811 11,132 12,494
6/30/1995 12,677 11,948 12,784
13,249 12,487 13,208
13,317 12,551 13,241
13,559 12,780 13,800
13,281 12,517 13,751
13,914 13,114 14,355
13,727 12,937 14,631
14,208 13,391 15,129
14,664 13,820 15,269
14,664 13,820 15,416
14,390 13,563 15,644
14,611 13,771 16,047
6/30/1996 14,455 13,624 16,108
13,610 12,827 15,397
13,740 12,950 15,721
14,683 13,838 16,606
15,546 14,652 17,064
16,756 15,793 18,354
16,592 15,638 17,990
18,091 17,050 19,114
17,791 16,768 19,264
17,035 16,055 18,473
18,005 16,969 19,575
18,889 17,803 20,767
6/30/1997 19,731 18,597 21,698
21,643 20,398 23,424
20,530 19,350 22,112
21,582 20,341 23,323
20,735 19,543 22,544
20,499 19,320 23,588
20,499 19,320 23,993
20,834 19,636 24,258
22,665 21,362 26,008
24,122 22,735 27,339
25,048 23,607 27,615
24,654 23,236 27,140
6/30/1998 25,973 24,480 28,242
26,111 24,609 27,942
21,129 19,914 23,902
21,280 20,056 25,433
23,422 22,075 27,502
25,372 23,913 29,169
27,346 25,774 30,849
29,200 27,521 32,139
27,105 25,547 31,141
27,755 26,159 32,386
27,659 26,068 33,641
26,768 25,229 32,846
6/30/1999 28,742 27,089 34,669
28,068 26,454 33,587
28,020 26,409 33,420
26,359 24,843 32,504
27,370 25,796 34,561
28,405 26,772 35,264
31,498 29,687 37,341
29,035 27,366 35,465
31,612 29,794 34,793
31,956 30,118 38,197
30,753 28,985 37,048
29,522 27,825 36,288
6/30/2000 29,636 27,932 37,182
28,691 27,042 36,601
30,050 28,323 38,874
28,963 27,298 36,822
29,024 27,355 36,666
28,752 27,099 33,776
30,063 28,335 33,941
27,398 25,822 35,145
26,530 25,005 31,941
25,856 24,369 29,917
26,980 25,429 32,242
26,434 24,914 32,458
6/30/2001 26,613 25,083 31,668
25,839 24,353 31,356
23,710 22,347 29,393
21,420 20,188 27,020
21,549 20,309 27,535
23,839 22,468 29,647
25,194 23,745 29,907
25,968 24,475 29,470
24,774 23,350 28,902
25,194 23,745 29,989
25,258 23,806 28,171
25,000 23,563 27,963
6/30/2002 24,194 22,803 25,972
21,516 20,279 23,947
21,516 20,279 24,104
20,194 19,033 21,485
19,710 18,576 23,376
19,226 18,120 24,751
17,935 16,904 23,297
17,935 16,904 22,687
17,806 16,783 22,347
18,226 17,178 22,564
19,387 18,272 24,422
21,064 19,853 25,709
6/30/2003 21,419 20,188 26,037
Average Annual Total Returns -- June 30, 2003
- --------------------------------------------------------------------------------
Since
6 Months 1 Year 5 Years 10 Years Inception
-------- ------ ------- -------- ---------
Class A (Inception 11/27/68)
Net Asset Value/1/ 19.42% -11.47% -3.78% 7.91% --
With Maximum Sales Charge/2/ 12.54 -16.58 -4.91 7.28 --
Class B (Inception 2/28/97)
Net Asset Value/1/ 18.75 -12.31 -4.52 -- 2.18%
With CDSC/3/ 13.75 -16.69 -4.75 -- 2.18
Class C (Inception 9/1/98)
Net Asset Value/1/ 18.98 -12.31 -- -- -1.60
With Maximum Sales Charge and
CDSC/3/ 16.87 -14.03 -- -- -1.80
Class Y (Inception 6/30/99)
Net Asset Value/1/ 19.54 -10.98 -- -- -6.70
- --------------------------------------------------------------------------------
Since Since Since
Class B Class C Class Y
Comparative Performance 6 Months 1 Year 5 Years 10 Years Incept./7/ Incept./7/ Incept./7/
- --------------------------------- -------- ------ ------- -------- ---------- ---------- ----------
S&P 500 Index/4/ 11.76% 0.25% -1.61% 10.04% 4.87% 0.50% -6.91%
Morningstar Large Blend Avg./5/ 10.88 -1.23 -1.90 8.45 3.75 0.62 -6.39
Lipper Multi-Cap Value Average/6/ 12.33 -0.50 1.64 9.72 5.99 5.08 -0.86
All returns represent past performance and do not guarantee future results.
Share price and return will vary and you may have a gain or loss when you sell
your shares. All results include reinvestment of dividends and capital gains.
Current returns may be higher or lower than those noted. Class Y shares are
available to certain institutional investors only.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
Portfolio Facts
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Fund Composition 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Common Stocks 99.6 99.6
- --------------------------------------------------------------------------------
Short Term Investments and Other 0.4 0.4
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Lennar Corp., Class A 7.6 8.5
- --------------------------------------------------------------------------------
D.R. Horton, Inc. 6.9 5.8
- --------------------------------------------------------------------------------
KB HOME 6.4 7.3
- --------------------------------------------------------------------------------
Altria Group, Inc. 6.1 --
- --------------------------------------------------------------------------------
Teva Pharmaceutical
Industries, Ltd. (ADR) 6.1 3.8
- --------------------------------------------------------------------------------
Abbott Laboratories 5.6 --
- --------------------------------------------------------------------------------
Countrywide Financial Corp. 5.2 --
- --------------------------------------------------------------------------------
3M Co. 4.9 --
- --------------------------------------------------------------------------------
Burlington Resources, Inc. 4.9 --
- --------------------------------------------------------------------------------
Dell Computer Corp. 4.8 --
% of Net Assets
as of
------------------
Five Largest Industries 6/30/03 12/31/02
- --------------------------------------------------------------------------------
Home Construction,
Furnishings & Appliances 29.1 34.5
- --------------------------------------------------------------------------------
Financial Services 17.9 14.9
- --------------------------------------------------------------------------------
Pharmaceuticals 11.7 10.5
- --------------------------------------------------------------------------------
Beverages, Food & Tobacco 7.1 --
- --------------------------------------------------------------------------------
Industrial - Diversified 4.9 --
Portfolio holdings and asset allocations will vary.
See page 13 for information on the possible risks associated with an investment
in this fund.
Notes to Charts
/1/ Does not include a sales charge.
/2/ Includes the maximum sales charge of 5.75%.
/3/ Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares. Class C share
performance assumes a 1.00% sales charge and a 1.00% CDSC applied when you
sell shares within one year of purchase.
/4/ S&P 500 Index is an unmanaged index of U.S. common stock performance.
/5/ Morningstar Large Blend Average is the average performance without sales
charges of funds with similar investment objectives as calculated by
Morningstar, Inc.
/6/ Lipper Multi-Cap Value Funds Average is the average performance without
sales charges of mutual funds with a similar current investment style or
objective as calculated by Lipper Inc.
/7/ The since-inception performance comparisons shown for each Class of fund
shares are calculated as follows: Class B from 2/28/97; Class C from
9/30/98 and Class Y from 6/30/99.
12
Risks of the CDC Nvest Equity Funds
- --------------------------------------------------------------------------------
The views expressed in this report reflect those of the portfolio managers as of
the dates indicated. The managers' views are subject to change at any time
without notice based on changes in market or other conditions. References to
specific securities or industries should not be regarded as investment advice.
Because these funds are actively managed, there is no assurance that they will
continue to invest in the securities or industries mentioned.
Any mutual fund investment involves risk. The following notes describe some of
the risks of the CDC Nvest Funds discussed in this report. These risks may
affect the value of your investment. See the funds' prospectus for details.
The Funds
CDC Nvest Capital Growth Fund invests primarily in common stocks of
growth-oriented companies. Its focus is primarily on large- and mid-cap
companies, but it may also invest in small-cap stocks.
CDC Nvest Growth and Income Fund may invest in growth stocks or value stocks of
large- and mid-size companies. It may also invest in foreign securities.
CDC Nvest International Equity Fund invests primarily in growth-oriented
companies outside the U.S., including emerging markets.
CDC Nvest Large Cap Growth Fund invests primarily in common stocks of companies
with large market capitalizations that the manager believes have above-average
long-term growth potential.
CDC Nvest Select Fund invests primarily in a concentrated portfolio of value
stocks.
CDC Nvest Targeted Equity Fund invests primarily in a focused portfolio of
common stocks of large companies. It may also invest in foreign securities and
REITs.
The Risks
Small-cap stocks represent ownership of less well known, untried companies with
little or no track record; they may have limited financial and management
resources. Small-cap stocks may also be more volatile in price than the overall
market and less liquid than large-cap stocks.
Emerging growth stocks represent ownership of small, rapidly growing companies
that are typically more volatile than the overall market. These stocks expose
investors to the risks of small-cap stocks.
Growth stocks tend to be more sensitive to market movements because their stock
prices are based on future expectations, which may not be realized.
Value stocks may fall out of favor with investors and underperform the broader
market; there is no guarantee that they will return to favor.
Concentrating on few stocks allows changes in the value of a single security (up
or down) to have a greater impact on the fund's performance than it would if the
fund were more broadly diversified. This means fund shares may be more volatile
in price and more vulnerable to losses.
Foreign and emerging market securities convey special risks, including
political, economic, regulatory and currency risks, as well as differing
accounting standards. Emerging markets may be more subject to these risks than
developed markets.
Real Estate Investment Trusts (REITs) may change in price with underlying real
estate values, rising interest rates, limited diversification of holdings. They
may also incur other mortgage-related risks, such as pre-payment risks.
- --------------------------------------------------------------------------------
NOT FDIC INSURED . MAY LOSE VALUE . NO BANK GUARANTEE
- --------------------------------------------------------------------------------
13
Capital Growth Fund -- Schedule of Investments
- ----------------------------------------------------------------------
Investments as of June 30, 2003 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 99.2% of Total Net Assets
Apparel Retailers -- 0.8%
33,500 Curtiss-Wright Corp .............................. $ 628,460
-----------
Beverages, Food & Tobacco -- 3.6%
4,500 Altria Group, Inc ................................ 204,480
37,000 Campbell Soup Co ................................. 906,500
38,400 H.J. Heinz Co .................................... 1,266,432
9,400 PepsiCo, Inc ..................................... 418,300
-----------
2,795,712
-----------
Biotechnology -- 3.3%
20,200 Amgen, Inc.(c) ................................... 1,342,088
33,700 Medimmune, Inc.(c) ............................... 1,225,669
-----------
2,567,757
-----------
Commercial Services -- 1.9%
33,200 H&R Block, Inc ................................... 1,435,900
-----------
Communications -- 5.5%
70,000 AT&T Wireless Services, Inc.(c) .................. 574,700
218,600 Cisco Systems, Inc.(c) ........................... 3,648,434
-----------
4,223,134
-----------
Computers -- 7.5%
99,800 Dell Computer Corp.(c) ........................... 3,189,608
61,200 EMC Corp.(c) ..................................... 640,764
13,200 International Business Machines Corp ............. 1,089,000
10,600 Storage Technology Corp.(c) ...................... 272,844
23,700 SunGard Data Systems, Inc.(c) .................... 614,067
-----------
5,806,283
-----------
Cosmetics & Personal Care -- 4.9%
17,600 Gillette Co. (The) ............................... 560,736
36,400 Procter & Gamble Co .............................. 3,246,152
-----------
3,806,888
-----------
Financial Services -- 8.7%
94,300 AmeriCredit Corp.(c) ............................. 806,265
55,800 Capital One Financial Corp ....................... 2,744,244
28,100 Fannie Mae ....................................... 1,895,064
27,600 T. Rowe Price Group, Inc ......................... 1,041,900
6,262 WFS Financial, Inc.(c) ........................... 209,840
-----------
6,697,313
-----------
Health Care Providers -- 5.0%
40,400 UnitedHealth Group, Inc .......................... 2,030,100
22,100 WellPoint Health Networks, Inc.(c) ............... 1,863,030
-----------
3,893,130
-----------
Home Construction, Furnishings &
Appliances -- 0.5%
8,200 Maytag Corp ...................................... 200,244
400 NVR, Inc.(c) ..................................... 164,400
-----------
364,644
-----------
Industrial - Diversified -- 4.6%
125,000 General Electric Co .............................. 3,585,000
-----------
Industrial Goods & Services -- 0.3%
19,600 PerkinElmer, Inc ................................. 270,676
-----------
Internet -- 0.4%
9,200 Yahoo!, Inc.(c) .................................. 301,392
-----------
Medical Supplies -- 6.9%
41,500 Becton, Dickinson & Co ........................... $ 1,612,275
11,500 Boston Scientific Corp.(c) ....................... 702,650
6,400 Guidant Corp ..................................... 284,096
10,600 St. Jude Medical, Inc.(c) ........................ 609,500
25,000 STERIS Corp.(c) .................................. 577,250
27,700 Varian Medical Systems, Inc.(c) .................. 1,594,689
-----------
5,380,460
-----------
Oil & Gas -- 4.0%
23,800 Anadarko Petroleum Corp .......................... 1,058,386
9,555 Apache Corp ...................................... 621,648
18,200 Houston Exploration Co.(c) ....................... 631,540
14,800 Murphy Oil Corp .................................. 778,480
-----------
3,090,054
-----------
Pharmaceuticals -- 16.1%
19,800 Abbott Laboratories .............................. 866,448
36,500 Johnson & Johnson ................................ 1,887,050
58,900 Merck & Co., Inc ................................. 3,566,395
19,950 Mylan Laboratories, Inc .......................... 693,661
111,550 Pfizer, Inc ...................................... 3,809,433
25,400 Schering-Plough Corp ............................. 472,440
29,600 Watson Pharmaceuticals, Inc.(c) (d) .............. 1,194,952
-----------
12,490,379
-----------
Retailers -- 4.2%
34,400 7-Eleven, Inc.(c) ................................ 362,920
34,600 Dollar General Corp .............................. 631,796
61,350 Home Depot, Inc .................................. 2,031,912
14,000 Staples, Inc.(c) ................................. 256,900
-----------
3,283,528
-----------
Semiconductors -- 10.3%
41,600 Altera Corp.(c) (d) .............................. 682,240
227,700 Intel Corp ....................................... 4,732,517
6,300 QLogic Corp.(c) (d) .............................. 304,479
118,110 Texas Instruments, Inc ........................... 2,078,736
5,500 Xilinx, Inc.(c) .................................. 139,205
-----------
7,937,177
-----------
Software -- 10.1%
12,200 BMC Software, Inc.(c) ............................ 199,226
20,100 Citrix Systems, Inc.(c) .......................... 409,236
42,500 Compuware Corp.(c) ............................... 245,225
3,100 Electronic Arts, Inc.(c) ......................... 229,369
20,300 First Data Corp .................................. 841,232
230,000 Microsoft Corp ................................... 5,890,300
-----------
7,814,588
-----------
Textiles, Clothing & Fabrics -- 0.3%
7,600 Jones Apparel Group, Inc.(c) ..................... 222,376
-----------
Transportation -- 0.3%
11,400 Swift Transportation Co., Inc.(c) ................ 212,268
-----------
Total Common Stocks (Identified
Cost $88,657,039) 76,807,119
-----------
14
Capital Growth Fund -- Schedule of Investments (continued)
Investments as of June 30, 2003 (unaudited)
Principal
Amount Description Value (a)
- --------------------------------------------------------------------------------
Short Term Investments --3.6%
$728,870 Repurchase Agreement with Investors
Bank & Trust Co. dated
6/30/2003 at 0.75% to be repurchased at
$728,885 on 7/01/2003,
collateralized by $714,757 Federal
National Mortgage Association
Bond, 7.50%, due 8/01/2015 valued at
$765,369 .......................................... $ 728,870
115,111 Bank of Montreal, 1.08%, due
7/02/2003(e) ...................................... 115,111
289,240 Bank of Montreal, 1.15%, due
7/09/2003(e) ...................................... 289,240
143,889 Bank of Nova Scotia, 1.05%, due
8/29/2003(e) ...................................... 143,889
172,666 Bank of Nova Scotia, 1.16%, due
7/09/2003(e) ...................................... 172,666
28,778 BNP Paribas, 1.03%, due 7/21/2003(e) .............. 28,778
57,555 Comerica Bank, 1.073%, due
11/19/2003(e) ..................................... 57,555
28,778 Credit Agricole Indosuez, 1.05%, due
8/26/2003(e) ...................................... 28,778
57,555 Den Danske Bank, 1.04%, due
7/24/2003(e) ...................................... 57,555
201,444 Dreyfus Cash Management Plus Fund,
1.102%, due 7/01/2003(e) .......................... 201,444
57,555 Liberty Lighthouse Funding, 1.081%,
due 7/14/2003(e) .................................. 57,555
22,203 Merrill Lynch Premier Institutional
Fund, 1.045%, due 7/01/2003(e) .................... 22,203
414,260 Merrimac Cash Fund-Premium Class,
1.052%, due 7/01/2003(e) .......................... 414,260
172,666 Royal Bank of Canada, 1.031%, due
7/07/2003(e) ...................................... 172,666
115,111 Royal Bank of Scotland, 1.05%, due
7/28/2003(e) ...................................... 115,111
143,889 Royal Bank of Scotland, 1.125%, due
7/01/2003(e) ...................................... 143,889
------------
Total Short Term Investments
(Identified Cost $2,749,570) ...................... 2,749,570
------------
Total Investments -- 102.8%
(Identified Cost $91,406,609)(b) .................. 79,556,689
Other assets less liabilities ..................... (2,138,115)
------------
Total Net Assets -- 100% .......................... $ 77,418,574
============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2003, the net unrealized depreciation on investments based
on cost of $91,406,609 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost ................. $ 6,030,958
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax
cost over value ........................................... (17,880,878)
------------
Net unrealized depreciation ............................... $(11,849,920)
============
At December 31, 2002, the Fund had a capital loss carryover of
approximately $53,531,761 of which $26,648,714 expires on December 31,
2009 and $26,883,047 expires on December 31, 2010. This may be
available to offset future realized capital gains, if any, to the
extent provided by regulations.
For the year ended December 31, 2002, the Fund has elected to defer
$2,293,916 of capital losses attributable to Post-October losses.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2003.
(e) Represents investments of securities lending collateral.
15 See accompanying notes to financial statements.
Growth and Income Fund -- Schedule of Investments
Investments as of June 30, 2003 (unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------------
Common Stocks -- 94.5% of Total Net Assets
Advertising -- 2.7%
640,400 Interpublic Group of Cos. (The), Inc............. $ 8,568,552
------------
Aerospace & Defense -- 4.3%
129,400 Boeing Co. (The) ................................ 4,441,008
348,700 Honeywell International, Inc. ................... 9,362,595
------------
13,803,603
------------
Apparel Retailers -- 3.0%
520,500 Gap (The), Inc. ................................. 9,764,580
------------
Automotive -- 0.4%
32,800 Harley-Davidson, Inc. ........................... 1,307,408
------------
Banking -- 7.4%
368,700 US Bancorp ...................................... 9,033,150
356,000 Washington Mutual, Inc. ......................... 14,702,800
------------
23,735,950
------------
Beverages, Food & Tobacco -- 10.3%
28,200 Anheuser-Busch Cos., Inc. ....................... 1,439,610
214,500 Diageo PLC (ADR) ................................ 9,386,520
65,500 General Mills, Inc. ............................. 3,105,355
254,800 H.J. Heinz Co. .................................. 8,403,304
297,400 Kraft Foods, Inc.(c) ............................ 9,680,370
24,200 Nestle SA (ADR) ................................. 1,251,140
------------
33,266,299
------------
Building Materials -- 2.8%
383,100 Masco Corp.(c) .................................. 9,136,935
------------
Commercial Services -- 3.1%
554,200 Cendant Corp.(d) ................................ 10,152,944
------------
Communications -- 1.9%
466,000 General Motors Corp., Class H (Hughes
Electronics Corp.)(d) ........................... 5,969,460
------------
Electric Utilities -- 3.2%
253,300 Duke Energy Corp.(c) ............................ 5,053,335
235,200 TXU Corp ........................................ 5,280,240
------------
10,333,575
------------
Entertainment & Leisure -- 4.2%
113,000 Carnival Corp ................................... 3,673,630
500,200 Walt Disney Co. (The) ........................... 9,878,950
------------
13,552,580
------------
Environmental Control -- 3.0%
398,100 Waste Management, Inc ........................... 9,590,229
------------
Financial Services -- 2.6%
125,400 Fannie Mae ...................................... 8,456,976
------------
Food Retailers -- 4.7%
567,000 Kroger Co. (The)(d) ............................. 9,457,560
282,600 Safeway, Inc.(d) ................................ 5,781,996
------------
15,239,556
------------
Household Products -- 2.2%
138,300 Fortune Brands, Inc. ............................ 7,219,260
------------
Industrial - Diversified -- 1.0%
47,900 Illinois Tool Works, Inc. ....................... 3,154,215
------------
Insurance -- 1.3%
90,000 MGIC Investment Corp ............................ 4,197,600
------------
Media - Broadcasting & Publishing --
12.0%
756,300 AOL Time Warner, Inc.(d) ........................ 12,168,867
249,500 Comcast Corp., Special Class A(d) ............... 7,193,085
61,700 Gannett Co., Inc. ............................... 4,739,177
Media - Broadcasting & Publishing --
(continued)
1,269,500 Liberty Media Corp.(c) (d) ...................... $ 14,675,420
------------
38,776,549
------------
Medical Supplies -- 4.5%
193,000 Baxter International, Inc. ...................... 5,018,000
214,700 Guidant Corp .................................... 9,530,533
------------
14,548,533
------------
Office/Business Equipment -- 0.3%
97,000 Xerox Corp.(d) .................................. 1,027,230
------------
Oil & Gas -- 2.8%
115,100 Burlington Resources, Inc. ...................... 6,223,457
51,846 ConocoPhillips .................................. 2,841,161
------------
9,064,618
------------
Pharmaceuticals -- 5.8%
151,500 Abbott Laboratories ............................. 6,629,640
245,600 Bristol-Myers Squibb Co ......................... 6,668,040
90,900 Merck & Co., Inc. ............................... 5,503,995
------------
18,801,675
------------
Restaurants -- 3.5%
514,000 McDonald's Corp ................................. 11,338,840
------------
Retailers -- 4.0%
387,200 Home Depot, Inc ................................. 12,824,064
------------
Software -- 3.5%
81,300 Automatic Data Processing, Inc .................. 2,752,818
208,400 First Data Corp ................................. 8,636,096
------------
11,388,914
------------
Total Common Stocks (Identified Cost
$285,874,743) ................................... 305,220,145
------------
Principal
Amount
- -----------
Short Term Investments -- 13.2%
$20,736,200 Repurchase Agreement with Investors Bank & Trust Co.
dated 6/30/2003 at 0.75% to be repurchased at $20,736,632
on 7/01/2003, collateralized by $21,200,015 Federal
National Mortgage Association Bond with rates ranging from
2.935% to 4.497%, and maturities ranging from 1/25/2022
to 8/01/2032 with an aggregate value of
$21,773,010 ..................................... 20,736,200
1,233,807 Bank of Montreal, 1.08%, due
7/02/2003(e) .................................... 1,233,807
3,100,200 Bank of Montreal, 1.15%, due
7/09/2003(e) .................................... 3,100,200
1,542,259 Bank of Nova Scotia, 1.05%, due
8/29/2003(e) .................................... 1,542,259
1,850,711 Bank of Nova Scotia, 1.16%, due
7/09/2003(e) .................................... 1,850,711
308,452 BNP Paribas, 1.03%, due 7/21/2003(e) ............ 308,452
616,904 Comerica Bank, 1.073%, due
11/19/2003(e) ................................... 616,904
308,452 Credit Agricole Indosuez, 1.05%, due
8/26/2003(e) .................................... 308,452
616,904 Den Danske Bank, 1.04%, due
7/24/2003(e) .................................... 616,904
2,159,163 Dreyfus Cash Management Plus Fund,
1.102%, due 7/01/2003(e) ........................ 2,159,163
616,904 Liberty Lighthouse Funding, 1.081%, due
7/14/2003(e) .................................... 616,904
237,980 Merrill Lynch Premier Institutional
Fund, 1.045%, due 7/01/2003(e) .................. 237,980
4,440,211 Merrimac Cash Fund-Premium Class,
1.052%, due 7/01/2003(e) ........................ 4,440,211
1,850,711 Royal Bank of Canada, 1.031%, due
7/07/2003(e) .................................... 1,850,711
1,233,808 Royal Bank of Scotland, 1.05%, due
7/28/2003(e) .................................... 1,233,808
1,542,259 Royal Bank of Scotland, 1.125%, due
7/01/2003(e) .................................... 1,542,259
------------
Total Short Term Investments
(Identified Cost $42,394,925) ................... 42,394,925
------------
Total Investments -- 107.7%
(Identified Cost $328,269,668) (b) .............. 347,615,070
Other assets less liabilities ................... (24,711,630)
------------
Total Net Assets -- 100% ........................ $322,903,440
============
See accompanying notes to financial statements. 16
Growth and Income Fund -- Schedule of Investments(continued)
Investments as of June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2003, the net unrealized appreciation on investments based
on cost of $328,269,668 for federal income tax purposes was as
follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over
tax cost ....................................... $ 29,499,702
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax
cost over value ................................ (10,154,300)
------------
Net unrealized appreciation $ 19,345,402
============
At December 31, 2002, the Fund had a capital loss carryover of
approximately $109,950,271 of which $19,895,206 expires on December
31, 2008, $69,951,207 expires on December 31, 2009 and $20,103,858
expires on December 31, 2010. This may be available to offset future
realized capital gains, if any, to the extent provided by regulations.
For the year ended December 31, 2002, the Fund has elected to defer
$4,943,400 of capital losses attributable to Post-October losses.
(c) All or a portion of this security was on loan to brokers at June 30,
2003.
(d) Non-income producing security.
(e) Represents investments of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign
issuer described. The values of ADRs are significantly influenced by
trading on exchanges not located in the United States.
17 See accompanying notes to financial statements.
International Equity Fund -- Schedule of Investments
Investments as of June 30, 2003 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 96.1% of Total Net Assets
Australia -- 4.3%
31,500 Lend Lease Corp., Ltd................................. $ 176,608
63,600 News Corp., Ltd....................................... 478,287
259,000 Promina Group, Ltd.(c) ............................... 410,417
28,300 Publishing & Broadcasting, Ltd........................ 187,740
26,650 Westpac Banking Corp., Ltd............................ 290,780
-----------
1,543,832
-----------
Austria -- 2.0%
4,100 Erste Bank der Oesterreichischen Sparkassen AG ....... 362,945
31,200 Telekom Austria AG(c) ................................ 354,618
-----------
717,563
-----------
Brazil -- 0.8%
15,600 Empresa Brasileira de Aeronautica SA (Embraer)(ADR) .. 297,960
-----------
Canada -- 5.3%
14,765 Barrick Gold Corp..................................... 261,411
10,779 EnCana Corp.(d) ...................................... 411,273
7,346 Petro-Canada ......................................... 292,539
7,550 Precision Drilling Corp., Class A(c) ................. 283,167
22,880 Rogers Communications, Inc., Class B ................. 365,573
11,145 Toronto-Dominion Bank (The)(d) ....................... 307,289
-----------
1,921,252
-----------
Czech Republic -- 0.7%
3,552 Komercni Banka AS .................................... 255,886
-----------
Finland -- 1.9%
21,600 Nokia OYJ (ADR) ...................................... 354,888
30,800 Stora Enso OYJ, R Shares ............................. 344,757
-----------
699,645
-----------
France -- 4.5%
5,500 BNP Paribas .......................................... 279,979
10,500 Compagnie Generale des Etablissements Michelin,
Class B ........................................... 410,693
3,600 Pernod-Ricard ........................................ 321,790
2,500 Technip-Coflexip SA .................................. 219,151
2,640 TotalFinaElf SA ...................................... 399,677
-----------
1,631,290
-----------
Germany -- 3.8%
3,700 Adidas-Salomon AG(d) ................................. 316,682
7,800 BASF AG .............................................. 332,454
2,700 Deutsche Bank AG(d) .................................. 174,717
24,450 Infineon Technologies AG (ADR)(c) .................... 234,476
5,020 Stada Arzneimittel AG ................................ 317,625
-----------
1,375,954
-----------
Greece -- 1.7%
18,000 Greek Organization of Football Prognostics SA ........ 183,880
22,650 Public Power Corp..................................... 409,609
-----------
593,489
-----------
Hong Kong -- 1.3%
189,100 Esprit Holdings, Ltd.................................. 463,162
-----------
Hungary -- 0.7%
26,300 OTP Bank Rt(c) ....................................... 254,545
-----------
India -- 0.5%
8,275 Wipro, Ltd. (ADR) .................................... 190,739
-----------
Ireland -- 3.7%
97,000 Anglo Irish Bank Corp., 144A ......................... 859,234
63,700 Ryanair Holdings PLC(c) .............................. 459,469
-----------
1,318,703
-----------
Israel -- 1.1%
6,900 Teva Pharmaceutical Industries, Ltd. (ADR)(d) ........ $ 392,817
-----------
Italy -- 6.1%
198,400 Banca Nazionole del Lavoro SpA - BNL(c) .............. 333,229
35,955 Banco Popolare di Verona e Novara Scrl ............... 492,215
34,450 Eni SpA(d) ........................................... 521,944
21,700 Mediaset SpA ......................................... 183,982
27,900 Saipem SpA ........................................... 209,267
49,200 Telecom Italia SpA(d) ................................ 446,006
-----------
2,186,643
-----------
Japan -- 16.8%
7,000 Canon, Inc............................................ 321,712
15,600 Credit Saison Co., Ltd................................ 256,205
26,000 Dai Nippon Printing Co., Ltd.......................... 275,419
37,000 Daiwa House Industry Co., Ltd......................... 254,917
49 East Japan Railway Co................................. 218,250
1,800 Hirose Electric Co., Ltd.............................. 149,087
7,000 Honda Motor Co., Ltd................................. 265,660
28,000 JGC Corp.............................................. 188,706
53,000 Kaneka Corp........................................... 327,133
46 KDDI Corp............................................. 178,414
1,630 Keyence Corp.(d)...................................... 299,108
2,300 Mabuchi Motor Co., Ltd................................ 176,111
49,000 Mitsubishi Corp....................................... 340,454
19,000 Nikon Corp.(c) ....................................... 156,735
63,000 Nippon Oil Corp....................................... 273,776
46,300 Nissan Motor Co., Ltd................................. 443,343
5,800 Nitto Denko Corp...................................... 190,124
60,000 NSK, Ltd ............................................. 191,175
6,000 Secom Co., Ltd ....................................... 176,162
16,000 Sharp Corp............................................ 205,655
5,000 Sony Corp............................................. 140,963
9,600 Takeda Chemical Industries, Ltd....................... 354,725
5,500 TDK Corp.............................................. 272,041
11,600 THK Co., Ltd.......................................... 156,357
5,800 Uni-Charm Corp........................................ 251,080
-----------
6,063,312
-----------
Mexico -- 0.6%
72,600 Wal-Mart de Mexico SA de CV, Series V ................ 213,977
-----------
Netherlands -- 1.5%
10,500 ING Groep NV ......................................... 182,758
7,600 Royal Dutch Petroleum Co.............................. 353,394
-----------
536,152
-----------
Norway -- 0.9%
76,000 Telenor ASA .......................................... 315,702
-----------
Republic of Korea -- 1.0%
1,255 Samsung Electronics Co., Ltd.......................... 372,980
-----------
Russia -- 1.3%
5,900 LUKOIL (ADR) ......................................... 463,740
-----------
Singapore -- 1.0%
70,000 City Developments, Ltd................................ 176,536
30,000 DBS Group Holdings, Ltd............................... 175,513
-----------
352,049
-----------
Spain -- 3.0%
6,800 Altadis SA ........................................... 174,603
7,000 Banco Popular Espanol ................................ 354,323
5,800 Grupo Ferrovial SA ................................... 157,800
21,700 Iberdrola SA ......................................... 376,452
-----------
1,063,178
-----------
See accompanying notes to financial statements. 18
International Equity Fund -- Schedule of Investments (Continued)
Investments as of June 30, 2003 (unaudited)
Shares Description Value (a)
- -------------------------------------------------------------------------------
Sweden -- 0.5%
6,600 Autoliv, Inc. (SDR)(d) .............................. $ 177,941
----------
Switzerland -- 7.3%
1,500 Centerpulse AG(c) ................................... 404,416
8,700 Credit Suisse Group ................................. 229,413
20,500 Novartis AG ......................................... 812,752
4,500 Roche Holding AG .................................... 353,656
530 Synthes-Stratec, Inc................................. 381,442
8,000 UBS AG .............................................. 445,874
----------
2,627,553
----------
Thailand -- 0.7%
67,200 Siam Cement Public Co. (The), Ltd ................... 268,353
----------
United Kingdom -- 23.1%
21,800 Anglo American PLC .................................. 333,718
39,500 Barclays PLC ........................................ 292,052
64,275 BHP Billiton PLC .................................... 338,160
70,700 BP PLC .............................................. 490,886
42,700 British Sky Broadcasting PLC(c) ..................... 471,891
34,400 Diageo PLC .......................................... 367,938
34,100 GlaxoSmithKline PLC ................................. 684,925
114,000 Hilton Group PLC .................................... 347,236
28,000 Imperial Tobacco Group PLC .......................... 502,227
148,650 Kingfisher PLC ...................................... 681,931
51,600 Lloyds TSB Group PLC ................................ 365,521
21,300 Next PLC ............................................ 361,804
21,600 Reckitt Benckiser PLC ............................... 396,359
34,700 Royal Bank of Scotland Group PLC .................... 971,178
38,000 United Utilities PLC ................................ 368,752
571,171 Vodafone Group PLC .................................. 1,116,554
36,400 Xstrata PLC ......................................... 242,203
----------
8,333,335
----------
Total Common Stocks
(Identified Cost $30,283,937) ....................... 34,631,752
----------
Preferred Stocks -- 0.6%
Germany -- 0.6%
550 Porsche AG (d) ...................................... 232,208
----------
Total Preferred Stocks
(Identified Cost $217,864) .......................... 232,208
----------
Principal
Amount Value (a)
- ---------
Short Term Investments -- 8.2%
$167,931 Bank of Montreal, 1.08%, due 7/02/2003(e) ........... 167,931
421,963 Bank of Montreal, 1.15%, due 7/09/2003(e) ........... 421,963
251,897 Bank of Nova Scotia, 1.16%, due 7/09/2003(e) ........ 251,897
209,914 Bank of Nova Scotia, 1.05%, due 8/29/2003(e) ........ 209,914
41,983 BNP Paribas, 1.03%, due 7/21/2003(e) ................ 41,983
83,966 Comerica Bank, 1.073%, due 11/19/2003(e) ............ 83,966
41,983 Credit Agricole Indosuez, 1.05%, due 8/26/2003(e) ... 41,983
83,966 Den Danske Bank, 1.04%, due 7/24/2003(e) ............ 83,966
293,880 Dreyfus Cash Management Plus Fund, 1.102%, due
7/01/2003(e) ..................................... 293,880
83,966 Liberty Lighthouse Funding, 1.081%, due
7/14/2003(e) ..................................... 83,966
32,391 Merrill Lynch Premier Institutional Fund, 1.045%,
due 7/01/2003(e) ................................. 32,391
Short Term Investments -- 8.2%(continued)
$604,350 Merrimac Cash Fund-Premium Class, 1.052%, due
7/01/2003(e) $ 604,350
251,897 Royal Bank of Canada, 1.031%, due 7/07/2003(e) ...... 251,897
209,914 Royal Bank of Scotland, 1.125%, due 7/01/2003(e) ... 209,914
167,931 Royal Bank of Scotland, 1.05%, due 7/28/2003(e) ..... 167,931
-----------
Total Short Term Investments
(Identified Cost $2,947,932) ........................ 2,947,932
-----------
Total Investments -- 104.9%
(Identified Cost $33,449,733) (b) ................... 37,811,892
Other assets less liabilities ....................... (1,779,949)
------------
Total Net Assets-- 100% ............................. $36,031,943
===========
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2003, the net unrealized appreciation on
investments based on cost of $33,449,733 for federal income
tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost .......... $ 4,673,234
-----------
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value ......... (311,075)
-----------
Net unrealized appreciation ................................ $ 4,362,159
===========
At December 31, 2003, the Fund had a capital loss carryover of
approximately $30,663,018 of which $20,761,210 expires on December 31, 2009
and $9,901,808 expires on December 31, 2010. This may be available to
offset future realized capital gains, if any, to the extent provided by
regulations.
For the year ended December 31, 2003, the Fund has elected to
defer $1,702,210 of capital losses and $37,437 of foreign
currency losses attributable to Post-October losses.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2002.
(e) Represents investments of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank
representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States.
SDR Swedish Depositary Receipt
144A Securities exempt from registration under Rule These securities 144A of the
Securities Act of 1933. may be resold in transactions exempt from
registrations, normally to qualified institutional buyers. At the period
end, the value of these amounted to $859,234 or 2.4% of net assets.
Industry Holdings at June 30, 2003
Banking 17.9%
Oil & Gas 10.4
Pharmaceuticals 8.2
Communications 6.0
Automotive 4.1
Beverages, Food & Tobacco 3.8
Media - Broadcasting & Publishing 3.6
Mining 3.2
Telephone Systems 2.7
Retailers 2.5
Chemicals 2.3
Electric Utilities 2.3
Electronics 2.2
Medical Supplies 2.2
Textiles, Clothing & Fabrics 2.2
Other, less than 2% each 23.1
19 See accompanying notes to financial statements.
Large Cap Growth Fund -- Schedule Of Investments
Investments as of June 30, 2003 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 100.1% of Total Net Assets
Aerospace & Defense -- 2.5%
7,300 Northrop Grumman Corp.(c) ........................... $ 629,917
-----------
Banking -- 4.2%
15,000 State Street Corp ................................... 591,000
9,000 Wells Fargo & Co .................................... 453,600
-----------
1,044,600
-----------
Beverages, Food & Tobacco -- 5.9%
9,000 Anheuser-Busch Cos., Inc ............................ 459,450
11,000 PepsiCo, Inc ........................................ 489,500
17,300 Sysco Corp.(c) ...................................... 519,692
-----------
1,468,642
-----------
Biotechnology -- 3.2%
12,000 Amgen, Inc.(d) ...................................... 797,280
-----------
Commercial Services -- 2.5%
34,000 Cendant Corp.(d) .................................... 622,880
-----------
Communications -- 3.4%
51,000 Cisco Systems, Inc.(d) .............................. 851,190
-----------
Computer & Business Equipment -- 0.6%
15,100 ATI Technologies, Inc.(d) ........................... 154,020
-----------
Computers -- 5.1%
22,000 Dell Computer Corp.(d) .............................. 703,120
7,000 International Business Machines Corp ................ 577,500
-----------
1,280,620
-----------
Education -- 1.1%
5,000 Education Management Corp.(d) ....................... 265,900
-----------
Electrical Equipment -- 1.0%
5,000 Emerson Electric Co ................................. 255,500
-----------
Financial Services -- 6.7%
12,700 American Express Co ................................. 530,987
9,200 Citigroup, Inc ...................................... 393,760
9,000 Goldman Sachs Group, Inc ............................ 753,750
-----------
1,678,497
-----------
Food Retailers -- 0.6%
9,000 Kroger Co. (The)(d) ................................. 150,120
-----------
Health Care Providers -- 1.0%
7,700 HCA, Inc ............................................ 246,708
-----------
Healthcare-Services -- 1.0%
8,200 Laboratory Corp. of America Holdings(d) ............. 247,230
-----------
Household Products -- 1.1%
4,900 Colgate-Palmolive Co ................................ 283,955
-----------
Industrial - Diversified -- 5.6%
49,000 General Electric Co ................................. 1,405,320
-----------
Insurance -- 2.4%
11,000 American International Group, Inc ................... 606,980
-----------
Media - Broadcasting & Publishing -- 4.1%
12,500 Clear Channel Communications, Inc.(d) ............... 529,875
15,300 Cox Communications, Inc., Class A(c) (d) ............ 488,070
-----------
1,017,945
-----------
Medical Supplies -- 4.3%
6,400 Boston Scientific Corp.(d) .......................... $ 391,040
6,700 Edwards Lifesciences Corp.(d) ....................... 215,338
10,000 Medtronic, Inc ...................................... 479,700
-----------
1,086,078
-----------
Oil & Gas -- 1.8%
7,000 BJ Services Co.(d) .................................. 261,520
9,000 Transocean, Inc.(d) ................................. 197,730
-----------
459,250
-----------
Pharmaceuticals -- 10.0%
4,700 Eli Lilly & Co ...................................... 324,159
21,100 IVAX Corp.(d) ....................................... 376,635
4,500 Johnson & Johnson ................................... 232,650
7,000 Merck & Co., Inc .................................... 423,850
34,000 Pfizer, Inc ......................................... 1,161,100
-----------
2,518,394
-----------
Restaurants -- 3.8%
14,000 Brinker International, Inc.(d) ...................... 504,280
9,100 PF Chang's China Bistro, Inc.(c) (d) ................ 447,811
-----------
952,091
-----------
Retailers -- 9.4%
17,000 Home Depot, Inc ..................................... 563,040
4,600 Kohl's Corp.(d) ..................................... 236,348
15,800 Walgreen Co ......................................... 475,580
20,000 Wal-Mart Stores, Inc ................................ 1,073,400
-----------
2,348,368
-----------
Semiconductors -- 10.7%
16,800 Analog Devices, Inc.(d) ............................. 584,976
34,700 Applied Materials, Inc.(d) .......................... 550,342
39,000 Intel Corp .......................................... 810,576
10,400 Microchip Technology, Inc ........................... 256,152
18,600 Xilinx, Inc.(d) ..................................... 470,766
-----------
2,672,812
-----------
Software -- 6.0%
46,800 Microsoft Corp ...................................... 1,198,548
33,500 Siebel Systems, Inc.(d) ............................. 319,590
-----------
1,518,138
-----------
Transportation -- 2.1%
8,200 United Parcel Service, Inc., Class B ................ 522,340
-----------
Total Common Stocks (Identified Cost $26,185,781) ... 25,084,775
-----------
See accompanying notes to financial statements. 20
Large Cap Growth Fund -- Schedule of Investments (Continued)
Investments as of June 30, 2003 (unaudited)
Principal
Amount Description Value (a)
- ---------------------------------------------------------------------------------------------
Short Term Investments -- 8.2%
$296,182 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2003 at 0.75% to be repurchased at $296,188 on 7/01/2003,
collateralized by $312,697 Federal Home Loan Mortgage
Corporation Bond, 1.63%, due 1/15/2028 valued at $313,978 ...... $ 296,182
100,766 Bank of Montreal, 1.08%, due 7/02/2003(e) 100,766
253,196 Bank of Montreal, 1.15%, due 7/09/2003(e) 253,196
125,958 Bank of Nova Scotia, 1.05%, due 8/29/2003(e) 125,958
151,150 Bank of Nova Scotia, 1.16%, due 7/09/2003(e) 151,150
25,192 BNP Paribas, 1.03%, due 7/21/2003(e) .............................. 25,192
50,383 Comerica Bank, 1.073%, due 11/19/2003(e) 50,383
25,192 Credit Agricole Indosuez, 1.05%, due 8/26/2003(e) 25,192
50,383 Den Danske Bank, 1.04%, due 7/24/2003(e) 50,383
176,341 Dreyfus Cash Management Plus Fund, 1.102%, due 7/01/2003(e) 176,341
50,383 Liberty Lighthouse Funding, 1.081%, due 7/14/2003(e) 50,383
19,436 Merrill Lynch Premier Institutional Fund, 1.045%, due 7/01/2003 (e) 19,436
362,637 Merrimac Cash Fund-Premium Class, 1.052%, due 7/01/2003(e) 362,637
151,149 Royal Bank of Canada, 1.031%, due 7/07/2003(e) 151,149
100,766 Royal Bank of Scotland, 1.05%, due 7/28/2003(e) 100,766
125,958 Royal Bank of Scotland, 1.125%, due 7/01/2003(e) 125,958
-----------
Total Short Term Investments (Identified Cost $2,065,072) 2,065,072
-----------
Total Investments -- 108.3% (Identified Cost $28,250,853) (b) ..... 27,149,847
Other assets less liabilities ..................................... (2,083,752)
-----------
Total Net Assets -- 100% .......................................... $25,066,095
===========
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2003, the net unrealized depreciation on investments based on
cost of $28,250,853 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which there
is an excess of value over tax cost ...................................... $ 1,607,394
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value ................................ (2,708,400)
-----------
Net unrealized depreciation .............................................. $(1,101,006)
===========
At December 31, 2002, the Fund had a capital loss carryover of
approximately $41,153,499 of which $3,696,755 expires on December 31,
2008, $26,085,507 expires on December 31, 2009 and $11,371,237 expires
on December 31, 2010. This may be available to offset future realized
capital gains, if any, to the extent provided by regulations.
For the year ended December 31, 2002, the Fund has elected to defer
$1,881,354 of capital losses attributable to Post-October losses.
(c) All or a portion of this security was on loan to brokers at June 30, 2003.
(d) Non-income producing security.
(e) Represents investments of securities lending collateral.
21 See accompanying notes to financial statements.
Select Fund -- Schedule of Investments
Investments as of June 30, 2003 (unaudited)
Shares Description Value (a)
- ----------------------------------------------------------------------------------------------
Common Stocks -- 91.2% of Total Net Assets
Banking -- 17.6%
1,170,600 Washington Mutual, Inc.(c) ........................................ $ 48,345,780
------------
Biotechnology -- 3.7%
235,300 Chiron Corp.(d) ................................................... 10,287,316
------------
Commercial Services -- 9.8%
505,900 H&R Block, Inc .................................................... 21,880,175
203,000 Valassis Communications, Inc.(c) (d) .............................. 5,221,160
------------
27,101,335
------------
Computers -- 1.3%
140,000 SunGard Data Systems, Inc.(d) ..................................... 3,627,400
------------
Food Retailers -- 4.1%
683,000 Kroger Co. (The)(c) (d) ........................................... 11,392,440
------------
Healthcare-Services -- 3.7%
303,000 Omnicare, Inc ..................................................... 10,238,370
------------
Lodging -- 2.5%
179,700 Marriott International, Inc., Class A ............................. 6,904,074
------------
Media - Broadcasting & Publishing -- 12.6%
711,300 AOL Time Warner, Inc.(d) .......................................... 11,444,817
185,300 Knight-Ridder, Inc ................................................ 12,772,729
908,400 Liberty Media Corp.(d) ............................................ 10,501,104
------------
34,718,650
------------
Medical Supplies -- 4.6%
286,500 Guidant Corp ...................................................... 12,717,735
------------
Oil & Gas -- 4.0%
205,400 Burlington Resources, Inc ......................................... 11,105,978
------------
Pharmaceuticals -- 3.3%
327,600 Bristol-Myers Squibb Co ........................................... 8,894,340
------------
Restaurants -- 5.2%
480,900 Yum! Brands, Inc.(d) .............................................. 14,215,404
------------
Retailers -- 5.2%
458,200 J.C. Penney Co., Inc.(c) .......................................... 7,720,670
346,500 TJX Cos., Inc ..................................................... 6,528,060
------------
14,248,730
------------
Software -- 6.8%
301,000 First Data Corp ................................................... 12,473,440
1,981,000 Novell, Inc.(d) ................................................... 6,101,480
------------
18,574,920
------------
Telephone Systems -- 4.1%
779,700 Sprint Corp. (FON Group) .......................................... 11,227,680
------------
Tools -- 2.7%
171,000 Black & Decker Corp ............................................... 7,429,950
------------
Total Common Stocks (Identified Cost $227,366,343) ................ 251,030,102
------------
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------
Short Term Investments -- 20.0%
$25,198,718 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2003 at 0.75% to be repurchased at $25,199,243 on
7/01/2003, collateralized by $3,133,850 Federal Home Loan
Mortgage Corporation Bond, 1.54%, due 9/25/2032 valued
at $23,324,241 ................................................. $ 25,198,718
1,692,371 Bank of Montreal, 1.08%, due 7/02/2003(e) ......................... 1,692,371
4,252,435 Bank of Montreal, 1.15%, due 7/09/2003(e) ......................... 4,252,435
2,115,463 Bank of Nova Scotia, 1.05%, due 8/29/2003(e) ...................... 2,115,463
2,538,556 Bank of Nova Scotia, 1.16%, due 7/09/2003(e) ...................... 2,538,556
423,093 BNP Paribas, 1.03%, due 7/21/2003(e) .............................. 423,093
846,185 Comerica Bank, 1.073%, due 11/19/2003(e) .......................... 846,185
423,093 Credit Agricole Indosuez, 1.05%, due 8/26/2003(e) ................. 423,093
846,185 Den Danske Bank, 1.04%, due 7/24/2003(e) .......................... 846,185
2,961,649 Dreyfus Cash Management Plus Fund, 1.102%, due 7/01/2003(e) ....... 2,961,649
846,185 Liberty Lighthouse Funding, 1.081%, due 7/14/2003(e) .............. 846,185
326,428 Merrill Lynch Premier Institutional Fund, 1.045%, due 7/01/2003(e) 326,428
6,090,482 Merrimac Cash Fund-Premium Class, 1.052%, due 7/01/2003(e) ........ 6,090,482
2,538,556 Royal Bank of Canada, 1.031%, due 7/07/2003(e) .................... 2,538,556
1,692,371 Royal Bank of Scotland, 1.05%, due 7/28/2003(e) ................... 1,692,371
2,115,463 Royal Bank of Scotland, 1.125%, due 7/01/2003(e) .................. 2,115,463
------------
Total Short Term Investments (Identified Cost $54,907,233) ........ 54,907,233
------------
Total Investments -- 111.2%
(Identified Cost $282,273,576) (b) ................................ 305,937,335
other assets less liabilities ..................................... (30,700,526)
------------
Total Net Assets -- 100% .......................................... $275,236,809
============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2003, the net unrealized appreciation on investments based
on cost of $282,273,576 for federal income tax purposes was as
follows:
Aggregate gross unrealized appreciation for all investments
in which there is an excess of value over tax cost ......................... $ 33,408,311
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value ............................ (9,744,552)
------------
Net unrealized appreciation ................................................ $ 23,663,759
============
At December 31, 2003, the Fund had a capital loss carryover of
approximately $8,193,164 of which $1,480,080 expires on December 31,
2009 and $6,713,084 expires on December 31, 2010. This may be
available to offset future realized capital gains, if any, to the
extent provided by regulations.
For the year ended December 31, 2003, the Fund has elected to defer
$7,802,742 of capital losses attributable to Post-October losses.
(c) All or a portion of this security was on loan to brokers at June 30,
2003.
(d) Non-income producing security.
(e) Represents investments of securities lending collateral.
See accompanying notes to financial statements. 22
Targeted Equity Fund -- Schedule of Investments
Investments as of June 30, 2003 (unaudited)
Shares Description Value (a)
- -----------------------------------------------------------------------------------------------
Common Stocks -- 99.6% of Total Net Assets
Beverages, Food & Tobacco -- 7.1%
955,000 Altria Group, Inc. ............................................... $ 43,395,200
150,000 Coca-Cola Co. (The) .............................................. 6,961,500
-------------
50,356,700
-------------
Biotechnology -- 1.0%
100,000 Genetech, Inc.(c) ................................................ 7,212,000
-------------
Computers -- 4.8%
1,075,000 Dell Computer Corp.(c) ........................................... 34,357,000
-------------
Cosmetics & Personal Care -- 3.5%
279,000 Procter & Gamble Co. ............................................. 24,881,220
-------------
Financial Services -- 17.9%
700,000 Citigroup, Inc. .................................................. 29,960,000
535,000 Countrywide Financial Corp. ...................................... 37,219,950
525,000 Freddie Mac ...................................................... 26,654,250
502,000 Lehman Brothers Holdings, Inc. ................................... 33,372,960
-------------
127,207,160
-------------
Home Construction, Furnishings & Appliances -- 29.1%
435,000 Centex Corp.(d) .................................................. 33,838,650
1,737,200 D.R. Horton, Inc. ................................................ 48,815,320
730,000 KB HOME .......................................................... 45,245,400
750,900 Lennar Corp., Class A(d) ......................................... 53,689,350
406,300 Pulte Homes, Inc. ................................................ 25,052,458
-------------
206,641,178
-------------
Industrial - Diversified -- 4.9
271,000 3M Co. ........................................................... 34,953,580
-------------
Oil & Gas -- 4.9%
645,000 Burlington Resources, Inc.(d) .................................... 34,875,150
-------------
Pharmaceuticals -- 11.7%
915,000 Abbott Laboratories .............................................. 40,040,400
760,000 Teva Pharmaceutical Industries, Ltd. (ADR)(d) .................... 43,266,800
-------------
83,307,200
-------------
Retailers -- 3.8%
615,000 Best Buy Co., Inc.(c) ............................................ 27,010,800
-------------
Semiconductors -- 4.7%
955,000 Analog Devices, Inc.(c) .......................................... 33,253,100
-------------
Software -- 4.6%
785,000 First Data Corp. ................................................. 32,530,400
-------------
Transportation -- 1.6%
180,000 United Parcel Service, Inc., Class B ............................. 11,466,000
-------------
Total Common Stocks (Identified Cost $563,129,118) ............... 708,051,488
-------------
Principal
Amount Description Value (a)
- -------------------------------------------------------------------------------------------------
Short Term Investments -- 15.6%
$ 3,080,274 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2002 at 0.75% to be repurchased at $3,080,338 on
7/01/2003, collateralized by $3,090,398 Small Business
Administration Bond, 3.63%, due 4/25/2024 valued
at $3,234,287 .................................................... $ 3,080,274
6,130,339 Bank of Montreal, 1.08%, due 7/02/2003(e) 6,130,339
15,403,760 Bank of Montreal, 1.15%, due 7/09/2003(e) 15,403,760
7,662,924 Bank of Nova Scotia, 1.05%, due 8/29/2003(e) 7,662,924
9,195,509 Bank of Nova Scotia, 1.16%, due 7/09/2003(e) 9,195,509
1,532,585 BNP Paribas, 1.03%, due 7/21/2003(e) 1,532,585
3,065,169 Comerica Bank, 1.073%, due 11/19/2003(e) 3,065,169
1,532,585 Credit Agricole Indosuez, 1.05%, due 8/26/2003(e) 1,532,585
3,065,170 Den Danske Bank, 1.04%, due 7/24/2003(e) 3,065,170
10,728,093 Dreyfus Cash Management Plus Fund, 1.102%, due 7/01/2003(e) 10,728,093
3,065,170 Liberty Lighthouse Funding, 1.081%, due 7/14/2003(e) 3,065,170
1,182,434 Merrill Lynch Premier Institutional Fund, 1.045%, due 7/01/2003 (e) 1,182,434
22,061,786 Merrimac Cash Fund-Premium Class, 1.052%, due 7/01/2003(e) 22,061,786
9,195,509 Royal Bank of Canada, 1.031%, due 7/07/2003(e) 9,195,509
6,130,339 Royal Bank of Scotland, 1.05%, due 7/28/2003(e) 6,130,339
7,662,924 Royal Bank of Scotland, 1.125%, due 7/01/2003(e) 7,662,924
-------------
Total Short Term Investments (Identified Cost $110,694,570) 110,694,570
-------------
Total Investments -- 115.2%
(Identified Cost $673,823,688)(b) ............................... 818,746,058
Other assets less liabilities ................................... (108,336,651)
-------------
Total Net Assets -- 100% ........................................ $ 710,409,407
=============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2003, the net unrealized appreciation on investments based
on cost of $628,907,353 for federal income tax purposes was as
follows:
Aggregate gross unrealized appreciation for all investments in which there
is an excess of value over tax cost ...................................... $ 149,118,580
Aggregate gross unrealized depreciation for all investments in which there
is an excess of tax cost over value ...................................... (4,196,210)
-------------
Net unrealized appreciation .............................................. $ 144,922,370
=============
At December 31, 2002, the Fund had a capital loss carryover of
approximately $382,471,007 of which $187,367,538 expires on December
31, 2009 and $195,103,469 expires on December 31, 2010. This may be
available to offset future realized capital gains, if any, to the
extent provided by regulations.
For the year ended December 31, 2002, the Fund has elected to defer
$51,910,302 of capital losses attributable to Post-October losses.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30,
2003.
(e) Represents investments of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign
issuer described. The values of ADRs are significantly influenced by
trading on exchanges not located in the United States.
23 See accompanying notes to financial statements.
FINANCIAL STATEMENTS
24
Statements of Assets & Liabilities
June 30, 2003 (unaudited)
Capital Growth Growth and International Large Cap
Fund Income Fund Equity Fund Growth Fund
-------------- ------------- ------------- ------------
ASSETS
Investments at cost ............................................ $ 91,406,609 $ 328,269,668 $ 33,449,733 $ 28,250,853
Net unrealized appreciation (depreciation) ..................... (11,849,920) 19,345,402 4,362,159 (1,101,006)
------------- ------------- ------------ ------------
Investments at value ........................................ 79,556,689 347,615,070 37,811,892 27,149,847
Receivable for Fund shares sold ................................ 19,505 336,362 1,709,678 7,084
Receivable for securities sold ................................. 195,583 2,258,339 1,084,695 373,001
Dividends and interest receivable .............................. 76,177 317,110 123,862 17,736
Tax reclaims receivable ........................................ -- -- 40,246 --
Receivable from investment adviser ............................. -- -- -- 23,060
Securities lending income receivable ........................... 1,912 14,389 4,199 460
------------- ------------- ------------ ------------
TOTAL ASSETS ................................................ 79,849,866 350,541,270 40,774,572 27,571,188
------------- ------------- ------------ ------------
LIABILITIES
Collateral on securities loaned, at value ...................... 2,020,700 21,658,725 2,947,932 1,768,890
Foreign cash at value (identified cost $15,637) ................ -- -- 12,810 --
Payable for securities purchased ............................... 102,761 1,255,738 767,670 618,262
Payable for Fund shares redeemed ............................... 123,530 662,171 53,806 41,932
Payable to custodian bank ...................................... -- 3,593,712 827,512 --
Management fees payable ........................................ 48,540 93,388 27,472 --
Deferred Trustees' fees ........................................ 43,534 146,744 31,606 3,509
Transfer agent fees payable .................................... 49,673 136,327 28,868 29,071
Accounting and administrative fees payable ..................... 5,045 20,172 2,336 1,581
Other accounts payable and accrued expenses .................... 37,509 70,853 42,617 41,848
------------- ------------- ------------ ------------
TOTAL LIABILITIES ........................................... 2,431,292 27,637,830 4,742,629 2,505,093
------------- ------------- ------------ ------------
NET ASSETS ........................................................ $ 77,418,574 $ 322,903,440 $ 36,031,943 $ 25,066,095
============= ============= ============ ============
NET ASSETS CONSIST OF:
Paid in capital ................................................ $ 145,480,207 $ 431,136,516 $ 65,366,038 $ 71,319,619
Undistributed (overdistributed) net investment income (loss) ... (462,621) (591,141) 69,314 (90,200)
Accumulated net realized gain (loss) on investments ............ (55,749,092) (126,987,337) (33,773,918) (45,062,318)
Net unrealized appreciation (depreciation) of investments ...... (11,849,920) 19,345,402 4,370,509 (1,101,006)
------------- ------------- ------------ ------------
NET ASSETS ........................................................ $ 77,418,574 $ 322,903,440 $ 36,031,943 $ 25,066,095
============= ============= ============ ============
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE:
Class A shares:
Net assets .................................................. $ 60,295,360 $ 196,940,194 $ 23,589,455 $ 11,024,516
============= ============= ============ ============
Shares of beneficial interest ............................... 6,242,939 18,189,780 2,165,091 1,109,268
============= ============= ============ ============
Net asset value and redemption price per share .............. $ 9.66 $ 10.83 $ 10.90 $ 9.94
============= ============= ============ ============
Offering price per share .................................... $ 10.25 $ 11.49 $ 11.56 $ 10.55
============= ============= ============ ============
Class B shares:(redemption price is equal to net asset value
less any applicable contingent deferred sales charges)
Net assets .................................................. $ 16,204,335 $ 88,682,289 $ 7,780,341 $ 12,028,274
============= ============= ============ ============
Shares of beneficial interest ............................... 1,909,249 8,575,392 756,362 1,241,168
============= ============= ============ ============
Net asset value and offering price per share ................ $ 8.49 $ 10.34 $ 10.29 $ 9.69
============= ============= ============ ============
Class C shares:(redemption price is equal to net asset value
less any applicable contingent deferred sales charges)
Net assets .................................................. $ 918,879 $ 9,645,792 $ 1,028,744 $ 1,036,340
============= ============= ============ ============
Shares of beneficial interest ............................... 108,435 935,152 100,222 106,930
============= ============= ============ ============
Net asset value per share ................................... $ 8.47 $ 10.31 $ 10.26 $ 9.69
============= ============= ============ ============
Offering price per share .................................... $ 8.56 $ 10.41 $ 10.37 $ 9.79
============= ============= ============ ============
Class Y shares:
Net assets .................................................. $ -- $ 27,635,165 $ 3,633,403 $ 976,965
============= ============= ============ ============
Shares of beneficial interest ............................... -- 2,497,121 319,259 97,121
============= ============= ============ ============
Net asset value, offering and redemption price per share .... $ -- $ 11.07 $ 11.38 $ 10.06
============= ============= ============ ============
25 See accompanying notes to financial statements.
Select Targeted Equity
Fund Fund
- ------------ ---------------
$282,273,576 $ 673,823,688
23,663,759 144,922,370
- ------------ -------------
305,937,335 818,746,058
919,641 155,974
-- 7,405,664
260,535 656,734
-- --
-- --
14,775 4,054
- ------------ -------------
307,132,286 826,968,484
- ------------ -------------
29,708,515 107,614,296
-- --
1,097,277 6,048,834
338,308 1,718,393
5 --
512,798 416,624
13,741 305,865
130,098 336,301
18,126 45,292
76,609 73,472
- ------------ -------------
31,895,477 116,559,077
- ------------ -------------
$275,236,809 $ 710,409,407
============ =============
$283,345,030 $ 984,373,914
(1,148,774) (2,791,267)
(30,623,206) (416,095,610)
23,663,759 144,922,370
- ------------ -------------
$275,236,809 $ 710,409,407
============ =============
$ 79,127,750 $ 651,687,251
============ =============
7,651,001 98,215,799
============ =============
$ 10.34 $ 6.64
============ =============
$ 10.97 $ 7.05
============ =============
$ 95,842,229 $ 49,912,084
============ =============
9,428,224 $ 7,961,088
============ =============
$ 10.17 $ 6.27
============ =============
$100,266,830 $ 2,419,170
============ =============
9,861,564 386,105
============ =============
$ 10.17 $ 6.27
============ =============
$ 10.27 $ 6.33
============ =============
$ -- $ 6,390,902
============ =============
-- 949,307
============ =============
$ -- $ 6.73
============ =============
26
Statements of Operations
For the Six Months Ended June 30, 2003 (unaudited)
Capital Growth Growth and International Large Cap
Fund Income Fund Equity Fund Growth Fund
-------------- ------------ ------------- -----------
INVESTMENT INCOME
Dividends ........................................................ $ 368,856 $ 1,464,116 $ 707,273 $ 115,746
Interest ......................................................... 1,845 35,832 3,576 1,110
Securities lending income ........................................ 1,366 -- 4,354 219
Less net foreign taxes withheld .................................. -- (10,329) (83,360) --
----------- ------------ ----------- -----------
372,067 1,489,619 631,843 117,075
----------- ------------ ----------- -----------
Expenses
Management fees ............................................... 277,716 749,205 156,799 108,397
Service fees - Class A ........................................ 71,878 161,260 28,080 13,468
Service and distribution fees - Class B ....................... 78,492 341,858 39,697 57,259
Service and distribution fees - Class C ....................... 4,283 34,500 5,505 5,086
Trustees' fees and expenses ................................... 8,158 22,545 6,060 5,980
Accounting and administrative ................................. 30,325 87,904 14,224 9,816
Custodian ..................................................... 22,568 27,467 58,770 24,896
Transfer agent fees - Class A, Class B, Class C ............... 249,963 570,598 116,085 104,072
Transfer agent fees - Class Y ................................. -- 5,500 1,670 422
Audit and tax services ........................................ 16,168 16,270 23,652 13,315
Legal ......................................................... 4,163 12,896 1,994 1,427
Shareholder reporting ......................................... 17,504 41,473 13,742 13,814
Registration .................................................. 14,817 29,942 21,071 20,970
Miscellaneous ................................................. 8,092 12,707 5,439 6,197
----------- ------------ ----------- -----------
Total expenses before reductions ................................. 804,127 2,114,125 492,788 385,119
----------- ------------ ----------- -----------
Less reimbursement/waiver ..................................... -- (61,423) -- (170,785)
Less reductions ............................................... (11,466) (26,603) (5,553) (9,140)
----------- ------------ ----------- -----------
Net expenses ..................................................... 792,661 2,026,099 487,235 205,194
----------- ------------ ----------- -----------
Net investment income (loss) ..................................... (420,594) (536,480) 144,608 (88,119)
----------- ------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Realized gain (loss) on investments - net ..................... 210,920 (11,529,100) (966,639) (1,957,122)
Foreign currency transactions - net ........................... -- -- (168,768) --
Change in unrealized appreciation (depreciation) on:
Investments - net ............................................. 9,017,909 42,623,740 4,065,604 4,739,797
Foreign currency transactions - net ........................... -- -- 2,112 --
----------- ------------ ----------- -----------
Net realized and unrealized gain (loss) on investments and
foreign currency transactions ................................. 9,228,829 31,094,640 2,932,309 2,782,675
----------- ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................... $ 8,808,235 $ 30,558,160 $ 3,076,917 $ 2,694,556
=========== ============ =========== ===========
27 See accompanying notes to financial statements.
Select Targeted Equity
Fund Fund
- ------------ ---------------
$ 1,513,738 $ 2,704,106
52,385 9,873
4,850 16,015
-- (21,352)
- ------------ ------------
1,570,973 2,708,642
- ------------ ------------
1,218,219 2,305,817
86,813 753,315
430,048 227,984
440,918 10,729
18,792 70,972
100,255 267,299
21,721 59,611
560,760 1,698,609
-- 2,841
15,992 18,028
13,653 35,621
64,241 76,417
22,836 28,235
17,765 25,916
- ------------ ------------
3,012,013 5,581,394
- ------------ ------------
(287,310) --
(13,930) (319,999)
- ------------ ------------
2,710,773 5,261,395
- ------------ ------------
(1,139,800) (2,552,753)
- ------------ ------------
(14,627,300) 18,386,160
-- --
43,730,903 101,106,375
-- --
- ------------ ------------
29,103,603 119,492,535
- ------------ ------------
$ 27,963,803 $116,939,782
============ ============
28
Statements of Changes in Net Assets
Capital Growth Fund Growth and Income Fund
-------------------------- ----------------------------
Six Months Six Months
Ended Ended
June 30, Year Ended June 30, Year Ended
2003 December 31, 2003 December 31,
(unaudited) 2002 (unaudited) 2002
----------- ------------ ------------ -------------
FROM OPERATIONS:
Net investment income (loss) ...................................... $ (420,594) $ (1,058,415) $ (536,480) $ (503,999)
Net realized gain (loss) on investments and
foreign currency transactions .................................. 210,920 (24,033,239) (11,529,100) (23,052,758)
Net change in unrealized appreciation (depreciation)
on investments ................................................. 9,017,909 (9,195,048) 42,623,740 (40,836,656)
----------- ------------ ------------ -------------
Increase (decrease) in net assets resulting from operations ....... 8,808,235 (34,286,702) 30,558,160 (64,393,413)
----------- ------------ ------------ -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS: .................................. -- -- -- --
----------- ------------ ------------ -------------
INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM CAPITAL SHARE TRANSACTIONS ........................... (7,233,344) (25,435,438) 73,149,535 (70,380,717)
----------- ------------ ------------ -------------
Total increase (decrease) in net assets ........................... 1,574,891 (59,722,140) 103,707,695 (134,774,130)
NET ASSETS
Beginning of period ............................................... 75,843,683 135,565,823 219,195,745 353,969,875
----------- ------------ ------------ -------------
End of period ..................................................... $77,418,574 $ 75,843,683 $322,903,440 $ 219,195,745
=========== ============ ============ =============
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) ......... $ (462,621) $ (42,027) $ (591,141) $ (54,661)
=========== ============ ============ =============
29 See accompanying notes to financial statements.
International Equity Large Cap Growth Select Targeted Equity
Fund Fund Fund Fund
- -------------------------- -------------------------- --------------------------- -----------------------------
Six Months Six Months Six Months Six Months
Ended Ended Ended Ended
June 30, Year Ended June 30, Year Ended June 30, Year Ended June 30, Year Ended
2003 December 31, 2003 December 31, 2003 December 31, 2003 December 31,
(unaudited) 2002 (unaudited) 2002 (unaudited) 2002 (unaudited) 2002
- ----------- ------------ ----------- ------------ ------------ ------------ ------------ --------------
$ 144,608 $ (394,794) $ (88,119) $ (274,025) $ (1,139,800) $ (1,930,970) $ (2,552,753) $ (8,332,759)
(1,135,407) (9,991,358) (1,957,122) (11,968,632) (14,627,300) (14,515,826) 18,386,160 (243,684,297)
4,067,716 (139,087) 4,739,797 (5,830,835) 43,730,903 (26,008,735) 101,106,375 (31,792,914)
- ----------- ------------ ----------- ------------ ------------ ------------ ------------ --------------
3,076,917 (10,525,239) 2,694,556 (18,073,492) 27,963,803 (42,455,531) 116,939,782 (283,809,970)
- ----------- ------------ ----------- ------------ ------------ ------------ ------------ --------------
-- -- -- -- -- -- -- --
- ----------- ------------ ----------- ------------ ------------ ------------ ------------ --------------
(2,752,748) (14,520,711) (2,676,100) (13,041,498) 6,549,564 140,115,357 (62,861,139) (163,710,155)
- ----------- ------------ ----------- ------------ ------------ ------------ ------------ --------------
324,169 (25,045,950) 18,456 (31,114,990) 34,513,367 97,659,826 54,078,643 (447,520,125)
35,707,774 60,753,724 25,047,639 56,162,629 240,723,442 143,063,616 656,330,764 1,103,850,889
- ----------- ------------ ----------- ------------ ------------ ------------ ------------ --------------
$36,031,943 $ 35,707,774 $25,066,095 $ 25,047,639 $275,236,809 $240,723,442 $710,409,407 $ 656,330,764
=========== ============ =========== ============ ============ ============ ============ ==============
$ 69,314 $ (75,294) $ (90,200) $ (2,081) $ (1,148,774) $ (8,974) $ (2,791,267) $ (238,514)
=========== ============ =========== ============ ============ ============ ============ ==============
30
Financial Highlights
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
----------------------------------------------------- ------------------------------------------------------
Net asset
value, Net Net realized Dividends Distributions
beginning investment and unrealized Total from from net from net
of income gain (loss) on investment investment realized Return of Total
the period (loss) investments operations income capital gains capital distributions
---------- ---------- -------------- ---------- ---------- ------------- --------- -------------
Capital
Growth Fund
Class A
6/30/2003(e) $ 8.58 $(0.04)(d) $ 1.12 $ 1.08 $ -- $ -- $-- $ --
12/31/2002 11.93 (0.09)(d) (3.26) (3.35) -- -- -- --
12/31/2001 15.04 (0.13)(d) (2.95) (3.08) -- (0.03) -- (0.03)
12/31/2000 22.86 (0.18)(d) (4.14) (4.32) -- (3.50) -- (3.50)
12/31/1999 20.67 (0.13)(d) 5.05 4.92 -- (2.73) -- (2.73)
12/31/1998 19.95 (0.13)(d) 5.18 5.05 -- (4.33) -- (4.33)
Class B
06/30/03(e) 7.56 (0.07)(d) 1.00 0.93 -- -- -- --
12/31/2002 10.61 (0.15)(d) (2.90) (3.05) -- -- -- --
12/31/2001 13.47 (0.20)(d) (2.63) (2.83) -- (0.03) -- (0.03)
12/31/2000 21.06 (0.32)(d) (3.77) (4.09) -- (3.50) -- (3.50)
12/31/1999 19.37 (0.27)(d) 4.69 4.42 -- (2.73) -- (2.73)
12/31/1998 19.10 (0.27)(d) 4.87 4.60 -- (4.33) -- (4.33)
Class C
06/30/03(e) 7.56 (0.06)(d) 0.97 0.91 -- -- -- --
12/31/2002 10.60 (0.14)(d) (2.90) (3.04) -- -- -- --
12/31/2001 13.47 (0.20)(d) (2.64) (2.84) -- (0.03) -- (0.03)
12/31/2000 21.06 (0.32)(d) (3.77) (4.09) -- (3.50) -- (3.50)
12/31/1999 19.37 (0.27)(d) 4.69 4.42 -- (2.73) -- (2.73)
12/31/1998 19.11 (0.27)(d) 4.86 4.59 -- (4.33) -- (4.33)
Growth and
Income Fund
Class A
06/30/03(e) $ 9.42 $(0.01)(d) $ 1.42 $ 1.41 $ -- $ -- $-- $ --
12/30/2002 11.78 0.01(d) (2.37) (2.36) -- -- -- --
12/31/2001 13.79 (0.01)(d) (2.00) (2.01) -- -- -- --
12/31/2000 15.33 0.01(d) (1.09) (1.08) -- (0.46) -- (0.46)
12/31/1999 16.57 0.08 1.40 1.48 (0.06) (2.66) -- (2.72)
12/31/1998 15.35 0.04 3.29 3.33 (0.01) (2.10) -- (2.11)
Class B
06/30/03(e) 9.02 (0.05)(d) 1.37 1.32 -- -- -- --
12/31/2002 11.37 (0.07)(d) (2.28) (2.35) -- -- -- --
12/31/2001 13.40 (0.10)(d) (1.93) (2.03) -- -- -- --
12/31/2000 15.03 (0.10)(d) (1.07) (1.17) -- (0.46) -- (0.46)
12/31/1999 16.37 (0.04) 1.36 1.32 -- (2.66) -- (2.66)
12/31/1998 15.28 (0.05) 3.24 3.19 -- (2.10) -- (2.10)
Class C
06/30/03(e) 9.01 (0.05)(d) 1.35 1.30 -- -- -- --
12/31/2002 11.36 (0.07)(d) (2.28) (2.35) -- -- -- --
12/31/2001 13.38 (0.10)(d) (1.92) (2.02) -- -- -- --
12/31/2000 15.01 (0.10)(d) (1.07) (1.17) -- (0.46) -- (0.46)
12/31/1999 16.35 (0.04) 1.36 1.32 -- (2.66) -- (2.66)
12/31/1998 15.28 (0.04) 3.21 3.17 -- (2.10) -- (2.10)
Class Y
06/30/03(e) 9.59 0.02(d) 1.46 1.48 -- -- -- --
12/31/2002 11.93 0.07(d) (2.41) (2.34) -- -- -- --
12/31/2001 13.87 0.06(d) (2.00) (1.94) -- -- -- --
12/31/2000 15.36 0.07(d) (1.10) (1.03) -- (0.46) -- (0.46)
12/31/1999 16.57 0.02 1.51 1.53 (0.08) (2.66) -- (2.74)
12/31/1998(f) 15.42 0.02 1.22 1.24 (0.02) (0.07) -- (0.09)
(a) A sales charge for Class A and Class C shares and a contingent deferred
sales charge for Class B and Class C shares are not reflected in total
return calculations. Periods less than one year are not annualized.
(b) Computed on an annualized basis for periods less than one year.
(c) Certain Funds have entered into agreements with certain brokers to rebate a
portion of brokerage commissions. The rebated commissions are used to
reduce operating expenses of the Fund.
(d) Per share net investment income (loss) has been calculated using the
average shares outstanding during the period.
31 See accompanying notes to financial statements.
Ratios to average net assets:
---------------------------------------
Net asset Net assets, Expenses
value, Total end of after expense Net investment Portfolio
end of return the period Expenses reductions income (loss) turnover
the period (%)(a) (000) (%)(b) (%)(b)(c) (%)(b) rate (%)
- ---------- -------- ----------- -------- ------------- -------------- ---------
$ 9.66 12.6 $ 60,295 2.00 1.97 (0.98) 32
8.58 (28.1) 58,729 1.75 1.71 (0.84) 103
11.93 (20.5) 98,412 1.62 1.58 (0.99) 90
15.04 (19.5) 143,425 1.40 1.37 (0.80) 118
22.86 24.7 200,821 1.39 1.39 (0.61) 124
20.67 29.0 175,511 1.46 1.46 (0.62) 136
8.49 12.3 16,204 2.75 2.72 (1.69) 32
7.56 (28.8) 16,267 2.50 2.46 (1.59) 103
10.61 (21.0) 35,409 2.37 2.33 (1.74) 90
13.47 (20.1) 56,884 2.15 2.12 (1.55) 118
21.06 23.8 74,774 2.14 2.14 (1.36) 124
19.37 28.2 57,796 2.21 2.21 (1.37) 136
8.47 12.0 919 2.75 2.72 (1.66) 32
7.56 (28.7) 847 2.50 2.46 (1.59) 103
10.60 (21.1) 1,745 2.37 2.33 (1.74) 90
13.47 (20.1) 2,487 2.15 2.12 (1.55) 118
21.06 23.8 3,110 2.14 2.14 (1.36) 124
19.37 28.1 1,609 2.21 2.21 (1.37) 136
$10.83 15.0 $196,940 1.68 1.65 (0.27) 15
9.42 (20.0) 130,751 1.56 1.54 0.07 195
11.78 (14.6) 211,138 1.46 1.41 (0.05) 154
13.79 (7.3) 290,714 1.31 1.28 0.04 139
15.33 9.5 375,676 1.21 1.21 0.48 133
16.57 23.9 304,139 1.23 1.23 0.33 114
10.34 14.6 88,682 2.43 2.40 (1.02) 15
9.02 (20.7) 71,436 2.31 2.29 (0.68) 195
11.37 (15.1) 120,361 2.21 2.16 (0.80) 154
13.40 (8.1) 165,767 2.06 2.03 (0.71) 139
15.03 8.6 216,457 1.96 1.96 (0.27) 133
16.37 23.1 153,369 1.98 1.98 (0.42) 114
10.31 14.4 9,646 2.43 2.40 (1.02) 15
9.01 (20.7) 6,440 2.31 2.29 (0.68) 195
11.36 (15.1) 10,553 2.21 2.16 (0.80) 154
13.38 (8.1) 19,373 2.06 2.03 (0.71) 139
15.01 8.6 26,983 1.96 1.96 (0.27) 133
16.35 22.9 18,288 1.98 1.98 (0.42) 114
11.07 15.4 27,635 1.03 1.00 0.36 15
9.59 (19.6) 10,569 0.96 0.94 0.66 195
11.93 (14.0) 11,918 0.91 0.87 0.52 154
13.87 (7.0) 10,131 0.87 0.84 0.48 139
15.36 9.8 14,377 0.96 0.96 (0.73) 133
16.57 8.1 1 0.98 0.98 0.58 114
(e) For the period ended June 30, 2003 (unaudited).
(f) For the period November 18, 1998 (inception) through December 31, 1998.
32
Financial Highlights
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
----------------------------------------------------- ------------------------------------------------------
Net asset
value, Net Net realized Dividends Distributions
beginning investment and unrealized Total from from net from net
of income gain (loss) on investment investment realized Return of Total
the period (loss)(d) investments operations income capital gains capital distributions
---------- ---------- -------------- ---------- ---------- ------------- --------- -------------
International
Equity Fund
Class A
6/30/2003(l) $10.04 $ 0.05 $ 0.81 $ 0.86 $ -- $ -- $-- $ --
12/31/2002 12.72 (0.08) (2.60) (2.68) -- -- -- --
12/31/2001 16.62 (0.10) (3.80) (3.90) -- -- -- --
12/31/2000 25.39 (0.22) (6.90) (7.12) (0.17) (1.48) -- (1.65)
12/31/1999 14.26 (0.03) 12.31 12.28 (0.02) (1.13) -- (1.15)
12/31/1998 14.06 0.15 0.77 0.92 (0.44) (0.28) -- (0.72)
Class B
6/30/2003(l) 9.51 0.01 0.77 0.78 -- -- -- --
12/31/2002 12.14 (0.16) (2.47) (2.63) -- -- -- --
12/31/2001 15.99 (0.20) (3.65) (3.85) -- -- -- --
12/31/2000 24.71 (0.37) (6.70) (7.07) (0.17) (1.48) -- (1.65)
12/31/1999 13.98 (0.15) 12.01 11.86 -- (1.13) -- (1.13)
12/31/1998 13.71 0.04 0.75 0.79 (0.24) (0.28) -- (0.52)
Class C
6/30/2003(l) 9.49 0.01 0.76 0.77 -- -- -- --
12/31/2002 12.18 (0.16) (2.53) (2.69) -- -- -- --
12/31/2001 16.05 (0.20) (3.67) (3.87) -- -- -- --
12/31/2000 24.78 (0.34) (6.74) (7.08) (0.17) (1.48) -- (1.65)
12/31/1999 14.02 (0.15) 12.04 11.89 -- (1.13) -- (1.13)
12/31/1998 13.74 0.05 0.75 0.80 (0.24) (0.28) -- (0.52)
Class Y
6/30/2003(l) 10.43 0.10 0.85 0.95 -- -- -- --
12/31/2002 13.11 0.01 (2.69) (2.68) -- -- -- --
12/31/2001 17.02 (0.02) (3.89) (3.91) -- -- -- --
12/31/2000 25.81 (0.10) (7.04) (7.14) (0.17) (1.48) -- (1.65)
12/31/1999 14.45 0.02 12.54 12.56 (0.07) (1.13) -- (1.20)
12/31/1998 14.35 0.25 0.77 1.02 (0.64) (0.28) -- (0.92)
Large Cap
Growth Fund*
Class A
6/30/2003(l) $ 8.87 $(0.02) $ 1.09 $ 1.07 $ -- $ -- $-- $ --
12/31/2002 13.84 (0.04) (4.93) (4.97) -- -- -- --
12/31/2001(k) 12.39 (0.02) 1.47 1.45 -- -- -- --
9/30/2001 21.67 (0.05) (7.87) (7.92) -- (1.36) -- (1.36)
9/30/2000 15.41 (0.13) 6.39 6.26 -- -- -- --
9/30/1999 10.32 (0.08) 5.17(h) 5.09 0.00(g) -- -- 0.00(g)
9/30/1998(i) 10.00 0.00(g) 0.32 0.32 -- -- -- --
Class B
6/30/2003(l) 8.68 (0.05) 1.06 1.01 -- -- -- --
12/31/2002 13.62 (0.12) (4.82) (4.94) -- -- -- --
12/31/2001(k) 12.22 (0.04) 1.44 1.40 -- -- -- --
9/30/2001 21.53 (0.17) (7.78) (7.95) -- (1.36) -- (1.36)
9/30/2000(j) 16.21 (0.26) 5.58 5.32 -- -- -- --
* The financial information for the periods through November 16, 2001
reflects the financial information for Kobrick Growth Fund's Class A shares
and Class B shares which were reorganized into Class A shares and Class B
shares of Large Cap Growth Fund, respectively, as of November 16, 2001. The
predecessor Fund was advised by Kobrick Funds LLC until July 1, 2001 and
had a September 30 fiscal year end.
(a) A sales charge for Class A and Class C shares and a contingent deferred
sales charge for Class B and Class C shares are not reflected in total
return calculations. Periods less than one year are not annualized.
(b) Computed on an annualized basis for periods less than one year.
(c) Certain Funds have entered into agreements with certain brokers to rebate a
portion of brokerage commissions. The rebated commissions are used to
reduce operating expenses of the Fund.
(d) Per share net investment income (loss) has been calculated using the
average shares outstanding during the period.
(e) Had certain expenses not been reduced during the period, total returns
would have been lower.
(f) The investment adviser agreed to reimburse a portion of the Fund's expenses
during the period. Without this reimbursement, expense ratios would have
been higher.
(g) Amount rounds to less than $0.01 per share.
(h) The amount shown for a share outstanding does not correspond with the
aggregate net gain/(loss) for the period ended December 31, 1998, due to
the timing of purchases and redemptions of Fund shares in relation to
fluctuating market values of the investments of the Fund.
(i) For the period September 1, 1998 (inception) through December 31, 1998.
33 See accompanying notes to financial statements.
Ratios to average net assets:
-----------------------------------------
Net asset Net assets, Expenses
value, Total end of after expense Net investment Portfolio
end of return the period Expenses reductions income (loss) turnover
the period (%) (a) (000) (%)(b) (%) (b)(c) (%) (b) rate (%)
- ---------- ------- ----------- -------- ------------- -------------- ---------
$10.90 8.6 $ 23,589 2.72 2.69 0.95 84
10.04 (21.1) 22,232 2.34 2.32 (0.67) 125
12.72 (23.5) 33,773 2.14 2.14 (0.74) 172
16.62 (28.6) 54,826 1.96 1.96 (1.01) 212
25.39 87.6(e) 67,197 2.00(f) 2.00(f) (0.15) 229
14.26 6.7(e) 47,444 1.91(f) 1.91(f) 1.04 105
10.29 8.2 7,780 3.47 3.44 0.16 84
9.51 (21.7) 8,950 3.09 3.07 (1.43) 125
12.14 (24.1) 17,549 2.89 2.89 (1.48) 172
15.99 (29.2) 29,013 2.71 2.71 (1.76) 212
24.71 86.3(e) 29,045 2.75(f) 2.75(f) (0.90) 229
13.98 5.8(e) 19,797 2.66(f) 2.66(f) 0.29 105
10.26 8.1 1,029 3.47 3.44 0.19 84
9.49 (22.1) 1,195 3.09 3.07 (1.43) 125
12.18 (24.1) 2,183 2.89 2.89 (1.50) 172
16.05 (29.1) 5,656 2.71 2.71 (1.76) 212
24.78 86.2(e) 1,267 2.75(f) 2.75(f) (0.90) 229
14.02 5.9(e) 860 2.66(f) 2.66(f) 0.29 105
11.38 9.1 3,633 1.83 1.80 1.85 84
10.43 (20.4) 3,330 1.60 1.58 0.07 125
13.11 (23.0) 7,249 1.49 1.49 (0.11) 172
17.02 (28.2) 11,940 1.39 1.39 (0.44) 212
25.81 88.6(e) 14,441 1.55(f) 1.55(f) 0.10 229
14.45 7.3(e) 5,552 1.31(f) 1.31(f) 1.64 105
$ 9.94 12.1(e) $ 11,025 1.40(f) 1.32(f) (0.35) 31
8.87 (35.9)(e) 11,340 1.40(f) 1.37(f) (0.37) 44
13.84 11.7(e) 27,873 1.40(f) 1.36(f) (0.56) 27
12.39 (38.5)(e) 27,668 1.40(f) 1.19(f) (0.27) 724
21.67 40.6(e) 103,087 1.40(f) 1.29(f) (0.62) 826
15.41 49.4(e) 46,827 1.40(f) 1.40(f) (0.55) 632
10.32 3.2(e) 1,054 1.40(f) 1.40(f) 0.32 11
9.69 11.6(e) 12,028 2.15(f) 2.08(f) (1.10) 31
8.68 (36.3)(e) 11,758 2.15(f) 2.12(f) (1.12) 44
13.62 11.5(e) 24,087 2.15(f) 2.11(f) (1.31) 27
12.22 (38.9)(e) 22,811 2.15(f) 1.98(f) (1.04) 724
21.53 32.8(e) 35,680 2.15(f) 1.99(f) (1.30) 826
(j) For the period October 29, 1999 (inception) through September 30, 2000.
(k) For the three months ended December 31, 2001.
(l) For the six months ended June 30, 2003 (unaudited).
34
Financial Highlights
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
----------------------------------------- -------------------------------------------------------
Net asset
value, Net Net realized Dividends Distributions
beginning investment and unrealized Total from from net from net
of income gain (loss) on investment investment realized Return of Total
the period (loss) investments operations income capital gains capital distributions
---------- ---------- -------------- ---------- ----------- ------------- --------- -------------
Large Cap Growth
Fund*(continued)
Class C
6/30/2003(k) $ 8.68 $(0.05)(d) $ 1.06 $ 1.01 $ -- $ -- $ -- $ --
12/31/2002 13.62 (0.12)(d) (4.82) (4.94) -- -- -- --
12/31/2001(k) 12.22 (0.04)(d) 1.44 1.40 -- -- -- --
9/30/2001 21.54 (0.17)(d) (7.79) (7.96) -- (1.36) -- (1.36)
9/30/2000(j) 16.21 (0.26)(d) 5.59 5.33 -- -- -- --
Class Y
6/30/2003(k) 8.97 (0.00)(d)(g) 1.09 1.09 -- -- -- --
12/31/2002 13.93 (0.01)(d) (4.95) (4.96) -- -- -- --
12/31/2001(k) 12.46 (0.01)(d) 1.48 1.47 -- -- -- --
9/30/2001 21.73 (0.01)(d) (7.90) (7.91) -- (1.36) -- (1.36)
9/30/2000(j) 16.21 (0.06)(d) 5.58 5.52 -- -- -- --
Select Fund
Class A
6/30/2003(k) $ 9.24 $(0.02)(d) $ 1.12 $ 1.10 $ -- $ -- $ -- $ --
12/31/2002(j) 10.96 (0.03)(d) (1.69) (1.72) -- -- -- --
12/31/2001 10.00 (0.01)(d) 0.97 0.96 -- -- -- --
Class B
6/30/2003(k) 9.12 (0.05)(d) 1.10 1.05 -- -- -- --
12/31/2002(j) 10.90 (0.11)(d) (1.67) (1.78) -- -- -- --
12/31/2001 10.00 (0.07)(d) 0.97 0.90 -- -- -- --
Class C
6/30/2003(k) 9.12 (0.05)(d) 1.10 1.05 -- -- -- --
12/31/2002(j) 10.90 (0.11)(d) (1.67) (1.78) -- -- -- --
12/31/2001 10.00 (0.07)(d) 0.97 0.90 -- -- -- --
Targeted Equity
Fund
Class A
6/30/2003(k) $ 5.56 $(0.02)(d) $ 1.10 $ 1.08 $ -- $ -- $ -- $ --
12/31/2002 7.81 (0.06)(d) (2.19) (2.25) -- -- -- --
12/31/2001 9.36 (0.03)(d) (1.49) (1.52) (0.03) -- -- (0.03)
12/31/2000 11.00 0.09(d) (0.60) (0.51) (0.06) (1.07) -- (1.13)
12/31/1999 11.36 0.02 1.57 1.59 -- (1.95) -- (1.95)
12/31/1998 10.41 0.08(d) 3.00 3.08 (0.10) (1.67) (0.36) (2.13)
Class B
6/30/2003(k) 5.28 (0.04)(d) 1.03 0.99 -- -- -- --
12/31/2002 7.47 (0.11)(d) (2.08) (2.19) -- -- -- --
12/31/2001 9.02 (0.09)(d) (1.43) (1.52) (0.03) -- -- (0.03)
12/31/2000 10.67 0.01(d) (0.58) (0.57) (0.01) (1.07) -- (1.08)
12/31/1999 11.15 (0.05) 1.52 1.47 -- (1.95) -- (1.95)
12/31/1998 10.32 0.00(d)(g) 2.95 2.95 (0.06) (1.67) (0.39) (2.12)
* The financial information for the periods through November 16, 2001
reflects the financial information for Kobrick Growth Fund's Class C shares
and Class Y shares which were reorganized into Class C shares and Class Y
shares of Large Cap Growth Fund, respectively, as of November 16, 2001. The
predecessor Fund was advised by Kobrick Funds LLC until July 1, 2001 and
had a September 30 fiscal year end.
(a) A sales charge for Class A and Class C shares and a contingent deferred
sales charge for Class B and Class C shares are not reflected in total
return calculations. Periods less than one year are not annualized.
(b) Computed on an annualized basis for periods less than one year.
(c) Certain Funds have entered into agreements with certain brokers to rebate a
portion of brokerage commissions. The rebated commissions are used to
reduce operating expenses of the Fund.
(d) Per share net investment income (loss) has been calculated using the
average shares outstanding during the period.
(e) Had certain expenses not been reduced during the period total return would
have been lower.
(f) The investment adviser agreed to reimburse a portion of the Fund's expenses
during the period. Without this reimbursement, expense ratios would have
been higher.
(g) Amount rounds to less than $0.01 per share.
(h) For the six months ended June 30, 2003 (unaudited).
35 See accompanying notes to financial statements.
Ratios to average net assets:
------------------------------------------
Net asset Net assets, Expenses
value, Total end of after expense Net investment Portfolio
end of return the period Expenses reductions income (loss) turnover
the period (%) (a) (000) (%) (b) (%) (b)(c) (%) (b) rate (%)
- ---------- --------- ----------- --------- ------------- -------------- ---------
$ 9.69 11.6 (e) $ 1,036 2.15(f) 2.07(f) (1.10) 31
8.68 (36.3)(e) 1,157 2.15(f) 2.12(f) (1.12) 44
13.62 11.5(e) 3,007 2.15(f) 2.11(f) (1.33) 27
12.22 (38.9)(e) 3,419 2.15(f) 1.98(f) (1.04) 724
21.54 32.9(e) 6,546 2.15(f) 2.01(f) (1.32) 826
10.06 12.2 (e) 977 1.15(f) 1.08(f) (0.10) 31
8.97 (35.6)(e) 792 1.15(f) 1.12(f) (0.12) 44
13.93 11.8(e) 1,196 1.15(f) 1.11(f) (0.32) 27
12.46 (38.3)(e) 1,251 1.15(f) 0.98(f) (0.06) 724
21.73 34.1(e) 1,746 1.15(f) 0.95(f) (0.28) 826
$ 10.34 11.9 (e) $ 79,128 1.70(f) 1.69(f) (0.40) 16
9.24 (15.7)(e) 68,660 1.70(f) 1.69(f) (0.35) 12
10.96 9.6 (e) 45,987 1.70(f) 1.63(f) (0.08) 10
10.17 11.5 (e) 95,842 2.45(f) 2.44(f) (1.15) 16
9.12 (16.3)(e) 85,794 2.45(f) 2.44(f) (1.10) 12
10.90 9.0 (e) 62,671 2.45(f) 2.39(f) (0.83) 10
10.17 11.5 (e) 100,267 2.45(f) 2.44(f) (1.15) 16
9.12 (16.3)(e) 86,269 2.45(f) 2.44(f) (1.10) 12
10.90 9.0 (e) 34,406 2.45(f) 2.39(f) (0.86) 10
$ 6.64 19.4 $ 651,687 1.65 1.56 (0.73) 135
5.56 (28.8) 602,989 1.47 1.39 (0.86) 223
7.81 (16.2) 1,012,161 1.38 1.35 (0.39) 243
9.36 (4.6) 1,413,685 1.18 1.16 0.83 266
11.00 15.2 1,871,138 1.12 1.12 0.23 206
11.36 33.4 1,825,107 1.12 1.12 0.74 202
6.27 18.8 49,912 2.40 2.31 (1.48) 135
5.28 (29.3) 45,633 2.23 2.15 (1.62) 223
7.47 (16.8) 78,744 2.13 2.10 (1.14) 243
9.02 (5.2) 107,594 1.93 1.91 0.08 266
10.67 14.4 135,786 1.87 1.87 (0.52) 206
11.15 32.4 75,444 1.87 1.87 (0.01) 202
36
Financial Highlights
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
Net asset ----------------------------------------- -------------------------------------------------------
value, Net Net realized Dividends Distributions
beginning investment and unrealized Total from from net from net
of income gain (loss) on investment investment realized Return of Total
the period (loss) investments operations income capital gains capital distributions
---------- ----------- -------------- ---------- ----------- ------------- --------- -------------
Targeted Equity
Fund (Continued)
Class C
6/30/2003(h) $ 5.27 $(0.04)(d) $ 1.04 $ 1.00 $ -- $ -- $ -- $ --
12/31/2002 7.47 (0.11)(d) (2.09) (2.20) -- -- -- --
12/31/2001 9.02 (0.09)(d) (1.43) (1.52) (0.03) -- -- (0.03)
12/31/2000 10.67 0.01(d) (0.58) (0.57) (0.01) (1.07) -- (1.08)
12/31/1999 11.15 (0.05) 1.52 1.47 -- (1.95) -- (1.95)
12/31/1998(f) 11.18 0.00(d)(e) 2.09 2.09 (0.06) (1.67) (0.39) (2.12)
Class Y
6/30/2003(h) 5.63 (0.00)(d)(e) 1.10 1.10 -- -- -- --
12/31/2002 7.85 (0.02)(d) (2.20) (2.22) -- -- -- --
12/31/2001 9.37 0.01(d) (1.50) (1.49) (0.03) -- -- (0.03)
12/31/2000 11.01 0.12(d) (0.60) (0.48) (0.09) (1.07) -- (1.16)
12/31/1999(g) 11.94 0.03 0.99 1.02 -- (1.95) -- (1.95)
(a) A sales charge and a contingent deferred sales charge for Class C shares
are not reflected in total return calculations. Periods less than one year
are not annualized.
(b) Computed on an annualized basis for periods less than one year.
(c) The Fund has entered into agreements with certain brokers to rebate a
portion of brokerage commissions. The rebated commissions are used to
reduce operating expenses of the Fund.
(d) Per share net investment income (loss) has been calculated using the
average shares outstanding during the period.
(e) Amount rounds to less than $0.01 per share.
(f) For the period September 1, 1998 (inception) through December 31, 1998.
(g) For the period June 30, 1999 (inception) through December 31, 1999.
(h) For the six months ended June 30, 2003 (unaudited).
37 See accompanying notes to financial statements.
Ratios to average net assets:
-------------------------------------------
Net asset Net assets, Expenses
value, Total end of after expense Net investment Portfolio
end of return the period Expenses reductions income (loss) turnover
the period (%) (a) (000) (%) (b) (%) (b)(c) (%) (b) rate (%)
- ---------- ---------- ----------- ---------- ------------- -------------- ---------
$ 6.27 19.0 $ 2,419 2.40 2.31 (1.47) 135
5.27 (29.5) 2,187 2.23 2.15 (1.62) 223
7.47 (16.8) 4,162 2.13 2.10 (1.14) 243
9.02 (5.2) 5,830 1.93 1.91 0.08 266
10.67 14.4 8,754 1.87 1.87 (0.52) 206
11.15 22.2 2,030 1.87 1.87 (0.01) 202
6.73 19.5 6,391 0.98 0.88 (0.05) 135
5.63 (28.3) 5,522 0.92 0.84 (0.31) 223
7.85 (15.9) 8,785 0.87 0.83 0.13 243
9.37 (4.2) 12,260 0.85 0.83 1.16 266
11.01 9.7 15,418 0.87 0.87 0.48 206
38
NOTES TO
FINANCIAL STATEMENTS
39
Notes To Financial Statements
For the Six Months Ended June 30, 2003 (unaudited)
1. Organization. CDC Nvest Funds Trust I, CDC Nvest Funds Trust II and CDC Nvest
Funds Trust III (the "Trusts" and each a "Trust") are organized as Massachusetts
business trusts. Each Trust is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company. Each Declaration
of Trust permits the Trustees to issue an unlimited number of shares of the
Trust in multiple series (individually, a "Fund" and, collectively, the
"Funds"). Information presented in these financial statements pertains to the
equity funds of the Trusts, the financial statements of the other Funds of the
Trusts are presented in separate reports. The following table provides a list of
the Funds included in this report.
CDC Nvest Funds Trust I:
CDC Nvest Capital Growth Fund (the "Capital Growth Fund")
CDC Nvest International Equity Fund (the "International Equity Fund")
CDC Nvest Large Cap Growth Fund (the "Large Cap Growth Fund")
CDC Nvest Targeted Equity Fund (the "Targeted Equity Fund")
CDC Nvest Funds Trust II:
CDC Nvest Growth and Income Fund (the "Growth and Income Fund")
CDC Nvest Funds Trust III:
CDC Nvest Select Fund (the "Select Fund")
Each Fund offers Class A, Class B, and Class C shares. Growth and Income Fund,
International Equity Fund, Large Cap Growth Fund and Targeted Equity Fund also
offer Class Y shares. Class A shares are sold with a maximum front end sales
charge of 5.75%. Class B shares do not pay a front end sales charge, but pay a
higher ongoing distribution fee than Class A shares for eight years (at which
point they automatically convert to Class A shares), and are subject to a
contingent deferred sales charge ("CDSC") if those shares are redeemed within
six years of purchase. Class C shares are sold with a maximum front end sales
charge of 1.00%, do not convert to any other class of shares and pay a higher
ongoing distribution fee than Class A shares and may be subject to a CDSC of
1.00% if those shares are redeemed within one year. Class Y shares do not pay a
front end sales charge, a CDSC or distribution fees. They are intended for
institutional investors with a minimum initial investment of $1,000,000.
Expenses of a Fund are borne pro rata by the holders of each class of shares,
except that each class bears expenses unique to that class (including the Rule
12b-1 service and distribution fees and transfer agent fees applicable to such
class), and votes as a class only with respect to its own Rule 12b-1 Plan.
Shares of each class would receive their pro rata share of the net assets of a
Fund, if the Fund were liquidated. The Trustees approve separate dividends from
net investment income on each class of shares.
2. Significant Accounting Policies. The following is a summary of significant
accounting policies consistently followed by each Fund in the preparation of its
financial statements. The Funds' financial statements are prepared in accordance
with accounting principles generally accepted in the United States of America
which require the use of management estimates that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
a. Security Valuation. Equity securities are valued on the basis of valuations
furnished to the Fund by a pricing service which has been authorized by the
Trustees. The pricing service provides the last reported sale price for
securities listed on an applicable securities exchange or on the NASDAQ national
market system, or, if no sale was reported and in the case of over-the-counter
securities not so listed, the last reported bid price. Effective April 14, 2003,
securities traded on the NASDAQ National Market are valued at the NASDAQ
Official Closing Price ("NOCP"), or if lacking an NOCP, at the most recent bid
quotation on the NASDAQ National Market. Debt securities (other than short-term
obligations with a remaining maturity of less than sixty days) are valued on the
basis of valuations furnished by a pricing service authorized by the Board of
Trustees, which service determines valuations for normal, institutional-size
trading units of such securities using market information, transactions for
comparable securities and various relationships between securities which are
generally recognized by institutional traders. Short-term obligations with a
remaining maturity of less than sixty days are stated at amortized cost, which
approximates market value. All other securities and assets are valued at their
fair value as determined in good faith by the Fund's investment adviser and
subadviser, under the supervision of the Fund's Trustees.
b. Security Transactions and Related Investment Income. Security transactions
are accounted for on trade date. Dividend income is recorded on ex-dividend
date, or in the case of certain foreign securities, as soon as the Fund is
notified. Interest income is recorded on an accrual basis. Interest income is
increased by the accretion of discount and decreased by the amortization of
premium. Investment income is recorded net of foreign taxes withheld when
recovery of such taxes is uncertain. In determining net gain or loss on
securities sold, the cost of securities has been determined on an identified
cost basis.
c. Foreign Currency Translation. The books and records of the Funds are
maintained in U.S. dollars. The value of securities, currencies and other assets
and liabilities denominated in currencies other than U.S. dollars are translated
into U.S. dollars based upon foreign exchange rates prevailing at the end of the
period. Purchases and sales of investment securities, income and expenses are
translated on the respective dates of such transactions.
40
Notes To Financial Statements (continued)
For the Six Months Ended June 30, 2003 (unaudited)
Since the values of investment securities are presented at the foreign exchange
rates prevailing at the end of the period, it is not practical to isolate that
portion of the results of operations arising from changes in exchange rates from
fluctuations arising from changes in market prices of the investment securities.
Such changes are included with the net realized and unrealized gain or loss on
investments.
Net realized foreign exchange gains or losses arise from: sales of foreign
currency, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Fund's books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities at the end of the fiscal periods, resulting from changes
in exchange rates.
d. Forward Foreign Currency Contracts. The International Equity Fund may use
foreign currency contracts to facilitate transactions in foreign securities and
to manage the Fund's currency exposure. Contracts to buy generally are used to
acquire exposure to foreign currencies, while contracts to sell are used to
hedge the Fund's investments against currency fluctuation. Also, a contract to
buy or sell can offset a previous contract. These contracts involve market risk
in excess of the unrealized gain or loss reflected in the Fund's Statement of
Assets and Liabilities. The U.S. dollar value of the currencies the Fund has
committed to buy or sell (if any) is shown in the portfolio composition under
the caption "Forward Currency Contracts Outstanding." These amounts represent
the aggregate exposure to each currency the Fund has acquired or hedged through
currency contracts outstanding at period end.
All contracts are "marked-to-market" daily at the applicable exchange rates and
any gains or losses are recorded for financial statement purposes as unrealized
until settlement date. Risks may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
e. Federal and Foreign Income Taxes. The Trusts treat each Fund as a separate
entity for federal income tax purposes. Each Fund intends to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies, and to distribute to its shareholders substantially all of its net
investment income and any net realized capital gains, at least annually.
Accordingly, no provision for federal income tax has been made. A Fund may be
subject to foreign taxes on income and gains on investments that are accrued
based upon the Fund's understanding of the tax rules and regulations that exist
in the countries in which the Fund invests. Foreign governments may also impose
taxes or other payments on investments with respect to foreign securities, such
taxes are accrued as applicable.
f. Dividends and Distributions to Shareholders. Dividends and distributions are
recorded on ex-dividend date. The timing and characterization of certain income
and capital gains distributions are determined in accordance with federal tax
regulations which may differ from accounting principles generally accepted in
the United States of America. These differences are primarily due to differing
treatments for book and tax purposes of items such as distributions from real
estate investment trusts, net operating losses, non-deductible expenses, foreign
currency transactions and gains realized from passive foreign investment
companies. Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to capital accounts.
Distributions from net investment income and short-term capital gains are
considered to be ordinary income for tax purposes.
g. Repurchase Agreements. Each Fund, through its custodian, receives delivery of
the underlying securities collateralizing repurchase agreements. It is each
Fund's policy that the market value of the collateral be at least equal to 100%
of the repurchase price, including interest. Each Fund's subadviser (adviser for
the Targeted Equity Fund) is responsible for determining that the value of the
collateral is at all times at least equal to the repurchase price, including
interest. Repurchase agreements could involve certain risks in the event of
default or insolvency of the counterparty including possible delays or
restrictions upon a Fund's ability to dispose of the underlying securities.
3. Purchases and Sales of Securities. For the six months ended June 30, 2003,
purchases and sales of securities (excluding U.S. Government/Agency securities
and short-term investments) were as follows:
Fund Purchases Sales
- ------------------------- ------------ ------------
Capital Growth Fund $ 23,884,590 $ 31,801,721
Growth and Income Fund 31,643,651 44,356,467
International Equity Fund 27,545,769 30,194,293
Large Cap Growth Fund 7,447,849 9,736,378
Select Fund 36,659,181 38,478,550
Targeted Equity Fund 895,941,461 960,054,354
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. CDC IXIS Asset Management Advisers, L.P. ("CDC IXIS
Advisers") is the investment adviser to each of the Funds except the Targeted
Equity Fund. Capital Growth Management Limited Partnership ("CGM") is the
investment adviser to the Targeted Equity Fund. Under the terms of the
management agreements, each Fund pays a management fee at the following annual
rates, calculated daily and payable monthly, based on each Fund's average daily
net assets:
41
Notes To Financial Statements (continued)
For the Six Months Ended June 30, 2003 (unaudited)
Percentage of Average Daily Net Assets
--------------------------------------------------------------------
First Next Next Next Over
Fund $200 million $300 million $500 million $1 billion $2 billion
- ------------------------- ------------ ------------ ------------ ---------- ----------
Capital Growth Fund 0.750% 0.700% 0.650% 0.650% 0.650%
Growth and Income Fund 0.700% 0.650% 0.600% 0.600% 0.600%
International Equity Fund 0.900% 0.850% 0.800% 0.800% 0.800%
Large Cap Growth Fund 0.900% 0.900% 0.900% 0.900% 0.900%
Select Fund 1.000% 1.000% 1.000% 0.950% 0.950%
Targeted Equity Fund 0.750% 0.700% 0.650% 0.650% 0.600%
For the six months ended June 30, 2003, the management fees and waivers for each
Fund were as follows:
Percentage of Average
Gross Waiver of Net Daily Net Assets*
Management Management Management ---------------------
Fund Fee Fee Fee Gross Net
- ------------------------- ---------- ---------- ---------- ------ ------
Capital Growth Fund $ 277,716 -- $ 277,716 0.750% 0.750%
Growth and Income Fund 749,205 -- 749,205 0.696% 0.696%
International Equity Fund 156,799 -- 156,799 0.900% 0.900%
Large Cap Growth Fund 108,397 66,291 42,106 0.900% 0.350%
Select Fund 1,218,219 -- 1,218,219 1.000% 1.000%
Targeted Equity Fund 2,305,817 -- 2,305,817 0.703% 0.703%
* Annualized
CDC IXIS Advisers has entered into subadvisory agreements for each Fund listed
below. Payments to CDC IXIS Advisers are reduced by payments to the subadvisers.
Capital Growth Fund Westpeak Global Advisors, L.P.
Growth and Income Fund Harris Associates L.P.
International Equity Fund Loomis, Sayles & Company, L.P.
Large Cap Growth Fund Vaughan, Nelson, Scarborough
& McCullough, L.P.
Select Fund Harris Associates L.P.
CDC IXIS Advisers and each of the subadvisers are wholly-owned subsidiaries of
CDC IXIS Asset Management North America, L.P. ("CDC IXIS North America"), CGM is
a 50% owned subsidiary of CDC IXIS Asset Management North America, L.P. Certain
officers and directors of CDC IXIS Advisers and Loomis Sayles are also officers
or Trustees of the Funds.
Broker commissions paid to affiliated broker/dealers by the Funds were as
follows:
Fund Commission
- ----------- ----------
Select Fund $5,600
b. Accounting and Administrative Expense. CDC IXIS Asset Management Services,
Inc. ("CIS"), a wholly owned subsidiary of CDC IXIS North America, performs
certain accounting and administrative services for the Funds and has
subcontracted with Investors Bank & Trust Company ("IBT"), to serve as
subadministrator. Pursuant to an agreement among the Trusts, CDC Nvest Cash
Management Trust, CDC Nvest Tax Exempt Money Market Trust, CDC Nvest Companies
Trust I and CIS each Fund pays CIS its pro rata portion of a group fee for these
services representing the higher amount based on the following calculations:
(1) Percentage of Eligible Average Daily Net Assets
First Next Over
$5 billion $5 billion $10 billion
---------- ---------- ------------
0.0600% 0.0500% 0.0450%
or
(2) Each Fund's pro rata portion, based on eligible assets, of
the annual aggregate minimum fee of $3.4 million.
For the six months ended June 30, 2003, fees paid to CIS for accounting and
administrative expense were as follows:
Accounting
And Percentage of Average
Fund Administrative Daily Net Assets*
- ------------------------- -------------- ---------------------
Capital Growth Fund $ 30,325 0.082%
Growth and Income Fund 87,904 0.082%
International Equity Fund 14,224 0.082%
Large Cap Growth Fund $ 9,816 0.082%
Select Fund 100,255 0.082%
Targeted Equity Fund 267,299 0.081%
*Annualized
42
Notes To Financial Statements (continued)
For the Six Months Ended June 30, 2003 (unaudited)
c. Transfer Agent Fees. CIS is the transfer and shareholder servicing agent for
each Fund and has subcontracted with Boston Financial Data Services ("BFDS") to
serve as subtransfer agent. Each Fund pays CIS service fees for servicing
shareholder accounts. Classes A, B and C pay service fees monthly representing
the higher amount based on the following calculations:
(1) Annual aggregate fee determined by applying an annual fee rate (see
schedule below) to the eligible average daily net assets. Eligible
assets are the average daily net assets of all non-networked accounts
in equity funds offered within the CDC Nvest Family of Funds for which
there are exchange privileges among the Funds.
First Next Over
$5 billion $5 billion $10.7 billion
---------- ---------- -------------
0.184% 0.180% 0.175%
Each Class of shares is subject to an annual class minimum of $18,000.
or
(2) An allocated portion, based on eligible assets, of an annual aggregate
minimum fee of $9.8 million.
In addition, pursuant to other servicing agreements, Classes A, B and C pay
service fees to other firms that provide similar services for their own
shareholder accounts.
Class Y shareholders pay service fees monthly at an annual rate of 0.10% of
their average daily net assets.
CIS and BFDS and other firms are also reimbursed by the Funds for out-of-pocket
expenses. For the six months ended June 30, 2003, amounts paid to CIS as
compensation for its services as transfer agent were as follows:
Fund Transfer Agent Fee
- ------------------------- ------------------
Capital Growth Fund $ 170,865
Growth and Income Fund 436,998
International Equity Fund 69,054
Large Cap Growth Fund 52,445
Select Fund 353,044
Targeted Equity Fund 1,431,154
Effective July 1, 2003, the annual aggregate minimum fee changed to $8.1
million.
d. Service and Distribution Fees. Pursuant to Rule 12b-1 under the 1940 Act, the
Trusts have adopted a Service Plan relating to each Fund's Class A shares (the
"Class A Plan") and Service and Distribution Plans relating to each Fund's Class
B and Class C shares (the "Class B and Class C Plans").
Under the Class A Plan, each Fund pays CDC IXIS Asset Management Distributors,
L.P. ("CDC IXIS Distributors"), the Fund's distributor (a wholly owned
subsidiary of CDC IXIS North America), a monthly service fee at the annual rate
of 0.25% of the average daily net assets attributable to the Fund's Class A
shares, as reimbursement for expenses incurred by CDC IXIS Distributors in
providing personal services to investors in Class A shares and/or the
maintenance of shareholder accounts.
Under the Class B and Class C Plans, each Fund pays CDC IXIS Distributors a
monthly service fee at the annual rate of 0.25% of the average daily net assets
attributable to the Fund's Class B and Class C shares, as compensation for
services provided and expenses incurred by CDC IXIS Distributors in providing
personal services to investors in Class B and Class C shares and/or the
maintenance of shareholder accounts.
Also under the Class B and Class C Plans, each Fund pays CDC IXIS Distributors a
monthly distribution fee at the annual rate of 0.75% of the average daily net
assets attributable to the Fund's Class B and Class C shares, as compensation
for services provided and expenses incurred by CDC IXIS Distributors in
connection with the marketing or sale of Class B and Class C shares.
For the six months ended June 30, 2003, the Funds paid the following service and
distribution fees:
Service Fee Distribution Fee
------------------------------ -------------------
Fund Class A Class B Class C Class B Class C
- ------------------------- -------- -------- -------- -------- --------
Capital Growth Fund $ 71,878 $ 19,623 $ 1,071 $ 58,869 $ 3,212
Growth and Income Fund 161,260 85,465 8,625 256,393 25,875
International Equity Fund 28,080 9,924 1,376 29,773 4,129
Large Cap Growth Fund 13,468 14,315 1,272 42,944 3,814
Select Fund 86,813 107,512 110,230 322,536 330,688
Targeted Equity Fund 753,315 56,996 2,682 170,988 8,047
43
Notes To Financial Statements (continued)
For the Six Months Ended June 30, 2003 (unaudited)
Prior to September 13, 1993 for Capital Growth Fund and International Equity
Fund and June 1, 1993 for Targeted Equity Fund, to the extent that reimbursable
expenses of CDC IXIS Distributors in prior years exceeded the maximum amount
payable under the Plan for that year, such expenses could be carried forward for
reimbursement in future years in which the Class A Plan remains in effect.
Unreimbursed expenses carried forward at December 31, 2002 are as follows:
Fund
- -------------------------
Capital Growth Fund $ 563,284
International Equity Fund 514,256
Targeted Equity Fund 2,030,882
Commissions (including contingent deferred sales charges) on Fund shares paid to
CDC IXIS Distributors by investors in shares of the Funds during the six months
ended June 30, 2003 were as follows:
Fund
- -------------------------
Capital Growth Fund $ 56,019
Growth and Income Fund 211,389
International Equity Fund 41,038
Large Cap Growth Fund 32,968
Select Fund 422,448
Targeted Equity Fund 232,830
e. Trustees Fees and Expenses.
Effective June 10, 2003, the Board of Trustees approved the unification of the
CDC Nvest Funds Board of Trustees with the Loomis Sayles Funds I and Loomis
Sayles Funds II Boards of Trustees. The result is a combined Board of Trustees
comprised of CDC Nvest Funds Trustees and Loomis Sayles Trustees that will
jointly govern CDC Nvest Funds Trusts I, II, III, CDC Nvest Companies Trust I,
CDC Nvest Cash Management Trust, CDC Nvest Tax Exempt Money Market Trust and AEW
Real Estate Income Fund (the "CDC Nvest Funds") and Loomis Sayles Funds I and
Loomis Sayles Funds II (the "Loomis Sayles Funds").
The Funds do not pay any compensation directly to their officers or Trustees who
are directors, officers or employees of CDC IXIS Advisers, CDC IXIS
Distributors, CDC IXIS North America, CIS or their affiliates. Each other
Trustee receives a retainer fee at the annual rate of $45,000 and meeting
attendance fees of $4,500 for each meeting of the Board of Trustees attended.
Each committee member receives an additional retainer fee at the annual rate of
$7,000 while each committee chairman receives a retainer fee (beyond the $7,000
fee) at the annual rate of $5,000. The retainer fees assume four Board or
Committee meetings per year; Trustees are compensated for each additional Board
and committee meeting, in excess of four meetings per year, at the rate of
$4,500 and $1,750, respectively. These fees are allocated to the various CDC
Nvest Funds and Loomis Sayles Funds based on a formula that takes into account,
among other factors, the relative net assets of each Fund.
A deferred compensation plan (the "Plan") is available to the Trustees on a
voluntary basis. Each participating Trustee will receive an amount equal to the
value that such deferred compensation would have been had it been invested in a
designated Fund or certain other CDC Nvest Funds or Loomis Sayles Funds on the
normal payment date. Deferred amounts remain in the Funds until distributed in
accordance with the Plan.
f. Publishing Services. CIS performs certain desktop publishing services for the
Funds. Fees for these services are presented in the statements of operations as
shareholder reporting. For the six months ended June 30, 2003, amounts paid to
CIS as compensation for these services were as follows:
Publishing
Fund Services Fee
- ------------------------- ------------
Capital Growth Fund $554
Growth and Income Fund 554
International Equity Fund 554
Large Cap Growth Fund 591
Select Fund 554
Targeted Equity Fund 554
44
Notes To Financial Statements (continued)
For the Six Months Ended June 30, 2003 (unaudited)
5. Capital Shares. Each Fund may issue an unlimited number of shares of
beneficial interest. Transactions in capital shares were as follows:
Capital Growth Fund
--------------------------------------------------
Six Months Ended
June 30, 2003 Year Ended
(unaudited) December 31, 2002
---------------------- -------------------------
Shares Amount Shares Amount
-------- ----------- ---------- ------------
Class A:
Shares sold .................................................... 181,266 $ 1,607,738 761,322 $ 8,210,459
Shares issued - merger ......................................... -- -- -- --
-------- ----------- ---------- ------------
181,266 1,607,738 761,322 8,210,459
Shares repurchased ............................................. (786,114) (6,942,030) (2,161,141) (22,158,435)
-------- ----------- ---------- ------------
Net increase (decrease) ........................................ (604,848) $(5,334,292) (1,399,819) $(13,947,976)
-------- ----------- ---------- ------------
Class B:
Shares sold .................................................... 121,089 $ 951,785 237,784 $ 2,165,602
Shares issued - merger ......................................... -- -- -- --
-------- ----------- ---------- ------------
121,089 951,785 237,784 2,165,602
Shares repurchased ................................................ (362,535) (2,821,251) (1,425,706) (13,198,190)
-------- ----------- ---------- ------------
Net increase (decrease) ........................................... (241,446) $(1,869,466) (1,187,922) $(11,032,588)
-------- ----------- ---------- ------------
Class C:
Shares sold .................................................... 14,497 $ 113,193 19,550 $ 183,007
Shares issued - merger ......................................... -- -- -- --
-------- ----------- ---------- ------------
14,497 113,193 19,550 183,007
Shares repurchased ............................................. (18,182) (142,779) (72,021) (637,881)
-------- ----------- ---------- ------------
Net increase (decrease) ........................................ (3,685) $ (29,586) (52,471) $ (454,874)
-------- ----------- ---------- ------------
Class Y:
Shares sold .................................................... -- $ -- -- $ --
Shares issued - merger ......................................... -- -- -- --
-------- ----------- ---------- ------------
-- -- -- --
Shares repurchased ............................................. -- -- -- --
-------- ----------- ---------- ------------
Net increase (decrease) ........................................ -- $ -- -- $ --
-------- ----------- ---------- ------------
Increase (decrease) derived from capital shares transactions ... (849,979) $(7,233,344) (2,640,212) $(25,435,438)
======== =========== ========== ============
45
Growth and Income Fund International Equity Fund
- ----------------------------------------------------- ----------------------------------------------------
Six Months Ended Six Months Ended
June 30, 2003 Year Ended June 30, 2003 Year Ended
(unaudited) December 31, 2002 (unaudited) December 31, 2002
- ------------------------- ------------------------- ------------------------ -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
832,568 $ 8,513,025 945,632 $ 10,205,721 3,599,021 $35,877,234 2,754,333 $ 29,936,420
5,074,156 54,768,963 -- -- -- -- -- --
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
5,906,724 63,281,988 945,632 10,205,721 3,599,021 35,877,234 2,754,333 29,936,420
(1,601,712) (15,602,263) (4,978,487) (52,521,283) (3,647,946) (36,652,973) (3,196,260) (35,287,699)
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
4,305,012 $ 47,679,725 (4,032,855) $(42,315,562) (48,925) $ (775,739) (441,927) $ (5,351,279)
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
428,335 $ 5,429,495 601,736 $ 6,071,959 28,085 $ 266,637 82,990 $ 907,560
1,412,967 14,552,145 -- -- -- -- -- --
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
1,841,302 19,981,640 601,736 6,071,959 28,085 266,637 82,990 907,560
(1,187,109) (12,071,019) (3,266,561) (33,165,088) (213,003) (1,994,900) (587,425) (6,411,587)
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
654,193 $ 7,910,621 (2,664,825) $(27,093,129) (184,918) $(1,728,263) (504,435) $ (5,504,027)
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
210,243 $ 2,064,048 96,568 $ 935,777 2,664 $ 25,356 322,458 $ 3,276,144
101,458 1,043,494 -- -- -- -- -- --
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
311,701 3,107,542 96,568 935,777 2,664 25,356 322,458 3,276,144
(91,527) (948,256) (310,868) (3,192,896) (28,323) (274,102) (375,769) (3,937,764)
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
220,174 $ 2,159,286 (214,300) $ (2,257,119) (25,659) $ (248,746) (53,311) $ (661,620)
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
30,713 $ 296,480 331,631 $ 3,818,587 -- $ -- 18,164 $ 231,399
1,419,921 15,668,839 -- -- -- -- -- --
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
1,450,634 15,965,319 331,631 3,818,587 -- -- 18,164 231,399
(55,302) (565,416) (228,979) (2,533,494) -- -- (251,729) (3,235,184)
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
1,395,332 $ 15,399,903 102,652 $ 1,285,093 -- $ -- (233,565) $ (3,003,785)
- ---------- ------------ ---------- ------------ ---------- ----------- ---------- ------------
6,574,711 $ 73,149,535 (6,809,328) $(70,380,717) (259,502) $(2,752,748) (1,233,238) $(14,520,711)
========== ============ ========== ============ ========== =========== ========== ============
46
Notes To Financial Statements (continued)
For the Six Months Ended June 30, 2003
Large Cap Growth Fund
--------------------------------------------------
Six Months Ended
June 30, 2003 Year Ended
(unaudited) December 31, 2002
---------------------- -------------------------
Shares Amount Shares Amount
-------- ----------- ---------- ------------
Class A
Shares sold .................................................... 76,708 $ 702,570 202,098 $ 2,343,505
Shares repurchased ............................................. (246,289) (2,243,053) (936,669) (10,274,458)
-------- ----------- ---------- ------------
Net increase (decrease) ........................................ (169,581) $(1,540,483) (734,571) $ (7,930,953)
-------- ----------- ---------- ------------
Class B
Shares sold .................................................... 74,435 $ 669,241 131,877 $ 1,421,109
Shares repurchased ............................................. (187,969) (1,657,599) (545,262) (5,619,744)
-------- ----------- ---------- ------------
Net increase (decrease) ........................................ (113,534) $ (988,358) (413,385) $ (4,198,635)
-------- ----------- ---------- ------------
Class C
Shares sold .................................................... 2,961 $ 26,527 16,263 $ 176,036
Shares repurchased ............................................. (29,307) (256,400) (103,754) (1,097,229)
-------- ----------- ---------- ------------
Net increase (decrease) ........................................ (26,346) $ (229,873) (87,491) $ (921,193)
-------- ----------- ---------- ------------
Class Y
Shares sold .................................................... 20,846 $ 191,813 24,593 $ 275,632
Shares repurchased ............................................. (12,111) (109,199) (22,048) (266,349)
-------- ----------- ---------- ------------
Net increase (decrease) ........................................ 8,735 $ 82,614 2,545 $ 9,283
-------- ----------- ---------- ------------
Increase (decrease) derived from capital shares transactions ... (300,726) $(2,676,100) (1,232,902) $(13,041,498)
======== =========== ========== ============
47
Select Fund Targeted Equity Fund
- ----------------------------------------------------- --------------------------------------------------------
Six Months Ended Six Months Ended
June 30, 2003 Year Ended June 30, 2003 Year Ended
(unaudited) December 31, 2002 (unaudited) December 31, 2002
- ------------------------- ------------------------- -------------------------- ---------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
1,238,200 $ 11,705,826 5,396,731 $ 55,604,458 1,655,112 $ 9,685,537 2,888,014 $ 20,668,849
(1,016,023) (9,400,378) (2,164,581) (21,141,953) (11,795,900) (68,541,790) (24,057,649) (169,752,395)
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
222,177 $ 2,305,448 3,232,150 $ 34,462,505 (10,140,788) $(58,856,253) (21,169,635) $(149,083,546)
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
994,127 $ 9,231,828 5,734,108 $ 59,212,895 405,821 $ 2,296,477 808,645 $ 5,457,636
(974,847) (8,845,029) (2,077,257) (19,685,531) (1,091,726) (5,992,811) (2,703,038) (18,188,643)
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
19,280 $ 386,799 3,656,851 $ 39,527,364 (685,905) $ (3,696,334) (1,894,393) $ (12,731,007)
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
1,490,460 $ 13,879,247 7,600,954 $ 78,413,530 26,505 $ 158,512 42,117 $ 286,122
(1,088,184) (10,021,930) (1,299,396) (12,288,042) (55,082) (293,390) (184,345) (1,163,741)
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
402,276 $ 3,857,317 6,301,558 $ 66,125,488 (28,577) $ (134,878) (142,228) $ (877,619)
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
-- $ -- -- $ -- 46,822 $ 283,423 72,523 $ 518,150
-- -- -- -- (79,083) (457,097) (209,324) (1,536,133)
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
-- $ -- -- $ -- (32,261) $ (173,674) (136,801) $ (1,017,983)
- ---------- ------------ ---------- ------------ ----------- ------------ ----------- -------------
643,733 $ 6,549,564 13,190,559 $140,115,357 (10,887,531) $(62,861,139) (23,343,057) $(163,710,155)
========== ============ ========== ============ =========== ============ =========== =============
48
6. Line of Credit. The Funds that comprise the CDC Nvest Funds Trusts
participate in a $50,000,000 committed line of credit provided by IBT. Advances
under the Agreement are taken primarily for temporary or emergency purposes.
Borrowings under the Agreement bear interest at a rate tied to one of several
short-term rates that may be selected by the lender from time to time. In
addition, the Funds are charged a facility fee equal to 0.10% per annum on the
unused portion of the line of credit. The annual cost of maintaining the line of
credit and the facility fee is apportioned pro rata among the participating
Funds. There were no borrowings as of or during the six months ended June 30,
2003.
7. Security Lending. Each Fund has entered into an agreement with IBT, as agent
of the Funds, to lend securities to certain designated borrowers. The loans are
collateralized at all times with cash or securities with a market value at least
equal to the market value of the securities on loan. The Funds receive fees for
lending their securities. The market value of securities on loan to borrowers
and the value of collateral held by the Funds with respect to such loans at June
30, 2003, is as follows:
Market Value of Value of Collateral
Fund Securities on Loan Received
- ---------------------- ------------------ -------------------
Capital Growth Fund $ 1,931,626 $ 2,020,700
Growth and Income Fund 20,758,176 21,658,725
International Equity 2,799,226 2,947,932
Large Cap Growth Fund 1,710,203 1,768,890
Select Fund 28,166,646 29,708,515
Targeted Equity Fund 105,092,606 107,614,296
8. Expense Reductions and Contingent Expense Obligations. Each Fund has entered
into agreements with certain brokers whereby the brokers will rebate a portion
of brokerage commissions. Amounts earned by the Funds under such agreements are
presented as a reduction of expenses in the statements of operations. For the
six months ended June 30, 2003, expenses were reduced under these agreements as
follows:
Fund Reductions
- ------------------------- ----------
Capital Growth Fund $ 11,466
Growth and Income Fund 26,603
International Equity Fund 5,553
Large Cap Growth Fund 9,140
Select Fund 13,930
Targeted Equity Fund 319,999
CDC IXIS Advisers has given binding undertakings to certain Funds to defer its
management fees and, if necessary, bear certain expenses associated with these
Funds to limit their operating expenses. For the six months ended June 30, 2003,
and in addition to the waiver of management fees as discussed in note 4, certain
class level expenses have been reimbursed as follows: Growth and Income Fund
$61,423; Large Cap Growth Fund $104,494; and Select Fund $287,310. These
undertakings are in effect until the dates indicated below and will be
reevaluated on an annual basis. The expense limitation for Growth and Income
Fund began June 1, 2003.
If in the following fiscal year the actual operating expenses of a Fund that
previously received a deferral or reimbursement are less than the expense limit
for that Fund, the Fund is required to pay an amount of additional expense that
is the lower of the difference between the expense limit and the actual amount
of fees previously waived or expenses reimbursed.
At June 30, 2003, the expense limits as a percentage of average daily net assets
and amounts subject to possible reimbursement under the expense limitation
agreements were as follows:
Expense Limit as a Percentage
of Average Daily Net Assets Expenses Subject
------------------------------------- Expiration to Possible
Fund Class A Class B Class C Class Y of Waiver Reimbursement
- ---------------------- ------- ------- ------- ------- -------------- ----------------
Growth and Income Fund 1.30% 2.05% 2.05% 1.05% April 30, 2004 $ 61,421
Large Cap Growth Fund 1.40% 2.15% 2.15% 1.15% April 30, 2004 586,369
Select Fund 1.70% 2.45% 2.45% --% April 30, 2004 495,448
49
9. Concentration of Risk. International Equity Fund had the following geographic
concentrations in excess of 10% of its total net assets at June 30, 2003: United
Kingdom 23.1% and Japan 16.8%. The Fund pursues its objectives by investing in
foreign securities. There are certain risks involved in investing in foreign
securities which are in addition to the usual risks inherent in domestic
investments. These risks include those resulting from future adverse political
or economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions.
Select Fund is a non-diversified Fund. Compared with diversified mutual funds,
the Fund may invest a greater percentage of its assets in a particular company.
Therefore, the Fund's returns could be significantly affected by the performance
of any one of the small number of stocks in its portfolio.
10. Acquisition of Assets. After the close of business on June 27, 2003, Growth
and Income Fund acquired all the assets and liabilities of CDC Nvest Balanced
Fund ("Balanced Fund"), pursuant to a plan of reorganization approved by its
shareholders on June 17, 2003. The acquisition was accomplished by a tax-free
exchange of 5,074,156 Class A shares of Growth and Income Fund for 6,129,454
shares of Balanced Fund Class A, 1,412,967 Class B shares of Growth and Income
Fund for 1,623,926 shares of Balanced Fund Class B, 101,458 Class C shares of
Growth and Income Fund for 116,986 shares of Balanced Fund Class C and 1,419,921
Class Y shares of Growth and Income Fund for 1,771,498 shares of Balanced Fund
Class Y. Balanced Fund net assets at that date $86,033,441, including $6,680,807
of net unrealized appreciation, were combined with those of the Fund. The
aggregate net assets of the Fund immediately before the acquisition were
$236,323,033. The combined net assets of the Fund immediately following the
acquisition were $322,356,474.
50
Notes
51
Notes
52
Notes
53
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved.]
Item 9. Controls and Procedures.
The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation.
Item 10. Exhibits.
(a) Code of Ethics - Not applicable.
(b) Certifications of Principal Executive Officer and Principal
Financial Officer.
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.
CDC Nvest Funds Trust III
By: /s/ John T. Hailer
----------------------------
Name: John T. Hailer
Title: President
Date: August 28, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ John T. Hailer
----------------------------
Name: John T. Hailer
Title: Chief Executive Officer
Date: August 28, 2003
By: /s/ Nicholas Palmerino
----------------------------
Name: Nicholas Palmerino
Title: Treasurer
Date: August 28, 2003
EXHIBIT INDEX
(b)(1) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2 under the Investment Company Act of 1940.
(b)(2) Certification of principal executive officer and principal financial
officer as required by Section 906 of the Sarbanes-Oxley Act of 2002.