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: 811-242
CDC Nvest Funds Trust III
(Exact name of registrant as specified in charter)
399 Boylston Street, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip code)
John E. Pelletier, Esq.
CDC IXIS Asset Management Distributors, L.P.
399 Boylston Street
Boston, Massachusetts 02116
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 449-2801
Date of fiscal year end: December 31, 2004
Date of reporting period: June 30, 2004
Item 1. Reports to Stockholders.
[LOGO] CDC Nvest Funds(SM)
CDC IXIS Asset Management Distributors
Equity Funds
Semiannual Report
June 30, 2004
CGM Advisor Targeted Equity Fund
Hansberger International Fund
(formerly CDC Nvest Star International Fund)
Harris Associates Focused Value Fund
Harris Associates Large Cap Value Fund
(formerly Harris Associates Growth and Income Fund)
Vaughan Nelson Small Cap Value Fund
(formerly CDC Nvest Star Small Cap Fund)
Westpeak Capital Growth Fund
TABLE OF CONTENTS
Management Discussion
and Performance................Page 1
Schedule of Investments..........Page 14
Financial Statements.............Page 25
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CGM Advisor Targeted Equity Fund
- --------------------------------------------------------------------------------
Portfolio Profile
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================================================================================
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:
Generally invests in a focused portfolio of common stocks of large-cap companies
- --------------------------------------------------------------------------------
Inception Date:
November 27, 1968
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Manager:
G. Kenneth Heebner
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Symbols:
Class A NEFGX
Class B NEBGX
Class C NEGCX
Class Y NEGYX
- --------------------------------------------------------------------------------
You Should Know:
The fund invests in a small number of securities, which may result in greater
volatility than more diversified funds. Growth stocks can be more sensitive to
market movements because their prices are based in part on future expectations.
The fund may invest in foreign securities that involve risks not associated with
domestic securities.
================================================================================
Management Discussion
- --------------------------------------------------------------------------------
Strong performance from a few key issues benefited CGM Advisor Targeted Equity
Fund during the six months ended June 30, 2004. Total return for Class A shares
at net asset value was 3.15% for the period, slightly below the Standard &
Poor's 500 Index, which returned 3.44%. However, the fund's performance was
above the average for its Morningstar Large Blend category: 2.78% for the
six-month period.
Fund fully invested to capture growth
The fund began 2004 positioned for several years of economic growth with rising
employment, consumer confidence and corporate profits. Inflation remains at its
lowest level in 40 years. Significant underutilized economic capacity and
prospects for productivity growth lead us to expect inflation to remain moderate
for some time to come.
During the first half of the year, we eliminated positions in pharmaceutical
stocks and significantly reduced our homebuilding investments to free up assets
for our expanding commitment to energy stocks and key individual issues.
Stocks selected for earnings growth were top contributors
During the period, several stocks led fund performance: Avon Products, Harman
International, and America Movil. All three stocks satisfied our emphasis on
earnings.
Avon Products, a new acquisition, is a well-known household products company.
While business is increasing modestly in the United States, with new products
and a motivated sales force, Avon's strongest growth is coming from Eastern
Europe, Latin America, and Russia, with prospects for healthy growth in China.
Also benefiting from growth abroad is America Movil, a dominant Latin American
cellular company. Based in Mexico, America Movil has made important acquisitions
in the much-less-saturated markets of Brazil, Columbia and Argentina. With
growth rates for cellular service in excess of 20%, these countries offer
tremendous business opportunities.
Harman International Industries, a leading consumer electronics company,
expanded a number of years ago into manufacturing electronics for automobiles.
The company most recently introduced a fully automated, voice-activated
infotainment system that bundles telephone, stereo, and navigational systems
into a single product. We believe the company's future growth rests on the
system's price point, as well as lack of competition and Harman's ability to
expand its product base from luxury automobiles to more moderately priced cars.
Electronics and technology lag
Disappointments included AU Optronics, a global electronics company that
manufactures flat panel screens for use in TVs, computer monitors, and laptops.
Although the company operates in a rapidly expanding market, the stock price
declined on fears of excess capacity in the sector.
Another stock that lagged was Micron Technology, a manufacturer of random access
chips. We sold this issue because the industry's supply and demand dynamic did
not develop as favorably as we anticipated, leading to pricing pressure and
disappointing earnings.
Emphasis on energy stocks
Currently, we are most interested in the energy sector. While much attention has
been focused on potential supply disruptions in the Middle East, upward pressure
on oil prices is also coming from strong demand from Asia, particularly China.
Demand for energy stocks dipped recently as investors anticipated a drop in oil
prices - an expectation we don't share.
Outlook for gradually rising interest rates
We expect the Federal Reserve Board to increase short-term interest rates
gradually during the coming year. However, we don't anticipate aggressive
tightening, which could jeopardize economic recovery. We will remain focused on
trying to identify a small number of companies that we believe offer superior
growth potential.
1
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CGM Advisor Targeted Equity Fund
- --------------------------------------------------------------------------------
Investment Results through June 30, 2004
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Performance in Perspective
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An 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. Investors would incur
transaction costs and other expenses if they purchased the securities necessary
to match the index.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
June 30, 1994 through June 30, 2004
[CHART]
Line Chart
Investment @ N.A.V. 10,000 Fund Inception: 11/27/1968
Sales Charge % 5.75 Statement Date: 6/30/2004
Sales Charge (575)
------
Investment @ M.S.C. 9,425
======
----------------------- S&P
Class A Class A 500
@ NAV @ M.S.C. Index
---------- ---------- ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ---------- ---------- ----------
6/30/1994 10,000 9,425 10,000
7/31/1994 10,348 9,753 10,328
8/31/1994 10,613 10,003 10,752
9/30/1994 10,266 9,675 10,489
10/31/1994 10,307 9,714 10,725
11/30/1994 9,714 9,155 10,334
12/31/1994 9,859 9,292 10,487
1/31/1995 9,625 9,072 10,759
2/28/1995 10,092 9,512 11,179
3/31/1995 10,403 9,805 11,508
4/30/1995 11,048 10,413 11,847
5/31/1995 11,715 11,041 12,321
6/30/1995 12,574 11,851 12,607
7/31/1995 13,141 12,386 13,025
8/31/1995 13,208 12,449 13,058
9/30/1995 13,449 12,676 13,609
10/31/1995 13,172 12,415 13,560
11/30/1995 13,801 13,007 14,155
12/31/1995 13,615 12,832 14,428
1/31/1996 14,092 13,282 14,919
2/29/1996 14,544 13,708 15,058
3/31/1996 14,544 13,708 15,202
4/30/1996 14,273 13,452 15,427
5/31/1996 14,492 13,659 15,824
6/30/1996 14,337 13,513 15,885
7/31/1996 13,499 12,722 15,183
8/31/1996 13,628 12,844 15,503
9/30/1996 14,563 13,725 16,376
10/31/1996 15,419 14,532 16,828
11/30/1996 16,620 15,664 18,100
12/31/1996 16,457 15,511 17,741
1/31/1997 17,943 16,911 18,849
2/28/1997 17,646 16,631 18,997
3/31/1997 16,896 15,924 18,216
4/30/1997 17,858 16,831 19,304
5/31/1997 18,735 17,658 20,479
6/30/1997 19,570 18,445 21,397
7/31/1997 21,466 20,232 23,099
8/31/1997 20,363 19,192 21,805
9/30/1997 21,406 20,175 22,999
10/31/1997 20,566 19,384 22,231
11/30/1997 20,332 19,163 23,260
12/31/1997 20,332 19,163 23,660
1/31/1998 20,664 19,475 23,922
2/28/1998 22,480 21,187 25,647
3/31/1998 23,925 22,550 26,960
4/30/1998 24,843 23,415 27,231
5/31/1998 24,453 23,047 26,763
6/30/1998 25,761 24,280 27,850
7/31/1998 25,898 24,409 27,554
8/31/1998 20,957 19,752 23,570
9/30/1998 21,106 19,893 25,080
10/31/1998 23,231 21,895 27,120
11/30/1998 25,165 23,718 28,764
12/31/1998 27,123 25,563 30,421
1/31/1999 28,961 27,296 31,694
2/28/1999 26,884 25,338 30,709
3/31/1999 27,529 25,946 31,937
4/30/1999 27,433 25,856 33,174
5/31/1999 26,550 25,023 32,391
6/30/1999 28,508 26,868 34,188
7/31/1999 27,839 26,238 33,121
8/31/1999 27,791 26,193 32,957
9/30/1999 26,144 24,641 32,053
10/31/1999 27,147 25,586 34,082
11/30/1999 28,173 26,553 34,775
12/31/1999 31,241 29,444 36,823
1/31/2000 28,798 27,142 34,973
2/29/2000 31,354 29,551 34,311
3/31/2000 31,695 29,873 37,667
4/30/2000 30,502 28,748 36,534
5/31/2000 29,281 27,598 35,784
6/30/2000 29,395 27,705 36,666
7/31/2000 28,457 26,821 36,093
8/31/2000 29,805 28,092 38,335
9/30/2000 28,727 27,075 36,311
10/31/2000 28,787 27,132 36,158
11/30/2000 28,517 26,877 33,307
12/31/2000 29,818 28,104 33,470
1/31/2001 27,174 25,612 34,658
2/28/2001 26,314 24,801 31,498
3/31/2001 25,645 24,170 29,502
4/30/2001 26,760 25,221 31,795
5/31/2001 26,218 24,711 32,008
6/30/2001 26,396 24,878 31,229
7/31/2001 25,628 24,155 30,921
8/31/2001 23,517 22,164 28,986
9/30/2001 21,245 20,023 26,645
10/31/2001 21,373 20,144 27,153
11/30/2001 23,644 22,285 29,236
12/31/2001 24,988 23,551 29,492
1/31/2002 25,756 24,275 29,062
2/28/2002 24,572 23,159 28,501
3/31/2002 24,988 23,551 29,573
4/30/2002 25,052 23,612 27,780
5/31/2002 24,796 23,371 27,575
6/30/2002 23,996 22,617 25,611
7/31/2002 21,341 20,114 23,615
8/31/2002 21,341 20,114 23,770
9/30/2002 20,029 18,877 21,186
10/31/2002 19,549 18,425 23,051
11/30/2002 19,069 17,973 24,408
12/31/2002 17,789 16,766 22,974
1/31/2003 17,789 16,766 22,372
2/28/2003 17,661 16,646 22,037
3/31/2003 18,077 17,038 22,251
4/30/2003 19,229 18,123 24,083
5/31/2003 20,893 19,691 25,352
6/30/2003 21,244 20,023 25,676
7/31/2003 20,828 19,631 26,128
8/31/2003 21,372 20,143 26,638
9/30/2003 21,628 20,385 26,355
10/31/2003 24,316 22,918 27,846
11/30/2003 25,276 23,822 28,091
12/31/2003 25,404 23,943 29,564
1/31/2004 24,828 23,400 30,107
2/29/2004 26,332 24,818 30,525
3/31/2004 27,548 25,964 30,065
4/30/2004 25,372 23,913 29,593
5/31/2004 25,980 24,486 29,999
6/30/2004 26,204 24,689 30,582
Average Annual Total Returns -- June 30, 2004
- --------------------------------------------------------------------------------
Since
6 Months 1 Year 5 Years 10 Years Inception
-------- ------ ------- -------- ---------
Class A (Inception 11/27/68)
Net Asset Value/1/ 3.15% 23.34% -1.67% 10.11% --
With Maximum Sales Charge/2/ -2.73 16.17 -2.83 9.46 --
Class B (Inception 2/28/97)
Net Asset Value/1/ 2.81 22.49 -2.41 -- 4.74%
With CDSC/3/ -2.19 17.49 -2.71 -- 4.74
Class C (Inception 9/1/98)
Net Asset Value/1/ 2.81 22.49 -2.41 -- 2.16
With CDSC/3/ 1.81 21.49 -2.41 -- 2.16
Class Y (Inception 6/30/99)
Net Asset Value/1/ 3.35 23.92 -1.25 -- -1.25
- --------------------------------------------------------------------------------
Since Since Since
Class B Class C Class Y
Comparative Performance 6 Months 1 Year 5 Years 10 Years Incept./6/ Incept./6/ Incept./6/
- ----------------------- -------- ------ ------- -------- ---------- ---------- ----------
S&P 500 Index/4/ 3.44% 19.11% -2.20% 11.83% 6.71% 3.51% -2.20%
Morningstar Large Blend Avg./5/ 2.78 17.63 -1.76 10.08 5.76 3.60 -1.76
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. 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. For performance current to the most recent
month end, visit www.cdcnvestfunds.com. 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 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Common Stocks 99.4 99.5
- --------------------------------------------------------------------------------
Short Term Investments and Other 0.6 0.5
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/04 12/31/03
- --------------------------------------------------------------------------------
America Movil SA de CV (ADR) 7.3 5.3
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Avon Products, Inc. 6.6 --
- --------------------------------------------------------------------------------
Mobile Telesystems (ADR) 6.4 --
- --------------------------------------------------------------------------------
D.R. Horton, Inc. 6.2 8.3
- --------------------------------------------------------------------------------
Toyota Motor Corp. (ADR) 5.6 --
- --------------------------------------------------------------------------------
Lennar Corp., Class A 5.2 8.1
- --------------------------------------------------------------------------------
Citigroup, Inc. 5.2 5.2
- --------------------------------------------------------------------------------
ConocoPhillips 5.1 --
- --------------------------------------------------------------------------------
Total SA (ADR) 5.0 4.9
- --------------------------------------------------------------------------------
Yum! Brands, Inc. 4.8 --
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Five Largest Industries 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Oil & Gas 15.5 6.2
- --------------------------------------------------------------------------------
Home Construction, Furnishings & Appliances 14.9 25.9
- --------------------------------------------------------------------------------
Telephone Systems 13.7 4.3
- --------------------------------------------------------------------------------
Cosmetics & Personal Care 10.5 4.1
- --------------------------------------------------------------------------------
Electronics 6.7 --
- --------------------------------------------------------------------------------
Portfolio holdings and asset allocations will vary.
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, which
declines annually between years 1 - 6 according to the following
schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes 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/ 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.
2
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Hansberger International Fund
- --------------------------------------------------------------------------------
Portfolio Profile
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================================================================================
Objective:
Seeks long-term growth of capital
- --------------------------------------------------------------------------------
Strategy:
Invests in common stocks of small-, mid- and large capitalization companies
located outside the U.S. Assets are diversified across developed and
emerging markets
- --------------------------------------------------------------------------------
Inception Date:
December 29, 1995
- --------------------------------------------------------------------------------
Managers:
Ronald Holt
Barry A. Lockhart
Robert Mazuelos
Lauretta Reeves
Patrick H. Tan
Thomas R.H. Tibbles
- --------------------------------------------------------------------------------
Symbols:
Class A NEFDX
Class B NEDBX
Class C NEDCX
- --------------------------------------------------------------------------------
You Should Know:
Foreign securities involve risks not associated with domestic securities, such
as currency fluctuations, differing political, economic conditions and
accounting standards. Growth stocks can be more sensitive to market movements
because their prices are based in part on future expectations. Value stocks may
fall out of favor and underperform the overall market during any given
period.
================================================================================
Management Discussion
- --------------------------------------------------------------------------------
For the six months ended June 30, 2004, Hansberger International Fund (formerly
CDC Nvest Star International Fund) returned 1.59%, based on the net asset value
of Class A shares. For the same period, the MSCI EAFE Index and the MSCI ACWI
ex-U.S. Index (neither of which include the United States) returned 4.86% and
4.10%, respectively, and the MSCI World Index (which includes the United States)
returned 3.79%. The average performance of comparable funds in the Morningstar
Foreign Large Blend category was 3.12%.
Effective March 1, 2004, the fund changed from its Star format with multiple
subadvisors to its present format with one investment advisor. Its focus is
unchanged - to invest in common stocks of companies located outside the United
States - but its assets are allocated between two segments: growth and value.
Growth segment buoyed by positive economy
For the past several months, the stocks of larger, growth-oriented, high-quality
companies that this segment favors tended to lag small-cap, value and
low-quality stocks. An environment of historically low interest rates tended to
favor value-oriented investors last year and early in the first half of 2004,
but during the second quarter, rising energy prices contributed to inflationary
fears and spawned an increase in interest rates. As of June 30, there had
already been four rate hikes in the U.K., one in the United States, and we
believe others are likely this fall in Europe and Canada.
To date, global economic growth has been positive, not overheated, and profits
of many companies have grown. For example, Japan has seen back-to-back quarters
of growth after nearly a decade of stagnation, although to date the primary
beneficiaries have been smaller, domestically oriented companies. Reflecting the
changing value of the U.S. dollar, geographic areas that benefited this segment
included emerging markets, the Pacific Rim ex-Japan, Canada, and Australia. Hong
Kong-based apparel company Esprit and German automaker Porsche benefited the
fund. Poor performers were low-cost air carrier Ryanair, which we believe may be
trying to expand too quickly, and Adecco, an employment agency with a global
reach, tainted by accounting questions.
Value segment emphasizes Europe and emerging markets
First half performance for this segment was positive, helped by European and
Japanese equities. Most continental European markets, as well as Japan, posted
positive returns as investors appear to finally believe that reports of
improving domestic demand and a surge in exports may indicate a sustainable
recovery. However, emerging markets did not perform well due to concerns over
the U.S. Fed tightening and other, country-specific factors.
Individual stocks that did well include Rolls Royce Group, the British
manufacturer of jet engines, and European Aeronautic Defense and Space Company
(the holding company for Airbus), which gained as the pick-up in the global
economy contributed to a rise in air travel. In turn this led to a rise in
demand for new aircraft, spare parts and service. Sumitomo Trust & Banking
Company and Asahi Glass contributed to the positive performance within the
fund's Japanese holdings, although we remain underweight in Japan relative to
the benchmark because we believe the market is expensive.
Detracting from performance were stocks in the consumer discretionary sector,
including Denway Motors, a Honda joint venture in China, and Germany's
Volkswagen. The fear of a slowdown in the Chinese economy as well as intense
competition from other automobile manufacturers hurt the performance of these
two stocks. The fund's Korean holdings also detracted from performance due to
Korea's links with China and the potential slowdown there as well. LG Chemical
and Kookmin Bank both proved disappointing.
Elections, rising interest rates, suggest volatile markets lie ahead
We expect many challenges for the balance of 2004 and into 2005, as elections
and monetary actions shift the economic landscape around the world.
Nonetheless, many companies are doing well and we will continue to deploy our
long-term fundamental stockpicking strategy in an effort to add value, even in
uncertain times.
3
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Hansberger International Fund
- --------------------------------------------------------------------------------
Investment Results through June 30, 2004
- --------------------------------------------------------------------------------
Performance in Perspective
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An 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. Investors would incur
transaction costs and other expenses if they purchased the securities necessary
to match the index.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
December 29, 1995 (inception) through June 30, 2004
[CHART]
Line Chart
Investment @ N.A.V. 10,000 Fund Inception: 12/29/1995
Sales Charge % 5.75 Statement Date: 6/30/2004
Sales Charge (575)
------
Investment @ M.S.C. 9,425 Indexes calculated from 12/31/95
======
----------------------- MSCI MSCI MSCI
Class A Class A World EAFE ACWI ex USA
@ NAV @ M.S.C. Index Index Index
---------- ---------- ---------- ------------------------
Month Cumulative Cumulative Cumulative Cumulative Cumulative
End Value Value Value Value Value
- ---------- ---------- ---------- ---------- ---------- -----------
12/29/1995 10,000 9,425 10,000 10,000 10,000
------ ------ ------
12/31/1995 10,000 9,425 10,000 10,000 10,000
------
1/31/1996 10,088 9,508 10,183 10,043 10,137
2/29/1996 10,264 9,674 10,247 10,080 10,137
3/31/1996 10,528 9,923 10,419 10,297 10,327
4/30/1996 10,872 10,247 10,666 10,598 10,640
5/31/1996 11,136 10,496 10,677 10,406 10,480
6/30/1996 11,176 10,533 10,733 10,467 10,533
7/31/1996 10,664 10,051 10,356 10,164 10,183
8/31/1996 10,952 10,322 10,477 10,189 10,243
9/30/1996 11,136 10,496 10,889 10,462 10,497
10/31/1996 11,048 10,413 10,967 10,357 10,392
11/30/1996 11,496 10,835 11,583 10,772 10,793
12/31/1996 11,667 10,996 11,400 10,636 10,668
1/31/1997 12,136 11,439 11,539 10,266 10,472
2/28/1997 12,388 11,675 11,674 10,437 10,664
3/31/1997 12,266 11,561 11,445 10,477 10,641
4/30/1997 12,388 11,675 11,821 10,535 10,731
5/31/1997 13,028 12,278 12,553 11,223 11,394
6/30/1997 13,627 12,844 13,181 11,845 12,023
7/31/1997 14,146 13,332 13,790 12,039 12,266
8/31/1997 13,352 12,584 12,869 11,142 11,301
9/30/1997 14,082 13,272 13,570 11,769 11,912
10/31/1997 13,061 12,310 12,858 10,867 10,898
11/30/1997 12,908 12,166 13,088 10,759 10,762
12/31/1997 13,146 12,390 13,249 10,855 10,886
1/31/1998 13,104 12,350 13,621 11,354 11,211
2/28/1998 13,996 13,192 14,544 12,085 11,959
3/31/1998 14,566 13,729 15,161 12,460 12,373
4/30/1998 14,651 13,809 15,311 12,561 12,461
5/31/1998 14,353 13,528 15,121 12,503 12,235
6/30/1998 14,056 13,248 15,483 12,601 12,189
7/31/1998 14,013 13,208 15,460 12,731 12,305
8/31/1998 11,794 11,116 13,401 11,157 10,570
9/30/1998 11,683 11,012 13,640 10,818 10,346
10/31/1998 12,534 11,813 14,875 11,948 11,430
11/30/1998 13,206 12,446 15,762 12,563 12,044
12/31/1998 13,673 12,887 16,535 13,062 12,459
1/31/1999 14,150 13,336 16,899 13,027 12,446
2/28/1999 13,971 13,168 16,452 12,719 12,167
3/31/1999 14,541 13,705 17,139 13,253 12,755
4/30/1999 15,323 14,442 17,817 13,793 13,393
5/31/1999 14,940 14,081 17,169 13,086 12,764
6/30/1999 15,816 14,907 17,972 13,599 13,350
7/31/1999 15,638 14,738 17,920 14,006 13,663
8/31/1999 15,527 14,634 17,891 14,061 13,711
9/30/1999 15,170 14,298 17,720 14,205 13,804
10/31/1999 15,706 14,803 18,643 14,740 14,318
11/30/1999 16,879 15,909 19,170 15,256 14,890
12/31/1999 18,819 17,736 20,725 16,628 16,310
1/31/2000 18,119 17,077 19,540 15,574 15,425
2/29/2000 19,253 18,146 19,595 15,996 15,842
3/31/2000 19,310 18,200 20,952 16,620 16,438
4/30/2000 17,911 16,881 20,069 15,748 15,520
5/31/2000 17,097 16,114 19,563 15,367 15,123
6/30/2000 17,599 16,587 20,224 15,971 15,767
7/31/2000 17,126 16,141 19,657 15,305 15,145
8/31/2000 17,637 16,623 20,299 15,441 15,332
9/30/2000 16,973 15,997 19,222 14,692 14,482
10/31/2000 16,329 15,390 18,903 14,348 14,021
11/30/2000 15,586 14,690 17,758 13,813 13,392
12/31/2000 16,519 15,569 18,047 14,307 13,850
1/31/2001 16,840 15,872 18,398 14,300 14,057
2/28/2001 15,763 14,857 16,845 13,229 12,945
3/31/2001 14,732 13,885 15,742 12,353 12,030
4/30/2001 15,683 14,781 16,909 13,220 12,848
5/31/2001 15,866 14,954 16,699 12,764 12,493
6/30/2001 15,735 14,830 16,178 12,246 12,014
7/31/2001 15,447 14,559 15,965 12,025 11,746
8/31/2001 15,113 14,244 15,202 11,722 11,455
9/30/2001 13,535 12,757 13,865 10,538 10,239
10/31/2001 13,800 13,006 14,132 10,807 10,526
11/30/2001 14,583 13,744 14,970 11,206 11,008
12/31/2001 15,035 14,170 15,066 11,273 11,150
1/31/2002 14,677 13,833 14,611 10,675 10,672
2/28/2002 14,711 13,865 14,487 10,750 10,749
3/31/2002 15,589 14,693 15,159 11,390 11,378
4/30/2002 15,485 14,595 14,622 11,419 11,407
5/31/2002 15,577 14,682 14,656 11,574 11,531
6/30/2002 14,630 13,788 13,770 11,118 11,033
7/31/2002 13,227 12,466 12,611 10,021 9,958
8/31/2002 13,250 12,488 12,637 10,001 9,958
9/30/2002 11,616 10,948 11,250 8,929 8,903
10/31/2002 12,253 11,549 12,082 9,410 9,381
11/30/2002 13,134 12,379 12,736 9,838 9,832
12/31/2002 12,566 11,843 12,122 9,508 9,514
1/31/2003 12,125 11,428 11,755 9,112 9,180
2/28/2003 11,789 11,111 11,554 8,904 8,994
3/31/2003 11,639 10,969 11,522 8,735 8,820
4/30/2003 12,856 12,117 12,551 9,601 9,669
5/31/2003 13,771 12,980 13,275 10,192 10,285
6/30/2003 14,084 13,275 13,510 10,444 10,570
7/31/2003 14,374 13,548 13,786 10,699 10,852
8/31/2003 14,826 13,974 14,088 10,959 11,175
9/30/2003 15,023 14,160 14,177 11,299 11,488
10/31/2003 16,090 15,165 15,021 12,004 12,233
11/30/2003 16,368 15,427 15,253 12,273 12,500
12/31/2003 17,469 16,465 16,214 13,232 13,454
1/31/2004 17,864 16,836 16,478 13,420 13,670
2/29/2004 18,084 17,044 16,760 13,732 14,017
3/31/2004 17,910 16,880 16,655 13,815 14,104
4/30/2004 17,400 16,399 16,323 13,514 13,665
5/31/2004 17,458 16,454 16,471 13,555 13,696
6/30/2004 17,749 16,731 16,829 13,875 14,006
Average Annual Total Returns -- June 30, 2004
- --------------------------------------------------------------------------------
Since
6 Months/9/ 1 Year/9/ 5 Years/9/ Inception/9/
----------- --------- ---------- ------------
Class A (Inception 12/29/95)
Net Asset Value/1/ 1.59% 26.01% 2.33% 6.98%
With Maximum Sales Charge/2/ -4.25 18.77 1.13 6.24
Class B (Inception 12/29/95)
Net Asset Value/1/ 1.21 25.04 1.58 6.20
With CDSC/3/ -3.79 20.04 1.28 6.20
Class C (Inception 12/29/95)
Net Asset Value/1/ 1.21 25.04 1.56 6.20
With CDSC/3/ 0.21 24.04 1.56 6.20
- --------------------------------------------------------------------------------
Since
Comparative Performance 6 Months 1 Year 5 Years Inception/8/
- ------------------------------------------- -------- ------ ------- ------------
MSCI ACWI ex-U.S. Index/6/ 4.10% 32.50% 0.96% 4.04%
MSCI World Index/4/ 3.79 24.57 -1.31 6.31
MSCI EAFE Index/5/ 4.86 32.85 0.40 3.93
Morningstar Foreign Large Blend Fund Avg/7/ 3.12 27.79 -0.27 4.47
All results represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. 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. For performance current to the most recent
month-end, visit www.cdcnvestfunds.com.
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 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Common Stocks 98.2 98.0
- --------------------------------------------------------------------------------
Short Term Investments and Other 1.8 2.0
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Total SA 1.8 1.5
- --------------------------------------------------------------------------------
Canon, Inc. 1.7 0.7
- --------------------------------------------------------------------------------
Societe Generale, Class A 1.7 0.9
- --------------------------------------------------------------------------------
Esprit Holdings, Ltd. 1.5 1.0
- --------------------------------------------------------------------------------
Royal Bank of Scotland Group PLC 1.4 0.6
- --------------------------------------------------------------------------------
Tesco PLC 1.4 0.3
- --------------------------------------------------------------------------------
Novartis AG 1.4 1.3
- --------------------------------------------------------------------------------
Johnson Electric Holdings, Ltd. 1.4 0.3
- --------------------------------------------------------------------------------
Samsung Electronics Co., Ltd. 1.3 1.2
- --------------------------------------------------------------------------------
Manulife Financial Corp. 1.2 0.3
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Five Largest Countries 6/30/04 12/31/03
- --------------------------------------------------------------------------------
United Kingdom 19.2 19.6
- --------------------------------------------------------------------------------
Japan 17.9 12.8
- --------------------------------------------------------------------------------
France 13.9 12.4
- --------------------------------------------------------------------------------
Germany 8.9 8.8
- --------------------------------------------------------------------------------
Hong Kong 5.5 3.1
- --------------------------------------------------------------------------------
Portfolio holdings and asset allocations will vary.
- --------------------------------------------------------------------------------
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, which declines annually
between years 1 - 6 according to the following schedule: 5, 4, 3, 3, 2,
1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell
shares within one year of purchase.
/4/ Morgan Stanley Capital International World Index (MSCI World) is an
unmanaged index of common stocks from the MSCI developed-market countries.
/5/ Morgan Stanley Capital International Europe Australasia and Far East Index
(MSCI EAFE) is an unmanaged index of common stocks traded outside the U.S.
The MSCI EAFE replaces the MSCI World 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.
/6/ Morgan Stanley Capital International All Countries World Index ex-U.S.
(MSCI ACWI-ex-U.S. Index) is an unmanaged index of stock markets throughout
the world excluding the United States.
/7/ Morningstar Foreign Large Blend Fund Average is the average performance
without sales charges of funds with similar investment objectives, as
calculated by Morningstar, Inc.
/8/ The since-inception performance comparisons shown are calculated from
12/31/95.
/9/ Fund performance has been increased by expense waivers, without which
performance would have been lower.
Note: Effective 3/1/04, the fund changed from a multiple subadvisor format
to its present format, with one subadvisor.
4
- --------------------------------------------------------------------------------
Harris Associates Focused Value 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
- --------------------------------------------------------------------------------
Symbols:
Class A NRSAX
Class B NRSBX
Class C NRSCX
- --------------------------------------------------------------------------------
You Should Know:
The fund invests in a small number of securities, which may result in greater
volatility than more diversified funds. Value stocks may fall out of favor with
investors and underperform the over-all market during any given period.
================================================================================
Management Discussion
- --------------------------------------------------------------------------------
Although the U.S. economy continued to expand, equity markets were largely
unchanged over the first half of 2004, as investors paused to reassess
valuations following a period of sharp gains. High oil prices and a worrisome
international situation also kept buyers on the sidelines.
Against this uncertain background, Harris Associates Focused Value Fund's total
return for the six months ended June 30, 2004 was 1.02%, based on the net asset
value of Class A shares. Performance trailed the fund's benchmark, the Standard
& Poor's 500 Index, which returned 3.44% for the period, and the 3.46% return on
Morningstar's Large Value Funds category.
Consumer-related, energy and defense issues aided performance
The fund's consumer stocks produced favorable results despite weakness in the
sector. Attractive new products, the continued popularity of its DeWalt tool
brand, and tight cost controls helped boost earnings at Black and Decker Corp.
TJX Cos., whose Marshalls and T.J. Maxx chains sell department store overstocks
at discounted prices, also contributed. Rising prices for oil and especially for
natural gas benefited Burlington Resources. Strong defense spending, increased
aerospace manufacturing and a management shake-up helped results at Raytheon, as
did the company's decision to terminate its involvement with the utility
industry.
Financial and healthcare holdings disappointed
Concern about higher interest rates pressured financial issues as the period
progressed. Slackening mortgage demand undercut earnings expectations at
Washington Mutual, but the company's retail bank continues to perform well and
we believe the shares still appear attractive. In healthcare, shares of
Omnicare, which provides pharmaceutical services to nursing homes and retirees
of major corporations, slid despite strong fundamentals.
Telecom and technology showed mixed results
First Data Corporation, which processes credit card transactions, saw volumes
rise with expanding economic activity and a series of acquisitions. But SunGard
Data Systems lagged when the securities firms it is targeting as customers for
its software and processing solutions were slow to invest in new technology.
Company-specific factors also affected performance
We eliminated grocery chain Kroger, which faces intense competition from
Wal-Mart and club stores, in favor of more attractive opportunities. Problems in
Time Warner's AOL division have obscured the company's overall strength, but
shares recovered some of the ground lost earlier in the period. A recent
addition to the fund, Hospira, which specializes in the growing area of
injectable drug delivery systems, rose following its spin-off from Abbott Labs.
Value discipline remains the fund's focus
We took advantage of volatility in the retail sector to purchase shares of
apparel maker Liz Claiborne. This well-managed company has succeeded in a
capricious industry by limiting its fashion risk, by absorbing smaller brand
lines and selling their products through an established distribution system. We
also added AutoNation, which sells automotive parts, used cars and several
brands of new cars through a network of dealerships. High gas prices drove
investors away for a time; that short-term reaction allowed us to establish a
position in this high-quality company while it was selling well below our
estimate of its potential value.
Recently the markets have been stuck in neutral. However, valuation levels
remain fairly high compared to a year ago. For that reason, we expect returns to
be relatively modest over the next several months, especially as the
presidential election plays out. We believe the portfolio retains solid
appreciation potential and we may use possible price increases to lock in
profits. At the same time, we will be looking for opportunities among companies
whose valuations suffer in a cyclical downturn or those experiencing short-term
problems that we think the market has treated too harshly.
5
- --------------------------------------------------------------------------------
Harris Associates Focused Value Fund
- --------------------------------------------------------------------------------
Investment Results through June 30, 2004
- --------------------------------------------------------------------------------
Performance in Perspective
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An 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. Investors would incur
transaction costs and other expenses if they purchased the securities necessary
to match the index.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
March 15, 2001 (inception) through June 30, 2004
[CHART]
Line Chart
Investment @ N.A.V. 10,000 Fund Inception: 3/15/2001
Sales Charge % 5.75 Statement Date: 6/30/2004
Sales Charge (575)
------
Investment @ M.S.C. 9,425
======
S&P 500 Index calculated from 3/31/2001
----------------------- S&P
Class A Class A 500
@ NAV @ M.S.C. Index
---------- ---------- ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ---------- ---------- ----------
3/15/2001 10,000 9,425 10,000
------
3/31/2001 10,090 9,510 10,000
4/30/2001 10,420 9,821 10,777
5/31/2001 10,690 10,075 10,849
6/30/2001 10,990 10,358 10,585
7/31/2001 11,310 10,660 10,481
8/31/2001 10,870 10,245 9,825
9/30/2001 10,240 9,651 9,032
10/31/2001 10,000 9,425 9,204
11/30/2001 10,680 10,066 9,910
12/31/2001 10,960 10,330 9,997
1/31/2002 10,890 10,264 9,851
2/28/2002 10,600 9,990 9,661
3/31/2002 10,910 10,283 10,024
4/30/2002 10,860 10,235 9,416
5/31/2002 10,930 10,301 9,347
6/30/2002 10,080 9,500 8,681
7/31/2002 9,620 9,067 8,005
8/31/2002 9,960 9,387 8,057
9/30/2002 8,570 8,077 7,181
10/31/2002 8,970 8,454 7,813
11/30/2002 9,470 8,925 8,273
12/31/2002 9,240 8,709 7,787
1/31/2003 9,010 8,492 7,583
2/28/2003 8,890 8,379 7,469
3/31/2003 8,990 8,473 7,542
4/30/2003 9,510 8,963 8,163
5/31/2003 10,120 9,538 8,593
6/30/2003 10,340 9,745 8,703
7/31/2003 10,260 9,670 8,856
8/31/2003 10,680 10,066 9,029
9/30/2003 10,560 9,953 8,933
10/31/2003 11,200 10,556 9,439
11/30/2003 11,690 11,018 9,522
12/31/2003 11,790 11,112 10,021
1/31/2004 12,100 11,404 10,205
2/29/2004 12,180 11,480 10,347
3/31/2004 11,940 11,253 10,191
4/30/2004 11,780 11,103 10,031
5/31/2004 12,040 11,348 10,168
6/30/2004 11,910 11,225 10,366
Average Annual Total Returns -- June 30, 2004
- --------------------------------------------------------------------------------
6 Months/6/ 1 Year/6/ Since Inception/6/
----------- --------- ------------------
Class A (Inception 3/15/01)
Net Asset Value/1/ 1.02% 15.18% 5.45%
With Maximum Sales Charge/2/ -4.80 8.57 3.57
Class B (Inception 3/15/01)
Net Asset Value/1/ 0.61 14.26 4.66
With CDSC/3/ -4.39 9.26 3.84
Class C (Inception 3/15/01)
Net Asset Value/1/ 0.61 14.26 4.66
With CDSC/3/ -0.39 13.26 4.66
- --------------------------------------------------------------------------------
Since
Class A, B, C
Comparative Performance 6 Months 1 Year Inception/7/
- ------------------------------------ -------- ------ -------------
S&P 500 Index/4/ 3.44% 19.11% 1.11%
Morningstar Large Value Fund Avg./5/ 3.46 19.70 2.36
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. 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. For performance current to the most recent
month-end, visit www.cdcnvestfunds.com.
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 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Common Stocks 92.5 91.6
- --------------------------------------------------------------------------------
Short Term Investments and Other 7.5 8.4
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Washington Mutual, Inc. 14.7 16.1
- --------------------------------------------------------------------------------
H&R Block, Inc. 7.0 8.6
- --------------------------------------------------------------------------------
Burlington Resources, Inc. 5.6 4.5
- --------------------------------------------------------------------------------
Yum! Brands, Inc. 5.6 5.4
- --------------------------------------------------------------------------------
First Data Corp. 5.5 5.1
- --------------------------------------------------------------------------------
RR Donnelley & Sons Co. 4.8 --
- --------------------------------------------------------------------------------
Omnicare, Inc. 4.4 4.3
- --------------------------------------------------------------------------------
Black & Decker Corp. 4.4 3.6
- --------------------------------------------------------------------------------
TJX Cos., Inc. 4.3 4.1
- --------------------------------------------------------------------------------
Time Warner, Inc. 4.2 4.2
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Five Largest Industries 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Banking 14.7 16.1
- --------------------------------------------------------------------------------
Commercial Services 13.9 12.4
- --------------------------------------------------------------------------------
Pharmaceuticals 10.9 8.5
- --------------------------------------------------------------------------------
Media - Broadcasting & Publishing 10.7 10.8
- --------------------------------------------------------------------------------
Oil & Gas 5.6 4.5
- --------------------------------------------------------------------------------
Portfolio holdings and asset allocations will vary.
- --------------------------------------------------------------------------------
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, which declines annually
between years 1 - 6 according to the following schedule: 5, 4, 3, 3, 2,
1, 0%. Class C share performance assumes 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/ Fund performance has been increased by expense waivers, without which
performance would have been lower.
/7/ The since-inception performance comparisons shown are calculated from
3/31/01.
6
- --------------------------------------------------------------------------------
Harris Associates Large Cap Value Fund
- --------------------------------------------------------------------------------
Portfolio Profile
- --------------------------------------------------------------------------------
================================================================================
Objective:
Seeks opportunities for long-term capital growth and income
- --------------------------------------------------------------------------------
Strategy:
Invests primarily in common stock of large-and mid-cap companies in any
industry
- --------------------------------------------------------------------------------
Inception Date:
May 6, 1931
- --------------------------------------------------------------------------------
Managers:
Robert M. Levy
Edward S. Loeb
Michael J. Mangan
- --------------------------------------------------------------------------------
Symbols:
Class A NEFOX
Class B NEGBX
Class C NECOX
Class Y NEOYX
- --------------------------------------------------------------------------------
You Should Know:
Value stocks may fall out of favor with investors and under-perform the overall
market during any given period.
================================================================================
Management Discussion
- --------------------------------------------------------------------------------
Major market indexes were essentially flat over the first six months of 2004
despite the economic expansion and growing corporate earnings. Investors paused
to reassess valuations after last year's powerful rally, while worrisome events
overseas also put a brake on stock prices.
For the six months ended June 30, 2004, Class A shares of Harris Associates
Large Cap Value Fund provided a total return of 3.10% at net asset value. These
results trailed the fund's benchmark for the period, with the Russell 1000 Value
Index returning 3.94%. The average return on the funds in Morningstar's Large
Blend Funds category was 2.78%.
Housing, energy, leisure and defense holdings made solid contributions
Mortgage insurer MGIC Investment Corporation, rebounded as interest rates rose
and homeowners held onto their mortgages rather than refinance, reversing
earlier trends. Masco Corporation, a diversified manufacturer of home
improvement and building products, rode strong waves of new home construction
and remodeling of existing houses. Rising energy prices, especially for natural
gas, benefited Burlington Resources.
The improving economy and job creation encouraged leisure expenditures,
benefiting cruise-ship operator Carnival Corporation. Major defense contractor
Raytheon, a relatively new addition to the portfolio, saw increases in its
government and aerospace businesses. Raytheon also made strategic management
changes and terminated its unproductive involvement in the utility industry.
Several stocks hit price targets
We took profits in Cendant, whose travel and real estate businesses flourished
along with the housing boom. When their valuations met our targets, we also
eliminated newspaper publisher Gannett; ADP, which processes business payrolls;
and household products giant Colgate Palmolive.
Some consumer, healthcare, and media issues disappointed
Kraft Foods continued to face tough competition from private-label brands and
rising costs. Although shares of Home Depot also lagged, the company continues
to build greater efficiencies into its business. Shares of McDonald's rose
modestly, despite the loss of key management figures. One of the worst
performers was Bristol-Myers Squibb, which struggled to overcome regulatory
questions concerning its inventory accounting, although we think the stock is
attractively valued currently. Comcast fell on fears that its bid to acquire
Disney was excessive; the bid was terminated but shares have not recovered
despite what we see as inherent strengths and a strong business strategy.
Turmoil in the broadcast, cable and advertising industries hurt Liberty Media,
TimeWarner, Viacom, and The Interpublic Group. We believe the economic recovery
will eventually benefit these media companies.
Washington Mutual fell late in the period
Long-time holding Washington Mutual fell in late June following management's
cautious forecast for the company's mortgage business, which faces reduced
activity due to higher interest rates. The company's retail banking operation,
however, continues to perform well, and the value of that component alone
supports a higher stock price, in our opinion. Also in the financial sector, we
added Citigroup, based on our assessment of its valuation and strong positioning
for growth in emerging markets.
Good return potential remains for carefully selected stocks
We were not surprised that returns on stocks were generally muted in the first
half of the year, as many stocks had reached levels that we believed
approximated their fair value and interest rates were on the rise. Looking
ahead, we believe stocks are unlikely to repeat the strong gains of 2003 in the
near future. However, we continue to emphasize underperforming areas like media,
healthcare, and some consumer stocks, where we think the long-term dynamics are
more favorable than the market's present view.
7
- --------------------------------------------------------------------------------
Harris Associates Large Cap Value Fund
- --------------------------------------------------------------------------------
Investment Results through June 30, 2004
- --------------------------------------------------------------------------------
Performance in Perspective
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An 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. Investors would incur
transaction costs and other expenses if they purchased the securities necessary
to match the index.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
June 30, 1994 through June 30, 2004
[CHART]
Line chart
Investment @ N.A.V. 10,000 Fund Inception: 5/6/1931
Sales Charge % 5.75 Statement Date: 6/30/2004
Sales Charge (575)
------
Investment @ M.S.C. 9,425
======
Russell
----------------------- 1000
Class A Class A Value
@ NAV @ M.S.C. Index
---------- ---------- ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ---------- ---------- ----------
6/30/1994 10,000 9,425 10,000
7/31/1994 10,296 9,704 10,311
8/31/1994 10,733 10,115 10,608
9/30/1994 10,478 9,875 10,257
10/31/1994 10,643 10,031 10,400
11/30/1994 10,279 9,688 9,980
12/31/1994 10,430 9,830 10,096
1/31/1995 10,690 10,076 10,407
2/28/1995 11,043 10,408 10,819
3/31/1995 11,350 10,697 11,057
4/30/1995 11,696 11,024 11,407
5/31/1995 12,076 11,381 11,886
6/30/1995 12,358 11,647 12,047
7/31/1995 12,790 12,055 12,466
8/31/1995 12,909 12,166 12,642
9/30/1995 13,475 12,700 13,099
10/31/1995 13,343 12,575 12,969
11/30/1995 13,788 12,995 13,626
12/31/1995 14,092 13,282 13,969
1/31/1996 14,533 13,697 14,404
2/29/1996 14,611 13,771 14,513
3/31/1996 14,684 13,840 14,760
4/30/1996 14,734 13,886 14,816
5/31/1996 14,959 14,099 15,002
6/30/1996 14,639 13,797 15,014
7/31/1996 13,911 13,111 14,446
8/31/1996 14,245 13,426 14,860
9/30/1996 14,974 14,113 15,450
10/31/1996 15,435 14,547 16,048
11/30/1996 16,807 15,840 17,211
12/31/1996 16,517 15,567 16,992
1/31/1997 17,338 16,341 17,815
2/28/1997 17,553 16,543 18,077
3/31/1997 16,789 15,824 17,427
4/30/1997 17,672 16,656 18,159
5/31/1997 18,806 17,724 19,174
6/30/1997 19,727 18,593 19,996
7/31/1997 20,971 19,765 21,501
8/31/1997 20,373 19,202 20,735
9/30/1997 21,631 20,387 21,988
10/31/1997 20,682 19,493 21,374
11/30/1997 21,574 20,334 22,319
12/31/1997 22,039 20,772 22,970
1/31/1998 22,169 20,894 22,645
2/28/1998 23,949 22,572 24,170
3/31/1998 25,299 23,844 25,648
4/30/1998 25,428 23,966 25,819
5/31/1998 25,083 23,641 25,437
6/30/1998 26,131 24,629 25,763
7/31/1998 25,729 24,250 25,308
8/31/1998 21,838 20,583 21,542
9/30/1998 22,926 21,608 22,778
10/31/1998 24,582 23,169 24,542
11/30/1998 25,697 24,220 25,686
12/31/1998 27,312 25,742 26,560
1/31/1999 28,103 26,487 26,772
2/28/1999 27,428 25,851 26,394
3/31/1999 27,807 26,208 26,941
4/30/1999 29,455 27,761 29,457
5/31/1999 29,323 27,637 29,133
6/30/1999 30,238 28,500 29,979
7/31/1999 29,346 27,658 29,101
8/31/1999 28,949 27,284 28,021
9/30/1999 27,776 26,179 27,042
10/31/1999 28,888 27,227 28,598
11/30/1999 28,972 27,306 28,375
12/31/1999 29,893 28,174 28,512
1/31/2000 28,333 26,704 27,582
2/29/2000 27,378 25,803 25,532
3/31/2000 29,600 27,898 28,648
4/30/2000 29,113 27,439 28,314
5/31/2000 28,216 26,593 28,613
6/30/2000 28,587 26,943 27,305
7/31/2000 28,411 26,777 27,647
8/31/2000 30,318 28,575 29,185
9/30/2000 28,932 27,269 29,453
10/31/2000 29,012 27,344 30,176
11/30/2000 27,284 25,716 29,056
12/31/2000 27,706 26,113 30,512
1/31/2001 27,726 26,132 30,629
2/28/2001 26,079 24,579 29,777
3/31/2001 24,612 23,197 28,725
4/30/2001 26,622 25,091 30,134
5/31/2001 26,662 25,129 30,811
6/30/2001 25,738 24,258 30,127
7/31/2001 24,854 23,425 30,063
8/31/2001 23,327 21,986 28,859
9/30/2001 21,378 20,149 26,828
10/31/2001 22,141 20,868 26,597
11/30/2001 23,709 22,345 28,143
12/31/2001 23,669 22,308 28,806
1/31/2002 23,548 22,194 28,584
2/28/2002 22,925 21,607 28,630
3/31/2002 23,548 22,194 29,985
4/30/2002 22,885 21,569 28,956
5/31/2002 22,784 21,474 29,101
6/30/2002 21,418 20,186 27,431
7/31/2002 20,052 18,899 24,881
8/31/2002 20,554 19,372 25,069
9/30/2002 17,781 16,759 22,281
10/31/2002 18,444 17,384 23,932
11/30/2002 19,690 18,558 25,440
12/31/2002 18,926 17,838 24,335
1/31/2003 18,464 17,403 23,745
2/28/2003 17,882 16,853 23,112
3/31/2003 18,103 17,062 23,151
4/30/2003 19,811 18,672 25,189
5/31/2003 21,297 20,073 26,815
6/30/2003 21,760 20,508 27,150
7/31/2003 21,559 20,319 27,554
8/31/2003 22,282 21,001 27,983
9/30/2003 21,800 20,546 27,710
10/31/2003 22,825 21,512 29,406
11/30/2003 23,628 22,270 29,805
12/31/2003 24,613 23,197 31,642
1/31/2004 24,794 23,368 32,199
2/29/2004 25,376 23,917 32,889
3/31/2004 24,995 23,557 32,601
4/30/2004 24,995 23,557 31,804
5/31/2004 25,015 23,576 32,129
6/30/2004 25,375 23,918 32,888
Average Annual Total Returns -- June 30, 2004
- --------------------------------------------------------------------------------
Since
6 Months/7/ 1 Year/7/ 5 Years/7/ 10 Years/7/ Inception/7/
----------- --------- ---------- ----------- ------------
Class A (Inception 5/6/31)
Net Asset Value/1/ 3.10% 16.62% -3.45% 9.76% --
With Maximum Sales Charge/2/ -2.85 9.92 -4.59 9.11 --
Class B (Inception 9/13/93)
Net Asset Value/1/ 2.75 15.67 -4.16 8.99 --
With CDSC/3/ -2.25 10.67 -4.47 8.99 --
Class C (Inception 5/1/95)
Net Asset Value/1/ 2.67 15.81 -4.16 -- 8.03%
With CDSC/3/ 1.67 14.81 -4.16 -- 8.03
Class Y (Inception 11/18/98)
Net Asset Value/1/ 3.27 16.98 -2.96 -- -0.53
- --------------------------------------------------------------------------------
Since Since
Class C Class Y
Comparative Performance 6 Months 1 Year 5 Years 10 Years Incept./6/ Incept./6/
- ---------------------------------- -------- ------ ------- -------- ---------- ----------
Russell 1000 Value Index/4/ 3.94% 21.13% 1.87% 12.64% 11.86% 4.53%
Morningstar Large Blend Average/5/ 2.78 17.63 -1.76 10.08 8.98 1.34
All returns represents past performance and do not guarantee future results.
Periods of less than one year are not annualized. 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. For performance current to the most recent
month-end, visit www.cdcnvestfunds.com. 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 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Common Stocks 94.1 95.9
- --------------------------------------------------------------------------------
Short Term Investments and Other 5.9 4.1
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Home Depot, Inc. 3.8 4.0
- --------------------------------------------------------------------------------
First Data Corp. 3.8 3.3
- --------------------------------------------------------------------------------
Washington Mutual, Inc. 3.6 3.8
- --------------------------------------------------------------------------------
Time Warner, Inc. 3.6 3.9
- --------------------------------------------------------------------------------
Masco Corp. 3.5 2.9
- --------------------------------------------------------------------------------
Gap (The), Inc. 3.2 3.3
- --------------------------------------------------------------------------------
Waste Management, Inc. 3.2 3.3
- --------------------------------------------------------------------------------
Liberty Media Corp., Class A 3.2 4.2
- --------------------------------------------------------------------------------
McDonald's Corp. 3.1 3.6
- --------------------------------------------------------------------------------
Diageo PLC (ADR) 3.0 3.2
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Five Largest Industries 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Media - Broadcasting & Publishing 12.6 13.4
- --------------------------------------------------------------------------------
Beverages, Food & Tobacco 12.5 12.9
- --------------------------------------------------------------------------------
Building Materials 7.3 6.8
- --------------------------------------------------------------------------------
Pharmaceuticals 6.9 6.7
- --------------------------------------------------------------------------------
Banking 5.5 5.9
- --------------------------------------------------------------------------------
Portfolio holdings and asset allocations will vary.
- --------------------------------------------------------------------------------
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, which declines annually
between years 1 - 6 according to the following schedule: 5, 4, 3, 3, 2, 1,
0%. Class C share performance assumes 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 1,000 U.S.
companies within the Russell 3000 with lower price-to-book ratios and lower
forcasted growth values.
/5/ Morningstar Large Blend Average is an average performance of funds with
similar investment objectives as calculated without sales charges by
Morningstar, Inc.
/6/ The since-inception performance comparisons shown for each Class of fund
shares are calculated as follows: Class C from 5/31/95 and Class Y from
11/30/98.
/7/ Fund performance has been increased by expense waivers, without which
performance would have been lower.
8
- --------------------------------------------------------------------------------
Vaughan Nelson Small Cap Value Fund
- --------------------------------------------------------------------------------
Portfolio Profile
- --------------------------------------------------------------------------------
================================================================================
Objective:
Seeks capital appreciation
- --------------------------------------------------------------------------------
Strategy:
Invests in small capitalization companies with a focus on absolute return using
a bottom-up value oriented investment process
- --------------------------------------------------------------------------------
Inception Date:
December 31, 1996
- --------------------------------------------------------------------------------
Managers:
Mark J. Roach
Chris D. Wallis
Scott J. Weber
- --------------------------------------------------------------------------------
Symbols:
Class A NEFJX
Class B NEJBX
Class C NEJCX
- --------------------------------------------------------------------------------
You Should Know:
Investing in small cap stocks carries special risk, including narrower markets,
limited financial and management resources, less liquidity and greater
volatility than large-company stocks. Value stocks may fall out of favor with
investors and underperform the overall market during any given period.
================================================================================
Management Discussion
- --------------------------------------------------------------------------------
During the first half of 2004, stock prices moved in what is called a trading
range, gaining a few percentage points and then giving them back. For the
six-month period, Vaughan Nelson Small Cap Value Fund (formerly CDC Nvest Star
Small Cap Fund) returned 4.59%, based on the net asset value of Class A shares.
For the same period the return on the Russell 2000 Index and the Russell 2000
Value Index were 6.76% and 7.83%, respectively, and the Morningstar Small Cap
Growth Fund category had an average return of 4.09%.
Bear in mind that effective March 1, 2004, the fund changed from its Star
format, with multiple subadvisors, to its present format and the portfolio has
changed significantly. As the new, sole subadvisor, we take the position that we
cannot predict what the market or the economy will do so we construct a
portfolio of individual companies that we believe will do well over time. Rather
than trying to identify sectors that we think will do well and searching within
that group, we start with a set of attributes: companies with prospects for
improving profit margins; companies we believe to be valued at a discount to
their net asset value; and companies with an attractive dividend yield and what
we determine to be minimal risk. Not all the companies in the portfolio have all
these characteristics, but each was purchased at what we regard as a discount to
its intrinsic value.
Price volatility may create buying opportunities
We are structured to look for opportunities when volatile markets bring prices
down to attractive levels. For example, we screen for companies trading below
their book value, or all securities trading below a certain price per share. We
also look for secular trends. Energy resources and healthcare are two of the
areas we currently like most.
Names that have done well for the fund during the brief period since we became
sole manager include Mandalay Resort Group, which we began selling at a profit
when purchase plans were announced by hotel-casino operator MGM Mirage. The fund
has also done well with Quicksilver Resources, a natural gas company. Allegheny
Technologies Incorporated, a maker of specialty steel, is benefiting from lower
costs and increasing demand for its unique products.
Technology sell-off viewed without sentiment
When Kana Software warned that "significant deals" had failed to close, we began
to sell off the stock. However, when another software company, Reynolds &
Reynolds (R&R), warned of an impending shortfall in earnings, we sold a third of
the position. We are uncomfortable with the increased uncertainty, but we
continue to like R&R, which we believe has a strong balance sheet, solid market
share and is attractively valued. We stood firm when escalating energy and raw
materials costs caused GrafTech International to miss its earnings targets. This
niche company, which manufactures graphite and carbon electrodes and cathodes,
enjoys a virtual monopoly in its market and they are raising prices without
losing business. Although we are not adding to it, we also are not selling any
of the stock.
Outlook for stocks is positive
As long as the economy continues to maintain its current strength, we believe
there is upward potential for stock prices for the balance of 2004 and into
2005. We don't think the market is overvalued, especially in terms of where
interest rates are currently. Unless there is a dramatic increase in inflation
that is not accompanied by higher earnings estimates, we view the risk/reward
potential of stock prices as favorable. Moreover, we believe most of the
companies the fund holds have solid business prospects and good valuations. If
terrorism or other factors disrupt the economy, we believe the characteristics
of the companies represented in the fund's portfolio should provide downside
support as well as upside potential for the long term.
9
- --------------------------------------------------------------------------------
Vaughan Nelson Small Cap Value Fund
- --------------------------------------------------------------------------------
Investment Results through June 30, 2004
- --------------------------------------------------------------------------------
Performance in Perspective
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An 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. Investors would incur
transaction costs and other expenses if they purchased the securities necessary
to match the index.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
December 31, 1996 (inception) through June 30, 2004
[CHART]
Line chart
Investment @ N.A.V. 10,000 Fund Inception: 12/31/1996
Sales Charge % 5.75 Statement Date: 6/30/2004
Sales Charge (575)
------
Investment @ M.S.C. 9,425
======
----------------------- Russell Russell
Class A Class A 2000 2000
@ NAV @ M.S.C. Index Value
---------- ---------- -----------------------
Month Cumulative Cumulative Cumulative Cumulative
End Value Value Value Value
- ---------- ---------- ---------- ---------- ----------
12/31/1996 10,000 9,425 10,000 10,000
1/31/1997 10,192 9,606 10,200 10,154
2/28/1997 9,920 9,350 9,953 10,250
3/31/1997 9,352 8,814 9,483 9,975
4/30/1997 9,264 8,731 9,509 10,122
5/31/1997 10,448 9,847 10,567 10,928
6/30/1997 11,040 10,405 11,020 11,481
7/31/1997 11,784 11,106 11,533 11,963
8/31/1997 12,104 11,408 11,797 12,153
9/30/1997 13,160 12,403 12,660 12,961
10/31/1997 12,672 11,943 12,104 12,608
11/30/1997 12,376 11,664 12,026 12,746
12/31/1997 12,697 11,967 12,236 13,178
1/31/1998 12,342 11,632 12,043 12,940
2/28/1998 13,349 12,582 12,934 13,722
3/31/1998 14,126 13,314 13,467 14,279
4/30/1998 13,994 13,189 13,542 14,349
5/31/1998 13,135 12,379 12,812 13,841
6/30/1998 13,341 12,574 12,839 13,763
7/31/1998 12,300 11,593 11,800 12,685
8/31/1998 9,624 9,070 9,509 10,699
9/30/1998 10,293 9,701 10,253 11,303
10/31/1998 10,748 10,130 10,671 11,638
11/30/1998 11,758 11,082 11,230 11,953
12/31/1998 12,958 12,212 11,925 12,328
1/31/1999 13,231 12,470 12,083 12,048
2/28/1999 12,122 11,425 11,105 11,226
3/31/1999 12,957 12,212 11,278 11,133
4/30/1999 13,934 13,133 12,289 12,150
5/31/1999 13,818 13,023 12,468 12,523
6/30/1999 14,968 14,107 13,032 12,976
7/31/1999 14,786 13,936 12,674 12,668
8/31/1999 14,654 13,811 12,205 12,205
9/30/1999 15,060 14,194 12,208 11,961
10/31/1999 16,201 15,270 12,257 11,722
11/30/1999 18,064 17,025 12,989 11,783
12/31/1999 21,428 20,196 14,460 12,145
1/31/2000 21,401 20,171 14,227 11,827
2/29/2000 26,680 25,146 16,577 12,550
3/31/2000 25,665 24,189 15,484 12,609
4/30/2000 22,655 21,352 14,552 12,684
5/31/2000 20,816 19,619 13,704 12,490
6/30/2000 22,509 21,215 14,899 12,855
7/31/2000 20,926 19,723 14,419 13,283
8/31/2000 23,526 22,174 15,520 13,877
9/30/2000 22,775 21,466 15,063 13,799
10/31/2000 20,859 19,659 14,391 13,750
11/30/2000 17,222 16,232 12,914 13,470
12/31/2000 18,810 17,729 14,023 14,917
1/31/2001 19,631 18,502 14,753 15,329
2/28/2001 17,101 16,118 13,785 15,307
3/31/2001 15,472 14,582 13,111 15,062
4/30/2001 17,021 16,043 14,136 15,759
5/31/2001 17,375 16,376 14,484 16,164
6/30/2001 17,967 16,934 14,984 16,815
7/31/2001 16,737 15,774 14,173 16,438
8/31/2001 15,711 14,808 13,715 16,381
9/30/2001 13,216 12,456 11,869 14,572
10/31/2001 14,116 13,305 12,563 14,953
11/30/2001 15,358 14,475 13,536 16,028
12/31/2001 16,543 15,592 14,371 17,009
1/31/2002 16,156 15,227 14,222 17,235
2/28/2002 14,868 14,013 13,832 17,340
3/31/2002 16,190 15,259 14,944 18,638
4/30/2002 15,814 14,905 15,080 19,294
5/31/2002 15,051 14,185 14,411 18,656
6/30/2002 14,048 13,240 13,696 18,243
7/31/2002 11,929 11,243 11,627 15,533
8/31/2002 11,917 11,232 11,598 15,463
9/30/2002 10,824 10,201 10,765 14,359
10/31/2002 11,382 10,727 11,110 14,575
11/30/2002 12,259 11,554 12,101 15,738
12/31/2002 11,450 10,792 11,428 15,066
1/31/2003 10,812 10,190 11,111 14,641
2/28/2003 10,436 9,836 10,776 14,149
3/31/2003 10,459 9,858 10,914 14,300
4/30/2003 11,461 10,802 11,949 15,659
5/31/2003 12,635 11,908 13,232 17,257
6/30/2003 13,113 12,359 13,471 17,550
7/31/2003 13,968 13,165 14,314 18,425
8/31/2003 14,686 13,841 14,970 19,125
9/30/2003 14,253 13,433 14,694 18,906
10/31/2003 15,278 14,400 15,928 20,447
11/30/2003 15,723 14,818 16,493 21,232
12/31/2003 15,882 14,969 16,828 22,000
1/31/2004 16,497 15,549 17,559 22,761
2/29/2004 16,406 15,463 17,716 23,201
3/31/2004 16,440 15,495 17,881 23,522
4/30/2004 15,734 14,829 16,970 22,306
5/31/2004 15,791 14,883 17,240 22,575
6/30/2004 16,612 15,660 17,966 23,721
Average Annual Total Returns -- June 30, 2004
- --------------------------------------------------------------------------------
Since
6 Months 1 Year 5 Years Inception
-------- ------ ------- ---------
Class A (Inception 12/31/96)
Net Asset Value/1/ 4.59% 26.67% 2.11% 7.01%
With Maximum Sales Charge/2/ -1.42 19.41 0.91 6.17
Class B (Inception 12/31/96)
Net Asset Value/1/ 4.28 25.71 1.34 6.21
With CDSC/3/ -0.72 20.71 1.05 6.21
Class C (Inception 12/31/96)
Net Asset Value/1/ 4.28 25.81 1.36 6.22
With CDSC/3/ 3.28 24.81 1.36 6.22
- --------------------------------------------------------------------------------
Since
Comparative Performance 6 Months 1 Year 5 Years Inception/7/
- ----------------------- -------- ------ ------- ------------
Russell 2000 Index/4/ 6.76% 33.37% 6.63% 8.12%
Russell 2000 Value Index/5/ 7.83 35.17 12.82 12.21
Morningstar Small Cap Growth Fund Average/6/ 4.09 28.31 4.19 7.18
All results represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. 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. For performance current to the most recent
month-end, visit www.cdcnvestfunds.com.
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 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Common Stocks 94.6 97.2
- --------------------------------------------------------------------------------
Short Term Investments and Other 5.4 2.8
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/04 12/31/03
- --------------------------------------------------------------------------------
iShares Russell 2000 Value Index Fund 4.7 --
- --------------------------------------------------------------------------------
Triad Hospitals, Inc. 2.9 --
- --------------------------------------------------------------------------------
Equitable Resources, Inc. 2.9 --
- --------------------------------------------------------------------------------
Dollar Thrifty Automotive Group, Inc. 2.7 0.8
- --------------------------------------------------------------------------------
Regis Corp. 2.6 --
- --------------------------------------------------------------------------------
Willbros Group, Inc. 2.0 --
- --------------------------------------------------------------------------------
Sterling Bancshares, Inc. 2.0 0.1
- --------------------------------------------------------------------------------
Southwestern Energy Co. 1.9 0.2
- --------------------------------------------------------------------------------
Consolidated Graphics, Inc. 1.9 --
- --------------------------------------------------------------------------------
Navigant International, Inc. 1.8 --
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Five Largest Industries 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Oil & Gas 10.0 3.6
- --------------------------------------------------------------------------------
Commercial Services 9.1 5.8
- --------------------------------------------------------------------------------
Banking 7.5 3.9
- --------------------------------------------------------------------------------
Aerospace & Defense 6.2 0.5
- --------------------------------------------------------------------------------
Retailers 6.1 3.6
- --------------------------------------------------------------------------------
Portfolio holdings and asset allocations will vary.
- --------------------------------------------------------------------------------
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, which declines annually
between years 1 - 6 according to the following schedule: 5, 4, 3, 3, 2, 1,
0%. Class C share performance assumes a 1.00% CDSC applied when you sell
shares within one year of purchase.
/4/ Russell 2000 Index is an unmanaged index measuring the stock price
performance of the 2,000 smallest companies within the Russell 3000 Index.
/5/ The Russell 2000 Value Index is an unmanaged index that measures the
performance of those Russell 2000 companies with lower price-to-book ratios
and lower forecasted growth values.
/6/ Morningstar Small Cap Growth Fund Average is the average performance
without sales charges of funds with similar investment objectives as
calculated by Morningstar, Inc.
/7/ The since-inception performance comparisons shown are calculated from
12/31/96.
Note: The fund is changing its benchmark from the Russell 2000 to the Russell
2000 Value Index because the advisor believes the latter is more representative
of the types of stocks in which the Fund can invest. Also, effective 3/1/04, the
fund changed from a multiple subadvisor format to its present format, with one
subadvisor.
10
- --------------------------------------------------------------------------------
Westpeak Capital Growth Fund
- --------------------------------------------------------------------------------
Portfolio Profile
- --------------------------------------------------------------------------------
================================================================================
Objective:
Seeks long-term growth of capital
- --------------------------------------------------------------------------------
Strategy:
Invests primarily in common stocks of large- and mid-cap companies in any
industry
- --------------------------------------------------------------------------------
Inception Date:
August 3, 1992
- --------------------------------------------------------------------------------
Manager:
Westpeak Global Advisors, L.P.
Team Management
- --------------------------------------------------------------------------------
Symbols:
Class A NEFCX
Class B NECBX
Class C NECGX
- --------------------------------------------------------------------------------
You Should Know:
Growth stocks can be more sensitive to market movements because their prices are
based in part on future expectations.
================================================================================
Management Discussion
- --------------------------------------------------------------------------------
During the first half of 2004, the market environment appeared to switch from
favoring value stocks in the first quarter to growth stocks in the second.
Large-cap stocks also began to outperform stocks of smaller companies in the
second quarter, as the risk-taking fervor displayed in 2003 appeared to abate.
Higher-risk companies that had been beaten down in the market slide of 1999
through 2002 became less attractive than quality companies with sustained,
rising earnings trends - stocks that are the mainstay of Westpeak Capital Growth
Fund.
For the six months ended June 30, 2004, the total return on Class A shares of
the fund was 0.46% at net asset value. The fund's results trailed its benchmark,
the Russell 1000 Growth Index, which returned 2.74% for the period, and the
average return on Morningstar's Large Growth Fund category, which was 2.42%.
Energy stocks advanced, financial stocks retreated
Energy stocks benefited from speculation and worries about diminishing supplies
due to events in the Middle East. Companies that own large reserves of oil and
gas performed well, for the most part, and the fund benefited from its emphasis
on these companies. However, our underweight position in oil services relative
to the benchmark detracted from performance.
Although the prospect of rising interest rates hurt financially sensitive
stocks, especially during the second quarter, the fund has benefited from its
position in New Century Financial. This mortgage lender has been in the
portfolio since last year, and it benefited when low interest rates created a
home equity financing boom. However, we have been gradually reducing this
position as we trim the fund's exposure to financial services.
Medical products companies were positive
We purchased shares of Apogent Technologies last year and sold them at a profit
shortly after the first quarter of 2004. This manufacturer of medical supplies
and diagnostic equipment performed well, but then slid in May and June. Another
medical products company, Becton, Dickinson & Co., remains in the fund. We have
held this profitable company since 2002 and it has performed well for the fund.
Technology generally suffered
Technology stocks in general have been hurt this year as investors became more
cautious and some companies announced slower-than-expected sales. The worst
performing stock in the portfolio during the period was Intel Corp. The fund has
owned this renowned semiconductor manufacturer for several years. Although the
stock performed poorly for the period, it did better than the industry average
and we believe it remains attractive relative to its peers. However, the share
price of QLogic Corp., a semiconductor manufacturer, fell steadily after we
purchased it last year and continued to fall after we sold the stock in March.
We also sold SPX Corp. on weakness when this technical and industrial products
company announced it would fall short of profit forecasts.
Market outlook continues to be mixed
Many market participants had hoped second-quarter results would help stocks
break out of the trading range in which they've been stuck this year, but a
steady march of earnings disappointments and profit warnings have done little to
lure buyers. In addition to financial and energy stocks, the utilities and
consumer discretionary sectors have all struggled, although the fund has
relatively little exposure to the latter industries.
As we enter the third quarter, the fund's greatest emphasis is on consumer
staples - products and services that people are likely to buy regardless of the
economy - including drug companies, food and beverages, grocery stores, home
products, and medical products and services. We continue to downplay the
consumer discretionary area, notably the specialty retail area, in an effort to
maintain a portfolio that emphasizes quality earnings that are as predictable as
possible in a volatile environment.
11
- --------------------------------------------------------------------------------
Westpeak Capital Growth Fund
- --------------------------------------------------------------------------------
Investment Results through June 30, 2004
- --------------------------------------------------------------------------------
Performance in Perspective
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An 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. Investors would incur
transaction costs and other expenses if they purchased the securities necessary
to match the index.
Growth of a $10,000 Investment in Class A Shares
- --------------------------------------------------------------------------------
June 30, 1994 through June 30, 2004
[CHART]
Line chart
Investment @ N.A.V. 10,000 Fund Inception: 8/3/1992
Sales Charge % 5.75 Statement Date: 6/30/2004
Sales Charge (575)
------
Investment @ M.S.C. 9,425
======
Russell
----------------------- 1000
Class A Class A Growth
@ NAV @ M.S.C. Index
---------- ---------- ----------
Month Cumulative Cumulative Cumulative
End Value Value Value
- ---------- ---------- ---------- ----------
6/30/1994 10,000 9,425 10,000
7/31/1994 10,384 9,786 10,342
8/31/1994 10,825 10,202 10,917
9/30/1994 10,644 10,032 10,770
10/31/1994 11,107 10,468 11,023
11/30/1994 10,622 10,012 10,669
12/31/1994 10,868 10,243 10,848
1/31/1995 10,955 10,325 11,080
2/28/1995 11,389 10,734 11,544
3/31/1995 11,766 11,089 11,881
4/30/1995 11,946 11,260 12,141
5/31/1995 12,279 11,573 12,563
6/30/1995 13,097 12,344 13,048
7/31/1995 13,683 12,896 13,591
8/31/1995 13,929 13,128 13,605
9/30/1995 14,400 13,572 14,233
10/31/1995 14,171 13,356 14,242
11/30/1995 14,514 13,680 14,796
12/31/1995 14,211 13,394 14,881
1/31/1996 14,473 13,641 15,379
2/29/1996 14,851 13,998 15,660
3/31/1996 14,713 13,867 15,680
4/30/1996 15,446 14,558 16,092
5/31/1996 15,909 14,994 16,655
6/30/1996 15,693 14,790 16,677
7/31/1996 14,612 13,772 15,700
8/31/1996 15,168 14,296 16,105
9/30/1996 16,427 15,482 17,278
10/31/1996 16,418 15,474 17,382
11/30/1996 17,236 16,245 18,687
12/31/1996 16,634 15,677 18,322
1/31/1997 17,574 16,564 19,607
2/28/1997 17,091 16,108 19,474
3/31/1997 15,813 14,904 18,420
4/30/1997 16,495 15,547 19,643
5/31/1997 17,946 16,914 21,061
6/30/1997 18,446 17,386 21,904
7/31/1997 19,741 18,606 23,841
8/31/1997 18,835 17,752 22,445
9/30/1997 19,403 18,287 23,550
10/31/1997 18,620 17,549 22,679
11/30/1997 19,107 18,008 23,643
12/31/1997 19,499 18,378 23,908
1/31/1998 19,656 18,525 24,623
2/28/1998 21,005 19,797 26,475
3/31/1998 21,943 20,681 27,530
4/30/1998 22,334 21,049 27,911
5/31/1998 21,796 20,543 27,119
6/30/1998 22,930 21,612 28,780
7/31/1998 22,715 21,409 28,589
8/31/1998 19,108 18,010 24,299
9/30/1998 20,255 19,090 26,165
10/31/1998 21,735 20,485 28,268
11/30/1998 23,040 21,715 30,419
12/31/1998 25,169 23,722 33,162
1/31/1999 26,435 24,915 35,109
2/28/1999 24,950 23,515 33,505
3/31/1999 25,498 24,032 35,269
4/30/1999 25,997 24,502 35,314
5/31/1999 25,522 24,054 34,229
6/30/1999 26,873 25,328 36,627
7/31/1999 26,276 24,766 35,463
8/31/1999 26,508 24,984 36,042
9/30/1999 26,121 24,619 35,285
10/31/1999 27,941 26,334 37,950
11/30/1999 28,771 27,117 39,997
12/31/1999 31,394 29,589 44,157
1/31/2000 29,623 27,920 42,087
2/29/2000 30,859 29,085 44,144
3/31/2000 33,331 31,415 47,304
4/30/2000 32,342 30,483 45,053
5/31/2000 30,832 29,059 42,784
6/30/2000 32,864 30,974 46,027
7/31/2000 32,013 30,172 44,108
8/31/2000 34,516 32,531 48,102
9/30/2000 31,328 29,526 43,552
10/31/2000 30,241 28,503 41,491
11/30/2000 26,162 24,658 35,375
12/31/2000 25,266 23,813 34,255
1/31/2001 26,475 24,953 36,622
2/28/2001 22,880 21,565 30,405
3/31/2001 20,747 19,554 27,096
4/30/2001 23,552 22,198 30,523
5/31/2001 23,283 21,945 30,074
6/30/2001 22,919 21,601 29,377
7/31/2001 21,710 20,461 28,643
8/31/2001 19,962 18,814 26,301
9/30/2001 17,912 16,882 23,675
10/31/2001 18,735 17,658 24,917
11/30/2001 20,365 19,194 27,311
12/31/2001 20,097 18,941 27,259
1/31/2002 20,012 18,862 26,778
2/28/2002 19,288 18,179 25,666
3/31/2002 19,945 18,798 26,554
4/30/2002 18,833 17,750 24,387
5/31/2002 18,429 17,369 23,797
6/30/2002 16,913 15,940 21,596
7/31/2002 15,599 14,702 20,408
8/31/2002 15,616 14,718 20,469
9/30/2002 13,965 13,162 18,346
10/31/2002 14,975 14,114 20,029
11/30/2002 15,464 14,575 21,117
12/31/2002 14,453 13,622 19,658
1/31/2003 14,083 13,273 19,181
2/28/2003 14,150 13,336 19,093
3/31/2003 14,436 13,606 19,449
4/30/2003 15,279 14,400 20,887
5/31/2003 16,121 15,194 21,929
6/30/2003 16,272 15,337 22,231
7/31/2003 16,492 15,543 22,784
8/31/2003 16,694 15,734 23,351
9/30/2003 16,761 15,797 23,101
10/31/2003 17,570 16,559 24,398
11/30/2003 17,772 16,750 24,654
12/31/2003 18,311 17,258 25,506
1/31/2004 18,580 17,512 26,027
2/29/2004 18,580 17,512 26,193
3/31/2004 18,243 17,194 25,707
4/30/2004 17,839 16,813 25,408
5/31/2004 18,159 17,115 25,882
6/30/2004 18,396 17,342 26,205
------
Average Annual Total Returns -- June 30, 2004
- --------------------------------------------------------------------------------
Since
6 Months 1 Year 5 Years 10 Years Inception
-------- ------ ------- -------- ---------
Class A (Inception 8/3/92)
Net Asset Value/1/ 0.46% 13.04% -7.30% 6.28% --
With Maximum Sales Charge/2/ -5.29 6.54 -8.39 5.66 --
Class B (Inception 9/13/93)
Net Asset Value/1/ 0.11 12.25 -7.98 5.45 --
With CDSC/3/ -4.89 7.25 -8.24 5.45 --
Class C (Inception 12/30/94)
Net Asset Value/1/ 0.11 12.28 -8.02 -- 4.84%
With CDSC/3/ -0.89 11.28 -8.02 -- 4.84
- --------------------------------------------------------------------------------
Since
Class C
6 Months 1 Year 5 Years 10 Years Incept./6/
-------- ------ ------- -------- ----------
Comparative Performance
Russell 1000 Growth Index/4/ 2.74% 17.88% -6.48% 10.11% 9.73%
Morningstar Large Growth Fund Avg./5/ 2.42 16.58 -4.89 9.06 8.97
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. 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. For performance current to the most recent
month-end, visit www.cdcnvestfunds.com.
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 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Common Stocks 98.6 99.1
- --------------------------------------------------------------------------------
Short Term Investments and Other 1.4 0.9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Ten Largest Holdings 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Pfizer, Inc. 6.8 4.9
- --------------------------------------------------------------------------------
Microsoft Corp. 6.6 5.7
- --------------------------------------------------------------------------------
Intel Corp. 5.1 5.8
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 4.8 4.8
- --------------------------------------------------------------------------------
Johnson & Johnson 4.2 2.3
- --------------------------------------------------------------------------------
General Electric Co. 3.9 3.7
- --------------------------------------------------------------------------------
Home Depot, Inc. 3.4 1.6
- --------------------------------------------------------------------------------
International Business Machines Corp. 3.2 --
- --------------------------------------------------------------------------------
Merck & Co., Inc. 2.8 0.8
- --------------------------------------------------------------------------------
Fannie Mae 2.8 2.8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
% of Net Assets
as of
------------------
Five Largest Industries 6/30/04 12/31/03
- --------------------------------------------------------------------------------
Pharmaceuticals 12.1 10.8
- --------------------------------------------------------------------------------
Software 9.0 9.0
- --------------------------------------------------------------------------------
Communications 7.8 5.1
- --------------------------------------------------------------------------------
Semiconductors 7.3 9.1
- --------------------------------------------------------------------------------
Beverages, Food & Tobacco 7.1 5.8
- --------------------------------------------------------------------------------
Portfolio holdings and asset allocations will vary.
- --------------------------------------------------------------------------------
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, which declines annually
between years 1 - 6 according to the following schedule: 5, 4, 3, 3, 2, 1,
0%. Class C share performance assumes 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/ The since-inception performance comparisons shown for Class C shares is
calculated from 12/31/94.
12
- --------------------------------------------------------------------------------
Additional Information
- --------------------------------------------------------------------------------
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.
For more complete information on any CDC Nvest Fund, contact your financial
professional or call CDC IXIS Asset Management Distributors, L.P. and ask for a
free prospectus, which contains more complete information including charges and
other ongoing expenses. Investors should consider a fund's objective, risks and
expenses carefully before investing. This and other information can be found in
the prospectus. Please read the prospectus carefully before investing.
Proxy Voting Information
A description of the funds' proxy voting policies and procedures is available
without charge, upon request, by calling CDC Nvest Funds at 800-225-5478; on the
funds' web-site at www.cdcnvestfunds.com; and on the Securities and Exchange
Commission's website at www.sec.gov. Information regarding how the funds voted
proxies relating to portfolio securities during the 12-month period ended June
30, 2004 is available from the fund's website and the SEC's website.
- --------------------------------------------------------------------------------
NOT FDICINSURED . MAY LOSE VALUE . NO BANK GUARANTEE
- --------------------------------------------------------------------------------
13
- --------------------------------------------------------------------------------
CGM Advisor Targeted Equity Fund -- Schedule of Investments
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 99.4% of Total Net Assets
Automotive -- 5.6%
515,000 Toyota Motor Corp. (ADR)(c) $ 42,034,300
------------
Business Services -- 2.3%
210,000 FedEx Corp. 17,154,900
------------
Cosmetics & Personal Care -- 10.5%
1,060,000 Avon Products, Inc. 48,908,400
534,000 Procter & Gamble Co. 29,070,960
------------
77,979,360
------------
Electronics -- 6.7%
1,759,250 AU Optronics Corp. (ADR)(c) 28,746,145
230,000 Harman International Industries, Inc. 20,930,000
------------
49,676,145
------------
Entertainment & Leisure -- 3.2%
620,000 International Game Technology 23,932,000
------------
Financial Services -- 5.2%
835,000 Citigroup, Inc. 38,827,500
------------
Home Construction, Furnishings & Appliances -- 14.9%
160,000 Centex Corp. 7,320,000
1,618,300 D.R. Horton, Inc.(c) 45,959,720
871,800 Lennar Corp., Class A(c) 38,986,896
362,600 Pulte Homes, Inc. 18,866,078
------------
111,132,694
------------
Industrial - Diversified -- 4.2%
346,000 3M Co. 31,143,460
------------
Internet -- 1.9%
150,000 eBay, Inc.(d) 13,792,500
------------
Medical Supplies -- 3.6%
230,000 Stryker Corp. 12,650,000
160,000 Zimmer Holdings, Inc.(d) 14,112,000
------------
26,762,000
------------
Oil & Gas -- 15.5%
647,000 Burlington Resources, Inc. 23,408,460
495,000 ConocoPhillips 37,763,550
385,000 Exxon Mobil Corp. 17,097,850
384,000 Total SA (ADR)(c) 36,894,720
------------
115,164,580
------------
Restaurants -- 4.8%
965,000 Yum! Brands, Inc.(d) 35,917,300
------------
Semiconductors -- 6.2%
305,000 Analog Devices, Inc.(c) 14,359,400
1,450,000 National Semiconductor Corp.(c)(d) 31,885,500
------------
46,244,900
------------
Telephone Systems -- 13.7%
1,500,000 America Movil SA de CV (ADR) 54,555,000
388,300 Mobile Telesystems (ADR) 47,372,600
------------
101,927,600
------------
Textiles, Clothing & Fabrics -- 1.1%
110,000 Nike, Inc., Class B 8,332,500
Total Common Stocks (Identified Cost $614,037,732) 740,021,739
------------
Principal
Amount Description Value (a)
- --------------------------------------------------------------------------------
Short Term Investments -- 11.5%
$2,577,409 Repurchase Agreement with Investors Bank & Trust
Co. dated 6/30/2004 at 0.70% to be purchased at
$2,577,459 on 7/01/2004, collateralized by
$2,542,705 Small Business Administration
Bond, 4.38%, due 4/25/2014
valued at $2,706,280 $ 2,577,409
11,563,312 Bank of America, 1.50%, due 7/21/2004(e) 11,563,312
1,472,871 Bank of Montreal, 1.20%, due 7/23/2004(e) 1,472,871
4,818,047 Bank of Nova Scotia, 1.04%, due 7/06/2004(e) 4,818,047
12,526,920 BGI Prime Money Market Fund(e) 12,526,920
3,854,437 BNP Paribas, 1.08%, due 7/02/2004(e) 3,854,437
3,854,437 BNP Paribas, 1.08%, due 7/29/2004(e) 3,854,437
1,927,219 Caylon, 1.04%, due 7/06/2004(e) 1,927,219
2,890,828 Caylon, 1.34%, due 8/24/2004(e) 2,890,828
260,570 Delaware Funding Corporation, 1.241%, due 260,570
7/22/2004(e)
1,927,219 Den Danske Bank, 1.03%, due 7/02/2004(e) 1,927,219
963,961 Fairway Finance, 1.281%, due 7/26/2004(e) 963,961
3,846,573 Fannie Mae, 1.131%, due 7/14/2004(e) 3,846,573
963,609 Fortis Bank, 1.19%, due 7/14/2004(e) 963,609
2,890,828 Greyhawk Funding, 1.221%, due 7/20/2004(e) 2,890,828
1,927,219 HBOS Halifax Bank of Scotland, 1.08%, due 1,927,219
7/29/2004(e)
2,285,335 Merrill Lynch Premier Institutional Fund(e) 2,285,335
7,708,875 Merrimac Cash Fund-Premium Class(e) 7,708,875
4,809,727 Prefco, 1.111%, due 7/07/2004(e) 4,809,727
2,890,828 Royal Bank of Scotland, 1.05%, due 7/07/2004(e) 2,890,828
1,927,219 Royal Bank of Scotland, 1.06%, due 7/30/2004(e) 1,927,219
2,890,828 Sheffield Receivables Corp, 1.071%, due 2,890,828
7/01/2004(e)
1,927,219 Wells Fargo, 1.19%, due 7/19/2004(e) 1,927,219
2,890,828 Wells Fargo, 1.24%, due 7/26/2004(e) 2,890,828
------------
Total Short Term Investments (Identified Cost
$85,596,318) 85,596,318
------------
Total Investments -- 110.9%
(Identified Cost $699,634,050)(b) 825,618,057
Other assets less liabilities (81,393,995)
------------
Total Net Assets -- 100% $744,224,062
============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2004, the net unrealized appreciation on
investments based on cost of $699,634,050 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 $144,033,415
Aggregate gross unrealized depreciation for all
investments in which
there is an excess of tax cost over value (18,049,408)
------------
Net unrealized appreciation $125,984,007
============
At December 31, 2003, the Fund had a capital loss carryover of
approximately $327,887,176 of which $132,783,707 expires on December 31,
2009 and $195,103,469 expires on December 31, 2010.
These amounts may be available to offset future realized capital gains, if
any, to the extent provided by regulations.
(c) All or a portion of this security was on loan to brokers at June 30, 2004.
(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.
See accompanying notes to financial statements.
14
- --------------------------------------------------------------------------------
Hansberger International Fund -- Schedule of Investments
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 98.2% of Total Net Assets
Brazil -- 0.5%
24,000 Petroleo Brasileiro SA (ADR) $ 673,680
-----------
Canada -- 2.0%
39,100 Manulife Financial Corp.(d) 1,583,550
40,000 Suncor Energy, Inc. 1,024,400
-----------
2,607,950
-----------
China -- 2.1%
200,000 China Mobile (Hong Kong), Ltd. 605,151
59,700 China Mobile (Hong Kong), Ltd. (ADR) 905,052
1,732,000 Denway Motors, Ltd. 627,319
17,800 Huaneng Power International, Inc. (ADR)(d) 644,360
-----------
2,781,882
-----------
Denmark -- 1.6%
27,700 Group 4 Falck AS 713,367
97,000 Vestas Wind Systems AS(d) 1,428,038
-----------
2,141,405
-----------
Finland -- 1.7%
17,800 Nokia OYJ 257,415
29,700 Nokia OYJ (ADR)(d) 431,838
33,600 Tietoenator OYJ 1,022,205
28,700 UPM-Kymmene OYJ 547,327
-----------
2,258,785
-----------
France -- 13.9%
9,300 Aventis SA(d) 703,644
45,000 Axa 993,161
58,800 Axa (ADR) 1,301,832
13,900 BNP Paribas 856,770
37,400 Bouygues SA 1,255,014
14,000 Carrefour SA 680,787
17,100 Cie Generale D'Optique Essilor International SA 1,118,650
11,200 Groupe Danone 979,187
6,400 Lafarge SA 572,021
12,400 L'Oreal SA 992,624
14,000 Schneider Electric SA 957,677
25,600 Societe Generale, Class A 2,180,393
42,000 STMicroelectronics NV (New York)(d) 924,420
24,100 Suez SA 502,800
39,400 Thomson Multimedia SA 778,767
12,300 Total SA 2,350,187
10,400 Total SA (ADR) 999,232
-----------
18,147,166
-----------
Germany -- 7.7%
5,300 Adidas-Salomon AG 634,623
11,500 BASF AG 617,692
12,000 Celesio AG 718,441
8,000 Deutsche Bank AG(d) 630,648
30,500 Deutsche Boerse AG(d) 1,560,128
13,500 E.ON AG 974,505
10,000 Fresenius Medical Care AG(d) 742,584
14,400 Linde AG 794,177
1,950 SAP AG 325,749
16,400 SAP AG (ADR)(d) 685,684
14,000 Schering AG 827,939
21,200 Siemens AG 1,529,041
-----------
10,041,211
-----------
Hong Kong -- 5.5%
436,900 Esprit Holdings, Ltd. $ 1,954,923
85,200 HSBC Holdings PLC (Hong Kong) 1,283,511
106,000 Hutchison Whampoa, Ltd. 723,682
1,746,500 Johnson Electric Holdings, Ltd. 1,768,959
719,052 Shangri-La Asia, Ltd. 700,642
127,000 Wing Hang Bank, Ltd. 753,888
-----------
7,185,605
-----------
Hungary -- 0.6%
19,000 OTP Bank Rt (ADR) 144A (d) 783,750
-----------
India -- 0.6%
8,400 Infosys Technologies, Ltd. (ADR)(d) 779,268
-----------
Ireland -- 0.6%
10,900 Bank of Ireland (Dublin) 145,934
51,900 Bank of Ireland (London) 693,596
-----------
839,530
-----------
Israel -- 0.7%
13,100 Teva Pharmaceutical Industries, Ltd. (ADR)(d) 881,499
-----------
Italy -- 3.1%
68,700 Eni-Ente Nazionale Idrocarburi SpA(d) 1,367,116
33,200 Luxottica Group SpA (ADR) 561,080
80,900 Saipem SpA 737,868
292,400 UniCredito Italiano SpA 1,447,544
-----------
4,113,608
-----------
Japan -- 17.9%
105,000 Asahi Glass Co., Ltd. 1,095,106
43,200 Canon, Inc. 2,282,564
28,100 Denso Corp. 655,860
11,400 Fanuc, Ltd. 681,957
29,500 Fujisawa Pharmaceutical Co., Ltd. 700,735
15,300 Honda Motor Co., Ltd. 739,518
25,000 Kao Corp. 604,181
296,000 Mazda Motor Corp.(d) 1,044,466
137,000 NEC Corp. 966,837
7,500 Nidec Corp. 770,503
27,100 Nitto Denko Corp. 1,389,552
640 NTT DoCoMo, Inc. 1,146,795
6,200 ORIX Corp. 712,153
9,600 Rohm Co., Ltd. 1,152,088
24,000 Seven-Eleven Japan Co., Ltd. 785,114
89,000 Sharp Corp. 1,425,472
53,000 Shiseido Co., Ltd. 669,653
11,000 SMC Corp. 1,192,741
27,900 Sony Corp. 1,053,701
145 Sumitomo Mitsui Financial Group, Inc.(d) 996,646
203,000 Sumitomo Trust & Banking Co. (The), Ltd.(d) 1,449,400
17,000 Takeda Chemical Industries, Ltd. 748,266
51,000 Tostem Inax Holding Corp. 1,103,653
-----------
23,366,961
-----------
Mexico -- 0.9%
23,400 Cemex SA de CV (ADR)(d) 680,940
16,000 Telefonos de Mexico SA de CV, Class L (ADR) 532,320
-----------
1,213,260
-----------
Netherlands -- 4.9%
29,569 ABN AMRO Holding NV 647,908
19,200 Akzo Nobel NV 707,730
36,300 European Aeronautic Defense and Space Co.(d) 1,012,724
42,052 ING Groep NV 1,001,935
See accompanying notes to financial statements.
15
- --------------------------------------------------------------------------------
Hansberger International Fund -- Schedule of Investments (continued)
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Netherlands -- continued
23,300 Koninklijke Philips Electronics NV $ 628,732
38,000 Koninklijke Philips Electronics NV (New York) 1,033,600
10,100 Unilever NV (ADR)(d) 691,951
21,490 VNU NV 627,844
------------
6,352,424
------------
Republic of Korea -- 4.9%
30,100 Kookmin Bank 935,981
31,600 Kookmin Bank (ADR)(d) 991,608
28,800 LG Chemical, Ltd. 975,383
2,500 Samsung Electronics Co., Ltd, (GDR), 144A(c) 516,010
4,100 Samsung Electronics Co., Ltd. 1,693,980
2,900 Shinsegae Co., Ltd. 698,311
29,900 SK Telecom Co., Ltd. (ADR)(d) 627,601
------------
6,438,874
------------
Singapore -- 1.3%
118,800 DBS Group Holdings, Ltd. 995,820
107,600 Singapore Airlines, Ltd. 701,508
------------
1,697,328
------------
South Africa -- 0.5%
349,700 Old Mutual PLC 663,248
------------
Spain -- 1.9%
51,300 Banco Bilbao Vizcaya Argentaria SA 686,828
62,400 Telefonica Moviles SA 652,830
78,213 Telefonica SA 1,158,734
------------
2,498,392
------------
Switzerland -- 5.0%
110,000 ABB, Ltd.(c) 602,945
4,700 Nestle SA(c) 1,256,141
6,900 Nobel Biocare Holding AG 1,082,180
40,400 Novartis AG 1,786,109
2,100 Swisscom AG 695,687
16,000 UBS AG 1,129,871
------------
6,552,933
------------
Taiwan -- 1.1%
406,149 Taiwan Semiconductor Manufacturing Co., Ltd. 585,570
96,120 Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) 798,759
------------
1,384,329
------------
United Kingdom -- 19.2%
110,000 Amvescap PLC 751,462
21,400 AstraZeneca PLC (ADR)(d) 976,696
174,054 Barclays PLC 1,486,702
79,011 BHP Billiton PLC 687,100
19,900 BP PLC (ADR) 1,066,043
125,300 British Sky Broadcasting PLC 1,417,901
103,000 Compass Group PLC 630,092
66,255 GlaxoSmithKline PLC 1,360,871
67,300 GUS PLC 1,038,894
59,645 HBOS PLC 740,053
137,400 Kesa Electricals PLC 723,043
140,410 Kingfisher PLC 731,220
91,781 Lloyds TSB Group PLC 720,507
41,509 Reckitt Benckiser PLC 1,178,825
198,500 Rolls-Royce Group PLC 908,245
63,030 Royal Bank of Scotland Group PLC 1,820,967
346,600 Signet Group PLC 726,731
91,100 Smith & Nephew PLC 981,170
91,632 Standard Chartered PLC 1,494,520
374,554 Tesco PLC 1,814,297
79,400 Unilever PLC $ 788,710
703,816 Vodafone Group PLC 1,546,146
34,300 Vodafone Group PLC (ADR) 758,030
14,700 WPP Group PLC (ADR) 753,081
------------
25,101,306
------------
Total Common Stocks (Identified Cost $118,730,484) 128,504,394
------------
Preferred Stocks -- 1.2%
Germany -- 1.2%
1,290 Porsche AG 869,061
24,400 Volkswagen AG 708,101
------------
Total Preferred Stocks (Identified Cost $1,510,579) 1,577,162
------------
Principal
Amount
- --------------------------------------------------------------------------------
Bonds and Notes -- 0.0%
France -- 0.0%
1,750 Axa SA, Zero Coupon Convertible Debt, 0.000%,
12/21/2004, (c) 39,178
------------
Total Bonds and Notes (Identified Cost $25,613) 39,178
------------
Short Term Investments -- 16.3%
$ 599,390 Repurchase Agreement with Investors Bank & Trust
Co. dated 6/30/2004 at 0.70% to be purchased at
$599,402 on 7/01/2004, collateralized by $575,811
Small Business Administration Bond, 4.5%, due
1/25/2017 valued at $629,360 599,390
2,895,736 Bank of America, 1.50%, due 7/21/2004(e) 2,895,736
368,843 Bank of Montreal, 1.20%, due 7/23/2004(e) 368,843
1,206,556 Bank of Nova Scotia, 1.04%, due 7/06/2004(e) 1,206,556
3,137,046 BGI Prime Money Market Fund(e) 3,137,046
965,245 BNP Paribas, 1.08%, due 7/02/2004(e) 965,245
965,245 BNP Paribas, 1.08%, due 7/29/2004(e) 965,245
482,623 Caylon, 1.04%, due 7/06/2004(e) 482,623
723,933 Caylon, 1.34%, due 8/24/2004(e) 723,933
65,253 Delaware Funding Corporation, 1.241%, due
7/22/2004(e) 65,253
482,623 Den Danske Bank, 1.03%, due 7/02/2004(e) 482,623
241,399 Fairway Finance, 1.281%, due 7/26/2004(e) 241,399
963,275 Fannie Mae, 1.131%, due 7/14/2004(e) 963,275
241,311 Fortis Bank, 1.19%, due 7/14/2004(e) 241,311
723,933 Greyhawk Funding, 1.221%, due 7/20/2004(e) 723,933
482,623 HBOS Halifax Bank of Scotland, 1.08%, due
7/29/2004(e) 482,623
572,303 Merrill Lynch Premier Institutional Fund(e) 572,303
1,930,490 Merrimac Cash Fund-Premium Class(e) 1,930,490
1,204,472 Prefco, 1.111%, due 7/07/2004(e) 1,204,472
723,933 Royal Bank of Scotland, 1.05%, due 7/07/2004(e) 723,933
482,623 Royal Bank of Scotland, 1.06%, due 7/30/2004(e) 482,623
723,933 Sheffield Receivables Corp, 1.071%, due
7/01/2004(e) 723,933
482,623 Wells Fargo, 1.19%, due 7/19/2004(e) 482,623
723,933 Wells Fargo, 1.24%, due 7/26/2004(e) 723,933
------------
Total Short Term Investments (Identified Cost
$21,389,344) 21,389,344
------------
Total Investments -- 115.7%
(Identified Cost $141,656,020) (b) 151,510,078
Other assets less liabilities (20,551,867)
------------
Total Net Assets-- 100% $130,958,211
============
See accompanying notes to financial statements.
16
- --------------------------------------------------------------------------------
Hansberger International Fund -- Schedule of Investments (continued)
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2004, the net unrealized appreciation on investments based on
cost of $141,656,020 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 $12,710,754
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (2,856,696)
-----------
Net unrealized appreciation $ 9,854,058
===========
At December 31, 2003, the Fund had a capital loss carryover of
approximately $33,932,986 of which $26,061,269 expires on December 31, 2009
and $7,871,717 expires on December 31, 2010. These amounts may be available
to offset future realized capital gains, if any, to the extent provided by
regulations.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2004.
(e) Represents investments of securities lending collateral.
ADR/GDR - An American Depositary Receipt (ADR) or Global Depositary Receipt
(GDR)is a certificate issued by a U.S. bank representing the right to
receive securities of the foreign issuer described. The values of ADRs and
GDRs are significantly influenced by trading on exchanges not located in
the United States.
144A Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registrations, normally to qualified institutional buyers. At the period
end, the value of these amounted to $1,299,760 or 1.0% of net assets.
Industry Holdings at June 30, 2004 as a Percentage of Net Assets (unaudited)
- ----------------------------------------------------------------------------
Financial Services 19.3%
Banking 17.6
Pharmaceuticals 6.5
Oil & Gas 6.3
Communications 5.3
Insurance 4.3
Semiconductors 4.0
Retailers 3.7
Automotive 3.6
Electrical Equipment 3.4
Medical Supplies 3.3
Electronics 3.1
Chemicals 2.8
Heavy Machinery 2.8
Beverages, Food & Tobacco 2.7
Cosmetics & Personal Care 2.7
Building Materials 2.5
Textiles, Clothing & Fabrics 2.0
Other 19.8
See accompanying notes to financial statements.
17
- --------------------------------------------------------------------------------
Harris Associates Focused Value Fund -- Schedule of Investments
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 92.5% of Total Net Assets
Aerospace & Defense -- 3.9%
378,600 Raytheon Co. $ 13,542,522
------------
Automotive -- 2.5%
497,800 AutoNation, Inc.(c) 8,512,380
------------
Banking -- 14.7%
1,314,000 Washington Mutual, Inc. 50,772,960
------------
Biotechnology -- 3.0%
235,300 Chiron Corp.(c) (d) 10,503,792
------------
Commercial Services -- 13.9%
505,900 H&R Block, Inc.(d) 24,121,312
108,500 Moody's Corp. 7,015,610
503,000 RR Donnelley & Sons Co. 16,609,060
------------
47,745,982
------------
Computers -- 4.0%
525,900 SunGard Data Systems, Inc.(c) 13,673,400
------------
Media - Broadcasting & Publishing -- 10.7%
181,400 Knight-Ridder, Inc.(d) 13,060,800
851,200 Liberty Media Corp., Class A 7,652,288
42,560 Liberty Media International, Inc.-Class A(c) 1,578,976
829,700 Time Warner, Inc.(c) 14,586,126
------------
36,878,190
------------
Oil & Gas -- 5.6%
534,000 Burlington Resources, Inc. 19,320,120
------------
Pharmaceuticals -- 10.9%
480,100 Bristol-Myers Squibb Co. 11,762,450
388,400 Hospira, Inc.(c) 10,719,840
351,000 Omnicare, Inc.(d) 15,026,310
------------
37,508,600
------------
Restaurants -- 5.6%
513,900 Yum! Brands, Inc.(c) 19,127,358
------------
Retailers -- 4.3%
611,900 TJX Cos., Inc. 14,771,266
------------
Software -- 5.5%
424,700 First Data Corp. 18,907,644
------------
Telephone Systems -- 2.8%
552,700 Sprint Corp. (FON Group) 9,727,520
------------
Textiles, Clothing & Fabrics -- 0.7%
69,200 Liz Claiborne, Inc. 2,489,816
------------
Tools -- 4.4%
241,300 Black & Decker Corp. 14,991,969
------------
Total Common Stocks (Identified Cost $261,818,763) 318,473,519
------------
Short Term Investments -- 14.5%
$26,946,106 Repurchase Agreement with Investors Bank & Trust
Co. dated 6/30/2004 at 0.70% to be purchased at
$26,946,630 on 7/01/2004, collateralized by
$3,800,107 Federal National Mortgage Association
Bond, 1.80%, due 3/25/2031 valued at $3,882,259
and $24,345,284 Federal National Mortgage
Association Bond, 1.8%, due 3/25/2031 valued at
$24,411,240 $ 26,946,106
3,221,088 Bank of America, 1.50%, due 7/21/2004(e) 3,221,088
410,285 Bank of Montreal, 1.20%, due 7/23/2004(e) 410,285
1,342,120 Bank of Nova Scotia, 1.04%, due 7/06/2004(e) 1,342,120
3,489,512 BGI Prime Money Market Fund(e) 3,489,512
1,073,696 BNP Paribas, 1.08%, due 7/02/2004(e) 1,073,696
1,073,696 BNP Paribas, 1.08%, due 7/29/2004(e) 1,073,696
536,848 Caylon, 1.04%, due 7/06/2004(e) 536,848
805,272 Caylon, 1.34%, due 8/24/2004(e) 805,272
72,585 Delaware Funding Corporation, 1.241%, due
7/22/2004(e) 72,585
536,848 Den Danske Bank, 1.03%, due 7/02/2004(e) 536,848
268,522 Fairway Finance, 1.281%, due 7/26/2004(e) 268,522
1,071,505 Fannie Mae, 1.131%, due 7/14/2004(e) 1,071,505
268,424 Fortis Bank, 1.19%, due 7/14/2004(e) 268,424
805,272 Greyhawk Funding, 1.221%, due 7/20/2004(e) 805,272
536,848 HBOS Halifax Bank of Scotland, 1.08%, due
7/29/2004(e) 536,848
636,605 Merrill Lynch Premier Institutional Fund(e) 636,605
2,147,392 Merrimac Cash Fund-Premium Class(e) 2,147,392
1,339,803 Prefco, 1.111%, due 7/07/2004(e) 1,339,803
805,272 Royal Bank of Scotland, 1.05%, due 7/07/2004(e) 805,272
536,848 Royal Bank of Scotland, 1.06%, due 7/30/2004(e) 536,848
805,272 Sheffield Receivables Corp, 1.071%, due
7/01/2004(e) 805,272
536,848 Wells Fargo, 1.19%, due 7/19/2004(e) 536,848
805,272 Wells Fargo, 1.24%, due 7/26/2004(e) 805,272
------------
Total Short Term Investments (Identified Cost
$50,071,939) 50,071,939
------------
Total Investments -- 107.0%
(Identified Cost $311,890,702)(b) 368,545,458
Other assets less liabilities (24,061,457)
------------
Total Net Assets -- 100% $344,484,001
============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2004, the net unrealized appreciation on investments based on
cost of $3,111,890,702 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 $56,819,450
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (164,694)
-----------
Net unrealized appreciation $56,654,756
===========
At December 31, 2003, the Fund had a capital loss carryover of
approximately $21,372,149 of which $1,480,080 expires on December 31, 2009,
$6,713,084 expires on December 31, 2010 and $13,178,985 expires on December
31, 2011. These amounts may be available to offset future realized capital
gains, if any, to the extent provided by regulations.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2004.
(e) Represents investments of securities lending collateral.
See accompanying notes to financial statements.
18
- --------------------------------------------------------------------------------
Harris Associates Large Cap Value Fund -- Schedule of Investments
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 94.1% of Total Net Assets
Advertising -- 1.7%
446,900 Interpublic Group of Cos. (The), Inc.(c) $ 6,135,937
------------
Aerospace & Defense -- 4.4%
190,200 Honeywell International, Inc. 6,967,026
245,500 Raytheon Co. 8,781,535
------------
15,748,561
------------
Apparel Retailers -- 3.6%
475,200 Gap (The), Inc.(d) 11,523,600
71,800 Limited Brands 1,342,660
------------
12,866,260
------------
Automotive -- 0.6%
32,400 Harley-Davidson, Inc.(d) 2,006,856
------------
Banking -- 5.5%
246,800 U.S. Bancorp 6,801,808
334,300 Washington Mutual, Inc. 12,917,352
------------
19,719,160
------------
Beverages, Food & Tobacco -- 12.5%
157,700 Anheuser-Busch Cos., Inc. 8,515,800
198,800 Diageo PLC (ADR)(d) 10,884,300
110,200 General Mills, Inc. 5,237,806
168,000 H.J. Heinz Co. 6,585,600
206,800 Kraft Foods, Inc., Class A(d) 6,551,424
101,700 Nestle SA (ADR) 6,903,294
------------
44,678,224
------------
Building Materials -- 7.3%
388,600 Home Depot, Inc. 13,678,720
398,600 Masco Corp.(d) 12,428,348
------------
26,107,068
------------
Entertainment & Leisure -- 3.7%
134,700 Carnival Corp. 6,330,900
265,500 Walt Disney Co. (The) 6,767,595
------------
13,098,495
------------
Environmental Control -- 3.2%
371,900 Waste Management, Inc. 11,398,735
------------
Financial Services -- 5.5%
188,200 Citigroup, Inc. 8,751,300
151,500 Fannie Mae 10,811,040
------------
19,562,340
------------
Food Retailers -- 1.4%
276,000 Kroger Co. (The)(c) (d) 5,023,200
------------
Household Products -- 4.7%
123,200 Fortune Brands, Inc. 9,292,976
136,900 Johnson & Johnson 7,625,330
------------
16,918,306
------------
Insurance -- 2.4%
43,200 Aflac, Inc. 1,762,992
91,300 MGIC Investment Corp. 6,926,018
------------
8,689,010
------------
Media - Broadcasting & Publishing -- 12.6%
344,700 Comcast Corp., Special Class A(c) 9,517,167
376,718 DIRECTV Group (The), Inc.(c) 6,441,878
1,254,700 Liberty Media Corp., Class A 11,279,753
730,600 Time Warner, Inc.(c) 12,843,948
133,800 Viacom, Inc., Class B 4,779,336
------------
44,862,082
------------
Medical Supplies -- 2.1%
103,600 Baxter International, Inc. $ 3,575,236
70,200 Guidant Corp. 3,922,776
------------
7,498,012
------------
Office & Business Equipment -- 2.8%
690,000 Xerox Corp.(c) (d) 10,005,000
------------
Oil & Gas -- 2.5%
141,800 Burlington Resources, Inc. 5,130,324
50,646 ConocoPhillips 3,863,783
------------
8,994,107
------------
Pharmaceuticals -- 6.9%
189,500 Abbott Laboratories 7,724,020
231,500 Bristol-Myers Squibb Co. 5,671,750
74,400 Cardinal Health, Inc.(d) 5,211,720
129,400 Merck & Co., Inc. 6,146,500
------------
24,753,990
------------
Restaurants -- 3.1%
425,000 McDonald's Corp. 11,050,000
------------
Retailers -- 3.8%
96,100 Costco Wholesale Corp. 3,946,827
155,200 Kohl's Corp.(c) 6,561,856
56,400 Wal-Mart Stores, Inc. 2,975,664
------------
13,484,347
------------
Software -- 3.8%
305,900 First Data Corp. 13,618,668
------------
Total Common Stocks (Identified Cost $278,809,843) 336,218,358
------------
Principal
Amount
- ----------
Short Term Investments -- 15.8%
$18,953,083 Repurchase Agreement with Investors Bank & Trust
Co. dated 6/30/2004 at 0.70% to be purchased at
$18,953,452 on 7/01/2004, collateralized by
$18,370,002 Small Business Administration Bond,
4.05%, due 8/25/2028 valued at $19,900,737 18,953,083
5,203,933 Bank of America, 1.50%, due 7/21/2004(e) 5,203,933
662,849 Bank of Montreal, 1.20%, due 7/23/2004(e) 662,849
2,168,306 Bank of Nova Scotia, 1.04%, due 7/06/2004(e) 2,168,306
5,637,596 BGI Prime Money Market Fund 5,637,596
1,734,644 BNP Paribas, 1.08%, due 7/02/2004(e) 1,734,644
1,734,644 BNP Paribas, 1.08%, due 7/29/2004(e) 1,734,644
867,322 Caylon, 1.04%, due 7/06/2004(e) 867,322
1,300,983 Caylon, 1.34%, due 8/24/2004(e) 1,300,983
117,267 Delaware Funding Corporation, 1.241%, due
7/22/2004(e) 117,267
867,322 Den Danske Bank, 1.03%, due 7/02/2004(e) 867,322
433,819 Fairway Finance, 1.281%, due 7/26/2004(e) 433,819
1,731,105 Fannie Mae, 1.131%, due 7/14/2004(e) 1,731,105
433,661 Fortis Bank, 1.19%, due 7/14/2004(e) 433,661
1,300,983 Greyhawk Funding, 1.221%, due 7/20/2004(e) 1,300,983
867,322 HBOS Halifax Bank of Scotland, 1.08%, due
7/29/2004(e) 867,322
1,028,488 Merrill Lynch Premier Institutional Fund(e) 1,028,488
3,469,289 Merrimac Cash Fund-Premium Class(e) 3,469,289
2,164,561 Prefco, 1.111%, due 7/07/2004(e) 2,164,561
1,300,983 Royal Bank of Scotland, 1.05%, due
7/07/2004(e) 1,300,983
867,322 Royal Bank of Scotland, 1.06%, due
7/30/2004(e) 867,322
1,300,983 Sheffield Receivables Corp, 1.071%, due
7/01/2004(e) 1,300,983
867,322 Wells Fargo, 1.19%, due 7/19/2004(e) 867,322
1,300,983 Wells Fargo, 1.24%, due 7/26/2004(e) 1,300,983
------------
Total Short Term Investments (Identified Cost
$56,314,770) 56,314,770
------------
See accompanying notes to financial statements.
19
- --------------------------------------------------------------------------------
Harris Associates Large Cap Value Fund
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Total Investments -- 109.9%
(Identified Cost $335,124,613) (b) $392,533,128
Other assets less liabilities (35,477,575)
------------
Total Net Assets -- 100% $357,055,553
============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2004, the net unrealized appreciation on
investments based on cost of $335,124,613 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 $ 59,557,744
Aggregate gross unrealized depreciation for all
investments in which there is an excess of tax cost over
value (2,149,229)
------------
Net unrealized appreciation $ 57,408,515
============
At December 31, 2003, the Fund had a capital loss carryover of
approximately $168,487,529 of which $15,926,671 expires on December 31,
2007, $34,642,742 expires on December 31, 2008 $83,318,807 expires on
December 31, 2009, $24,633,843 expires on December 31, 2010 and $9,965,466
expires on December 31, 2011. These amounts, subject to limitations, may be
available to offset future realized capital gains, if any, to the extent
provided by regulations.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2004.
(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.
See accompanying notes to financial statements.
20
- --------------------------------------------------------------------------------
Vaughan Nelson Small Cap Value Fund -- Schedule of Investments
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 94.6% of Total Net Assets
Aerospace & Defense -- 6.2%
30,125 Alliant Techsystems, Inc.(c) (d) $ 1,908,117
57,450 DRS Technologies, Inc.(c) 1,832,655
59,275 Esterline Technologies Corp.(c) 1,750,391
39,050 Moog, Inc., Class A(c) 1,449,145
-----------
6,940,308
-----------
Automotive -- 2.5%
62,525 Aftermarket Technology Corp.(c) 1,031,662
58,975 United Auto Group, Inc. 1,807,584
-----------
2,839,246
-----------
Banking -- 7.5%
39,700 Chittenden Corp. 1,395,455
48,951 MB Financial, Inc. 1,801,886
54,775 Provident Bankshares Corp. 1,579,711
154,489 Sterling Bancshares, Inc. 2,192,199
83,250 Texas Capital Bancshares, Inc.(c) 1,381,950
-----------
8,351,201
-----------
Building Materials -- 0.9%
145,475 U.S. Concrete, Inc.(c) 1,025,599
-----------
Business Services -- 1.2%
101,425 Cornell Companies, Inc.(c) 1,379,380
-----------
Commercial Services -- 9.1%
47,900 Consolidated Graphics, Inc.(c) 2,109,995
111,000 Dollar Thrifty Automotive Group, Inc.(c) 3,045,840
128,850 Healthcare Services Group, Inc. 1,971,405
218,175 Integrated Alarm Services Group, Inc. (c) (d) 1,178,145
38,225 Monro Muffler, Inc.(c) 927,338
109,575 Stewart Enterprises, Inc., Class A(c) 891,940
-----------
10,124,663
-----------
Communications -- 0.8%
105,625 Hypercom Corp.(c) 892,531
-----------
Computer Software & Processing -- 0.8%
354,000 Kana Software Inc.(c) 842,520
-----------
Computers -- 1.0%
47,175 Reynolds & Reynolds Co. (The), Class A 1,091,158
-----------
Electrical Equipment -- 1.7%
24,200 AZZ, Inc.(c) 367,840
150,725 GrafTech International, Ltd.(c) (d) 1,576,583
-----------
1,944,423
-----------
Electronics -- 1.1%
53,300 MTS Systems Corp. 1,249,885
-----------
Entertainment & Leisure -- 2.7%
64,300 K2, Inc.(c) 1,009,510
113,025 Navigant International, Inc.(c) (d) 2,010,715
-----------
3,020,225
-----------
Environmental Control -- 1.6%
134,850 Allied Waste Industries, Inc.(c) 1,777,323
-----------
Financial Services -- 3.6%
53,925 Friedman, Billings, Ramsey Group, Inc., Class A 1,067,176
61,925 MCG Capital Corp. 952,406
73,375 Raymond James Financial, Inc. 1,940,769
-----------
3,960,351
-----------
Health Care Providers -- 4.6%
25,950 Pediatrix Medical Group, Inc.(c) 1,812,607
88,375 Triad Hospitals, Inc.(c) 3,290,201
-----------
5,102,808
-----------
Heavy Machinery -- 2.8%
18,850 Briggs & Stratton Corp. $ 1,665,398
34,525 Nordson Corp. 1,497,349
-----------
3,162,747
-----------
Home Construction, Furnishings & Appliances -- 1.1%
92,175 Walter Industries, Inc. 1,255,424
-----------
Household Products -- 1.1%
41,925 Yankee Candle Co. (The), Inc.(c) 1,226,306
-----------
Insurance -- 4.6%
56,075 HCC Insurance Holdings, Inc. 1,873,466
59,925 Infinity Property & Casualty Corp. 1,977,525
237,100 Meadowbrook Insurance Group, Inc.(c) 1,256,630
-----------
5,107,621
-----------
Investment Companies -- 4.7%
30,150 iShares Russell 2000 Value Index Fund(d) 5,194,845
-----------
Lodging -- 2.3%
162,475 La Quinta Corp.(c) 1,364,790
17,200 Mandalay Resort Group 1,180,608
-----------
2,545,398
-----------
Media - Broadcasting & Publishing -- 1.3%
74,925 Journal Register Co.(c) 1,498,500
-----------
Metals -- 2.1%
77,475 Allegheny Technologies, Inc.(d) 1,398,424
34,850 Steel Dynamics, Inc.(c) 997,756
-----------
2,396,180
-----------
Oil & Gas -- 10.0%
63,075 Equitable Resources, Inc.(d) 3,261,608
72,925 Oil States International, Inc.(c) 1,115,753
23,400 Quicksilver Resources, Inc.(c) (d) 1,569,438
4,975 Range Resources Corp. 72,635
73,950 Southwestern Energy Co.(c) (d) 2,120,147
20,125 Ultra Petroleum Corp.(c) 751,266
149,025 Willbros Group, Inc.(c) (d) 2,245,807
-----------
11,136,654
-----------
Railroads & Equipment -- 1.4%
63,775 Genesee & Wyoming, Inc.(c) 1,511,468
-----------
REITs - Hotels -- 2.7%
181,150 Ashford Hospitality Trust, Inc. 1,512,603
153,300 Highland Hospitality Corp. 1,540,665
-----------
3,053,268
-----------
REITs - Mortgage -- 1.5%
65,400 American Home Mortgage Investment Corp. 1,695,822
-----------
REITs - Office Buildings -- 1.3%
101,425 American Financial Realty Trust(d) 1,449,363
-----------
Restaurants -- 1.5%
56,025 Triarc Cos., Inc., Class A 578,738
112,125 Triarc Cos., Inc., Class B 1,140,311
-----------
1,719,049
-----------
Retailers -- 6.1%
56,100 PEP Boys-Manny, Moe & Jack Corp.(d) 1,422,135
64,525 Regis Corp. 2,877,170
25,900 Sports Authority (The), Inc.(c) 929,810
57,950 Zale Corp.(c) 1,579,717
-----------
6,808,832
-----------
Semiconductors -- 1.3%
128,000 Entegris, Inc.(c) 1,480,960
-----------
See accompanying notes to financial statements.
21
- --------------------------------------------------------------------------------
Vaughan Nelson Small Cap Value Fund
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Software -- 1.3%
57,775 Inter-Tel, Inc. $ 1,442,642
-------------
Transportation -- 2.2%
28,500 Landstar System, Inc.(c) 1,506,795
67,325 RailAmerica, Inc.(c) 982,945
------------
2,489,740
------------
Total Common Stocks (Identified Cost $100,729,937) 105,716,440
------------
Principal
Amount
- ---------
Short Term Investments -- 20.5%
$6,037,234 Repurchase Agreement with Investors Bank &
Trust Co. dated 6/30/2004 at 0.70% to be purchased
at $6,037,351 on 7/01/2004, collateralized by
$6,256,135 Federal National Mortgage Association
Bond, 5.15%, due 5/01/2032
valued at $6,339,096 6,037,234
2,349,470 Bank of America, 1.50%, due 7/21/2004(e) 2,349,470
299,263 Bank of Montreal, 1.20%, due 7/23/2004(e) 299,263
978,946 Bank of Nova Scotia, 1.04%, due 7/06/2004(e) 978,946
2,545,257 BGI Prime Money Market Fund(e) 2,545,257
783,157 BNP Paribas, 1.08%, due 7/02/2004(e) 783,157
783,157 BNP Paribas, 1.08%, due 7/29/2004(e) 783,157
391,579 Caylon, 1.04%, due 7/06/2004(e) 391,579
587,367 Caylon, 1.34%, due 8/24/2004(e) 587,367
52,943 Delaware Funding Corporation, 1.241%, due
7/22/2004(e) 52,943
391,579 Den Danske Bank, 1.03%, due 7/02/2004(e) 391,579
195,861 Fairway Finance, 1.281%, due 7/26/2004(e) 195,861
781,559 Fannie Mae, 1.131%, due 7/14/2004(e) 781,559
195,789 Fortis Bank, 1.19%, due 7/14/2004(e) 195,789
587,367 Greyhawk Funding, 1.221%, due 7/20/2004(e) 587,367
391,579 HBOS Halifax Bank of Scotland, 1.08%, due
7/29/2004(e) 391,579
464,341 Merrill Lynch Premier Institutional Fund(e) 464,341
1,566,313 Merrimac Cash Fund-Premium Class(e) 1,566,313
977,255 Prefco, 1.111%, due 7/07/2004(e) 977,255
587,367 Royal Bank of Scotland, 1.05%, due 7/07/2004(e) 587,367
391,579 Royal Bank of Scotland, 1.06%, due 7/30/2004(e) 391,579
587,367 Sheffield Receivables Corp, 1.071%, due
7/01/2004(e) 587,367
391,579 Wells Fargo, 1.19%, due 7/19/2004(e) 391,579
587,367 Wells Fargo, 1.24%, due 7/26/2004(e) 587,367
------------
Total Short Term Investments (Identified Cost
$22,905,275) 22,905,275
------------
Total Investments -- 115.1%
(Identified Cost $123,635,212) (b) 128,621,715
Other assets less liabilities (16,913,747)
------------
Total Net Assets -- 100% $111,707,968
============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2004, the net unrealized appreciation on
investments based on cost of $123,635,212 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 $ 8,702,560
Aggregate gross unrealized depreciation for all
investments in which
there is an excess of tax cost over value (3,716,057)
------------
Net unrealized appreciation $ 4,986,503
============
At December 31, 2003, the Fund had a capital loss carryover of
approximately $61,631,063 of which $34,341,113 expires on December 31, 2009
and $27,289,950 expires on December 31, 2010. These amounts may be
available to offset future realized capital gains, if any, to the extent
provided by regulations.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2004.
(e) Represents investments of securities lending collateral.
REITs Real Estate Investment Trusts
See accomanying notes to financial statements.
22
- --------------------------------------------------------------------------------
Westpeak Capital Growth Fund -- Schedule of Investments
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Common Stocks -- 98.6% of Total Net Assets
Apparel Retailers -- 1.5%
46,400 Gap (The), Inc.(c) $1,125,200
----------
Banking -- 0.8%
10,200 Wells Fargo & Co. 583,746
----------
Beverages, Food & Tobacco -- 7.1%
6,400 Altria Group, Inc. 320,320
19,200 Anheuser-Busch Cos., Inc. 1,036,800
11,900 Coca-Cola Co. (The) 600,712
40,600 H.J. Heinz Co. 1,591,520
31,100 Pepsi Bottling Group, Inc. 949,794
15,600 PepsiCo, Inc. 840,528
----------
5,339,674
----------
Biotechnology -- 2.2%
15,500 Amgen, Inc.(d) 845,835
11,200 Invitrogen Corp.(d) 806,288
----------
1,652,123
----------
Building Materials -- 3.4%
72,050 Home Depot, Inc. 2,536,160
----------
Chemicals -- 0.6%
7,800 Sigma - Aldrich Corp.(c) 464,958
----------
Commercial Services -- 3.1%
24,400 Convergys Corp.(d) 375,760
20,800 Equifax, Inc. 514,800
47,800 Rent-A-Center, Inc.(d) 1,430,654
----------
2,321,214
----------
Communications -- 7.8%
32,600 Boston Communications Group(d) 334,150
152,200 Cisco Systems, Inc.(d) 3,607,140
55,000 Polycom, Inc.(d) 1,232,550
9,100 QUALCOMM, Inc. 664,118
----------
5,837,958
----------
Computers -- 3.2%
27,600 International Business Machines Corp. 2,432,940
----------
Cosmetics & Personal Care -- 2.5%
22,200 Estee Lauder Cos. (The), Inc., Class A 1,082,916
18,700 Gillette Co. (The) 792,880
----------
1,875,796
----------
Electrical Equipment -- 1.8%
30,100 Energizer Holdings, Inc.(d) 1,354,500
----------
Electronics -- 1.1%
38,800 Applera Corp. - Applied Biosystems Group 843,900
----------
Financial Services -- 5.5%
5,200 Capital One Financial Corp. 355,576
10,200 CompuCredit Corp.(d) 176,460
29,100 Fannie Mae(c) 2,076,576
19,200 MBNA Corp. 495,168
22,500 New Century Financial Corp.(c) 1,053,450
----------
4,157,230
----------
Health Care Providers -- 3.0%
6,300 Coventry Health Care, Inc.(d) 308,070
30,800 UnitedHealth Group, Inc. 1,917,300
----------
2,225,370
----------
Healthcare-Services -- 1.2%
23,100 Laboratory Corp. of America Holdings(d) 917,070
----------
Household Products -- 4.2%
57,000 Johnson & Johnson $3,174,900
----------
Industrial - Diversified -- 3.9%
89,800 General Electric Co. 2,909,520
----------
Insurance -- 1.8%
14,300 AMBAC Financial Group, Inc.(c) 1,050,192
4,500 American International Group, Inc. 320,760
----------
1,370,952
----------
Internet -- 2.5%
19,800 Infospace, Inc.(d) 753,192
19,700 Symantec Corp.(d) 862,466
6,600 Yahoo!, Inc.(d) 239,778
----------
1,855,436
----------
Lodging -- 0.9%
11,900 Harrah's Entertainment, Inc. 643,790
----------
Media - Broadcasting & Publishing -- 2.6%
10,800 McGraw-Hill Cos. (The), Inc. 826,956
31,200 Viacom, Inc., Class B 1,114,464
----------
1,941,420
----------
Medical Supplies -- 4.1%
32,200 Becton, Dickinson & Co.(c) 1,667,960
5,800 Boston Scientific Corp.(d) 248,240
10,200 Hillenbrand Industries, Inc. 616,590
7,000 St. Jude Medical, Inc.(d) 529,550
----------
3,062,340
----------
Mining -- 0.3%
6,800 Freeport-McMoran Copper & Gold, Inc., 225,420
----------
Class B(c)
Oil & Gas -- 1.8%
12,800 Anadarko Petroleum Corp. 750,080
15,900 Baker Hughes, Inc. 598,635
----------
1,348,715
----------
Pharmaceuticals -- 12.1%
42,200 Abbott Laboratories 1,720,072
5,790 Hospira, Inc.(d) 159,804
44,400 Merck & Co., Inc. 2,109,000
148,950 Pfizer, Inc. 5,106,006
----------
9,094,882
----------
Retailers -- 1.1%
12,000 RadioShack Corp. 343,560
9,500 Wal-Mart Stores, Inc. 501,220
----------
844,780
----------
Semiconductors -- 7.3%
28,000 Altera Corp.(c) (d) 622,160
28,500 Applied Materials, Inc.(d) 559,170
139,400 Intel Corp. 3,847,440
18,000 Texas Instruments, Inc. 435,240
----------
5,464,010
----------
Software -- 9.0%
32,500 Automatic Data Processing, Inc. 1,361,100
11,400 Citrix Systems, Inc.(d) 232,104
9,700 IMS Health, Inc. 227,368
173,100 Microsoft Corp. 4,943,736
----------
6,764,308
----------
Telephone Systems -- 0.2%
7,200 Nextel Communications, Inc., Class A(d) 191,952
----------
See accompanying notes to financial statements.
23
- --------------------------------------------------------------------------------
Westpeak Capital Growth Fund -- Schedule of Investments (continued)
- --------------------------------------------------------------------------------
Investments as of June 30, 2004 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------
Tools -- 1.5%
17,900 Black & Decker Corp.(c) $ 1,112,127
-----------
Transportation -- 0.5%
4,300 FedEx Corp. 351,267
-----------
Total Common Stocks (Identified Cost $76,321,948) 74,023,658
-----------
Principal
Amount
- ----------
Short Term Investments -- 11.6%
$ 640,508 Repurchase Agreement with Investors Bank &
Trust Co. dated 6/30/2004 at 0.70% to be purchased
at $640,520 on 7/01/2004, collateralized by $672,075
Countrywide Home Loans Bond, 1.85%, due 4/25/2033
valued at $672,533 640,508
1,123,349 Bank of America, 1.50%, due 7/21/2004(e) 1,123,349
143,087 Bank of Montreal, 1.20%, due 7/23/2004(e) 143,087
468,062 Bank of Nova Scotia, 1.04%, due 7/06/2004(e) 468,062
1,216,957 BGI Prime Money Market Fund(e) 1,216,957
374,450 BNP Paribas, 1.08%, due 7/02/2004(e) 374,450
374,450 BNP Paribas, 1.08%, due 7/29/2004(e) 374,450
187,225 Caylon, 1.04%, due 7/06/2004(e) 187,225
280,837 Caylon, 1.34%, due 8/24/2004(e) 280,837
25,314 Delaware Funding Corporation, 1.241%, due
7/22/2004(e) 25,314
187,225 Den Danske Bank, 1.03%, due 7/02/2004(e) 187,225
93,647 Fairway Finance, 1.281%, due 7/26/2004(e) 93,647
373,686 Fannie Mae, 1.131%, due 7/14/2004(e) 373,686
93,612 Fortis Bank, 1.19%, due 7/14/2004(e) 93,612
280,837 Greyhawk Funding, 1.221%, due 7/20/2004(e) 280,837
187,225 HBOS Halifax Bank of Scotland, 1.08%, due
7/29/2004(e) 187,225
222,015 Merrill Lynch Premier Institutional Fund(e) 222,015
748,899 Merrimac Cash Fund-Premium Class(e) 748,899
467,254 Prefco, 1.111%, due 7/07/2004(e) 467,254
280,837 Royal Bank of Scotland, 1.05%, due 7/07/2004(e) 280,837
187,225 Royal Bank of Scotland, 1.06%, due 7/30/2004(e) 187,225
280,837 Sheffield Receivables Corp, 1.071%, due 7/01/2004(e) 280,837
187,225 Wells Fargo, 1.19%, due 7/19/2004(e) 187,225
280,837 Wells Fargo, 1.24%, due 7/26/2004(e) 280,837
-----------
Total Short Term Investments (Identified Cost
$8,705,600) 8,705,600
-----------
Total Investments -- 110.2%
(Identified Cost $85,027,548) (b) 82,729,258
Other assets less liabilities (7,682,243)
-----------
Total Net Assets -- 100% $75,047,015
-----------
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information:
At June 30, 2004, the net unrealized depreciation on
investments based on cost of $85,027,548 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 $ 5,031,114
Aggregate gross unrealized depreciation for all investments
in which there is an excess of tax cost over value (7,329,404)
-----------
Net unrealized depreciation $(2,298,290)
===========
At December 31, 2003, the Fund had a capital loss carryover of
approximately $57,629,674 of which $26,648,714 expires on December 31,
2009, $26,883,047 expires on December 31, 2010 and $4,097,913 expires on
December 31, 2011. These amounts may be available to offset future realized
capital gains, if any, to the extent provided by regulations.
(c) All or a portion of this security was on loan to brokers at June 30, 2004.
(d) Non-income producing security.
(e) Represents investments of securities lending collateral.
See accompanying notes to financial statements.
24
Statements of Assets & Liabilities
June 30, 2004 (unaudited)
CGM Advisor Hansberger Harris Associates Harris Associates
Targeted Equity International Focused Value Large Cap Value
Fund Fund Fund Fund
--------------- ------------- ----------------- -----------------
ASSETS
Investments at cost $ 699,634,050 $141,656,020 $311,890,702 $ 335,124,613
Net unrealized appreciation (depreciation) 125,984,007 9,854,058 56,654,756 57,408,515
------------- ------------ ------------ -------------
Investments at value 825,618,057 151,510,078 368,545,458 392,533,128
Receivable for Fund shares sold 94,788 230,609 852,138 428,138
Receivable for securities sold 49,417,606 671,836 -- 2,211,195
Dividends and interest receivable 1,380,725 272,089 347,540 291,230
Tax reclaims receivable 42,850 53,277 -- --
Securities lending income receivable 104,650 12,849 4,020 11,985
------------- ------------ ------------ -------------
TOTAL ASSETS 876,658,676 152,750,738 369,749,156 395,475,676
------------- ------------ ------------ -------------
LIABILITIES
Collateral on securities loaned, at value 83,018,909 20,789,954 23,125,833 37,361,687
Payable for securities purchased 46,928,983 654,998 591,920 --
Payable for Fund shares redeemed 1,196,981 71,985 1,009,062 556,634
Management fees payable 425,622 84,698 283,719 121,733
Deferred Trustees' fees 468,671 56,444 26,389 185,497
Transfer agent fees payable 205,415 60,455 108,977 100,865
Accounting and administrative fees payable 49,126 8,301 18,149 19,292
Deferred expense payable -- -- 36,348 --
Other accounts payable and accrued expenses 140,907 65,692 64,758 74,415
------------- ------------ ------------ -------------
TOTAL LIABILITIES 132,434,614 21,792,527 25,265,155 38,420,123
------------- ------------ ------------ -------------
NET ASSETS $ 744,224,062 $130,958,211 $344,484,001 $ 357,055,553
============= ============ ============ =============
NET ASSETS CONSIST OF:
Paid in capital $ 858,008,701 $135,663,150 $309,676,072 $ 413,771,418
Undistributed (overdistributed) net
investment income (loss) 576,642 (46,947) (1,281,036) (304,323)
Accumulated net realized gain (loss) (240,345,288) (14,513,675) (20,565,791) (113,820,057)
Net unrealized appreciation (depreciation) on
investments and foreign currency translations 125,984,007 9,855,683 56,654,756 57,408,515
------------- ------------ ------------ -------------
NET ASSETS $ 744,224,062 $130,958,211 $344,484,001 $ 357,055,553
============= ============ ============ =============
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE:
Class A shares:
Net assets $ 678,530,599 $ 65,912,468 $103,086,419 $ 221,106,994
============= ============ ============ =============
Shares of beneficial interest 82,846,323 4,306,479 8,656,934 17,509,478
============= ============ ============ =============
Net asset value and redemption price per share $ 8.19 $ 15.31 $ 11.91 $ 12.63
============= ============ ============ =============
Offering price per share $ 8.69 $ 16.24 $ 12.64 $ 13.40
============= ============ ============ =============
Class B shares: (redemption price is equal to
net asset value less any applicable contingent
deferred sales charges)
Net assets $ 54,884,601 $ 50,403,914 $106,273,415 $ 84,525,349
============= ============ ============ =============
Shares of beneficial interest 7,145,365 3,543,254 9,147,374 7,068,530
============= ============ ============ =============
Net asset value and offering price per share $ 7.68 $ 14.23 $ 11.62 $ 11.96
============= ============ ============ =============
Class C shares: (redemption price is equal to
net asset value less any applicable contingent
deferred sales charges)
Net assets $ 2,725,696 $ 14,641,829 $135,124,167 $ 22,874,039
============= ============ ============ =============
Shares of beneficial interest 354,988 1,028,914 11,628,799 1,915,268
============= ============ ============ =============
Net asset value and offering price per share $ 7.68 $ 14.23 $ 11.62 $ 11.94
============= ============ ============ =============
Class Y shares:
Net assets $ 8,083,166 $ -- $ -- $ 28,549,171
============= ============ ============ =============
Shares of beneficial interest 968,859 -- -- 2,204,280
============= ============ ============ =============
Net asset value, offering and
redemption price per share $ 8.34 $ -- $ -- $ 12.95
============= ============ ============ =============
See accompanying notes to financial statements.
25
Vaughan Nelson Westpeak
Small Cap Value Capital Growth
Fund Fund
- --------------- --------------
$123,635,212 $ 85,027,548
4,986,503 (2,298,290)
------------ ------------
128,621,715 82,729,258
72,206 8,572
118,633 573,794
159,676 72,932
30 --
4,149 1,547
------------ ------------
128,976,409 83,386,103
------------ ------------
16,868,041 8,065,092
-- --
139,481 73,489
80,582 46,169
61,196 65,191
58,599 38,202
6,290 4,169
-- --
54,252 46,776
------------ ------------
17,268,441 8,339,088
------------ ------------
$111,707,968 $ 75,047,015
============ ============
$151,192,268 $132,697,186
(895,403) (404,797)
(43,575,400) (54,947,084)
4,986,503 (2,298,290)
------------ ------------
$111,707,968 $ 75,047,015
============ ============
$ 45,231,044 $ 59,858,510
============ ============
3,101,616 5,479,458
============ ============
$ 14.58 $ 10.92
============ ============
$ 15.47 $ 11.59
============ ============
$ 54,373,577 $ 14,109,464
============ ============
3,986,062 1,480,294
============ ============
$ 13.64 $ 9.53
============ ============
$ 12,103,347 $ 1,079,041
============ ============
886,799 113,416
============ ============
$ 13.65 $ 9.51
============ ============
$ -- $ --
============ ============
-- --
============ ============
$ -- $ --
============ ============
26
Statements of Operations
For the Six Months Ended June 30, 2004 (unaudited)
CGM Advisor Hansberger Harris Associates Harris Associates
Targeted Equity International Focused Value Large Cap Value
Fund Fund Fund Fund
--------------- ------------- ----------------- -----------------
INVESTMENT INCOME
Dividends $ 6,281,236 $ 1,962,599 $ 2,458,410 $ 2,372,917
Interest 15,526 6,292 39,501 29,104
Securities lending income 277,257 53,728 14,917 22,850
Less net foreign taxes withheld (364,509) (268,224) -- --
------------ ------------ ----------- -----------
6,209,510 1,754,395 2,512,828 2,424,871
------------ ------------ ----------- -----------
Expenses
Management fees 2,693,437 584,216 1,697,443 1,192,903
Service fees - Class A 885,446 78,276 125,851 273,283
Service and distribution fees - Class B 280,851 280,392 536,942 436,392
Service and distribution fees - Class C 13,535 67,310 657,096 97,520
Trustees' fees and expenses 40,885 8,329 12,366 18,910
Accounting and administrative 262,087 42,950 110,620 115,283
Custodian 64,251 90,360 28,017 33,437
Transfer agent fees - Class A, Class B, Class C 1,258,121 313,927 506,208 634,907
Transfer agent fees - Class Y 9,619 -- -- 18,996
Audit and tax services 13,431 18,157 11,389 11,669
Legal 25,472 4,868 10,654 10,504
Shareholder reporting 67,177 25,096 34,223 41,233
Registration 38,435 24,818 20,999 32,224
Deferred expense reimbursement -- -- 12,846 --
Miscellaneous 33,634 7,229 17,134 17,025
------------ ------------ ----------- -----------
Total expenses before reductions 5,686,381 1,545,928 3,781,788 2,934,286
------------ ------------ ----------- -----------
Less reimbursement/waiver -- (11,186) -- (289,886)
Less reductions (404,500) (13,647) (7,777) (9,870)
------------ ------------ ----------- -----------
Net expenses 5,281,881 1,521,095 3,774,011 2,634,530
------------ ------------ ----------- -----------
Net investment income (loss) 927,629 233,300 (1,261,183) (209,659)
------------ ------------ ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 88,107,957 21,104,353 874,757 8,006,023
Foreign currency transactions - net -- (353,619) -- --
Change in unrealized appreciation (depreciation) on:
Investments - net (65,402,272) (19,147,006) 2,553,205 2,650,797
Foreign currency translations - net -- (5,940) -- --
------------ ------------ ----------- -----------
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 22,705,685 1,597,788 3,427,962 10,656,820
------------ ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 23,633,314 $ 1,831,088 $ 2,166,779 $10,447,161
============ ============ =========== ===========
See accompanying notes to financial statements.
27
Vaughan Nelson Westpeak
Small Cap Value Capital Growth
Fund Fund
- --------------- --------------
$ 475,227 $ 416,386
11,284 2,151
19,516 2,238
------------ -----------
506,027 420,775
------------ -----------
534,789 291,716
56,810 76,915
274,453 75,663
60,449 5,632
8,040 7,357
37,072 25,497
39,853 23,858
296,262 211,451
------------ -----------
17,811 11,566
4,060 3,019
26,863 17,417
27,925 21,738
------------ -----------
10,152 7,707
1,394,539 779,536
-- --
(33,515) (14,290)
------------ -----------
1,361,024 765,246
------------ -----------
(854,997) (344,471)
------------ -----------
18,501,468 2,838,623
(273) --
(12,858,388) (2,160,035)
-- --
------------ -----------
5,642,807 678,588
------------ -----------
$ 4,787,810 $ 334,117
============ ===========
28
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
CGM Advisor Hansberger International
Targeted Equity Fund Fund
-------------------------------- --------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended June 30, Year Ended
2004 December 31, 2004 December 31,
(unaudited) 2003 (unaudited) 2003
---------------- ------------- ---------------- -------------
FROM OPERATIONS:
Net investment income (loss) $ 927,629 $ (3,122,630) $ 233,300 $ (860,042)
Net realized gain (loss) on investments
and foreign currency transactions 88,107,957 106,028,525 20,750,734 4,108,518
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations (65,402,272) 147,570,284 (19,152,946) 34,846,636
------------ ------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations 23,633,314 250,476,179 1,831,088 38,095,112
------------ ------------- ------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
-- -- -- --
------------ ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM CAPITAL SHARE TRANSACTIONS (70,925,011) (115,291,688) (3,488,320) (19,850,820)
------------ ------------- ------------- -------------
Redemption fees
Class A 460 -- 52 --
Class B 37 -- 42 --
Class C 2 -- 12 --
Class Y 5 -- -- --
------------ ------------- ------------- -------------
Total increase (decrease) in net assets (47,291,193) 135,184,491 (1,657,126) 18,244,292
NET ASSETS
Beginning of period 791,515,255 656,330,764 132,615,337 114,371,045
------------ ------------- ------------- -------------
End of period $744,224,062 $ 791,515,255 $ 130,958,211 $ 132,615,337
============ ============= ============= =============
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT
INCOME (LOSS) $ 576,642 $ (350,987) $ (46,947) $ (280,247)
============ ============= ============= =============
See accompanying notes to financial statements.
29
Harris Associates Harris Associates Vaughan Nelson Westpeak
Focused Value Fund Large Cap Value Fund Small Cap Value Fund Capital Growth Fund
- ------------------------------ ------------------------------ ------------------------------ ------------------------------
Six Months Ended Six Months Ended Six Months Ended Six Months Ended
June 30, Year Ended June 30, Year Ended June 30, Year Ended June 30, Year Ended
2004 December 31, 2004 December 31, 2004 December 31, 2004 December 31,
(unaudited) 2003 (unaudited) 2003 (unaudited) 2003 (unaudited) 2003
- ---------------- ------------ ---------------- ------------ ---------------- ------------ ---------------- ------------
$ (1,261,183) $ (2,201,302) $ (209,659) $ (400,858) $ (854,997) $ (2,106,900) $ (344,471) $ (780,856)
874,757 (5,444,642) 8,006,023 (6,367,843) 18,501,195 11,598,714 2,838,623 (1,825,695)
2,553,205 74,168,695 2,650,797 78,036,056 (12,858,388) 22,419,975 (2,160,035) 20,729,574
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------
2,166,779 66,522,751 10,447,161 71,267,355 4,787,810 31,911,789 334,117 18,123,023
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------
-- -- -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------
14,915,585 20,155,440 (1,832,871) 57,978,163 (6,225,783) (14,351,582) (6,326,091) (12,927,717)
2 -- -- -- 1 -- -- --
1 -- -- -- 1 -- -- --
1 -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------
17,082,368 86,678,191 8,614,290 129,245,518 (1,437,971) 17,560,207 (5,991,974) 5,195,306
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------
327,401,633 240,723,442 348,441,263 219,195,745 113,145,939 95,585,732 81,038,989 75,843,683
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------
$344,484,001 $327,401,633 $357,055,553 $348,441,263 $111,707,968 $113,145,939 $75,047,015 $ 81,038,989
============ ============ ============ ============ ============ ============ =========== ============
$ (1,281,036) $ (19,853) $ (304,323) $ (94,664) $ (895,403) $ (40,406) $ (404,797) $ (60,326)
============ ============ ============ ============ ============ ============ =========== ============
30
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share outstanding throughout each period.
Income (loss) from investment operations:
Net asset -----------------------------------------
value, Net Net realized
beginning investment and unrealized Total from
of income gain (loss) on investment
the period (loss) investments operations
---------- ---------- -------------- ----------
CGM Advisor Targeted Equity Fund
Class A
6/30/2004(h) $ 7.94 $ 0.01(c) $ 0.24 $ 0.25
12/31/2003 5.56 (0.03)(c) 2.41 2.38
12/31/2002 7.81 (0.06)(c) (2.19) (2.25)
12/31/2001 9.36 (0.03)(c) (1.49) (1.52)
12/31/2000 11.00 0.09(c) (0.60) (0.51)
12/31/1999 11.36 0.02 1.57 1.59
Class B
6/30/2004(h) 7.47 (0.02)(c) 0.23 0.21
12/31/2003 5.28 (0.07)(c) 2.26 2.19
12/31/2002 7.47 (0.11)(c) (2.08) (2.19)
12/31/2001 9.02 (0.09)(c) (1.43) (1.52)
12/31/2000 10.67 0.01(c) (0.58) (0.57)
12/31/1999 11.15 (0.05) 1.52 1.47
Class C
6/30/2004(h) 7.47 (0.02)(c) 0.23 0.21
12/31/2003 5.27 (0.07)(c) 2.27 2.20
12/31/2002 7.47 (0.11)(c) (2.09) (2.20)
12/31/2001 9.02 (0.09)(c) (1.43) (1.52)
12/31/2000 10.67 0.01(c) (0.58) (0.57)
12/31/1999 11.15 (0.05) 1.52 1.47
Class Y
6/30/2004(h) 8.07 0.03(c) 0.24 0.27
12/31/2003 5.63 0.01(c) 2.43 2.44
12/31/2002 7.85 (0.02)(c) (2.20) (2.22)
12/31/2001 9.37 0.01(c) (1.50) (1.49)
12/31/2000 11.01 0.12(c) (0.60) (0.48)
12/31/1999(d) 11.94 0.03 0.99 1.02
Hansberger International Fund
Class A
6/30/2004(h) $15.07 $ 0.06(c) $ 0.18 $ 0.24
12/31/2003 10.84 (0.04)(c) 4.27 4.23
12/31/2002 13.02 (0.05)(c) (2.08) (2.13)
12/31/2001 14.42 0.13(c) (1.42) (1.29)
12/31/2000 19.90 (0.02)(c) (2.43) (2.45)
12/31/1999 16.08 (0.07)(c) 5.98 5.91
Class B
6/30/2004(h) 14.06 (0.01)(c) 0.18 0.17
12/31/2003 10.19 (0.12)(c) 3.99 3.87
12/31/2002 12.32 (0.14)(c) (1.94) (2.08)
12/31/2001 13.74 0.03(c) (1.36) (1.33)
12/31/2000 19.26 (0.16)(c) (2.33) (2.49)
12/31/1999 15.73 (0.20)(c) 5.82 5.62
Less distributions:
-----------------------------------------------------------
Dividends Distributions
from from net
net investment realized Total Redemption
income capital gains distributions fee
-------------- ------------- ------------- ----------
CGM Advisor Targeted Equity Fund
Class A
6/30/2004(h) $ -- $ -- $ -- $0.00(i)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 (0.03) -- (0.03) --
12/31/2000 (0.06) (1.07) (1.13) --
12/31/1999 -- (1.95) (1.95) --
Class B
6/30/2004(h) -- -- -- 0.00(i)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 (0.03) -- (0.03) --
12/31/2000 (0.01) (1.07) (1.08) --
12/31/1999 -- (1.95) (1.95) --
Class C
6/30/2004(h) -- -- -- 0.00(i)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 (0.03) -- (0.03) --
12/31/2000 (0.01) (1.07) (1.08) --
12/31/1999 -- (1.95) (1.95) --
Class Y
6/30/2004(h) -- -- -- 0.00(i)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 (0.03) -- (0.03) --
12/31/2000 (0.09) (1.07) (1.16) --
12/31/1999(d) -- (1.95) (1.95) --
Hansberger International Fund
Class A
6/30/2004(h) $ -- $ -- $ -- 0.00(i)
12/31/2003 -- -- -- --
12/31/2002 (0.05) -- (0.05) --
12/31/2001 (0.03) (0.08) (0.11) --
12/31/2000 -- (3.03) (3.03) --
12/31/1999 -- (2.09) (2.09) --
Class B
6/30/2004(h) -- -- -- 0.00(i)
12/31/2003 -- -- -- --
12/31/2002 (0.05) -- (0.05) --
12/31/2001 (0.01) (0.08) (0.09) --
12/31/2000 -- (3.03) (3.03) --
12/31/1999 -- (2.09) (2.09) --
(a) A sales charge for Class A 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) 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.
(c) Per share net investment income (loss) has been calculated using the
average shares outstanding during the period.
(d) For the period June 30, 1999 (inception) through December 31, 1999.
(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, expenses would have been
higher.
(g) Computed on an annualized basis for periods less than one year.
(h) For the six months ended June 30, 2004 (unaudited).
(i) Amount rounds to less than $0.01 per share.
See accompanying notes to financial statements.
31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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) (%)(g) (%) (b)(g) (%) (g) rate (%)
- ---------- ------- ----------- -------- ------------- -------------- ---------
$ 8.19 3.2 $ 678,531 1.41 1.31 0.29 138
7.94 42.8 724,214 1.57 1.48 (0.40) 261
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
7.68 2.8 54,885 2.16 2.06 (0.44) 138
7.47 41.5 56,880 2.32 2.23 (1.14) 261
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
7.68 2.8 2,726 2.16 2.06 (0.43) 138
7.47 41.8 2,647 2.32 2.23 (1.14) 261
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
8.34 3.4 8,083 1.08 0.97 0.65 138
8.07 43.3 7,773 1.03 0.94 0.16 261
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
$15.31 1.6(e) $ 65,912 1.93(f) 1.91(f) 0.81 66
15.07 39.0(e) 59,762 2.30(f) 2.27(f) (0.34) 92
10.84 (16.4) 50,053 2.19 2.18 (0.45) 91
13.02 (9.0) 71,536 2.12 2.10 0.98 110
14.42 (12.2) 102,507 2.01 2.01 (0.13) 175
19.90 37.6 126,415 2.06 2.06 (0.42) 91
14.23 1.2(e) 50,404 2.68(f) 2.66(f) (0.09) 66
14.06 38.0(e) 60,296 3.05(f) 3.02(f) (1.09) 92
10.19 (17.0) 53,306 2.94 2.93 (1.20) 91
12.32 (9.7) 82,861 2.87 2.85 0.23 110
13.74 (12.8) 114,450 2.76 2.76 (0.88) 175
19.26 36.6 141,338 2.81 2.81 (1.17) 91
32
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share outstanding throughout each period.
Income (loss) from investment operations:
Net asset -----------------------------------------
value, Net Net realized
beginning investment and unrealized Total from
of income gain (loss) on investment
the period (loss) investments operations
---------- ---------- -------------- ----------
Hansberger International Fund (continued)
Class C
6/30/2004(i) $14.06 $ 0.00 (c) $ 0.17 $ 0.17
12/31/2003 10.19 (0.12)(c) 3.99 3.87
12/31/2002 12.33 (0.14)(c) (1.95) (2.09)
12/31/2001 13.75 0.03(c) (1.36) (1.33)
12/31/2000 19.27 (0.16)(c) (2.33) (2.49)
12/31/1999 15.75 (0.21)(c) 5.82 5.61
Harris Associates Focused Value Fund
Class A
6/30/2004(i) $11.79 $(0.01)(c) $ 0.13 $ 0.12
12/31/2003 9.24 (0.03)(c) 2.58 2.55
12/31/2002 10.96 (0.03)(c) (1.69) (1.72)
12/31/2001(g) 10.00 (0.01)(c) 0.97 0.96
Class B
6/30/2004(i) 11.55 (0.06)(c) 0.13 0.07
12/31/2003 9.12 (0.10)(c) 2.53 2.43
12/31/2002 10.90 (0.11)(c) (1.67) (1.78)
12/31/2001(g) 10.00 (0.07)(c) 0.97 0.90
Class C
6/30/2004(i) 11.55 (0.06)(c) 0.13 0.07
12/31/2003 9.12 (0.10)(c) 2.53 2.43
12/31/2002 10.90 (0.11)(c) (1.67) (1.78)
12/31/2001(g) 10.00 (0.07)(c) 0.97 0.90
Harris Associates Large Cap Value Fund
Class A
6/30/2004(i) $12.25 $ 0.01(c) $ 0.37 $ 0.38
12/31/2003 9.42 0.01(c) 2.82 2.83
12/30/2002 11.78 0.01(c) (2.37) (2.36)
12/31/2001 13.79 (0.01)(c) (2.00) (2.01)
12/31/2000 15.33 0.01(c) (1.09) (1.08)
12/31/1999 16.57 0.08 1.40 1.48
Class B
6/30/2004(i) 11.64 (0.04)(c) 0.36 0.32
12/31/2003 9.02 (0.07)(c) 2.69 2.62
12/31/2002 11.37 (0.07)(c) (2.28) (2.35)
12/31/2001 13.40 (0.10)(c) (1.93) (2.03)
12/31/2000 15.03 (0.10)(c) (1.07) (1.17)
12/31/1999 16.37 (0.04) 1.36 1.32
Less distributions:
-----------------------------------------------------------
Dividends Distributions
from from net
net investment realized Total Redemption
income capital gains distributions fee
-------------- ------------- ------------- ----------
Hansberger International Fund (continued)
Class C
6/30/2004(i) $ -- $ -- $ -- $0.00(j)
12/31/2003 -- -- -- --
12/31/2002 (0.05) -- (0.05) --
12/31/2001 (0.01) (0.08) (0.09) --
12/31/2000 -- (3.03) (3.03) --
12/31/1999 -- (2.09) (2.09) --
Harris Associates Focused Value Fund
Class A
6/30/2004(i) $ -- $ -- $ -- $0.00(j)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001(g) -- -- -- --
Class B
6/30/2004(i) -- -- -- 0.00(j)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001(g) -- -- -- --
Class C
6/30/2004(i) -- -- -- 0.00(j)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001(g) -- -- -- --
Harris Associates Large Cap Value Fund
Class A
6/30/2004(i) $ -- $ -- $ -- $ --
12/31/2003 -- -- -- --
12/30/2002 -- -- -- --
12/31/2001 -- -- -- --
12/31/2000 -- (0.46) (0.46) --
12/31/1999 (0.06) (2.66) (2.72) --
Class B
6/30/2004(i) -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 -- -- -- --
12/31/2000 -- (0.46) (0.46) --
12/31/1999 -- (2.66) (2.66) --
(a) A sales charge for Class A 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) 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.
(c) Per share net investment income (loss) has been calculated using the
average shares outstanding during the period.
(d) 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.
(e) Had certain expenses not been reduced during the period, total return would
have been lower.
(f) Portfolio turnover excludes the impact of an increase in assets as a result
of a merger with another Fund.
(g) For the period March 15, 2001 (inception) through December 31, 2001.
(h) Computed on an annualized basis for periods less than one year.
(i) For the six months ended June 30, 2004 (unaudited).
(j) Amount rounds to less than $0.01 per share.
See accompanying notes to financial statements.
33
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) (%)(h) (%)(b)(h) (%)(h) rate(%)
- ---------- ------ ----------- -------- ------------- -------------- ---------
$14.23 1.2(e) $ 14,642 2.68(d) 2.66(d) 0.07 66
14.06 38.0(e) 12,557 3.05(d) 3.02(d) (1.09) 92
10.19 (17.0) 11,013 2.94 2.93 (1.20) 91
12.33 (9.7) 16,493 2.87 2.85 0.23 110
13.75 (12.8) 23,949 2.76 2.76 (0.88) 175
19.27 36.5 28,703 2.81 2.81 (1.17) 91
$11.91 1.0(e) $103,086 1.70(d) 1.70(d) (0.21) 13
11.79 27.6(e) 95,957 1.70(d) 1.69(d) (0.28) 30
9.24 (15.7)(e) 68,660 1.70(d) 1.69(d) (0.35) 12
10.96 9.6(e) 45,987 1.70(d) 1.63(d) (0.08) 10
11.62 0.6(e) 106,273 2.45(d) 2.45(d) (0.97) 13
11.55 26.6(e) 107,017 2.45(d) 2.44(d) (1.03) 30
9.12 (16.3)(e) 85,794 2.45(d) 2.44(d) (1.10) 12
10.90 9.0(e) 62,671 2.45(d) 2.39(d) (0.83) 10
11.62 0.6(e) 135,124 2.45(d) 2.45(d) (0.97) 13
11.55 26.6(e) 124,427 2.45(d) 2.44(d) (1.03) 30
9.12 (16.3)(e) 86,269 2.45(d) 2.44(d) (1.10) 12
10.90 9.0(e) 34,406 2.45(d) 2.39(d) (0.86) 10
$12.63 3.1(e) $221,107 1.30(d) 1.29(d) 0.08 15(f)
12.25 30.0(e) 215,259 1.45(d) 1.43(d) 0.07 30(f)
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
11.96 2.8(e) 84,525 2.05(d) 2.05(d) (0.67) 15(f)
11.64 29.1(e) 91,085 2.20(d) 2.18(d) (0.69) 30(f)
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
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 from net
of income gain (loss) on investment net investment realized Total Redemption
the period (loss) investments operations income capital gains distributions fee
---------- ---------- -------------- ---------- -------------- ------------- ------------- ----------
Harris Associates Large Cap Value Fund (continued)
Class C
6/30/2004(h) $11.63 $(0.04)(c) $ 0.35 $ 0.31 $ -- $ -- $ -- $ --
12/31/2003 9.01 (0.07)(c) 2.69 2.62 -- -- -- --
12/31/2002 11.36 (0.07)(c) (2.28) (2.35) -- -- -- --
12/31/2001 13.38 (0.10)(c) (1.92) (2.02) -- -- -- --
12/31/2000 15.01 (0.10)(c) (1.07) (1.17) -- (0.46) (0.46) --
12/31/1999 16.35 (0.04) 1.36 1.32 -- (2.66) (2.66) --
Class Y
6/30/2004(h) 12.54 0.03(c) 0.38 0.41 -- -- -- --
12/31/2003 9.59 0.06(c) 2.89 2.95 -- -- -- --
12/31/2002 11.93 0.07(c) (2.41) (2.34) -- -- -- --
12/31/2001 13.87 0.06(c) (2.00) (1.94) -- -- -- --
12/31/2000 15.36 0.07(c) (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) --
Vaughan Nelson Small Cap Value Fund
Class A
6/30/2004(h) $13.94 $(0.08)(c) $ 0.72 $ 0.64 $ -- $ -- $ -- $0.00(i)
12/31/2003 10.05 (0.19)(c) 4.08 3.89 -- -- -- --
12/31/2002 14.52 (0.21)(c) (4.26) (4.47) -- -- -- --
12/31/2001 16.51 (0.21)(c) (1.78) (1.99) -- -- -- --
12/31/2000 23.42 (0.28) (2.30) (2.58) -- (4.33) (4.33) --
12/31/1999 15.66 (0.27) 10.22 9.95 -- (2.19) (2.19) --
Class B
6/30/2004(h) 13.08 (0.12)(c) 0.68 0.56 -- -- -- 0.00(i)
12/31/2003 9.51 (0.26)(c) 3.83 3.57 -- -- -- --
12/31/2002 13.84 (0.28)(c) (4.05) (4.33) -- -- -- --
12/31/2001 15.86 (0.30)(c) (1.72) (2.02) -- -- -- --
12/31/2000 22.85 (0.44) (2.22) (2.66) -- (4.33) (4.33) --
12/31/1999 15.43 (0.39) 10.00 9.61 -- (2.19) (2.19) --
Class C
06/30/2004(h) 13.09 (0.12)(c) 0.68 0.56 -- -- -- --
12/31/2003 9.51 (0.26)(c) 3.84 3.58 -- -- -- --
12/31/2002 13.84 (0.28)(c) (4.05) (4.33) -- -- -- --
12/31/2001 15.86 (0.30)(c) (1.72) (2.02) -- -- -- --
12/31/2000 22.85 (0.44) (2.22) (2.66) -- (4.33) (4.33) --
12/31/1999 15.43 (0.39) 10.00 9.61 -- (2.19) (2.19) --
(a) A sales charge for Class A 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) 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.
(c) Per share net investment income (loss) has been calculated using the
average shares outstanding during the period.
(d) 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.
(e) Had certain expenses not been reduced during the period, total return would
have been lower.
(f) Portfolio turnover excludes the impact of assets as a result of a merger
with another Fund.
(g) Computed on an annualized basis for periods less than one year.
(h) For the six months ended June 30, 2004 (unaudited).
(i) Amount rounds to less than $0.01 per share.
See accompanying notes to financial statements.
35
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) (%)(g) (%)(b)(g) (%)(g) rate(%)
- ---------- ------ ----------- -------- ------------- -------------- ---------
$11.94 2.7(e) $ 22,874 2.05(d) 2.05(d) (0.67) 15(f)
11.63 29.1(e) 15,553 2.20(d) 2.18(d) (0.69) 30(f)
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
12.95 3.3 28,549 0.98 0.97 0.41 15(f)
12.54 30.8 26,545 1.01 0.99 0.51 30(f)
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
$14.58 4.6 $ 45,231 2.03 1.97 (1.07) 137
13.94 38.7 45,442 2.33 2.31 (1.69) 156
10.05 (30.8) 38,441 2.13 2.11 (1.72) 160
14.52 (12.1) 69,873 2.08 2.07 (1.43) 174
16.51 (12.2) 89,714 1.88 1.88 (1.19) 216
23.42 65.4 84,725 2.06 2.06 (1.54) 263
13.64 4.3 54,374 2.78 2.72 (1.82) 137
13.08 37.5 55,662 3.08 3.06 (2.44) 156
9.51 (31.3) 46,215 2.88 2.86 (2.47) 160
13.84 (12.7) 82,060 2.83 2.82 (2.18) 174
15.86 (12.9) 107,083 2.63 2.63 (1.94) 216
22.85 64.1 102,029 2.81 2.81 (2.29) 263
13.65 4.3 12,103 2.78 2.72 (1.82) 137
13.09 37.6 12,042 3.08 3.06 (2.44) 156
9.51 (31.3) 10,930 2.88 2.86 (2.47) 160
13.84 (12.7) 22,047 2.83 2.82 (2.18) 174
15.86 (12.9) 28,090 2.63 2.63 (1.94) 216
22.85 64.1 26,027 2.81 2.81 (2.29) 263
36
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share outstanding throughout each period.
Income (loss) from investment operations:
-----------------------------------------
Net asset
value, Net Net realized
beginning investment and unrealized Total from
of income gain (loss) on investment
the period (loss)(c) investments operations
---------- ---------- -------------- -----------
Westpeak Capital Growth Fund
- ----------------------------
Class A
6/30/2004(e) $10.87 $(0.04) $ 0.09 $ 0.05
12/31/2003 8.58 (0.08) 2.37 2.29
12/31/2002 11.93 (0.09) (3.26) (3.35)
12/31/2001 15.04 (0.13) (2.95) (3.08)
12/31/2000 22.86 (0.18) (4.14) (4.32)
12/31/1999 20.67 (0.13) 5.05 4.92
Class B
6/30/2004(e) 9.52 (0.07) 0.08 0.01
12/31/2003 7.56 (0.13) 2.09 1.96
12/31/2002 10.61 (0.15) (2.90) (3.05)
12/31/2001 13.47 (0.20) (2.63) (2.83)
12/31/2000 21.06 (0.32) (3.77) (4.09)
12/31/1999 19.37 (0.27) 4.69 4.42
Class C
6/30/2004(e) 9.50 (0.07) 0.08 0.01
12/31/2003 7.56 (0.13) 2.07 1.94
12/31/2002 10.60 (0.14) (2.90) (3.04)
12/31/2001 13.47 (0.20) (2.64) (2.84)
12/31/2000 21.06 (0.32) (3.77) (4.09)
12/31/1999 19.37 (0.27) 4.69 4.42
Less distributions:
----------------------------------------------
Dividends Distributions
from from net
net investment realized Total Redemption
income capital gains distributions fee
-------------- ------------- ------------- ----------
Westpeak Capital Growth Fund
- ----------------------------
Class A
6/30/2004(e) $-- $ -- $ -- $--
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 -- (0.03) (0.03) --
12/31/2000 -- (3.50) (3.50) --
12/31/1999 -- (2.73) (2.73) --
Class B
6/30/2004(e) -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 -- (0.03) (0.03) --
12/31/2000 -- (3.50) (3.50) --
12/31/1999 -- (2.73) (2.73) --
Class C
6/30/2004(e) -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 -- (0.03) (0.03) --
12/31/2000 -- (3.50) (3.50) --
12/31/1999 -- (2.73) (2.73) --
(a) A sales charge for Class A 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) 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.
(c) Per share net investment income (loss) has been calculated using the
average shares outstanding during the period.
(d) Computed on an annualized basis for periods less than one year.
(e) For the six months ended June 30, 2004 (unaudited).
See accompanying notes to financial statements.
37
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) (%)(d) (%)(b)(d) (%)(d) rate(%)
- ---------- -------- ----------- -------- ------------- --------------- ---------
$10.92 0.5 $ 59,859 1.85 1.81 (0.73) 64
10.87 26.7 63,380 1.93 1.89 (0.85) 107
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
9.53 0.1 14,109 2.60 2.56 (1.48) 64
9.52 25.9 16,485 2.68 2.64 (1.60) 107
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
9.51 0.1 1,079 2.60 2.56 (1.48) 64
9.50 25.7 1,174 2.68 2.64 (1.60) 107
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
38
- --------------------------------------------------------------------------------
Notes To Financial Statements
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2004 (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 ("1940 Act"), 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 Funds
are included in this report:
CDC Nvest Funds Trust I:
CGM Advisor Targeted Equity Fund (the "Targeted Equity Fund")
Hansberger International Fund (the "International Fund"), formerly CDC Nvest
Star International Fund
Vaughan Nelson Small Cap Value Fund (the "Small Cap Value Fund"), formerly CDC
Nvest Star Small Cap Fund
Westpeak Capital Growth Fund (the "Capital Growth Fund")
CDC Nvest Funds Trust II:
Harris Associates Large Cap Value Fund (the "Large Cap Value Fund"), formerly
Harris Associates Growth and Income Fund
CDC Nvest Funds Trust III:
Harris Associates Focused Value Fund (the "Focused Value Fund")
Each Fund offers Class A, Class B, and Class C shares. Targeted Equity Fund and
Large Cap Value 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 do not pay a front end
sales charge, 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. Prior to February 1, 2004 a
1% front end sales charge was imposed on Class C shares. 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 for which market quotations are readily
available are valued at market price on the basis of valuations furnished to the
Fund by a pricing service which has been authorized by the Board of 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. 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 for which market quotations are readily available (other than
short-term obligations with a remaining maturity of less than sixty days) are
generally valued at market price 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, pursuant to the procedures
approved by the Board of 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, and 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.
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.
39
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2004 (unaudited)
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 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 102%
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 102% of 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, 2004,
purchases and sales of securities (excluding short-term investments) were as
follows:
Fund Purchases Sales
- ---- --------- -----
Targeted Equity Fund $1,066,862,548 $1,134,794,195
International Fund 85,590,997 89,219,902
Focused Value Fund 54,670,572 39,543,192
Large Cap Value Fund 51,107,227 61,200,743
Small Cap Value Fund 141,226,384 151,085,315
Capital Growth Fund 49,558,774 56,553,221
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:
Percentage of Average Daily Net Assets
--------------------------------------------------------------------
First Next Next Next Over
Fund $200 million $300 million $500 million $1 billion $2 billion
- ---- ------------ ------------ ------------ ---------- ----------
Targeted Equity Fund 0.750% 0.700% 0.650% 0.650% 0.600%
International Fund 0.800% 0.750% 0.750% 0.750% 0.750%
Focused Value Fund 1.000% 1.000% 1.000% 0.950% 0.950%
Large Cap Value Fund 0.700% 0.650% 0.600% 0.600% 0.600%
Small Cap Value Fund 0.900% 0.900% 0.900% 0.900% 0.900%
Capital Growth Fund 0.750% 0.700% 0.650% 0.650% 0.650%
40
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2004 (unaudited)
Prior to March 1, 2004, the International Fund and Small Cap Value Fund each
paid management fees at the annual rate of 1.05% of each Fund's average daily
net assets.
For the six months ended June 30, 2004, 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
- ---- ---------- ---------- ---------- ----- -----
Targeted Equity Fund $2,693,437 $ -- $2,693,437 0.700% 0.700%
International Fund 584,216 11,186 573,030 0.880% 0.870%
Focused Value Fund 1,697,443 -- 1,697,443 1.000% 1.000%
Large Cap Value Fund 1,192,903 -- 1,192,903 0.680% 0.680%
Small Cap Value Fund 534,789 -- 534,789 0.950% 0.950%
Capital Growth Fund 291,716 -- 291,716 0.750% 0.750%
* 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.
International Fund Hansberger Global Investors, Inc.
Focused Value Fund Harris Associates L.P.
Large Cap Value Fund Harris Associates L.P.
Small Cap Value Fund Vaughan Nelson Investment Management, L.P.
Capital Growth Fund Westpeak Global Advisors, 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 North America. Certain officers and directors
of CDC IXIS Advisers are also officers or Trustees of the Funds.
Broker commissions paid to affiliated broker/dealers by the Funds were as
follows:
Fund Commission
- ---- ----------
Focused Value Fund $ 5,832
Large Cap Value Fund 6,156
Small Cap Value Fund 4,371
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 Co. ("IBT") to serve as
subadministrator. Pursuant to an agreement among CDC Nvest Funds Trust I, CDC
Nvest Funds Trust II, CDC Nvest Funds Trust III, CDC Nvest Cash Management
Trust, CDC Nvest Companies Trust I (the "CDC Nvest Funds Trusts"), Loomis Sayles
Funds I, Loomis Sayles Funds II (the "Loomis Sayles Funds Trusts") 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
---------- ---------- -----------
0.0675% 0.0625% 0.0500%
or
(2) Each Fund's pro rata portion, allocated based on the combined
assets of the CDC Nvest Funds Trusts and the Loomis Sayles Funds Trusts of the
annual aggregate minimum fee of $5 million.
For the six months ended June 30, 2004, amounts paid to CIS for accounting and
administrative expense were as follows:
Accounting
And
Fund Administrative
- ---- --------------
Targeted Equity Fund $262,087
International Fund 42,950
Focused Value Fund 110,620
Large Cap Value Fund 115,283
Small Cap Value Fund 37,072
Capital Growth Fund 25,497
41
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2004 (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 sub-transfer 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) An 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 accounts
in Load Equity funds. Load Equity funds consist of all equity
funds within the CDC Nvest Funds Trusts, Loomis Sayles Growth
Fund, Loomis Sayles International Equity Fund and Loomis Sayles
Research Fund.
First Next Over
$5.7 billion $5 billion $10.7 billion
------------ ---------- -------------
0.184% 0.180% 0.175%
Each Class of shares is subject to a monthly Class minimum of
$1,500 allocated based on the combined assets of Class A, Class B and
Class C.
or
(2) An allocated portion, based on eligible assets, of a minimum
annual aggregate fee of $8.4 million.
Class Y pays service fees monthly representing the higher amount based on the
following calculations:
(1) An annual aggregate fee determined by applying an annual rate of
0.026% to the eligible average daily net assets. Eligible assets
are the average daily net assets of all accounts in No-Load
Retail Funds* and Load Funds - Class Y**.
Class Y shares are subject to a monthly Class minimum of $1,250.
or
(2) An allocated portion, based on eligible assets of a minimum
annual aggregate fee of $650,000.
* No-Load Retail Funds consist of Loomis Sayles Aggressive Growth Fund, Loomis
Sayles Bond Fund, Loomis Sayles Global Bond Fund, Loomis Sayles Small Cap Growth
Fund, Loomis Sayles Small Cap Value Fund, Loomis Sayles Tax-Managed Equity Fund,
Loomis Sayles Value Fund and Loomis Sayles Worldwide Fund.
** Load Funds - Class Y consist of all Funds with Class Y offered within the CDC
Nvest Funds Trusts and Loomis Sayles Funds Trusts.
In addition, pursuant to other servicing agreements, the Funds pay service fees
to other firms that provide similar services for their own shareholder accounts.
CIS and BFDS and other firms are also reimbursed by the Funds for out-of-pocket
expenses. For the six months ended June 30, 2004, amounts paid to CIS as
compensation for its services as transfer agent were as follows:
Transfer Agent
Fund Fee
- ---- --------------
Targeted Equity Fund $1,034,856
International Fund 242,090
Focused Value Fund 332,295
Large Cap Value Fund 505,922
Small Cap Value Fund 212,968
Capital Growth Fund 167,087
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
42
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2004 (unaudited)
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, 2004, the Funds paid the following service and
distribution fees:
Service Fee Distribution Fee
------------------------------- -------------------
Fund Class A Class B Class C Class B Class C
- ---- --------- -------- -------- -------- --------
Targeted Equity Fund $885,446 $ 70,213 $ 3,384 $210,638 $ 10,151
International Fund 78,276 70,098 16,828 210,294 50,482
Focused Value Fund 125,851 134,236 164,274 402,706 492,822
Large Cap Value Fund 273,283 109,098 24,380 327,294 73,140
Small Cap Value Fund 56,810 68,613 15,112 205,840 45,337
Capital Growth Fund 76,915 18,916 1,408 56,747 4,224
Commissions (including CDSC) on Fund shares paid to CDC IXIS Distributors by
investors in shares of the Funds during the six months ended June 30, 2004 were
as follows:
Fund
- ----
Targeted Equity Fund $225,507
International Fund 81,586
Focused Value Fund 289,908
Large Cap Value Fund 226,245
Small Cap Value Fund 79,474
Capital Growth Fund 46,227
e. Trustees Fees and Expenses. The Trust does not pay any compensation directly
to its officers or Trustees who are directors, officers or employees of CDC IXIS
Advisers, CDC IXIS Asset Management Distributors, L.P., CDC IXIS North America,
CIS or its 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 or Committee meeting in excess of four per
year, at the rate of $4,500 and $1,750, respectively. These fees are allocated
to the various series of the Trust based on a formula that takes into account,
among other factors, the relative net assets of each Fund. Trustees are
reimbursed for travel expenses in connection with attendance at meetings.
Effective July 1, 2004, each independent Trustee will receive, in the aggregate,
a retainer fee at the annual rate of $50,000 and meeting attendance fees of
$5,000 for each meeting of the Board of Trustees that he or she attends. Each
committee chairman will receive an additional retainer fee at the annual rate of
$7,000. Each Trustee will be compensated $3,750 per Committee meeting that he or
she attends.
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
the Trust or certain other series of the Trusts on the normal payment date.
Deferred amounts remain in the Trust 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, 2004, amounts paid to
CIS as compensation for these services were as follows:
Publishing
Fund Services Fee
- ---- ------------
Targeted Equity Fund $127
International Fund 395
Focused Value Fund 127
Large Cap Value Fund 99
Small Cap Value Fund 462
Capital Growth Fund 99
g. Redemption fees. Shareholders of Class A shares of Targeted Equity Fund,
Focused Value Fund and International Fund will be charged a 2% redemption fee if
they redeem, including redeeming by exchange, Class A shares of these Funds
within 60 days of their acquisition (including acquisition by exchange). The
redemption fee is intended to offset the costs to the Funds of short-term
trading, such as portfolio transaction and market impact costs associated with
redemption activity and administrative costs associated with processing
redemptions. The redemption fee is deducted from the shareholder's redemption or
exchange proceeds and is paid to the Fund. The "first-in, first-out" (FIFO)
method is used to determine the holding period of redeemed or exchanged shares,
which means that if you acquired shares on different days, the shares acquired
first will be redeemed or exchanged first for purposes of determining whether
the redemption fee applies. A new holding period begins with each purchase or
exchange. These fees are broken out on the Statements of Changes in Net Assets.
43
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2004 (unaudited)
5. Line of Credit. Each Fund along with certain other 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, 2004.
6. 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, 2004, were as follows:
Market Value of Value of Collateral
Fund Securities on Loan Received
- ---- ------------------ -------------------
Targeted Equity Fund $80,307,478 $83,018,909
International Fund 19,914,076 20,789,954
Focused Value Fund 22,385,332 23,125,833
Large Cap Value Fund 36,206,173 37,361,687
Small Cap Value Fund 16,248,997 16,868,041
Capital Growth Fund 7,845,514 8,065,092
7. 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, 2004, expenses were reduced under these agreements as
follows:
Fund Reductions
- ---- ----------
Targeted Equity Fund $404,500
International Fund 13,647
Focused Value Fund 7,777
Large Cap Value Fund 9,870
Small Cap Value Fund 33,515
Capital Growth Fund 14,290
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. These undertakings are in effect until
the dates under "Expiration of Waiver" below and will be reevaluated on an
annual basis. For the six months ended June 30, 2004, certain class level
expenses have been reimbursed as follows: Large Cap Value Fund $289,886.
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. For the six months ended June
30, 2004, the investment adviser has been reimbursed by Focused Value Fund for
$12,846 of expenses deferred in 2003.
At June 30, 2004, 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:
Expenses Subject Expenses Subject Total
to Possible to Possible Expenses Subject
Expense Limit as a Percentage Expiration Reimbursement Reimbursement to Possible
of Average Daily Net Assets of Waiver through 2004 through 2005 Reimbursement
---------------------------------- -------------- ---------------- ---------------- ----------------
Fund Class A Class B Class C Class Y
- ---- ------- ------- ------- -------
Focused Value Fund 1.70% 2.45% 2.45% -- April 30, 2005 $377,187 $ 0 $377,187
Large Cap Value Fund 1.30% 2.05% 2.05% 1.05% April 30, 2005 471,915 289,886 761,801
8. Concentration of Risk. Focused Value 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.
International Fund had the following geographic concentrations in excess of 10%
of its total net assets at June 30, 2004: France 13.9%, Japan 17.9%, and United
Kingdom 19.2%. The Fund pursues its objective by investing in foreign
securities. There are certain risks involved in investing in foreign securities
that 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.
44
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2004 (unaudited)
9. Capital Shares. Each Fund may issue an unlimited number of shares of
beneficial interest. Transactions in capital shares were as follows:
CGM Advisor Targeted Equity Fund
--------------------------------------------------------
Six Months Ended
June 30, 2004 Year Ended
(unaudited) December 31, 2003
-------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------ ----------- -------------
Class A:
Shares sold 1,852,394 $ 15,296,677 3,272,602 $ 21,476,490
Shares repurchased (10,228,859) (82,768,301) (20,406,401) (130,309,788)
----------- ------------ ----------- -------------
Net increase (decrease) (8,376,465) $(67,471,624) (17,133,799) $(108,833,298)
----------- ------------ ----------- -------------
Class B:
Shares sold 320,631 $ 2,457,246 703,119 $ 4,292,342
Shares repurchased (786,760) (5,969,249) (1,738,618) (10,346,801)
----------- ------------ ----------- -------------
Net increase (decrease) (466,129) $ (3,512,003) (1,035,499) $ (6,054,459)
----------- ------------ ----------- -------------
Class C:
Shares sold 33,280 $ 254,719 38,555 $ 239,637
Shares repurchased (32,669) (248,294) (98,860) (579,017)
----------- ------------ ----------- -------------
Net increase (decrease) 611 $ 6,425 (60,305) $ (339,380)
----------- ------------ ----------- -------------
Class Y:
Shares sold 51,380 $ 422,989 98,496 $ 670,426
Shares repurchased (45,322) (370,798) (117,263) (734,977)
----------- ------------ ----------- -------------
Net increase (decrease) 6,058 $ 52,191 (18,767) $ (64,551)
----------- ------------ ----------- -------------
Increase (decrease) derived from capital shares transactions (8,835,925) $(70,925,011) (18,248,370) $(115,291,688)
=========== ============ =========== =============
45
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
- --------------------------------------------------------------------------------
Hansberger International Fund Harris Associates Focused Value Fund
- --------------------------------------------------- ----------------------------------------------------
Six Months Ended Six Months Ended
June 30, 2004 Year Ended June 30, 2004 Year Ended
(unaudited) December 31, 2003 (unaudited) December 31, 2003
- ----------------------- ------------------------- ------------------------ -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
773,920 $ 11,835,596 5,487,733 $ 61,630,766 1,487,643 $ 17,791,551 2,875,956 $ 29,849,185
(434,058) (6,638,190) (6,139,050) (69,259,645) (966,886) (11,575,283) (2,168,603) (22,052,029)
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
339,862 $ 5,197,406 (651,317) $ (7,628,879) 520,757 $ 6,216,268 707,353 $ 7,797,156
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
155,094 $ 2,223,116 290,640 $ 3,415,741 510,762 $ 5,998,533 1,701,970 $ 16,766,807
(901,754) (12,841,002) (1,233,804) (13,640,399) (630,002) (7,349,007) (1,844,300) (18,116,704)
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
(746,660) $(10,617,886) (943,164) $(10,224,658) (119,240) $ (1,350,474) (142,330) $ (1,349,897)
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
196,669 $ 2,801,026 125,234 $ 1,506,714 1,727,887 $ 20,236,183 3,353,028 $ 33,891,515
(60,816) (868,866) (312,978) (3,503,997) (871,108) (10,186,392) (2,040,296) (20,183,334)
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
135,853 $ 1,932,160 (187,744) $ (1,997,283) 856,779 $ 10,049,791 1,312,732 $ 13,708,181
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
-- $ -- -- $ -- -- $ -- -- $ --
-- -- -- -- -- -- -- --
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
-- $ -- -- $ -- -- $ -- -- $ --
- -------- ------------ ---------- ------------ --------- ------------ ---------- ------------
(270,945) $ (3,488,320) (1,782,225) $(19,850,820) 1,258,296 $ 14,915,585 1,877,755 $ 20,155,440
======== ============ ========== ============ ========= ============ ========== ============
46
- --------------------------------------------------------------------------------
Notes To Financial Statements (continued)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2004 (unaudited)
9. Capital Shares (continued):
Harris Associates Large Cap Value Fund
-----------------------------------------------------
Six Months Ended
June 30, 2004 Year Ended
(unaudited) December 31, 2003
------------------------- -------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
Class A:
Shares sold 1,370,587 $ 17,034,760 2,100,861 $ 22,762,821
Shares issued - merger -- -- 5,074,724 54,776,568
---------- ------------ ---------- ------------
1,370,587 17,034,760 7,175,585 77,539,389
Shares repurchased (1,436,023) (17,900,297) (3,485,439) (36,836,357)
---------- ------------ ---------- ------------
Net increase (decrease) (65,436) $ (865,537) 3,690,146 $ 40,703,032
---------- ------------ ---------- ------------
Class B:
Shares sold 356,699 $ 4,208,530 856,774 $ 9,891,819
Shares issued - merger -- -- 1,413,315 14,555,728
---------- ------------ ---------- ------------
356,699 4,208,530 2,270,089 24,447,547
Shares repurchased (1,113,039) (13,129,338) (2,366,418) (24,751,845)
---------- ------------ ---------- ------------
Net increase (decrease) (756,340) $ (8,920,808) (96,329) $ (304,298)
---------- ------------ ---------- ------------
Class C:
Shares sold 713,473 $ 8,394,584 706,519 $ 7,419,708
Shares issued - merger -- -- 101,458 1,043,494
---------- ------------ ---------- ------------
713,473 8,394,584 807,977 8,463,202
Shares repurchased (135,889) (1,604,655) (185,271) (1,965,684)
---------- ------------ ---------- ------------
Net increase (decrease) 577,584 $ 6,789,929 622,706 $ 6,497,518
---------- ------------ ---------- ------------
Class Y:
Shares sold 230,300 $ 2,984,652 60,321 $ 637,760
Shares issued - merger -- -- 1,419,922 15,668,839
---------- ------------ ---------- ------------
230,300 2,984,652 1,480,243 16,306,599
Shares repurchased (142,249) (1,821,107) (465,803) (5,224,688)
---------- ------------ ---------- ------------
Net increase (decrease) 88,051 $ 1,163,545 1,014,440 $ 11,081,911
---------- ------------ ---------- ------------
Increase (decrease) derived from capital shares transactions (156,141) $ (1,832,871) 5,230,963 $ 57,978,163
========== ============ ========== ============
47
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Vaughan Nelson Small Cap Value Fund Westpeak Capital Growth Fund
- -------------------------------------------------- --------------------------------------------------
Six Months Ended Six Months Ended
June 30, 2004 Year Ended June 30, 2004 Year Ended
(unaudited) December 31, 2003 (unaudited) December 31, 2003
- ---------------------- ------------------------- ---------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
236,342 $ 3,416,675 735,059 $ 8,197,295 197,024 $ 2,145,423 459,334 $ 4,434,198
-- -- -- -- -- -- -- --
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
236,342 3,416,675 735,059 8,197,295 197,024 2,145,423 459,334 4,434,198
(395,542) (5,629,463) (1,297,834) (14,135,491) (549,918) (5,970,311) (1,474,769) (14,012,775)
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
(159,200) $(2,212,788) (562,775) $ (5,938,196) (352,894) $(3,824,888) (1,015,435) $ (9,578,577)
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
178,832 $ 2,396,661 495,700 $ 5,413,902 82,979 $ 792,170 241,744 $ 2,031,512
-- -- -- -- -- -- -- --
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
178,832 2,396,661 495,700 5,413,902 82,979 792,170 241,744 2,031,512
(447,214) (5,972,386) (1,100,218) (11,475,987) (334,842) (3,198,464) (660,282) (5,491,199)
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
(268,382) $(3,575,725) (604,518) $ (6,062,085) (251,863) $(2,406,294) (418,538) $ (3,459,687)
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
61,629 $ 821,511 92,836 $ 1,009,312 10,533 $ 100,145 43,266 $ 374,020
-- -- -- -- -- -- -- --
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
61,629 821,511 92,836 1,009,312 10,533 100,145 43,266 374,020
(94,766) (1,258,781) (321,688) (3,360,613) (20,742) (195,054) (31,761) (263,473)
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
(33,137) $ (437,270) (228,852) $ (2,351,301) (10,209) $ (94,909) 11,505 $ 110,547
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
-- $ -- -- $ -- -- $ -- -- $ --
-- -- -- -- -- -- -- --
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
-- $ -- -- $ -- -- $ -- -- $ --
- -------- ----------- ---------- ------------ -------- ----------- ---------- ------------
(460,719) $(6,225,783) (1,396,145) $(14,351,582) (614,966) $(6,326,091) (1,422,468) $(12,927,717)
======== =========== ========== ============ ======== =========== ========== ============
48
- --------------------------------------------------------------------------------
Additional Information
- --------------------------------------------------------------------------------
Shareholder Meeting (Unaudited). At a special shareholders' meeting held on
February 18, 2004, shareholders of the Vaughan Nelson Small Cap Value Fund
(hereinafter referred to as the "Fund") voted for the following proposal:
1. Approval of a new subadvisory agreement for the Fund among CDC Nvest Funds
Trust I, CDC IXIS Asset Management Advisers, L.P. and Vaughan Nelson Investment
Management, L.P.
Voted For Voted Against Abstained Votes Broker Non-Votes Total Votes
- ------------- ------------- --------------- ---------------- -------------
5,995,736.288 177,986.322 189,268.957 0 6,362,991.567
49
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. Schedule of Investments.
Not Applicable
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Companies and Affiliated Purchasers.
Not Applicable.
Item 9. Submission of Matters to a Vote of Securities Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the Trust's Board of Trustees.
Item 10. 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 11. Exhibits.
(a) (1) Not applicable.
(a) (2) Certifications of Principal Executive Officer and Principal
Financial Officer pursuant to 30a-2 under the Investment Company Act
of 1940 (17 CFR 270.30a-2), as herewith as exhibits (a)(2)(1) and
(a)(2)(2)
(a) (3) Not applicable.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 are
filed herewith as Exhibit (b)
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 and Chief Executive Officer
Date: August 20, 2004
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: President and Chief Executive Officer
Date: August 20, 2004
By: /s/ Nicholas H. Palmerino
----------------------------------------
Name: Nicholas H. Palmerino
Title: Treasurer
Date: August 20, 2004