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NVEST STAR ADVISERS FUND
NVEST STAR WORLDWIDE FUND
NVEST STAR SMALL CAP FUND
NVEST STAR VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION -- PART I
MAY 1, 2000 (AS REVISED JULY 31, 2000)
This Statement of Additional Information (the "Statement") contains
information which may be useful to investors but which is not included in the
Prospectus of the Nvest Funds listed above (the "Funds" and each a "Fund"). This
Statement is not a prospectus and is only authorized for distribution when
accompanied or preceded by the Prospectus of the Funds dated May 1, 2000 for
Class A, Class B and Class C shares or the Prospectus dated May 1, 2000 for
Class Y shares (the "Prospectus" or "Prospectuses"). The Statement should be
read together with the Prospectus. Investors may obtain a free copy of the
Prospectus from Nvest Funds Distributor, L.P., Prospectus Fulfillment Desk, 399
Boylston Street, Boston, Massachusetts 02116, by calling Nvest Funds at
800-225-5478 or by placing an order online at www.nvestfunds.com.
Part I of this Statement contains specific information about the Funds.
Part II includes information about the Funds and other Nvest Funds. The Funds
are each a diversified fund of Nvest Funds Trust I (the "Trust"), a registered
open-end management investment company that offers a total of twelve funds.
The Funds' financial statements and accompanying notes that appear in the
Funds' annual and semi-annual reports are incorporated by reference into this
Statement. Each Fund's annual and semiannual report contains additional
performance information and is available upon request and without charge, by
calling 800-225-5478.
T a b l e o f C o n t e n t s
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PART I
Investment Restrictions .............................................. ii
Fund Charges and Expenses ........................................... vii
Ownership of Fund Shares ............................................ xiii
Investment Performance of the Funds ................................. xiv
PART II
Miscellaneous Investment Practices .................................... 2
Management of the Trusts .............................................. 22
Portfolio Transactions and Brokerage .................................. 38
Description of the Trusts and Ownership of Shares ..................... 45
How to Buy Shares ..................................................... 48
Net Asset Value and Public Offering Price ............................. 49
Reduced Sales Charges - Class A Shares Only ........................... 50
Shareholder Services .................................................. 52
Redemptions ........................................................... 59
Standard Performance Measures ......................................... 61
Income Dividends, Capital Gain Distributions and Tax Status ........... 66
Financial Statements .................................................. 68
Appendix A - Description of Bond Ratings .............................. 69
Appendix B - Media That May Contain Fund Information .................. 71
Appendix C - Advertising and Promotional Literature ................... 74
Appendix D - Portfolio Composition of the High Income, Strategic
Income, Bond Income and Municipal Income Funds ................ 78
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INVESTMENT RESTRICTIONS
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The following is a description of restrictions on the investments to be
made by the Funds. The restrictions marked with an asterisk (*) may not be
changed without the vote of a majority of the outstanding voting securities of
the relevant Fund (as defined in the Investment Company Act of 1940, as amended
the "1940 Act"). Except in the case of restrictions marked with a dagger (+)
below, the percentages set forth below and the percentage limitations set forth
in the Prospectus will apply at the time of the purchase of a security and shall
not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of a purchase of such security.
NVEST STAR ADVISERS FUND
Nvest Star Advisers Fund (the "Star Advisers Fund") may not:
*(1) With respect to 75% of its total assets, invest in the securities of any
one issuer (other than the U.S. Government and its agencies and
instrumentalities) if, immediately after and as a result of such
investment, more than 5% of the total assets of the Fund would be invested
in such issuer;
*(2) Purchase any security (other than U.S. Government securities) if, as a
result, more than 25% of the Fund's total assets (taken at current value)
would be invested in any one industry (in the utilities category, gas,
electric, water and telephone companies will be considered as being in
separate industries, and each foreign country's government (together with
subdivisions thereof) will be considered to be a separate industry);
(3) Purchase securities on margin (but it may obtain such short-term credits as
may be necessary for the clearance of purchases and sales of securities),
or make short sales except when, by virtue of ownership of other
securities, it has the right to obtain, without payment of further
consideration, securities equivalent in kind and amount to those sold, and
the Fund will not deposit or pledge more than 10% of its total assets
(taken at current value) as collateral for such sales. (For this purpose,
the deposit or payment by the Fund of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin);
(4) Acquire more than 10% of any class of securities of an issuer (other than
U.S. Government securities and taking all preferred stock issues of an
issuer as a single class and all debt issues of an issuer as a single
class) or acquire more than 10% of the outstanding voting securities of an
issuer;
*(5) Borrow money in excess of 25% of its total assets, and then only as a
temporary measure for extraordinary or emergency purposes;
(6) Pledge more than 25% of its total assets (taken at cost). (For the purpose
of this restriction, collateral arrangements with respect to options,
futures contracts and options on futures contracts and with respect to
initial and variation margin are not deemed to be a pledge of assets);
*(7) Make loans, except by entering into repurchase agreements or by purchase of
bonds, debentures, commercial paper, corporate notes and similar evidences
of indebtedness, which are a part of an issue to the public or to financial
institutions, or through the lending of the Fund's portfolio securities;
*(8) Buy or sell oil, gas or other mineral leases, rights or royalty contracts,
real estate or commodities or commodity contracts, except that the Fund may
buy and sell futures contracts and related options. (This restriction does
not prevent the Fund from purchasing securities of companies investing in
the foregoing);
*(9) Act as underwriter, except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal securities laws;
(10) Except to the extent permitted by rule or order of the Securities and
Exchange Commission (the "SEC"), participate on a joint or joint and
several basis in any trading account in securities. (The "bunching" of
orders for the purchase or sale of portfolio securities with any investment
adviser or subadviser of the Fund or accounts under any such
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investment adviser's or subadviser's management to reduce brokerage
commissions to average prices among them or to facilitate such transactions
is not considered a trading account in securities for purposes of this
restriction);
(11) Write, purchase or sell options, except that the Fund may (a) write,
purchase and sell put and call options on securities, securities indexes,
currencies, futures contracts, swap contracts and other similar instruments
and (b) enter into currency forward contracts;
+(12)Purchase any illiquid security if, as a result, more than 15% of its net
assets (taken at current value) would be invested in such securities
(excluding Rule 144A securities and certain Section 4(2) commercial paper
deemed to be liquid under guidelines established by the Trust's trustees);
or
*(13)Issue senior securities; (For the purpose of this restriction none of the
following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restrictions (3) or (6) above; any
borrowing permitted by restriction (4) above; any collateral arrangements
with respect to forward contracts, options, futures contracts and options
on futures contracts and with respect to initial and variation margin; the
purchase or sale of options, forward contracts, futures contracts or
options on futures contracts; and the issuance of shares of beneficial
interest permitted from time to time by the provisions of the Trust's
Agreement and Declaration of Trust and by the 1940 Act, the rules
thereunder, or any exemption therefrom.)
The staff of the SEC is currently of the view that repurchase agreements
maturing in more than seven days are illiquid and thus subject to
restriction (12) above.
NVEST STAR WORLDWIDE FUND
Nvest Star Worldwide Fund (the "Star Worldwide Fund") may not:
(1) With respect to 75% of its total assets, invest in the securities of any
one issuer (other than the U.S. Government and its agencies and
instrumentalities) if, immediately after and as a result of such
investment, more than 5% of the total assets of the Fund would be invested
in such issuer;
*(2) Purchase any security (other than U.S. Government securities) if, as a
result, more than 25% of the Fund's total assets (taken at current value)
would be invested in any one industry (in the utilities category, gas,
electric, water and telephone companies will be considered as being in
separate industries, and each foreign country's government (together with
all subdivisions thereof) will be considered to be a separate industry);
(3) Purchase securities on margin (but it may obtain such short-term credits as
may be necessary for the clearance of purchases and sales of securities),
or make short sales except when it owns or, by virtue of ownership of other
securities, it has the right to obtain, without payment of further
consideration, securities equivalent in kind and amount to those sold. (For
this purpose, the deposit or payment by the Fund of initial or variation
margin in connection with futures contracts or related options transactions
is not considered the purchase of a security on margin);
(4) Acquire more than 10% of any class of securities of an issuer (other than
U.S. Government securities and taking all preferred stock issues of an
issuer as a single class and all debt issues of an issuer as a single
class) or with respect to 75% of its total assets, acquire more than 10% of
the outstanding voting securities of an issuer;
*(5) Borrow money in excess of 33 1/3% of its total assets, and then only as a
temporary measure for extraordinary or emergency purposes;
(6) Pledge more than 33 1/3% of its total assets (taken at cost). (For the
purpose of this restriction, reverse repurchase agreements, collateral
arrangements with respect to options, futures contracts, options on futures
contracts, forward contracts, swap contracts and other similar instruments
and with respect to initial and variation margin are not deemed to be a
pledge of assets);
*(7) Make loans, except by entering into repurchase agreements or by purchase of
bonds, debentures, commercial paper, corporate notes and similar evidences
of indebtedness, which are a part of an issue to the public or to financial
institutions, or through the lending of the Fund's portfolio securities;
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*(8) Buy or sell oil, gas or other mineral leases, rights or royalty contracts,
real estate or commodities or commodity contracts, except that the Fund may
buy and sell futures contracts and related options, swap contracts,
currency forward contracts, structured notes and other similar instruments.
(This restriction does not prevent the Fund from purchasing securities of
companies investing in the foregoing);
*(9) Act as underwriter, except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal securities laws;
(10) Except to the extent permitted by rule or order of the SEC, participate on
a joint or joint and several basis in any trading account in securities.
(The "bunching" of orders for the purchase or sale of portfolio securities
with any investment adviser or subadviser of the Fund or accounts under any
such investment adviser's or subadviser's management to reduce brokerage
commissions to average prices among them or to facilitate such transactions
is not considered a trading account in securities for purposes of this
restriction);
(11) Write, purchase or sell options, except that the Fund may (a) write,
purchase and sell put and call options on securities, securities indexes,
currencies, futures contracts, swap contracts and other similar
instruments, (b) enter into currency forward contracts and (c) invest in
structured notes;
+(12)Purchase any illiquid security if, as a result, more than 15% of its net
assets (taken at current value) would be invested in such securities
(excluding Rule 144A securities and certain Section 4(2) commercial paper
deemed to be liquid under guidelines established by the Trust's trustees);
or
*(13)Issue senior securities; For the purpose of this restriction none of the
following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restriction (6) above; any borrowing
permitted by restriction (5) above; any collateral arrangements with
respect to options or futures contracts, and with respect to initial and
variation margin; the purchase or sale of options, forward contracts,
futures contracts, swap contracts or other similar instruments; and the
issuance of shares of beneficial interest permitted from time to time by
the provisions of the Trust's Agreement and Declaration of Trust and by the
1940 Act, the rules thereunder, or any exemption therefrom. (The Fund is
required, under regulatory provisions applicable to it as interpreted by
the staff of the SEC, to set aside in a segregated account with its
custodian bank liquid assets in amounts sufficient at all times to satisfy
its obligations under options, futures contracts, forward contracts, swap
contracts and other similar instruments).
The staff of the SEC is currently of the view that repurchase agreements
maturing in more than seven days are illiquid and thus subject to
restriction (12) above.
NVEST STAR SMALL CAP FUND
Nvest Star Small Cap Fund (the "Star Small Cap Fund") may not:
(1) With respect to 75% of its total assets, invest in the securities of any
one issuer (other than the U.S. Government and its agencies and
instrumentalities) if, immediately after and as a result of such
investment, more than 5% of the total assets of the Fund would be invested
in such issuer;
*(2) Purchase any security (other than U.S. Government securities) if, as a
result, more than 25% of the Fund's total assets (taken at current value)
would be invested in any one industry (in the utilities category, gas,
electric, water and telephone companies will be considered as being in
separate industries, and each foreign country's government (together with
all subdivisions thereof) will be considered to be a separate industry);
(3) Purchase securities on margin (but it may obtain such short-term credits as
may be necessary for the clearance of purchases and sales of securities);
(for this purpose, the deposit or payment by the Fund of initial or
variation margin in connection with futures contracts or related options
transactions is not considered the purchase of a security on margin);
(4) Acquire more than 10% of any class of securities of an issuer (other than
U.S. Government securities and taking all preferred stock issues of an
issuer as a single class and all debt issues of an issuer as a single
class) or, with respect to 75% of its total assets, acquire more than 10%
of the outstanding voting securities of an issuer;
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*(5) Borrow money in excess of 33 1/3% of its total assets, and then only as a
temporary measure for extraordinary or emergency purposes;
(6) Pledge more than 33 1/3% of its total assets (taken at cost); (for the
purpose of this restriction, reverse repurchase agreements, collateral
arrangements with respect to options, futures contracts, options on futures
contracts, forward contracts, swap contracts, short sales and other similar
instruments and with respect to initial and variation margin are not deemed
to be a pledge of assets);
*(7) Make loans, except by entering into repurchase agreements or by purchase of
bonds, debentures, commercial paper, corporate notes and similar evidences
of indebtedness, which are a part of an issue to the public or to financial
institutions, or through the lending of the Fund's portfolio securities;
*(8) Buy or sell oil, gas or other mineral leases, rights or royalty contracts,
real estate or commodities or commodity contracts, except that the Fund may
buy and sell futures contracts and related options, swap contracts,
currency forward contracts, structured notes and other similar instruments.
(This restriction does not prevent the Fund from purchasing securities of
companies investing in the foregoing);
*(9) Act as underwriter, except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal securities laws;
(10) Except to the extent permitted by rule or order of the SEC, participate on
a joint or joint and several basis in any trading account in securities.
(The "bunching" of orders for the purchase or sale of portfolio securities
with any investment adviser or subadviser of the Fund or accounts under any
such investment adviser's or subadviser's management to reduce brokerage
commissions to average prices among them or to facilitate such transactions
is not considered a trading account in securities for purposes of this
restriction);
+(11)Purchase any illiquid security if, as a result, more than 15% of its
net assets (taken at current value) would be invested in such securities
(excluding Rule 144A securities and certain Section 4(2) commercial paper
deemed to be liquid under guidelines established by the Trust's trustees);
or
*(12)Issue senior securities. For the purpose of this restriction none of the
following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restriction (6) above; any borrowing
permitted by restriction (5) above; any collateral arrangements with
respect to options or futures contracts, and with respect to initial and
variation margin; the purchase or sale of options, forward contracts,
futures contracts, swap contracts or other similar instruments; and the
issuance of shares of beneficial interest permitted from time to time by
the provisions of the Trust's Agreement and Declaration of Trust and by the
1940 Act, the rules thereunder, or any exemption therefrom. (The Fund is
required, under regulatory provisions applicable to it as interpreted by
the staff of the SEC, to set aside in a segregated account with its
custodian bank liquid assets in amounts sufficient at all times to satisfy
its obligations under options, futures contracts, forward contracts, swap
contracts and other similar instruments).
The staff of the SEC is currently of the view that repurchase agreements
maturing in more than seven days are illiquid and thus subject to
restriction (11) above.
NVEST STAR VALUE FUND
Nvest Star Value Fund (the "Star Value Fund") may not:
*(1) Purchase any security (other than U.S. Government securities) if, as a
result, more than 5% of the Fund's total assets (taken at current value)
would then be invested in securities of a single issuer or 25% of the
Fund's total assets (taken at current value) would be invested in any one
industry;
*(2) Purchase securities on margin (but it may obtain such short-term credits as
may be necessary for the clearance of purchases and sales of securities),
or make short sales except when, by virtue of ownership of other
securities, it has the right to obtain, without payment of further
consideration, securities equivalent in kind and amount to those sold, and
the Fund will not deposit or pledge more than 10% of its total assets
(taken at current value) as collateral for such sales;
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*(3) Acquire more than 10% of any class of securities of an issuer (taking all
preferred stock issues of an issuer as a single class and all debt issues
of an issuer as a single class) or acquire more than 10% of the outstanding
voting securities of an issuer;
*(4) Borrow money in excess of 10% of its total assets (taken at cost) or 5% of
its total assets (taken at current value), whichever is lower, and then
only as a temporary measure for extraordinary or emergency purposes;
*(5) Pledge more than 15% of its total assets (taken at cost);
*(6) Invest more than 5% of its total assets (taken at current value) in
securities of businesses (including predecessors) less than three years
old;
*(7) Purchase or retain securities of any issuer if officers and trustees of New
England Funds Trust I or of the investment adviser of the Fund who
individually own more than 1/2 of 1% of the shares or securities of that
issuer together own more than 5%;
*(8) Make loans, except by purchase of bonds, debentures, commercial paper,
corporate notes and similar evidences of indebtedness, which are a part of
an issue to the public or to financial institutions;
*(9) Buy or sell oil, gas or other mineral leases, rights or royalty contracts,
real estate or commodities or commodity contracts. Also, the Fund will not
buy or sell real estate or interests in real estate which are not readily
marketable. (This restriction does not prevent the Fund from purchasing
securities of companies investing in the foregoing);
*(10)Act as underwriter, except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal securities laws;
*(11)Make investments for the purpose of exercising control or management;
*(12)Participate on a joint or joint and several basis in any trading account
in securities;
*(13)Purchase options or warrants if, as a result, more than 1% of its total
assets (taken at current value) would be invested in such securities;
*(14) Write options or warrants;
*(15)Invest in the securities of other investment companies, except by
purchases in the open market involving only customary brokers' commissions.
(Under the 1940 Act, the Fund may not (a) invest more than 10% of its total
assets taken at current value in such securities, (b) own securities of any
one investment company having a value in excess of 5% of the total assets
of such Fund taken at current value, or (c) own more than 3% of the
outstanding voting stock of any one investment company);
*(16)Issue senior securities. For the purpose of this restriction, none of the
following is deemed to be a senior security: any borrowing permitted by
restriction (4) above; any pledge or other encumbrance of assets permitted
by restriction (5) above; any collateral arrangements with respect to
options, forward contracts, futures contracts, swap contracts and other
similar contracts and options on futures contracts and with respect to
initial and variation margin; the purchase or sale of options, forward
contracts, futures contracts, swap contracts and other similar contracts or
options on futures contracts; and the issuance of shares of beneficial
interest permitted from time to time by the provisions of New England Funds
Trust I's Agreement and Declaration of Trust and by the 1940 Act, the rules
thereunder, or any exemption therefrom; or
+(17)Invest more than 15% of the Fund's total net assets in illiquid securities
(excluding Rule 144A securities and certain Section 4(2) commercial paper
deemed to be liquid under guidelines established by the Trust's trustees.)
The staff of the SEC is currently of the view that repurchase agreements
maturing in more than seven days are illiquid and thus subject to
restriction (17) above.
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FUND CHARGES AND EXPENSES
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MANAGEMENT FEES
Pursuant to separate advisory agreements, each dated August 30, 1996 and
amended May 1, 1998 for the Star Advisers, Star Worldwide and Star Value Funds
and dated December 31, 1996 and amended May 1, 1998, for the Star Small Cap
Fund, Nvest Funds Management, L.P. ("Nvest Management") has agreed, subject to
the supervision of the Board of Trustees of the Trust, to manage the investment
and reinvestment of the assets of each Fund and to provide a range of
administrative services to each Fund. For the services described in the advisory
agreements, the Star Worldwide and Star Small Cap Funds have each agreed to pay
Nvest Management a gross management fee at the annual rate of 1.05% of the
Fund's average daily net assets, including any amount of any subsidiary fees
paid by the Fund to its subadvisers pursuant to any subadvisory agreement; the
Star Advisers Fund has agreed to pay Nvest Management a gross management fee at
the annual rate of 1.05% of the first $1 billion of the Fund's average daily net
assets and 1.00% of such assets in excess of $1 billion, including any the
amount of any subadvisory fees paid by the Fund to its subadvisers pursuant to
any subadvisory agreement; and Star Value Fund has agreed to pay Nvest
Management a gross management fee at the annual rate of 0.75% of the first $200
million of the Fund's average daily net assets, 0.70% of the next $300 million
of the Fund's average daily net assets and 0.65% of amounts in excess of $500
million of the Fund's average daily net assets, including any amount of any
sub-advisory fees paid by the Fund to its subadvisers pursuant to any
subadvisory agreement. Prior to May 9, 1997, the management fee rate payable by
the Star Advisers Fund to Nvest Management was 1.05% of the Fund's average daily
net assets.
As explained in the Prospectus, the Star Advisers, Star Small Cap, Star
Worldwide and Star Value Funds' portfolios are each divided into four segments.
Pursuant to separate subadvisory agreements, Nvest Management has delegated
responsibility for the investment and reinvestment of assets of the segments of
the Star Advisers Fund's portfolio to four different subadvisers: Kobrick Funds
LLC ("Kobrick"), Janus Capital Corporation ("Janus Capital"), Loomis, Sayles &
Company, L.P. ("Loomis Sayles") and Harris Associates L.P. ("Harris
Associates"). The subadvisory agreement with Janus Capital is dated August 30,
1996. The subadvisory agreements with Loomis Sayles and Harris Associates are
both dated October 17, 1997 and amended May 1, 1998. The subadvisory agreement
with Kobrick is dated October 29, 1999. For providing subadvisory services to
its segment of Star Advisers Fund, Nvest Management pays Janus Capital a
subadvisory fee at the annual rate of 0.55% of the first $50 million of the
average net assets of the segment that Janus Capital manages and 0.50% of such
assets in excess of $50 million. The Star Advisers Fund pays Harris Associates,
for providing subadvisory services to a segment of the Fund, a subadvisory fee
at the annual rate of 0.65% of the first $50 million of the average net assets
it manages in its segment, 0.60% of the next $50 million of such assets and
0.55% of such assets in excess of $100 million. The Star Advisers Fund pays
Loomis Sayles and Kobrick a subadvisory fee at the annual rate of 0.55% of the
first $50 million of the average daily net assets of the segment that each
manages, 0.50% of the next $200 million of such assets and 0.475% of such assets
in excess of $250 million. Prior to August 23, 1999, Founders Asset Management
LLC ("Founders") served as subadviser to the segment of the Star Advisers Fund
now managed by Kobrick, pursuant to a subadvisory agreement providing for a
subadvisory fee to be paid by Nvest Management to Founders at the same rates as
those currently paid by the Fund to Kobrick. Prior to October 17, 1997, Nvest
Management paid each of Founders and Loomis Sayles a subadvisory fee for
managing their respective segment of the Fund at the same rate payable to Janus
Capital for managing its segment of the Fund; however, from May 9 to October 16,
1997, Founders and Loomis Sayles each voluntarily agreed to waive a portion of
their respective subadvisory fees equal to 0.025%, annually, of the excess, if
any, of the average net assets of the segment of the Star Advisers Fund managed
by each subadviser in excess of $250 million. Prior to July 25, 1997, Berger
Associates, Inc. ("Berger") served as subadviser to the segment of the Star
Advisers Fund now managed by Harris Associates, pursuant to a subadvisory
agreement providing for a subadvisory fee at the annual rate of 0.55% of the
first $50 million of the average daily net assets of the segment and 0.50% of
such assets in excess of $50 million. From July 25, 1997 to October 16, 1997,
Harris Associates served as the subadviser to the segment of the Star Advisers
Fund that it currently manages pursuant to a subadvisory agreement providing for
a subadvisory fee at the same rate that was payable to Berger for managing such
segment. Harris Associates voluntarily agreed to waive its entire subadvisory
fee from July 25, 1997 to August 31, 1997. This waiver by Harris Associates did
not reduce the management fee paid by the Star Advisers Fund to Nvest Management
during this period. Nvest Management paid the waived fees to Berger.
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Pursuant to separate subadvisory agreements, Nvest Management has delegated
responsibility for the investment and reinvestment of the assets of the segments
of the Star Worldwide Fund's portfolio to four different subadvisers. The
subadvisers of the Star Worldwide Fund are Harris Associates, which manages two
of the four segments, Loomis Sayles and Montgomery Asset Management, L.L.C.
("Montgomery"), each of which manages one of the four segments. The subadvisory
agreement with Harris Associates is dated August 30, 1996 and amended May 1,
1998; the subadvisory agreement with Loomis Sayles is dated April 14, 2000; and
the subadvisory agreement with Montgomery is dated August 3, 1998. Prior to
August 23, 1999, Founders served as a subadviser to a segment of the Star
Worldwide Fund. Following Founders' departure, the assets of the segment it had
managed were reallocated to the remaining subadvisers. The Fund pays Harris
Associates and Loomis Sayles a subadvisory fee for managing their respective
segments of the portfolio at the annual rate of 0.65% of the average daily net
assets of each such segment up to $50 million, 0.60% of the next $50 million of
such assets and 0.55% of such assets in excess of $100 million. Prior to
February 28, 2000, Janus Capital served as subadviser to the segment of the Star
Worldwide Fund now managed by Loomis Sayles, pursuant to a subadvisory agreement
providing for a subadvisory fee to be paid by Nvest Management to Janus Capital
at the same rates as those currently paid by the Fund to Loomis Sayles. Nvest
Management pays Montgomery a subadvisory fee at the annual rate of 0.85% of the
average daily net assets of its segment of the Fund up to $25 million, 0.65% of
the next $25 million of such assets and 0.55% of such assets in excess of $50
million. Prior to August 3, 1998, Montgomery's subadvisory fee was at the annual
rate of 0.90% of the average daily net assets of its segment of the portfolio up
to $25 million, 0.70% of the next $25 million of such assets and 0.55% of such
assets in excess of $50 million. Montgomery agreed to waive 0.15% of its
subadvisory fee from December 29, 1995 through June 30, 1996.
Pursuant to separate subadvisory agreements, Nvest Management has delegated
responsibility for the investment and reinvestment of the assets of the Star
Small Cap Fund's portfolio to four different subadvisers. The subadvisers of the
Star Small Cap Fund are Montgomery, RS Investment Management, L.P. ("RS
Investment Management"), Loomis Sayles and Harris Associates, each of which
manage one of the four segments. The subadvisory agreements with Loomis Sayles
and Harris Associates are each dated December 31, 1996 and amended May 1, 1998;
the subadvisory agreement with Montgomery is dated July 31, 1997; and the
subadvisory agreement with RS Investment Management is dated October 1, 1997.
The Fund pays Loomis Sayles and Nvest Management pays RS Investment Management a
subadvisory fee at an annual rate of 0.55% of the first $50 million of the
average daily net assets of the segment of the Fund that such subadviser manages
and 0.50% of such assets in excess of $50 million. Nvest Management pays
Montgomery a subadvisory fee at an annual rate of 0.65% of the first $50 million
of the average daily net assets of the segment that Montgomery manages and 0.50%
of such assets in excess of $50 million. The Fund pays Harris Associates a
subadvisory fee at the annual rate of 0.70% of the average daily net assets of
the segment of the Fund that Harris Associates manages.
Pursuant to separate subadvisory agreements each dated April 19, 2000,
Nvest Management has delegated responsibility for the investment and
reinvestment of assets of the Star Value Fund's portfolio to four different
subadvisers. The subadvisers of Star Value Fund are Loomis Sayles, Harris
Associates, Vaughan, Nelson Scarborough & McCullough, L.P. ("Vaughn Nelson") and
Westpeak Investment Advisors, L.P. ("Westpeak"), each of which manages one of
the four segments. The Fund pays to Loomis Sayles a subadvisory fee at an annual
rate of 0.535% of the first $200 million of its segment of the Fund's average
daily net assets, 0.350% of the next $300 million of such assets and 0.300% of
such assets in excess of $500 million. The Fund pays to Vaughan Nelson a
subadvisory fee at an annual rate of 0.500% of the first $25 million of its
segment of the Fund's average daily net assets, 0.400% of the next $175 million
of such assets, 0.325% of the next $300 million of such assets and 0.275% of
such assets in excess of $500 million. The Fund pays to Harris Associates a
subadvisory fee at an annual rate of 0.500% of the first $100 million of its
segment of the Fund's average daily net assets and 0.450% of such assets in
excess of $100 million. The Fund pays to Westpeak a sub-advisory fee at an
annual rate of 0.50% of the first $25 million of such assets, 0.40% of the next
$75 million of such assets, 0.35% of the next $100 million of such assets and
0.30% of such assets in excess of $200 million. Beginning on February 28, 2000
through April 18, 2000, the Fund paid subadvisory fees under this arrangement to
each of the above-referenced subadvisers under separate interim subadvisory
agreements. These agreements were superseded by the subadvisory agreements
approved by Star Value Fund's shareholders at a special shareholder meeting on
April 19, 2000.
Prior to February 28, 2000, the Star Value Fund had a single subadviser
structure with Loomis Sayles acting as subadviser pursuant to a subadvisory
agreement dated August 30, 1996 and amended May 1, 1998. The subadvisory fee
payable by the Fund to Loomis Sayles was 0.535% of the first $200 million of the
Fund's average daily net assets, 0.350% of the next $300 million of the Fund's
average daily net assets and 0.300% of the Fund's average daily net assets in
excess of $500 million.
viii
<PAGE>
As of May 1, 1998, each subadvisory agreement between Nvest Management and
Loomis Sayles or Harris Associates was amended to add the relevant Fund as a
party and to provide that the subadvisory fees payable under such agreement are
payable by the Fund rather than by Nvest Management. Also as of May 1, 1998, the
advisory agreement for each such Fund was amended to provide that the management
fees payable by the Fund to Nvest Management are reduced by the amounts of any
subadvisory fees paid directly by the Fund to its subadvisers. These amendments
to the Funds' advisory and subadvisory agreements did not change the management
and subadvisory fee rates under the agreements, nor the services to be provided
to the Funds by Nvest Management and the subadvisers under the agreements.
Furthermore, these amendments did not change the overall level of fees payable
by any Fund.
Management fees for the Star Advisers Fund for the fiscal years ended
December 31, 1997, 1998 and 1999 were $9,732,113, $10,961,734 and $12,591,170,
respectively. The Fund commenced operations on July 7, 1994.
Management fees for the Star Worldwide Fund for the fiscal years ended
December 31, 1997, 1998 and 1999 were $2,442,270, $2,758,173 and $2,625,697,
respectively. The Fund commenced operations on December 29, 1995.
Management fees for the Star Small Cap Fund for the fiscal years ended
December 31, 1997, 1998 and 1999 were $745,638, $1,304,538 and $1,492,557,
respectively. The Fund commenced operations on December 31, 1996.
Management fees for the Star Value Fund for the fiscal years ended December
31, 1997, 1998 and 1999 were $3,030,220, $3,260,867 and $2,627,025 respectively.
The Star Value Fund assumed a multi-manager structure on February 28, 2000. The
Fund commenced operations on June 5, 1970.
For the Star Advisers Fund, the Fund paid Kobrick $403,591 in subadvisory
fees for the period October 20 through December 31, 1999. Nvest Management paid
$1,263,834, $1,313,190 and $1,301,880 in subadvisory fees to Founders (or its
predecessor) for the fiscal years ending December 31, 1997 and 1998, and for the
period January 1 through October 19, 1999, respectively. Nvest Management paid
Berger $704,081 in subadvisory fees for the period January 31 through August 1,
1997. Nvest Management paid $1,108,613, $1,358,439 and $2,213,726 in subadvisory
fees to Janus Capital for the fiscal years ending December 31, 1997, 1998 and
1999, respectively. The Fund paid Loomis Sayles $839,505 and $1,143,365 in
subadvisory fees for the period May 1 through December 31, 1998 and the fiscal
year ended December 31, 1999, respectively. Nvest Management paid Loomis Sayles
$1,263,657 and $473,685 in subadvisory fees for the fiscal year ended December
31, 1997 and for the period January 1 to April 30, 1998, respectively. The Fund
paid Harris Associates $882,519 and $1,213,904 in subadvisory fees for the
period May 1through December 31, 1998 and for the fiscal year ended December 31,
1999, respectively. Nvest Management paid Harris Associates $431,615 and
$467,681 in subadvisory fees for the periods September 1 through December 31,
1997 and January 1 to April 30, 1998, respectively.
For the Star Worldwide Fund, Nvest Management paid $291,060, $345,986 and
$248,981; $321,893, $428,211 and $480,249; and $353,540, $278,706 and $264,825;
in subadvisory fees to Founders, Janus Capital and Montgomery, or their
respective predecessors, respectively, for the fiscal years ended December 31,
1997, 1998 and 1999 (for the period January 1 through October 19, 1999 for
Founders). Nvest Management paid $611,766 and $252,350 in subadvisory fees to
Harris Associates for the fiscal year ending December 31, 1997 and for the
period January 1 to April 30, 1998, respectively. The Fund paid Harris
Associates $445,724 and $663,004; and in subadvisory fees for the period May 1
to December 31, 1998 and the fiscal year ending December 31, 1999, respectively.
For the Star Small Cap Fund, Nvest Management paid $112,593, $186,559 and
$170,613; and $100,286, $185,912 and $275,662 in subadvisory fees to Montgomery
(or its predecessor) and RS Investment Management (or its predecessor),
respectively, for the fiscal years ended December 31, 1997, 1998 and 1999. Nvest
Management paid $130,052 and $75,229; and $92,832 and $56,037 in subadvisory
fees to Harris Associates and Loomis Sayles, respectively, for the fiscal year
ended December 31, 1997 and for the period January 1 to April 30, 1998. The Fund
paid $140,461 and $176,418, and $114,053 and $220,509 to Harris Associates and
Loomis Sayles, respectively, for the period May 1 to December 31, 1998 and the
fiscal year ended December 31, 1999.
For the Star Value Fund, Nvest Management paid $1,835,110 and $673,095 in
subadvisory fees to Loomis Sayles for the fiscal year ended December 31, 1997
and the period January 1 to April 30, 1998, respectively. The Fund paid
$1,277,533 and $1,634,514 in subadvisory fees to Loomis Sayles for the period
May 1 to December 31, 1998 and the fiscal year ended December 31, 1999,
respectively.
Prior to July 31, 1997, Montgomery Asset Management, L.P., the predecessor
to Montgomery, served as subadviser to the segments of the Star Worldwide and
Star Small Cap Funds currently managed by Montgomery, pursuant to separate
ix
<PAGE>
subadvisory agreements providing for the same subadvisory fees as are currently
in effect in the subadvisory agreements with Montgomery.
Prior to October 1, 1997, RS Investment Management served as subadviser to
the segments of the Star Worldwide and Star Small Cap Funds that it currently
manages, pursuant to separate subadvisory agreements providing for the same
subadvisory fees as are currently in effect for such segment in the subadvisory
agreements.
BROKERAGE COMMISSIONS
For the fiscal years ended December 31, 1997, 1998 and 1999, brokerage
transactions for the Star Advisers Fund aggregating $1,985,896,882, $150,204,537
and $597,331,571, respectively, were allocated to brokers providing research
services, and $406,641, $164,649 and $653,867, respectively, in commissions were
paid on these transactions. For the fiscal year ended December 31, 1997, 1998
and 1999, the Fund paid total brokerage commissions of $2,844,608, $2,180,020
and $3,184,677, respectively. For the fiscal years ending December 31, 1997,
1998 and 1999, the Fund paid $207,494, $39,570 and $106,400 in brokerage
commissions to Harris Associates Securities L.P. ("HASLP"), a registered
broker-dealer and an affiliate of Harris Associates. For the fiscal year ended
December 31, 1999, the Fund paid 3.3% of its total brokerage commissions to
HASLP and effected 2.8% of its total brokerage transactions through HASLP.
For the fiscal years ending December 31, 1997, 1998 and 1999, brokerage
transactions for the Star Worldwide Fund aggregating $127,118,826, $73,990,355
and $162,179,150, respectively, were allocated to brokers providing research
services, and $79,513, $84,070 and $323,884, respectively, in commissions were
paid on these transactions. For the fiscal years ending December 31, 1997, 1998
and 1999, the Fund paid total brokerage commissions of $1,046,316, $887,495 and
$837,557, respectively. For the fiscal years ending December 31, 1997, 1998 and
1999, the Fund paid $21,298, $16,316 and $35,398 in brokerage commissions to
HASLP. For the fiscal year ended December 31, 1999, the Fund paid 4.23% of its
total brokerage commissions to HASLP and effected 5.7% of its total brokerage
transactions through HASLP.
For the period December 31, 1996 (commencement of operations) to December
31, 1997 and for the fiscal years ended December 31, 1998 and 1999, brokerage
transactions for the Star Small Cap Fund aggregating $26,084,510, $21,619,565
and $39,905,597 were allocated to brokers providing research services, and
$34,323, $48,385 and $112,113 in commissions were paid on these transactions.
For the period December 31, 1996 to December 31, 1997 and for the fiscal years
ended December 31, 1998 and 1999, the Fund paid total brokerage commissions of
$298,987, $476,149 and $514,974. For the fiscal years ending December 31, 1997,
1998 and 1999, the Fund paid $24,483, $10,110 and $18,631 in brokerage
commissions to HASLP. For the fiscal year ended December 31, 1999, the Fund paid
3.6% of its total brokerage commissions to HASLP and effected 4.0% of its total
brokerage transactions through HASLP.
In 1997, 1998 and 1999 brokerage transactions for Star Value Fund
aggregating $19,208,488, $77,873,944 and $223,245,053, respectively, were
allocated to brokers providing research services, and $29,690, $119,738, and
$297,149, respectively, in commissions were paid on these transactions in such
years. During 1997, 1998, and 1999 the Fund paid total brokerage commissions of
$618,342, $967,035 and $810,251, respectively.
For more information about the Funds' portfolio transactions, see
"Portfolio Transactions and Brokerage" in Part II of this Statement.
SALES CHARGES AND 12B-1 FEES
As explained in Part II of this Statement, the Class A, Class B and Class C
shares of each Fund pay Nvest Funds Distributor, L.P. (the "Distributor"), fees
under plans adopted pursuant to Rule 12b-1 under the 1940 Act. The following
table shows the amounts of Rule 12b-1 fees paid by the Funds during the fiscal
years ended December 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
Fund 1997 1998 1999
---- ---- ---- ----
<S> <C> <C> <C>
Star Advisers Fund $967,853 $1,072,116 $1,212,508 (Class A)
$4,220,821 $4,826,734 $5,635,995 (Class B)
$875,440 $958,464 $1,075,550 (Class C)
x
<PAGE>
Star Worldwide Fund $261,744 $285,578 $270,924 (Class A)
$1,037,171 $1,235,217 $1,181,955 (Class B)
$241,823 $249,303 $235,012 (Class C)
Star Small Cap Fund $79,699 $132,793 $147,871 (Class A)
$304,812 $569,200 $668,816 (Class B)
$86,522 $142,047 $161,139 (Class C)
Star Value Fund $819,873 $840,948 $674,343 (Class A)
$661,091 $840,370 $740,246 (Class B)
$52,413 $70,069 $49,847 (Class C)
</TABLE>
During the fiscal year ended December 31, 1999, the Distributor's expenses
relating to each Fund's 12b-1 plans were as follows (Class B compensation to
investment dealers excludes advanced commissions sold to a third party):
STAR ADVISERS FUND
(Class A shares)
Compensation to Investment Dealers $1,207,997
Compensation to Distributor's Sales Personnel $778,810
and Other Related Costs
----------
TOTAL $1,986,807
(Class B shares)
Compensation to Investment Dealers $1,139,823
Compensation to Distributor's Sales Personnel $911,105
and Other Related Costs
----------
TOTAL $2,050,928
(Class C shares)
Compensation to Investment Dealers $1,031,730
Compensation to Distributor's Sales Personnel
and Other Related Costs $220,442
----------
TOTAL $1,252,172
STAR WORLDWIDE FUND
(Class A shares)
Compensation to Investment Dealers $270,732
Compensation to Distributor's Sales Personnel $417,436
and Other Related Costs
----------
TOTAL $688,168
(Class B shares)
Compensation to Investment Dealers $261,975
Compensation to Distributor's Sales Personnel
and Other Related Costs $131,305
----------
TOTAL $393,280
(Class C shares)
Compensation to Investment Dealers $237,535
Compensation to Distributor's Sales Personnel
and Other Related Costs $41,948
----------
TOTAL $279,483
STAR SMALL CAP FUND
(Class A shares)
Compensation to Investment Dealers $148,001
Compensation to Distributor's Sales Personnel
and Other Related Costs $259,299
----------
TOTAL $407,300
xi
<PAGE>
(Class B shares)
Compensation to Investment Dealers $128,638
Compensation to Distributor's Sales Personnel
and Other Related Costs $138,699
----------
TOTAL $267,337
(Class C shares)
Compensation to Investment Dealers $166,846
Compensation to Distributor's Sales Personnel
and Other Related Costs $74,353
----------
TOTAL $241,199
STAR VALUE FUND
(Class A Shares)
Compensation to Investment Dealers $671,145
Compensation to Distributor's Sales Personnel
and Other Related Costs $189,394
----------
TOTAL $860,539
(Class B Shares)
Compensation to Investment Dealers $138,078
Compensation to Distributor's Sales Personnel
and Other Related Costs $90,760
----------
TOTAL $228,838
(Class C Shares)
Compensation to Investment Dealers $42,002
Compensation to Distributor's Sales Personnel
and Other Related Costs $9,097
----------
TOTAL $51,099
Of the amounts listed above as compensation to investment dealers, the
following amounts were paid by the Distributor to New England Securities
Corporation ("New England Securities"), MetLife Securities, Inc. ("MetLife
Securities") and Nathan & Lewis Securities, Inc. ("Nathan & Lewis"),
broker-dealer affiliates of the Distributor. New England Securities, MetLife
Securities and Nathan & Lewis paid substantially all of the fees they received
from the Distributor (a) in commissions to their sales personnel and (b) to
defray sales-related overhead costs.
New England Securities
----------------------
Class A Class B Class C
Star Advisers $704,375 $443,823 $129,678
Star Worldwide $152,537 $94,045 $27,808
Star Small Cap $80,962 $48,423 $28,593
Star Value $496,805 $90,836 $11,983
MetLife Securities
------------------
Class A Class B Class C
Star Advisers $22,016 $34,623 $7,375
Star Worldwide $3,466 $7,132 $62
Star Small Cap $2,369 $3,550 --
Star Value $4,054 $3,932 --
Nathan & Lewis
--------------
Class A Class B Class C
Star Advisers $4,709 $1,114 $4,057
Star Worldwide $845 $470 $578
Star Small Cap $393 $257 --
Star Value $2,762 $422 $208
xii
<PAGE>
--------------------------------------------------------------------------------
OWNERSHIP OF FUND SHARES
--------------------------------------------------------------------------------
As of March 31, 2000, to the Trust's knowledge, the following persons owned
of record or beneficially 5% or more of the outstanding shares of the indicated
classes set forth below.
<TABLE>
<CAPTION>
FUND SHAREHOLDER AND ADDRESS OWNERSHIP PERCENTAGE
---- ----------------------- --------------------
<S> <C> <C>
Star Advisers Fund
Class C shares MPLF & S For the Sole Benefit of Its Customers 6.82%
Attn Fund Administration ML#97VA7
4800 Deer Lake Drive East - 2nd Floor
Jacksonville, FL 32246-6484
Class Y shares
New England Mutual Life Insurance Co. 54.03%
Seperate Investment Accounting
Attn Brenda Harmon
501 Boylston Street - 6th Floor
Boston, MA 02116-3706
New England Life Insurance Co. 14.24%
Insurance Accounting 6th floor
501 Boylston Street
Boston, MA 02116-3706
New England Life Insurance Co. 10.37%
C/o Mary Beth Klien
Insurance Accounting 6th floor
501 Boylston Street
Boston, MA 02116-3706
Metropolitan Life Insurance Co. 18.17%
C/o Mary Beth Klein
Insurance Accounting 6th Fl.
501 Boylston Street
Boston, MA 02116-3706
Star Small Cap
Class B shares MPLF & S For the Sole Benefit of Its Customers 6.43%
Attn Fund Administration ML#97MR9
4800 Deer Lake Drive East - 2nd Floor
Jacksonville, FL 32246-6484
Class C shares MPLF & S For the Sole Benefit of Its Customers 13.74%
Attn Fund Administration ML#97UA9
4800 Deer Lake Drive East - 2nd Floor
Jacksonville, FL 32246-6484
xiii
<PAGE>
Star Value Fund
Class Y shares Metropolitan Life Insurance Co. Issuer 74.92%
501 Boylston Street
Boston, MA 02116-3706
New England Life Insurance Co. 23.34%
C/o Mary Beth Klein
Insurance Accounting 6th Fl.
501 Boylston St.
Boston, MA 02116-3706
</TABLE>
--------------------------------------------------------------------------------
INVESTMENT PERFORMANCE OF THE FUNDS
--------------------------------------------------------------------------------
PERFORMANCE RESULTS - PERCENT CHANGE*
FOR THE PERIODS ENDED 12/31/99
STAR ADVISERS FUND
<TABLE>
<CAPTION>
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
Since Since
Class A shares: As a % of 1 Year 5 Years 7/7/94** 5 Years 7/7/94**
----------------------------------------- ------ -------- -------- ------- --------
Net Asset Value 46.44 235.49 256.89 27.39 26.11
Maximum Offering Price 38.03 216.16 236.43 25.89 24.76
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class B shares: As a % of 1 Year 5 Years 7/7/94** 5 Years 7/7/94**
----------------------------------------- ------ -------- -------- ------- --------
Net Asset Value 45.36 223.44 242.82 26.46 25.18
Redemption at End of Period 40.36 221.44 241.82 26.30 25.12
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class C shares: As a % of 1 Year 5 Years 7/7/94** 5 Years 7/7/94**
----------------------------------------- ------ -------- -------- ------- --------
Net Asset Value 45.31 223.35 242.89 26.45 25.19
Redemption at End of Period 44.31 223.35 242.89 26.45 25.19
---------------------------
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class Y shares: As a % of 1 Year 5 Years 11/15/94** 5 Years 11/15/94**
----------------------------------------- ------ -------- -------- ------- --------
Net Asset Value 46.78 241.02 233.69 27.81 26.50
xiv
<PAGE>
STAR WORLDWIDE FUND
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class A shares: As a % of 1 Year 12/29/95** 12/29/95**
----------------------------------------- ------ ---------- ----------
Net Asset Value 37.63 88.19 17.10
Maximum Offering Price 29.72 77.40 15.39
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class B shares: As a % of 1 Year 12/29/95** 12/29/95**
----------------------------------------- ------ ---------- ----------
Net Asset Value 36.62 82.86 16.26
Redemption at End of Period 31.62 80.86 15.94
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class C shares: As a % of 1 Year 12/29/95** 12/29/95**
----------------------------------------- ------ ---------- ----------
Net Asset Value 36.50 82.94 16.28
Redemption at End of Period 35.50 82.94 16.28
---------------------------
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class Y shares: As a % of 1 Year inception** inception**
----------------------------------------- ------ ----------- -----------
Net Asset Value N\A N\A N\A
Star Small Cap Fund
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class A shares: As a % of 1 Year 12/31/96** 12/31/96**
----------------------------------------- ------ ---------- ----------
Net Asset Value 65.38 114.29 28.92
Maximum Offering Price 55.82 102.01 26.41
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class B shares: As a % of 1 Year 12/31/96** 12/31/96**
----------------------------------------- ------ ---------- ----------
Net Asset Value 64.14 109.61 27.98
Redemption at End of Period 59.14 109.61 27.37
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class C shares: As a % of 1 Year 12/31/96** 12/31/96**
----------------------------------------- ------ ---------- ----------
Net Asset Value 64.14 109.61 27.98
Redemption at End of Period 63.14 109.61 27.98
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class Y shares: As a % of 1 Year inception** inception**
----------------------------------------- ------ ---------- ----------
Net Asset Value N/A N/A N/A
Star Value Fund
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Class A shares: As a % of 1 Year 5 Years 10 Years 5 Years 10 Years
----------------------------------------- ------ ------- -------- ------- --------
Net Asset Value -6.92 101.45 197.56 15.04 11.52
Maximum Offering Price -12.27 89.96 180.33 13.69 10.86
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class B shares: As a % of 1 Year 5 Years 9/13/93** 5 Years 9/13/93**
----------------------------------------- ------ ------- -------- ------- ---------
Net Asset Value -7.61 93.36 102.08 14.17 11.82
Redemption at End of Period -11.41 91.99 102.08 13.93 11.82
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class C shares: As a % of 1 Year 5 Years 12/30/94** 5 Years 12/30/94**
----------------------------------------- ------ ------- --------- ------- ----------
Net Asset Value -7.60 94.16 94.16 14.19 14.18
Redemption at End of Period -8.36 94.16 94.16 14.19 14.18
Aggregate Average Annual
Total Return Total Return
------------------------------------------- ------------------------------
Since Since
Class Y shares: As a % of 1 Year 5 Years 3/31/94** 5 Years 3/31/94**
----------------------------------------- ------ ------- -------- ------- ---------
Net Asset Value -6.72 103.99 108.85 15.32 13.66
</TABLE>
[FN]
* Federal regulations require this example to be calculated using a $1,000
investment. The normal minimum initial investment in shares of the Funds is
$2,500, however.
** Commencement of Fund operations or offering of the specified class of
shares.
</FN>
The foregoing data represent past performance only and are not a prediction
as to the future returns of any Fund. The investment return and principal value
of an investment in any Fund will fluctuate so that the investor's shares, when
redeemed, may be worth more or less than their original cost.
