<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-12
NVEST FUNDS TRUST III
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY PROXY MATERIALS
NVEST FUNDS AND KOBRICK FUNDS LOGOS
August 2000
Dear Shareholder:
As we announced in July, our parent company has entered into an agreement to
be acquired by CDC Asset Management, a leading French financial institution,
as more fully described in the enclosed proxy statement. We are writing to ask
for your vote approving certain items described in the proxy statement and
outlined, for your convenience, in this letter. Your vote is extremely
important, so we urge you to read all material carefully and vote your shares
promptly. You may vote by returning the enclosed card, via our web site,
www.nvestfunds.com, or by calling us toll-free from a touch-tone phone at 888-
221-0697.
Q. WHAT ARE THE PROPOSALS ABOUT?
At the front of the enclosed proxy statement you'll find a table that
indicates which of the three proposals are relevant to your Fund.
The first two proposals relate to the advisory and sub-advisory agreements
for the Funds. The laws governing mutual funds generally require that when an
investment adviser or sub-adviser undergoes a change in ownership, the
advisory or sub-advisory agreement with each fund will terminate. In order for
the Nvest and Kobrick Funds to continue with their current investment advisers
and sub-advisers, shareholders must approve the new agreements. The proposed
agreements are substantially the same as the current agreements. FEES WILL NOT
CHANGE AND NO CHANGES ARE PLANNED TO THE PORTFOLIO MANAGERS OF YOUR FUND AS A
RESULT OF THE CDC ASSET MANAGEMENT TRANSACTION.
The third proposal relates to election of the Trustees of the Nvest Funds,
and is not relevant for shareholders of the Kobrick Funds. The current
Trustees of the Nvest Funds will remain the same, with the addition of John
Hailer. You will find information about all the current Trustees' and Mr.
Hailer's experience and tenure with the Funds in the proxy statement.
Q. HOW WILL THE CDC ASSET MANAGEMENT TRANSACTION AFFECT THE FUNDS?
It is not expected to affect the daily operations of the Funds or the
investment management activities of the Funds' advisers and sub-advisers. Both
Kobrick Funds and Nvest Funds, as well as the affiliated sub-advisers to the
Nvest Funds, will continue to operate autonomously, just as they have in the
past, but they will become part of a larger organization, with the resources
of CDC Asset Management. We will continue to work to meet your expectations
for consistent, competitive performance and high-quality customer service.
THERE ARE NO PLANS TO CHANGE THE FUNDS' NAMES, INVESTMENT OBJECTIVES,
STRATEGIES OR PORTFOLIO MANAGERS AS A RESULT OF THE TRANSACTION.
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SEPARATE PROXY CARDS ARE ENCLOSED FOR EACH ACCOUNT YOU OWN.
If you own shares in more than one account, we have enclosed a separate card
for each account in each Fund. THESE ARE NOT DUPLICATE CARDS; IT IS IMPORTANT
TO VOTE EACH ACCOUNT REPRESENTED BY THE PROXY CARDS ENCLOSED.
REMEMBER--YOUR VOTE COUNTS!
We cannot overemphasize the importance of your vote, regardless of how many
shares you own. Voting promptly is also important. If we do not receive enough
votes, we will have to resolicit shareholders, which can be time consuming and
may delay the meeting scheduled for October 13, 2000. A proxy solicitation
firm, D.F. King & Company, may call to remind you to return your proxy.
VOTE BY MAIL, VIA THE INTERNET, OR BY TOLL-FREE TELEPHONE.
You may vote by returning the enclosed proxy card, or following the voting
instructions available on our web site (www.nvestfunds.com), or by calling our
toll-free number (888-221-0697) from a touch-tone phone. Please see your proxy
card for more information and voting instructions. If you do vote
electronically, you do not need to mail your proxy card. If you want to change
your vote you may do so using the proxy card, telephone or the Internet.
Thank you for your cooperation in voting on these important proposals. If
you have questions, please call your financial representative. Or, if your
questions relate specifically to the proxy matters, please call our service
center representatives toll-free at 800-xxx-xxxx.
Sincerely,
John T. Hailer, Frederick R. Kobrick
President of Nvest Funds President of Kobrick Funds
<PAGE>
NVEST KOBRICK INVESTMENT TRUST
(the "Kobrick Funds Trust")
101 FEDERAL STREET
BOSTON, MA 02110
NVEST FUNDS TRUST I
NVEST FUNDS TRUST II
NVEST FUNDS TRUST III
NVEST CASH MANAGEMENT TRUST
NVEST TAX EXEMPT MANAGEMENT TRUST
(the "Nvest Funds Trusts")
399 BOYLSTON STREET
BOSTON, MA 02116
Kobrick Capital Fund Nvest Star Worldwide Fund
Kobrick Emerging Growth Fund Nvest Bond Income Fund
Kobrick Growth Fund Nvest Government Securities Fund
(the "Kobrick Funds") Nvest High Income Fund
Nvest Intermediate Term Tax Free Fund of
Nvest Balanced Fund California
Nvest Bullseye Fund Nvest Limited Term U.S. Government Fund
Nvest Capital Growth Fund Nvest Massachusetts Tax Free Income Fund
Nvest Equity Income Fund Nvest Municipal Income Fund
Nvest Growth and Income Fund Nvest Short Term Corporate Income Fund
Nvest Growth Fund Nvest Strategic Income Fund
Nvest International Equity Fund Nvest Cash Management Trust--Money Market
Nvest Star Advisers Fund Series
Nvest Star Small Cap Fund Nvest Tax Exempt Money Market Trust
Nvest Star Value Fund (the "Nvest Funds")
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
October 13, 2000
A Special Meeting of the shareholders of each Fund will be held at 2 p.m. on
October 13, 2000 at 399 Boylston Street, 10th floor, Boston, MA 02116 for
these purposes:
1a. To be voted on separately by shareholders of each Nvest Fund (except
Nvest Growth Fund): To approve a new Advisory Agreement with Nvest Funds
Management, L.P. ("Nvest Management") for each such Nvest Fund.
<PAGE>
1b. To be voted on separately by shareholders of Nvest Growth Fund: To
approve a new Advisory Agreement between Capital Growth Management Limited
Partnership ("CGM") and Nvest Growth Fund.
1c. To be voted on separately by shareholders of each Kobrick Fund: To
approve a new Advisory Agreement with Kobrick Funds LLC (the "Kobrick
Adviser") for each Kobrick Fund.
2a. To be voted on separately by shareholders of Nvest Bond Income Fund,
Nvest Cash Management Trust--Money Market Series, Nvest Government
Securities Fund, Nvest Intermediate Term Tax Free Fund of California,
Nvest Limited Term U.S. Government Fund, Nvest Massachusetts Tax Free
Income Fund, Nvest Municipal Income Fund, Nvest Short Term Corporate
Income Fund and Nvest Tax Exempt Money Market Trust: To approve a new Sub-
Advisory Agreement among Nvest Management, Back Bay Advisors, L.P. and the
Fund for each of these Funds.
2b. To be voted on separately by shareholders of Nvest Star Advisers
Fund, Nvest Star Small Cap Fund, Nvest Star Value Fund and Nvest Star
Worldwide Fund: To approve a new Sub-Advisory Agreement among Nvest
Management, Harris Associates L.P. and the Fund for each of these Funds.
2c. To be voted on separately by shareholders of Nvest Star Advisers
Fund: To approve a new Sub-Advisory Agreement among Nvest Management,
Janus Capital Corporation and the Fund.
2d. To be voted on separately by shareholders of Nvest Bullseye Fund: To
approve a new Sub-Advisory Agreement among Nvest Management, Jurika &
Voyles, L.P. and the Fund.
2e. To be voted on separately by shareholders of Nvest Star Advisers
Fund: To approve a new Sub-Advisory Agreement among Nvest Management, the
Kobrick Adviser and the Fund.
2f. To be voted on separately by shareholders of Nvest Balanced Fund,
Nvest High Income Fund, Nvest International Equity Fund, Nvest Star
Advisers Fund, Nvest Star Small Cap Fund, Nvest Star Value Fund, Nvest
Star Worldwide Fund and Nvest Strategic Income Fund: To approve a new Sub-
Advisory Agreement among Nvest Management, Loomis, Sayles & Company, L.P.
and the Fund for each of these Funds.
2g. To be voted on separately by shareholders of Nvest Star Small Cap
Fund and Nvest Star Worldwide Fund: To approve a new Sub-Advisory
Agreement among Nvest Management, Montgomery Asset Management, LLC and the
Fund for each of these Funds.
2h. To be voted on separately by shareholders of Nvest Star Small Cap
Fund: To approve a new Sub-Advisory Agreement among Nvest Management, RS
Investment Management, L.P. and the Fund.
2
<PAGE>
PROXY STATEMENT
NVEST KOBRICK INVESTMENT TRUST
(the "Kobrick Funds Trust")
101 FEDERAL STREET
BOSTON, MA 02110
NVEST FUNDS TRUST I
NVEST FUNDS TRUST II
NVEST FUNDS TRUST III
NVEST CASH MANAGEMENT TRUST
NVEST TAX EXEMPT MANAGEMENT TRUST
(the "Nvest Funds Trusts")
399 BOYLSTON STREET
BOSTON, MA 02116
Kobrick Capital Fund Nvest Star Worldwide Fund
Kobrick Emerging Growth Fund Nvest Bond Income Fund
Kobrick Growth Fund Nvest Government Securities Fund
(the "Kobrick Funds") Nvest High Income Fund
Nvest Intermediate Term Tax Free Fund of
Nvest Balanced Fund California
Nvest Bullseye Fund Nvest Limited Term U.S. Government Fund
Nvest Capital Growth Fund Nvest Massachusetts Tax Free Income Fund
Nvest Equity Income Fund Nvest Municipal Income Fund
Nvest Growth and Income Fund Nvest Short Term Corporate Income Fund
Nvest Growth Fund Nvest Strategic Income Fund
Nvest International Equity Fund Nvest Cash Management Trust--Money Market
Nvest Star Advisers Fund Series
Nvest Star Small Cap Fund Nvest Tax Exempt Money Market Trust
Nvest Star Value Fund (the "Nvest Funds")
(The Kobrick Funds and the Nvest Funds are referred to collectively as the
"Funds")
The Trustees of the Nvest Funds (the "Nvest Trustees") and the Kobrick Funds
(the "Kobrick Trustees") (collectively the "Trustees") are soliciting proxies
from the shareholders of each of the Funds in connection with a Special Meeting
of Shareholders of each Fund (the "Meeting"). The Meeting has been called to be
held at 2:00 p.m. on October 13, 2000 at 399 Boylston Street, 10th floor,
Boston, MA 02116. The meeting notice, this Proxy Statement and proxy cards are
being sent to shareholders of record as of August 29, 2000 (the "Record Date")
beginning on or about August 29, 2000.
1
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The only items of business that the Trustees expect will come before the
Meeting are (1) approval of a new advisory agreement (the "New Advisory
Agreement") for each Nvest Fund (except Nvest Growth Fund) with Nvest Funds
Management, L.P. ("Nvest Management"), a New Advisory Agreement for Nvest
Growth Fund with Capital Growth Management Limited Partnership ("CGM") and a
New Advisory Agreement for each Kobrick Fund with Kobrick Funds LLC (the
"Kobrick Adviser" and together with Nvest Management and CGM, the "Advisers"),
(2) approval of a new sub-advisory agreement (the "New Sub-Advisory
Agreement") for each Nvest Fund (except Nvest Growth Fund) among Nvest
Management, such Nvest Fund's respective sub-adviser(s) (each, a "Sub-
Adviser", in addition, in its capacity as sub-advisor of a segment of Nvest
Star Advisers Fund, the Kobrick Adviser is sometimes referred to as a Sub-
Adviser) and such Nvest Fund, and (3) the election of Trustees of each Nvest
Funds Trust.
SUMMARY OF PROPOSALS AND FUNDS AFFECTED*
<TABLE>
<CAPTION>
1. PROPOSAL TO 2. PROPOSAL TO
APPROVE A NEW APPROVE A NEW
INVESTMENT INVESTMENT SUB- 3. PROPOSAL
ADVISORY ADVISORY TO ELECT
NAME OF FUND AGREEMENT AGREEMENT TRUSTEES
------------ -------------- ----------------- -----------
<S> <C> <C> <C>
Kobrick Capital Fund............ X (1c)
Kobrick Emerging Growth Fund.... X (1c)
Kobrick Growth Fund............. X (1c)
Nvest Balanced Fund............. X (1a) X (2f) X
Nvest Bullseye Fund............. X (1a) X (2d) X
Nvest Capital Growth Fund....... X (1a) X (2j) X
Nvest Equity Income Fund........ X (1a) X (2i) X
Nvest Growth and Income Fund.... X (1a) X (2j) X
Nvest Growth Fund............... X (1b) X
Nvest International Equity
Fund........................... X (1a) X (2f) X
Nvest Star Advisers Fund........ X (1a) X (2b, 2c, 2e, 2f) X
Nvest Star Small Cap Fund....... X (1a) X (2b, 2f, 2g, 2h) X
Nvest Star Value Fund........... X (1a) X (2b, 2f, 2i, 2j) X
Nvest Star Worldwide Fund....... X (1a) X (2b, 2f, 2g) X
Nvest Bond Income Fund.......... X (1a) X (2a) X
Nvest Government Securities
Fund........................... X (1a) X (2a) X
Nvest High Income Fund.......... X (1a) X (2f) X
Nvest Intermediate Term Tax Free
Fund of California............. X (1a) X (2a) X
Nvest Limited Term U.S.
Government Fund................ X (1a) X (2a) X
Nvest Massachusetts Tax Free
Income Fund.................... X (1a) X (2a) X
Nvest Municipal Income Fund..... X (1a) X (2a) X
Nvest Short Term Corporate
Income Fund.................... X (1a) X (2a) X
Nvest Strategic Income Fund..... X (1a) X (2f) X
Nvest Cash Management Trust--
Money Market Series............ X (1a) X (2a) X
Nvest Tax Exempt Money Market
Trust.......................... X (1a) X (2a) X
</TABLE>
-----------
* An "X" denotes that the Fund is affected by the proposal and that the Fund's
shareholders are being solicited with respect to that proposal. Where
applicable, the proposal sub-item is provided in parentheses.
2
<PAGE>
I. PROPOSALS 1 AND 2
NEW ADVISORY AND SUB-ADVISORY AGREEMENTS
As explained below, the proposed New Advisory Agreement for each Fund is
substantially identical (except for its date and the use of trade name
provision) to the Advisory Agreement currently in effect for that Fund (each
Fund's "Current Advisory Agreement"), and the proposed New Sub-Advisory
Agreement(s) for each Nvest Fund is substantially identical (except for its
date) to the Sub-Advisory Agreement(s) currently in effect for that Nvest Fund
(each Nvest Fund's "Current Sub-Advisory Agreement"). In this Proxy Statement,
the New Advisory Agreements for the Funds and the New Sub-Advisory Agreements
for the Nvest Funds are together sometimes referred to as the "New
Agreements," and the Current Advisory Agreement for the Funds and the Current
Sub-Advisory Agreements for the Nvest Funds are together sometimes referred to
as the "Current Agreements." The Nvest Funds and the Kobrick Funds are
governed by separate Boards of Trustees. Therefore, references below to the
Trustees' actions and considerations on these matters relate specifically to
the Funds for which the Trustees serve in that capacity.
The reason the Trustees are proposing the New Agreements for each Fund is
that the Current Agreements will terminate when the Advisers' and affiliated
Sub-Advisers' parent company, Nvest Companies, L.P. ("Nvest"), is acquired by
a new parent company, CDC Asset Management ("CDC AM"). (A federal law, the
Investment Company Act of 1940, as amended (the "Investment Company Act"),
provides generally that the advisory agreements of mutual funds, including
sub-advisory agreements such as the Current Sub-Advisory Agreements,
automatically terminate when its investment adviser (including sub-advisers)
or its parent company undergo a significant change of ownership.) The Trustees
have carefully considered the matter, and have concluded that it is
appropriate to enter into the New Agreements for each Fund, so that the
Advisers and the respective Sub-Advisers can continue, following the
acquisition of Nvest by CDC AM, to manage each Fund on substantially the same
terms as are now in effect.
The acquisition of Nvest by CDC AM will occur only if various conditions are
satisfied (or waived by the parties if permitted by law). These conditions
include, among others, certain government approvals of the acquisition and
approval of the acquisition by vote of the unitholders of Nvest and Nvest,
L.P. ("Nvest, L.P."), Nvest's advising general partner. Nvest currently
expects that the acquisition will occur during the fourth calendar quarter of
2000, but the acquisition could be delayed. If the acquisition does not occur,
the New Agreements would not be needed because the automatic termination of
the Current Agreements would not occur.
3
<PAGE>
Apart from the new date, the only other significant change to the New
Advisory Agreements for the Nvest Funds is the removal of the use of trade
name provision that was included in the Nvest Funds' Current Advisory
Agreements. This provision requires automatic termination of such agreement if
Nvest Management (or, in the case of Nvest Growth Fund, Nvest Funds
Distributor, L.P., the principal underwriter) requires the relevant Fund to
change its name so as to discontinue the use of certain trade names unless
such change is approved by vote of a majority of the outstanding voting
securities of the Fund and by vote of a majority of the Trustees, including a
majority of the Independent Trustees (as defined below under "Description of
the New Advisory Agreement"). The Nvest Funds intend to enter into a separate
agreement to address the use of Nvest's trade names. The New Agreements will
also standardize minor variances among the different Current Agreements that
have occurred over the years. These changes are conforming in nature and do
not materially change the Current Agreements.
Apart from the new date, there are two changes to the New Advisory
Agreements for the Kobrick Funds. First is the removal of the use of trade
name provision that was included in the Kobrick Funds' Current Advisory
Agreements. This provision requires the Kobrick Funds to discontinue the use
of certain trade names if the Kobrick Adviser ceases to be retained as the
investment adviser. The Kobrick Funds intend to enter into a separate
agreement to address the use of trade name. The second change is the
separation of the three Kobrick Funds into individual New Advisory Agreements.
The Current Advisory Agreement aggregates the three Kobrick Funds together.
Under the Investment Company Act, a Fund cannot enter into a New Agreement
unless the shareholders of that Fund vote to approve the New Agreement. The
Meeting is being held to seek shareholder approval of the New Agreements. NO
CHANGE IN ADVISORY OR SUB-ADVISORY FEE RATE IS BEING PROPOSED.
Shareholders of each Fund will vote only with regard to the New Advisory
Agreement and, where applicable, the New Sub-Advisory Agreement for their own
Fund. Each share is entitled to cast one vote, and fractional shares are
entitled to a proportionate fractional vote.
THE TRUSTEES OF EACH FUND RECOMMEND THAT THE SHAREHOLDERS OF SUCH FUND VOTE
TO APPROVE THE NEW AGREEMENTS FOR THEIR FUND.
Description of the New Advisory Agreements
The New Advisory Agreement for each Fund is identical to the Current
Advisory Agreement for that Fund, except that the date of each New Advisory
Agreement will be the date that CDC AM acquires Nvest, certain non-material
conforming changes will be made and the provision relating to the use of trade
4
<PAGE>
name will be removed. Appendix A1 to this Proxy Statement sets forth
information about the Current Advisory Agreements, including the dates of the
Current Advisory Agreements and the advisory fee rates under both the New
Advisory Agreements and the Current Advisory Agreements. Appendix B1 to this
Proxy Statement contains the form of the Advisory Agreements for the Nvest
Funds and Appendix B2 contains the form of the Advisory Agreements for the
Kobrick Funds. Each Current Advisory Agreement and each New Advisory Agreement
matches the form in Appendix B1 for the Nvest Funds and Appendix B2 for the
Kobrick Funds, upon completion of the names of the Funds, the dates of the
Agreements, the fee rates, conforming changes and the removal of the use of
trade name provision mentioned previously. The next several paragraphs briefly
summarize some important provisions of the New Advisory Agreements, but for a
complete understanding of the Agreements you should read Appendices A1, B1 and
B2.
Each New Advisory Agreement essentially provides that the Adviser, under the
Trustees' supervision, will (1) decide what securities to buy and sell for the
Fund's portfolio, (2) select brokers and dealers to carry out portfolio
transactions for the Fund and (3) provide officers, office space and certain
administrative services to the Fund.
Each New Advisory Agreement provides that it will continue in effect for an
initial period of two years (beginning on the date CDC AM acquires Nvest).
After that, it will continue in effect from year to year as long as the
continuation is approved at least annually (i) by the Trustees or by vote of a
majority of the outstanding voting securities of the relevant Fund, and (ii)
by vote of a majority of the Trustees who are not "interested persons," as
that term is defined in the Investment Company Act, of the Trust or the
Adviser (these Trustees who are not "interested persons" of the Trust, an
Adviser or a Sub-Adviser are referred to below as the "Independent Trustees").
Each New Advisory Agreement may be terminated without penalty by vote of the
Trustees or by vote of a majority of the outstanding voting securities of the
relevant Fund, on sixty days' written notice to the Adviser, or by the Adviser
upon ninety days' written notice (in the case of the Nvest Funds) or sixty
days' written notice (in the case of the Kobrick Funds) to the relevant Trust,
and each terminates automatically in the event of its "assignment" as defined
in the Investment Company Act. The Investment Company Act defines "assignment"
to include, in general, transactions in which a significant change in the
ownership of an investment adviser (including a sub-adviser) or its parent
company occur (such as the acquisition of Nvest by CDC AM).
Each New Advisory Agreement provides that the Adviser will not be liable to
the relevant Fund or its shareholders, except for liability arising from the
Adviser's
5
<PAGE>
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties.
Description of the New Sub-Advisory Agreements for the Nvest Funds
The New Sub-Advisory Agreement for each Nvest Fund is identical to the
Current Sub-Advisory Agreement for that Fund, except that the date of each New
Sub-Advisory Agreement will be the date that CDC AM acquires Nvest, and
certain non-material conforming changes will be made. Appendix A2 to this
Proxy Statement sets forth information about the Current Sub-Advisory
Agreements, including the dates of the Current Sub-Advisory Agreements and the
advisory fee rates under both the New Sub-Advisory Agreements and the Current
Sub-Advisory Agreements. Appendix B3 to this Proxy Statement contains the form
of the Sub-Advisory Agreements. Each Current Sub-Advisory Agreement and each
New Sub-Advisory Agreement matches the form in Appendix B3, upon completion of
the names of the Funds, the dates of the Agreements, the fee rates and the
non-material conforming changes mentioned previously. The next several
paragraphs briefly summarize some important provisions of the New Sub-Advisory
Agreements, but for a complete understanding of the Agreements you should read
Appendices A2 and B2.
Each New Sub-Advisory Agreement essentially provides that the Sub-Adviser,
under the Trustees' and Nvest Management's supervision, will (1) decide what
securities to buy and sell for the Fund's portfolio, (2) select brokers and
dealers to carry out portfolio transactions for the Fund and (3) provide
officers, office space and certain administrative services to the Fund.
Each New Sub-Advisory Agreement provides that it will continue in effect for
an initial period of two years (beginning on the date CDC AM acquires Nvest).
After that, it will continue in effect from year to year as long as the
continuation is approved at least annually (i) by the Trustees or by vote of a
majority of the outstanding voting securities of the relevant Fund, and (ii)
by vote of a majority of the Independent Trustees.
Each New Sub-Advisory Agreement may be terminated without penalty (i) by
vote of the Trustees or by vote of a majority of the outstanding voting
securities of the relevant Fund, on sixty days' written notice to the Sub-
Adviser, (ii) by Nvest Management, on ninety days' written notice to the Sub-
Adviser, or (iii) by the Sub-Adviser, upon ninety days' written notice to
Nvest Management and the Trust, and each terminates automatically in the event
of its "assignment" as defined in the Investment Company Act or upon
termination of the Advisory Agreement.
Each New Sub-Advisory Agreement provides that the Sub-Adviser will not be
liable to the Adviser, the relevant Trust, the relevant Fund or its
shareholders,
6
<PAGE>
except for liability arising from the Sub-Adviser's willful misfeasance, bad
faith, gross negligence or reckless disregard of its duty. In addition, each
New Sub-Advisory Agreement provides that Nvest Management shall indemnify the
Sub-Adviser for liability arising from any claim or demand by any past or
present shareholder of the relevant Fund that is not based upon the
obligations of the Sub-Adviser.
Basis for the Trustees' Recommendations
The Nvest Trustees determined at a meeting held on August 25, 2000 to
recommend that each Nvest Fund's shareholders vote to approve the New Advisory
Agreement and, where applicable, the New Sub-Advisory Agreement for their
Fund. The Kobrick Trustees determined at a meeting held on August 21, 2000 to
recommend that each Kobrick Fund's shareholders vote to approve the New
Advisory Agreement for their Fund.
In coming to this recommendation, the Trustees considered a wide range of
information of the type they regularly consider when determining whether to
continue a Fund's advisory agreement as in effect from year to year. (In each
of the following, reference to the Sub-Advisers is for the Nvest Trustees
only.) The Trustees considered information about, among other things:
. the Advisers and Sub-Advisers and their respective personnel
(including particularly those personnel with responsibilities for
providing services to the Funds), resources and investment process;
. the terms of the relevant advisory agreements (in this case, the New
Agreements);
. the scope and quality of the services that the Advisers and Sub-
Advisers have been providing to the Funds;
. the investment performance of the Funds and of similar funds managed
by other advisers;
. the advisory fee rates payable to the Advisers and certain Sub-
Advisers by the Funds and by Nvest Management to certain Sub-Advisers
with respect to the Funds, and by other funds and client accounts
managed by the Advisers and Sub-Advisers, and payable by similar funds
managed by other advisers (Appendix C to this Proxy Statement contains
information comparing each Fund's advisory fee schedule to the fee
schedule for other funds managed by such Fund's Adviser and, where
applicable, the Fund's Sub-Adviser(s) that have investment objectives
similar to the Fund's);
. the total expense ratios of the Funds and of similar funds managed by
other advisers;
7
<PAGE>
. the Advisers' and Sub-Advisers' practices regarding the selection and
compensation of brokers and dealers that execute portfolio
transactions for the Funds, and the brokers' and dealers' provision of
brokerage and research services to the Advisers and Sub-Advisers (see
"Certain Brokerage Matters" below and Appendix D for more information
about these matters); and
. compensation payable by the Funds to affiliates of the Advisers and
Sub-Advisers for other services (see Appendix E to this Proxy
Statement for more information about this compensation).
In addition to reviewing these kinds of information, which the Trustees
regularly consider on an annual or more frequent basis, the Trustees gave
particular consideration to matters relating to the possible effects on the
Advisers, the affiliated Sub-Advisers and the Funds of the acquisition of
Nvest by CDC AM. Among other things, the Trustees considered:
. the stated intention of Nvest and CDC AM that the Advisers and the
affiliated Sub-Advisers will continue to have a high degree of
managerial autonomy from their parent organizations and from other
subsidiaries of Nvest;
. the stated intention of Nvest, CDC AM, the Advisers and the affiliated
Sub-Advisers that the acquisition not change the investment approach
or process used by the Advisers and the affiliated Sub-Advisers in
managing the Funds;
. representations of senior executives of the Advisers, the affiliated
Sub-Advisers and the portfolio managers of the Funds that they have no
intention of terminating their employment with the Advisers or the
affiliated Sub-Advisers as a result of CDC AM's acquisition of Nvest,
and representations of the Advisers, the affiliated Sub-Adviser, Nvest
and CDC AM that they have no intention of terminating the employment
of these executives or portfolio managers as a result of the
acquisition;
. certain actions taken by CDC AM, Nvest, the Advisers and the
affiliated Sub-Advisers to help retain and incent their key personnel;
. assurances from the Advisers and the affiliated Sub-Advisers that they
have no plans, as a result of or in connection with CDC AM's
acquisition of Nvest, to change or discontinue existing arrangements
under which it waives fees or bears expenses of certain of the Funds;
. the general reputation and the financial resources of CDC AM and its
parent organizations; and
. the fact that affiliates of the Advisers and affiliated Sub-Advisers
who currently provide transfer agency, administration and brokerage
and
8
<PAGE>
distribution services to the Funds are willing to continue to do so
following the acquisition, and that the compensation rates payable by
the Funds for these services are not expected to change as a result of
the acquisition.
In addition, the Trustees considered that the agreement relating to the
acquisition of Nvest by CDC AM provides that CDC AM and its immediate parent
company will (subject to certain qualifications) use their reasonable best
efforts to assure compliance with Section 15(f) of the Investment Company Act.
Section 15(f) provides that a mutual fund investment adviser or its affiliates
can receive benefit or compensation in connection with a change of control of
the investment adviser (such as CDC AM's acquisition of the Advisers' parent,
Nvest) if two conditions are satisfied. First, for three years after the
change of control, at least 75% of the members of the board of any registered
investment company advised by the adviser must consist of persons who are not
"interested persons," as defined in the Investment Company Act, of the
adviser. (No changes in the current composition of the Trustees are required
to satisfy this condition.) Second, no "unfair burden" may be imposed on any
such registered investment company as a result of the change of control
transaction or any express or implied terms, conditions or understandings
applicable to the transaction. "Unfair burden" means any arrangement, during
the two years after the transaction, by which the investment adviser or any
"interested person" of the adviser receives or is entitled to receive any
compensation, directly or indirectly, from such investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any other person in connection with the purchase or sale of
securities or other property to, from or on behalf of such investment company.
After carefully considering the information summarized above, the Trustees,
including the Independent Trustees, unanimously voted to approve the New
Advisory Agreement for each Fund and new Sub-Advisory Agreement(s) for each
Nvest Fund (except Nvest Growth Fund) and to recommend that each Fund's
shareholders vote to approve the New Advisory Agreement and, where applicable,
the new Sub-Advisory Agreement for their Fund.
Information About the Ownership of the Advisers, the Sub-Advisers and the
CDC AM/Nvest Transaction
Nvest Management.
Nvest Funds Management, L.P. Nvest Management is a limited partnership that
has one general partner, Nvest Distribution Corporation (the "Adviser General
Partner"). John T. Hailer is the principal executive officer of the Adviser.
Mr. Hailer's principal occupation is his position with Nvest Management. The
address of Nvest Management, the Adviser General Partner and Mr. Hailer is 399
9
<PAGE>
Boylston Street, Boston, Massachusetts 02116. The Adviser General Partner is a
direct wholly-owned subsidiary of Nvest Holdings, Inc. ("Nvest Holdings"),
which in turn is a direct wholly-owned subsidiary of Nvest. Nvest's managing
general partner, Nvest Corporation, is a direct wholly-owned subsidiary of
MetLife New England Holdings, Inc. MetLife New England Holdings, Inc. is a
direct wholly-owned subsidiary of Metropolitan Life Insurance Company
("MetLife"). Nvest Corporation is also the sole general partner of Nvest, L.P.
Nvest, L.P., Nvest's advising general partner, is a publicly traded company
listed on the New York Stock Exchange. In addition to owning Nvest
Corporation, MetLife owns, directly or indirectly, approximately a 48% limited
partnership interest in Nvest. Nvest, L.P. owns approximately 15% of Nvest.
(These percentages, which are as of June 30, 2000, do not reflect the vesting
and exercise, described below, of various options held by personnel of Nvest
and of its affiliates, including the Advisers and the affiliated Sub-Advisers,
to acquire limited partnership units of Nvest, L.P.) If the proposed
acquisition is completed, Nvest Corporation will cease to be the managing
general partner of Nvest and the general partner of Nvest, L.P., and MetLife
will cease to own any partnership interest in Nvest. MetLife is a wholly-owned
subsidiary of MetLife, Inc., a publicly traded company listed on the New York
Stock Exchange. The address of Nvest, Nvest Corporation, Nvest Holdings and
Nvest, L.P. is 399 Boylston Street, Boston, Massachusetts 02116. The address
of MetLife New England Holdings, Inc., MetLife and MetLife, Inc. is One
Madison Avenue, New York, New York 10010.
CGM.
Capital Growth Management Limited Partnership. CGM is a limited partnership
whose sole general partner, Kenbob, Inc., is a corporation owned in equal
shares by Robert L. Kemp and G. Kenneth Heebner. Mr. Kemp and Mr. Heebner are
the principal executive officers of CGM and the principal occupation of each
principal executive officer is his position with CGM. The address of CGM, Mr.
Kemp and Mr. Heebner is One International Place, Boston, Massachusetts 02110.
Nvest owns a majority limited partnership interest in CGM. Information about
Nvest and the ownership of Nvest is disclosed above under "Nvest Management."
As of June 30, 2000, CGM had assets under management of approximately $7.228
billion.
The Kobrick Adviser.
Kobrick Funds LLC. The Kobrick Adviser is a limited liability company that
has a board of managers consisting of the following four individuals:
Frederick Kobrick, Richard Goldman, Jeffrey Plunkett and Sherry Umberfield.
Frederick Kobrick is the principal executive officer of the Kobrick Adviser.
Mr. Kobrick's principal occupation is his position with the Kobrick Adviser.
The address of the Kobrick Adviser, Mr. Kobrick and Mr. Goldman is 101 Federal
Street, Boston, Massachusetts 02110. The address of Mr. Plunkett and Ms.
Umberfield is 399 Boylston Street, Boston Massachusetts 02116. The Kobrick
Adviser is a direct
10
<PAGE>
wholly-owned subsidiary of Nvest. Information about Nvest and the ownership of
Nvest is disclosed above under "Nvest Management." As of June 30, 2000, the
Kobrick Adviser had assets under management of approximately $1.1 billion.
The Sub-Advisers.
Back Bay Advisors, L.P. Back Bay Advisors, L.P. ("Back Bay Advisors") is a
limited partnership that has one general partner, Back Bay Advisors, Inc. (the
"Back Bay General Partner"). J. Michael Gaffney is the principal executive
officer of Back Bay Advisors. Mr. Gaffney's principal occupation is his
position with Back Bay Advisors. The address of Back Bay Advisors, the Back
Bay General Partner and Mr. Gaffney is 399 Boylston Street, Boston,
Massachusetts 02116. The Back Bay General Partner is a wholly-owned subsidiary
of Nvest. Information about Nvest and the ownership of Nvest is disclosed
above under "Nvest Management." As of June 30, 2000, Back Bay Advisors had
assets under management of approximately $4.987 billion.
Harris Associates L.P. Harris Associates L.P. ("Harris Associates") is a
limited partnership that has one general partner, Harris Associates Inc. (the
"Harris Associates General Partner"). Robert M. Levy is the principal
executive officer of Harris Associates. Mr. Levy's principal occupation is his
position with Harris Associates. The address of Harris Associates, the Harris
Associates General Partner and Mr. Levy is Two North LaSalle Street, Chicago,
Illinois 60602. The Harris Associates General Partner is a wholly-owned
subsidiary of Nvest. Information about Nvest and the ownership of Nvest is
disclosed above under "Nvest Management." As of June 30, 2000, Harris
Associates had assets under management of approximately $10.8 billion.
Janus Capital Corporation. Janus Capital Corporation ("Janus Capital") is a
corporation that has a board of directors consisting of the following
individuals: Thomas Bailey, James Craig, Michael Stoper, Michael Herman,
Thomas McDonnell and Landon Rowland. Thomas Bailey is the chief executive
officer of Janus Capital. Mr. Bailey's principal occupation is his position
with Janus Capital. The address of Janus Capital and its directors is 100
Fillmore Street, Denver, Colorado 80206. Janus Capital is a majority-owned
subsidiary of Stilwell Financial Inc., 114 West 11th Street, Kansas City,
Missouri 64105. Stilwell Financial Inc. owns approximately 81.5% of the
outstanding voting stock of Janus Capital and is a publicly traded holding
company with principal operations in financial asset management businesses.
Thomas Bailey owns approximately 12% of the outstanding voting stock of Janus
Capital. Mr. Bailey by agreement with Stilwell Financial Inc. selects at least
a majority of Janus Capital's Board subject to the approval of Stilwell
Financial, which approval cannot be unreasonably withheld. As of June 30,
2000, Janus Capital had assets under management of approximately $304 billion.
11
<PAGE>
Jurika & Voyles, L.P. Jurika & Voyles, L.P. ("Jurika & Voyles") is a limited
partnership that has one general partner, Jurika & Voyles, Inc. (the "Jurika &
Voyles General Partner"). Christopher L. Bittman is the principal executive
officer of Jurika & Voyles. Mr. Bittman's principal occupation is his position
with Jurika & Voyles. The address of Jurika & Voyles, the Jurika & Voyles
General Partner and Mr. Bittman is 1999 Harrison Street, Suite 700, Oakland,
California 94162. The Jurika & Voyles General Partner is a wholly-owned
subsidiary of Nvest. Information about Nvest and the ownership of Nvest is
disclosed above under "Nvest Management." As of June 30, 2000, Jurika & Voyles
had assets under management of approximately $2.635 billion.
Loomis, Sayles & Company, L.P. Loomis, Sayles & Company, L.P. ("Loomis
Sayles") is a limited partnership that has one general partner, Loomis, Sayles
& Company, Inc. (the "Loomis Sayles General Partner"). Robert J. Blanding is
the principal executive officer of Loomis Sayles. Mr. Blanding's principal
occupation is his position with Loomis Sayles. The address of Loomis Sayles
and the Loomis Sayles General Partner is One Financial Center, Boston,
Massachusetts 02111. The address of Mr. Blanding is 555 California Street, San
Francisco, California 94104. The Loomis Sayles General Partner is a wholly-
owned subsidiary of Nvest. Information about Nvest and the ownership of Nvest
is disclosed above under "Nvest Management." As of June 30, 2000, Loomis
Sayles had assets under management of approximately $67.4 billion.
Montgomery Asset Management, LLC. Montgomery Asset Management, LLC
("Montgomery") is a limited liability corporation that has a board of
directors consisting of the following individuals: Stephen Doyles (chairman),
Mark B. Geist, Andreas Kleffel, H. Josef Hockmann and Freidrich P. Schmitz.
Mark B. Geist is the chief executive officer of Montgomery. Mr. Geist's
principal occupation is his position with Montgomery. The address of
Montgomery and its directors is 101 California Street, San Francisco,
California 94111. Montgomery is a majority-owned subsidiary of Commerzbank AG,
Platz der Einheit 1, 60261 Frankfurt an Main, Germany, which holds an 86.2%
interest in Montgomery. As of June 30, 2000, Montgomery had assets under
management of approximately $10.6 billion.
RS Investment Management, L.P. RS Investment Management, L.P. ("RSIM") is a
limited partnership with one general partner, RS Investment Management, Co.
LLC (the "RSIM General Partner"). G. Randall Hecht is the Chief Executive
Officer of RSIM. Mr. Hecht's principal occupation is his position with RSIM.
The address of RSIM, the RSIM General Partner and Mr. Hecht is 388 Market
Street, San Francisco, California 94111. As of June 30, 2000, RSIM had assets
under management of approximately $11.9 billion.
Vaughan, Nelson, Scarborough & McCullough, L.P. Vaughan, Nelson, Scarborough
& McCullough, L.P. ("Vaughan Nelson") is a limited partnership that has one
general partner, Vaughan, Nelson, Scarborough & McCullough, Inc. (the
12
<PAGE>
"Vaughan Nelson General Partner"). Lee A. Lahourcade is the principal
executive officer of Vaughan Nelson. Mr. Lahourcade's principal occupation is
his position with Vaughan Nelson. The address of Vaughan Nelson, the Vaughan
Nelson General Partner and Mr. Lahourcade is 6300 Chase Tower, Houston, Texas
77002. The Vaughan Nelson General Partner is a wholly-owned subsidiary of
Nvest. Information about Nvest and the ownership of Nvest is disclosed above
under "Nvest Management." As of June 30, 2000, Vaughan Nelson had assets under
management of approximately $4.489 billion.
Westpeak Investment Advisors, L.P. Westpeak Investment Advisors, L.P.
("Westpeak") is a limited partnership that has one general partner, Westpeak
Investment Advisors, Inc. (the "Westpeak General Partner"). Gerald H. Scriver
is the principal executive officer of Westpeak. Mr. Scriver's principal
occupation is his position with Westpeak. The address of Westpeak, the
Westpeak General Partner and Mr. Scriver is 1011 Walnut Street, Boulder,
Colorado 80302. The Westpeak General Partner is a wholly-owned subsidiary of
Nvest. Information about Nvest and the ownership of Nvest is disclosed above
under "Nvest Management." As of June 30, 2000, Westpeak had assets under
management of approximately $9.33 billion.
Description of the Transaction
On June 16, 2000, Nvest and CDC AM announced that they and certain of their
respective affiliated companies had entered into an Agreement and Plan of
Merger (the "Merger Agreement"). Under the Merger Agreement, CDC AM would
acquire all of the outstanding units of partnership interest in both Nvest and
Nvest, L.P., at a price of $40 per unit. This price is subject to reduction
(but not below $34 per unit) based in part on a formula that takes into
account the investment advisory fees payable to the Advisers, the affiliated
Sub-Advisers and other Nvest affiliates by their mutual fund and other
investment advisory clients that have consented to the transaction. Under this
formula, the price per unit that CDC AM will pay to acquire Nvest, including
the price it will pay to those trustees and officers of the Trusts who hold or
have been granted options to acquire units (see below), could be reduced if a
Fund's shareholders do not approve the New Agreements for their Fund. Assuming
a transaction price of $40 per unit, and the number of units and options
outstanding as of June 30, 2000, the aggregate price payable by CDC AM to
acquire all of the units of Nvest will be approximately $1.5 billion, and the
aggregate price payable by CDC AM to acquire all of the units of Nvest, L.P.
(including payments with respect to units subject to options) will be
approximately $375 million.
The transaction will not occur unless various conditions are satisfied (or
waived by the parties, if permitted by law). One of these conditions is
obtaining approval or consent from investment advisory clients of the
Advisers, the affiliated
13
<PAGE>
Sub-Advisers and other Nvest affiliates (including mutual fund clients) whose
advisory fees represent a specified percentage of the total advisory fee
revenues of the Nvest organization. Because of this condition, approval or
disapproval by a Fund's shareholders of the New Agreements for their Fund,
taken together with other clients' consents or approvals, could affect whether
or not the transaction occurs. As described below, certain trustees and
officers of the Trusts will receive certain material payments or benefits if
the transaction occurs. The transaction will result in automatic termination
of the Current Agreements. If for some reason the transaction does not occur,
the automatic termination of the Current Agreements will not occur, and the
New Agreements will not be entered into, even if they have been approved by
the Funds' shareholders.
As a result of the acquisition, Nvest and Nvest, L.P. would become indirect
wholly-owned subsidiaries of CDC AM, which in turn is 60% owned by CDC
Finance, a wholly-owned subsidiary of Caisse des depots et Consignations
("CDC"). Founded in 1816, CDC is a major diversified financial institution
with a strong global presence in the banking, insurance, investment banking,
asset management and global custody industries. In addition to its 60%
ownership of CDC AM through CDC Finance, CDC owns 40% of CNP Assurances, the
leading French insurance company, which itself owns 20% of CDC AM. CDC also
owns 35% of Caisse National des Caisses d'Epargne, which also owns 20% of CDC
AM. CDC is 100% owned by the French state. The main place of business of CDC
AM is 7, place des Cinq Martyrs du Lycee Buffon, 75015 Paris, France. The
registered address of CDC Finance is 56 rue de Lille, 75007 Paris, France. The
registered address of CDC is 56 rue de Lille, 70057 Paris, France. The
registered address of CNP Assurances is 4, place Raoul Dautry, 75015 Paris,
France. The registered address of Caisse National des Caisses d'Epargne is 5,
rue Masseran, 75007, Paris, France. Following the acquisition, it is expected
that Nvest will be renamed CDC Asset Management--North America.
Various personnel of Nvest and of its affiliates, including the Advisers and
the affiliated Sub-Advisers, have previously been granted options to purchase
limited partnership units of Nvest, L.P. ("Nvest L.P. Units"). The Merger
Agreement provides that these options will vest and become fully exercisable
immediately before CDC AM's acquisition of Nvest and Nvest, L.P., even though
some of these options would not otherwise have vested or been exercisable at
that time. Each option will be converted into the right to receive cash from
Nvest in an amount equal to the difference between the option's exercise price
and the transaction price of $40 per unit (subject to reduction, but not below
$34 per unit as explained above).
Certain Relationships and Interests of Trustees and Officers--Nvest
Funds. Peter S. Voss, a Trustee of the Nvest Funds Trusts and John T. Hailer,
the
14
<PAGE>
President of the Nvest Funds Trusts and a nominee for election as a Trustee of
the Nvest Funds Trusts, and the following persons who are officers of the
Nvest Funds Trusts, are also officers or employees of Nvest Management,
directors of the Adviser General Partner or directors of Nvest Corporation:
John E. Pelletier and Thomas P. Cunningham (collectively, the "Nvest
Management Affiliates"). Some of the Nvest Management Affiliates, including
Messrs. Voss and Hailer, own partnership units in Nvest or Nvest, L.P. or have
the right to acquire partnership units under options and, upon completion of
CDC AM's acquisition of Nvest, will receive the consideration provided in the
Merger Agreement for the partnership units they own or have the right to
acquire under options. Depending on the number of units an Nvest Management
Affiliate owns or has the right to acquire, the amount of consideration he or
she receives could be substantial. In addition, the Merger Agreement provides
that, in connection with CDC AM's acquisition of Nvest, certain Nvest
Management Affiliates, including Messrs. Voss and Hailer, would enter into
ongoing employment agreements or participate in a retention program described
below. Among other matters, such an employment agreement would generally
restrict an employee from competing with Nvest Management and soliciting
clients of Nvest Management and would provide for substantial payments to be
made if the employee remains employed for specified periods of up to five
years, in addition to regular salary and bonus payments. Under the retention
program, certain Nvest Management Affiliates would receive cash retention
awards payable over one to three years. To receive these awards, which are in
addition to regular salary and bonus payments and in some cases may be
substantial in amount, an eligible Nvest Management Affiliate must remain
employed by Nvest Management and must agree to refrain from competing with
Nvest Management and soliciting clients of Nvest Management.
Certain Relationships and Interests of Trustees and Officers--Kobrick
Funds. The following persons who are Trustees or officers of the Kobrick Funds
Trust are also officers or employees of the Kobrick Adviser or members of the
Kobrick Adviser's Board of Managers: Frederick R. Kobrick, Richard A. Goldman
and Sherri A. Brown.
CERTAIN BROKERAGE MATTERS
In their consideration of the New Agreements, the Trustees took account of
the Advisers' and the Sub-Advisers' practices regarding the selection and
compensation of brokers and dealers that execute portfolio transactions for
the Funds, and the brokers' and dealers' provision of brokerage and research
services to the Advisers and the Sub-Advisers. The Advisers and the Sub-
Advisers have informed the Trustees that they do not expect to change these
practices as a result of CDC AM's acquisition of Nvest. A summary of the
brokerage practices of the Advisers and the Sub-Advisers is presented in
Appendix D.
15
<PAGE>
II. PROPOSAL 3
ELECTION OF TRUSTEES (FOR NVEST FUNDS TRUSTS ONLY)
The purpose of this proposal is to elect a Board of Trustees of the Nvest
Funds Trusts. Pursuant to the provisions of each of the Nvest Fund's
Declaration of Trust, the Trustees have determined that the number of Trustees
shall be fixed at nine. It is intended that the persons named as proxies will
vote in favor of the election as Trustees of the nine nominees listed below,
unless such authority has been withheld. Should the nominees be elected, each
nominee's term of office will be until his or her successor is elected and
qualified. If a nominee should be unavailable for election at the time of the
meeting (which is not presently anticipated), the persons named as proxies may
vote for other persons in their discretion, or the Trustees may vote to fix
the number of Trustees at fewer than nine.
All nominees named below are currently Trustees of the Trusts except for
John T. Hailer and have served in that capacity continuously since originally
elected or appointed except for Mr. Allison as described in footnote A to the
table below. None of the nominees are related to each other. Those nominees
indicated by an asterisk (*) are "interested persons," as defined in the
Investment Company Act, of the Trusts by virtue of their affiliation with the
Trusts, Nvest Management, or the Funds' principal underwriter, Nvest Funds
Distributor, L.P.
The election of Trustees of the Nvest Funds Trusts will be by a plurality of
the shares of each Trust (each Trust voting separately and all Funds of each
Trust voting together as a single class) present at the meeting in person or
by proxy. The nine nominees receiving the highest number of votes for such
Trust cast at the Meeting, provided a quorum is present, shall be elected.
<TABLE>
<CAPTION>
NOMINEE YEAR OF
NAME, (AGE), PRINCIPAL OCCUPATION(S) ELECTION OR
POSITION(S) DURING THE LAST FIVE YEARS** APPOINTMENT***
------------ ------------------------------------ --------------
<S> <C> <C>
GRAHAM T. ALLISON, JR. Douglas Dillon Professor and 1984A
(60) Trustee and Director for the Center of Science
Contract Review and and International Affairs, John F.
Governance Committee Kennedy School of Government;
Member Special Advisor to the United States
Secretary of Defense; formerly,
Assistant Secretary of Defense;
formerly, Dean, John F. Kennedy
School of Government.
DANIEL M. CAIN (55) President and CEO, Cain Brothers & 1996
Trustee and Audit and Company, Incorporated (investment
Transfer Agent and banking); Trustee, Universal Health
Shareholder Services Realty Income Trust (Exchange),
Committee Member Norman Rockwell Museum, Sharon
Health Corporation and National
Committee for Quality Healthcare
(all not-for-profit organizations);
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NOMINEE YEAR OF
NAME, (AGE), PRINCIPAL OCCUPATION(S) ELECTION OR
POSITION(S) DURING THE LAST FIVE YEARS** APPOINTMENT***
------------ ------------------------------------ --------------
<S> <C> <C>
KENNETH J. COWAN (68) Retired; formerly, Senior Vice 1980B
Trustee and Contract President-Finance and Chief
Review and Governance Financial Officer, Blue Cross of
Committee Member Massachusetts, Inc. and Blue Shield
of Massachusetts, Inc.; formerly,
Director, Neworld Bank for Savings
and Neworld Bancorp.
RICHARD DARMAN (57) Partner, The Carlyle Group 1996
Trustee and Contract (investments); Public Service
Review and Governance Professor, Harvard Graduate School
Committee Member of Government; Trustee, Council for
Excellence in Government (not for
profit); Director, Frontier Ventures
(personal investment); Director,
Telcom Ventures
(telecommunications); Director,
Prime Communications (cable
communications); Director, Neptune
Communications (undersea cable
systems); formerly, Director of the
U.S. Office of Management and Budget
and a member of President Bush's
Cabinet; formerly, Managing
Director, Shearson Lehman Brothers
(Investments).
SANDRA O. MOOSE (58); Senior Vice President and Director, 1982C
Trustee and Audit and The Boston Consulting Group, Inc.
Transfer Agent and (management consulting); Director,
Shareholder Services GTE Corporation (communications
Committee Member services); Director, Rohm and Haas
Company (specialty chemicals);
Trustee, Boston Public Library
Foundation; Board of Overseers,
Museum of Fine Arts and Beth
Israel/New England Deaconess
Hospital; Director, Harvard Graduate
School Society Council; Member,
Visiting Committee, Harvard School
of Public Health.
JOHN A. SHANE (67) President, Palmer Service 1982D
Trustee and Audit and Corporation (venture capital
Transfer Agent and organization); General Partner,
Shareholder Services Palmer Partners L.P.; Director, Arch
Committee Member Communications Group, Inc. (paging
service); Director, Eastern Bank
Corporation; Director, Gensym
Corporation (developer of expert
system software); Director, Overland
Data, Inc. (manufacturer of computer
tape drives); Director, United Asset
Management Corporation (holding
company for institutional money
management firms).
PETER S. VOSS* (53) Director, President and Chief 1992
Trustee and Chairman Executive Officer, Nvest, L.P. and
Nvest Companies, L.P.; Chairman of
the Board and Director, President
and Chief Executive Officer, Nvest
Corporation; Director, Nvest
Services Company; Director, Nvest
Distribution Corporation; Director
of various affiliates of Nvest Funds
Management, L.P.; formerly,
Director, New England Financial;
Board Member, Investment Company
Institute and United Way of
Massachusetts Bay; Committee Member,
New York Stock Exchange Listed
Company Advisory Committee.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
NOMINEE YEAR OF
NAME, (AGE), PRINCIPAL OCCUPATION(S) ELECTION OR
POSITION(S) DURING THE LAST FIVE YEARS** APPOINTMENT***
------------ ------------------------------------ --------------
<S> <C> <C>
PENDLETON P. WHITE (69) Retired; formerly, President and 1981E
Trustee and Contract Chairman of the Executive Committee,
Review and Governance Studwell Associates (executive
Committee Member search consultants); formerly,
Trustee, The Faulkner Corporation
(community hospital corporation).
JOHN HAILER* (39) President and Chief Executive Not
President Officer, Nvest Funds Management, Applicable
L.P.; President and Chief Executive
Officer, Nvest Funds Distributor,
L.P.; and Executive Vice President,
Nvest Distribution Corporation;
formerly, Senior Vice President,
International Division and Head of
Strategic Marketing, Fidelity
Investments.
</TABLE>
-----------
** Except where noted to the contrary, each nominee's principal occupation
and business experience has been with the employer(s) indicated, although
in some cases the nominee may have held different positions with such
employer.
*** The year provided is the earliest year during which a Trustee was elected
or appointed for any of the Nvest Funds Trusts.
A Mr. Allison served as Trustee from 1984 to 1993 for Nvest Cash Management
Trust, Nvest Tax Exempt Money Market Trust and Nvest Funds Trust I
(including its predecessors) and for a short period in 1993 for Nvest
Funds Trust II. Mr. Allison has served as Trustee from 1995 to the present
for the Nvest Funds Trusts.
B Mr. Cowan has served as Trustee from 1980 to the present for Nvest Funds
Trust II, from 1993 to the present for Nvest Cash Management Trust, Nvest
Tax Exempt Money Market Trust and Nvest Funds Trust I and from 1995 to the
present for Nvest Funds Trust III.
C Ms. Moose has served as Trustee from 1982 to the present for Nvest Cash
Management Trust, Nvest Tax Exempt Money Market Trust and Nvest Funds
Trust I, from 1993 to the present for Nvest Funds Trust II and from 1995
to the present for Nvest Funds Trust III.
D Mr. Shane has served as Trustee from 1982 to the present for Nvest Funds
Trust II, from 1993 to the present for Nvest Cash Management Trust, Nvest
Tax Exempt Money Market Trust and Nvest Funds Trust I, and from 1995 to
the present for Nvest Funds Trust III.
E Mr. White has served as Trustee from 1981 to the present for Nvest Funds
Trust II, from 1993 to the present for Nvest Cash Management Trust, Nvest
Tax Exempt Money Market Trust and Nvest Funds Trust I and from 1995 to the
present for Nvest Funds Trust III.
If elected, the Trustees will hold office without limit in time except that
(a) any Trustee may resign; (b) the retirement age for any Trustee has been
fixed by the Boards of Trustees at age 72 and any member reaching that age
would retire at
18
<PAGE>
the end of the calendar year during which he or she reaches such age and (c)
any Trustee may be removed at any special meeting of shareholders by a two-
thirds vote of the outstanding voting securities of the trust. If a vacancy
exists for any reason, the remaining Trustees will fill such vacancy by
appointing another Trustee so long as, immediately after such appointment, at
least two-thirds of the Trustees have been elected by shareholders. If, at any
time, less than a majority of the Trustees holding office has been elected by
the shareholders, the Trustees then in office will promptly call a
shareholders' meeting for the purpose of electing Trustees. Otherwise, there
will normally be no meeting of shareholders for the purpose of electing
Trustees.
The Boards of Trustees of Nvest Funds Trust I, Nvest Funds Trust II and
Nvest Funds Trust III, which is currently composed of one interested and seven
Independent Trustees, each met four times during the twelve months ended
December 31, 1999. The Boards of Trustees of Nvest Cash Management Trust and
Nvest Tax Exempt Money Market Trust, which is currently composed of one
interested and seven Independent Trustees, each met four times during the
twelve months ended June 30, 2000. For each Trust, all Trustees attended at
least 75% of the board and relevant committee meetings held during each
Trust's last fiscal year.
COMMITTEES
The Contract Review and Governance Committee of the Nvest Funds Trusts is
comprised solely of Independent Trustees and considers matters relating to
advisory, sub-advisory and distribution arrangements, potential conflicts of
interest between the adviser or subadviser and the Funds, and governance
matters relating to the Funds, including the screening and nomination of
candidates for election as Independent Trustees. The Contract Review and
Governance Committee members are Messrs. White, Darman, and Allison. Mr. Cowan
is chairman and member of the Contract Review and Governance Committee. The
Contract Review and Governance Committee met four times during the most recent
fiscal year of each Trust.
The Audit and Transfer Agent and Shareholders Services Committee of the
Nvest Funds is comprised solely of Independent Trustees and considers matters
relating to the scope and results of the Funds' audits and serves as a forum
in which the independent accountants can raise any issues or problems
identified in the audit with the Board of Trustees. This Committee also
reviews and monitors compliance with stated investment objectives and polices,
regulations of the Securities and Exchange Commission and Internal Revenue
Service as well as operational issues relating to the transfer agent. The
Audit and Transfer Agent and Shareholders Services Committee members are Mr.
Shane and Ms. Moose. Mr. Cain is Chairman and member of the Audit and Transfer
Agent and Shareholders Services Committee. The Audit and Transfer Agent and
Shareholders Services Committee met four times during the most recent fiscal
year of each Trust.
19
<PAGE>
TRUSTEE COMPENSATION
The following table sets forth information describing the compensation of
each Trustee and committee member for his or her services for the fiscal year
ended June 30, 2000 or the fiscal year ended December 31, 1999, as applicable.
The Funds have not adopted any pension or retirement plan for the Trustees.
COMPENSATION TABLE
TOTAL AGGREGATE COMPENSATION FROM EACH FUND*
<TABLE>
<CAPTION>
DANIEL KENNETH
GRAHAM T. M. J. RICHARD
NAME OF NVEST FUND ALLISON, JR.** CAIN*** COWAN** DARMAN**
------------------ -------------- ------- ------- --------
<S> <C> <C> <C> <C>
Balanced Fund......................... 2,763 2,950 2,950 2,763
Bullseye Fund......................... 747 767 767 747
Capital Growth Fund................... 2,119 2,251 2,251 2,119
Equity Income Fund.................... 805 830 830 805
Growth and Income Fund................ 4,026 4,313 4,313 4,026
Growth Fund........................... 12,315 13,285 13,285 12,315
International Equity Fund............. 1,070 1,117 1,117 1,070
Star Advisers Fund.................... 7,921 8,524 8,524 7,921
Star Small Cap Fund................... 1,497 1,577 1,577 1,497
Star Value Fund....................... 2,888 3,086 3,086 2,888
Star Worldwide Fund................... 2,152 2,287 2,287 2,152
Bond Income Fund...................... 2,588 2,759 2,759 2,588
Government Securities Fund............ 1,278 1,342 1,342 1,278
High Income Fund...................... 1,547 1,632 1,632 1,547
Intermediate Term Tax Free Fund of
California.......................... 907 940 940 907
Limited Term U.S. Government Fund..... 1,916 2,033 2,033 1,916
Massachusetts Tax Free Income Fund.... 1,343 1,413 1,413 1,343
Municipal Income Fund................. 1,729 1,830 1,830 1,729
Short Term Corporate Income Fund...... 1,158 1,213 1,213 1,158
Strategic Income Fund................. 2,455 2,616 2,616 2,455
Cash Management Trust -- Money Market
Series.............................. 5,462 5,847 5,847 5,462
Tax Exempt Money Market Trust......... 1,090 1,151 1,151 1,090
Intermediate Tax Free Fund of New
Yorka............................... 192 196 192 192
TOTAL COMPENSATION FROM FUND
COMPLEX***b, c...................... 59,968 63,959 63,955 59,968
</TABLE>
20
<PAGE>
-----------
* Information is for the fiscal year ended June 30, 2000 for Cash Management
Trust--Money Market Series and Tax Exempt Money Market Trust and is for
the fiscal year ended December 31, 1999 for all remaining Nvest Funds.
** Member of the Contract Review and Governance Committee of which Mr. Cowan
serves as chairman.
*** Member of the Audit and Transfer Agent and Shareholders Services Committee
of which Mr. Cain serves as chairman.
a This Fund discontinued operations on June 15, 1999.
b Compensation amounts include cash and amounts deferred at the election of
the Trustees. As of June 30, 2000, the total amount of deferred
compensation accrued for each Trustee was as follows: Mr. Allison
$819,969; Mr. Cain $46,813; Mr. Cowan $80,000 and Mr. Darman $42,645.
c This amount reflects the aggregate compensation paid by Nvest Cash
Management Trust--Money Market Series, Nvest Tax Exempt Money Market
Trust, Nvest Funds Trust I, Nvest Funds Trust II and Nvest Funds Trust III
which total 22 funds. Each Independent Trustee receives a retainer fee at
the annual rate of $40,000 and meeting attendance fees of $3,500 for each
meeting of the Boards that he or she attends. Each committee member
receives an additional retainer fee at the annual rate of $6,000. Each
committee chairman receives an additional retainer fee (beyond the $6,000
fee) at the annual rate of $4,000. These fees are allocated among the
mutual fund portfolios in the Nvest Funds Trusts based on a formula that
takes into account, among other factors, the relative net assets of each
Nvest Fund.
21
<PAGE>
COMPENSATION TABLE
TOTAL AGGREGATE COMPENSATION FROM EACH FUND*
(CONTINUED)
<TABLE>
<CAPTION>
SANDRA PENDLETON
O. JOHN A. PETER S. P.
NAME OF NVEST FUND MOOSE*** SHANE*** VOSS**** WHITE**
------------------ -------- -------- -------- ---------
<S> <C> <C> <C> <C>
Balanced Fund............................ 2,763 2,763 $ 0 2,763
Bullseye Fund............................ 747 747 0 747
Capital Growth Fund...................... 2,119 2,119 0 2,119
Equity Income Fund....................... 805 805 0 805
Growth and Income Fund................... 4,026 4,026 0 4,026
Growth Fund.............................. 12,315 12,315 0 12,315
International Equity Fund................ 1,070 1,070 0 1,070
Star Advisers Fund....................... 7,921 7,921 0 7,921
Star Small Cap Fund...................... 1,497 1,497 0 1,497
Star Value Fund.......................... 2,888 2,888 0 2,888
Star Worldwide Fund...................... 2,152 2,152 0 2,152
Bond Income Fund......................... 2,588 2,588 0 2,588
Government Securities Fund............... 1,278 1,278 0 1,278
High Income Fund......................... 1,547 1,547 0 1,547
Intermediate Term Tax Free Fund of
California............................. 907 907 0 907
Limited Term U.S. Government Fund........ 1,916 1,916 0 1,916
Massachusetts Tax Free Income Fund....... 1,343 1,343 0 1,343
Municipal Income Fund.................... 1,729 1,729 0 1,729
Short Term Corporate Income Fund......... 1,158 1,158 0 1,158
Strategic Income Fund.................... 2,455 2,455 0 2,455
Cash Management Trust--Money Market
Series................................. 5,462 5,462 0 5,462
Tax Exempt Money Market Trust............ 1,090 748 0 1,090
Intermediate Tax Free Fund of New Yorka.. 192 192 0 192
TOTAL COMPENSATION FROM FUND COMPLEX***
B...................................... 59,968 59,626 0 59,968
</TABLE>
-----------
* Information is for the fiscal year ended June 30, 2000 for Cash Management
Trust--Money Market Series and Tax Exempt Money Market Trust and is for
the fiscal year ended December 31, 1999 for all remaining Nvest Funds.
** Member of the Contract Review and Governance Committee of which Mr. Cowan
serves as chairman.
22
<PAGE>
*** Member of the Audit and Transfer Agent and Shareholders Services Committee
of which Mr. Cain serves as chairman.
**** Mr. Voss is compensated for his services by Nvest.
a This Fund discontinued operations on June 15, 1999.
b This amount reflects the aggregate compensation paid by Nvest Cash
Management Trust--Money Market Series, Nvest Tax Exempt Money Market
Trust, Nvest Funds Trust I, Nvest Funds Trust II and Nvest Funds Trust III
which total 22 funds. Each Independent Trustee receives a retainer fee at
the annual rate of $40,000 and meeting attendance fees of $3,500 for each
meeting of the Boards that he or she attends. Each committee member
receives an additional retainer fee at the annual rate of $6,000. Each
committee chairman receives an additional retainer fee (beyond the $6,000
fee) at the annual rate of $4,000. These fees are allocated among the
mutual fund portfolios in the Nvest Funds Trusts based on a formula that
takes into account, among other factors, the relative net assets of each
Nvest Fund.
Certain Interests of Messrs. Voss and Hailer
As discussed under "New Advisory and Sub-Advisory Agreements--Certain
Relationships and Interests of Trustees and Officers," Messrs. Voss and Hailer
have certain interests in the CDC AM/Nvest transaction and the matters to be
acted upon at the Meeting.
Executive Officers
Executive Officers of the Trusts, in addition to Messrs. Voss and Hailer,
and their ages (in parentheses) and principal occupations during at least the
past five years are listed below.
Thomas P. Cunningham--Treasurer (54); Senior Vice President, Nvest Services
Company; Senior Vice President, Nvest Management; formerly, Vice President,
Allmerica Financial Life Insurance and Annuity Company, formerly, Treasurer,
Allmerica Investment Trust; formerly, Vice President, First Data Investor
Services Group.
John E. Pelletier--Secretary and Clerk (36); Director, Nvest Distribution
Corporation; Senior Vice President, General Counsel, Secretary and Clerk,
Nvest Funds Distributor, L.P.; Senior Vice President, General Counsel,
Secretary and Clerk, Nvest Management; Executive Vice President, General
Counsel, Secretary and Clerk, Nvest Services Company; formerly, Senior Vice
President and General Counsel, Funds Distributor, Inc. (mutual funds service
company); formerly, Vice President and General Counsel, Boston Institutional
Group (mutual funds service company); formerly, Senior Vice President and
General Counsel, Financial Research Corporation.
23
<PAGE>
Independent Accountants
At the regular meeting of the Boards of Trustees on February 25, 2000,
PricewaterhouseCoopers, LLP was selected and approved by the Boards of
Trustees of Nvest Funds Trust I, Nvest Funds Trust II and Nvest Funds Trust
III to serve as the Funds' independent accountant for the fiscal year ending
December 31, 2000. At the regular meeting of the Boards of Trustees on August
25, 2000, PricewaterhouseCoopers, LLP was selected and approved by the Boards
of Trustees of Nvest Cash Management Trust and Nvest Tax Exempt Money Market
Trust to serve as the Funds' independent accountant for the fiscal year ending
June 30, 2001. Representatives of PricewaterhouseCoopers LLP are expected to
be available at the Meeting. If they so desire, they may have an opportunity
to make a statement and are expected to be available to respond to appropriate
questions.
NOMINATION OF DIRECTORS BY SHAREHOLDERS
The Amended and Restated Agreement and Declaration of Trust of each Nvest
Funds Trust does not provide for the annual election of Trustees. However, in
accordance with the Investment Company Act, (i) each Trust will hold a
shareholders' meeting for the election of Trustees at such time as less than a
majority of the Trustees holding office have been elected by shareholders, and
(ii) if, as a result of a vacancy in the Board of Trustees, less than two-
thirds of the Trustees holding office have been elected by the shareholders,
that vacancy may only be filled by a vote of the shareholders.
III. OTHER INFORMATION
Principal Underwriter's and Administrator's Address. The Adviser General
Partner is the sole general partner of Nvest Funds Distributor, L.P., the
Funds' principal underwriter (the "Distributor"), and the sole shareholder of
Nvest Services Company, Inc. ("Nvest Services"), the Funds' transfer and
dividend disbursing agent and the Funds' administrator. Nvest owns the entire
limited partnership interest in the Distributor. The address of the
Distributor and Nvest Services is 399 Boylston Street, Boston, MA 02116.
FUND ANNUAL AND SEMI-ANNUAL REPORTS. EXCEPT AS STATED OTHERWISE, THE NVEST
FUNDS AND KOBRICK FUNDS HAVE PREVIOUSLY SENT THEIR ANNUAL AND SEMIANNUAL
REPORTS TO THEIR SHAREHOLDERS AS OF THE RELEVANT DATE. NVEST CASH MANAGEMENT
TRUST--MONEY MARKET SERIES AND NVEST TAX EXEMPT MONEY MARKET TRUST HAVE
PREVIOUSLY SENT THEIR ANNUAL REPORT TO THEIR SHAREHOLDERS. YOU CAN OBTAIN A
COPY OF THESE REPORTS WITHOUT CHARGE BY WRITING TO NVEST FUNDS DISTRIBUTOR,
L.P., 399 BOYLSTON STREET, BOSTON, MA 02116 OR BY CALLING 1-800-225-5478. IN
ADDITION, THE FUNDS' ANNUAL AND SEMI-ANNUAL REPORTS ARE
24
<PAGE>
AVAILABLE ON OUR WEBSITE AT WWW.NVESTFUNDS.COM (CLICK ON FUND INFORMATION AND
THEN FINANCIAL REPORTS).
Certain Purchases and Sales of Securities of Nvest, Nvest, L.P. and MetLife,
Inc. [TO BE PROVIDED.]
Outstanding Shares and Significant Shareholders. Shareholders of record at
the close of business on August 29, 2000 are entitled to notice of and to vote
at the Meeting and any adjourned session. Appendix F to this Proxy Statement
lists for each Fund the total number of shares outstanding as of July 24, 2000
for each class of the Fund's shares entitled to vote at the Meeting. It also
identifies holders, as of July 18, 2000, of more than 5% of any class of
shares of each Fund, and contains information about the shareholdings in the
Funds of the Trustees and the executive officers of the Funds.
Information About Proxies and the Conduct of the Meeting
Solicitation of Proxies. Proxies will be solicited primarily by mailing this
Proxy Statement and its enclosures, but proxies may also be solicited through
further mailings, telephone calls, personal interviews or e-mail by officers
of the Funds or by employees or agents of the Adviser, a Sub-Adviser or of
Nvest and its affiliated companies. In addition, D.F. King & Co., Inc. has
been engaged to assist in the solicitation of proxies, at an estimated cost of
approximately [$ ].
Costs of Solicitation. The costs of the Meeting, including the costs of
soliciting proxies, will be paid by the Advisers, a Sub-Adviser, Nvest or CDC
AM to the extent the costs relate to the CDC AM transaction. [A portion of the
costs of printing and mailing this proxy statement to shareholders will be
allocated to the Nvest Funds to the extent the costs relate to the proposal to
elect Trustees.].
Voting and Tabulation of Proxies. Shares represented by duly executed and
timely proxies will be voted as instructed on the proxy. If no instructions
are given, the proxy will be voted in favor of the relevant New Agreement(s)
and in favor of the nominees for election as Trustees of the Nvest Funds
Trusts. You may vote by any one of the three following methods: (1) by mailing
the enclosed proxy card, (2) through use of the internet or (3) by telephone.
If you mail the enclosed proxy and no choice is indicated for a proposal
listed in the attached Notice of Meeting, your proxy will be voted in favor of
that proposal, including all of the nominees for election as Trustees. Votes
made through use of the internet or by telephone must have an indicated choice
in order to be accepted. At any time before it has been voted, your proxy may
be revoked in one of the following ways: (i) by sending a signed, written
letter of revocation to the Secretary of the Trust, (ii) by properly executing
a later-dated proxy (by any of the methods of voting described above), or
(iii) by attending the Meeting, requesting return of any previously delivered
proxy and voting in person.
25
<PAGE>
Votes cast in person or by proxy at the Meeting will be counted by persons
appointed by the Funds as tellers for the Meeting (the "Tellers"). Forty
percent of the shares of any Nvest Fund and fifty percent of the shares of any
Kobrick Fund outstanding on the record date, present in person or represented
by proxy, constitute quorums for the transaction of business by the
shareholders of that Fund at the Meeting. In determining whether a quorum is
present, the Tellers will count shares represented by proxies that reflect
abstentions, and "broker non-votes," as shares that are present and entitled
to vote. Since these shares will be counted as present, but not as voting in
favor of any proposal, these shares will have the same effect as if they cast
votes against the proposal. "Broker non-votes" are shares held by brokers or
nominees as to which (i) the broker or nominee does not have discretionary
voting power or (ii) the broker or nominee has not received instructions from
the beneficial owner or other person who is entitled to instruct how the
shares will be voted.
Votes on Proposals 1 and 2 (New Advisory and Sub-Advisory Agreements) will
be tabulated on an individual Fund basis, such that shareholders of each Fund
will vote separately on these proposals. Votes on Proposal 3 (Election of
Trustees) will be tabulated on a Trust basis, such that shareholders of the
Funds within each Nvest Funds Trust will vote together as a single class for
the Board of Trustees.
Required Vote. For each Fund, the vote required to approve the New Advisory
Agreement and a New Sub-Advisory Agreement is the lesser of (1) 67% of the
shares of that Fund that are present at the Meeting, if the holders of more
than 50% of the shares of the Fund outstanding as of the record date are
present or represented by proxy at the Meeting, or (2) more than 50% of the
shares of the Fund outstanding on the record date. If the required vote is not
obtained for any Fund, the Trustees will consider what other actions to take
in the best interests of that Fund.
The election of Trustees of the Nvest Funds Trusts will be by a plurality of
the shares of each Trust (each Trust voting separately and all Funds of each
Trust voting together as a single class) present at the meeting in person or
by proxy. The nine nominees receiving the highest number of votes for such
Trust cast at the Meeting, provided a quorum is present, shall be elected.
Adjournments; Other Business. In the event that a quorum is not present for
purposes of acting on a proposal, or if sufficient votes in favor of a
proposal are not received by the time of the Meeting, the persons named as
proxies may propose that the Meeting be adjourned one or more times as to that
Fund to permit further solicitation of proxies. Any adjournment requires the
affirmative vote of more than 50% of the total number of shares of that Fund
that are present in person or by proxy when the adjournment is being voted on.
The persons named as proxies will
26
<PAGE>
vote in favor of any such adjournment all proxies that they are entitled to
vote in favor of any proposal that has not yet then been adopted. They will
vote against any such adjournment any proxy that directs them to vote against
each proposal that has not yet then been adopted. They will not vote any proxy
that directs them to abstain from voting on the New Advisory Agreement and/or
New Sub-Advisory Agreement.
The Meeting has been called to transact any business that properly comes
before it. The only business that management of the Funds intends to present
or knows that others will present is the approval of the New Agreements and
the election of the Trustees of the Nvest Funds Trusts. If any other matters
properly come before the Meeting, and on all matters incidental to the conduct
of the Meeting, the persons named as proxies intend to vote the proxies in
accordance with their judgment, unless the Secretary of the Trust has
previously received written contrary instructions from the shareholder
entitled to vote the shares.
Shareholder Proposals at Future Meetings. The Trusts do not hold annual or
other regular meetings of shareholders. Shareholder proposals to be presented
at any future meeting of shareholders of a Funds must be received by the Fund
in writing a reasonable amount of time before the Trust solicits proxies for
that meeting, in order to be considered for inclusion in the proxy materials
for that meeting.
27
<PAGE>
APPENDIX A1
ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
DATE OF LAST
SHAREHOLDER
DESCRIPTION OF TRUSTEE ACTION APPROVAL OF
DATE OF CURRENT REGARDING CURRENT ADVISORY CURRENT ADVISORY
ADVISORY FEE RATE ADVISORY AGREEMENT SINCE BEGINNING OF AGREEMENT AND
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT FUND'S LAST FISCAL YEAR REASON
------------ ----------------- ---------------- ----------------------------- ----------------
<S> <C> <C> <C> <C>
Kobrick Capital Fund 1.00% of each Kobrick 7/7/99 *
Kobrick Emerging Growth Fund
Fund
Kobrick Growth Fund
Nvest Growth Fund 0.75% of the first $200 8/30/96 **
million; 0.70% of the (amended 6/1/99)
next $300 million; 0.65%
over $500 million; and
0.60% over $2 billion
Nvest Balanced Fund 0.75% of the first $200 8/30/96 **
million; 0.70% of the (amended 5/1/98)
next $300 million; and
0.65% over $500 million
Nvest Bullseye Fund 0.95% of the first $200 3/31/98 **
million; 0.90% of the
next $300 million; and
0.85% over $500 million
Nvest Capital Growth 0.75% of the first $200 8/30/96 **
Fund million; 0.70% of the (amended 5/1/98)
next $300 million; and
0.65% over $500 million
Nvest Equity Income Fund 0.70% of the first $200 8/30/96 **
(expense cap) million; 0.65% of the (amended 5/1/98)
next $300 million; and
0.60% over $500 million
</TABLE>
A1-1
<PAGE>
<TABLE>
<CAPTION>
DATE OF LAST
SHAREHOLDER
DESCRIPTION OF TRUSTEE ACTION APPROVAL OF
DATE OF CURRENT REGARDING CURRENT ADVISORY CURRENT ADVISORY
ADVISORY FEE RATE ADVISORY AGREEMENT SINCE BEGINNING OF AGREEMENT AND
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT FUND'S LAST FISCAL YEAR REASON
------------ ----------------- --------------- ----------------------------- ----------------
<S> <C> <C> <C> <C>
Nvest Growth and Income 0.70% of the first $200 8/30/96 **
Fund million; 0.65% of the (amended 5/1/98)
next $300 million; and
0.60% over $500 million
Nvest International 0.90% of the first $200 8/30/96 **
Equity Fund million; 0.85% of the (amended 5/1/98)
next $300 million; and
0.80% over $500 million
Nvest Star Advisers Fund 1.05% of the first $1 8/30/96 **
billion; and 1.00% over (amended 5/7/97
$1 billion and 5/1/98)
Nvest Star Small Cap 1.05% 12/31/96 **
Fund (amended 5/1/98)
Nvest Star Value Fund 0.75% of the first $200 8/30/96 **
million; 0.70% of the (amended 5/1/98)
next $300 million; and
0.65% over $500 million
Nvest Star Worldwide 1.05% 8/30/96 **
Fund (amended 5/1/98)
Nvest Bond Income Fund 0.50% of the first $100 8/30/96 **
million; and 0.375% over (amended 5/1/98)
$100 million
Nvest Government 0.65% of the first $200 8/30/96 **
Securities Fund million; 0.625% of the (amended 5/1/98)
next $300 million; and
0.60% over $500 million
</TABLE>
A1-2
<PAGE>
<TABLE>
<CAPTION>
DATE OF LAST
SHAREHOLDER
DESCRIPTION OF TRUSTEE ACTION APPROVAL OF
DATE OF CURRENT REGARDING CURRENT ADVISORY CURRENT ADVISORY
ADVISORY FEE RATE ADVISORY AGREEMENT SINCE BEGINNING OF AGREEMENT AND
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT FUND'S LAST FISCAL YEAR REASON
------------ ----------------- --------------- ----------------------------- ----------------
<S> <C> <C> <C> <C>
Nvest High Income Fund 0.70% of the first $200 8/30/96 **
million; and 0.65% over (amended 5/1/98)
$200 million
Nvest Intermediate Term 0.525% of the first $200 8/30/96 **
Tax Free Fund of million; 0.50% of the (amended 5/1/98)
California next $300 million; and
0.475% over $500 million
Nvest Limited Term U.S. 0.65% of the first $200 8/30/96 **
Government Fund million; 0.625% of the (amended 5/1/98)
next $300 million; and
0.60% over $500 million
Nvest Massachusetts Tax 0.60% of the first $100 8/30/96 **
Free Income Fund million; and 0.50% over (amended 5/1/98)
$100 million
Nvest Municipal Income 0.50% of the first $100 8/30/96 **
Fund million; and 0.375% over (amended 5/1/98)
$100 million
Nvest Short Term 0.55% of the first $200 8/30/96 **
Corporate Income Fund million; 0.51% of the (amended 5/1/98)
next $300 million; and
0.47% over $500 million
Nvest Strategic Income 0.65% of the first $200 8/30/96 **
Fund million; and 0.60% over (amended 5/1/98)
$200 million
</TABLE>
A1-3
<PAGE>
<TABLE>
<CAPTION>
DATE OF LAST
SHAREHOLDER
DESCRIPTION OF TRUSTEE ACTION APPROVAL OF
DATE OF CURRENT REGARDING CURRENT ADVISORY CURRENT ADVISORY
ADVISORY FEE RATE ADVISORY AGREEMENT SINCE BEGINNING OF AGREEMENT AND
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT FUND'S LAST FISCAL YEAR REASON
------------ ----------------- --------------- ----------------------------- ----------------
<S> <C> <C> <C> <C>
Nvest Cash Management 0.425% of the first $500 8/30/96 **
Trust--Money Market million; 0.40% of the (amended 5/1/98)
Series next $500 million; 0.35%
of the next $500
million; 0.30% of the
next $500 million; and
0.25% over $2 billion
Nvest Tax Exempt Money 0.40% of the first $100 8/30/96 **
Market Trust million; and 0.30% over (amended 5/1/98)
$100 million
</TABLE>
----
/1/Fee rates are annualized and are applied to each Fund's average daily net
assets.
/2/Through May 1, 2001, Nvest Management will waive its management fee (and to
the extent necessary, bear the other expenses) to the extent that expenses
of each class of a Fund, exclusive of brokerage, interest, taxes and
deferred organizational expenses, would exceed the following annual rates:
1.75%, 2.50% and 2.50% of the average daily net assets for classes A, B and
C, respectively, of Nvest Bullseye Fund; 1.50%, 2.25% and 2.25% of the
average daily net assets for classes A, B and C, respectively, of Nvest
Equity Income Fund; 0.85% and 1.60% of the average daily net assets for
classes A and B, respectively, of Nvest Intermediate Term Tax Free Fund of
California; 1.20% and 1.85% of the average daily net assets for Classes A
and B, respectively, of Nvest Massachusetts Tax Free Income Fund; and 0.90%,
1.65%, 1.65% and 0.60% of the average daily net assets for classes A, B, C
and Y, respectively, of Nvest Short Term Corporate Income Fund. Through at
least January 31, 2001, the Kobrick Adviser has given a binding undertaking
to limit the total amount of expenses, excluding certain expenses, to 1.50%,
2.25%, 2.25% and 1.25% of the average daily net assets for classes A, B, C
and Y, respectively, of Kobrick Capital Fund and Kobrick Emerging Growth
Fund and 1.40%, 2.15%, 2.15% and 1.15% of the average daily net assets for
classes A, B, C and Y, respectively, of Kobrick Growth Fund.
* On July 7, 1999, shareholders of the Kobrick Funds approved the Current
Advisory Agreement for a two-year term, effective upon the acquisition of
the Kobrick Adviser by Nvest.
** On May 12, 2000, the Trustees approved the continuation of the Current
Advisory Agreement for a one-year period commencing June 1, 2000.
A1-4
<PAGE>
APPENDIX A2
SUB-ADVISORY AGREEMENTS
<TABLE>
<CAPTION>
DESCRIPTION OF DATE OF LAST
TRUSTEE ACTION SHAREHOLDER
REGARDING CURRENT APPROVAL
ADVISORY OF CURRENT
DATE OF CURRENT AGREEMENT SINCE ADVISORY
SUB-ADVISORY FEE RATE SUB-ADVISORY BEGINNING OF FUND'S AGREEMENT
NAME OF FUND SCHEDULE/1/, /2/ AGREEMENT LAST FISCAL YEAR AND REASON
------------ --------------------- --------------- ------------------- ------------
<S> <C> <C> <C> <C>
NVEST BALANCED FUND 0.535% of the first $200 8/30/96 **
million; 0.35% of the (amended
next $300 million; and 5/1/98)
0.30% over $500 million
NVEST BULLSEYE FUND 0.57% of the first $200 3/31/98 **
million; 0.50% of the
next $300 million; and
0.43% over $500 million
NVEST CAPITAL GROWTH 0.40% of the first $200 4/17/98 **
FUND million 0.35% of the
next $300 million; and
0.30% over $500 million
NVEST EQUITY INCOME FUND 0.40% of the first $200 07/27/99 **
million; 0.325% of the
next $300 million; and
0.275% over $500 million
NVEST GROWTH AND INCOME 0.50% of the first $25 8/30/96 **
FUND million; 0.40% of the (amended
next $75 million; 0.35% 5/1/98)
of the next $100
million; and 0.30% over
$200 million
NVEST INTERNATIONAL 0.40% of the first $200 2/14/97 **
EQUITY FUND million; and 0.35% over (amended
$200 million 5/1/98)
</TABLE>
A2-1
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF DATE OF LAST
TRUSTEE ACTION SHAREHOLDER
REGARDING CURRENT APPROVAL
ADVISORY OF CURRENT
DATE OF CURRENT AGREEMENT SINCE ADVISORY
SUB-ADVISORY FEE RATE SUB-ADVISORY BEGINNING OF FUND'S AGREEMENT
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT LAST FISCAL YEAR AND REASON
------------ --------------------- --------------- ------------------- ------------
<S> <C> <C> <C> <C>
NVEST STAR ADVISERS FUND
Harris Associates 0.65% of the first $50 10/17/97 **
million; 0.60% of the (amended
next $50 million; and 5/1/98)
0.55% over $100 million
Kobrick Funds LLC 0.55% of the first $50 10/29/99 ** 10/29/99
million; 0.50% of the to
next $200 million; and replace
0.475% over 250 million a sub-
adviser
Janus Capital 0.55% of the first $50 8/30/96 **
million; and 0.50% over
$50 million
Loomis Sayles 0.55% of the first $50 10/17/97 **
million; 0.50% of the (amended
next $200 million; and 5/1/98)
0.475% over $250 million
NVEST STAR SMALL CAP
FUND Harris Associates 0.70% 12/31/96 **
(amended
5/1/98)
Loomis Sayles 0.55% of the first $50 12/31/96 **
million; and 0.50% over (amended
$50 million 5/1/98)
Montgomery 0.65% of the first $50 7/31/97 **
million; and 0.50% over
$50 million
</TABLE>
A2-2
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF DATE OF LAST
TRUSTEE ACTION SHAREHOLDER
REGARDING CURRENT APPROVAL
ADVISORY OF CURRENT
DATE OF CURRENT AGREEMENT SINCE ADVISORY
SUB-ADVISORY FEE RATE SUB-ADVISORY BEGINNING OF FUND'S AGREEMENT
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT LAST FISCAL YEAR AND REASON
------------ --------------------- --------------- ------------------- ------------
<S> <C> <C> <C> <C>
NVEST STAR SMALL CAP FUND (CONTINUED)
RSIM 0.55% of the first $50 2/26/99 **
million; and 0.50% over
$50 million
NVEST STAR VALUE FUND
Harris Associates 0.50% of the first $100 4/19/00 ** 4/19/00 To
million; and 0.45% over approve
$100 million new sub-
advisers
related to
creating a
multi-
segment
fund
Loomis Sayles 0.535% of the first $200 4/19/00 ** 4/19/00 To
million; 0.350% of the approve
next $300 million; and new sub-
0.300% over $500 million advisers
related to
creating a
multi-
segment
fund
Vaughan Nelson 0.50% of the first $25 4/19/00 ** 4/19/00 To
million; 0.40% of the approve
next $175 million; new sub-
0.325% of the next $300 advisers
million; and 0.275% over related to
$500 million creating a
multi-
segment
fund
</TABLE>
A2-3
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF DATE OF LAST
TRUSTEE ACTION SHAREHOLDER
REGARDING CURRENT APPROVAL
ADVISORY OF CURRENT
DATE OF CURRENT AGREEMENT SINCE ADVISORY
SUB-ADVISORY FEE RATE SUB-ADVISORY BEGINNING OF FUND'S AGREEMENT
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT LAST FISCAL YEAR AND REASON
------------ --------------------- --------------- ------------------- ------------
<S> <C> <C> <C> <C>
NVEST STAR VALUE FUND
(CONTINUED)
Westpeak 0.50% of the first $25 4/19/00 ** 4/19/00
million; 0.40% of the To
next $75 million; 0.35% approve
of the next $100 new sub-
million; and 0.30% over advisers
$200 million related
to
creating
a multi-
segment
fund
NVEST STAR WORLDWIDE
FUND
Harris Associates 0.65% of the first $50 8/30/96 **
million; 0.60% of the (amended
next $50 million; and 5/1/98)
0.55% over $100 million
Loomis Sayles 0.65% of the first $50 4/14/00 ** 4/14/00
million; 0.60% of the To
next $50 million; and replace
0.55% over $100 million a sub-
adviser
Montgomery 0.85% of the first $25 8/3/98 **
million; 0.65% of the
next $25 million; and
0.55% over $50 million
NVEST BOND INCOME FUND 0.25% of the first 100 8/30/96 **
million; and 0.1875% (amended
over $100 million 5/1/98)
</TABLE>
A2-4
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF DATE OF LAST
TRUSTEE ACTION SHAREHOLDER
REGARDING CURRENT APPROVAL
ADVISORY OF CURRENT
DATE OF CURRENT AGREEMENT SINCE ADVISORY
SUB-ADVISORY FEE RATE SUB-ADVISORY BEGINNING OF FUND'S AGREEMENT
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT LAST FISCAL YEAR AND REASON
------------ --------------------- --------------- ------------------- ------------
<S> <C> <C> <C> <C>
NVEST GOVERNMENT 0.325% of the first $200 8/30/96 **
SECURITIES FUND million; 0.3125% of the (amended
next $300 million; and 5/1/98)
0.30% over $500 million
NVEST HIGH INCOME FUND 0.35% of the first $200 8/30/96 **
million; and 0.30% over (amended
$200 million 5/1/98)
NVEST INTERMEDIATE TERM 0.2625% of the first 8/30/96 **
TAX FREE FUND OF $200 million; 0.25% of (amended
CALIFORNIA the next $300 million; 5/1/98)
and 0.2375% over $500
million
NVEST LIMITED TERM U.S. 0.325% of the first $200 8/30/96 **
GOVERNMENT FUND million; 0.3125% of the (amended
next $300 million; and 5/1/98)
0.30% over $500 million
NVEST MASSACHUSETTS TAX 0.30% of the first $100 8/30/96 **
FREE INCOME FUND million; and 0.25% over (amended
$100 million 5/1/98)
NVEST MUNICIPAL INCOME 0.25% of the first $100 8/30/96 **
FUND million; and 0.1875% (amended
over $100 million 5/1/98)
NVEST SHORT TERM 0.275% of the first $200 8/30/96 **
CORPORATE INCOME FUND million; 0.255% of the (amended
next $300 million; and 5/1/98)
0.235% over $500 million
</TABLE>
A2-5
<PAGE>
<TABLE>
<CAPTION>
DATE OF
DESCRIPTION OF LAST
TRUSTEE ACTION SHAREHOLDER
REGARDING CURRENT APPROVAL
ADVISORY OF CURRENT
DATE OF CURRENT AGREEMENT SINCE ADVISORY
SUB-ADVISORY FEE RATE SUB-ADVISORY BEGINNING OF FUND'S AGREEMENT
NAME OF FUND SCHEDULE/1/,/2/ AGREEMENT LAST FISCAL YEAR AND REASON
------------ --------------------- --------------- ------------------- -----------
<S> <C> <C> <C> <C>
NVEST STRATEGIC INCOME 0.35% of the first $200 8/30/96 **
FUND million; and 0.30% over (amended
$200 million 5/1/98)
NVEST CASH MANAGEMENT 0.205% of the first $500 8/30/96 **
TRUST--MONEY MARKET million; 0.18% of the (amended
SERIES next $500 million; 0.16% 5/1/98)
of the next $500
million; 0.14% of the
next $500 million; and
0.12% over $2 billion
NVEST TAX EXEMPT MONEY 0.20% of the first $100 8/30/96 **
MARKET TRUST million; and 0.15% over (amended
$100 million 5/1/98)
</TABLE>
----
/1/Fee rates are annualized and are applied to each Fund's (or each segment's,
where applicable) average daily net assets.
/2/Through May 1, 2001, Nvest Management will waive its management fee (and to
the extent necessary, bear the other expenses) to the extent that expenses
of each class of a Fund, exclusive of brokerage, interest, taxes and
deferred organizational expenses, would excess the following annual rates:
1.75%, 2.50% and 2.50% of the average daily net assets for classes A, B and
C, respectively, of Nvest Bullseye Fund; 1.50%, 2.25% and 2.25% of the
average daily net assets for classes A, B and C, respectively, of Nvest
Equity Income Fund; 0.85% and 1.60% of the average daily net assets for
classes A and B, respectively, of Nvest Intermediate Term Tax Free Fund of
California; 1.20% and 1.85% of the average daily net assets for Classes A
and B, respectively, of Nvest Massachusetts Tax Free Income Fund; and 0.90%,
1.65%, 1.65% and 0.60% of the average daily net assets for classes A, B, C
and Y, respectively, of Nvest Short Term Corporate Income Fund.
** On May 12, 2000, the Trustees approved the continuation of the Current Sub-
Advisory Agreement for a one-year period commencing June 1, 2000.
A2-6
<PAGE>
APPENDIX B1
FORM OF INVESTMENT ADVISORY AGREEMENTS
NVEST FUND
ADVISORY AGREEMENT
AGREEMENT made the [date] day of , 20 , by and between NVEST TRUST
, a Massachusetts business trust (the "Fund"), with respect to its Nvest
Fund series (the "Series"), and [NVEST FUNDS MANAGEMENT, L.P. or CAPITAL
GROWTH MANAGEMENT LIMITED PARTNERSHIP], a Delaware limited partnership (the
"Manager").
WITNESSETH:
WHEREAS, the Fund and the Manager wish to enter into an agreement setting
forth the terms upon which the Manager (or certain other parties acting
pursuant to delegation from the Manager) will perform certain services for the
Series;
NOW, THEREFORE, in consideration of the premises and covenants hereinafter
contained, the parties agree as follows:
1. (a) The Fund hereby employs the Manager to furnish the Fund with
Portfolio Management Services (as defined in Section 2 hereof) and
Administrative Services (as defined in Section 3 hereof), subject to the
authority of the Manager to delegate any or all of its responsibilities
hereunder to other parties as provided in Sections 1(b) and (c) hereof.
The Manager hereby accepts such employment and agrees, at its own expense,
to furnish such services (either directly or pursuant to delegation to
other parties as permitted by Sections 1(b) and (c) hereof) and to assume
the obligations herein set forth, for the compensation herein provided;
provided, however, that the Manager shall have no obligation to pay the
fees of any Sub-Adviser (as defined in Section 1(b) hereof), to the extent
that the Fund has agreed, under any contract to which the Fund and the
Sub-Adviser are parties (a "Sub-Advisory Agreement") to pay such fees. The
Manager shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be
deemed an agent of the Fund.
(b) The Manager may delegate any or all of its responsibilities
hereunder with respect to the provision of Portfolio Management Services
(and assumption of related expenses) to one or more other parties (each
such party, a "Sub-Adviser"), pursuant in each case to a written agreement
with such Sub-Adviser that meets the requirements of Section 15 of the
Investment
B1-1
<PAGE>
Company Act of 1940 and the rules thereunder (the "1940 Act") applicable
to contracts for service as investment adviser of a registered investment
company (including without limitation the requirements for approval by the
trustees of the Fund and the shareholders of the Series), subject,
however, to such exemptions as may be granted by the Securities and
Exchange Commission. Any Sub-Adviser may (but need not) be affiliated with
the Manager. If different Sub-Advisers are engaged to provide Portfolio
Management Services with respect to different segments of the portfolio of
the Series, the Manager shall determine, in the manner described in the
prospectus of the Series from time to time in effect, what portion of the
assets belonging to the Series shall be managed by each Sub-Adviser.
(c) The Manager may delegate any or all of its responsibilities
hereunder with respect to the provision of Administrative Services to one
or more other parties (each such party, an "Administrator") selected by
the Manager. Any Administrator may (but need not) be affiliated with the
Manager.
2. As used in this Agreement, "Portfolio Management Services" means
management of the investment and reinvestment of the assets belonging to
the Series, consisting specifically of the following:
(a) obtaining and evaluating such economic, statistical and
financial data and information and undertaking such additional
investment research as shall be necessary or advisable for the
management of the investment and reinvestment of the assets belonging
to the Series in accordance with the Series' investment objectives
and policies;
(b) taking such steps as are necessary to implement the investment
policies of the Series by purchasing and selling of securities,
including the placing of orders for such purchase and sale; and
(c) regularly reporting to the Board of Trustees of the Fund with
respect to the implementation of the investment policies of the
Series.
3. As used in this Agreement, "Administrative Services" means the
provision to the Fund, by or at the expense of the Manager, of the
following:
(a) office space in such place or places as may be agreed upon from
time to time by the Fund and the Manager, and all necessary office
supplies, facilities and equipment;
(b) necessary executive and other personnel for managing the
affairs of the Series (exclusive of those related to and to be
performed under contract for custodial, transfer, dividend and plan
agency services by the entity or entities selected to perform such
services and exclusive of any managerial functions described in
Section 4);
B1-2
<PAGE>
(c) compensation, if any, of trustees of the Fund who are
directors, officers or employees of the Manager, any Sub-Adviser or
any Administrator or of any affiliated person (other than a
registered investment company) of the Manager, any Sub-Adviser or any
Administrator; and
(d) supervision and oversight of the Portfolio Management Services
provided by each Sub-Adviser, and oversight of all matters relating
to compliance by the Fund with applicable laws and with the Series'
investment policies, restrictions and guidelines, if the Manager has
delegated to one or more Sub-Advisers any or all of its
responsibilities hereunder with respect to the provision of Portfolio
Management Services.
4. Nothing in section 3 hereof shall require the Manager to bear, or to
reimburse the Fund for:
(a) any of the costs of printing and mailing the items referred to
in sub-section (n) of this section 4;
(b) any of the costs of preparing, printing and distributing sales
literature;
(c) compensation of trustees of the Fund who are not directors,
officers or employees of the Manager, any Sub-Adviser or any
Administrator or of any affiliated person (other than a registered
investment company) of the Manager, any Sub-Adviser or any
Administrator;
(d) registration, filing and other fees in connection with
requirements of regulatory authorities;
(e) the charges and expenses of any entity appointed by the Fund
for custodial, paying agent, shareholder servicing and plan agent
services;
(f) charges and expenses of independent accountants retained by the
Fund;
(g) charges and expenses of any transfer agents and registrars
appointed by the Fund;
(h) brokers' commissions and issue and transfer taxes chargeable to
the Fund in connection with securities transactions to which the Fund
is a party;
(i) taxes and fees payable by the Fund to federal, state or other
governmental agencies;
(j) any cost of certificates representing shares of the Fund;
B1-3
<PAGE>
(k) legal fees and expenses in connection with the affairs of the
Fund, including registering and qualifying its shares with Federal
and State regulatory authorities;
(l) expenses of meetings of shareholders and trustees of the Fund;
(m) interest, including interest on borrowings by the Fund;
(n) the costs of services, including services of counsel, required
in connection with the preparation of the Fund's registration
statements and prospectuses, including amendments and revisions
thereto, annual, semiannual and other periodic reports of the Fund,
and notices and proxy solicitation material furnished to shareholders
of the Fund or regulatory authorities; and
(o) the Fund's expenses of bookkeeping, accounting, auditing and
financial reporting, including related clerical expenses.
5. All activities undertaken by the Manager or any Sub-Adviser or
Administrator pursuant to this Agreement shall at all times be subject to
the supervision and control of the Board of Trustees of the Fund, any duly
constituted committee thereof or any officer of the Fund acting pursuant
to like authority.
6. The services to be provided by the Manager and any Sub-Adviser or
Administrator hereunder are not to be deemed exclusive and the Manager and
any Sub-Adviser or Administrator shall be free to render similar services
to others, so long as its services hereunder are not impaired thereby.
7. As full compensation for all services rendered, facilities furnished
and expenses borne by the Manager hereunder, the Fund shall pay the
Manager compensation in an amount equal to (x) the annual rate of
(or such lesser amount as the Manager may from time to time agree to
receive) minus (y) any fees payable by the Fund, with respect to the
period in question, to any one or more Sub-Advisers pursuant to any Sub-
Advisory Agreements in effect with respect to such period. Such
compensation shall be payable monthly in arrears or at such other
intervals, not less frequently than quarterly, as the Board of Trustees of
the Fund may from time to time determine and specify in writing to the
Manager. The Manager hereby acknowledges that the Fund's obligation to pay
such compensation is binding only on the assets and property belonging to
the Series.
8. If the total of all ordinary business expenses of the Fund as a whole
(including investment advisory fees but excluding interest, taxes,
portfolio brokerage commissions, distribution-related expenses and
extraordinary expenses) for any fiscal year exceeds the lowest applicable
percentage of average net assets or income limitations prescribed by any
state in which shares of the Series are qualified for sale, the Manager
shall pay such excess.
B1-4
<PAGE>
Solely for purposes of applying such limitations in accordance with the
foregoing sentence, the Series and the Fund shall each be deemed to be a
separate fund subject to such limitations. Should the applicable state
limitation provisions fail to specify how the average net assets of the
Fund or belonging to the Series are to be calculated, that figure shall be
calculated by reference to the average daily net assets of the Fund or the
Series, as the case may be.
9. It is understood that any of the shareholders, trustees, officers,
employees and agents of the Fund may be a shareholder, director, officer,
employee or agent of, or be otherwise interested in, the Manager, any
affiliated person of the Manager, any organization in which the Manager
may have an interest or any organization which may have an interest in the
Manager; that the Manager, any such affiliated person or any such
organization may have an interest in the Fund; and that the existence of
any such dual interest shall not affect the validity hereof or of any
transactions hereunder except as otherwise provided in the Agreement and
Declaration of Trust of the Fund, the partnership agreement of the Manager
or specific provisions of applicable law.
10. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, this Agreement shall continue in
effect for two years from the date of execution, and from year to
year thereafter so long as such continuance is specifically approved
at least annually (i) by the Board of Trustees of the Fund or by vote
of a majority of the outstanding voting securities of the Series, and
(ii) by vote of a majority of the trustees of the Fund who are not
interested persons of the Fund or the Manager, cast in person at a
meeting called for the purpose of voting on, such approval;
(b) this Agreement may at any time be terminated on sixty days'
written notice to the Manager either by vote of the Board of Trustees
of the Fund or by vote of a majority of the outstanding voting
securities of the Series;
(c) this Agreement shall automatically terminate in the event of
its assignment;
(d) this Agreement may be terminated by the Manager on ninety days'
written notice to the Fund;
Termination of this Agreement pursuant to this Section 10 shall be
without the payment of any penalty.
11. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Fund shall have
been approved by vote of a majority of the outstanding voting securities
of the Series and by vote of a majority of the trustees of the Fund who
are not
B1-5
<PAGE>
interested persons of the Fund or the Manager, cast in person at a meeting
called for the purpose of voting on such approval.
12. For the purpose of this Agreement, the terms "vote of a majority of
the outstanding voting securities," "interested person," "affiliated
person" and "assignment" shall have their respective meanings defined in
the 1940 Act, subject, however, to such exemptions as may be granted by
the Securities and Exchange Commission under the 1940 Act. References in
this Agreement to any assets, property or liabilities "belonging to" the
Series shall have the meaning defined in the Fund's Agreement and
Declaration of Trust as amended from time to time.
13. In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Manager, or reckless disregard of its obligations and
duties hereunder, the Manager shall not be subject to any liability to the
Fund, to any shareholder of the Fund or to any other person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder.
B1-6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
NVEST TRUST
on behalf of its Nvest Fund series
By:________________________
Name:
Title:
[NVEST FUNDS MANAGEMENT, L.P. or CAPITAL GROWTH MANAGEMENT LIMITED PARTNERSHIP]
By [ ], its general partner
By:________________________
Name:
Title:
B1-7
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust establishing Nvest
Trust (the "Fund") is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed with
respect to the Fund's Nvest Fund series (the "Series") on behalf of the
Fund by officers of the Fund as officers and not individually and that the
obligations of or arising out of this Agreement are not binding upon any of
the trustees, officers or shareholders individually but are binding only upon
the assets and property belonging to the Series.
B1-8
<PAGE>
APPENDIX B2
FORM OF INVESTMENT ADVISORY AGREEMENT
Nvest Kobrick Investment Trust
101 Federal Street
Boston, Massachusetts 02110
[date], 2000
Kobrick Funds LLC
101 Federal Street
Boston, Massachusetts 02110
Re: Advisory Agreement
Ladies and Gentlemen:
Nvest Kobrick Investment Trust (the "Trust") is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust is entering into this Agreement on behalf of
Kobrick Fund. The Trust's shares of beneficial interest represent an
undivided interest in the assets, subject to the liabilities, allocated to
that Fund.
1. Appointment as Adviser. The Trust being duly authorized hereby appoints
and employs Kobrick Funds, LLC ("Adviser") as discretionary portfolio manager,
on the terms and conditions set forth herein, of the Fund.
2. Acceptance of Appointment; Standard of Performance. Adviser accepts the
appointment as discretionary portfolio manager and agrees to use its best
professional judgment to make timely investment decisions for the Fund in
accordance with the provisions of this Agreement.
3. Portfolio Management Services of Adviser. Adviser is hereby employed and
authorized to select portfolio securities for investment by the Trust on
behalf of the Fund, to purchase and sell securities of the Fund, and upon
making any purchase or sale decision, to place orders for the execution of
such portfolio transactions in accordance with paragraphs 5 and 6 hereof. In
providing portfolio management services to the Fund, Adviser shall be subject
to such investment restrictions as are set forth in the Act and the rules
thereunder, the Internal Revenue Code of 1986, the supervision and control of
the Trustees of the Trust, such specific instructions as the Trustees may
adopt and communicate to Adviser and the investment objectives, policies and
restrictions of the Trust applicable to the Fund
B2-1
<PAGE>
furnished pursuant to paragraph 4. Adviser is not authorized by the Trust to
take any action, including the purchase or sale of securities for the Fund, in
contravention of any restriction, limitation, objective, policy or instruction
described in the previous sentence. Adviser shall maintain on behalf of the
Trust the records listed in Schedule A hereto (as amended from time to time).
At the Trust's reasonable request, Adviser will consult with the Trust with
respect to any decision made by it with respect to the investments of the
Fund.
4. Investment Objectives, Policies and Restrictions. The Trust will provide
Adviser with the statement of investment objectives, policies and restrictions
applicable to the Fund as contained in the Trust's registration statements
under the Act and the Securities Act of 1933, and any instructions adopted by
the Trustees supplemental thereto. The Trust will provide Adviser with such
further information concerning the investment objectives, policies and
restrictions applicable thereto as Adviser may from time to time reasonably
request. The Trust retains the right, on written notice to Adviser from the
Trust, to modify any such objectives, policies or restrictions in any manner
at any time.
5. Transaction Procedures. All transactions will be consummated by payment
to or delivery by State Street Bank and Trust Company or any successor
custodian (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, as custodian for the Trust, of all
cash and/or securities due to or from the Fund, and Adviser shall not have
possession or custody thereof. Adviser shall advise Custodian and confirm in
writing to the Trust and to Boston Financial Data Services, Inc., or any other
designated agent of the Trust, all investment orders for the Fund placed by it
with brokers and dealers. Adviser shall issue to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by the Adviser.
6. Allocation of Brokerage. Adviser shall have authority and discretion to
select brokers and dealers to execute portfolio transactions initiated by
Adviser and to select the markets on or in which the transactions will be
executed.
In doing so, the Adviser will give primary consideration to securing the
most favorable price and efficient execution. Consistent with this policy, the
Adviser may consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may effect
or be a party to any such transaction or other transactions to which other
clients of the Adviser may be a party. It is understood that neither the Trust
nor the Adviser has adopted a formula for allocation of the Trust's investment
transaction business. It is also understood that it is desirable for the Trust
that the Adviser have access to supplemental investment and market research
and security and economic analyses provided by certain brokers who may execute
brokerage transactions at a higher commission to
B2-2
<PAGE>
the Trust than may result when allocating brokerage to other brokers on the
basis of seeking the lowest commission. Therefore, the Adviser is authorized
to place orders for the purchase and sale of securities for the Fund with such
certain brokers, subject to review by the Trust's Trustees from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to the Adviser in
connection with its services to other clients.
On occasions when the Adviser deems the purchase or sale of a security to be
in the best interest of the Fund as well as other clients, the Adviser, to the
extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold,
as well as expenses incurred in the transaction, will be made by the Adviser
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Trust and to such other clients.
For each fiscal quarter of the Trust, Adviser shall prepare and render
reports to the Trust's Trustees of the total brokerage business placed and the
manner in which the allocation has been accomplished. Such reports shall set
forth at a minimum the information required to be maintained by Rule 31a-
1(b)(9) under the Act.
7. Proxies. The Trust will vote all proxies solicited by or with respect to
the issuers of securities in which assets of the Fund may be invested from
time to time. At the request of the Trust, Adviser shall provide the Trust
with its recommendations as to the voting of such proxies.
8. Reports to Adviser. The Trust will provide Adviser with such periodic
reports concerning the status of the Fund as Adviser may reasonably request.
9. Fees for Services. For all of the services to be rendered and payments
made as provided in this Agreement, the Kobrick Fund will pay the Adviser
a monthly advisory fee computed daily at the annual rate of 1.00% of the
average of the values of the net assets of the Fund as determined at the close
of each business day during the month.
10. Allocation of Charges and Expenses. Adviser shall employ or provide and
compensate the executive, administrative, secretarial and clerical personnel
necessary to provide the services set forth herein, and shall bear the expense
thereof. Adviser shall compensate all Trustees, officers and employees of the
Trust who are also shareholders or employees of Adviser. Adviser will pay all
expenses
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incurred in connection with the sale or distribution of the Fund's shares to
the extent such expenses are not assumed by the Fund under the Trustees'
Distribution Expense Plan.
The Fund will be responsible for the payment of all operating expenses of
the Trust, including fees and expenses incurred by the Trust in connection
with membership in investment company organizations, brokerage fees and
commissions, legal, auditing and accounting expenses, expenses of registering
shares under federal and state securities laws, insurance expenses, taxes or
governmental fees, fees and expenses of the custodian, the transfer,
shareholder service and dividend disbursing agent and the accounting and
pricing agent of the Fund, expenses including clerical expenses of issue,
sale, redemption or repurchase of shares of the Fund, the fees and expenses of
Trustees of the Trust who are not interested persons of the Trust, the cost of
preparing, printing and distributing prospectuses, statements, reports and
other documents to shareholders, expenses of shareholders' meetings and proxy
solicitations, and such extraordinary or non-recurring expenses as may arise,
including litigation to which the Trust may be a party and indemnification of
the Trust's officers and Trustees with respect thereto, or any other expense
not specifically described above incurred in the performance of the Trust's
obligations. All other expenses not expressly assumed by Adviser herein
incurred in connection with the organization, registration of shares and
operations of the Fund will be borne by the Fund.
11. Other Investment Activities of Adviser. The Trust acknowledges that
Adviser or one or more of its affiliates may have investment responsibilities
or render investment advice to or perform other investment advisory services
for other individuals or entities and that Adviser, its affiliates or any of
its or their directors, officers, agents or employees may buy, sell or trade
in any securities for its or their respective accounts ("Affiliated
Accounts"). Subject to the provisions of paragraph 2 hereof, the Trust agrees
that Adviser or its affiliates may give advice or exercise investment
responsibility and take such other action with respect to other Affiliated
Accounts which may differ from the advice given or the timing or nature of
action taken with respect to the Fund, provided that Adviser acts in good
faith, and provided further, that it is Adviser's policy to allocate, within
its reasonable discretion, investment opportunities to the Fund over a period
of time on a fair and equitable basis relative to the Affiliated Accounts,
taking into account the investment objectives and policies of the Fund and any
specific investment restrictions applicable thereto. The Trust acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which the Fund may have an interest from time to time, whether in
transactions which involve the Fund or otherwise. Adviser shall have no
obligation to acquire for the Fund a position in any investment which any
Affiliated Account may acquire, and the Trust shall have
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no first refusal, co-investment or other rights in respect of any such
investment, either for the Fund or otherwise.
12. Certificate of Authority. The Trust and the Adviser shall furnish to
each other from time to time certified copies of the resolutions of their
Trustees or Board of Directors or executive committees, as the case may be,
evidencing the authority of officers and employees who are authorized to act
on behalf of the Trust, the Fund and/or the Adviser.
13. Limitation of Liability. Adviser shall not be liable for any action
taken, omitted or suffered to be taken by it in its reasonable judgment, in
good faith and believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement, or in accordance with
(or in the absence of) specific directions or instructions from the Trust,
provided, however, that such acts or omissions shall not have resulted from
Adviser's willful misfeasance, bad faith or gross negligence, a violation of
the standard of care established by and applicable to Adviser in its actions
under this Agreement or breach of its duty or of its obligations hereunder.
Nothing in this paragraph 13 shall be construed in a manner inconsistent with
Sections 17(h) and (i) of the Act.
14. Confidentiality. Subject to the duty of Adviser and the Trust to comply
with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of Adviser and the
Trust in respect thereof.
15. Assignment. No assignment of this Agreement shall be made by Adviser,
and this Agreement shall terminate automatically in the event of such
assignment. Adviser shall notify the Trust in writing sufficiently in advance
of any proposed change of control, as defined in Section 2(a)(9) of the Act,
as will enable the Trust to consider whether an assignment will occur, and to
take the steps necessary to enter into a new contract with Adviser.
16. Representation, Warranties and Agreements of the Trust. The Trust
represents, warrants and agrees that:
A. Adviser has been duly appointed by the Trustees of the Trust to
provide investment services to the Fund as contemplated hereby.
B. The Trust will deliver to Adviser true and complete copies of its
then current prospectuses and statements of additional information as
effective from time to time and such other documents or instruments
governing the investments of the Fund and such other information as is
necessary for Adviser to carry out its obligations under this Agreement.
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<PAGE>
C. The Trust is currently in compliance and shall at all times comply
with the requirements imposed upon the Trust by applicable law and
regulations.
17. Representations, Warranties and Agreements of Adviser. Adviser
represents, warrants and agrees that:
A. Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940.
B. Adviser will maintain, keep current and preserve on behalf of the
Trust, in the manner and for the time periods required or permitted by the
Act, the records identified in Schedule A. Adviser agrees that such
records (unless otherwise indicated on Schedule A) are the property of the
Trust, and will be surrendered to the Trust promptly upon request.
C. Adviser will complete such reports concerning purchases or sales of
securities on behalf of the Fund as the Trust may from time to time
require to ensure compliance with the Act, the Internal Revenue Code of
1986 and applicable state securities laws.
D. Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will provide the Trust with a
copy of the code of ethics and evidence of its adoption. Within forty-five
(45) days of the end of the last calendar quarter of each year while this
Agreement is in effect, an officer of Adviser shall certify to the Trust
that Adviser has complied with the requirements of Rule 17j-1 during the
previous quarter and that there has been no violation of the Adviser's
code of ethics or, if such a violation has occurred, that appropriate
action was taken in response to such violation. Upon the written request
of the Trust, Adviser shall permit the Trust, its employees or its agents
to examine the reports required to be made to Adviser by Rule 17j-1(c)(1).
E. Adviser will, promptly after filing with the Securities and Exchange
Commission an amendment to its Form ADV, furnish a copy of such amendment
to the Trust.
F. Upon request of the Trust, Adviser will provide assistance to the
Custodian in the collection of income due or payable to the Fund.
G. Adviser will immediately notify the Trust of the occurrence of any
event which would disqualify Adviser from serving as an investment adviser
of an investment company pursuant to Section 9(a) of the Act or otherwise.
18. Amendment. This Agreement may be amended at any time, but only by
written agreement between Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Trustees and the
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shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to
approval of amendments to this Agreement.
19. Effective Date; Term. This Agreement shall become effective on the date
of its execution and shall remain in force for a period of two (2) years from
such date, and from year to year thereafter but only so long as such
continuance is specifically approved at least annually by the vote of a
majority of the Trustees who are not interested persons of the Trust or the
Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner
consistent with the Act and the rules and regulations thereunder.
20. Termination. This Agreement may be terminated by either party hereto,
without the payment of any penalty, immediately upon written notice to the
other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities
of any party hereto to the other.
21. Limitation of Liability. It is expressly agreed that the obligations of
the Trust hereunder shall not be binding upon any of the trustees,
shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees of the Trust
and signed by an officer of the Trust, acting as such, and neither such
authorization by such trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust.
22. Definitions. As used in paragraphs 15 and 19 of this Agreement, the
terms "assignment," "interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act
and the rules and regulations thereunder.
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<PAGE>
23. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the Commonwealth
of Massachusetts.
NVEST KOBRICK INVESTMENT TRUST
On behalf of Kobrick Fund
By: ________________________________________
Title: President
Date:
ACCEPTANCE
The foregoing Agreement is hereby accepted.
KOBRICK FUNDS LLC
By: ______________________________________
Title: President
Date:
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<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all
other portfolio purchases or sales, given by the Adviser on behalf of the Fund
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase and
sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers
to:
(a) The Trust;
(b) The Adviser; and,
(c) Any person affiliated with the foregoing persons.
(iii) Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
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<PAGE>
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by a
committee or group, a record shall be kept of the names of its members who
participate in the authorization. There shall be retained as part of this
record any memorandum, recommendation or instruction supporting or authorizing
the purchase or sale of portfolio securities and such other information as is
appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required
to be maintained by registered investment advisers by rule adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such records
are necessary or appropriate to record the Adviser's transactions with respect
to the Fund.
-----------
* Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal
reports or portfolio adviser reviews.
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<PAGE>
APPENDIX B3
FORM OF INVESTMENT SUB-ADVISORY AGREEMENTS
NVEST FUND
SUB-ADVISORY AGREEMENT
( )
Sub-Advisory Agreement (this "Agreement") entered into as of [insert date]
day of , 20 , by and among Nvest Trust, a Massachusetts business
trust (the "Trust"), with respect to its Nvest Fund series (the
"Series"), Nvest Funds Management, L.P., a Delaware limited partnership (the
"Manager"), and , L.P., a limited partnership (the "Sub-Adviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated (the
"Advisory Agreement") with the Trust, relating to the provision of portfolio
management and administrative services to the Series;
WHEREAS, the Advisory Agreement provides that the Manager may delegate any
or all of its portfolio management responsibilities under the Advisory
Agreement to one or more sub-advisers;
WHEREAS, the Manager and the trustees of the Trust desire to retain the Sub-
Adviser to render portfolio management services in the manner and on the terms
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Trust, the Manager and the Sub-Adviser agree as
follows:
1. Sub-Advisory Services.
a. The Sub-Adviser shall, subject to the supervision of the Manager
and of any administrator appointed by the Manager (the
"Administrator"), manage the investment and reinvestment of the
assets of the Series, and have the authority on behalf of the Series
to vote all proxies and exercise all other rights of the Series as a
security holder of companies in which the Series from time to time
invests. The Sub-Adviser shall manage the Series in conformity with
(1) the investment objective, policies and restrictions of the Series
set forth in the Trust's prospectus and statement of additional
information relating to the Series, (2) any additional policies or
guidelines established by the Manager or by the Trust's trustees that
have been furnished in writing to the Sub-Adviser and (3) the
provisions of the Internal Revenue Code (the "Code") applicable to
"regulated
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<PAGE>
investment companies" (as defined in Section 851 of the Code), all as
from time to time in effect (collectively, the "Policies"), and with
all applicable provisions of law, including without limitation all
applicable provisions of the Investment Company Act of 1940 (the
"1940 Act") and the rules and regulations thereunder. Subject to the
foregoing, the Sub-Adviser is authorized, in its discretion and
without prior consultation with the Manager, to buy, sell, lend and
otherwise trade in any stocks, bonds and other securities and
investment instruments on behalf of the Series, without regard to the
length of time the securities have been held and the resulting rate
of portfolio turnover or any tax considerations; and the majority or
the whole of the Series may be invested in such proportions of
stocks, bonds, other securities or investment instruments, or cash,
as the Sub-Adviser shall determine.
b. The Sub-Adviser shall furnish the Manager and the Administrator
monthly, quarterly and annual reports concerning portfolio
transactions and performance of the Series in such form as may be
mutually agreed upon, and agrees to review the Series and discuss the
management of it. The Sub-Adviser shall permit all books and records
with respect to the Series to be inspected and audited by the Manager
and the Administrator at all reasonable times during normal business
hours, upon reasonable notice. The Sub-Adviser shall also provide the
Manager with such other information and reports as may reasonably be
requested by the Manager from time to time, including without
limitation all material requested by or required to be delivered to
the Trustees of the Trust.
c. The Sub-Adviser shall provide to the Manager a copy of the Sub-
Adviser's Form ADV as filed with the Securities and Exchange
Commission and a list of the persons whom the Sub-Adviser wishes to
have authorized to give written and/or oral instructions to
custodians of assets of the Series.
2. Obligations of the Manager.
a. The Manager shall provide (or cause the Series' Custodian (as
defined in Section 3 hereof) to provide) timely information to the
Sub-Adviser regarding such matters as the composition of assets of
the Series, cash requirements and cash available for investment in
the Series, and all other information as may be reasonably necessary
for the Sub-Adviser to perform its responsibilities hereunder.
b. The Manager has furnished the Sub-Adviser a copy of the
prospectus and statement of additional information of the Series and
agrees during the continuance of this Agreement to furnish the Sub-
Adviser copies of any revisions or supplements thereto at, or, if
practicable, before the time the revisions or supplements become
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<PAGE>
effective. The Manager agrees to furnish the Sub-Adviser with minutes
of meetings of the trustees of the Trust applicable to the Series to
the extent they may affect the duties of the Sub-Adviser, and with
copies of any financial statements or reports made by the Series to
its shareholders, and any further materials or information which the
Sub-Adviser may reasonably request to enable it to perform its
functions under this Agreement.
3. Custodian. The Manager shall provide the Sub-Adviser with a copy of
the Series's agreement with the custodian designated to hold the assets of
the Series (the "Custodian") and any modifications thereto (the "Custody
Agreement"), copies of such modifications to be provided to the Sub-
Adviser a reasonable time in advance of the effectiveness of such
modifications. The assets of the Series shall be maintained in the custody
of the Custodian identified in, and in accordance with the terms and
conditions of, the Custody Agreement (or any sub-custodian properly
appointed as provided in the Custody Agreement). The Sub-Adviser shall
have no liability for the acts or omissions of the Custodian, unless such
act or omission is taken in reliance upon instruction given to the
Custodian by a representative of the Sub-Adviser properly authorized to
give such instruction under the Custody Agreement. Any assets added to the
Series shall be delivered directly to the Custodian.
4. Proprietary Rights. The Manager agrees and acknowledges that the Sub-
Adviser is the sole owner of the name " , L.P." and that all use of any
designation consisting in whole or part of " , L.P." under this
Agreement shall inure to the benefit of the Sub-Adviser. The Manager on
its own behalf and on behalf of the Series agrees not to use any such
designation in any advertisement or sales literature or other materials
promoting the Series, except with the prior written consent of the Sub-
Adviser. Without the prior written consent of the Sub-Adviser, the Manager
shall not, and the Manager shall use its best efforts to cause the Series
not to, make representations regarding the Sub-Adviser in any disclosure
document, advertisement or sales literature or other materials relating to
the Series. Upon termination of this Agreement for any reason, the Manager
shall cease, and the Manager shall use its best efforts to cause the
Series to cease, all use of any such designation as soon as reasonably
practicable.
5. Expenses. Except for expenses specifically assumed or agreed to be
paid by the Sub-Adviser pursuant hereto, the Sub-Adviser shall not be
liable for any organizational, operational or business expenses of the
Manager or the Trust including, without limitation, (a) interest and
taxes, (b) brokerage commissions and other costs in connection with the
purchase or sale of securities or other investment instruments with
respect to the Series, and (c) custodian fees and expenses. Any
reimbursement of advisory fees required
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<PAGE>
by any expense limitation provision of any law shall be the sole
responsibility of the Manager. The Manager and the Sub-Adviser shall not
be considered as partners or participants in a joint venture. The Sub-
Adviser will pay its own expenses incurred in furnishing the services to
be provided by it pursuant to this Agreement. Neither the Sub-Adviser nor
any affiliated person thereof shall be entitled to any compensation from
the Manager or the Trust with respect to service by any affiliated person
of the Sub-Adviser as an officer or trustee of the Trust (other than the
compensation to the Sub-Adviser payable by the Manager pursuant to Section
7 hereof).
6. Purchase and Sale of Assets. The Sub-Adviser shall place all orders
for the purchase and sale of securities for the Series with brokers or
dealers selected by the Sub-Adviser, which may include brokers or dealers
affiliated with the Sub-Adviser, provided such orders comply with Rule
17e-1 under the 1940 Act in all respects. To the extent consistent with
applicable law, purchase or sell orders for the Series may be aggregated
with contemporaneous purchase or sell orders of other clients of the Sub-
Adviser. The Sub-Adviser shall use its best efforts to obtain execution of
transactions for the Series at prices which are advantageous to the Series
and at commission rates that are reasonable in relation to the benefits
received. However, the Sub-Adviser may select brokers or dealers on the
basis that they provide brokerage, research or other services or products
to the Series and/or other accounts serviced by the Sub-Adviser. To the
extent consistent with applicable law, the Sub-Adviser may pay a broker or
dealer an amount of commission for effecting a securities transaction in
excess of the amount of commission or dealer spread another broker or
dealer would have charged for effecting that transaction if the Sub-
Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research products
and/or services provided by such broker or dealer. This determination,
with respect to brokerage and research services or products, may be viewed
in terms of either that particular transaction or the overall
responsibilities which the Sub-Adviser and its affiliates have with
respect to the Series or to accounts over which they exercise investment
discretion. Not all such services or products need be used by the Sub-
Adviser in managing the Series.
To the extent permitted by applicable law, and in all instances subject
to the foregoing policy of best execution, the Sub-Adviser may allocate
brokerage transactions in a manner that takes into account the sale of
shares of one or more funds distributed by Nvest Funds Distributor, L.P.
("Nvest Distributor"). In addition, the Sub-Adviser may allocate brokerage
transactions to broker-dealers (including affiliates of Nvest Distributor)
that have entered into arrangements in which the broker-dealer allocates a
portion of the commissions paid by a fund toward the reduction of that
fund's expenses, subject to the policy of best execution.
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<PAGE>
7. Compensation of the Sub-Adviser. As full compensation for all
services rendered, facilities furnished and expenses borne by the Sub-
Adviser hereunder, the Sub-Adviser shall be paid at the annual rate of
(or such lesser amount as the Sub-Adviser may from time to time
agree to receive). Such compensation shall be paid by the Trust (except to
the extent that the Trust, the Sub-Adviser and the Manager otherwise agree
in writing from time to time). Such compensation shall be payable monthly
in arrears or at such other intervals, not less frequently than quarterly,
as the Manager is paid by the Series pursuant to the Advisory Agreement.
8. Non-Exclusivity. The Manager and the Series agree that the services
of the Sub-Adviser are not to be deemed exclusive and that the Sub-Adviser
and its affiliates are free to act as investment manager and provide other
services to various investment companies and other managed accounts,
except as the Sub-Adviser and the Manager or the Administrator may
otherwise agree from time to time in writing before or after the date
hereof. This Agreement shall not in any way limit or restrict the Sub-
Adviser or any of its directors, officers, employees or agents from
buying, selling or trading any securities or other investment instruments
for its or their own account or for the account of others for whom it or
they may be acting, provided that such activities do not adversely affect
or otherwise impair the performance by the Sub-Adviser of its duties and
obligations under this Agreement. The Manager and the Series recognize and
agree that the Sub-Adviser may provide advice to or take action with
respect to other clients, which advice or action, including the timing and
nature of such action, may differ from or be identical to advice given or
action taken with respect to the Series. The Sub-Adviser shall for all
purposes hereof be deemed to be an independent contractor and shall,
unless otherwise provided or authorized, have no authority to act for or
represent the Series or the Manager in any way or otherwise be deemed an
agent of the Series or the Manager.
9. Liability. Except as may otherwise be provided by the 1940 Act or
other federal securities laws, neither the Sub-Adviser nor any of its
officers, directors, partners, employees or agents (the "Indemnified
Parties") shall be subject to any liability to the Manager, the Trust, the
Series or any shareholder of the Series for any error of judgment, any
mistake of law or any loss arising out of any investment or other act or
omission in the course of, connected with, or arising out of any service
to be rendered under this Agreement, except by reason of willful
misfeasance, bad faith or gross negligence in the performance of the Sub-
Adviser's duties or by reason of reckless disregard by the Sub-Adviser of
its obligations and duties hereunder. The Manager shall hold harmless and
indemnify the Sub-Adviser for any loss, liability, cost, damage or expense
(including reasonable attorneys fees and costs) arising from any claim or
demand by any past or present shareholder of the Series
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<PAGE>
that is not based upon the obligations of the Sub-Adviser under this
Agreement.
The Manager acknowledges and agrees that the Sub-Adviser makes no
representation or warranty, expressed or implied, that any level of
performance or investment results will be achieved by the Series or that
the Series will perform comparably with any standard or index, including
other clients of the Sub-Adviser, whether public or private.
10. Effective Date and Termination. This Agreement shall become
effective as of the date of its execution, and
a. unless otherwise terminated, this Agreement shall continue in
effect for two years from the date of execution, and from year to
year thereafter so long as such continuance is specifically approved
at least annually (i) by the Board of Trustees of the Trust or by
vote of a majority of the outstanding voting securities of the
Series, and (ii) by vote of a majority of the trustees of the Trust
who are not interested persons of the Trust, the Manager or the Sub-
Adviser, cast in person at a meeting called for the purpose of voting
on such approval;
b. this Agreement may at any time be terminated on sixty days'
written notice to the Sub-Adviser either by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Series;
c. this Agreement shall automatically terminate in the event of its
assignment or upon the termination of the Advisory Agreement; and
d. this Agreement may be terminated by the Sub-Adviser on ninety
days' written notice to the Manager and the Trust, or by the Manager
on ninety days' written notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 10 shall be
without the payment of any penalty.
11. Amendment. This Agreement may be amended at any time by mutual
consent of the Manager and the Sub-Adviser, provided that, if required by
law, such amendment shall also have been approved by vote of a majority of
the outstanding voting securities of the Series and by vote of a majority
of the trustees of the Trust who are not interested persons of the Trust,
the Manager or the Sub-Adviser, cast in person at a meeting called for the
purpose of voting on such approval.
12. Certain Definitions. For the purpose of this Agreement, the terms
"vote of a majority of the outstanding voting securities," "interested
person," "affiliated person" and "assignment" shall have their respective
meanings defined in the 1940 Act, subject, however, to such exemptions as
may be granted by the Securities and Exchange Commission under the 1940
Act.
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<PAGE>
13. General.
a. The Sub-Adviser may perform its services through any employee,
officer or agent of the Sub-Adviser, and the Manager shall not be
entitled to the advice, recommendation or judgment of any specific
person; provided, however, that the persons identified in the
prospectus of the Series shall perform the day-to-day portfolio
management duties described therein until the Sub-Adviser notifies
the Manager that one or more other employees, officers or agents of
the Sub-Adviser, identified in such notice, shall assume such duties
as of a specific date.
b. If any term or provision of this Agreement or the application
thereof to any person or circumstances is held to be invalid or
unenforceable to any extent, the remainder of this Agreement or the
application of such provision to other persons or circumstances shall
not be affected thereby and shall be enforced to the fullest extent
permitted by law.
c. This Agreement shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
NVEST FUNDS MANAGEMENT, L.P.
By Nvest Distribution Corp., its general partner
By: ______________________________________
Name:
Title:
, L.P.
By:__________________ , Inc.,
its general partner
By: ______________________________________
Name:
Title:
NVEST TRUST ,
on behalf of its Nvest Fund series
By: ______________________________________
Name:
Title:
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<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust establishing Nvest
Trust (the "Fund") is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed with
respect to the Fund's Nvest Fund series (the "Series") on behalf of the
Fund by officers of the Fund as officers and not individually and that the
obligations of or arising out of this Agreement are not binding upon any of
the trustees, officers or shareholders individually but are binding only upon
the assets and property belonging to the Series.
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<PAGE>
APPENDIX C
CERTAIN OTHER MUTUAL FUNDS ADVISED BY THE ADVISER AND THE SUB-ADVISERS
The Adviser and the Sub-Advisers act as investment adviser or sub-adviser to
the following other mutual funds that have investment objectives similar to
the Funds, for compensation at the annual percentage rates of the
corresponding average net asset levels of those funds set forth below. The
Sub-Advisers for each of the Nvest Balanced Fund, Nvest Bullseye Fund, Nvest
Capital Growth Fund, Nvest High Income Fund, Nvest Strategic Income Fund,
Nvest Star Value Fund (Vaughan Nelson segment), Nvest Equity Income Fund,
Nvest Government Securities Fund, Nvest Intermediate Term Tax Free Fund of
California, Nvest Limited Term U.S. Government Fund, Nvest Massachusetts Tax
Free Fund, Nvest Municipal Income Fund, Nvest Short Term Corporate Income
Fund, Nvest Tax Exempt Money Market Trust, Kobrick Emerging Growth Fund and
Kobrick Growth Fund do not manage comparable mutual funds.
<TABLE>
<CAPTION>
ADVISER'S/
NET ASSETS SUB-ADVISER'S
OF OTHER RELATIONSHIP
FUND AT TO OTHER FUND
OTHER FUND(S) WITH JUNE 30, (ADVISER OR
FUND/ADVISER OR SUB-ADVISER SIMILAR OBJECTIVES 2000 FEE RATE SUB-ADVISER)
--------------------------- ------------------ ----------- -------- -------------
<S> <C> <C> <C> <C>
KOBRICK CAPITAL FUND Nvest Star Advisers Fund 0.55% of the first Sub-
Kobrick Funds LLC segment $50 million; 0.50% Adviser
of the next $200
million; and 0.475%
over 250 million
NVEST GROWTH FUND New England Zenith $ 0.70% of the first
Capital Growth Fund--Capital Growth 1.7 billion $200 million; 0.65%
Management Limited Series of the next $300
Partnership million; 0.60% of
the next $1.5
billion and 0.55%
over $2 billion
Capital Growth New England Variable $69,870,427 0.3066%
Management Limited Annuity Fund I
Partnership
</TABLE>
C-1
<PAGE>
<TABLE>
<CAPTION>
ADVISER'S/
NET ASSETS SUB-ADVISER'S
OF OTHER RELATIONSHIP
FUND AT TO OTHER FUND
OTHER FUND(S) WITH JUNE 30, (ADVISER OR
FUND/ADVISER OR SUB-ADVISER SIMILAR OBJECTIVES 2000 FEE RATE SUB-ADVISER)
--------------------------- ------------------ ---------- -------- -------------
<S> <C> <C> <C> <C>
NVEST GROWTH FUND TNE Separate Capital $ 548 0.45%
Capital Growth Growth Account million
Management Limited
Partnership
NVEST GROWTH AND INCOME New England Zenith $ 404 0.50% of the first Sub-Adviser
FUND Westpeak Fund--Growth and Income million $25 million; 0.40%
Fund of the next $75
million; 0.35% of
the next $100
million; and 0.30%
over $200 million
Westpeak Nvest Star Value Fund 0.50% of the first Sub-Adviser
segment $25 million; 0.40%
of the next $75
million; 0.35% of
the next $100
million; and 0.30%
over $200 million
Loomis Sayles Nvest Star 0.65% of the first Sub-Adviser
Worldwide Fund Segment $50 million;
[1] 0.60% of the next
$50 million; and
0.55% over $100
million
NVEST INTERNATIONAL Loomis Sayles $ 134 0.75% on all assets Adviser
EQUITY FUND International Equity million
Loomis Sayles Fund
Loomis Sayles Nvest Star Worldwide [$] 0.65% of the first Sub-Adviser
Fund segment $50 million; 0.60%
of the next $50
million; and 0.55%
over $100 million
NVEST STAR ADVISERS Kobrick Capital Fund $ 332.6 1.00%* Adviser
FUND million
Kobrick Funds LLC
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
ADVISER'S/
SUB-ADVISER'S
RELATIONSHIP
NET ASSETS OF TO OTHER FUND
OTHER FUND(S) WITH OTHER FUND AT (ADVISER OR
FUND/ADVISER OR SUB-ADVISER SIMILAR OBJECTIVES JUNE 30, 2000 FEE RATE SUB-ADVISER)
--------------------------- ------------------ ---------------- -------- -------------
<S> <C> <C> <C> <C>
Harris Associates The Oakmark Fund $ 2.1 billion 1.00% on first $2.5 Adviser
billion of net
assets; 0.90% on the
next $1.25 billion
of net assets; 0.85%
on the next $5
billion of net
assets; and 0.80% on
the excess of $10
billion of net
assets
Janus Capital Janus Mercury Fund $ 1.7 billion 0.65% of its daily Adviser
net assets
Janus Capital CGG Trust Growth Series $ 1.9 billion 0.55% on the first Sub-
Fund $100 million of net Adviser
assets; 0.50% on the
next $400 million of
net assets; and
0.45% on the excess
of $500 million
Janus Capital Pacific Select Growth LT $4,169.7 million .055% on the first Sub-
$100 million of net Adviser
assets; 0.50% on the
next $400 million of
net assets; and
0.45% on the excess
of $500 million
Loomis Sayles Loomis Sayles Small Cap $ 303 million 0.75% on all assets Adviser
Value Fund
Loomis Sayles Loomis Sayles Small $ 43 million 0.75% on all assets Adviser
Company Value Fund
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ADVISER'S/
NET ASSETS SUB-ADVISER'S
OF OTHER RELATIONSHIP
FUND AT TO OTHER FUND
OTHER FUND(S) WITH JUNE 30, (ADVISER OR
FUND/ADVISER OR SUB-ADVISER SIMILAR OBJECTIVES 2000 FEE RATE SUB-ADVISER)
--------------------------- ------------------ ---------- -------- -------------
<S> <C> <C> <C> <C>
Loomis Sayles Maxim Loomis Sayles 0.50 on the first Sub-
Small Cap Value $10 million of Adviser
Portfolio assets; 0.45% on the
next $15 million of
assets; 0.40% on the
next $75 million of
assets; and 0.30% on
all amounts in
excess of $100
million
Loomis Sayles New England Zenith $ 450 0.55% of the first Sub-
Fund--Loomis Sayles million $25 million of Adviser
Small Cap Series assets; 0.50% on the
next $75 million of
assets; 0.45% on the
next $100 million of
assets; and 0.40% of
amounts in excess of
$200 million
NVEST STAR SMALL CAP The Oakmark Small Cap $ 220 1.25% on the first Adviser
FUND Fund million $1 billion of net
Harris Associates assets; 1.15% on the
next $500 million of
net assets; 1.10% on
the next $500
million of net
assets; 1.05% on the
next $500 million of
net assets; and
1.00% on the excess
of $2.5 billion of
net assets
Loomis Sayles Loomis Sayles Small Cap $ 232 0.75% on all assets Adviser
Growth Fund million
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ADVISER'S/
NET ASSETS SUB-ADVISER'S
OF OTHER RELATIONSHIP
FUND AT TO OTHER FUND
OTHER FUND(S) WITH JUNE 30, (ADVISER OR
FUND/ADVISER OR SUB-ADVISER SIMILAR OBJECTIVES 2000 FEE RATE SUB-ADVISER)
--------------------------- ------------------ ---------- -------- -------------
<S> <C> <C> <C> <C>
Loomis Sayles Loomis Sayles Small $ 123 0.75 on all assets Adviser
Company Growth million
Loomis Sayles New England Zenith $ 450 0.55% on the first Sub-
Fund--Loomis Sayles million $25 million of Adviser
Small Cap Series assets; 0.50% on the
next $75 million of
assets; 0.45% of the
next $100 million of
assets; and 0.40% of
amounts in excess of
$200 million
Montgomery Montgomery U.S. Emerging $ 225 1.33% Adviser
Growth Fund million
RSIM RS Diversified Growth
Fund
RSIM LPT Variable Series
Trust
NVEST STAR VALUE FUND The Oakmark Select Fund $ 1.5 1.00% on the first Adviser
Harris Associates billion $1 billion of net
assets; 0.95% on the
next $500 million of
net assets; 0.90% on
the next $500
million of net
assets; 0.85% on the
next $500 million of
net assets; 0.80% on
the next $2.5
billion of net
assets; and 0.75% on
the excess of $5
billion of net
assets
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
ADVISER'S/
NET ASSETS SUB-ADVISER'S
OF OTHER RELATIONSHIP
FUND AT TO OTHER FUND
OTHER FUND(S) WITH JUNE 30, (ADVISER OR
FUND/ADVISER OR SUB-ADVISER SIMILAR OBJECTIVES 2000 FEE RATE SUB-ADVISER)
--------------------------- ------------------ ---------- -------- -------------
<S> <C> <C> <C> <C>
Loomis Sayles Loomis Sayles Core Value $ 40 0.50% on all assets Adviser
Fund million
Westpeak New England Zenith $ 1.7 0.70% of the first Sub-
Fund--Growth and Income billion $200 million; 0.65% Adviser
Series of the next $300
million; 0.60% of
the next $1.5
billion; and 0.55%
over $2 billion
Nvest Growth and Income [$] 0.50% of the first Sub-
Fund $25 million; 0.40% Adviser
of the next $75
million; 0.35% of
the next $100
million; and 0.30%
over $200 million
NVEST STAR WORLDWIDE The Oakmark Fund $ 2.1 1.00% on first $2.5 Adviser
FUND billion billion of net
Harris Associates assets; 0.90% on the
next $1.25 billion
of net assets; 0.85%
on the next $5
billion of net
assets; and 0.80% on
the excess of $10
billion of net
assets
Harris Associates The Oakmark $ .819 1.00% on the first Adviser
International Fund billion $2.5 billion of net
assets; 1.15% on the
next $2.5 billion of
net assets; 0.90% on
the excess of $5
billion of net
assets
Loomis Sayles Loomis Sayles $ .134 0.75% on all assets Adviser
International Equity billion
Fund
Montgomery Montgomery Global $ 85 1.25% of its net Adviser
Opportunities Fund million assets
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
ADVISER'S/
NET ASSETS SUB-ADVISER'S
OF OTHER RELATIONSHIP
FUND AT TO OTHER FUND
OTHER FUND(S) WITH JUNE 30, (ADVISER OR
FUND/ADVISER OR SUB-ADVISER SIMILAR OBJECTIVES 2000 FEE RATE SUB-ADVISER)
--------------------------- ------------------ ---------- -------- -------------
<S> <C> <C> <C> <C>
NVEST BOND INCOME FUND New England Zenith $ 271 0.25% on the first Sub-
Back Bay Advisors Fund--Bond Income Series million $50 million; 0.20% Adviser
on the next $200
million; and 0.15%
on the excess of
$250 million
Back Bay Advisors Back Bay Fund, Inc.-- $ 37 0.35% Adviser
Total Return Bond million
NVEST CASH MANAGEMENT New England Zenith $ 214 0.15% on the first Sub-
TRUST-- Fund--Money Market million $100 million; and Adviser
MONEY MARKET SERIES Series 0.10% on the excess
Back Bay Advisors of $100 million
</TABLE>
For The Oakmark Fund, The Oakmark Small Cap Fund, The Oakmark International
Fund and the Oakmark Select Fund, Harris Associates L.P. has voluntarily
agreed to reimburse each Fund to the extent annual expenses exceed 1.50%,
1.50%, 2.00%, and 1.50%, respectively, of such Fund's average net assets.
For Montgomery Global Opportunities Fund and Montgomery U.S. Emerging Growth
Fund, Montgomery has contractually agreed to reduce its fees and/or absorb
expense to limit each Fund's total annual operating expenses (excluding
interest and tax expense) to 1.90% and 1.50%, respectively. This contract has
a rolling 10-year term.
For Kobrick Capital Fund, Kobrick Funds LLC has agreed to cap the amount of
total expenses at 1.50%, 2.25%, 2.25% and 1.25% for the Class A, B, C and Y
expenses, respectively. If the total expenses exceed the respective cap,
Kobrick Funds LLC will reduce its management fees and/or reimburse the Fund
for certain expenses. For a certain period of time, Kobrick Funds LLC is
permitted to recover expenses it has borne to the extent that the Fund's
expenses fall below the cap.
For New England Zenith Fund--Capital Growth Series and New England Variable
Annuity Fund I, Capital Growth Management Limited Partnership entered into a
service agreement with New England Investment Management, Inc. for charges to
be combined for the two funds at 0.12% of daily net assets on the first $100
million, 0.10% on the next $250 million and .08% in excess of $350 million.
C-7
<PAGE>
APPENDIX D
BROKERAGE PRACTICES
Following is a summary of the brokerage practices of the Advisers and Sub-
Advisers:
General. Subject to the overriding objective of obtaining the best possible
execution of orders and subject to procedures adopted by the Trustees, the
Funds' brokerage transactions may be executed by brokers that are affiliated
with Nvest or the Advisers or Sub-Advisers. Any such transactions will comply
with Rule 17e-1 under the Investment Company Act. In order for the affiliated
broker to effect portfolio transactions for the Fund, the commissions, fees or
other remuneration received by the affiliated broker must be reasonable and
fair compared to the commissions, fees and other remuneration paid to other
brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a
comparable period. Furthermore, the trustees of the Trusts, including a
majority of the Independent Trustees, have adopted procedures which are
reasonably designed to provide that any commissions, fees or other
remuneration paid to an affiliated broker are consistent with the foregoing
standard.
Under the Investment Company Act, persons affiliated with each Trust are
prohibited from dealing with each Trust's Funds as a principal in the purchase
and sale of securities. Since transactions in the over-the-counter market
usually involve transactions with dealers acting as principals for their own
accounts, affiliated persons of the Trusts may not serve as the Funds' dealer
in connection with such transactions.
To the extent permitted by applicable law, and in all instances subject to
the foregoing policy of best execution, the Nvest Adviser or Sub-Advisers may
allocate brokerage transactions in a manner that takes into account the sale
of shares of one or more Funds distributed by Nvest Funds Distributor, L.P. In
addition, the Advisers or Sub-Advisers may allocate brokerage transactions to
broker-dealers (including affiliates of Nvest Funds Distributor, L.P.) that
have entered into arrangements in which the broker-dealer allocates a portion
of the commissions paid by a Fund toward the reduction of that Fund's
expenses, subject to the requirement that the Advisers or Sub-Advisers will
seek best execution.
It is expected that the portfolio transactions in fixed-income securities
will generally be with issuers or dealers on a net basis without a stated
commission. Securities firms may receive brokerage commissions on transactions
involving options, futures and options on futures and the purchase and sale of
underlying securities upon exercise of options. The brokerage commissions
associated with
D-1
<PAGE>
buying and selling options may be proportionately higher than those associated
with general securities transactions.
CGM (with respect to Nvest Growth Fund). In placing orders for the purchase
and sale of portfolio securities for the Fund, CGM always seeks the best price
and execution. Transactions in unlisted securities will be carried out through
broker-dealers that make the primary market for such securities unless, in the
judgment of CGM, a more favorable price can be obtained by carrying out such
transactions through other brokers.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker that CGM believes will provide the best price and execution
for a transaction. These research services include not only a wide variety of
reports on such matters as economic and political developments, industries,
companies, securities, portfolio strategy, account performance, daily prices
of securities, stock and bond market conditions and projections, asset
allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although
it is not possible to assign an exact dollar value to these services, they
may, to the extent used, tend to reduce CGM's expenses. Such services may be
used by CGM in servicing other client accounts and in some cases may not be
used with respect to the Fund. Receipt of services or products other than
research from brokers is not a factor in the selection of brokers.
Kobrick Funds LLC (with respect to Nvest Star Advisers Fund, Kobrick Capital
Fund, Kobrick Emerging Growth Fund and Kobrick Growth Fund). The Kobrick
Adviser's policy is to seek for its clients, including the Funds, what in the
Kobrick Adviser's judgment will be the best overall execution of purchase or
sale orders and the most favorable net prices in securities transactions
consistent with its judgment as to the business qualifications of the various
broker or dealer firms with which the Kobrick Adviser may do business, and the
Kobrick Adviser may not necessarily choose the broker offering the lowest
available commission rate. Decisions with respect to the market where the
transaction is to be completed, to the form of transaction (whether principal
or agency) and to the allocation of orders among brokers or dealers are made
in accordance with this policy. In selecting brokers or dealers to effect
portfolio transactions, consideration is given to their proven integrity and
financial responsibility, their demonstrated execution experience and
capabilities both generally and with respect to particular markets or
securities, the competitiveness of their commission rates in agency
transactions (and their net prices in principal transactions), their
willingness to commit capital, and their clearance and settlement capability.
The Kobrick Adviser makes every effort to keep informed of commission rate
structures and prevailing bid/ask spread characteristics of the markets and
securities in which transactions for its segment of the Fund occurs. Against
this background, the Kobrick Adviser evaluates the
D-2
<PAGE>
reasonableness of a commission or a net price with respect to a particular
transaction by considering such factors as difficulty of execution or security
positioning by the executing firm. The Kobrick Adviser may or may not solicit
competitive bids based on its judgment of the expected benefit or harm to the
execution process for that transaction.
When it appears that a number of firms could satisfy the required standards
in respect of a particular transaction, consideration may also be given to
services other than execution services which certain of such firms have
provided in the past or may provide in the future. Negotiated commission rates
and prices, however, are based upon the Kobrick Adviser's judgment of the rate
which reflects the execution requirements of the transaction without regard to
whether the broker provides services in addition to execution. Among such
other services are the supplying of supplemental investment research; general
economic, political and business information; analytical and statistical data;
relevant market information, quotation equipment and services; reports and
information about specific companies, industries and securities; purchase and
sale recommendations for stocks and bonds; portfolio strategy services;
historical statistical information; market data services providing information
on specific issues and prices; financial publications; proxy voting data and
analysis services; technical analysis of various aspects of the securities
markets, including technical charts; computer hardware used for brokerage and
research purposes; computer software and databases, including those used for
portfolio analysis and modeling; and portfolio evaluation services and
relative performance of accounts. Certain nonexecution services provided by
broker-dealers may in turn be obtained by the broker-dealers from third
parties that are paid for such services by the broker-dealers.
The Kobrick Adviser regularly reviews and evaluates the services furnished
by broker-dealers. Some services may be used for research and investment
decision-making purposes, and also for marketing or administrative purposes.
Under these circumstances, the Kobrick Adviser allocates the cost of such
services to determine the appropriate proportion of the cost which is
allocable to purposes other than research or investment decision-making and is
therefore paid directly by the Kobrick Adviser. Some research and execution
services may benefit the Kobrick Adviser's clients as a whole, while others
may benefit a specific segment of clients. Not all such services will
necessarily be used exclusively in connection with the accounts which pay the
commissions to the broker-dealer producing the services.
The Kobrick Adviser has no fixed agreements or understanding with any
broker-dealer as to the amount of brokerage business which that firm may
expect to receive for services supplied to the Kobrick Adviser or otherwise.
There may be, however, understandings with certain firms that in order for
such firms to be
D-3
<PAGE>
able to continuously supply certain services, they need to receive allocation
of a specified amount of brokerage business. These understandings are honored
to the extent possible in accordance with the Kobrick Adviser's obligation to
obtain best execution and the policies set forth above.
It is not the Kobrick Adviser's policy to intentionally pay a firm a
brokerage commission higher than that which another firm would charge for
handling the same transaction in recognition of services (other than execution
services); provided, however, that the Kobrick Adviser is aware that this is
an area where differences of opinion as to fact and circumstances may exist,
and in such circumstances, if any, the Kobrick Adviser relies on the
provisions of Section 28(e) of the Securities Act of 1934, to the extent
applicable.
Back Bay Advisors (with respect to Nvest Cash Management Trust--Money Market
Series and Nvest Tax Exempt Money Market Trust). In placing orders for the
purchase and sale of portfolio securities for each Fund, Back Bay Advisors
will always seek the best price and execution. It is expected that the Funds'
portfolio transactions will generally be with issuers or dealers in money
market instruments acting as principal. Accordingly, the Funds do not
anticipate that they will pay significant brokerage commissions. Some of the
portfolio transactions for each Fund are placed with dealers who provide Back
Bay Advisors with supplementary investment and statistical information or
furnish market quotations to the Funds or other investment companies advised
by Back Bay Advisors. The business would not be so placed if the Funds would
not thereby obtain the best price and execution. Although it is not possible
to assign an exact dollar value to these research services, they may, to the
extent used, tend to reduce the expenses of Back Bay Advisors. The research
services may also be used by Back Bay Advisors in connection with its other
advisory accounts and in some cases may not be used with respect to the Funds.
The Nvest Trustees have requested that Back Bay Advisors seek to reduce
underwriting commissions or similar fees on Fund portfolio transactions
through certain methods currently available. It is not expected that these
methods will result in material reductions. The Nvest Trustees have not
requested that Back Bay Advisors or its affiliates attempt to join
underwriting syndicates to reduce underwriting commissions or fees.
It is expected that the Tax Exempt Money Market Trust's portfolio securities
will normally be purchased directly from an underwriter or in the over-the-
counter market from the principal dealers in such securities, unless it
appears that a better price or execution may be obtained elsewhere. Purchases
from underwriters will include a commission or concession paid by the issuer
to the underwriter, and purchases from dealers will include the spread between
the bid and asked price.
D-4
<PAGE>
Loomis Sayles (with respect to Nvest High Income Fund and Nvest Strategic
Income Fund) and Back Bay Advisors (with respect to Nvest Bond Income Fund,
Nvest Government Securities Funds, Nvest Intermediate Term Tax Free Fund of
California, Nvest Limited Term U.S. Government Fund, Nvest Massachusetts Tax
Free Income Fund, Nvest Municipal Income Fund and Nvest Short Term Corporate
Income Fund). In placing orders for the purchase and sale of portfolio
securities for each Fund, Back Bay Advisors and Loomis Sayles always seek the
best price and execution. Some of each Fund's portfolio transactions are
placed with brokers and dealers that provide Back Bay Advisors or Loomis
Sayles with supplementary investment and statistical information or furnish
market quotations to that Fund, the other Funds or other investment companies
advised by Back Bay Advisors or Loomis Sayles. The business would not be so
placed if the Funds would not thereby obtain the best price and execution.
Although it is not possible to assign an exact dollar value to these services,
they may, to the extent used, tend to reduce the expenses of Back Bay Advisors
or Loomis Sayles. The services may also be used by Back Bay Advisors or Loomis
Sayles in connection with their other advisory accounts and in some cases may
not be used with respect to the Funds.
Loomis Sayles (with respect to Nvest Balanced Fund, Nvest International
Equity Fund, Nvest Star Advisers Fund, Nvest Small Cap Fund, Nvest Star Value
Fund and Nvest Star Worldwide Fund). In placing orders for the purchase and
sale of securities, Loomis Sayles follows the same policies as for the other
Funds for which it acts as Sub-Adviser, except that Loomis Sayles may cause
these Funds to pay a broker-dealer that provides brokerage and research
services to Loomis Sayles an amount of commission for effecting a securities
transaction for the Fund in excess of the amount another broker-dealer would
have charged for effecting that transaction. Loomis Sayles must determine in
good faith that such greater commission is reasonable in relation to the value
of the brokerage and research services provided by the executing broker-dealer
viewed in terms of that particular transaction or Loomis Sayles' overall
responsibilities to the Fund and its other clients. Loomis Sayles' authority
to cause these Funds or segments to pay such greater commissions is also
subject to such policies as the trustees of the Trusts may adopt from time to
time.
Harris Associates (with respect to Nvest Star Advisers Fund, Nvest Star
Worldwide Fund, Nvest Star Value Fund and Nvest Star Small Cap Fund). In
placing orders for the purchase and sale of portfolio securities, Harris
Associates always seeks best execution, subject to the considerations set
forth below. Transactions in unlisted securities are carried out through
broker-dealers that make the market for such securities unless, in the
judgment of Harris Associates, a more favorable execution can be obtained by
carrying out such transactions through other brokers or dealers. Subject to
the above standard, portfolio transactions for each Fund may be executed
through Harris Associates Securities L.P., a registered broker-dealer and an
affiliate of Harris Associates.
D-5
<PAGE>
Harris Associates selects only brokers or dealers that it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates
which, when combined with the quality of the foregoing services, will produce
best execution for the transaction. This does not necessarily mean that the
lowest available brokerage commission will be paid. However, the commissions
are believed to be competitive with generally prevailing rates. Harris
Associates will use its best efforts to obtain information as to the general
level of commission rates being charged by the brokerage community from time
to time and will evaluate the overall reasonableness of brokerage commissions
paid on transactions by reference to such data. In making such evaluation, all
factors affecting liquidity and execution of the order, as well as the amount
of the capital commitment by the broker in connection with the order, are
taken into account.
Receipt of brokerage or research services from brokers may sometimes be a
factor in selecting a broker which Harris Associates believes will provide
best execution for a transaction. These services include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although
it is not possible to assign an exact dollar value to these services, they
may, to the extent used, tend to reduce Harris Associates' expenses. Such
services may be used by Harris Associates in servicing other client accounts
and in some cases may not be used with respect to the Funds. Consistent with
the Rules of the National Association of Securities Dealers, Inc., and subject
to seeking best execution, Harris Associates may, however, consider purchases
of shares of Nvest Star Advisers Fund, Nvest Star Worldwide Fund, Nvest Star
Value Fund and Nvest Star Small Cap Fund by customers of broker-dealers as a
factor in the selection of broker-dealers to execute Fund portfolio
transactions.
Harris Associates may cause its segments of Nvest Star Advisers Fund, Nvest
Star Worldwide Fund, Nvest Star Value Fund and Nvest Star Small Cap Fund to
pay a broker-dealer that provides brokerage and research services to Harris
Associates an amount of commission for effecting a securities transaction for
the Fund in excess of the amount another broker-dealer would have charged for
effecting that transaction. Harris Associates must determine in good faith
that such greater commission is reasonable in relation to the value of the
brokerage and research services provided by the executing broker-dealer viewed
in terms of that particular transaction or Harris Associates' overall
responsibilities to the Funds and its other clients. Harris Associates'
authority to cause the Funds to pay such greater commissions is also subject
to such policies as the trustees of the Trusts may adopt from time to time.
D-6
<PAGE>
Harris Associates may cause portfolio transactions for the Funds to be
executed by Harris Associates Securities L.P., a brokerage firm that is
affiliated with Harris Associates because Harris Associates is a 99% limited
partner of Harris Associates Securities L.P. and Harris Associates General
Partner is the 1% general partner of Harris Associates Securities L.P. Nvest
Star Adviser Fund, Nvest Star Small Cap Fund, Nvest Star Worldwide Fund and
Nvest Star Value Fund pay brokerage commissions to this brokerage firm for
executing these portfolio transactions. Appendix E contains information about
these commission payments.
Janus Capital (with respect to Nvest Star Advisers Fund). Decisions as to
the assignment of portfolio business for the segment of Nvest Star Advisers
Fund's portfolio advised by Janus Capital and negotiation of its commission
rates are made by Janus Capital, whose policy is to obtain the "best
execution" (prompt and reliable execution at the most favorable securities
price) of all portfolio transactions. In placing portfolio transactions for
its segments, Janus Capital may agree to pay brokerage commissions for
effecting a securities transaction in an amount higher than another broker or
dealer would have charged for effecting that transaction as authorized, under
certain circumstances, by the Securities Exchange Act of 1934.
In selecting brokers and dealers and in negotiating commissions, Janus
Capital considers a number of factors, including, but not limited to: Janus
Capital's knowledge of currently available negotiated commission rates or
prices of securities currently available and other current transaction costs;
the nature of the securities being traded; the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the desired timing of the trade; the activity existing and
expected in the market for the particular security; confidentiality; the
quality of the execution, clearance and settlement services; financial
stability of the broker or dealer; the existence of actual or apparent
operational problems of any broker or dealer; and research products or
services provided. In recognition of the value of the foregoing factors, Janus
Capital may place portfolio transactions with a broker or dealer with which it
has negotiated a commission that is in excess of the commission another broker
or dealer would have charged for effecting that transaction if Janus Capital
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research provided by such broker or
dealer viewed in terms of either that particular transaction or of the overall
responsibilities of Janus Capital. Research may include furnishing advice,
either directly or through publications or writing, as to the value of
securities, the advisability of purchasing or selling specific securities and
the availability of securities or purchasers or sellers of securities;
furnishing seminars, information, analyses and reports concerning issuers,
industries, securities, trading markets and methods, legislative developments,
changes in accounting practices, economic factors and trends and
D-7
<PAGE>
portfolio strategy; access to research analysts, corporate management
personnel, industry experts, economists and government officials; comparative
performance evaluation and technical measurement services and quotation
services, and products and other services (such as third party publications,
reports and analyses, and computer and electronic access, equipment, software,
information and accessories that deliver, process or otherwise utilize
information, including the research described above) that assist Janus Capital
in carrying out its responsibilities. Research received from brokers or
dealers is supplemental to Janus Capital's own research efforts.
Janus Capital may use research products and services in servicing other
accounts in addition to Nvest Star Advisers Fund. If Janus Capital determines
that any research product or service has a mixed use, such that it also serves
functions that do not assist in the investment decision-making process, Janus
Capital may allocate the costs of such service or product accordingly. Only
that portion of the product or service that Janus Capital determines will
assist it in the investment decision-making process may be paid for in
brokerage commission dollars. Such allocation may create a conflict of
interest for Janus Capital.
Janus Capital may also consider sales of shares of mutual funds advised by
Janus Capital by a broker-dealer or the recommendation of a broker-dealer to
its customers that they purchase shares of such funds as a factor in the
selection of broker-dealers to execute portfolio transactions for Nvest Star
Advisers Fund. In placing portfolio business with such broker-dealers, Janus
Capital will seek the best execution of each transaction.
Jurika & Voyles (with respect to Nvest Bullseye Fund). In placing orders for
the purchase and sale of portfolio securities, Jurika & Voyles always seeks
best execution, subject to the considerations set forth below. Transactions in
unlisted securities are carried out through broker-dealers who make the market
for such securities unless, in the judgment of Jurika & Voyles, a more
favorable execution can be obtained by carrying out such transactions through
other brokers or dealers.
Jurika & Voyles selects only brokers or dealers that it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates
which, when combined with the quality of the foregoing services, will produce
best execution for the transaction. This does not necessarily mean that the
lowest available brokerage commission will be paid. However, the commissions
are believed to be competitive with generally prevailing rates. Jurika &
Voyles will use its best efforts to obtain information as to the general level
of commission rates being charged by the brokerage community from time to time
and will evaluate the overall reasonableness of brokerage commissions paid on
transactions by reference to such data. In making such
D-8
<PAGE>
evaluation, all factors affecting liquidity and execution of the order, as
well as the amount of the capital commitment by the broker in connection with
the order, are taken into account.
Receipt of brokerage or research services from brokers may sometimes be a
factor in selecting a broker which Jurika & Voyles believes will provide best
execution for a transaction. These services include not only a wide variety of
reports on such matters as economic and political developments, industries,
companies, securities, portfolio strategy, account performance, daily prices
of securities, stock and bond market conditions and projections, asset
allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although
it is not possible to assign an exact dollar value to these services, they
may, to the extent used, tend to reduce Jurika & Voyles' expenses. Such
services may be used by Jurika & Voyles in servicing other client accounts and
in some cases may not be used with respect to the Fund. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc., and
subject to seeking best execution, Jurika & Voyles may, however, consider
purchases of shares of the Fund by customers of broker-dealers as a factor in
the selection of broker-dealers to execute the Fund's securities transactions.
Jurika & Voyles may cause the Fund to pay a broker-dealer that provides
brokerage and research services to Jurika & Voyles an amount of commission for
effecting a securities transaction for the Fund in excess of the amount
another broker-dealer would have charged for effecting that transaction.
Jurika & Voyles must determine in good faith that such greater commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker-dealer viewed in terms of that particular
transaction or Jurika & Voyles' overall responsibilities to the Fund and its
other clients. Jurika & Voyles' authority to cause the Fund to pay such
greater commissions is also subject to such policies as the trustees of the
Trust may adopt from time to time.
Montgomery (with respect to Nvest Star Worldwide Fund and Nvest Star Small
Cap Fund). In all purchases and sales of securities, Montgomery's primary
consideration is to obtain the most favorable execution available. Pursuant to
the subadvisory agreements between Nvest Management and Montgomery, Montgomery
determines which securities are to be purchased and sold by its segments and
which broker-dealers are eligible to execute its segments' portfolio
transactions, subject to the instructions of, and review by, Nvest Management
and the trustees. Purchases and sales of securities within the U.S. other than
on a securities exchange will generally be executed directly with a market-
maker unless, in the opinion of Montgomery, a better price and execution can
otherwise be obtained by using a broker for the transaction.
D-9
<PAGE>
For Nvest Star Worldwide Fund, Montgomery contemplates purchasing most
equity securities directly in the securities markets located in emerging or
developing countries or in the over-the-counter markets. In purchasing
American Depository Receipts ("ADRs") and European Depository Receipts
("EDRs") (and other similar instruments), Montgomery's segments of Nvest Star
Worldwide Fund may purchase those listed on stock exchanges, or traded in the
over-the-counter markets in the U.S. or Europe, as the case may be. ADRs, like
other securities traded in the U.S., will be subject to negotiated commission
rates. The foreign and domestic debt securities and money market instruments
in which Montgomery's segment of Nvest Star Worldwide Fund may invest may be
traded in the over-the-counter markets.
Purchases of portfolio securities for the segments also may be made directly
from issuers or from underwriters. Where possible, purchase and sale
transactions will be effected through dealers (including banks) which
specialize in the types of securities which this segment will be holding,
unless better executions are available elsewhere. Dealers and underwriters
usually act as principals for their own account. Purchases from underwriters
will include a concession paid by the issuer to the underwriter and purchases
from dealers will include the spread between the bid and the asked price. If
the execution and price offered by more than one dealer or underwriter are
comparable, the order may be allocated to a dealer or underwriter that has
provided research or other services as discussed below.
In placing portfolio transactions, Montgomery will use its best efforts to
choose a broker-dealer capable of providing the services necessary generally
to obtain the most favorable execution available. The full range and quality
of services available will be considered in making these determinations, such
as the firm's ability to execute trades in a specific market required by the
segment of the Fund, such as in an emerging market, the size of the order, the
difficulty of execution, the operational facilities of the firm involved, the
firm's risk in positioning a block of securities, and other factors.
Montgomery may also consider the sale of Nvest Star Worldwide Fund and Nvest
Star Small Cap Fund shares as a factor in the selection of broker-dealers to
execute portfolio transactions for its segments. The placement of portfolio
transactions with broker-dealers who sell shares of the Funds is subject to
rules adopted by the National Association of Securities Dealers, Inc.
While Montgomery's general policy is to seek first to obtain the most
favorable execution available, in selecting a broker-dealer to execute
portfolio transactions, weight may also be given to the ability of a broker-
dealer to furnish brokerage, research and statistical services to Montgomery,
even if the specific services were not imputed just to the Fund and may be
lawfully and appropriately
D-10
<PAGE>
used by Montgomery in advising other clients. Montgomery considers such
information, which is in addition to, and not in lieu of, the services
required to be performed by it under its subadvisory agreements with Nvest
Management, to be useful in varying degrees, but of indeterminable value. In
negotiating any commissions with a broker or evaluating the spread to be paid
to a dealer, the segments of the Funds may therefore pay a higher commission
or spread than would be the case if no weight were given to the furnishing of
these supplemental services, provided that the amount of such commission or
spread has been determined in good faith by Montgomery to be reasonable in
relation to the value of the brokerage and/or research services provided by
such broker-dealer, which services either produce a direct benefit to the
segments of the Funds or assist Montgomery in carrying out its
responsibilities to the segments of the Funds. The standard of reasonableness
is to be measured in light of Montgomery's overall responsibilities to its
segments. The trustees of the Trusts review all brokerage allocations where
services other than best execution capabilities are a factor to ensure that
the other services provided meet the criteria outlined above and produce a
benefit to the Fund.
On occasion, situations may arise in which legal and regulatory
considerations will preclude trading for the segments' accounts by reason of
activities of Montgomery Securities, a broker-dealer affiliated with
Montgomery, or its affiliates. It is the judgment of the trustees that the
Funds will not be materially disadvantaged by any such trading preclusion and
that the desirability of continuing their subadvisory arrangements with
Montgomery and Montgomery's affiliation with Montgomery Securities and other
affiliates of Montgomery Securities outweigh any disadvantages that may result
from the foregoing.
Montgomery's sell discipline for the segments' investments is based on the
premise of a long-term investment horizon; however, sudden changes in
valuation levels arising from, for example, new macroeconomic policies,
political developments, and industry conditions could change the assumed time
horizon. Liquidity, volatility, and overall risk of a position are other
factors considered by Montgomery in determining the appropriate investment
horizon.
At the company level, sell decisions are influenced by a number of factors,
including current stock valuation relative to the estimated fair value range,
or a high price-to-earnings ratio relative to expected growth. Negative
changes in the relevant industry sector, or a reduction in international
competitiveness and declining financial flexibility, may also signal a sell.
RS Investment Management (with respect to Nvest Star Small Cap Fund). It is
the policy of RS Investment Management, in effecting transactions in portfolio
securities, to seek the best execution of orders. The determination of what
may constitute best execution in a securities transaction involves a number of
D-11
<PAGE>
judgmental considerations, including, without limitation, the overall direct
net economic result to this segment of the Fund (involving both price paid or
received and any commissions and other costs), the efficiency with which the
transaction is effected, the ability to effect the transaction at all when a
large block is involved, the availability of the broker to stand ready to
execute possibly difficult transactions for this segment in the future, and
the financial strength and stability of the broker.
Subject to the policy of seeking best execution of orders at the most
favorable prices, RS Investment Management may execute transactions with
brokerage firms which provide research services and products to RS Investment
Management. The phrase "research services and products" includes advice as to
the value of securities, the advisability of investing in, purchasing or
selling securities, the availability of securities or purchasers or sellers of
securities, the furnishing of analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and
the performance of accounts, and the obtainment of products such as third-
party publications, computer and electronic access equipment, software
programs, and other information and accessories that may assist RS Investment
Management in furtherance of its investment advisory responsibilities to its
advisory clients. Such services and products permit RS Investment Management
to supplement its own research and analysis activities, and provide it with
information from individuals and research staffs of many securities firms.
Generally, it is not possible to place a dollar value on the benefits derived
from specific research services and products. RS Investment Management may
receive a benefit from these research services and products which is not
passed on, in the form of a direct monetary benefit, to this segment of the
Fund. If RS Investment Management determines that any research product or
service has a mixed use, such that it also serves functions that do not assist
in the investment decision-making process, RS Investment Management may
allocate the cost of such service or product accordingly. The portion of the
product or service that RS Investment Management determines will assist it in
the investment decision-making process may be paid for in brokerage commission
dollars. Any such allocation may create a conflict of interest for RS
Investment Management. Subject to the standards outlined in this and the
preceding paragraph, RS Investment Management may arrange to execute a
specified dollar amount of transactions through a broker that has provided
research products or services. Such arrangements do not constitute commitments
by RS Investment Management to allocate portfolio brokerage upon any
prescribed basis, other than upon the basis of seeking best execution of
orders.
Research services and products may be useful to RS Investment Management in
providing investment advice to any of the funds or clients it advises.
Likewise, information made available to RS Investment Management from brokers
effecting securities transactions for such other funds and clients may be
utilized on behalf of
D-12
<PAGE>
another fund. Thus, there may be no correlation between the amount of
brokerage commissions generated by a particular fund or client and the
indirect benefits received by that fund or client.
Subject to the policy of seeking the best execution of orders, sales of
shares of the Fund may also be considered as a factor in the selection of
brokerage firms to execute portfolio transactions for this segment of the
Fund.
Because selection of executing brokers is not based solely on net
commissions, the segment of the Fund advised by RS Investment Management may
pay an executing broker a commission higher than that which might have been
charged by another broker for that transaction. RS Investment Management will
not knowingly pay higher mark-ups on principal transactions to brokerage firms
as consideration for receipt of research services or products. While it is not
practicable for RS Investment Management to solicit competitive bids for
commissions on each portfolio transaction, consideration is regularly given to
available information concerning the level of commissions charged in
comparable transactions by various brokers. Transactions in over-the-counter
securities are normally placed with principal market makers, except in
circumstances where, in the opinion of RS Investment Management, better prices
and execution are available elsewhere.
Vaughan Nelson (with respect to Nvest Equity Income Fund and Nvest Star
Value Fund). In placing orders for the purchase and sale of securities for
Equity Income Fund, Vaughan Nelson selects only brokers or dealers which it
believes are financially responsible and will provide efficient and effective
services in executing, clearing and settling an order. Vaughan Nelson will use
its best efforts to obtain information as to the general level of commission
rates being charged by the brokerage community from time to time and will
evaluate the overall reasonableness of brokerage commissions paid on
transactions by reference to such data. In making such evaluation, all factors
affecting liquidity and execution of the order, as well as the amount of the
capital commitment by the broker in connection with the order, are taken into
account. Transactions in unlisted securities are carried out through broker-
dealers who make the primary market for such securities unless, in the
judgment of Vaughan Nelson, a more favorable price can be obtained by carrying
out such transactions through other brokers or dealers.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Vaughan Nelson believes will provide best execution
for a transaction. These research services include not only a wide variety of
reports on such matters as economic and political developments, industries,
companies, securities, portfolio strategy, account performance, daily prices
of securities, stock and bond market conditions and projections, asset
allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although
it is not possible to assign an exact dollar
D-13
<PAGE>
value to these services, they may, to the extent used, tend to reduce Vaughan
Nelson's expenses. Such services may be used by Vaughan Nelson in servicing
other client accounts and in some cases may not be used with respect to the
Fund. Receipt of services or products other than research from brokers is not
a factor in the selection of brokers. Consistent with the Conduct Rules of the
National Association of Securities Dealers, Inc., Vaughan Nelson may, however,
consider purchases of shares of the Fund and other funds managed by Vaughan
Nelson by customers of broker-dealers as a factor in the selection of broker-
dealers to execute the Fund's securities transactions.
In placing orders for the purchase and sale of securities for the Fund,
Vaughan Nelson may cause the Fund to pay a broker-dealer that provides the
brokerage and research services to Vaughan Nelson an amount of commission for
effecting a securities transaction for the Fund in excess of the amount
another broker-dealer would have charged for effecting that transaction.
Vaughan Nelson must determine in good faith that such greater commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker-dealer viewed in terms of that particular
transaction or Vaughan Nelson's overall responsibilities to the Trust and its
other clients. Vaughan Nelson's authority to cause the Fund to pay such
greater commissions is also subject to such policies as the Trustees of the
Trust may adopt from time to time.
Westpeak (with respect to Nvest Growth and Income Fund, Nvest Capital Growth
Fund and Nvest Star Value Fund). In placing orders for the purchase and sale
of securities, Westpeak always seeks best execution. Westpeak selects only
brokers or dealers that it believes are financially responsible, will provide
efficient and effective services in executing, clearing and settling an order
and will charge commission rates that, when combined with the quality of the
foregoing services, will produce best price and execution. This does not
necessarily mean that the lowest available brokerage commission will be paid.
Westpeak will use its best efforts to obtain information as to the general
level of commission rates being charged by the brokerage community from time
to time and will evaluate the overall reasonableness of brokerage commissions
paid on transactions by reference to such data. In making such evaluation, all
factors affecting liquidity and execution of the order, as well as the amount
of the capital commitment by the broker in connection with the order, are
taken into account. Westpeak may cause the Fund to pay a broker-dealer that
provides brokerage and research services to Westpeak an amount of commission
for effecting a securities transaction for the Fund in excess of the amount
another broker-dealer would have charged effecting that transaction. Westpeak
must determine in good faith that such greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker-dealer viewed in terms of that particular transaction or
Westpeak's overall responsibilities to the Fund and its other clients.
Westpeak's authority to cause the Fund it manages to pay such greater
commissions is also subject to such policies as the trustees of the Trusts may
adopt from time to time.
D-14
<PAGE>
APPENDIX E
Compensation Payable by a Fund to the Adviser and Sub-Adviser and Affiliates
for each Fund's last fiscal year.*/1/
<TABLE>
<CAPTION>
BROKERAGE PERCENTAGE OF
TRANSFER DISTRIBUTION AND COMMISSIONS FUND'S TOTAL
AGENCY AND SHAREHOLDER ON FUND'S BROKERAGE
ACCOUNTING AND SHAREHOLDER SERVICING PORTFOLIO COMMISSIONS
ADMINISTRATIVE SERVICING FEES (12B-1) FEES TRANSACTIONS PAID TO
FEES PAID TO PAID TO PAID TO PAID TO ADVISERS'/SUB-
ADVISORY FEE SUB-ADVISORY ADVISERS'/SUB- ADVISERS'/SUB- ADVISERS'/SUB- SUB-ADVISER'S ADVISERS'
PAID TO FEE PAID TO ADVISERS' ADVISERS' ADVISERS' BROKERAGE BROKERAGE
NAME OF FUND ADVISER SUB-ADVISER AFFILIATES AFFILIATES AFFILIATES AFFILIATE** AFFILIATES**
------------ ------------ ------------ -------------- -------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kobrick Capital
Fund 780,662 -- 0 0 0 0 0
Kobrick Emerging
Growth Fund 381,071 -- 0 0 0 0 0
Kobrick Growth Fund 295,301 -- 0 0 0 0 0
Nvest Balanced Fund $ 1,047,478 $1,469,622 $ 99,614 $ 743,877 $1,337,057 0 0
Nvest Bullseye Fund $ 73,557 $ 110,335 $ 18,707 $ 121,182 $ 126,656 0 0
Nvest Capital
Growth Fund $ 862,232 $ 963,811 $ 74,071 $ 631,717 $1,114,412 0 0
Nvest Equity Income
Fund $ 22,000 $ 124,062 $ 174,263 0 0
Nvest Adviser $ 84,835 -- -- -- -- 0 0
Loomis Sayles/2/ -- $ 51,737 -- -- -- 0 0
VNSM -- $ 60,775 -- -- -- 0 0
Nvest Growth and
Income Fund $ 1,921,579 $1,922,351 $153,450 $1,195,460 $3,075,070 0 0
Nvest Growth Fund $12,879,997 NA $485,101 $2,615,459 $5,705,227 0 0
Nvest International
Equity Fund $ 352,375 $ 281,900 $ 29,210 $ 381,156 $ 303,671 0 0
Nvest Star Advisers
Fund $310,812 $2,656,691 $7,924,053 106,400
Nvest Adviser $ 6,314,704 -- -- -- -- 0 0
Harris Associates -- $1,213,904 -- -- -- 0 0
Founders Asset
Management/2/ -- $1,301,880 -- -- -- 0 0
Kobrick Adviser -- $ 403,591 -- -- -- 0 0
Janus Capital -- $2,213,726 -- -- -- 0 0
Loomis Sayles -- $1,143,365 -- -- -- 0 0
Nvest Star Small
Cap Fund $ 47,197 $ 571,761 $ 977,826 18,631
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
BROKERAGE PERCENTAGE OF
TRANSFER DISTRIBUTION AND COMMISSIONS FUND'S TOTAL
AGENCY AND SHAREHOLDER ON FUND'S BROKERAGE
ACCOUNTING AND SHAREHOLDER SERVICING PORTFOLIO COMMISSIONS
ADMINISTRATIVE SERVICING FEES (12B-1) FEES TRANSACTIONS PAID TO
FEES PAID TO PAID TO PAID TO PAID TO ADVISERS'/SUB-
ADVISORY FEE SUB-ADVISORY ADVISERS'/SUB- ADVISERS'/SUB- ADVISERS'/SUB- SUB-ADVISER'S ADVISERS'
PAID TO FEE PAID TO ADVISERS' ADVISERS' ADVISERS' BROKERAGE BROKERAGE
NAME OF FUND ADVISER SUB-ADVISER AFFILIATES AFFILIATES AFFILIATES AFFILIATE** AFFILIATES**
------------ ------------ ------------ -------------- -------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nvest Adviser $649,355 -- -- -- -- 0 0
Harris Associates -- $ 176,418 -- -- -- 0 0
Loomis Sayles -- $ 220,509 -- -- -- 0 0
Montgomery -- $ 170,613 -- -- -- 0 0
RS Investment
Management -- $ 275,662 -- -- -- 0 0
Nvest Star Value
Fund $992,511 $1,634,514 $103,852 $862,873 $1,464,436 0 0
Nvest Star
Worldwide Fund $ 74,470 $938,035 $1,687,891 35,398
Nvest Adviser $968,638 -- -- -- -- 0 0
Harris Associates -- $ 663,004 -- -- -- 0 0
Montgomery -- $ 264,825 -- -- -- 0 0
Janus/2/ -- $ 480,249 -- -- -- 0 0
Founders Asset
Management/2/ -- $ 248,981 -- -- -- 0 0
Nvest Bond Income
Fund $677,178 $ 677,178 $ 93,528 $566,356 $1,489,257 0 0
Nvest Government
Securities Fund $347,031 $ 347,030 $ 39,373 $241,900 $ 334,684 0 0
Nvest High Income
Fund $542,562 $ 542,562 $ 50,720 $215,159 $ 976,772 0 0
Nvest Intermediate
Term Tax Free Fund
of California $121,840 $ 121,839 $ 23,808 $ 42,991 $ 182,722 0 0
Nvest Limited Term
U.S. Government
Fund $675,744 $ 675,744 $ 64,717 $350,531 $ 883,210 0 0
Nvest Massachusetts
Tax Free Income
Fund $345,047 $ 345,046 $ 41,880 $220,551 $ 471,069 0 0
Nvest Municipal
Income Fund $401,526 $ 401,525 $ 57,743 $151,161 $ 573,490 0 0
Nvest Short Term
Corporate Income
Fund $236,447 $ 236,446 $ 34,629 $132,746 $ 245,545 0 0
Nvest Strategic
Income Fund $903,681 $1,003,685 $ 87,873 $505,178 $2,057,839 0 0
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
BROKERAGE PERCENTAGE OF
TRANSFER DISTRIBUTION AND COMMISSIONS FUND'S TOTAL
AGENCY AND SHAREHOLDER ON FUND'S BROKERAGE
ACCOUNTING AND SHAREHOLDER SERVICING PORTFOLIO COMMISSIONS
ADMINISTRATIVE SERVICING FEES (12B-1) FEES TRANSACTIONS PAID TO
FEES PAID TO PAID TO PAID TO PAID TO ADVISERS'/SUB-
ADVISORY FEE SUB-ADVISORY ADVISERS'/SUB- ADVISERS'/SUB- ADVISERS'/SUB- SUB-ADVISER'S ADVISERS'
PAID TO FEE PAID TO ADVISERS' ADVISERS' ADVISERS' BROKERAGE BROKERAGE
NAME OF FUND ADVISER SUB-ADVISER AFFILIATES AFFILIATES AFFILIATES AFFILIATE** AFFILIATES**
------------ ------------ ------------ -------------- -------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nvest Cash Manage-
ment Trust--Money
Market Series 0 0
Nvest Tax Exempt
Money Market Trust 0 0
</TABLE>
----
* It is expected that the service for which the above amounts have been paid
will continue to be provided after the approval of the New Agreements.
** For the Funds it subadvises, Harris Associates caused portfolio
transactions to be executed by Harris Associates Securities L.P., a
brokerage firm that is affiliated with Harris Associates because Harris
Associates is a 99% limited partner of Harris Associates Securities L.P.
and Harris Associates General Partner is the 1% general partner of Harris
Associates Securities L.P.
/1/The information is for the fiscal year ended September 30, 1999 for Kobrick
Capital Fund, Kobrick Emerging Growth Fund and Kobrick Growth Fund, for the
fiscal year ended June 30, 2000 for Nvest Cash Management Trust--Money
Market Series and Nvest Tax Exempt Money Market Trust and for the fiscal
year ended December 31, 1999 for all remaining Funds.
/2/Firm does not currently serve as the Fund's sub-adviser.
E-3
<PAGE>
APPENDIX F
SHARES OUTSTANDING AND ENTITLED TO VOTE
For each class of the Fund's shares entitled to vote at the Meeting, the
number of shares outstanding as of July 24, 2000 was as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES PER CLASS
------------------------------------------------------------
NAME OF FUND CLASS A CLASS B CLASS C CLASS Y
------------ --------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Kobrick Capital Fund.... 10,548,799.950 4,528,269.277 803,539.476 1,379,236.411
Kobrick Emerging Growth
Fund.................... 5,794,303.390 2,064,281.593 479,618.682 294,611.512
Kobrick Growth Fund..... 4,631,648.156 1,436,614.877 288,819.184 78,005.552
Nvest Balanced Fund..... 10,964,403.260 4,182,001.830 210,718.205 3,273,097.191
Nvest Bullseye Fund..... 629,177.112 594,397.594 81,364.977 --
Nvest Capital Growth
Fund.................... 8,142,549.115 3,476,740.011 145,933.465 --
Nvest Equity Income
Fund.................... 473,287.418 441,817.116 43,040.789 --
Nvest Growth and Income
Fund.................... 21,742,819.810 12,650,433.420 1,508,363.611 729,622.278
Nvest Growth Fund....... 151,750,328.400 11,472,146.650 588,070.426 1,293,770.074
Nvest International
Equity Fund............. 3,193,637.983 1,656,304.724 212,584.766 657,970.466
Nvest Star Advisers
Fund.................... 26,554,640.700 34,608,917.270 6,555,413.576 3,484,634.931
Nvest Star Small Cap
Fund.................... 4,249,465.384 5,252,023.267 1,408,151.194 --
Nvest Star Value Fund... 22,637,652.190 6,353,335.383 355,970.707 1,231,738.039
Nvest Star Worldwide
Fund.................... 6,253,496.664 7,324,441.531 1,573,090.878 --
Nvest Bond Income Fund.. 15,713,685.250 8,085,012.406 1,159,809.716 969,858.389
Nvest Government
Securities Fund......... 6,773,273,585 809,868.888 -- 258,282.688
Nvest High Income Fund.. 8,210,550.939 8,179,683.739 957,261.391 --
Nvest Intermediate Term
Tax Free Fund of
California.............. 4,421,339.328 1,035,208.384 -- --
Nvest Limited Term U.S.
Government Fund......... 11,343,606.580 1,060,477.261 596,045.040 320,438.693
Nvest Massachusetts Tax
Free Income Fund........ 5,726,490.287 533,437.384 -- --
Nvest Municipal Income
Fund.................... 19,713,895.780 1,997,669.178 -- --
Nvest Short Term
Corporate Income Fund... 9,123,654.270 477,400.825 65,270.568 --
Nvest Strategic Income
Fund.................... 10,894,850.740 11,030,836.230 3,487,464.628 18,947.068
Nvest Cash Management
Trust--Money Market
Series.................. 578,936,340.600 19,075,104.410 2,644,028.560 164,485,541.600
Nvest Tax Exempt Money
Market Trust............ 73,060,658.750 501,116.570 -- --
</TABLE>
F-1
<PAGE>
OWNERSHIP OF SHARES
As of July 18, 2000, the following persons owned of record or beneficially 5%
more of the noted class of shares of the noted Fund:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
KOBRICK CAPITAL FUND
Class A Cendant Corp 2,860,904.990 27.02%
Attn: Jim Buckman
6 Sylvan Way
Parsippany, NJ 07054-3826
National Financial Services 1,230,831.983 11.63%
Corp
For The Exclusive Benefit Of
Our Customer
Attn Mutual Funds Dept 5th Fl
200 Liberty St 1 World Finan
Ctr
New York, NY 10281-1003
MLPF&S For the Sole Benefit 676,957.648 6.39%
Of Its Customers
Attn Fund Administration ML#
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Charles Schwab & Co Inc 617,257.908 5.83%
Special Custody Account For
The Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St
San Francisco, CA 94104-4122
Class B MLPF&S For the Sole Benefit 360,981.735 8.01%
Of Its Customers
Attn Fund Administration ML#
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class C MLPF&S For the Sole Benefit 252,069.138 31.74%
Of Its Customers*
Attn Fund Administration ML#
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
Class Y Natl Financial Services Corp 1,200,660.751 83.31%
For The Exclusive Benefit Of
Our Customers
PO Box 3752
Church St Station
New York, NY 10008-3752
KOBRICK EMERGING GROWTH FUND
Class A Cendant Corp 2,286,838.657 39.50%
Attn: Jim Buckman
6 Sylvan Way
Parsippany, NJ 07054-3826
National Financial Services 466,939.783 8.07%
Corp
For The Exclusive Benefit Of
Our Customer
Attn Mutual Funds Dept 5th Fl
200 Liberty St 1 World Finan
Ctr
New York, NY 10281-1003
Charles Schwab & Company 444,577.081 7.68%
Special Custody Account For
The Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St
San Francisco, CA 94104-4122
MLPF&S For the Sole Benefit 380,919.822 6.58%
Of Its Customers
Attn Fund Administration ML#
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class C MLPF&S For the Sole Benefit 124,704.449 25.96%
Of Its Customers*
Attn Fund Administration ML#
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class Y Charles Schwab & Co Inc 271,726.930 92.14%
Spl Cstdy A/c For Excl Bnft
Cust
Attn: Mutual Funds
101 Montgomery St
San Francisco, CA 94104-4122
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
KOBRICK GROWTH FUND
Class A Cendant Corp 2,448,936.044 52.76%
Attn: Jim Buckman
6 Sylvan Way
Parsippany, NJ 07054-3826
National Financial Services 272,178.508 5.86%
Corp
For The Exclusive Benefit Of
Our Customer
Attn Mutual Funds Dept 5th Fl
200 Liberty St 1 World Finan
Ctr
New York, NY 10281-1003
Class C MLPF&S For the Sole Benefit 138,843.734 48.46%
Of Its Customers
Attn Fund Administration ML#
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class Y Chase Manhattan Bank Directed 43,939.462 58.52%
Trustee for MetLife
Defined Contribution Group
4 New York Plz
New York, NY 10004-2413
Charles Schwab & Co Inc 20,402.491 27.17%
Spl Cstdy A/C For Excl Bnft
Cust
Attn: Mutual Funds
101 Montgomery St
San Francisco, CA 94104-4122
Donaldson Lufkin Jenrette 4,490.302 5.98%
Securities Corporation Inc
P O Box 2052
Jersey City, NJ
07303-2052
NVEST BALANCED FUND
Class C NFSC FEBO # 041-773786 24,806.617 11.45%
E L Moody, C W Moody As Co-
TTEE
Elizabeth L and Charles W
Moody
U D T, U/A 5/6/93
6865 Pacific Dr
Stuart, FL 34997-8604
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
MLPF&S For the Sole Benefit 12,698.164 5.86%
Of Its Customers
Attn Fund Administration
ML#97UA
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class Y New England Mutual Life Ins 2,704,103.170 82.21%
Co
Separate Investment
Accounting
Attn Brenda Harmon
501 Boylston Street--6th Fl
Boston, MA 02116-3769
Metropolitan Life Insurance 324,178.161 9.86%
Co
c/o GADC-Gerald Hart--Agency
Operations NELICO
501 Boylston St 10th Fl
Boston, MA 02116-3769
Chase Manhattan Bank Directed 239,260.447 7.27%
Trustee for MetLife
Defined Contribution Group
770 Broadway 10th Fl
New York, NY 10003-9522
NVEST BULLSEYE FUND
Class B MLPF&S For the Sole Benefit 30,234.604 5.08%
Of Its Customers
Attn Fund Administration
ML#97UR
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class C MLPF&S For the Sole Benefit 5,972.264 7.33%
Of Its Customers
Attn Fund Administration
ML#97UR
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Dorothy N & Ronald P Frudden 4,962.779 6.09%
& Susan T Gilles TTEES
Frudden Appointment Tax
Defferal Trust
202 Villa Dr
King City, CA 93930-3014
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
State Street Bank & Trust Co 4,255.690 5.22%
Cust For The IRA of Herbert E.
Schomberg
3885 Breaker
Waterford, MI 48329-2219
State Street Bank & Trust Co 4,914.467 6.03%
Cust For The IRA of Dexter
Jarett
310 Hershey Blvd
Waterford, MI 48327-2434
NVEST EQUITY INCOME FUND
Class C Painewebber For The Benefit Of 6,034.100 12.96%
Robert Adam, Brian King,
Robert Campagnone & Kathleen
Lomeli
Willimanic PST Dtd 5/1/73
PO Box 23
Willimantic, CT 06226-0023
Dorothy N & Ronald P Frudden & 5,498.001 11.81%
Susan T Gilles TTEES
Frudden Exempt Tax Defferal Tr
202 Villa Dr
King City, CA 93930-3014
Prudential Securities Inc. FBO 3,110.041 6.68%
Miss Nancy Ann Wright
344 Springmoor Dr
Raleigh, NC 27615-7740
Wexford Clearing Services Corp 2,862.049 6.15%
F Ellen C Davidson
4520 Kenyon Dr
Little Rock, AR 72205-2017
Resources Trust Co Tr IRA U/A 2,404.291 5.16%
11/18/97
FBO Billy F. Watkins R-456-34-
8235
PO Box 5900
Denver, CO 80217-5900
NVEST GROWTH AND INCOME FUND
Class C Forest County Potawatomi-- 279,905.196 18.32%
Child
PO Box 340
Crandon, WI 54520-0340
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
MLPF&S For the Sole Benefit 199,597.526 13.07%
Of Its Customers
Attn Fund Administration
ML#97UA
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class Y Chase Manhattan Bank Directed 77,792.782 51.74%
Trustee for MetLife
Defined Contribution Group
770 Broadway 10th Fl
New York, NY 10003-9522
Metropolitan Life Ins 269,041.163 36.85%
GADC Dianne Lunny
501-6 Boylston
Boston, MA 02116-3769
Metropolitan Life Ins Co 39,944.235 5.47%
c/o Met Life FBC/SFM
Att; Jay Langan
4100 W Boy Scout Blvd
Tampa, FL 33607-5793
NVEST GROWTH FUND
Class B MLPF&S For the Sole Benefit 752,805.549 6.54%
Of Its Customers
Attn Fund Administration
ML#97CH
4800 Deer Lake Dr East 2nd Fl
Jacksonville, FL 32246-6484
Class C MLPF&S For the Sole Benefit 171,956.031 29.25%
Of Its Customers
Attn Fund Administration
ML#97UR
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class Y Chase Manhattan Bank Directed 1,292,288.853 99.95%
T MetLife Defined
Contribution Gro
4 New York Plaza
Fl 2
New York NY 10004-2413
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
NVEST INTERNATIONAL EQUITY FUND
Class C MLPF&S For the Sole Benefit 70,460.456 34.04%
Of Its Customers
Attn Fund Administration ML#
97UB
4800 Deer Lake Dr East--2nd
Fl
Jacksonville, FL 32246-6484
Class Y Chase Manhattan Bank Directed 331,413.614 50.07%
Trustee for MetLife Defined
Contribution Group*
770 Broadway 10th Fl
New York, NY 1003-9522
Metropolitan Life Insurance 244,635.027 39.96%
Co
c/o GADC--Gerald Hart--Agency
Operations NELICO
501 Boylston St 10th Fl
Boston, MA 02116-3769
Metropolitan Life Ins Co 62,243.126 9.40%
c/o Met Life FBC/SFM
Attn: Jay Langan
4100 W Boy Scout BLVD
Tampa, FL 33607-5793
NVEST STAR ADVISERS FUND
Class C MLPF&S For The Sole Benefit 573,017.897 8.77%
of Its Customers
Attn Fund Administration
ML#97UA
4800 Deer Lake DR East--2nd
Fl
Jacksonville, FL 32246-6486
Class Y New England Mutual Life Ins 1,844,288.801 53.05%
Co Separate Investment
Accounting
Attn Brenda Harmon
501 Boylston Street--6th
Floor
Boston, MA 02116-3769
Metropolitan Life Insurance 634,512.413 18.25%
Co c/o Mary Beth Klein
Insurance Accting 6th Flr
501 Boylston St
Boston, MA 02116-3769
</TABLE>
F-8
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
New England Life Insurance Co 494,135.908 14.21%
Insurance Accounting 6th Floor
Attn Charles Sullivan
501 Boylston Street
Boston, MA 02116-3769
New England Life Insurance Co 370,701.429 10.66%
c/o Mary Beth Klein
Insurance Accounting 6th Fl
501 Boylston St
Boston, MA 02116-3769
NVEST STAR SMALL CAP FUND
Class B MLPF&S For The Sole Benefit of 311,991.129 5.97%
Its Customers
Attn Fund Administration
ML#97MR
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
Class C MLPF&S For The Sole Benefit of 230,383.760 16.50%
Its Customers
Attn Fund Administration
ML#97UA
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
NVEST STAR VALUE FUND
Class Y Metropolitan Life Insurance 910,229.710 73.89%
Company Issuer*
501 Boylston Street--6th Fl
Boston, MA 02116-3769
New England Life Insurance Co 297,144.997 24.12%
c/o Mary Beth Klein
Insurance Accounting 6th Flr
501 Boylston St
Boston, MA 02116-3769
NVEST BOND INCOME FUND
Class B MLPF&S For The Sole Benefit of 799,734.161 9.92%
Its Customers
Attn Fund Administration
ML#97CJ
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
Class C MLPF&S For The Sole Benefit of 237,646.235 20.45%
Its Customers
Attn Fund Administration
ML#97UD
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
Southtrust Bank of Georgia NA 92,999.496 8.00%
Att Trust Dept FAO
Atlanta Regional Commission
Retirement Plan
79 W Paces Ferry Rd
Atlanta, GA 30305-1350
Class Y Chase Manhattan Bank Directed 305,930.171 31.56%
Trustee
Metlife Defined Contribution
Gro
770 Broadway 10th Fl
New York, NY 10003-9522
MLPF&S For The Sole Benefit of 165,209.762 17.04%
Its Customers
Attn Fund Administration
ML#97PN
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
New England Life Insurance Co 144,565.362 14.91%
c/o Mary Beth Klein
Insurance Accounting 6th Flr
501 Boylston St
Boston, MA 02116-3769
Metropolitan Life Insurance Co 130,281.400 13.44%
c/o GADC--Gerald Hart--Agency
Operations NELICO
501 Boylston St 10th Fl
Boston, MA 02116-3769
Parbanc Co 128,125.832 13.22%
514 Market Street
Parkersburg, WV 26101-5144
Metlife Insurance Company 74,566.115 7.69%
Attn Adrienne Lavis
2 Montgomery St 3rd Fl
Jersey City, NJ 07302-3802
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
NVEST GOVERNMENT SECURITIES FUND
Class B MLPF&S For The Sole Benefit of 59,952.884 7.40%
Its Customers
Attn Fund Administration
ML#97CH
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
Class Y New England Mutual Life 251,371.580 100.00%
Insurance Co
Separate Investment Accounting
Attn: Brenda Harmon
501 Boylston St--6th Fl
Boston, MA 02116-3769
NVEST HIGH INCOME FUND
Class B MLPF&S For The Sole Benefit of 735,526.391 8.98%
Its Customers
Attn Fund Administration
ML#97CJ
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
Class C Southtrust Bank of Georgia NA 155,331.647 16.20%
Att Trust Dept FAO
Atlanta Regional Commission
Retirement Plan
79 W Paces Ferry Rd
Atlanta, GA 30305-1350
MLPF&S For The Sole Benefit of 99,367.695 10.36%
Its Customers
Attn Fund Administration
ML#97UA
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
NVEST INTERMEDIATE TERM TAX FREE FUND OF
CALIFORNIA
Class A Bancboston Robertson Stephens 341,060.944 7.71%
#
FBO Jeffrey Skoll
27040 Old Trace Lane "Acct #2"
Los Altos Hills, CA 94022-1977
FleetBoston Roberston Stephens 277,182.270 5.14%
I
FBO Steve Westly & Anita Yu
JTWROS
**Discretionary Account**
555 California St Ste 2600
San Francisco, CA 94104-1502
Class B Marie S. Black 99,329.795 9.60%
1710 Birchwood Dr
San Marcos, CA 92069-9608
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
Allen Kelly & Margaret M Kelly 64,846.021 6.26%
TTEES
Kelly Family Trust
DTD 9-27-90
19980 Angus Ct
Saratoga, CA 95070-4406
Wanda M. Hansen TTEE 59,042.481 5.70%
Wanda M Hansen Trust
U/A DTD 9/29/94
664 Rolling Hills Road
Vista, CA 92083-7502
NVEST LIMITED TERM U.S. GOVERNMENT FUND
Class C The Bank of New York As Funds 43,507.549 7.25%
Custodian For the City of
Forsyth Georgia
100 Ashford Center N Ste 520
Atlanta, GA 30338-4865
Class Y New England Mutual Life 156,907.747 50.00%
Insurance Co
Separate Investment Accounting
Attn: Brenda Harmon
501 Boylston St--6th Fl
Boston, MA 02116-3769
Chase Manhattan Bank Directed 116,141.335 37.01%
Trustee For Metlife Defined
Contribution Group
Attn Brenda Hager
770 Broadway Fl 10
New York, NY 10003-9522
The New England Life Insurance 40,784.310 13.00%
Company
c/o Mary Beth Klein
Insurance Accounting 6th Flr
501 Boylston St
Boston, MA 02116-3738
NVEST MASSACHUSETTS TAX FREE FUND
Class B MLPF&S For The Sole Benefit of 60,370.822 11.28%
Its Customers
Attn Fund Administration
ML#97CJ
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
NVEST SHORT TERM CORPORATE INCOME FUND
Class A Treasurer County of Lake 865,867.732 9.39%
255 No Forbes Street Rm 215
Lakeport, CA 95453
National Auto Dealers Assoc 647,668.287 7.02%
8400 Westpark Dr
Mclean, VA 22102-3522
County of San Benito 615,979.835 6.68%
Mary Lou Andrade
County Treasurer
440 Fifth St Room 107
Hollister, CA 95023-3843
J.C. Bradford & Co. Cuto FBO 540,055.724 5.86%
The Cato Corporation
330 Commerce St
Nashville, TN 37201-1805
Class C Salomon Smith Barney Inc. 29,613.916 45.37%
00137337312
333 West 34th St--3rd Floor
New York, New York 10001
Cheryl Nichols 29,077.403 44.55%
5545 Country Club Ln
Hamburg, NY 14075-5867
NVEST STRATEGIC INCOME FUND
Class B MLPF&S For The Sole Benefit of 594,968.549 5.38%
Its Customers
Attn Fund Administration
ML#97GM
4800 Deer Lake DR East--2nd Fl
Jacksonville, FL 32246-6484
Class C Southtrust Bank of Georgia NA 252,259.241 7.24%
Att Trust Dept FAO
Atlanta Regional Commission
Retirement Plan
79 W Paces Ferry Rd
Atlanta, GA 30305-1350
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
Class Y Metlife Insurance Company 5,933.389 100.00%
Attn Adrienne Lavis
Mellon Bank
Attn: Queen Roberts
1 Mellon Bank Center
Pittsburgh, PA 15259-0001
NVEST CASH MANAGEMENT TRUST--MONEY MARKET
SERIES
Class C NTO LLC 200,940.390 6.89%
PO Box 55
Odum, GA 31555-0055
State Street Bank and Trust 162,876.190 5.58%
Co
Cust For the IRA Rollover
of
Jack M Jensen
805 Tipperary Rd
Oregon, WI 53575-2641
State Street Bank and Trust 155,176.260 5.32%
Co
Cust For the IRA Rollover
of
Roger L Dahlin
9111 Octavia Ct
Springfield, VA 22153-1637
Class Y Natl Financial Services 164,342,291.850 100.00%
Corp
For The Exclusive Benefit
Of Our Customers
PO Box 3752
Church St Station
New York, NY 10008-3752
NVEST TAX EXEMPT MONEY MARKET TRUST
Class A Natl Financial Services 15,195,374.060 21.19%
Corp
For The Exclusive Benefit
Of Our Customers
PO Box 3752
Church St Station
New York, NY 10008-3752
Class B Pilgrim Baptist Village #1 249,210.860 49.74%
c/o Social Enterprise
Associates
694 Clinton Ave
Newark, NJ 07108-1432
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIALLY SHARES OF
FUND AND CLASS BENEFICIAL OWNER OWNED CLASS OWNED
-------------- ------------------- ------------ -------------
<C> <S> <C> <C>
Fred Luntsford 91,285.050 18.22%
Ann Luntsford Tod
Paul K Luntsford
Kathryn Robinson
14155 Magnolia Blvd #128
Sherman Oaks, CA 91423-1150
Donaldson Lufkin Jenrette 28,099.500 5.61%
Securities Corporation Inc
P O Box 2052
Jersey City, NJ 07303-2052
</TABLE>
-----------
[* Entity owned 25% or more of the outstanding shares of beneficial interest of
the Fund, and therefore may be presumed to "control" the Fund, as that term
is defined in the 1940 Act.]
F-15
<PAGE>
OWNERSHIP OF SHARES BY MANAGEMENT
As of July 18, 2000, all trustees and the executive officers of each of the
Nvest Funds Trusts, as a group, owned [less than 1%] of each class of each
Nvest Fund.
As of July 18, 2000, all trustees and the executive officers of the Kobrick
Funds Trust, as a group, owned [less than 1%] of each class of each Kobrick
Fund.
F-16
<PAGE>
PLEASE VOTE YOUR PROXY TODAY
Prompt response will save the expense of additional solicitations
CHOOSE THE VOTING METHOD THAT IS MOST CONVENIENT FOR YOU.
1. VOTE BY MAIL: Sign and date your proxy card and return it in the enclosed
------------
postage paid envelope.
NOTE: Your proxy is not valid unless it is signed.
-------------------------------------------
2. VOTE BY TOUCH-TONE PHONE: Dial 1-888-221-0697, enter the CONTROL NUMBER
------------------------
printed on the upper portion of your proxy card and follow the simple
instructions. Telephone voting is available 24 hours a day, 7 days a week.
THE CALL IS TOLL-FREE. If you received more than one proxy card, you can
---------------------
vote each card during the call. Each card has a different control number.
3. VOTE VIA THE INTERNET: Log on to www.nvestfunds.com, click on [__________],
---------------------
enter your CONTROL NUMBER and follow the instructions on the screen. If
you received more than one proxy card, you may vote them all during the
same session. Each card has a different control number.
4. VOTE VIA FAX: Sign and date your proxy card and fax BOTH THE FRONT AND THE
------------ ----------------------
BACK to _____________.
----
IF YOU VOTE BY PHONE, FAX OR INTERNET,
PLEASE DO NOT RETURN YOUR PROXY CARD.
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL-FREE 1-888-221-0697
OR LOG ON TO www.nvestfunds.com
Please fold and detach card at perforation before mailing
<PAGE>
PROXY SOLICITED BY THE BOARDS OF TRUSTEES
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS ON OCTOBER 13, 2000
The undersigned hereby appoints John E. Pelletier, Thomas P. Cunningham and
Coleen Downs Dinneen and each of them separately, proxies with full power of
substitution to each, and hereby authorizes them to represent and to vote, as
designated below, at the Special Meeting of Shareholders of Nvest Funds Trust I,
Nvest Funds Trust II, Nvest Funds Trust III, Nvest Cash Management Trust, Nvest
Tax Exempt Money Market Trust and Nvest Kobrick Investment Trust (the "Trusts"),
on October 13, 2000 at 2:00 p.m. Eastern time, and any adjournments thereof, all
of the shares of each Fund of the Trusts that the undersigned would be entitled
to vote if personally present.
NOTE: Please sign exactly as your name appears on this
proxy card. All joint owners should sign. When signing
as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full
title as such. If a corporation, please sign in full
corporate name and indicate the signer's office. If a
partner, sign in the partnership name.
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Signature(s) (if held jointly)
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Date
Please fold and detach card at perforation before mailing
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH PROPOSAL.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. The Trustees recommend a
vote FOR all Proposals
Please vote by filling in the appropriate box below.
1(a) All Nvest Funds (except Nvest Growth Fund): Approval of a new Advisory
Agreement between each Nvest Fund and Nvest Funds Management, L.P.
FOR AGAINST ABSTAIN
[_] [_] [_]
1(b) Nvest Growth Fund: Approval of a new Advisory Agreement between Nvest
Growth Fund and Capital Growth Management Limited Partnership.
FOR AGAINST ABSTAIN
[_] [_] [_]
1(c) All Kobrick Funds: Approval of a new Advisory Agreement between each
Kobrick Fund and Kobrick Funds LLC.
FOR AGAINST ABSTAIN
[_] [_] [_]
2a. Nvest Bond Income Fund, Nvest Cash Management Trust - Money Market
Series, Nvest Government Securities Fund, Nvest Intermediate Term Tax
Free Fund of California, Nvest Limited Term U.S. Government Fund, Nvest
Massachusetts Tax Free Income Fund, Nvest Municipal Income Fund, Nvest
Short Term Corporate Income Fund and Nvest Tax Exempt Money Market
Trust: Approval of a new Sub-Advisory Agreement among Nvest Funds
Management, L.P., Back Bay Advisors, L.P. and each Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
2b. Nvest Star Advisers Fund, Nvest Star Small Cap Fund, Nvest Star Value
Fund and Nvest Star Worldwide Fund: Approval of a new Sub-Advisory
Agreement among Nvest Funds Management, L.P., Harris Associates L.P.
and each Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
2c. Nvest Star Advisers Fund: Approval of a new Sub-Advisory Agreement
among Nvest Funds Management, L.P., Janus Capital Corporation and
Nvest Star Advisers Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
2d. Nvest Bullseye Fund: Approval of a new Sub-Advisory Agreement among
Nvest Funds Management, L.P., Jurika & Voyles, L.P. and Nvest Bullseye
Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
<PAGE>
2e. Nvest Star Advisers Fund: Approval of a new Sub-Advisory Agreement
among Nvest Funds Management, L.P., Kobrick Funds LLC and Nvest Star
Advisers Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
2f. Nvest Balanced Fund, Nvest High Income Fund, Nvest International
Equity Fund, Nvest Star Advisers Fund, Nvest Star Small Cap Fund,
Nvest Star Value Fund, Nvest Star Worldwide Fund and Nvest Strategic
Income Fund: Approval of a new Sub-Advisory Agreement among Nvest
Funds Management, L.P., Loomis, Sayles & Company, L.P. and each Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
2g Nvest Star Small Cap Fund and Nvest Star Worldwide Fund: Approval of a
new Sub-Advisory Agreement among Nvest Funds Management, L.P.,
Montgomery Asset Management, LLC and each Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
2h Nvest Star Small Cap Fund: Approval of a new Sub-Advisory Agreement
among Nvest Funds Management, L.P., RS Investment Management, L.P. and
Nvest Star Small Cap Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
2i. Nvest Equity Income Fund and Nvest Star Value Fund: Approval of a new
Sub-Advisory Agreement among Nvest Funds Management, L.P., Vaughan,
Nelson, Scarborough & McCullough, L.P. and each Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
2j. Nvest Capital Growth Fund, Nvest Growth and Income Fund and Nvest Star
Value Fund: Approval of a new Sub-Advisory Agreement among Nvest Funds
Management, L.P., Westpeak Investment Advisors, L.P. and each Fund.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. All Nvest Funds: Election of Trustees to hold office until their
respective successors have been duly elected and qualified or until
their earlier resignation or removal.
Nominees: (1) Graham T. Allison, Jr., (2) Daniel M. Cain, (3) Kenneth
J. Cowan, (4) Richard Darman, (5) Sandra O. Moose, (6) John A. Shane,
(7) Peter S. Voss, (8) Pendleton P. White, (9) John T. Hailer
FOR all nominees WITHHOLD authority
listed (except as noted to vote for all nominees
in space provided) listed
[_] [_]
<PAGE>
Instruction: to withhold authority to vote for any individual nominee, write the
name(s) on the line below.
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The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
