UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-7345
IXIS Advisor Funds Trust III
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(Exact name of Registrant as specified in charter)
399 Boylston Street, Boston, Massachusetts 02116
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(Address of principal executive offices) (Zip code)
Coleen Downs Dinneen, Esq.
IXIS Asset Management Distributors, L.P.
399 Boylston Street
Boston, Massachusetts 02116
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(Name and address of agent for service)
Registrant's telephone number, including area code: (617)449-2810
Date of fiscal year end: December 31
Date of reporting period: June 30, 2005
Item 1. Reports to Stockholders.
[LOGO]
IXIS
ADVISOR FUNDS
Equity Funds
Semiannual Report
June 30, 2005
CGM Advisor Targeted Equity Fund
Hansberger International Fund
Harris Associates Focused Value Fund
Harris Associates Large Cap Value Fund
IXIS U.S. Diversified Portfolio
(formerly CDC Nvest Star Advisers Fund)
Harris Associates
Loomis, Sayles & Company
Mercury Advisors
IXIS Value Fund
(formerly CDC Nvest Star Value Fund)
Harris Associates
Loomis, Sayles & Company
Vaughan Nelson Investment Management
Westpeak Global Advisors
Vaughan Nelson Small Cap Value Fund
Westpeak Capital Growth Fund
TABLE OF CONTENTS
Management Discussion and Performance.......Page 1
Schedule of Investments....................Page 27
Financial Statements.......................Page 47
CGM ADVISOR TARGETED EQUITY FUND
PORTFOLIO PROFILE
Objective:
Seeks long-term growth of capital through investments in equity securities of
companies whose earnings are expected to grow at a faster rate than the overall
U.S. economy
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Strategy:
Generally invests in a focused portfolio of common stocks of large-cap companies
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Inception Date:
November 27, 1968
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Manager:
G. Kenneth Heebner
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Symbols:
Class A NEFGX
Class B NEBGX
Class C NEGCX
Class Y NEGYX
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You Should Know:
The fund invests in a small number of securities, which may result in greater
volatility than more diversified funds. Growth stocks can be more sensitive to
market movements because their prices are based in part on future expectations.
The fund may invest in foreign securities that involve risks not associated
with domestic securities.
Management Discussion
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CGM Advisor Targeted Equity Fund's concentrated investment approach served
shareholders well during the first half of 2005, as several key holdings
delivered strong gains. For the six months ended June 30, 2005, the fund
returned 3.34%, based on the net asset value of class A shares and $0.01 in
dividends reinvested during the period. The fund's performance was ahead of
both its benchmark, the S&P 500 Index, which returned -0.81% for the period,
and Morningstar's Large Blend category, which averaged -0.60%.
ASSETS SHIFTED TO CAPITALIZE ON INVESTMENT OPPORTUNITIES
We began 2005 fully invested in anticipation of continued moderate economic
growth, rising corporate profits and modest interest rates. Because we expected
continued increases in oil and gas prices, these industries were the most
heavily weighted. The fund also held a variety of economically sensitive
companies and defense firms.
However, during the first half of the year we eliminated the defense holdings
and reduced the economically sensitive securities, using the proceeds to add to
the fund's positions in oil services and healthcare, including pharmaceutical
and biotech companies.
ENERGY STOCKS AMONG TOP PERFORMERS
Reflecting our optimism for the sector, energy stocks accounted for
approximately one-third of fund assets. The biggest gainer during the period
was ConocoPhillips, a leading integrated oil company, which recently made a
major investment in LUKOIL, Russia's largest oil company. Oil and gas
producers -- including British Petroleum, France's Total, and Halliburton (a
major U.S. provider of oil services) -- all contributed positively to fund
performance. Going forward, we believe that oil and gas prices will continue to
increase, creating significant investment opportunities within the industry.
Other top performers in the fund's portfolio included Genentech, which
manufactures and markets biotechnology products in the U.S., Europe and Asia.
In addition to receiving recognition for its leadership in drugs used in
treating cancer, Genentech targets rare and/or badly underserved diseases,
sidestepping its competition. Google, a global internet search engine, has made
impressive earnings gains since its initial public offering in the fall of 2004.
FINANCIAL SERVICES AND INTERNET STOCKS UNDERPERFORMED
Laggards for the period included American International Group (AIG), a major
global financial services company. AIG declined in the face of regulatory
accusations and the departure of its CEO, Maurice Greenburg. eBay, a popular
online auction service, also proved disappointing. eBay's results were less
than expected and we sold the stock at a significant loss.
However, we have high expectations for Legg Mason, which we added to the fund's
financial services investments late in the period. Legg Mason recently
announced the acquisition of CitiGroup's asset management business. We believe
this merger should greatly increase Legg Mason's earning power and enhance its
competitive position.
MANAGER EXPECTS CONTINUED ECONOMIC GROWTH AND GRADUALLY RISING INTEREST RATES
We expect further economic expansion and additional short-term rate increases,
as the Federal Reserve Board continues to raise interest rates from the
abnormally low levels established in 2003 and 2004. While the market is not
inexpensive by historical standards, we continue to find opportunities in
individual stocks. As always, we will target a relatively small number of
established companies in industries we believe will have earnings growth rates
well above the overall economy.
1
CGM ADVISOR TARGETED EQUITY FUND
Investment Results through June 30, 2005
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PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the
results. It is not possible to invest directly in an index. Investors would
incur transaction costs and other expenses if they purchased the securities
necessary to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
June 30, 1995 through June 30, 2005
Maximum
Net Asset Value/1/ Sales Charge/2/ S&P 500 Index/4/
---------------- ---------------- ----------------
6/30/1995 $10,000 $ 9,425 $10,000
7/31/1995 10,451 9,850 10,332
8/31/1995 10,504 9,900 10,358
9/30/1995 10,695 10,080 10,795
10/31/1995 10,475 9,873 10,756
11/30/1995 10,975 10,344 11,228
12/31/1995 10,827 10,204 11,445
1/31/1996 11,207 10,562 11,834
2/29/1996 11,566 10,901 11,944
3/31/1996 11,566 10,901 12,059
4/30/1996 11,351 10,699 12,237
5/31/1996 11,526 10,863 12,552
6/30/1996 11,403 10,747 12,600
7/31/1996 10,736 10,118 12,043
8/31/1996 10,839 10,216 12,297
9/30/1996 11,582 10,916 12,990
10/31/1996 12,263 11,558 13,348
11/30/1996 13,219 12,459 14,357
12/31/1996 13,089 12,336 14,072
1/31/1997 14,271 13,450 14,951
2/28/1997 14,034 13,227 15,069
3/31/1997 13,438 12,665 14,450
4/30/1997 14,204 13,387 15,312
5/31/1997 14,901 14,044 16,244
6/30/1997 15,566 14,671 16,972
7/31/1997 17,074 16,092 18,323
8/31/1997 16,196 15,265 17,296
9/30/1997 17,026 16,047 18,243
10/31/1997 16,358 15,418 17,634
11/30/1997 16,172 15,242 18,450
12/31/1997 16,172 15,242 18,767
1/31/1998 16,435 15,490 18,975
2/28/1998 17,880 16,852 20,343
3/31/1998 19,030 17,935 21,385
4/30/1998 19,760 18,624 21,600
5/31/1998 19,450 18,332 21,229
6/30/1998 20,491 19,313 22,091
7/31/1998 20,599 19,415 21,856
8/31/1998 16,669 15,711 18,696
9/30/1998 16,787 15,822 19,894
10/31/1998 18,478 17,415 21,512
11/30/1998 20,015 18,864 22,816
12/31/1998 21,572 20,332 24,131
1/31/1999 23,035 21,710 25,140
2/28/1999 21,383 20,154 24,358
3/31/1999 21,897 20,637 25,333
4/30/1999 21,820 20,565 26,314
5/31/1999 21,117 19,903 25,693
6/30/1999 22,674 21,370 27,119
7/31/1999 22,141 20,868 26,272
8/31/1999 22,103 20,832 26,142
9/30/1999 20,792 19,597 25,425
10/31/1999 21,591 20,349 27,034
11/30/1999 22,407 21,119 27,584
12/31/1999 24,847 23,418 29,208
1/31/2000 22,904 21,587 27,741
2/29/2000 24,938 23,504 27,216
3/31/2000 25,210 23,760 29,878
4/30/2000 24,262 22,867 28,979
5/31/2000 23,291 21,952 28,385
6/30/2000 23,382 22,038 29,084
7/31/2000 22,636 21,335 28,630
8/31/2000 23,709 22,346 30,408
9/30/2000 22,851 21,537 28,803
10/31/2000 22,899 21,582 28,681
11/30/2000 22,684 21,379 26,420
12/31/2000 23,718 22,354 26,549
1/31/2001 21,614 20,372 27,491
2/28/2001 20,929 19,726 24,984
3/31/2001 20,398 19,225 23,401
4/30/2001 21,285 20,061 25,220
5/31/2001 20,855 19,656 25,389
6/30/2001 20,997 19,789 24,771
7/31/2001 20,386 19,214 24,527
8/31/2001 18,706 17,630 22,992
9/30/2001 16,899 15,927 21,135
10/31/2001 17,000 16,023 21,538
11/30/2001 18,808 17,726 23,190
12/31/2001 19,876 18,733 23,393
1/31/2002 20,486 19,308 23,052
2/28/2002 19,544 18,420 22,607
3/31/2002 19,874 18,731 23,458
4/30/2002 19,926 18,780 22,036
5/31/2002 19,722 18,588 21,873
6/30/2002 19,085 17,988 20,315
7/31/2002 16,973 15,997 18,732
8/31/2002 16,973 15,997 18,854
9/30/2002 15,929 15,013 16,805
10/31/2002 15,546 14,653 18,285
11/30/2002 15,164 14,292 19,361
12/31/2002 14,147 13,333 18,223
1/31/2003 14,147 13,333 17,746
2/28/2003 14,045 13,237 17,480
3/31/2003 14,375 13,548 17,649
4/30/2003 15,290 14,411 19,103
5/31/2003 16,613 15,658 20,110
6/30/2003 16,892 15,921 20,366
7/31/2003 16,561 15,609 20,725
8/31/2003 16,993 16,016 21,130
9/30/2003 17,197 16,208 20,905
10/31/2003 19,335 18,223 22,088
11/30/2003 20,098 18,943 22,282
12/31/2003 20,201 19,039 23,451
1/31/2004 19,742 18,607 23,881
2/29/2004 20,939 19,735 24,213
3/31/2004 21,906 20,647 23,848
4/30/2004 20,176 19,016 23,473
5/31/2004 20,660 19,472 23,795
6/30/2004 20,837 19,639 24,258
7/31/2004 19,846 18,705 23,455
8/31/2004 20,074 18,920 23,550
9/30/2004 21,320 20,095 23,805
10/31/2004 21,574 20,334 24,169
11/30/2004 22,541 21,245 25,147
12/31/2004 23,023 21,699 26,003
1/31/2005 22,820 21,508 25,369
2/28/2005 24,347 22,947 25,903
3/31/2005 23,278 21,940 25,444
4/30/2005 22,643 21,341 24,961
5/31/2005 23,279 21,941 25,756
6/30/2005 23,797 22,428 25,792
Average Annual Total Returns -- June 30, 2005
SINCE
6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION
Class A (Inception 11/27/68)
Net Asset Value/1/ 3.34% 14.19% 0.36% 9.06% --
With Maximum Sales Charge/2/ -2.58 7.62 -0.82 8.41 --
Class B (Inception 2/28/97)
Net Asset Value/1/ 3.10 13.44 -0.40 -- 5.74%
With CDSC/3/ -1.90 8.44 -0.76 -- 5.74
Class C (Inception 9/1/98)
Net Asset Value/1/ 2.99 13.31 -0.42 -- 3.73
With CDSC/3/ 1.99 12.31 -0.42 -- 3.73
Class Y (Inception 6/30/99)
Net Asset Value/1/ 3.60 14.66 0.81 -- 1.24
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-------------------------
SINCE SINCE SINCE
CLASS B CLASS C CLASS Y
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ INCEPTION/6/ INCEPTION/6/
S&P 500 Index/4/ -0.81% 6.32% -2.37% 9.94% 6.66% 3.92% -0.83%
Morningstar Large Blend Fund Avg./5/ -0.60 6.35 -1.79 8.61 5.84 4.19 -0.22
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All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those noted. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to
certain institutional investors only.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/31/04
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Common Stocks 99.2 99.4
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Short Term Investments
and Other 0.8 0.6
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% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
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ConocoPhillips 7.7 5.7
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Total SA, Sponsored ADR 6.1 5.6
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Halliburton Co. 5.5 --
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HCA, Inc. 5.4 --
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BP PLC, Sponsored ADR 5.3 4.7
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Occidental Petroleum Corp. 5.2 --
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J.C. Penney Co., Inc. 5.2 --
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Altria Group, Inc. 5.2 --
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Schlumberger, Ltd. 5.1 --
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Yum! Brands, Inc. 5.1 2.4
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% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/05 12/31/04
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Oil & Gas 24.8 23.7
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Oil & Gas Services 10.6 --
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Telecommunications 9.7 13.5
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Insurance 7.2 4.4
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Health Care -- Services 5.4 4.7
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Portfolio holdings and asset allocations will vary.
Notes to Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/S&P 500 Index is an unmanaged index of U.S. common stocks.
/5/Morningstar Large Blend Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
/6/The since-inception performance comparisons for each Class of fund shares
are calculated as follows: Class B from 2/28/97; Class C from 9/30/98; and
Class Y from 6/30/99.
2
HANSBERGER INTERNATIONAL FUND
PORTFOLIO PROFILE
Objective:
Seeks long-term growth of capital
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Strategy:
Invests in common stocks of small-, mid- and large-cap companies located
outside the U.S. Assets are diversified across developed and emerging markets
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Inception Date:
December 29, 1995
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Managers:
Growth:
Barry A. Lockhart
Patrick H. Tan
Thomas R.H. Tibbles
Value:
Ronald Holt
Robert Mazuelos
Lauretta Reeves
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Symbols:
Class A NEFDX
Class B NEDBX
Class C NEDCX
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You Should Know:
Foreign securities involve risks not associated with domestic securities, such
as currency fluctuations, differing political, economic conditions and
accounting standards. Growth stocks can be more sensitive to market movements
because their prices are based in part on future expectations. Value stocks may
fall out of favor and underperform the overall market during any given period.
Management Discussion
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Hansberger International Fund is managed by two teams of international equity
specialists -- one that focuses on value stocks and the other that looks for
growth potential. For the six months ended June 30, 2005, the fund's total
return was -0.58%, based on the net asset value of class A shares. The fund's
benchmarks, the MSCI EAFE Index and the MSCI ACWI ex-U.S. Index (neither of
which include the United States) returned -0.85% and 0.32%, respectively, for
the six-month period, while the average performance of Morningstar's Foreign
Large Blend category was -1.20%.
VALUE TEAM EMPHASIZED EUROPE AND EMERGING MARKETS
The value team's three strongest stocks were Brazilian companies, followed by
two high-tech firms, one each in Taiwan and South Korea. Petrobras, a Brazilian
oil company, was the top performer, as worldwide demand kept upward pressure on
oil prices. A Brazilian electric utility, Cemig, was the second best performer,
followed by one of the largest banks in Brazil, Banco Bradesco. Although
concern about political stability hurt Brazilian stocks in the closing weeks of
the semiannual period, these holdings were still a net positive. Two other
major contributors were Taiwan Semiconductor and Samsung Electronics -- both
information technology companies. The team believes this sector may be poised
for recovery. They also like Finland's Nokia, one of Europe's leading
telecommunication equipment companies, and Celestica, one of two Canadian
companies recently added to the portfolio. Celestica is moving its electronics
production operations into countries like China, where costs are lower.
Energy was the top-performing sector during the period, and the value segment
benefited from its position in France's Total, a world leader in oil and gas
production. However, energy was a relatively small portion of the fund's
holdings. The value segment's worst performer was Telefonica Moviles, Spain's
leading cellular telephone company, which is also active in cellular services
in Latin America. Pricing wars have discouraged investors, but the team
believes in the potential for Telefonica's growth in Mexico and Brazil. Another
disappointing performer, Japan's Sumitomo Trust & Banking Company, was hurt
when it was unable to take over the trust operations of another bank, and by
sluggish economic growth in Japan. Although the team took some profits in
Japanese stocks, the segment's exposure to Japan has increased.
INDIVIDUAL STOCK SELECTION HELPED GROWTH SEGMENT
Emerging markets were positive for both segments of the fund in 2005. In the
growth segment, Europe was neutral and Japan was weak. Areas of concentration
included information technology and healthcare; energy and materials were
smaller positions relative to the benchmark. However, individual stock
selection had a strongly positive influence on performance.
Energy is not considered a traditional growth investment, but this team is
particularly interested in the growth potential of companies developing
alternative energy sources. Denmark's Vestas Wind Systems, a pioneer and world
leader in wind turbines, was this segment's top performing stock during the
period. Canada's Suncor Energy was another leader. In addition to exploring for
and producing crude oil and natural gas, after decades of work Suncor has
developed a relatively inexpensive process that will enable it to pump oil out
of huge deposits of tar sand the company owns in Alberta -- reserves said to
equal those of Saudi Arabia. Energy-hungry China has expressed interest in
buying the company. British Sky Broadcasting was one of this segment's worst
performers in the first half of 2005. The company supplies digital television
programming in the U.K. The growth team believes in the long-term fundamental
outlook for Sky, although investors appear to be concerned that the franchise
may be too powerful and potentially vulnerable to action by the British
government that could hurt profits.
INTERNATIONAL MARKETS APPEAR UNDERVALUED RELATIVE TO THE UNITED STATES
Hansberger believes that stocks in emerging markets are selling at a discount
to developed markets. High oil prices and interest rates may slow economic
growth, especially in Japan and Europe.
3
HANSBERGER INTERNATIONAL FUND
Investment Results through June 30, 2005
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PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the
results. It is not possible to invest directly in an index. Investors would
incur transaction costs and other expenses if they purchased the securities
necessary to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
December 29, 1995 (inception) through June 30, 2005
Maximum MSCI MSCI ACWI
Net Asset Sales EAFE ex USA
Value/1/ Charge/2/ Index/4/ Index/5/
---------- ---------- ---------- -----------
12/29/1995 $10,000 $ 9,425
12/31/1995 10,000 9,425 $10,000 $10,000
1/31/1996 10,088 9,508 10,043 10,137
2/29/1996 10,264 9,673 10,080 10,137
3/31/1996 10,527 9,922 10,297 10,327
4/30/1996 10,872 10,246 10,598 10,640
5/31/1996 11,136 10,495 10,406 10,480
6/30/1996 11,176 10,533 10,467 10,533
7/31/1996 10,664 10,051 10,164 10,183
8/31/1996 10,952 10,322 10,189 10,243
9/30/1996 11,136 10,496 10,462 10,497
10/31/1996 11,048 10,413 10,357 10,392
11/30/1996 11,495 10,834 10,772 10,793
12/31/1996 11,665 10,995 10,636 10,668
1/31/1997 12,136 11,438 10,266 10,472
2/28/1997 12,387 11,675 10,437 10,664
3/31/1997 12,265 11,560 10,477 10,641
4/30/1997 12,387 11,675 10,535 10,731
5/31/1997 13,027 12,278 11,223 11,394
6/30/1997 13,626 12,843 11,845 12,023
7/31/1997 14,144 13,331 12,039 12,266
8/31/1997 13,351 12,583 11,142 11,301
9/30/1997 14,081 13,271 11,769 11,912
10/31/1997 13,060 12,309 10,867 10,898
11/30/1997 12,907 12,165 10,759 10,762
12/31/1997 13,145 12,389 10,855 10,886
1/31/1998 13,103 12,349 11,354 11,211
2/28/1998 13,995 13,190 12,085 11,959
3/31/1998 14,565 13,727 12,460 12,373
4/30/1998 14,649 13,807 12,561 12,461
5/31/1998 14,352 13,527 12,503 12,235
6/30/1998 14,055 13,247 12,601 12,189
7/31/1998 14,013 13,207 12,731 12,305
8/31/1998 11,793 11,115 11,157 10,570
9/30/1998 11,682 11,010 10,818 10,346
10/31/1998 12,533 11,812 11,948 11,430
11/30/1998 13,204 12,445 12,563 12,044
12/31/1998 13,672 12,886 13,062 12,459
1/31/1999 14,148 13,334 13,027 12,446
2/28/1999 13,969 13,166 12,719 12,167
3/31/1999 14,539 13,703 13,253 12,755
4/30/1999 15,321 14,440 13,793 13,393
5/31/1999 14,938 14,079 13,086 12,764
6/30/1999 15,814 14,905 13,599 13,350
7/31/1999 15,635 14,736 14,006 13,663
8/31/1999 15,524 14,631 14,061 13,711
9/30/1999 15,167 14,295 14,205 13,804
10/31/1999 15,702 14,800 14,740 14,318
11/30/1999 16,875 15,905 15,256 14,890
12/31/1999 18,814 17,733 16,628 16,310
1/31/2000 18,115 17,073 15,574 15,425
2/29/2000 19,248 18,142 15,996 15,842
3/31/2000 19,304 18,194 16,620 16,438
4/30/2000 17,905 16,875 15,748 15,520
5/31/2000 17,092 16,109 15,367 15,123
6/30/2000 17,593 16,581 15,971 15,767
7/31/2000 17,119 16,135 15,305 15,145
8/31/2000 17,631 16,617 15,441 15,332
9/30/2000 16,968 15,993 14,692 14,482
10/31/2000 16,325 15,387 14,348 14,021
11/30/2000 15,582 14,686 13,813 13,392
12/31/2000 16,516 15,566 14,307 13,850
1/31/2001 16,836 15,868 14,300 14,057
2/28/2001 15,760 14,854 13,229 12,945
3/31/2001 14,730 13,883 12,353 12,030
4/30/2001 15,680 14,778 13,220 12,848
5/31/2001 15,863 14,951 12,764 12,493
6/30/2001 15,732 14,827 12,246 12,014
7/31/2001 15,444 14,556 12,025 11,746
8/31/2001 15,110 14,241 11,722 11,455
9/30/2001 13,533 12,754 10,538 10,239
10/31/2001 13,798 13,004 10,807 10,526
11/30/2001 14,582 13,743 11,206 11,008
12/31/2001 15,034 14,169 11,273 11,150
1/31/2002 14,676 13,832 10,675 10,672
2/28/2002 14,711 13,865 10,750 10,749
3/31/2002 15,589 14,693 11,390 11,378
4/30/2002 15,485 14,594 11,419 11,407
5/31/2002 15,578 14,682 11,574 11,531
6/30/2002 14,631 13,789 11,118 11,033
7/31/2002 13,227 12,467 10,021 9,958
8/31/2002 13,250 12,488 10,001 9,958
9/30/2002 11,615 10,947 8,929 8,903
10/31/2002 12,253 11,548 9,410 9,381
11/30/2002 13,134 12,378 9,838 9,832
12/31/2002 12,565 11,842 9,508 9,514
1/31/2003 12,124 11,427 9,112 9,180
2/28/2003 11,788 11,110 8,904 8,994
3/31/2003 11,637 10,968 8,735 8,820
4/30/2003 12,854 12,115 9,601 9,669
5/31/2003 13,770 12,978 10,192 10,285
6/30/2003 14,082 13,272 10,444 10,570
7/31/2003 14,372 13,546 10,699 10,852
8/31/2003 14,824 13,971 10,959 11,175
9/30/2003 15,021 14,157 11,299 11,488
10/31/2003 16,087 15,162 12,004 12,233
11/30/2003 16,365 15,424 12,273 12,500
12/31/2003 17,467 16,463 13,232 13,454
1/31/2004 17,862 16,835 13,420 13,670
2/29/2004 18,081 17,042 13,732 14,017
3/31/2004 17,908 16,878 13,815 14,104
4/30/2004 17,397 16,397 13,514 13,665
5/31/2004 17,455 16,451 13,555 13,696
6/30/2004 17,745 16,724 13,875 14,006
7/31/2004 16,944 15,970 13,427 13,598
8/31/2004 17,095 16,112 13,489 13,706
9/30/2004 17,536 16,528 13,844 14,147
10/31/2004 18,046 17,009 14,317 14,639
11/30/2004 19,100 18,002 15,299 15,655
12/31/2004 19,841 18,701 15,971 16,327
1/31/2005 19,413 18,297 15,679 16,046
2/28/2005 20,479 19,301 16,360 16,838
3/31/2005 19,911 18,766 15,955 16,381
4/30/2005 19,447 18,329 15,598 15,977
5/31/2005 19,517 18,395 15,622 16,077
6/30/2005 19,731 18,600 15,835 16,380
Average Annual Total Returns -- June 30, 2005
SINCE
6 MONTHS 1 YEAR/8/ 5 YEARS/8/ INCEPTION/8/
CLASS A (Inception 12/29/95)
Net Asset Value/1/ -0.58% 11.17% 2.31% 7.41%
With Maximum Sales Charge/2/ -6.28 4.80 1.10 6.75
CLASS B (Inception 12/29/95)
Net Asset Value/1/ -0.95 10.33 1.55 6.63
With CDSC/3/ -5.90 5.33 1.22 6.63
CLASS C (Inception 12/29/95)
Net Asset Value/1/ -1.01 10.33 1.54 6.63
With CDSC/3/ -2.00 9.33 1.54 6.63
- ---------------------------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION/7/
MSCI ACWI ex-U.S. Index/5/ 0.32% 16.95% 0.76% 5.33%
MSCI EAFE Index/4/ -0.85 14.13 -0.17 4.96
Morningstar Foreign Large Blend Fund Avg./6/ -1.20 12.57 -2.51 5.09
All results represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those shown. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/31/04
- --------------------------------------------------------
Common Stocks 97.6 97.4
- --------------------------------------------------------
Short Term Investments
and Other 2.4 2.6
- --------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
- --------------------------------------------------------
HBOS PLC 1.8 1.6
- --------------------------------------------------------
Royal Bank of Scotland PLC 1.8 1.8
- --------------------------------------------------------
Novartis AG 1.6 1.6
- --------------------------------------------------------
Canon, Inc. 1.4 1.7
- --------------------------------------------------------
DBS Group Holdings, Ltd. 1.4 0.8
- --------------------------------------------------------
Nestle SA 1.4 0.9
- --------------------------------------------------------
Schneider Electric SA 1.3 0.7
- --------------------------------------------------------
Hutchison Whampoa, Ltd. 1.3 1.3
- --------------------------------------------------------
Vestas Wind Systems AS 1.2 1.0
- --------------------------------------------------------
Banco Bilbao Vizcaya Argentaria SA 1.1 0.8
- --------------------------------------------------------
% of Net Assets as of
FIVE LARGEST COUNTRIES 6/30/05 12/31/04
- --------------------------------------------------------
United Kingdom 18.7 19.0
- --------------------------------------------------------
Japan 16.7 18.7
- --------------------------------------------------------
France 13.1 13.9
- --------------------------------------------------------
Switzerland 8.9 5.6
- --------------------------------------------------------
Germany 6.4 7.2
- --------------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes to Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/Morgan Stanley Capital International Europe Australasia and Far East Index
(MSCI EAFE) is an unmanaged index designed to measure developed market
equity performance, excluding the United States and Canada.
/5/Morgan Stanley Capital International All Countries World Index ex-U.S. (MSCI
ACWI ex-U.S. Index) is an unmanaged index designed to measure equity market
performance in developed and emerging markets, excluding the United States.
/6/Morningstar Foreign Large Blend Fund Average is the average performance
without sales charges of funds with similar investment objectives, as
calculated by Morningstar, Inc.
/7/The since-inception performance comparisons are calculated from 12/31/95.
/8/Fund performance has been increased by expense waivers, without which
performance would have been lower.
4
HARRIS ASSOCIATES FOCUSED VALUE FUND
PORTFOLIO PROFILE
Objective:
Seeks long-term capital appreciation
- --------------------------------------------------------------------------------
Strategy:
Focuses on 25 to 30 stocks of mid- to large-cap U.S. companies
- --------------------------------------------------------------------------------
Inception Date:
March 15, 2001
- --------------------------------------------------------------------------------
Managers:
Floyd J. Bellman
Robert M. Levy
- --------------------------------------------------------------------------------
Symbols:
Class A NRSAX
Class B NRSBX
Class C NRSCX
- --------------------------------------------------------------------------------
You Should Know:
The fund invests in a small number of securities, which may result in greater
volatility than more diversified funds. Value stocks may fall out of favor with
investors and underperform the overall market during any given period.
Management Discussion
- --------------------------------------------------------------------------------
Equity returns were muted during the first half of 2005, but Harris Associates
Focused Value Fund's total return for the six months ended June 30 was 2.76%,
based on the net asset value of the fund's class A shares. The fund
outperformed its benchmark, the Standard & Poor's 500 Index, which returned
- -0.81% for the period, and exceeded the 0.39% average return on Morningstar's
Large Value category.
CAREFUL STOCK-PICKING BROUGHT SOLID RESULTS
Although the fund's energy position was significantly less than the benchmark,
strong performance by Burlington Resources, a North American producer of oil
and natural gas, had a positive impact on the fund's performance. In addition,
the fund's technology holdings kept pace with the benchmark's tech segment,
despite having far less exposure. H&R Block had a positive impact on fund
performance by confounding the market's negative expectations. Although tax
preparation volumes were flat, Block enhanced its competitive position, opened
more stores, and exceeded estimates for its mortgage division. The result was
increased revenue and a higher stock price. Among the fund's healthcare
holdings, Omnicare, which provides pharmaceutical services to nursing homes,
saw earnings stabilize as inconsistencies among state reimbursement plans were
better managed. In 2006, this function will be further simplified as
reimbursement rates will be set by the federal government. Omnicare has also
slashed costs, and its proposed acquisition of one of its competitors,
Neighborcare, drew favorable market response. Hospira, which makes a variety of
hospital supply products and specialty injectable pharmaceuticals, has
continued to move forward after it was spun off from Abbott Laboratories.
TIME WARNER, WASHINGTON MUTUAL, AND HARLEY DAVIDSON HURT RESULTS
Media giant Time Warner was down sharply, as cable and media stocks came under
competitive fire from traditional phone companies encroaching on their
franchises, and problems persisted at America Online (AOL). We think the market
has overreacted to AOL's troubles and largely ignored Time Warner's other
strengths. Because Washington Mutual was a relatively large holding, the modest
drop in its stock price had a negative impact on the portfolio. We believe
changes in management and other short-term news obscured the company's solid
operating results. The market also may have misread Harley-Davidson's
announcement of production cutbacks, which were aimed at controlling dealer
inventory and maintaining pricing. Some investors saw the news as signaling a
sales slowdown. Our dealer contacts reported continued strong demand for Harley
products, and we increased the fund's holdings when the stock fell.
ADDITIONS INCLUDED HIGH-TECH BUSINESSES AND MCDONALD'S
We added two technology companies whose share prices have fallen and whose
managements are using capital to enhance shareholder value. National
Semiconductor is shifting its focus from digital to analog chips for use in
high-volume consumer products. This is a more stable, higher margin business
niche than large computer applications. National is buying back stock and,
unlike many tech companies, pays a dividend. CDW Corp. is a direct distributor
of multi-brand computers and other technology products to small businesses. CDW
has a solid record of growth, good market share and business prospects, and an
attractive return on capital, but we believe its shares have been overlooked.
Management is committed to a long-term program of increasing shareholder value.
We regarded the recent decline in McDonald's shares as an opportunity to invest
in this global company at an attractive price. We believe the new management
team is dedicated to better capital allocation, and to building returns by
improving margins and enhancing return on capital.
MANAGERS FOCUS ON VALUE AND STOCK SELECTION
We believe the fund's current holdings are selling at low prices relative to
the overall market -- a comfortable stance at a time when overall equity
returns seem likely to stay subdued. Against that backdrop, we believe our
style of opportunistic stock selection offers potential for good absolute and
relative returns.
5
HARRIS ASSOCIATES FOCUSED VALUE FUND
Investment Results through June 30, 2005
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the
results. It is not possible to invest directly in an index. Investors would
incur transaction costs and other expenses if they purchased the securities
necessary to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
March 15, 2001 (inception) through June 30, 2005
Net Maximum
Asset Sales S&P 500
Value/1/ Charge/2/ Index/4/
---------- ---------- ----------
3/15/2001 $10,000 $ 9,425
3/31/2001 10,090 9,510 $10,000
4/30/2001 10,420 9,821 10,777
5/31/2001 10,690 10,075 10,849
6/30/2001 10,990 10,358 10,585
7/31/2001 11,310 10,660 10,481
8/31/2001 10,870 10,245 9,825
9/30/2001 10,240 9,651 9,032
10/31/2001 10,000 9,425 9,204
11/30/2001 10,680 10,066 9,910
12/31/2001 10,960 10,330 9,997
1/31/2002 10,890 10,264 9,851
2/28/2002 10,600 9,990 9,661
3/31/2002 10,910 10,282 10,024
4/30/2002 10,859 10,235 9,416
5/31/2002 10,929 10,300 9,347
6/30/2002 10,079 9,499 8,681
7/31/2002 9,619 9,066 8,005
8/31/2002 9,959 9,386 8,057
9/30/2002 8,568 8,076 7,181
10/31/2002 8,968 8,453 7,813
11/30/2002 9,468 8,924 8,273
12/31/2002 9,238 8,707 7,787
1/31/2003 9,008 8,490 7,583
2/28/2003 8,888 8,377 7,469
3/31/2003 8,988 8,471 7,542
4/30/2003 9,507 8,960 8,163
5/31/2003 10,117 9,535 8,593
6/30/2003 10,336 9,742 8,703
7/31/2003 10,256 9,667 8,856
8/31/2003 10,676 10,062 9,029
9/30/2003 10,556 9,949 8,933
10/31/2003 11,196 10,552 9,439
11/30/2003 11,687 11,015 9,522
12/31/2003 11,787 11,109 10,021
1/31/2004 12,097 11,401 10,205
2/29/2004 12,177 11,477 10,347
3/31/2004 11,937 11,251 10,191
4/30/2004 11,777 11,100 10,031
5/31/2004 12,037 11,345 10,168
6/30/2004 11,907 11,223 10,366
7/31/2004 11,677 11,006 10,023
8/31/2004 11,627 10,959 10,064
9/30/2004 11,938 11,251 10,173
10/31/2004 12,148 11,449 10,328
11/30/2004 12,648 11,921 10,746
12/31/2004 13,058 12,307 11,111
1/31/2005 12,608 11,883 10,841
2/28/2005 12,987 12,240 11,069
3/31/2005 12,817 12,080 10,873
4/30/2005 12,597 11,872 10,667
5/31/2005 13,046 12,296 11,006
6/30/2005 13,420 12,648 11,022
Average Annual Total Returns -- June 30, 2005
SINCE
6 MONTHS 1 YEAR INCEPTION/7/
CLASS A (Inception 3/15/01)
Net Asset Value/1/ 2.76% 12.68% 7.09%
With Maximum Sales Charge/2/ -3.17 6.17 5.63
CLASS B (Inception 3/15/01)
Net Asset Value/1/ 2.44 11.88 6.30
With CDSC/3/ -2.56 6.88 5.92
CLASS C (Inception 3/15/01)
Net Asset Value/1/ 2.44 11.88 6.30
With CDSC/3/ 1.44 10.88 6.30
- -----------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR INCEPTION/6/
S&P 500 Index/4/ -0.81% 6.32% 2.32%
Morningstar Large Value Fund Avg./5/ 0.39 9.55 4.31
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those shown. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect
taxes shareholders might owe on any fund distributions or when they redeem
their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/31/04
- ------------------------------------------------
Common Stocks 92.2 90.6
- ------------------------------------------------
Short Term Investments
and Other 7.8 9.4
- ------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
- ------------------------------------------------
Washington Mutual, Inc. 9.6 15.3
- ------------------------------------------------
Yum! Brands, Inc. 5.5 6.7
- ------------------------------------------------
Omnicare, Inc. 5.5 4.3
- ------------------------------------------------
RR Donnelley & Sons Co. 5.3 4.9
- ------------------------------------------------
H&R Block, Inc. 5.0 6.6
- ------------------------------------------------
Time Warner, Inc. 4.7 5.0
- ------------------------------------------------
Hospira, Inc. 4.6 3.6
- ------------------------------------------------
TJX Cos., Inc. 4.5 4.2
- ------------------------------------------------
Raytheon Co. 4.5 4.0
- ------------------------------------------------
Burlington Resources, Inc. 4.0 4.3
- ------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/05 12/31/04
- ------------------------------------------------
Pharmaceuticals 13.7 11.3
- ------------------------------------------------
Commercial Services 13.3 14.5
- ------------------------------------------------
Savings & Loans 12.2 15.3
- ------------------------------------------------
Media 12.0 11.5
- ------------------------------------------------
Retail 10.6 13.5
- ------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes to Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/S&P 500 Index is an unmanaged index of U.S. common stocks.
/5/Morningstar Large Value Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
/6/The since-inception performance comparisons are calculated from 3/31/01.
/7/Fund performance has been increased by expense waivers, without which
performance would have been lower.
6
HARRIS ASSOCIATES LARGE CAP VALUE FUND
PORTFOLIO PROFILE
Objective:
Seeks opportunities for long-term capital growth and income
- --------------------------------------------------------------------------------
Strategy:
Invests primarily in common stock of large- and mid-cap companies in any
industry
- --------------------------------------------------------------------------------
Inception Date:
May 6, 1931
- --------------------------------------------------------------------------------
Managers:
Edward S. Loeb
Michael J. Mangan
Diane Mustain
- --------------------------------------------------------------------------------
Symbols:
Class A NEFOX
Class B NEGBX
Class C NECOX
Class Y NEOYX
- --------------------------------------------------------------------------------
You Should Know:
Value stocks may fall out of favor with investors and underperform the overall
market during any given period.
Management Discussion
- --------------------------------------------------------------------------------
Despite growing corporate earnings, the stock market's engines idled during the
first half of 2005. High oil prices, the nation's trade deficit, and steady
upticks in interest rates prompted investors to question the durability of the
U.S. economic expansion.
For the six months ended June 30, 2005, class A shares of Harris Associates
Large Cap Value Fund had a total return of -3.86% based on net asset value and
$0.01 in dividends reinvested during the period. The fund's results trailed
both its benchmark, the Russell 1000 Value Index, which returned 1.76% for the
period, and the -0.60% average return on the funds in Morningstar's Large Blend
category.
LOW EXPOSURE TO ENERGY, UTILITIES AND BASIC MATERIALS HURT RESULTS
The fund had relatively little exposure to energy, the period's best-performing
segment, and we have been selling our smaller holdings as prices rise. At this
point, the rise in the price of oil seems driven by speculative traders. Like
any commodity, its price is sensitive to shifts in supply and demand; some data
suggest that prices have outrun long-term demand. Our underweight stance in
utilities and basic materials, two other sectors that performed well, also held
back returns.
Earnings at Washington Mutual, the nation's largest savings and loan company,
continue to progress. However, shares fell moderately over this period as
investors focused on short-term issues, such as changes in management. The
acquisition of Providian's credit card business fits well with the company's
retail business, in our opinion.
MEDIA STOCKS ALSO SUFFERED
Media companies were among the fund's weakest holdings over the period,
accounting for a large portion of our underperformance; Time Warner, Viacom,
Liberty Media, Disney, and Comcast all declined. In each case, investors
focused on short-term weaknesses, while ignoring greater strengths. Viacom's
Infinity Broadcasting suffered during a challenging time for radio generally.
But other parts of the businesses -- MTV, Nickelodeon, Comedy Central -- are
growing rapidly. At Disney, the focus has been on ABC's problems rather than on
the success of ESPN. And Time Warner's cable and other divisions are doing
well, while investors only seem to see the difficulties at America Online
(AOL). In our view, all these companies are moving forward. Management's
efforts to help investors see the real values inherent in their companies also
bolster our enthusiasm. For example, Time Warner and Comcast are adding
Adelphia's former subscribers, Viacom is splitting apart to highlight the sum
of its parts, and Liberty Media is spinning off the highly profitable Discovery
Channel.
FORTUNE BRANDS, HEWLETT-PACKARD AND BAXTER WERE POSITIVE
Conglomerate Fortune Brands' spirits business was bolstered by the announcement
of its purchase, with Pernod, of several high-quality liquor brands. Fortune,
which also makes a broad range of home and hardware products, has benefited
from the strong housing market.
We bought Hewlett-Packard (HP) when shares slumped during a sudden management
change that followed a series of failed initiatives. The firm reported better
results than expected during the second quarter of 2005, and the stock has
performed well since the appointment of a new CEO. HP's many assets include a
dominant position in printers.
The turnaround at Baxter International continues to go well, as this medical
products and services company reported solid quarterly results, with improved
margins and the formation of a new management team under its new CEO.
CONDITIONS APPEAR TO FAVOR EQUITIES
We believe business is moving ahead. The economy is expanding at a reasonable
pace, corporate profits are increasing faster than many expected, and interest
rates are still relatively low -- not an unattractive scenario for equity
investors. Moreover, there are few alternatives at the moment. Bond prices are
vulnerable to higher interest rates and real estate prices are nearing
extremes. The market may continue to mark time, but if the economy continues to
move forward, as we think it will, stock prices should follow.
7
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Investment Results through June 30, 2005
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the
results. It is not possible to invest directly in an index. Investors would
incur transaction costs and other expenses if they purchased the securities
necessary to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
June 30, 1995 through June 30, 2005
Net Asset Maximum Sales Russell 1000
Value/1/ Charge/2/ Value Index/4/
---------- --------------- -------------------
6/30/1995 $10,000 $ 9,425 $10,000
7/31/1995 10,350 9,755 10,348
8/31/1995 10,446 9,846 10,494
9/30/1995 10,905 10,278 10,874
10/31/1995 10,797 10,176 10,766
11/30/1995 11,158 10,516 11,311
12/31/1995 11,403 10,747 11,595
1/31/1996 11,760 11,084 11,957
2/29/1996 11,823 11,144 12,047
3/31/1996 11,883 11,199 12,252
4/30/1996 11,922 11,236 12,299
5/31/1996 12,104 11,408 12,453
6/30/1996 11,845 11,164 12,463
7/31/1996 11,256 10,609 11,992
8/31/1996 11,527 10,864 12,335
9/30/1996 12,117 11,420 12,825
10/31/1996 12,490 11,772 13,321
11/30/1996 13,600 12,818 14,287
12/31/1996 13,365 12,596 14,105
1/31/1997 14,029 13,223 14,789
2/28/1997 14,203 13,386 15,006
3/31/1997 13,585 12,804 14,466
4/30/1997 14,300 13,478 15,074
5/31/1997 15,217 14,342 15,916
6/30/1997 15,962 15,044 16,599
7/31/1997 16,968 15,992 17,848
8/31/1997 16,484 15,536 17,212
9/30/1997 17,501 16,495 18,252
10/31/1997 16,735 15,772 17,742
11/30/1997 17,456 16,452 18,527
12/31/1997 17,833 16,808 19,068
1/31/1998 17,938 16,907 18,798
2/28/1998 19,379 18,264 20,063
3/31/1998 20,472 19,295 21,290
4/30/1998 20,576 19,393 21,433
5/31/1998 20,296 19,129 21,115
6/30/1998 21,145 19,929 21,386
7/31/1998 20,819 19,622 21,008
8/31/1998 17,671 16,655 17,882
9/30/1998 18,551 17,484 18,908
10/31/1998 19,891 18,747 20,373
11/30/1998 20,794 19,598 21,322
12/31/1998 22,099 20,829 22,048
1/31/1999 22,740 21,433 22,224
2/28/1999 22,195 20,918 21,910
3/31/1999 22,501 21,207 22,363
4/30/1999 23,835 22,465 24,452
5/31/1999 23,728 22,363 24,183
6/30/1999 24,468 23,061 24,886
7/31/1999 23,746 22,381 24,157
8/31/1999 23,426 22,079 23,260
9/30/1999 22,477 21,185 22,448
10/31/1999 23,378 22,034 23,740
11/30/1999 23,446 22,098 23,554
12/31/1999 24,192 22,801 23,668
1/31/2000 22,929 21,611 22,896
2/29/2000 22,156 20,882 21,195
3/31/2000 23,955 22,578 23,781
4/30/2000 23,560 22,205 23,504
5/31/2000 22,834 21,521 23,752
6/30/2000 23,134 21,803 22,666
7/31/2000 22,992 21,670 22,950
8/31/2000 24,535 23,124 24,227
9/30/2000 23,414 22,068 24,449
10/31/2000 23,480 22,129 25,049
11/30/2000 22,080 20,811 24,120
12/31/2000 22,422 21,133 25,328
1/31/2001 22,438 21,148 25,425
2/28/2001 21,105 19,892 24,718
3/31/2001 19,919 18,774 23,845
4/30/2001 21,545 20,306 25,014
5/31/2001 21,577 20,336 25,576
6/30/2001 20,828 19,631 25,009
7/31/2001 20,114 18,957 24,956
8/31/2001 18,879 17,793 23,956
9/30/2001 17,302 16,307 22,270
10/31/2001 17,920 16,890 22,078
11/30/2001 19,189 18,085 23,362
12/31/2001 19,156 18,055 23,912
1/31/2002 19,058 17,963 23,728
2/28/2002 18,553 17,487 23,766
3/31/2002 19,058 17,962 24,890
4/30/2002 18,521 17,456 24,037
5/31/2002 18,439 17,379 24,157
6/30/2002 17,333 16,336 22,770
7/31/2002 16,227 15,294 20,654
8/31/2002 16,633 15,676 20,809
9/30/2002 14,389 13,562 18,496
10/31/2002 14,926 14,067 19,866
11/30/2002 15,933 15,017 21,117
12/31/2002 15,315 14,434 20,200
1/31/2003 14,941 14,082 19,711
2/28/2003 14,469 13,637 19,186
3/31/2003 14,648 13,806 19,218
4/30/2003 16,030 15,108 20,909
5/31/2003 17,234 16,243 22,259
6/30/2003 17,608 16,595 22,537
7/31/2003 17,446 16,443 22,873
8/31/2003 18,032 16,995 23,229
9/30/2003 17,642 16,628 23,003
10/31/2003 18,472 17,409 24,410
11/30/2003 19,122 18,022 24,741
12/31/2003 19,919 18,774 26,266
1/31/2004 20,067 18,913 26,728
2/29/2004 20,538 19,357 27,301
3/31/2004 20,230 19,067 27,062
4/30/2004 20,230 19,067 26,401
5/31/2004 20,246 19,082 26,670
6/30/2004 20,540 19,359 27,300
7/31/2004 19,792 18,654 26,916
8/31/2004 19,889 18,745 27,298
9/30/2004 19,889 18,745 27,722
10/31/2004 20,313 19,145 28,182
11/30/2004 20,865 19,665 29,607
12/31/2004 21,744 20,493 30,599
1/31/2005 21,320 20,094 30,056
2/28/2005 21,239 20,017 31,052
3/31/2005 20,980 19,773 30,626
4/30/2005 20,556 19,374 30,077
5/31/2005 21,059 19,848 30,801
6/30/2005 20,898 19,697 31,138
Average Annual Total Returns -- June 30, 2005
SINCE
6 MONTHS 1 YEAR/7/ 5 YEARS/7/ 10 YEARS/7/ INCEPTION/7/
CLASS A (Inception 5/6/31)
Net Asset Value/1/ -3.86% 1.78% -2.01% 7.65% --
With Maximum Sales Charge/2/ -9.41 -4.07 -3.16 7.01 --
CLASS B (Inception 9/13/93)
Net Asset Value/1/ -4.24 1.04 -2.73 6.86 --
With CDSC/3/ -9.03 -3.96 -3.11 6.86 --
CLASS C (Inception 5/1/95)
Net Asset Value/1/ -4.17 1.13 -2.72 6.86 --
With CDSC/3/ -5.13 0.13 -2.72 6.86 --
CLASS Y (Inception 11/18/98)
Net Asset Value/1/ -3.75 2.12 -1.52 -- 0.77%
- --------------------------------------------------------------------------------------------
SINCE CLASS Y
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/
Russell 1000 Value Index/4/ 1.76% 14.06% 6.56% 12.03% 5.92%
Morningstar Large Blend Fund Avg./5/ -0.60 6.35 -1.79 8.61 2.29
All returns represents past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those shown. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to
certain institutional investors only.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/31/04
- ----------------------------------------------------
Common Stocks 98.5 97.3
- ----------------------------------------------------
Short Term Investments
and Other 1.5 2.7
- ----------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
- ----------------------------------------------------
Washington Mutual, Inc. 4.1 4.0
- ----------------------------------------------------
Liberty Media Corp., Class A 4.1 4.0
- ----------------------------------------------------
McDonald's Corp. 4.0 3.6
- ----------------------------------------------------
JPMorgan Chase & Co. 3.5 3.0
- ----------------------------------------------------
Time Warner, Inc. 3.3 3.6
- ----------------------------------------------------
Home Depot, Inc. 3.3 3.5
- ----------------------------------------------------
Citigroup, Inc. 3.0 2.4
- ----------------------------------------------------
Hewlett-Packard Co. 3.0 --
- ----------------------------------------------------
Baxter International, Inc. 2.9 2.1
- ----------------------------------------------------
Viacom, Inc., Class B 2.9 2.5
- ----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/05 12/31/04
- ----------------------------------------------------
Media 16.6 17.8
- ----------------------------------------------------
Retail 15.4 15.5
- ----------------------------------------------------
Diversified Financial Services 11.1 8.2
- ----------------------------------------------------
Beverages 5.3 6.7
- ----------------------------------------------------
Health Care -- Products 4.9 5.9
- ----------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes to Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/Russell 1000 Value Index is an unmanaged index of the largest 1,000 U.S.
companies within the Russell 3000 with lower price-to-book ratios and lower
forecasted growth values.
/5/Morningstar Large Blend Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
/6/The since-inception performance comparison for Class Y shares is calculated
from 11/30/98.
/7/Fund performance has been increased by expense waivers, without which
performance would have been lower.
8
IXIS U.S. DIVERSIFIED PORTFOLIO
PORTFOLIO PROFILE
Objective:
Seeks long-term growth of capital
- --------------------------------------------------------------------------------
Strategy:
Features growth and value investments through a diversified portfolio of
complementary equity investment disciplines provided by specialized money
managers
- --------------------------------------------------------------------------------
Inception Date:
July 7, 1994
- --------------------------------------------------------------------------------
Subadvisors:
Harris Associates, L.P.
Loomis, Sayles & Company, L.P.
Mercury Advisors
- --------------------------------------------------------------------------------
Symbols:
Class A NEFSX
Class B NESBX
Class C NECCX
- --------------------------------------------------------------------------------
What You Should Know:
Growth stocks can be more sensitive to market movements because their values
are based on future expectations. Value stocks may fall out of favor with
investors and underperform the overall market. Small cap stocks carry special
risks, including narrower markets, limited financial and management resources,
less liquidity and greater volatility.
Management Discussion
- --------------------------------------------------------------------------------
Faced with rising oil prices and the Federal Reserve Board's efforts to raise
interest rates, U.S. stocks made only modest gains during the first half of
2005. For the six months ended June 30, 2005, IXIS U.S. Diversified Portfolio
returned -0.37%, based on the net asset value of class A shares, slightly ahead
of the -0.81% return on the Standard & Poor's 500 Index. However, the fund's
results lagged the 3.85% return on the Standard & Poor's Midcap 400 Index and
the 2.19% return on the Wilshire 4500 Index. It also fell short of the 0.05%
average return of the funds in Morningstar's Mid-Cap Growth category.
The fund's four segments provide exposure to growth and value stocks across the
capitalization spectrum. Harris Associates' large-cap value segment favored
undervalued mid- to large-cap companies. Loomis Sayles manages two segments.
Loomis' mid-cap growth segment focused on companies with a combination of
earnings growth, attractive relative value and strong price trends, while their
small-cap value segment emphasized companies whose appreciation potential had
not been recognized by the market, in the managers' opinion. Mercury Advisors'
segment sought large-cap growth stocks offering the potential for above-average
earnings growth and return on equity.
HARRIS ASSOCIATES' LARGE-CAP VALUE SEGMENT FOCUSED ON INDIVIDUAL STOCKS
This segment had a relatively small position in energy, which hurt results
during the period, while its media-related stocks, for which Harris Associates
sees attractive business prospects, received only lukewarm attention from
investors. One of the segment's energy holdings, Burlington Resources,
benefited from lower exploration expenses and the rise in the price of oil and
natural gas. Consumer products company Fortune Brands advanced on plans to
spin-off its office products business and on the potential purchase of several
high-quality liquor brands. A new CEO and better-than-expected earnings pushed
Hewlett-Packard to a top-performing position. However, weak revenue growth
depressed the price of Xerox Corporation stock, although Harris Associates
believes the company's strong balance sheet, cash flow, and record of product
innovation augur well for the future. Time Warner gave back some of its 2004
gains, depressing the stock, but Harris continues to like the company's stable
of assets and strong cash flow. While McDonald's stock slumped toward the end
of the period, Harris believes its fundamentals remain attractive.
LOOMIS SAYLES' MID-CAP GROWTH SEGMENT BALANCED CYCLICAL AND NON-CYCLICAL AREAS
Positives for this segment included producer durables, consumer discretionary,
and energy. Among producer durables, stocks of homebuilders rose on strong
earnings gains, including Toll Brothers, which builds high-end homes. Specialty
retail stocks were leaders, including Chico's FAS, a women's apparel company.
Google, the global Internet search company, has been confounding critics with
its exceptional earnings growth since its initial offering last year. The
segment's large energy position was a positive. However, relatively few of the
segment's technology holdings were big contributors during the period, and
several financial services selections were weak. Individual stocks that proved
disappointing included Harman International, a manufacturer of audio systems
for automobiles, which weakened as competition in "infotainment" systems heated
up. After a great run in 2004, shares of XM Satellite Radio fell on profit
taking. Profit taking and concerns about the sustainability of its
extraordinary sales numbers also drove down Starbucks' stock price. Loomis has
been gradually moving the segment into less cyclical areas, like healthcare and
consumer staples.
LOOMIS SAYLES' SMALL-CAP SEGMENT FOCUSED ON QUALITY COMPANIES WITH STRONG CASH
FLOWS
Utilities, healthcare, and consumer staples were the strongest sectors during
the period. The best performers among individual stocks included Triad
Hospitals, which advanced on superior operating results; Trammell Crow Company,
a real estate management and development company benefiting from the attractive
commercial leasing and development environment; and UGI Corporation, a natural
gas utility with operations in Europe, aided by the good performance of a
9
IXIS U.S. DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
recent acquisition in France. Weakest contributors during the period included
Commercial Capital Bancorp. Loomis sold its holdings in this California-based
savings and loan, once a strong performer, when the stock fell as net interest
margins declined. Avocent Corporation, which makes switching systems and remote
access devices, fell after a disappointing earnings forecast; Loomis trimmed
the position but decided to hold the stock after meeting with management.
Bluelinx Holdings, a building products distributor, also declined in value but
it remains in the segment because of its dividend yield and attractive
valuation.
MERCURY'S LARGE-CAP GROWTH SEGMENT PURSUED OPPORTUNITIES IN A VARIETY OF SECTORS
While certain individual energy stocks contributed to results, the Mercury
segment's relatively small position in energy and utilities -- two of the best
performing areas of the market -- held back performance. Selections in the
financial and consumer staples areas also proved disappointing. Individual
holdings that did poorly included Doral Financial, a diversified Puerto Rican
financial company whose presence in the segment was brief but harmful; Wynn
Resorts, a hotel and casino company in a highly competitive marketplace; and 3M
Company, a diversified company with a broad product reach, which was obliged to
narrow its full-year earnings estimates. Stock selection in the healthcare,
information technology, consumer discretionary, and materials sectors had a
positive impact on the segment. The best performers in this segment included
Alcon, which makes medical instruments and supplies to treat eye diseases;
Gilead Sciences, a biotechnology company; Transocean Inc., an offshore drilling
company; and Corning, an information technology firm.
10
IXIS U.S. DIVERSIFIED PORTFOLIO
Investment Results through June 30, 2005
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the
results. It is not possible to invest directly in an index. Investors would
incur transaction costs and other expenses if they purchased the securities
necessary to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
June 30, 1995 through June 30, 2005
Maximum S&P Midcap
Net Asset Sales 400 S&P 500 Wilshire 4500
Value/1/ Charge/2/ Index/4/ Index/5/ Index/6/
---------- ------------ ---------- --------- -------------
6/30/1995 $10,000 $ 9,425 $10,000 $10,000 $10,000
7/31/1995 10,727 10,110 10,522 10,332 10,588
8/31/1995 10,950 10,320 10,716 10,358 10,835
9/30/1995 11,291 10,641 10,976 10,795 11,128
10/31/1995 11,023 10,389 10,694 10,756 10,830
11/30/1995 11,504 10,842 11,161 11,228 11,290
12/31/1995 11,666 10,995 11,133 11,445 11,433
1/31/1996 11,798 11,119 11,294 11,834 11,550
2/29/1996 12,257 11,552 11,678 11,944 11,926
3/31/1996 12,465 11,748 11,818 12,059 12,108
4/30/1996 13,132 12,377 12,179 12,237 12,671
5/31/1996 13,542 12,763 12,344 12,552 13,078
6/30/1996 13,138 12,383 12,159 12,600 12,667
7/31/1996 12,130 11,433 11,336 12,043 11,716
8/31/1996 12,721 11,990 11,990 12,297 12,349
9/30/1996 13,428 12,656 12,513 12,990 12,938
10/31/1996 13,316 12,550 12,549 13,348 12,746
11/30/1996 13,973 13,170 13,256 14,357 13,284
12/31/1996 13,877 13,079 13,271 14,072 13,404
1/31/1997 14,496 13,662 13,769 14,951 13,837
2/28/1997 14,015 13,209 13,656 15,069 13,545
3/31/1997 13,427 12,655 13,073 14,450 12,838
4/30/1997 13,687 12,900 13,412 15,312 12,870
5/31/1997 14,717 13,871 14,585 16,244 14,150
6/30/1997 15,321 14,440 14,995 16,972 14,821
7/31/1997 16,549 15,598 16,480 18,323 15,841
8/31/1997 16,076 15,152 16,460 17,296 15,985
9/30/1997 16,854 15,885 17,406 18,243 17,093
10/31/1997 16,310 15,372 16,648 17,634 16,441
11/30/1997 16,435 15,490 16,895 18,450 16,446
12/31/1997 16,677 15,718 17,551 18,767 16,849
1/31/1998 16,750 15,787 17,217 18,975 16,608
2/28/1998 17,980 16,946 18,643 20,343 17,879
3/31/1998 18,731 17,654 19,484 21,385 18,803
4/30/1998 18,943 17,854 19,839 21,600 19,042
5/31/1998 18,420 17,361 18,947 21,229 18,153
6/30/1998 19,008 17,915 19,066 22,091 18,436
7/31/1998 18,439 17,379 18,327 21,856 17,392
8/31/1998 15,382 14,498 14,915 18,696 14,022
9/30/1998 16,500 15,552 16,308 19,894 15,034
10/31/1998 17,514 16,506 17,765 21,512 15,888
11/30/1998 18,387 17,330 18,652 22,816 16,876
12/31/1998 19,888 18,744 20,905 24,131 18,304
1/31/1999 20,823 19,625 20,091 25,140 18,599
2/28/1999 20,206 19,044 19,039 24,358 17,587
3/31/1999 21,419 20,187 19,571 25,333 18,273
4/30/1999 22,273 20,993 21,115 26,314 19,729
5/31/1999 21,656 20,411 21,206 25,693 19,558
6/30/1999 23,018 21,695 22,342 27,119 20,379
7/31/1999 22,254 20,975 21,867 26,272 19,762
8/31/1999 22,165 20,891 21,118 26,142 19,269
9/30/1999 22,245 20,966 20,466 25,425 19,121
10/31/1999 23,044 21,719 21,509 27,034 20,098
11/30/1999 25,005 23,567 22,637 27,584 21,794
12/31/1999 29,128 27,453 23,983 29,208 24,798
1/31/2000 28,770 27,115 23,307 27,741 24,500
2/29/2000 32,300 30,442 24,939 27,216 28,310
3/31/2000 31,967 30,129 27,026 29,878 27,262
4/30/2000 29,505 27,809 26,082 28,979 23,983
5/31/2000 27,080 25,523 25,757 28,385 22,213
6/30/2000 27,603 26,016 26,135 29,084 24,881
7/31/2000 26,891 25,344 26,548 28,630 24,174
8/31/2000 28,999 27,331 29,512 30,408 26,872
9/30/2000 28,146 26,528 29,310 28,803 25,778
10/31/2000 26,812 25,270 28,316 28,681 23,672
11/30/2000 23,571 22,215 26,179 26,420 19,643
12/31/2000 24,181 22,791 28,181 26,549 20,886
1/31/2001 24,870 23,440 28,809 27,491 22,023
2/28/2001 22,376 21,089 27,165 24,984 19,347
3/31/2001 20,861 19,661 25,145 23,401 17,573
4/30/2001 22,692 21,388 27,919 25,220 19,432
5/31/2001 22,913 21,595 28,569 25,389 19,893
6/30/2001 22,784 21,474 28,454 24,771 20,054
7/31/2001 22,386 21,098 28,030 24,527 19,121
8/31/2001 21,434 20,202 27,113 22,992 18,192
9/30/2001 19,160 18,058 23,741 21,135 15,852
10/31/2001 19,643 18,513 24,791 21,538 16,683
11/30/2001 21,256 20,033 26,635 23,190 17,979
12/31/2001 21,917 20,656 28,011 23,393 18,943
1/31/2002 21,724 20,475 27,866 23,052 18,574
2/28/2002 21,311 20,086 27,900 22,607 18,048
3/31/2002 22,359 21,074 29,894 23,458 19,272
4/30/2002 21,767 20,515 29,754 22,036 19,083
5/31/2002 21,477 20,242 29,253 21,873 18,661
6/30/2002 19,740 18,605 27,112 20,315 17,383
7/31/2002 18,003 16,968 24,483 18,732 15,691
8/31/2002 18,141 17,098 24,609 18,854 15,782
9/30/2002 16,322 15,383 22,626 16,805 14,719
10/31/2002 17,079 16,097 23,606 18,285 15,203
11/30/2002 18,085 17,045 24,972 19,361 16,254
12/31/2002 17,134 16,149 23,946 18,223 15,569
1/31/2003 16,693 15,734 23,246 17,746 15,233
2/28/2003 16,515 15,565 22,693 17,480 14,845
3/31/2003 16,639 15,682 22,884 17,649 15,064
4/30/2003 17,935 16,904 24,545 19,103 16,319
5/31/2003 19,258 18,151 26,579 20,110 17,869
6/30/2003 19,520 18,398 26,918 20,366 18,295
7/31/2003 20,016 18,865 27,873 20,725 19,149
8/31/2003 20,995 19,788 29,138 21,130 19,951
9/30/2003 20,472 19,295 28,692 20,905 19,704
10/31/2003 21,961 20,698 30,861 22,088 21,196
11/30/2003 22,512 21,217 31,936 22,282 21,920
12/31/2003 22,897 21,580 32,475 23,451 22,376
1/31/2004 23,435 22,087 33,179 23,881 23,177
2/29/2004 23,641 22,282 33,976 24,213 23,583
3/31/2004 23,695 22,333 34,120 23,848 23,682
4/30/2004 23,212 21,877 33,000 23,473 22,730
5/31/2004 23,569 22,214 33,685 23,795 23,076
6/30/2004 24,175 22,785 34,451 24,258 23,678
7/31/2004 22,797 21,486 32,844 23,455 22,359
8/31/2004 22,521 21,226 32,758 23,550 22,368
9/30/2004 23,238 21,901 33,728 23,805 23,281
10/31/2004 23,665 22,304 34,267 24,169 23,804
11/30/2004 24,837 23,408 36,308 25,147 25,423
12/31/2004 25,842 24,356 37,828 26,003 26,532
1/31/2005 25,127 23,682 36,863 25,369 25,661
2/28/2005 25,637 24,163 38,099 25,903 26,126
3/31/2005 25,168 23,720 37,678 25,444 25,663
4/30/2005 24,367 22,966 36,213 24,961 24,796
5/31/2005 25,388 23,928 38,394 25,756 26,266
6/30/2005 25,754 24,275 39,284 25,792 27,112
Average Annual Total Returns -- June 30, 2005
6 MONTHS 1 YEAR 5 YEARS 10 YEARS
CLASS A (Inception 7/7/94)
Net Asset Value/1/ -0.37% 6.50% -1.38% 9.92%
With Maximum Sales Charge/2/ -6.08 0.38 -2.54 9.27
CLASS B (Inception 7/7/94)
Net Asset Value/1/ -0.71 5.68 -2.12 9.10
With CDSC/3/ -5.68 0.68 -2.46 9.10
CLASS C (Inception 7/7/94)
Net Asset Value/1/ -0.77 5.68 -2.13 9.10
With CDSC/3/ -1.76 4.68 -2.13 9.10
CLASS Y (Inception 11/15/94)
Net Asset Value/1/ -0.15 7.03 -0.82 10.41
- ------------------------------------------------------------------------
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
S&P Midcap 400 Index/4/ 3.85% 14.03% 8.49% 14.66%
S&P 500 Index/5/ -0.81 6.32 -2.37 9.94
Wilshire 4500 Index/6/ 2.19 14.50 1.73 10.49
Morningstar Mid-Cap Growth Fund Avg./7/ 0.05 7.75 -4.72 8.56
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those shown. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to
certain institutional investors only.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/31/04
- ----------------------------------------------------
Common Stocks 99.3 98.3
- ----------------------------------------------------
Short Term Investments
and Other 0.7 1.7
- ----------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
- ----------------------------------------------------
General Electric Co. 1.3 1.3
- ----------------------------------------------------
Johnson & Johnson 1.3 0.6
- ----------------------------------------------------
Liberty Media Corp., Class A 1.1 1.1
- ----------------------------------------------------
Washington Mutual, Inc. 1.1 1.1
- ----------------------------------------------------
NRG Energy, Inc. 1.1 0.9
- ----------------------------------------------------
McDonald's Corp. 1.1 1.0
- ----------------------------------------------------
Citigroup, Inc. 1.0 0.7
- ----------------------------------------------------
Assurant, Inc. 1.0 0.8
- ----------------------------------------------------
Certegy, Inc. 0.9 0.6
- ----------------------------------------------------
JPMorgan Chase & Co. 0.9 0.8
- ----------------------------------------------------
% of Net Assets as of
FIVE LARGEST HOLDINGS 6/30/05 12/31/04
- ----------------------------------------------------
Retail 7.6 7.8
- ----------------------------------------------------
Media 5.5 6.4
- ----------------------------------------------------
Health Care -- Products 5.2 5.4
- ----------------------------------------------------
Diversified Financial Services 4.6 4.1
- ----------------------------------------------------
Software 3.8 5.2
- ----------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes to Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/S&P Midcap 400 Index is an unmanaged index of U.S. mid-sized companies.
/5/S&P 500 Index is an unmanaged index of U.S. common stocks.
/6/Wilshire 4500 Index is an unmanaged index of 4,500 mid- and small-sized
companies.
/7/Morningstar Mid-Cap Growth Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
11
IXIS VALUE FUND
PORTFOLIO PROFILE
Objective:
Seeks a reasonable, long-term investment return from a combination of market
appreciation and dividend income from equity securities
- --------------------------------------------------------------------------------
Strategy:
Features value investments through a diversified portfolio of complementary
equity investment disciplines provided by specialized money managers
- --------------------------------------------------------------------------------
Inception Date:
June 5, 1970
- --------------------------------------------------------------------------------
Subadvisors:
Harris Associates, L.P.
Loomis, Sayles & Company, L.P.
Vaughan Nelson Investment Management, L.P.
Westpeak Global Advisors, L.P.
- --------------------------------------------------------------------------------
Symbols:
Class A NEFVX
Class B NEVBX
Class C NECVX
- --------------------------------------------------------------------------------
What You Should Know:
Value stocks may fall out of favor with investors and underperform the overall
market. Small cap stocks carry special risks, including narrower markets,
limited financial and management resources, less liquidity and greater
volatility.
Management Discussion
- --------------------------------------------------------------------------------
Mixed economic data, rising oil prices and interest rates, and concerns about
the U.S. trade and budget deficits weighed on the market during the first half
of 2005. Value stocks narrowly outperformed growth stocks. For the six months
ended June 30, 2005, the total return on IXIS Value Fund was 1.52% based on the
net asset value of class A shares and $0.24 in reinvested capital gains.
Although the fund slightly lagged its benchmark, the Russell 1000 Value Index,
which returned 1.76%, its results were above the -0.60% average return for the
funds in Morningstar's Large Blend category.
The fund's four segments invest primarily in value stocks. Harris Associates
focuses on companies with positive cash flows and favorable growth potential
that are trading at discounts to their true business value. Loomis Sayles
focuses on companies with below-average valuations and above-average earnings
prospects. Vaughan Nelson emphasizes established but undervalued companies that
they believe should rebound. Westpeak invests across the capitalization
spectrum and employs proprietary research to select stocks based on their value
and growth potential, while seeking to manage risk.
HARRIS ASSOCIATES' MID-CAP VALUE SEGMENT LOOKED FOR THE BASICS
The manager's stock-by-stock investment process led to an emphasis on
consumer-oriented areas. The segment's exposure to energy, financials,
utilities, and materials was less than the benchmark, which impeded relative
performance. Media stocks were also weak even though, in the opinion of Harris
Associates, many companies have attractive business prospects. Cablevision
Systems, Yum! Brands and Baxter International were the top three performers.
Cablevision stock rallied on plans to privatize the company. Yum! Brands rose
on strong performance from its KFC operations in China. Baxter International, a
healthcare company, is a turnaround story. Disappointments included Time
Warner, McDonald's, and Liberty Media Corporation. Time Warner gave back some
of its 2004 gains on weak revenues from two of its divisions, but Harris
Associates believes the stock price does not adequately reflect the company's
attractive stable of assets or cash flow. Although slow revenue growth in
Europe hurt McDonald's, Harris still likes the company's long-term prospects.
Liberty Media gave back some of its impressive 2004 gains. However, Harris
believes the media group represents good value.
LOOMIS SAYLES' LARGE-CAP SEGMENT SOUGHT VALUE AND WISE USE OF CASH FLOW
Loomis Sayles added to each of its top-performing sectors, which included
energy and healthcare. The high-yielding utilities sector was strong because of
weakness in bond yields. Favored companies were those that deployed cash flow
wisely. These included Universal Health Services, which rebounded after
forecasting an earnings shortfall, and retailer JC Penney, which benefited from
gains in market share. Exxon Mobil Corporation outperformed on good earnings
growth. Stocks in telecommunications services, financials, and industrials
struggled. The poorest performers included Avaya, Inc., a designer of
communications networks, which declined on lackluster sales; Tyco
International, which lost ground because of concerns that growth rates for
industrials might slow later in 2005; and McDonald's, which experienced
disappointing revenue growth in Europe.
VAUGHAN NELSON'S LARGE-CAP SEGMENT EMPHASIZED ATTRACTIVE ABSOLUTE RETURNS
This segment's positions in information technology, consumer discretionary,
energy and consumer staples were among the biggest contributors. Triad
Hospitals was one of the segment's top performers, as the company reduced its
bad debt expenses. Pioneer Natural Resources, an oil and gas exploration and
production company, and Kerr-McGee Corporation, a global energy company, were
also among the best performing stocks. Both companies benefited from positive
business fundamentals in the energy industry; both were sold during the period
because they appeared overvalued. Individual stocks that detracted from results
included International Business Machines (IBM), which missed first quarter
earnings estimates and was sold from this segment. Regis Corporation, which
owns, operates and franchises hair styling salons and schools in the United
States and
12
IXIS VALUE FUND
Management Discussion
- --------------------------------------------------------------------------------
Europe, declined on reports of slowing growth and rising expenses. Regis is
raising prices and a reduced position in the stock remains in the segment. This
segment sold its shares of American International Group (AIG) when it became
the focus of several investigations.
WESTPEAK'S ALL-CAP SEGMENT PURSUED ATTRACTIVELY PRICED STOCKS WITH PRICE
MOMENTUM
This segment did well by focusing on stocks with positive price momentum and
relatively low price/earnings ratios. A shift toward smaller companies and away
from higher-yielding stocks was also positive. Investments in the construction,
real estate, energy reserves, and electronic equipment industries produced good
results. The segment's top three performers were Energizer Holdings, an
industrial parts company best known for its batteries, Federated Department
Stores, and Tesoro Corporation, a refiner of petroleum products. Energizer
stock rose when earnings exceeded estimates; Federated made steady gains on
improving sales and profits; and Tesoro benefited from rising oil prices.
Holdings in the mining and metals industry posted the biggest declines.
Disappointing stocks included Steel Dynamics, which declined on weakening
demand for steel. International Business Machines (IBM) was hurt by
disappointing first-quarter earnings; and NL Industries, a chemical company,
slumped along with industrial companies in general. This segment sold its
shares of Steel Dynamics and NL Industries, but retained a reduced position in
IBM stock.
13
IXIS VALUE FUND
Investment Results through June 30, 2005
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the
results. It is not possible to invest directly in an index. Investors would
incur transaction costs and other expenses if they purchased the securities
necessary to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
June 30, 1995 through June30, 2005
Maximum Russell 1000
Net Asset Sales Value
Value/1/ Charge/2/ Index/4/
---------- ---------- ------------
6/30/1995 $10,000 $ 9,425 $10,000
7/31/1995 10,324 9,730 10,348
8/31/1995 10,324 9,730 10,494
9/30/1995 10,639 10,027 10,874
10/31/1995 10,379 9,782 10,766
11/30/1995 10,948 10,319 11,311
12/31/1995 11,121 10,482 11,595
1/31/1996 11,501 10,840 11,957
2/29/1996 11,653 10,983 12,047
3/31/1996 11,692 11,019 12,252
4/30/1996 11,831 11,151 12,299
5/31/1996 12,033 11,341 12,453
6/30/1996 12,033 11,341 12,463
7/31/1996 11,641 10,971 11,992
8/31/1996 11,983 11,294 12,335
9/30/1996 12,663 11,934 12,825
10/31/1996 13,055 12,304 13,321
11/30/1996 14,077 13,268 14,287
12/31/1996 14,048 13,240 14,105
1/31/1997 14,399 13,571 14,789
2/28/1997 14,560 13,723 15,006
3/31/1997 14,004 13,199 14,466
4/30/1997 14,267 13,447 15,074
5/31/1997 15,072 14,205 15,916
6/30/1997 15,862 14,950 16,599
7/31/1997 17,061 16,080 17,848
8/31/1997 16,402 15,459 17,212
9/30/1997 17,096 16,113 18,252
10/31/1997 16,359 15,419 17,742
11/30/1997 16,744 15,781 18,527
12/31/1997 16,990 16,013 19,068
1/31/1998 16,956 15,981 18,798
2/28/1998 18,095 17,055 20,063
3/31/1998 18,815 17,734 21,290
4/30/1998 18,799 17,718 21,433
5/31/1998 18,263 17,213 21,115
6/30/1998 18,246 17,197 21,386
7/31/1998 17,626 16,612 21,008
8/31/1998 14,644 13,802 17,882
9/30/1998 15,478 14,588 18,908
10/31/1998 16,777 15,812 20,373
11/30/1998 17,649 16,635 21,322
12/31/1998 18,189 17,144 22,048
1/31/1999 17,720 16,701 22,224
2/28/1999 17,401 16,401 21,910
3/31/1999 17,476 16,471 22,363
4/30/1999 18,829 17,746 24,452
5/31/1999 18,659 17,586 24,183
6/30/1999 19,148 18,047 24,886
7/31/1999 18,284 17,233 24,157
8/31/1999 17,495 16,489 23,260
9/30/1999 16,485 15,537 22,448
10/31/1999 17,291 16,297 23,740
11/30/1999 17,042 16,062 23,554
12/31/1999 16,932 15,958 23,668
1/31/2000 16,408 15,465 22,896
2/29/2000 14,999 14,136 21,195
3/31/2000 16,544 15,592 23,781
4/30/2000 16,499 15,550 23,504
5/31/2000 16,408 15,465 23,752
6/30/2000 16,023 15,101 22,666
7/31/2000 16,068 15,144 22,950
8/31/2000 17,048 16,067 24,227
9/30/2000 16,753 15,790 24,449
10/31/2000 17,207 16,217 25,049
11/30/2000 16,661 15,703 24,120
12/31/2000 17,274 16,281 25,328
1/31/2001 17,820 16,796 25,425
2/28/2001 17,343 16,346 24,718
3/31/2001 16,751 15,788 23,845
4/30/2001 17,797 16,773 25,014
5/31/2001 18,274 17,223 25,576
6/30/2001 17,956 16,923 25,009
7/31/2001 17,796 16,773 24,956
8/31/2001 17,024 16,045 23,956
9/30/2001 15,592 14,695 22,270
10/31/2001 16,069 15,145 22,078
11/30/2001 17,138 16,152 23,362
12/31/2001 17,501 16,495 23,912
1/31/2002 17,251 16,259 23,728
2/28/2002 17,069 16,088 23,766
3/31/2002 17,819 16,794 24,890
4/30/2002 17,274 16,280 24,037
5/31/2002 17,274 16,280 24,157
6/30/2002 15,933 15,017 22,770
7/31/2002 14,547 13,710 20,654
8/31/2002 14,774 13,924 20,809
9/30/2002 12,979 12,233 18,496
10/31/2002 13,820 13,025 19,866
11/30/2002 14,934 14,075 21,117
12/31/2002 14,093 13,283 20,200
1/31/2003 13,752 12,961 19,711
2/28/2003 13,434 12,662 19,186
3/31/2003 13,457 12,683 19,218
4/30/2003 14,707 13,862 20,909
5/31/2003 15,775 14,868 22,259
6/30/2003 16,070 15,146 22,537
7/31/2003 16,252 15,317 22,873
8/31/2003 16,661 15,703 23,229
9/30/2003 16,298 15,361 23,003
10/31/2003 17,367 16,368 24,410
11/30/2003 17,800 16,776 24,741
12/31/2003 18,549 17,482 26,266
1/31/2004 18,753 17,675 26,728
2/29/2004 19,162 18,060 27,301
3/31/2004 19,049 17,953 27,062
4/30/2004 18,753 17,675 26,401
5/31/2004 18,980 17,889 26,670
6/30/2004 19,345 18,232 27,300
7/31/2004 18,776 17,696 26,916
8/31/2004 18,731 17,654 27,298
9/30/2004 18,958 17,868 27,722
10/31/2004 19,208 18,103 28,182
11/30/2004 20,095 18,940 29,607
12/31/2004 20,658 19,470 30,599
1/31/2005 20,356 19,186 30,056
2/28/2005 20,865 19,665 31,052
3/31/2005 20,588 19,404 30,626
4/30/2005 20,124 18,967 30,077
5/31/2005 20,726 19,534 30,801
6/30/2005 20,969 19,759 31,138
Average Annual Total Returns -- June 30, 2005
6 MONTHS 1 YEAR 5 YEARS 10 YEARS
CLASS A (Inception 6/5/70)
Net Asset Value/1/ 1.52% 8.41% 5.53% 7.69%
With Maximum Sales Charge/2/ -4.28 2.17 4.29 7.05
CLASS B (Inception 9/13/93)
Net Asset Value/1/ 1.16 7.69 4.75 6.89
With CDSC/3/ -3.75 2.69 4.42 6.89
CLASS C (Inception 12/30/94)
Net Asset Value/1/ 1.16 7.69 4.75 6.89
With CDSC/3/ 0.18 6.69 4.75 6.89
- ---------------------------------------------------------------------
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
Russell 1000 Value Index/4/ 1.76% 14.06% 6.56% 12.03%
Morningstar Large Blend Fund Avg./5/ -0.60 6.35 -1.79 8.61
All results represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those shown. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/31/04
- --------------------------------------------------------
Common Stocks 96.6 96.9
- --------------------------------------------------------
Short Term Investments
and Other 3.4 3.1
- --------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
- --------------------------------------------------------
Exxon Mobil Corp. 3.1 2.4
- --------------------------------------------------------
JPMorgan Chase & Co. 2.5 2.5
- --------------------------------------------------------
McDonald's Corp. 2.2 2.5
- --------------------------------------------------------
Time Warner, Inc. 2.1 2.5
- --------------------------------------------------------
Citigroup, Inc. 2.1 1.8
- --------------------------------------------------------
Baxter International, Inc. 1.9 1.9
- --------------------------------------------------------
Waste Management, Inc. 1.9 2.0
- --------------------------------------------------------
Coca-Cola Co. (The) 1.8 0.5
- --------------------------------------------------------
Cablevision Systems Corp., Class A 1.8 1.3
- --------------------------------------------------------
Cendant Corp. 1.7 1.9
- --------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/05 12/31/04
- --------------------------------------------------------
Retail 10.4 11.3
- --------------------------------------------------------
Diversified Financial Services 8.6 9.1
- --------------------------------------------------------
Media 7.8 7.6
- --------------------------------------------------------
Oil & Gas 7.5 6.5
- --------------------------------------------------------
Banks 5.1 6.2
- --------------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes to Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1,
0%. Class C share performance assumes a 1.00% CDSC applied when you sell
shares within one year of purchase.
/4/Russell 1000 Value Index is an unmanaged index of the 1,000 largest U.S.
companies within the Russell 3000 Index with lower price-to-book ratios and
lower forecasted growth values.
/5/Morningstar Large Blend Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
14
VAUGHAN NELSON SMALL CAP VALUE FUND
PORTFOLIO PROFILE
Objective:
Seeks capital appreciation
- --------------------------------------------------------------------------------
Strategy:
Invests in small-cap companies with a focus on absolute return using a bottom
up value oriented investment process
- --------------------------------------------------------------------------------
Inception Date:
December 31, 1996
- --------------------------------------------------------------------------------
Managers:
Mark J. Roach
Chris D. Wallis
Scott J. Weber
- --------------------------------------------------------------------------------
Symbols:
Class A NEFJX
Class B NEJBX
Class C NEJCX
- --------------------------------------------------------------------------------
You Should Know:
Investing in small cap stocks carries special risk, including narrower markets,
limited financial and management resources, less liquidity and greater
volatility than large company stocks. Value stocks may fall out of favor with
investors and underperform the overall market during any given period.
Management Discussion
- --------------------------------------------------------------------------------
Although small-cap stocks continued to do relatively well in the first half of
2005, the market made little net progress. Vaughan Nelson Small Cap Value Fund
provided a total return of 2.99% for the first half of 2005, based on the net
asset value of class A shares. The fund outperformed both its benchmark, the
Russell 2000 Value Index, which returned 0.90% for the period, and the 0.96%
average return on the funds in Morningstar's Small Value category.
FUND'S TOP PERFORMERS WERE IN A VARIETY OF INDUSTRIES
Although rising oil prices put the energy sector in the lead, the fund's best
performers have come from various sectors. Healthcare Services Group, which
provides management and housekeeping services to nursing homes, was one of the
fund's largest holdings and had the greatest impact on the fund's positive
results year to date. We still like the company, but we have begun to take
profits in the stock. The best-performing stock during the period was
Southwestern Energy Company. This gas and oil company's operations include
exploration, production, marketing, and transportation, primarily in the
southwestern United States. Its operations are expanding and we do not expect
energy prices to retreat. Another positive contributor among the fund's energy
holdings was Oil State International, which provides specialty products and
services to oil and gas companies both on and offshore. It is benefiting from
increases in drilling activity and we believe the stock is still reasonably
priced.
Another company that has done well this year is CB Richards Ellis Group, a
commercial real estate broker. The company's global exposure allows it to
benefit from activity around the world. We continue to like the stock. We have
begun to take profits on another good performer, Gold Kist -- a small,
profitable company that processes chickens.
INDUSTRIAL AND RETAIL SECTORS WERE WEAK
The fund's positives were stronger than its negatives during the period.
Disappointments included K2 Inc, a retailer of sporting goods equipment that
trimmed its earnings forecasts earlier this year. Since we believe the
company's longer-term outlook is strong, we have used the price weakness to add
to the fund's holdings in K2. The fund's industrial stocks retraced some of
their gains from previous periods, including Briggs & Stratton Corporation,
which designs and makes gasoline engines, small generators and pressure washing
equipment, and Monaco Coach Corporation, which makes recreational vehicles.
Consolidated Graphics, a commercial printer, also did some backtracking, but
all three names remain in the portfolio. However, we sold all of the fund's
steel and aluminum holdings on weakness during the period, taking profits on
several positions.
FUND HOLDS RELATIVELY FEW REITS OR REGIONAL SAVINGS BANKS
We have chosen to underweight REITs (real estate investment trusts) and
regional savings banks because we felt their valuations were too high relative
to our growth expectations. This decision has cut into the fund's performance
results during the past few years. However, the relatively few financial stocks
in the portfolio have done well.
In general, we look for companies we believe are both reasonably valued and
likely to grow, and these are not easy to find. We have actually reduced the
number of holdings in the portfolio, narrowing its focus but not its sector
concentration. During the down market in May, we took advantage of low prices
to build up the fund's energy holdings, but there were no other major changes
in the past six months.
OUTLOOK FOR 2005 IS FOR MODEST GAINS
We believe the Federal Reserve Board may be almost ready to pause in its
rate-tightening program, and that oil prices are now at the higher end of their
range for the next few months. If this proves to be the case, we expect to see
stocks end 2005 in positive territory, although we don't anticipate major gains
this year.
15
VAUGHAN NELSON SMALL CAP VALUE FUND
Investment Results through June 30, 2005
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the
results. It is not possible to invest directly in an index. Investors would
incur transaction costs and other expenses if they purchased the securities
necessary to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
December 31, 1996 (inception) through June 30, 2005
Maximum Russell 2000
Net Asset Sales Value
Value/1/ Charge/2/ Index/4/
---------- ---------- ------------
12/31/1996 $10,000 $ 9,425 $10,000
1/31/1997 10,192 9,606 10,154
2/28/1997 9,920 9,349 10,250
3/31/1997 9,351 8,814 9,975
4/30/1997 9,264 8,731 10,122
5/31/1997 10,447 9,847 10,928
6/30/1997 11,040 10,405 11,481
7/31/1997 11,784 11,106 11,963
8/31/1997 12,104 11,408 12,153
9/30/1997 13,160 12,403 12,961
10/31/1997 12,672 11,943 12,608
11/30/1997 12,375 11,664 12,746
12/31/1997 12,696 11,966 13,178
1/31/1998 12,340 11,631 12,940
2/28/1998 13,348 12,581 13,722
3/31/1998 14,125 13,313 14,279
4/30/1998 13,994 13,189 14,349
5/31/1998 13,135 12,379 13,841
6/30/1998 13,341 12,574 13,763
7/31/1998 12,300 11,593 12,685
8/31/1998 9,624 9,070 10,699
9/30/1998 10,294 9,702 11,303
10/31/1998 10,749 10,131 11,638
11/30/1998 11,758 11,082 11,953
12/31/1998 12,957 12,212 12,328
1/31/1999 13,231 12,470 12,048
2/28/1999 12,122 11,425 11,226
3/31/1999 12,957 12,212 11,133
4/30/1999 13,934 13,133 12,150
5/31/1999 13,818 13,024 12,523
6/30/1999 14,968 14,107 12,976
7/31/1999 14,785 13,935 12,668
8/31/1999 14,654 13,811 12,205
9/30/1999 15,061 14,195 11,961
10/31/1999 16,203 15,271 11,722
11/30/1999 18,066 17,027 11,783
12/31/1999 21,430 20,198 12,145
1/31/2000 21,402 20,172 11,827
2/29/2000 26,682 25,148 12,550
3/31/2000 25,666 24,190 12,609
4/30/2000 22,655 21,352 12,684
5/31/2000 20,815 19,619 12,490
6/30/2000 22,508 21,213 12,855
7/31/2000 20,925 19,722 13,283
8/31/2000 23,526 22,174 13,877
9/30/2000 22,776 21,466 13,799
10/31/2000 20,858 19,659 13,750
11/30/2000 17,223 16,232 13,470
12/31/2000 18,811 17,729 14,917
1/31/2001 19,631 18,502 15,329
2/28/2001 17,102 16,119 15,307
3/31/2001 15,472 14,583 15,062
4/30/2001 17,023 16,044 15,759
5/31/2001 17,375 16,376 16,164
6/30/2001 17,968 16,934 16,815
7/31/2001 16,737 15,774 16,438
8/31/2001 15,711 14,807 16,381
9/30/2001 13,216 12,456 14,572
10/31/2001 14,116 13,304 14,953
11/30/2001 15,358 14,475 16,028
12/31/2001 16,544 15,593 17,009
1/31/2002 16,157 15,228 17,235
2/28/2002 14,869 14,014 17,340
3/31/2002 16,191 15,260 18,638
4/30/2002 15,815 14,906 19,294
5/31/2002 15,051 14,186 18,656
6/30/2002 14,049 13,241 18,243
7/31/2002 11,929 11,243 15,533
8/31/2002 11,917 11,232 15,463
9/30/2002 10,823 10,201 14,359
10/31/2002 11,382 10,727 14,575
11/30/2002 12,259 11,554 15,738
12/31/2002 11,450 10,792 15,066
1/31/2003 10,812 10,190 14,641
2/28/2003 10,436 9,836 14,149
3/31/2003 10,459 9,857 14,300
4/30/2003 11,462 10,803 15,659
5/31/2003 12,636 11,909 17,257
6/30/2003 13,114 12,360 17,550
7/31/2003 13,970 13,166 18,425
8/31/2003 14,688 13,843 19,125
9/30/2003 14,254 13,435 18,906
10/31/2003 15,279 14,401 20,447
11/30/2003 15,724 14,820 21,232
12/31/2003 15,883 14,969 22,000
1/31/2004 16,497 15,549 22,761
2/29/2004 16,407 15,463 23,201
3/31/2004 16,441 15,496 23,522
4/30/2004 15,734 14,829 22,306
5/31/2004 15,791 14,883 22,575
6/30/2004 16,610 15,655 23,721
7/31/2004 15,893 14,979 22,631
8/31/2004 15,734 14,829 22,853
9/30/2004 16,292 15,355 23,757
10/31/2004 16,520 15,570 24,126
11/30/2004 17,774 16,752 26,267
12/31/2004 18,309 17,256 26,894
1/31/2005 17,762 16,740 25,853
2/28/2005 18,343 17,288 26,367
3/31/2005 18,080 17,041 25,824
4/30/2005 17,214 16,224 24,492
5/31/2005 18,125 17,083 25,986
6/30/2005 18,856 17,775 27,135
Average Annual Total Returns -- June 30, 2005
SINCE
6 MONTHS 1 YEAR 5 YEARS INCEPTION
CLASS A (Inception 12/31/96)
Net Asset Value/1/ 2.99% 13.51% -3.48% 7.75%
With Maximum Sales Charge/2/ -2.93 6.98 -4.62 7.01
CLASS B (Inception 12/31/96)
Net Asset Value/1/ 2.60 12.61 -4.21 6.94
With CDSC/3/ -2.40 7.61 -4.52 6.94
CLASS C (Inception 12/31/96)
Net Asset Value/1/ 2.60 12.60 -4.19 6.95
With CDSC/3/ 1.60 11.60 -4.19 6.95
- ----------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION
Russell 2000 Value Index/4/ 0.90% 14.39% 16.12% 12.46%
Morningstar Small Value Fund Avg./5/ 0.96 12.85 14.96 11.67
All results represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those shown. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/31/04
- -----------------------------------------------------------
Common Stocks 98.9 98.6
- -----------------------------------------------------------
Short Term Investments
and Other 1.1 1.4
- -----------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
- -----------------------------------------------------------
iShares Russell 2000 Value Index Fund 3.5 3.7
- -----------------------------------------------------------
HCC Insurance Holdings, Inc. 2.5 1.8
- -----------------------------------------------------------
DRS Technologies, Inc. 2.3 2.2
- -----------------------------------------------------------
Triad Hospitals, Inc. 2.3 1.8
- -----------------------------------------------------------
Ashford Hospitality Trust, Inc. 2.3 1.9
- -----------------------------------------------------------
Raymond James Financial, Inc. 2.2 2.0
- -----------------------------------------------------------
Jacuzzi Brands, Inc. 2.1 1.4
- -----------------------------------------------------------
Genesee & Wyoming, Inc., Class A 2.1 1.6
- -----------------------------------------------------------
Oil States International, Inc. 2.1 1.3
- -----------------------------------------------------------
Comstock Resources, Inc. 2.0 1.7
- -----------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/05 12/31/04
- -----------------------------------------------------------
Oil & Gas 8.7 3.2
- -----------------------------------------------------------
Retail 7.1 7.5
- -----------------------------------------------------------
Commercial Services 7.1 7.9
- -----------------------------------------------------------
Aerospace & Defense 6.3 5.7
- -----------------------------------------------------------
Banks 6.1 8.2
- -----------------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes to Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/The Russell 2000 Value Index is an unmanaged index that measures the
performance of those Russell 2000 companies with lower price-to-book ratios
and lower forecasted growth values.
/5/Morningstar Small Value Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
16
WESTPEAK CAPITAL GROWTH FUND
PORTFOLIO PROFILE
Objective:
Seeks long-term growth of capital
- --------------------------------------------------------------------------------
Strategy:
Invests primarily in common stocks of large- and mid-cap companies in any
industry
- --------------------------------------------------------------------------------
Inception Date:
August 3, 1992
- --------------------------------------------------------------------------------
Manager:
Westpeak Global Advisors, L.P.
Team Management
- --------------------------------------------------------------------------------
Symbols:
Class A NEFCX
Class B NECBX
Class C NECGX
- --------------------------------------------------------------------------------
You Should Know:
Growth stocks can be more sensitive to market movements because their prices
are based in part on future expectations.
Management Discussion
- --------------------------------------------------------------------------------
Rising oil prices pumped up the energy sector during the first half of 2005,
but in other respects the market lacked a clear direction. For the six months
ended June 30, 2005, the total return on class A shares of Westpeak Capital
Growth Fund was -0.53% at net asset value -- better results than its
benchmark, the Russell 1000 Growth Index, which returned -1.72% for the period,
and the -1.78% average return on the funds in Morningstar's Large Growth
category.
ENERGY STOCKS LED THE MARKET
As oil prices reached $60 a barrel, stock prices of most energy and
energy-related companies rose during the past six months. Even though energy is
not a traditional focus for growth-oriented mutual funds, this fund's
diversified portfolio includes energy stocks, and Southwestern Energy was the
best-performing stock in the portfolio. Utility stocks also did well, but
higher-yielding stocks that are generally regarded as defensive did not do as
well as might have been expected during this uncertain market period. Although
value stocks performed slightly better than growth stocks for the first half of
the year, neither strategy was dominant.
FUND'S TECHNOLOGY HOLDINGS WERE MIXED
The fund began 2005 with a relatively large exposure to technology. We reduced
this position early in the year, although late in the period we began building
the position back up again. In general, we focus on what we consider reasonable
valuations among high-quality stocks of companies that appear able to deliver
sustainable earnings growth. Our core holdings include International Business
Machines (IBM), Best Buy, and Intel -- companies we regarded as more stable
than others in their respective industries. A world leader in business and
information technology, IBM dipped sharply in April, although it has begun to
recover. We have also been reducing the fund's holdings in Microsoft, which has
been in the portfolio for some time. After lingering in the first quarter,
chip-maker Intel staged a brisk recovery in the second quarter, as did Cisco
Systems, to a lesser extent.
Best Buy -- a leading retailer of consumer electronics -- has been a strong
performer for the fund and is now one of our larger holdings. Travelzoo, which
provides online marketing services to the travel industry, was a major success
story in 2004, but the price of the stock reversed sharply early in the year
and we sold the position in January. Even though the fund realized a profit on
the sale of Travelzoo, the sharp decline in the stock's value in January had a
negative effect on the fund's performance year-to-date.
We also sold off Taser International early in the year, as negative news
stories about the potential dangers of the non-lethal weapons the company makes
sent the price of the stock into a swift decline during the first two weeks of
the year. Even though we got out well before the low, the net effect on fund
performance was negative.
ENERGIZER AND AMERISOURCEBERGEN WERE POSITIVES
In addition to Best Buy and Southwestern Energy, the fund's top performers
included Energizer Holdings, an industrial parts company best known for its
Energizer batteries, and AmerisourceBergen Corporation, a wholesaler and
distributor of pharmaceuticals. Both of these stocks are among the fund's
larger holdings.
MANAGER SEEKS VALUE PLUS PRICE MOMENTUM
We continue to focus on stocks that appear to be reasonably valued, maintaining
our emphasis on stocks with low price/earnings ratios, as well as on stocks
with strong recent price performance. We also favor shares of companies in the
smaller-cap range of the fund's mid- and large-cap universe, as they currently
appear to have some advantage over shares of larger companies, while always
keeping in mind the importance we place on diversification and risk control.
Our current industry emphasis is on consumer staples, interest sensitive, and
energy-related companies, while limiting the fund's exposure to the basic
industry and consumer discretionary sectors.
17
WESTPEAK CAPITAL GROWTH FUND
Investment Results through June 30, 2005
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, the index is unmanaged and does not have expenses that affect the
results. it is not possible to invest directly in an index. investors would
incur transaction costs and other expenses if they purchased the securities
necessary to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
June 30, 1995 through June 30, 2005
Maximum
Net Asset Sales Russell 1000
Value/1/ Charge/2/ Growth Index/4/
---------- ---------- ---------------
6/30/1995 $10,000 $ 9,425 $10,000
7/31/1995 10,448 9,847 10,416
8/31/1995 10,636 10,024 10,427
9/30/1995 10,996 10,363 10,908
10/31/1995 10,821 10,199 10,915
11/30/1995 11,084 10,446 11,339
12/31/1995 10,852 10,228 11,404
1/31/1996 11,053 10,417 11,786
2/29/1996 11,341 10,689 12,001
3/31/1996 11,235 10,589 12,017
4/30/1996 11,794 11,116 12,333
5/31/1996 12,148 11,449 12,764
6/30/1996 11,983 11,294 12,781
7/31/1996 11,157 10,516 12,032
8/31/1996 11,581 10,915 12,343
9/30/1996 12,542 11,821 13,242
10/31/1996 12,536 11,815 13,322
11/30/1996 13,160 12,404 14,322
12/31/1996 12,700 11,970 14,041
1/31/1997 13,419 12,647 15,026
2/28/1997 13,050 12,299 14,924
3/31/1997 12,075 11,380 14,117
4/30/1997 12,595 11,871 15,054
5/31/1997 13,702 12,914 16,141
6/30/1997 14,085 13,275 16,787
7/31/1997 15,073 14,207 18,271
8/31/1997 14,381 13,555 17,202
9/30/1997 14,816 13,964 18,048
10/31/1997 14,217 13,400 17,381
11/30/1997 14,590 13,751 18,119
12/31/1997 14,889 14,033 18,322
1/31/1998 15,008 14,145 18,870
2/28/1998 16,037 15,115 20,290
3/31/1998 16,754 15,791 21,099
4/30/1998 17,053 16,072 21,391
5/31/1998 16,642 15,685 20,784
6/30/1998 17,507 16,500 22,057
7/31/1998 17,342 16,345 21,911
8/31/1998 14,588 13,750 18,622
9/30/1998 15,464 14,575 20,053
10/31/1998 16,594 15,640 21,664
11/30/1998 17,590 16,578 23,312
12/31/1998 19,215 18,110 25,414
1/31/1999 20,182 19,021 26,907
2/28/1999 19,047 17,952 25,678
3/31/1999 19,466 18,347 27,030
4/30/1999 19,848 18,707 27,064
5/31/1999 19,485 18,364 26,233
6/30/1999 20,517 19,338 28,070
7/31/1999 20,062 18,908 27,178
8/31/1999 20,238 19,075 27,622
9/30/1999 19,943 18,796 27,042
10/31/1999 21,333 20,106 29,084
11/30/1999 21,967 20,704 30,653
12/31/1999 23,970 22,592 33,841
1/31/2000 22,618 21,318 32,255
2/29/2000 23,561 22,206 33,831
3/31/2000 25,449 23,985 36,253
4/30/2000 24,693 23,273 34,528
5/31/2000 23,540 22,186 32,789
6/30/2000 25,091 23,648 35,274
7/31/2000 24,441 23,036 33,804
8/31/2000 26,352 24,837 36,864
9/30/2000 23,917 22,542 33,377
10/31/2000 23,087 21,760 31,798
11/30/2000 19,973 18,824 27,111
12/31/2000 19,288 18,179 26,253
1/31/2001 20,212 19,050 28,066
2/28/2001 17,467 16,463 23,302
3/31/2001 15,837 14,927 20,766
4/30/2001 17,978 16,945 23,392
5/31/2001 17,774 16,752 23,048
6/30/2001 17,496 16,490 22,514
7/31/2001 16,572 15,620 21,952
8/31/2001 15,238 14,362 20,156
9/30/2001 13,673 12,887 18,144
10/31/2001 14,302 13,480 19,096
11/30/2001 15,547 14,653 20,930
12/31/2001 15,341 14,459 20,891
1/31/2002 15,277 14,399 20,522
2/28/2002 14,724 13,877 19,670
3/31/2002 15,226 14,351 20,351
4/30/2002 14,378 13,551 18,690
5/31/2002 14,069 13,260 18,238
6/30/2002 12,911 12,169 16,551
7/31/2002 11,908 11,223 15,641
8/31/2002 11,921 11,235 15,687
9/30/2002 10,661 10,048 14,060
10/31/2002 11,433 10,775 15,350
11/30/2002 11,805 11,127 16,184
12/31/2002 11,033 10,399 15,066
1/31/2003 10,751 10,133 14,700
2/28/2003 10,802 10,181 14,633
3/31/2003 11,021 10,387 14,905
4/30/2003 11,663 10,993 16,007
5/31/2003 12,306 11,598 16,806
6/30/2003 12,422 11,707 17,037
7/31/2003 12,589 11,865 17,461
8/31/2003 12,744 12,011 17,896
9/30/2003 12,795 12,059 17,704
10/31/2003 13,412 12,641 18,699
11/30/2003 13,566 12,786 18,894
12/31/2003 13,977 13,173 19,548
1/31/2004 14,183 13,367 19,947
2/29/2004 14,183 13,367 20,074
3/31/2004 13,926 13,125 19,701
4/30/2004 13,617 12,834 19,472
5/31/2004 13,860 13,063 19,835
6/30/2004 14,041 13,233 20,083
7/31/2004 13,398 12,627 18,948
8/31/2004 13,384 12,615 18,854
9/30/2004 13,462 12,688 19,033
10/31/2004 13,770 12,978 19,330
11/30/2004 14,285 13,464 19,995
12/31/2004 14,696 13,851 20,779
1/31/2005 14,272 13,451 20,086
2/28/2005 14,387 13,560 20,300
3/31/2005 14,002 13,197 19,930
4/30/2005 13,694 12,906 19,551
5/31/2005 14,440 13,610 20,497
6/30/2005 14,625 13,787 20,421
Average Annual Total Returns -- June 30, 2005
6 MONTHS 1 YEAR 5 YEARS 10 YEARS
CLASS A (Inception 8/3/92)
Net Asset Value/1/ -0.53% 4.12% -10.24% 3.87%
With Maximum Sales Charge/2/ -6.27 -1.90 -11.29 3.26
CLASS B (Inception 9/13/93)
Net Asset Value/1/ -1.01 3.25 -10.91 3.05
With CDSC/3/ -5.96 -1.75 -11.20 3.05
CLASS C (Inception 12/30/94)
Net Asset Value/1/ -1.01 3.26 -10.98 3.03
With CDSC/3/ -2.00 2.26 -10.98 3.03
- ----------------------------------------------------------------------
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
Russell 1000 Growth Index/4/ -1.72% 1.68% -10.36% 7.40%
Morningstar Large Growth Fund Avg./5/ -1.78 3.24 -8.27 7.37
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those shown. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com.
The table and graph do not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/30/04
- -----------------------------------------------------------
Common Stocks 99.1 98.4
- -----------------------------------------------------------
Short Term Investments
and Other 0.9 1.6
- -----------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
- -----------------------------------------------------------
Johnson & Johnson 5.2 2.4
- -----------------------------------------------------------
Intel Corp. 4.8 4.7
- -----------------------------------------------------------
Microsoft Corp. 4.3 5.3
- -----------------------------------------------------------
Cisco Systems, Inc. 4.2 4.3
- -----------------------------------------------------------
Pfizer, Inc. 3.9 3.6
- -----------------------------------------------------------
Home Depot, Inc. 3.3 3.6
- -----------------------------------------------------------
UnitedHealth Group, Inc. 3.2 1.3
- -----------------------------------------------------------
Oracle Corp. 2.8 6.7
- -----------------------------------------------------------
International Business Machines Corp. 2.8 4.0
- -----------------------------------------------------------
Target Corp. 2.8 --
- -----------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/05 12/31/04
- -----------------------------------------------------------
Pharmaceuticals 11.5 6.8
- -----------------------------------------------------------
Retail 10.7 8.0
- -----------------------------------------------------------
Health Care -- Products 9.4 5.4
- -----------------------------------------------------------
Software 8.1 9.3
- -----------------------------------------------------------
Health Care -- Services 5.7 2.4
- -----------------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes to Charts
/1/Does not include a sales charge.
/2/Includes maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/Russell 1000 Growth Index is an unmanaged index of the 1,000 largest U.S.
companies within the Russell 3000 Index with higher price-to-book ratios and
higher forecasted growth values.
/5/Morningstar Large Growth Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
18
ADDITIONAL INFORMATION
The views expressed in this report reflect those of the portfolio managers as
of the dates indicated. The managers' views are subject to change at any time
without notice based on changes in market or other conditions. References to
specific securities or industries should not be regarded as investment advice.
Because the funds are actively managed, there is no assurance that they will
continue to invest in the securities or industries mentioned.
For more complete information on any IXIS Advisor Fund, contact your financial
professional or call IXIS Advisor Funds and ask for a free prospectus, which
contains more complete information, including charges and other ongoing
expenses. Investors should consider a fund's objective, risks and expenses
carefully before investing. This and other fund information can be found in the
prospectus. Please read the prospectus carefully before investing.
PROXY VOTING INFORMATION
A description of the funds' proxy voting policies and procedures is available
without charge, upon request, by calling IXIS Advisor Funds at 800-225-5478; on
the funds' website at www.ixisadvisorfunds.com; and on the Securities and
Exchange Commission's website at www.sec.gov. Information regarding how the
funds voted proxies relating to portfolio securities during the 12-month period
ended June 30, 2005 is available from the funds' website and the SEC's website.
QUARTERLY PORTFOLIO SCHEDULES
The funds file a complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q
are available on the SEC's website at www.sec.gov and may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
19
UNDERSTANDING YOUR FUND'S EXPENSES
As a mutual fund shareholder, you incur different costs: transaction costs,
including sales charges (loads) on purchases, redemption fees and certain
exchange fees and ongoing costs, including management fees, distribution fees
(12b-1 fees), and other fund expenses. In addition, each fund assesses a
minimum balance fee of $20 on an annual basis for accounts that fall below the
required minimum to establish an account. Certain exemptions may apply. These
costs are described in more detail in the funds' prospectus. The examples below
are intended to help you understand the ongoing costs of investing in the funds
and help you compare these with the ongoing costs of investing in other mutual
funds.
The first line in the table of each Class of fund shares shows the actual
account values and actual fund expenses you would have paid on a $1,000
investment in the fund from January 1, 2005 through June 30, 2005. It also
shows how much a $1,000 investment would be worth at the close of the period,
assuming actual fund returns and expenses. To estimate the expenses you paid
over the period, simply divide your account value by $1,000 (for example $8,600
account value divided by $1,000 = $8.60) and multiply the result by the number
in the Expenses Paid During Period column as shown below for your Class.
The second line in the table of each Class of fund shares provides information
about hypothetical account values and hypothetical expenses based on the fund's
actual expense ratios and an assumed rate of return of 5% per year before
expenses, which is not the fund's actual return. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid on your investment for the period. You may use
this information to compare the ongoing costs of investing in the fund and
other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown reflect ongoing costs only, and do not
include any transaction costs, such as sales charges, redemption fees or
exchange fees. Therefore, the second line in the table of each fund is useful
in comparing ongoing costs only, and will not help you determine the relative
costs of owning different funds. If transaction costs were included, total
costs would be higher.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
CGM ADVISOR TARGETED EQUITY FUND 1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,033.40 $6.55
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.30 $6.51
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,031.00 $10.32
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.60 $10.24
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,029.90 $10.32
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.60 $10.24
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,036.00 $5.50
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,019.40 $5.46
*Expenses are equal to the fund's annualized expense ratio: 1.30%, 2.05%,
2.05%, 1.09% for Class A, B, C and Y, respectively, multiplied by the average
account value over the period, multiplied by the number of days in the most
recent fiscal half-year divided by 365 (to reflect the half-year period).
20
UNDERSTANDING YOUR FUND'S EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
HANSBERGER INTERNATIONAL FUND 1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $994.20 $8.90
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.90 $9.00
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $990.50 $12.59
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.72
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $989.90 $12.58
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.72
*Expenses are equal to the fund's annualized expense ratio: 1.80%, 2.55%, and
2.55% for Class A, B, and C, respectively, multiplied by the average account
value over the period, multiplied by the number of days in the most recent
fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
HARRIS ASSOCIATES FOCUSED VALUE FUND 1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,027.60 $8.35
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.60 $8.30
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,024.40 $12.10
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.80 $12.03
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,024.40 $12.10
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.80 $12.03
*Expenses are equal to the fund's annualized expense ratio: 1.66%, 2.41%, and
2.41% for Class A, B, and C, respectively, multiplied by the average account
value over the period, multiplied by the number of days in the most recent
fiscal half-year divided by 365 (to reflect the half-year period).
21
UNDERSTANDING YOUR FUND'S EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
HARRIS ASSOCIATES LARGE CAP VALUE FUND 1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $961.40 $6.32
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.30 $6.51
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $957.60 $9.95
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.60 $10.24
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $958.30 $9.95
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,014.60 $10.24
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $962.50 $5.06
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,019.70 $5.21
*Expenses are equal to the fund's annualized expense ratio: 1.43%, 2.18%, 2.18%
and 1.04% for Class A, B, C and Y, respectively, multiplied by the average
account value over the period, multiplied by the number of days in the most
recent fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
IXIS U.S. DIVERSIFIED PORTFOLIO 1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $996.30 $9.01
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.80 $9.10
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $992.90 $12.70
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.82
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $992.30 $12.70
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.82
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $998.50 $6.84
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.00 $6.90
*Expenses are equal to the fund's annualized expense ratio: 1.82%, 2.57%, 2.57%
and 1.38% for Class A, B, C and Y, respectively, multiplied by the average
account value over the period, multiplied by the number of days in the most
recent fiscal half-year divided by 365 (to reflect the half-year period).
22
UNDERSTANDING YOUR FUND'S EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
IXIS VALUE FUND 1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,015.20 $7.89
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,017.00 $7.90
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,011.60 $11.62
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,013.20 $11.63
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,011.60 $11.62
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,013.20 $11.68
*Expenses are equal to the fund's annualized expense ratio: 1.58%, 2.33%, and
2.33% for Class A, B, and C, respectively, multiplied by the average account
value over the period, multiplied by the number of days in the most recent
fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
VAUGHAN NELSON SMALL CAP VALUE FUND 1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,029.90 $9.97
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.00 $9.89
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,026.00 $13.71
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,011.30 $13.61
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $1,026.00 $13.71
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,011.30 $13.61
*Expenses are equal to the fund's annualized expense ratio: 1.98%, 2.73%, and
2.73% for Class A, B, and C, respectively, multiplied by the average account
value over the period, multiplied by the number of days in the most recent
fiscal half-year divided by 365 (to reflect the half-year period).
23
UNDERSTANDING YOUR FUND'S EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
WESTPEAK CAPITAL GROWTH FUND 1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $994.70 $9.45
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.30 $9.54
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $989.90 $13.12
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,011.60 $13.27
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000 $989.90 $13.12
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,011.60 $13.27
*Expenses are equal to the fund's annualized expense ratio: 1.91%, 2.66%, and
2.66% for Class A, B, and C, respectively, multiplied by the average account
value over the period, multiplied by the number of days in the most recent
fiscal half-year divided by 365 (to reflect the half-year period).
24
BOARD APPROVAL OF MANAGEMENT CONTRACTS
The Board of Trustees, including the Independent Trustees, considers matters
bearing on each Fund's advisory and sub-advisory agreements (collectively, the
"Agreements") at most of its meetings throughout the year. Once a year, usually
in the spring, the Contract Review and Governance Committee of the Board meets
to review the Agreements to determine whether to recommend that the full Board
approve the continuation of the Agreements for an additional one-year period.
After the Committee has made its recommendation, the full Board, including the
Independent Trustees, determines whether to approve the continuation of the
Agreements.
In connection with these meetings, the Trustees receive materials that the
Funds' investment advisers believe to be reasonably necessary for the Trustees
to evaluate the Agreements. These materials generally include, among other
items, (i) information on the investment performance of the Funds and the
performance of peer groups of funds and the Funds' performance benchmarks,
(ii) information on the Funds' advisory and sub-advisory fees and other
expenses, including information comparing the Funds' expenses to those of peer
groups of funds and information about any applicable expense caps and fee
"breakpoints," (iii) sales and redemption data in respect of the Funds, (iv)
information about the profitability of the Agreements to the Funds' advisers
and sub-advisers (collectively, the "Advisers"), and (v) information obtained
through the completion of a questionnaire by the Advisers (the Trustees are
consulted as to the information requested through that questionnaire). The
Board of Trustees, including the Independent Trustees, may also consider other
material facts such as (i) each Adviser's financial results and financial
condition, (ii) each Fund's investment objective and strategies and the size,
education and experience of the Advisers' respective investment staffs and
their use of technology, external research and trading cost measurement tools,
(iii) arrangements in respect of the distribution of the Funds' shares, (iv)
the procedures employed to determine the value of the Funds' assets, (v) the
allocation of the Funds' securities transactions, including allocations to
brokers affiliated with the Advisers and the use of "soft" commission dollars
to pay Fund expenses and to pay for research and other similar services, (vi)
the resources devoted to, and the record of compliance with, the Funds'
investment policies and restrictions, policies on personal securities
transactions and other compliance policies, and (vii) the general economic
outlook with particular emphasis on the mutual fund industry. Throughout the
process, the Trustees are afforded the opportunity to ask questions of and
request additional materials from the Advisers.
The Board of Trustees most recently approved the continuation of the Agreements
at their meeting held in May, 2005. In considering whether to approve the
continuation of the Agreements, the Board of Trustees, including the
Independent Trustees, did not identify any single factor as determinative.
Matters considered by the Trustees, including the Independent Trustees, in
connection with their approval of the Agreements included the following:
The nature, extent and quality of the services provided to the Funds under the
Agreements. The Trustees considered the nature, extent and quality of the
services provided by the Advisers and their affiliates to the Funds and the
resources dedicated to the Funds by the Advisers and their affiliates. The
Trustees considered not only the advisory services provided by the Advisers to
the Funds, but also the monitoring and oversight services provided by IXIS
Advisors with respect to sub-advised Funds. For each Fund, the Trustees also
considered the benefits to shareholders of investing in a mutual fund that is
part of a family of funds offering a variety of investment disciplines and
providing for a variety of fund and shareholder services. After reviewing these
and related factors, the Trustees concluded, within the context of their
overall conclusions regarding each of the Agreements, that the nature, extent
and quality of services provided supported the renewal of the Agreements.
Investment performance of the Funds and the Advisers. As noted above, the
Trustees received information about the performance of the Funds over various
time periods, including information which compared the performance of the Funds
to the performance of peer groups of funds and the Funds' respective
performance benchmarks. In addition, the Trustees also reviewed data prepared
by an independent third party which analyzed the performance of the Funds using
a variety of performance metrics, including metrics which also measured the
performance of the Funds on a risk adjusted basis.
With respect to each Fund, the Board concluded that the Fund's performance
supported the renewal of the Agreement(s) relating to that Fund. In the case of
each Fund that had performance that lagged that of a relevant peer group for
certain (although not necessarily all) periods, the Board concluded that other
factors relevant to performance supported renewal of the Funds' Agreements.
These factors varied from Fund to Fund, but included one or more of the
following: (1) that the Fund's performance, although lagging in certain recent
periods, was strong over the longer term; (2) that the underperformance was
attributable, to a significant extent, to investment decisions by the Fund's
Advisers that were reasonable and consistent with the Fund's investment
objective and policies; (3) that the Fund's performance was competitive when
compared to other relevant performance benchmarks or peer groups; (4) that the
Fund's Adviser has taken or is taking steps designed to help improve the Fund's
investment performance; and (5) that the Fund's advisory fee or other expenses
have recently been, or were proposed to be, reduced, with the goal of helping
the Fund's net return to shareholders become more competitive.
The Trustees also considered each Adviser's performance and reputation
generally, these Funds' performance as a fund family generally, and the
historical responsiveness of the Advisers to Trustee concerns about performance
and the willingness of the Advisers to take steps intended to improve
performance.
25
BOARD APPROVAL OF MANAGEMENT CONTRACTS (continued)
After reviewing these and related factors, the Trustees concluded, within the
context of their overall conclusions regarding each of the Agreements, that the
performance of the Funds and the Advisers supported the renewal of the
Agreements.
The costs of the services to be provided and profits to be realized by the
Advisers and their affiliates from their respective relationships with the
Funds. The Trustees considered the fees charged to the Funds for advisory and
sub-advisory services as well as the total expense levels of the Funds. This
information included comparisons (provided both by management and also by an
independent third party) of the Funds' advisory fees and total expense levels
to those of their peer groups and information about the advisory fees charged
by the Advisers to comparable accounts. In considering the fees charged to
comparable accounts, the Trustees considered, among other things, management's
representations about the differences between managing mutual funds as compared
to other types of accounts, including the additional resources required to
effectively manage mutual fund assets. In evaluating each Fund's advisory and
sub-advisory fees, the Trustees also took into account the demands, complexity
and quality of the investment management of such Fund. The Trustees considered
management's recommendations regarding reductions in advisory fee rates,
implementation of advisory fee breakpoints, institution of advisory fee waivers
and reductions of expense caps, which impacted 7 of the Funds and resulted in
an estimated annual savings to the Funds of $1,287,600. The Trustees noted that
U.S. Diversified Portfolio had a total expense ratio and an advisory fee rate
that were at or above the median of a peer group of Funds. The Trustees noted
that management was proposing fee reductions for this Fund. The Trustees also
noted management's stated justification for the fees charged to the Funds,
which included information about the performance of the Funds, the services
provided to the Funds and management's view as to why it was appropriate that
some funds bear advisory fees or total expenses greater than their peer group
median.
The Trustees also considered the compensation directly or indirectly received
by the Advisers and their affiliates from their relationships with the Funds.
The Trustees reviewed information provided by management as to the
profitability of the Advisers' and their affiliates' relationships with the
Funds, and information about the allocation of expenses used to calculate
profitability. When reviewing profitability, the Trustees also considered
information about court cases in which adviser profitability was an issue in
whole or in part, the performance of the relevant Funds, the expense levels of
the Funds, and whether the Advisers had implemented breakpoints and/or expense
caps with respect to such Funds.
After reviewing these and related factors, the Trustees concluded, within the
context of their overall conclusions regarding each of the Agreements, that the
advisory fees charged to each of the Funds were fair and reasonable, and that
the costs of these services generally and the related profitability of the
Advisers and their affiliates in respect of their relationships with the Funds
supported the renewal of the Agreements.
Economies of Scale. The Trustees considered the existence of any economies of
scale in the provision of services by the Advisers and whether those economies
are shared with the Funds through breakpoints in their investment advisory fees
or other means, such as expense waivers. The Trustees noted that 7 of the Funds
benefited from breakpoints and/or expense caps, and that for the remaining
Fund, management had represented that the Fund's Advisers did not benefit from
economies of scale in providing services to the Fund because of the small size
of the Fund. In considering these issues, the Trustees also took note of the
costs of the services provided (both on an absolute and a relative basis) and
the profitability to the Advisers and their affiliates of their relationships
with the Funds, as discussed above.
After reviewing these and related factors, the Trustees considered, within the
context of their overall conclusions regarding each of the Agreements, that the
extent to which economies of scale were shared with the Funds supported the
renewal of the Agreements.
The Trustees also considered other factors, which included but were not limited
to the following:
.. whether each Fund has operated in accordance with its investment objective
and the Fund's record of compliance with its investment restrictions, and
the compliance programs of the Funds and the Advisers. They also considered
the compliance related resources the Advisers and their affiliates were
providing to the Funds.
.. the nature, quality, cost and extent of administrative and shareholder
services performed by the Advisers and their affiliates, both under the
Agreements and under separate agreements covering transfer agency and
administrative services.
.. so-called "fallout benefits" to the Advisers, such as the engagement of
affiliates of the Advisers to provide distribution, brokerage and transfer
agency services to the Funds, and the benefits of research made available to
the Advisers by reason of brokerage commissions generated by the Funds'
securities transactions. The Trustees also considered the fact that IXIS
Advisors' parent company benefits from the retention of affiliated Advisers.
The Trustees considered the possible conflicts of interest associated with
these fallout and other benefits, and the reporting, disclosure and other
processes in place to disclose and monitor such possible conflicts of
interest
Based on their evaluation of all factors that they deemed to be material,
including those factors described above, and assisted by the advice of
independent counsel, the Trustees, including the Independent Trustees,
concluded that each of the existing advisory and sub-advisory agreements should
be continued through June 30, 2006.
26
CGM ADVISOR TARGETED EQUITY FUND -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- -------------------------------------------------------------------------
Common Stocks -- 99.2% of Total Net Assets
Beverages & Tobacco -- 5.2%
588,000 Altria Group, Inc. $ 38,020,080
------------
Biotechnology -- 5.0%
459,000 Genentech, Inc.(c) 36,848,520
------------
Cosmetics & Personal Care -- 4.2%
584,000 Procter & Gamble Co.(d) 30,806,000
------------
Diversified Financial Services -- 4.8%
340,000 Legg Mason, Inc. 35,397,400
------------
Health Care -- Services -- 5.4%
700,000 HCA, Inc. 39,669,000
------------
Heavy Machinery -- 0.3%
25,000 Caterpillar, Inc. 2,382,750
------------
Insurance -- 7.2%
725,000 Aflac, Inc. 31,378,000
380,000 American International Group, Inc. 22,078,000
------------
53,456,000
------------
Internet -- 3.4%
85,000 Google, Inc., Class A(c)(d) 25,002,750
------------
Miscellaneous -- Manufacturing -- 1.8%
380,000 General Electric Co. 13,167,000
------------
Oil & Gas -- 24.8%
50,000 Apache Corp. 3,230,000
630,000 BP PLC, Sponsored ADR 39,299,400
990,000 ConocoPhillips 56,915,100
499,000 Occidental Petroleum Corp. 38,388,070
384,000 Total SA, Sponsored ADR(d) 44,870,400
------------
182,702,970
------------
Oil & Gas Services -- 10.6%
845,000 Halliburton Co. 40,407,900
500,000 Schlumberger, Ltd. 37,970,000
------------
78,377,900
------------
Pharmaceuticals -- 5.1%
850,000 Wyeth Corp. 37,825,000
------------
Restaurants -- 5.1%
727,000 Yum! Brands, Inc. 37,862,160
------------
Retail -- 5.2%
730,000 J.C. Penney Co., Inc. 38,383,400
------------
Semiconductors -- 1.4%
390,000 Intel Corp. 10,163,400
------------
Telecommunications -- 9.7%
585,000 America Movil SA de CV, Series L, ADR 34,871,850
2,210,000 Corning, Inc. 36,730,200
------------
71,602,050
------------
Total Common Stocks (Identified Cost $670,890,323) 731,666,380
------------
Principal
Amount Description Value (a)
- -------------------------------------------------------------------------------------------------
Short Term Investments -- 9.5%
$4,973,267 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at $4,973,544 on 7/01/2005, collateralized by
$4,840,678 Small Business Administration Bond, 5.875% due
1/25/2029 valued at $5,221,930 $ 4,973,267
2,983,939 American Beacon Fund, 3.18%, due 7/01/2005(e) 2,983,939
4,266,969 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 4,266,969
958,869 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 958,869
2,397,174 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 2,397,174
3,926,350 BGI Institutional Money Market Fund(e) 3,926,350
3,918,388 Calyon, 3.09%, due 7/01/2005(e) 3,918,388
2,397,174 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 2,397,174
2,588,948 Compass Securitization, 3.16%, due 7/11/2005(e) 2,588,948
2,617,138 Fairway Finance, 3.26%, due 7/25/2005(e) 2,617,138
2,397,174 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 2,397,174
1,917,739 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 1,917,739
2,032,370 Goldman Sachs Financial Square Prime Obligations Fund(e) 2,032,370
2,468,130 Greyhawk Funding, 3.26%, due 8/01/2005(e) 2,468,130
2,397,174 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 2,397,174
2,397,174 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 2,397,174
306,860 Merrimac Cash Fund-Premium Class(e) 306,860
3,682,303 National Australia Bank, 3.26%, due 7/06/2005(e) 3,682,303
2,397,174 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 2,397,174
2,397,174 Prefco, 3.26%, due 7/26/2005(e) 2,397,174
1,874,029 Rabobank Nederland, 3.35%, due 7/01/2005(e) 1,874,029
2,359,139 Ranger Funding, 3.19%, due 7/15/2005(e) 2,359,139
2,397,174 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 2,397,174
4,794,344 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 4,794,344
2,397,174 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 2,397,174
2,384,269 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 2,384,269
------------
Total Short Term Investments (Identified Cost $69,627,617) 69,627,617
------------
Total Investments -- 108.7%
(Identified Cost $740,517,940)(b) 801,293,997
Other assets less liabilities (63,911,234)
------------
Total Net Assets -- 100% $737,382,763
============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at
the end of the Fund's fiscal year for tax purposes. Such adjustments are
primarily due to wash sales):
At June 30, 2005, the net unrealized appreciation on investments based
on cost of $740,517,940 for federal income tax purposes was as
follows:
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $ 61,701,985
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (925,928)
------------
Net unrealized appreciation $ 60,776,057
============
See accompanying notes to financial statements.
27
CGM ADVISOR TARGETED EQUITY FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
At December 31, 2004, the Fund had a capital loss carryover of approximately $141,323,294
which expires on December 31, 2010. This amount may be available to offset future realized
capital gains, if any, to the extent provided by regulations.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2005.
(e) Represents investments of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right
to receive securities of the foreign issuer described. The values of ADRs are significantly influenced
by trading on exchanges not located in the United States.
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Oil & Gas 24.8%
Oil & Gas Services 10.6
Telecommunications 9.7
Insurance 7.2
Health Care -- Services 5.4
Retail 5.2
Beverages & Tobacco 5.2
Restaurants 5.1
Pharmaceuticals 5.1
Biotechnology 5.0
Diversified Financial Services 4.8
Cosmetics & Personal Care 4.2
Internet 3.4
Other, less than 2% each 3.5
See accompanying notes to financial statements.
28
HANSBERGER INTERNATIONAL FUND -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------------
Common Stocks -- 97.6% of Total Net Assets
Australia -- 0.8%
46,400 Woodside Petroleum, Ltd. $ 1,030,956
---------------
Brazil -- 2.1%
15,000 Banco Bradesco SA, Sponsored ADR(c) 530,850
27,000 Cia Energetica de Minas Gerais, Sponsored ADR 859,950
25,860 Petroleo Brasileiro SA, ADR(c) 1,348,082
---------------
2,738,882
---------------
Canada -- 3.0%
21,200 Alcan, Inc.(c) 636,000
50,000 Celestica, Inc.(d) 670,000
28,500 Manulife Financial Corp.(c) 1,362,585
23,800 Suncor Energy, Inc.(c) 1,126,216
---------------
3,794,801
---------------
China -- 1.8%
1,910,410 Denway Motors, Ltd. 677,461
451,160 Ping An Insurance Group Co. of China, Ltd.(d) 722,892
23,200 Shanda Interactive Entertainment, Ltd., ADR(c)(d) 853,528
---------------
2,253,881
---------------
Denmark -- 1.2%
92,200 Vestas Wind Systems AS(c)(d) 1,525,406
---------------
Finland -- 2.0%
52,380 Nokia OYJ 871,589
44,700 Nokia OYJ, Sponsored ADR 743,808
30,000 Tietoenator OYJ 910,559
---------------
2,525,956
---------------
France -- 13.1%
40,520 Axa 1,008,877
44,200 Axa, Sponsored ADR(c) 1,101,022
12,000 BNP Paribas 819,630
29,500 Bouygues SA 1,219,545
20,380 Carrefour SA 985,665
10,300 Cie Generale D'Optique Essilor International SA 702,516
10,000 Groupe Danone 876,194
9,401 L'Oreal SA 673,155
9,300 Sanofi-Aventis 761,681
22,430 Schneider Electric SA 1,686,763
12,800 Societe Generale, Class A 1,298,015
21,240 Suez SA(c) 574,145
16,400 Technip SA 760,898
42,800 Thomson 1,021,031
5,140 Total SA 1,202,788
11,900 Total SA, Sponsored ADR(c) 1,390,515
18,700 Veolia Environnement 700,013
---------------
16,782,453
---------------
Germany -- 5.7%
4,750 Adidas-Salomon AG 792,362
8,100 Allianz AG 923,955
11,620 Deutsche Bank AG 904,772
11,710 E.ON AG 1,039,576
8,090 Fresenius Medical Care AG(c) 688,669
9,910 Linde AG 667,108
16,700 SAP AG, Sponsored ADR(c) 723,110
15,380 Schering AG 945,004
9,700 Siemens AG 704,820
---------------
7,389,376
---------------
Shares Description Value (a)
- -----------------------------------------------------------------------------------
Hong Kong -- 4.5%
194,900 Esprit Holdings, Ltd. $ 1,405,454
64,000 HSBC Holdings PLC (Hong Kong) 1,022,991
178,950 Hutchison Whampoa, Ltd. 1,610,661
1,058,730 Johnson Electric Holdings, Ltd. 969,967
544,217 Shangri-La Asia, Ltd. 839,423
---------------
5,848,496
---------------
India -- 1.6%
23,300 HDFC Bank, Ltd., ADR 1,083,683
12,600 Infosys Technologies, Ltd., Sponsored ADR(c) 976,122
---------------
2,059,805
---------------
Indonesia -- 0.6%
1,300,000 PT Indosat Tbk 734,406
---------------
Israel -- 0.6%
24,300 Teva Pharmaceutical Industries, Ltd., Sponsored ADR(c) 756,702
---------------
Italy -- 2.4%
46,420 Eni-Ente Nazionale Idrocarburi SpA(c) 1,192,794
52,040 Saipem SpA 699,890
229,300 UniCredito Italiano SpA(c) 1,208,975
---------------
3,101,659
---------------
Japan -- 16.7%
90,000 Asahi Glass Co., Ltd.(c) 941,046
21,655 Astellas Pharma, Inc. 737,987
53,000 Bank of Yokohama, Ltd. (The) 304,665
35,400 Canon, Inc. 1,856,562
54,500 Denso Corp. 1,238,245
46,400 JS Group Corp. 784,394
483,000 Kawasaki Heavy Industries, Ltd.(c) 925,054
3,400 Keyence Corp. 758,400
210,000 Marubeni Corp. 716,432
115,000 NEC Corp. 618,844
9,200 Nidec Corp. 970,358
65,000 Nissan Motor Co., Ltd. 642,970
18,900 Nitto Denko Corp. 1,077,527
6,400 ORIX Corp. 956,207
45,000 Pioneer Corp. 680,269
80,000 Sharp Corp. 1,245,542
46,000 Shionogi & Co., Ltd. 591,416
9,800 SMC Corp. 1,063,073
23,400 Sony Corp. 803,760
156 Sumitomo Mitsui Financial Group, Inc. 1,049,654
194,000 Sumitomo Trust & Banking Co., Ltd. (The) 1,174,700
18,600 Takeda Pharmaceutical Co., Ltd. 920,269
18,500 Toyota Motor Corp. 660,574
22,000 World Co., Ltd. 768,387
---------------
21,486,335
---------------
Netherlands -- 3.0%
37,575 ABN AMRO Holding NV(c) 923,171
16,880 Akzo Nobel NV 663,810
55,400 ASML Holding NV, ADR(c)(d) 867,564
35,028 ING Groep NV 984,580
19,190 Koninklijke Philips Electronics NV 483,381
---------------
3,922,506
---------------
Republic of Korea -- 3.6%
15,660 Kookmin Bank 706,758
16,200 Kookmin Bank, Sponsored ADR(c) 738,396
16,430 LG Chem, Ltd. 599,392
See accompanying notes to financial statements.
29
HANSBERGER INTERNATIONAL FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- -------------------------------------------------------------------------
Republic of Korea -- continued
2,490 Samsung Electronics Co., Ltd. $ 1,179,253
3,400 Samsung Electronics Co., Ltd., GDR, 144A(c) 812,579
1,920 Shinsegae Co., Ltd. 602,334
---------------
4,638,712
---------------
Russia -- 0.6%
20,000 LUKOIL Sponsored ADR 722,000
---------------
Singapore -- 1.9%
211,140 DBS Group Holdings, Ltd. 1,786,800
93,470 Singapore Airlines, Ltd. 620,136
---------------
2,406,936
---------------
South Africa -- 0.5%
303,020 Old Mutual PLC 660,368
---------------
Spain -- 3.7%
93,500 Banco Bilbao Vizcaya Argentaria SA 1,436,666
56,000 Banco Santander Central Hispano SA 648,347
128,500 Telefonica Moviles SA(c) 1,357,608
77,390 Telefonica SA 1,262,557
---------------
4,705,178
---------------
Switzerland -- 8.9%
132,750 ABB, Ltd.(d) 869,847
10,900 Ciba Specialty Chemicals AG 633,586
25,000 Credit Suisse Group(d) 979,597
18,880 Lonza Group AG 1,042,572
6,867 Nestle SA 1,753,647
3,800 Nobel Biocare Holding AG 769,341
42,010 Novartis AG 1,993,794
6,960 Roche Holding AG 877,884
759 Serono SA, Class B 485,658
1,148 Sika AG(d) 715,961
16,100 UBS AG 1,254,637
---------------
11,376,524
---------------
Taiwan -- 0.6%
449,054 Taiwan Semiconductor Manufacturing Co., Ltd. 781,789
---------------
United Kingdom -- 18.7%
25,000 AstraZeneca PLC, Sponsored ADR 1,030,549
98,818 Barclays PLC 979,374
56,711 BHP Billiton PLC 722,836
12,700 BP PLC, Sponsored ADR 792,226
146,900 British Sky Broadcasting PLC 1,381,653
234,090 Compass Group PLC 980,119
60,351 Exel PLC 915,257
39,595 GlaxoSmithKline PLC 956,621
299,300 Group 4 Securicor PLC(d) 785,663
152,533 HBOS PLC 2,344,812
51,991 ICAP PLC 275,914
37,600 Johnson Matthey PlC 716,722
122,799 Kingfisher PLC 538,665
110,401 Lloyds TSB Group PLC 932,209
29,972 Reckitt Benckiser PLC 880,306
75,742 Royal Bank of Scotland Group PLC 2,280,190
330,070 Signet Group PLC 641,455
81,400 Smith & Nephew PLC 800,149
84,200 Smiths Group PLC 1,381,501
36,380 Standard Chartered PLC 662,701
229,588 Tesco PLC 1,307,788
71,610 Unilever PLC 688,828
Shares Description Value (a)
- ---------------------------------------------------------------------------------------
United Kingdom -- continued
514,446 Vodafone Group PLC $ 1,250,578
34,300 Vodafone Group PLC, Sponsored ADR 834,176
---------------
24,080,292
---------------
Total Common Stocks (Identified Cost $112,620,832) 125,323,419
---------------
Preferred Stocks -- 1.3%
Brazil -- 0.6%
25,500 Companhia de Bebidas das Americas, ADR 787,950
---------------
Germany -- 0.7%
1,237 Porsche AG(c) 926,766
---------------
Total Preferred Stocks (Identified Cost $1,356,808) 1,714,716
---------------
Principal
Amount Description Value (a)
- ---------------------------------------------------------------------------------------
Short Term Investments -- 16.5%
$ 1,848,112 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at $1,848,215 on 7/01/2005, collateralized by
$1,806,396 Small Business Administration Bond, 6.875% due
4/25/2016 valued at $1,940,517 1,848,112
895,698 American Beacon Fund, 3.18%, due 7/01/2005(e) 895,698
1,280,829 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 1,280,829
287,826 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 287,826
719,566 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 719,566
1,178,584 BGI Institutional Money Market Fund(e) 1,178,584
1,176,194 Calyon, 3.09%, due 7/01/2005(e) 1,176,194
719,566 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 719,566
777,132 Compass Securitization, 3.16%, due 7/11/2005(e) 777,132
785,595 Fairway Finance, 3.26%, due 7/25/2005(e) 785,595
719,566 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 719,566
575,654 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 575,654
610,062 Goldman Sachs Financial Square Prime Obligations Fund(e) 610,062
740,865 Greyhawk Funding, 3.26%, due 8/01/2005(e) 740,865
719,566 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 719,566
719,566 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 719,566
92,111 Merrimac Cash Fund-Premium Class(e) 92,111
1,105,328 National Australia Bank, 3.26%, due 7/06/2005(e) 1,105,328
719,566 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 719,566
719,566 Prefco, 3.26%, due 7/26/2005(e) 719,566
562,533 Rabobank Nederland, 3.35%, due 7/01/2005(e) 562,533
708,149 Ranger Funding, 3.19%, due 7/15/2005(e) 708,149
719,566 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 719,566
1,439,138 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 1,439,138
719,566 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 719,566
715,693 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 715,693
---------------
Total Short Term Investments (Identified Cost $21,255,597) 21,255,597
---------------
Total Investments -- 115.4%
(Identified Cost $135,233,237)(b) 148,293,732
Other assets less liabilities (19,831,035)
---------------
Total Net Assets -- 100% $ 128,462,697
===============
See accompanying notes to financial statements.
30
HANSBERGER INTERNATIONAL FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the
Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales):
At June 30, 2005, the net unrealized appreciation on investments based on cost of
$135,233,237 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which there
is an excess of value over tax cost $15,749,490
Aggregate gross unrealized depreciation for all investments in which there
is an excess of tax cost over value (2,688,995)
-----------
Net unrealized appreciation $13,060,495
===========
At December 31, 2004, the Fund had a capital loss carryover of approximately $8,938,160
of which $1,066,443 expires on December 31, 2009 and $7,871,717 expires on December
31, 2010. These amounts may be available to offset future realized capital gains, if any, to
the extent provided by regulations.
For the year ended December 31, 2004, the Fund has elected to defer $9,235 of foreign
currency attributable to Post-October losses.
(c) All or a portion of this security was on loan to brokers at June 30, 2005.
(d) Non-income producing security.
(e) Represents investments of securities lending collateral.
ADR/GDR An American Depositary Receipt (ADR) or Global Depositary Receipt (GDR) is a certificate
issued by a U.S. bank representing the right to receive securities of the foreign issuer
described. The values of ADRs and GDRs are significantly influenced by trading on
exchanges not located in the United States.
144A Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registrations, normally to qualified
institutional buyers. At the period end, the value of these amounted to $812,579 or 0.6% of
net assets.
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Banks 17.8%
Pharmaceuticals 7.8
Oil & Gas 6.8
Telecommunications 5.6
Insurance 5.3
Electrical Components & Equipment 4.5
Food 4.4
Chemicals 3.1
Hand & Machine Tools 2.9
Electronics 2.6
Miscellaneous -- Manufacturing 2.4
Health Care -- Products 2.2
Engineering & Construction 2.2
Other, less than 2% each 31.3
See accompanying notes to financial statements.
31
HARRIS ASSOCIATES FOCUSED VALUE FUND -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- -------------------------------------------------------------------------------
Common Stocks -- 92.2% of Total Net Assets
Aerospace & Defense -- 4.5%
378,600 Raytheon Co. $ 14,810,832
---------------
Apparel -- 2.4%
203,800 Liz Claiborne, Inc. 8,103,088
---------------
Beverages -- 3.6%
548,500 Coca-Cola Enterprises, Inc. 12,072,485
---------------
Commercial Services -- 13.3%
282,500 H&R Block, Inc.(c) 16,483,875
228,400 Moody's Corp.(c) 10,268,864
503,000 RR Donnelley & Sons Co. 17,358,530
---------------
44,111,269
---------------
Distribution & Wholesale -- 1.0%
55,600 CDW Corp. 3,174,204
---------------
Hand & Machine Tools -- 1.6%
57,500 Black & Decker Corp.(c) 5,166,375
---------------
Health Care -- Products -- 1.9%
170,300 Baxter International, Inc. 6,318,130
---------------
Leisure Time -- 2.7%
179,300 Harley-Davidson, Inc. 8,893,280
---------------
Media -- 12.0%
138,400 Cablevision Systems Corp., Class A(d) 4,456,480
181,400 Knight-Ridder, Inc.(c) 11,127,076
851,200 Liberty Media Corp., Class A(d) 8,673,728
932,700 Time Warner, Inc.(d) 15,585,417
---------------
39,842,701
---------------
Oil & Gas -- 4.0%
239,200 Burlington Resources, Inc. 13,213,408
---------------
Pharmaceuticals -- 13.7%
480,100 Bristol-Myers Squibb Co.(c) 11,992,898
388,400 Hospira, Inc.(d) 15,147,600
425,900 Omnicare, Inc. 18,070,937
---------------
45,211,435
---------------
Restaurants -- 5.5%
348,100 Yum! Brands, Inc. 18,129,048
---------------
Retail -- 10.6%
564,800 AutoNation, Inc.(d) 11,589,696
303,900 McDonald's Corp. 8,433,225
611,900 TJX Cos., Inc.(c) 14,899,765
---------------
34,922,686
---------------
Savings & Loans -- 12.2%
380,300 Sovereign Bancorp, Inc. 8,495,902
782,500 Washington Mutual, Inc.(c) 31,839,925
---------------
40,335,827
---------------
Semiconductors -- 1.2%
177,900 National Semiconductor Corp. 3,919,137
---------------
Software -- 2.0%
168,700 First Data Corp. 6,771,618
---------------
Total Common Stocks (Identified Cost $239,081,564) 304,995,523
---------------
Principal
Amount Description Value (a)
- ----------------------------------------------------------------------------------------------------
Short Term Investments -- 25.5%
$ 26,052,899 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at 2.01% to be repurchased at $26,054,354 on
7/01/2005, collateralized by $20,793,986 Federal National
Mortgage Association Bond, 3.814% due 11/25/2033 valued at
$21,000,000 and $5,876,783 Small Business Administration Bond,
6.295% due 3/25/2023 valued at $6,355,544 $ 26,052,899
2,687,343 American Beacon Fund, 3.18%, due 7/01/2005(e) 2,687,343
3,842,842 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 3,842,842
863,560 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 863,560
2,158,900 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 2,158,900
3,536,080 BGI Institutional Money Market Fund(e) 3,536,080
3,528,909 Calyon, 3.09%, due 7/01/2005(e) 3,528,909
2,158,900 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 2,158,900
2,331,612 Compass Securitization, 3.16%, due 7/11/2005(e) 2,331,612
2,357,001 Fairway Finance, 3.26%, due 7/25/2005(e) 2,357,001
2,158,900 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 2,158,900
1,727,120 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 1,727,120
1,830,357 Goldman Sachs Financial Square Prime Obligations Fund(e) 1,830,357
2,222,804 Greyhawk Funding, 3.26%, due 8/01/2005(e) 2,222,804
2,158,900 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 2,158,900
2,158,900 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 2,158,900
276,359 Merrimac Cash Fund-Premium Class(e) 276,359
3,316,291 National Australia Bank, 3.26%, due 7/06/2005(e) 3,316,291
2,158,900 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 2,158,900
2,158,900 Prefco, 3.26%, due 7/26/2005(e) 2,158,900
1,687,755 Rabobank Nederland, 3.35%, due 7/01/2005(e) 1,687,755
2,124,646 Ranger Funding, 3.19%, due 7/15/2005(e) 2,124,646
2,158,900 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 2,158,900
4,317,801 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 4,317,801
2,158,900 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 2,158,900
2,147,278 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 2,147,278
---------------
Total Short Term Investments (Identified Cost $84,280,757) 84,280,757
---------------
Total Investments -- 117.7%
(Identified Cost $323,362,321)(b) 389,276,280
Other assets less liabilities (58,673,664)
---------------
Total Net Assets -- 100% $ 330,602,616
===============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the
Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales):
At June 30, 2005, the net unrealized appreciation on investments based on cost of
$323,362,321 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $ 67,989,617
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (2,075,658)
---------------
Net unrealized appreciation $ 65,913,959
===============
At December 31, 2004, the Fund had a capital loss carryover of approximately
$10,136,380 which expires on December 31, 2011. This amount may be available to
offset future realized capital gains, if any, to the extent provided by regulations.
(c) All or a portion of this security was on loan to brokers at June 30, 2005.
(d) Non-income producing security.
(e) Represents investments of securities lending collateral.
See accompanying notes to financial statements.
32
HARRIS ASSOCIATES FOCUSED VALUE FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Pharmaceuticals 13.7%
Commercial Services 13.3
Savings & Loans 12.2
Media 12.0
Retail 10.6
Restaurants 5.5
Aerospace & Defense 4.5
Oil & Gas 4.0
Beverages 3.6
Leisure Time 2.7
Apparel 2.4
Software 2.0
Other, less than 2% each 5.7
See accompanying notes to financial statements.
33
HARRIS ASSOCIATES LARGE CAP VALUE FUND -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------
Common Stocks -- 98.5% of Total Net Assets
Aerospace & Defense -- 2.7%
213,000 Raytheon Co. $ 8,332,560
---------------
Banks -- 0.9%
98,100 U.S. Bancorp 2,864,520
---------------
Beverages -- 5.3%
83,800 Anheuser-Busch Cos., Inc. 3,833,850
38,500 Coca-Cola Co. (The) 1,607,375
144,200 Coca-Cola Enterprises, Inc. 3,173,842
130,100 Diageo PLC, Sponsored ADR(c) 7,714,930
---------------
16,329,997
---------------
Building Materials -- 2.9%
279,100 Masco Corp.(c) 8,864,216
---------------
Computers -- 4.5%
386,400 Hewlett-Packard Co. 9,084,264
1,241,900 Sun Microsystems, Inc.(d) 4,632,287
---------------
13,716,551
---------------
Diversified Financial Services -- 11.1%
61,100 American Express Co. 3,252,353
198,800 Citigroup, Inc. 9,190,524
120,300 Fannie Mae 7,025,520
299,300 JPMorgan Chase & Co. 10,571,276
77,500 Morgan Stanley 4,066,425
---------------
34,106,098
---------------
Electronics -- 2.4%
264,500 Texas Instruments, Inc. 7,424,515
---------------
Environmental Control -- 2.9%
307,300 Waste Management, Inc. 8,708,882
---------------
Food -- 1.8%
60,700 General Mills, Inc. 2,840,153
40,100 Nestle SA, Sponsored ADR 2,564,996
---------------
5,405,149
---------------
Health Care-Products -- 4.9%
241,200 Baxter International, Inc. 8,948,520
91,000 Johnson & Johnson 5,915,000
---------------
14,863,520
---------------
Household Products & Wares -- 2.5%
85,600 Fortune Brands, Inc. 7,601,280
---------------
Insurance --1.9%
73,700 Aflac, Inc. 3,189,736
41,600 MGIC Investment Corp. 2,713,152
---------------
5,902,888
---------------
Leisure Time -- 3.8%
60,300 Carnival Corp. 3,289,365
165,600 Harley-Davidson, Inc.(c) 8,213,760
---------------
11,503,125
---------------
Media -- 16.6%
207,000 Comcast Corp., Special Class A(d) 6,199,650
313,200 DIRECTV Group (The), Inc.(d) 4,854,600
1,229,700 Liberty Media Corp., Class A(d) 12,530,643
614,000 Time Warner, Inc.(d) 10,259,940
278,200 Viacom, Inc., Class B 8,907,964
322,500 Walt Disney Co. (The) 8,120,550
---------------
50,873,347
---------------
Shares Description Value (a)
- ------------------------------------------------------------------------------
Miscellaneous--Manufacturing -- 3.0%
120,500 Honeywell International, Inc. $ 4,413,915
164,300 Tyco International, Ltd. 4,797,560
---------------
9,211,475
---------------
Office & Business Equipment -- 2.6%
586,400 Xerox Corp.(d) 8,086,456
---------------
Oil & Gas -- 1.0%
56,800 Burlington Resources, Inc. 3,137,632
---------------
Pharmaceuticals -- 3.1%
127,400 Abbott Laboratories 6,243,874
131,000 Bristol-Myers Squibb Co.(c) 3,272,380
---------------
9,516,254
---------------
Retail -- 15.4%
83,500 Costco Wholesale Corp. 3,742,470
395,100 Gap (The), Inc. 7,803,225
257,900 Home Depot, Inc. 10,032,310
109,200 Kohl's Corp.(d) 6,105,372
71,800 Limited Brands, Inc. 1,537,956
438,200 McDonald's Corp. 12,160,050
117,100 Wal-Mart Stores, Inc. 5,644,220
---------------
47,025,603
---------------
Savings & Loans -- 4.1%
309,300 Washington Mutual, Inc.(c) 12,585,417
---------------
Semiconductors -- 2.0%
238,000 Intel Corp. 6,202,280
---------------
Software -- 1.1%
81,800 First Data Corp. 3,283,452
---------------
Transportation -- 2.0%
95,000 Union Pacific Corp. 6,156,000
---------------
Total Common Stocks (Identified Cost $260,233,076) 301,701,217
---------------
Principal
Amount
- -------------------------------------------------------------------------------------
Short Term Investments -- 8.9%
$ 2,093,927 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at $2,094,044 on 7/01/2005, collateralized by
$2,062,123 Small Business Administration Bond, 6.625% due
9/25/2015 valued at 2,198,623 2,093,927
1,168,830 American Beacon Fund, 3.18%, due 7/01/2005(e) 1,168,830
1,671,402 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 1,671,402
375,596 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 375,596
938,990 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 938,990
1,537,980 BGI Institutional Money Market Fund(e) 1,537,980
1,534,861 Calyon, 3.09%, due 7/01/2005(e) 1,534,861
938,990 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 938,990
1,014,109 Compass Securitization, 3.16%, due 7/11/2005(e) 1,014,109
1,025,152 Fairway Finance, 3.26%, due 7/25/2005(e) 1,025,152
938,990 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 938,990
751,192 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 751,192
796,094 Goldman Sachs Financial Square Prime Obligations Fund(e) 796,094
966,784 Greyhawk Funding, 3.26%, due 8/01/2005(e) 966,784
938,990 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 938,990
938,990 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 938,990
120,199 Merrimac Cash Fund-Premium Class(e) 120,199
1,442,385 National Australia Bank, 3.26%, due 7/06/2005(e) 1,442,385
938,990 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 938,990
938,990 Prefco, 3.26%, due 7/26/2005(e) 938,990
734,071 Rabobank Nederland, 3.35%, due 7/01/2005(e) 734,071
See accompanying notes to financial statements.
34
HARRIS ASSOCIATES LARGE CAP VALUE FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------
Short Term Investments -- continued
$ 924,092 Ranger Funding, 3.19%, due 7/15/2005(e) $ 924,092
938,990 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 938,990
1,877,982 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 1,877,982
938,990 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 938,990
933,935 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 933,935
---------------
Total Short Term Investments (Identified Cost $27,419,501) 27,419,501
---------------
Total Investments -- 107.4%
(Identified Cost $287,652,577)(b) 329,120,718
Other assets less liabilities (22,806,082)
---------------
Total Net Assets -- 100% $ 306,314,636
===============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the
Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales):
At June 30, 2005, the net unrealized appreciation on investments based on cost of
$287,652,577 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost $ 47,127,925
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (5,659,784)
---------------
Net unrealized appreciation $ 41,468,141
===============
At December 31, 2004, the Fund had a capital loss carryover of approximately
$134,352,059 of which $16,433,943 expires on December 31, 2008, $83,318,807
expires on December 31, 2009, $24,633,843 expires on December 31, 2010 and
$9,965,466 expires on December 31, 2011. These amounts may be available to offset
future realized capital gains, if any, to the extent provided by regulations.
For the year ended December 31, 2004, the Fund has elected to defer $159,806 of
capital losses attributable to Post-October losses.
(c) All or a portion of this security was on loan to brokers at June 30, 2005.
(d) Non-income producing security.
(e) Represents investments of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing
the right to receive securities of the foreign issuer described. The values of ADRs are
significantly influenced by trading on exchanges not located in the United States.
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Media 16.6%
Retail 15.4
Diversified Financial Services 11.1
Beverages 5.3
Health Care -- Products 4.9
Computers 4.5
Savings & Loans 4.1
Leisure Time 3.8
Pharmaceuticals 3.1
Miscellaneous -- Manufacturing 3.0
Building Materials 2.9
Environmental Control 2.9
Aerospace & Defense 2.7
Office & Business Equipment 2.6
Household Products & Wares 2.5
Electronics 2.4
Semiconductors 2.0
Transportation 2.0
Other, less than 2% each 6.7
See accompanying notes to financial statements.
35
IXIS U.S. DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------
Common Stocks -- 99.3% of Total Net Assets
Advertising -- 1.6%
31,225 Getty Images, Inc.(c)(d) $ 2,318,768
66,300 Lamar Advertising Co.(c) 2,835,651
77,700 R.H. Donnelley Corp.(c) 4,815,846
---------------
9,970,265
---------------
Aerospace & Defense -- 1.3%
29,200 Boeing Co. (The) 1,927,200
26,900 Lockheed Martin Corp. 1,745,003
118,300 Raytheon Co. 4,627,896
---------------
8,300,099
---------------
Apparel -- 0.9%
127,850 Coach, Inc.(c) 4,291,924
15,300 Nike, Inc., Class B 1,324,980
---------------
5,616,904
---------------
Auto Parts & Equipment -- 0.2%
19,825 Harman International Industries, Inc. 1,612,962
---------------
Banks -- 3.8%
37,700 Bank of America Corp. 1,719,497
78,700 BOK Financial Corp. 3,629,644
60,125 City National Corp. 4,311,564
168,550 Colonial BancGroup Inc. 3,718,213
84,506 Dearborn Bancorp, Inc.(c) 2,188,705
130,650 South Financial Group (The), Inc.(d) 3,713,073
35,450 SVB Financial Group(c)(d) 1,698,055
100,500 U.S. Bancorp(d) 2,934,600
---------------
23,913,351
---------------
Beverages -- 2.1%
46,400 Anheuser-Busch Cos., Inc. 2,122,800
21,400 Coca-Cola Co. (The) 893,450
80,100 Coca-Cola Enterprises, Inc. 1,763,001
81,725 Constellation Brands, Inc.(c) 2,410,887
72,200 Diageo PLC, Sponsored ADR(d) 4,281,460
39,200 PepsiCo, Inc. 2,114,056
---------------
13,585,654
---------------
Biotechnology -- 1.1%
19,175 Affymetrix, Inc.(c)(d) 1,034,108
28,600 Amgen, Inc.(c) 1,729,156
15,950 Celgene Corp.(c) 650,281
42,000 Gilead Sciences, Inc.(c) 1,847,580
22,150 Invitrogen Corp.(c) 1,844,873
---------------
7,105,998
---------------
Building Materials -- 1.7%
356,875 Comfort Systems USA, Inc.(c) 2,348,237
155,000 Masco Corp.(d) 4,922,800
61,425 Texas Industries, Inc. 3,453,928
---------------
10,724,965
---------------
Chemicals -- 2.2%
33,900 Air Products & Chemicals, Inc. 2,044,170
154,500 Airgas, Inc.(d) 3,811,515
33,575 Cytec Industries, Inc. 1,336,285
65,900 Dow Chemical Co. (The) 2,934,527
39,000 Du Pont (E.I.) de Nemours & Co. 1,677,390
45,500 Praxair, Inc. 2,120,300
---------------
13,924,187
---------------
Shares Description Value (a)
- -----------------------------------------------------------------------
Commercial Services -- 3.8%
123,550 Adesa, Inc. $ 2,689,683
143,450 Aramark Corp., Class B(d) 3,787,080
47,925 Arbitron, Inc. 2,055,983
39,275 Corporate Executive Board Co. 3,076,411
92,050 Exponent, Inc.(c) 2,630,789
20,200 Hewitt Associates, Inc., Class A(c) 535,502
33,400 Manpower, Inc. 1,328,652
66,700 Moody's Corp.(d) 2,998,832
109,700 United Rentals, Inc.(c) 2,217,037
105,518 Viad Corp. 2,990,380
---------------
24,310,349
---------------
Computers -- 2.1%
61,950 Cognizant Technology Solutions Corp.(c) 2,919,703
214,600 Hewlett-Packard Co. 5,045,246
38,925 Micros Systems Inc.(c) 1,741,894
29,150 PalmOne Inc. 867,795
690,600 Sun Microsystems, Inc.(c) 2,575,938
---------------
13,150,576
---------------
Cosmetics & Personal Care -- 0.5%
58,200 Procter & Gamble Co.(d) 3,070,050
---------------
Distribution & Wholesale -- 0.5%
275,750 BlueLinx Holdings, Inc. 2,917,435
---------------
Diversified Financial Services -- 4.6%
33,800 American Express Co. 1,799,174
141,300 Citigroup, Inc. 6,532,299
66,800 Fannie Mae 3,901,120
21,300 Franklin Resources, Inc. 1,639,674
166,000 JPMorgan Chase & Co. 5,863,120
22,100 Legg Mason, Inc. 2,300,831
43,000 Morgan Stanley 2,256,210
125,825 Nuveen Investments, Class A(d) 4,733,536
---------------
29,025,964
---------------
Electric -- 2.3%
44,041 Allete, Inc. 2,197,646
193,975 MDU Resources Group, Inc. 5,464,276
183,500 NRG Energy, Inc.(c)(d) 6,899,600
---------------
14,561,522
---------------
Electrical Components & Equipment -- 0.6%
91,825 Ametek, Inc. 3,842,876
---------------
Electronics -- 2.0%
71,000 Amphenol Corp., Class A 2,852,070
111,200 Avnet, Inc.(c) 2,505,336
65,675 Cogent, Inc.(c) 1,875,021
16,400 Fisher Scientific International, Inc.(c) 1,064,360
146,900 Texas Instruments, Inc. 4,123,483
15,500 Waters Corp.(c) 576,135
---------------
12,996,405
---------------
Engineering & Construction -- 0.7%
84,625 Washington Group International, Inc.(c)(d) 4,326,030
---------------
Environmental Control -- 1.0%
65,550 Nalco Holding Co.(c)(d) 1,286,746
170,700 Waste Management, Inc. 4,837,638
---------------
6,124,384
---------------
See accompanying notes to financial statements.
36
IXIS U.S. DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ----------------------------------------------------------------------------
Food -- 2.3%
159,175 Dean Foods Co.(c) $ 5,609,327
33,700 General Mills, Inc. 1,576,823
43,200 McCormick & Co., Inc. 1,411,776
22,300 Nestle SA, Sponsored ADR 1,426,419
31,835 TreeHouse Foods Inc.(c) 907,616
21,600 Whole Foods Market, Inc. 2,555,280
20,000 WM Wrigley Jr. Co. 1,376,800
---------------
14,864,041
---------------
Gas -- 1.4%
124,325 Oneok, Inc.(d) 4,059,211
169,150 UGI Corp. 4,719,285
---------------
8,778,496
---------------
Health Care -- Products -- 5.2%
52,300 Alcon, Inc. 5,719,005
133,900 Baxter International, Inc. 4,967,690
73,100 Boston Scientific Corp.(c) 1,973,700
21,825 Intuitive Surgical, Inc.(c) 1,017,918
125,100 Johnson & Johnson 8,131,500
48,800 Medtronic, Inc. 2,527,352
92,450 St. Jude Medical, Inc.(c) 4,031,744
39,100 Sybron Dental Specialties, Inc.(c) 1,470,942
41,500 Varian Medical Systems, Inc.(c)(d) 1,549,195
36,750 Ventana Medical Systems(c)(d) 1,478,452
---------------
32,867,498
---------------
Health Care -- Services -- 3.2%
35,300 Caremark Rx, Inc.(c) 1,571,556
53,850 Covance, Inc.(c) 2,416,249
36,700 Sierra Health Services, Inc.(c)(d) 2,622,582
62,725 Triad Hospitals, Inc.(c) 3,427,294
34,025 United Surgical Partners International, Inc.(c) 1,772,022
65,800 UnitedHealth Group, Inc. 3,430,812
76,750 WellPoint, Inc.(c) 5,344,870
---------------
20,585,385
---------------
Heavy Machinery -- 0.7%
14,500 Caterpillar, Inc. 1,381,995
64,900 National Oilwell Varco, Inc.(c) 3,085,346
---------------
4,467,341
---------------
Home Builders -- 1.3%
63,950 DR Horton, Inc.(d) 2,405,159
15,000 Meritage Homes Corp.(c) 1,192,500
24,575 Standard-Pacific Corp.(d) 2,161,371
23,175 Toll Brothers, Inc.(c)(d) 2,353,421
---------------
8,112,451
---------------
Home Furnishings -- 0.3%
73,450 Tempur-Pedic International(c)(d) 1,629,121
---------------
Household Products & Wares -- 1.1%
71,475 Church & Dwight Co., Inc.(d) 2,587,395
47,400 Fortune Brands, Inc. 4,209,120
---------------
6,796,515
---------------
Insurance -- 3.0%
40,900 Aflac, Inc. 1,770,152
173,175 Assurant, Inc. 6,251,617
23,100 MGIC Investment Corp. 1,506,582
71,875 Old Republic International Corp. 1,817,719
106,725 Platinum Underwriters Holdings, Ltd. 3,395,989
99,250 Protective Life Corp. 4,190,335
---------------
18,932,394
---------------
Shares Description Value (a)
- -----------------------------------------------------------------------------
Internet -- 1.5%
61,225 Avocent Corp.(c) $ 1,600,422
11,000 Google, Inc., Class A(c)(d) 3,235,650
92,600 VeriSign, Inc.(c)(d) 2,663,176
67,600 Yahoo!, Inc.(c)(d) 2,342,340
---------------
9,841,588
---------------
Iron & Steel -- 0.1%
52,218 Roanoke Electric Steel Corp. 862,641
---------------
Leisure Time -- 1.2%
61,000 Carnival Corp.(d) 3,327,550
92,300 Harley-Davidson, Inc.(d) 4,578,080
---------------
7,905,630
---------------
Lodging -- 2.4%
17,475 Choice Hotels International, Inc.(d) 1,148,108
431,800 La Quinta Corp.(c) 4,028,694
38,000 Marriott International, Inc., Class A 2,592,360
68,750 Starwood Hotels & Resorts Worldwide, Inc. 4,026,688
39,400 Station Casinos, Inc. 2,616,160
23,500 Wynn Resorts, Ltd.(c)(d) 1,110,845
---------------
15,522,855
---------------
Machinery--Diversified -- 1.6%
79,275 Alamo Group, Inc. 1,480,064
104,000 Albany International Corp., Class A 3,339,440
19,900 Deere & Co. 1,303,251
187,650 Wabtec Corp. 4,030,722
---------------
10,153,477
---------------
Media -- 5.5%
115,000 Comcast Corp., Special Class A(c) 3,444,250
173,900 DIRECTV Group (The), Inc.(c) 2,695,450
700,000 Liberty Media Corp., Class A(c) 7,133,000
84,500 Scholastic Corp.(c) 3,257,475
338,500 Time Warner, Inc.(c) 5,656,335
41,350 Univision Communications, Inc., Class A(c) 1,139,193
155,200 Viacom, Inc., Class B 4,969,504
205,200 Walt Disney Co. (The) 5,166,936
53,150 XM Satellite Radio Holdings, Inc., Class A(c)(d) 1,789,029
---------------
35,251,172
---------------
Metal Fabricate & Hardware -- 0.4%
31,575 Precision Castparts Corp. 2,459,693
---------------
Miscellaneous -- Manufacturing -- 3.5%
75,300 3M Co. 5,444,190
19,150 Brink's Co.The 689,400
239,500 General Electric Co. 8,298,675
66,800 Honeywell International, Inc. 2,446,884
13,300 ITT Industries, Inc. 1,298,479
43,500 Pall Corp. 1,320,660
91,000 Tyco International, Ltd. 2,657,200
---------------
22,155,488
---------------
Office & Business Equipment -- 0.7%
325,700 Xerox Corp.(c) 4,491,403
---------------
Office Furnishings -- 0.3%
243,939 Interface, Inc., Class A(c) 1,963,709
---------------
Oil & Gas -- 3.1%
33,400 Baker Hughes, Inc. 1,708,744
31,700 Burlington Resources, Inc. 1,751,108
173,375 Energy Partners, Ltd.(c) 4,544,159
48,725 EOG Resources, Inc. 2,767,580
See accompanying notes to financial statements.
37
IXIS U.S. DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------
Oil & Gas -- continued
44,600 Halliburton Co. $ 2,132,772
34,100 Southwestern Energy Co.(c) 1,602,018
93,050 Transocean, Inc.(c) 5,021,909
---------------
19,528,290
---------------
Oil & Gas Services -- 1.8%
170,575 FMC Technologies, Inc.(c) 5,453,283
18,600 Grant Prideco, Inc.(c) 491,970
38,000 Schlumberger, Ltd. 2,885,720
78,700 Universal Compression Holdings, Inc.(c) 2,852,088
---------------
11,683,061
---------------
Pharmaceuticals -- 3.0%
70,500 Abbott Laboratories 3,455,205
49,450 Amylin Pharmaceuticals, Inc.(c)(d) 1,034,989
39,200 Avon Products, Inc. 1,483,720
72,400 Bristol-Myers Squibb Co. 1,808,552
37,700 Express Scripts, Inc.(c)(d) 1,884,246
23,325 Idenix Pharmaceuticals, Inc.(c) 505,686
44,825 Medco Health Solutions, Inc.(c) 2,391,862
96,200 Omnicare, Inc. 4,081,766
167,025 Perrigo Co. 2,328,329
---------------
18,974,355
---------------
Pipelines -- 0.4%
37,775 Questar Corp. 2,489,373
---------------
Real Estate -- 1.7%
56,725 CB Richard Ellis Group, Inc., Class A(c) 2,487,959
34,725 St. Joe Co. (The)(d) 2,831,477
224,250 Trammell Crow Co.(c) 5,435,820
---------------
10,755,256
---------------
REITs -- Financial Services -- 0.3%
37,450 CBL & Associates Properties, Inc. 1,612,972
---------------
REITs -- Shopping Centers -- 0.6%
87,975 Developers Diversified Realty Corp. 4,043,331
---------------
Restaurants -- 0.5%
63,000 Yum! Brands, Inc. 3,281,040
---------------
Retail -- 7.6%
40,125 Advance Auto Parts(c) 2,590,069
83,275 Applebee's International, Inc. 2,205,955
71,625 BJ's Wholesale Club, Inc.(c) 2,327,096
27,400 CBRL Group, Inc. 1,064,764
69,750 Chico's FAS, Inc.(c)(d) 2,391,030
46,400 Costco Wholesale Corp. 2,079,648
25,875 Family Dollar Stores 675,338
219,400 Gap (The), Inc. 4,333,150
142,700 Home Depot, Inc. 5,551,030
61,000 Kohl's Corp.(c) 3,410,510
84,700 Limited Brands, Inc. 1,814,274
242,400 McDonald's Corp. 6,726,600
10,000 MSC Industrial Direct Co., Inc. 337,500
7,375 Regis Corp. 288,215
99,950 Staples, Inc. 2,130,934
35,300 Starbucks Corp.(c) 1,823,598
90,725 Talbots, Inc. 2,945,841
43,575 Urban Outfitters, Inc.(c)(d) 2,470,267
65,000 Wal-Mart Stores, Inc. 3,133,000
---------------
48,298,819
---------------
Shares Description Value (a)
- --------------------------------------------------------------------------------------
Savings & Loans -- 1.1%
170,000 Washington Mutual, Inc.(d) $ 6,917,300
---------------
Semiconductors -- 2.3%
80,700 Cypress Semiconductor Corp.(c) 1,016,013
232,375 Entegris, Inc.(c) 2,300,513
132,500 Intel Corp. 3,452,950
59,700 Marvell Technology Group, Ltd.(c) 2,270,988
107,125 MEMC Electronic Materials, Inc.(c) 1,689,361
87,600 Microsemi Corp.(c) 1,646,880
556,375 ON Semiconductor Corp.(c) 2,559,325
---------------
14,936,030
---------------
Software -- 3.8%
107,750 Activision, Inc.(c) 1,780,030
51,125 Autodesk, Inc. 1,757,166
156,350 Certegy, Inc.(d) 5,975,697
327,650 Compuware Corp.(c) 2,355,804
21,925 Dun & Bradstreet Corp.(c) 1,351,676
80,300 First Data Corp. 3,223,242
224,800 Microsoft Corp. 5,584,032
125,550 Sybase, Inc.(c) 2,303,843
---------------
24,331,490
---------------
Telecommunications -- 3.1%
140,875 ADTRAN, Inc. 3,492,291
84,400 Corning, Inc. 1,402,728
101,750 Harris Corp. 3,175,618
108,650 Juniper Networks, Inc.(c)(d) 2,735,807
124,475 Nextel Partners, Inc., Class A(c)(d) 3,133,036
27,525 NII Holdings, Inc., Class B(c)(d) 1,759,949
46,200 Telefonaktiebolaget LM Ericsson, Sponsored ADR(d) 1,476,090
165,175 Valor Communications Group, Inc. 2,279,415
---------------
19,454,934
---------------
Transportation -- 1.3%
206,750 Laidlaw International, Inc.(c) 4,982,675
53,000 Union Pacific Corp. 3,434,400
---------------
8,417,075
---------------
Total Common Stocks (Identified Cost $531,112,060) 631,444,200
---------------
Principal
Amount
- --------------------------------------------------------------------------------------
Short Term Investments --15.1%
$ 4,993,909 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at $4,994,188 on 7/01/2005, collateralized by
$4,874,421 Small Business Administration Bond, 6.125% due
9/25/2022 valued at $5,243,604 4,993,909
4,210,078 American Beacon Fund, 3.18%, due 7/01/2005(e) 4,210,078
6,020,320 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 6,020,320
1,352,881 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 1,352,881
3,382,202 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 3,382,202
5,539,736 BGI Institutional Money Market Fund(e) 5,539,736
5,528,502 Calyon, 3.09%, due 7/01/2005(e) 5,528,502
3,382,202 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 3,382,202
3,652,778 Compass Securitization, 3.16%, due 7/11/2005(e) 3,652,778
3,692,553 Fairway Finance, 3.26%, due 7/25/2005(e) 3,692,553
3,382,202 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 3,382,202
2,705,762 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 2,705,762
2,867,496 Goldman Sachs Financial Square Prime Obligations Fund(e) 2,867,496
3,482,315 Greyhawk Funding, 3.26%, due 8/01/2005(e) 3,482,315
3,382,202 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 3,382,202
See accompanying notes to financial statements.
38
IXIS U.S. DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------
Short Term Investments -- continued
$ 3,382,202 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) $ 3,382,202
432,952 Merrimac Cash Fund-Premium Class(e) 432,952
5,195,407 National Australia Bank, 3.26%, due 7/06/2005(e) 5,195,407
3,382,202 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 3,382,202
3,382,202 Prefco, 3.26%, due 7/26/2005(e) 3,382,202
2,644,092 Rabobank Nederland, 3.35%, due 7/01/2005(e) 2,644,092
3,328,539 Ranger Funding, 3.19%, due 7/15/2005(e) 3,328,539
3,382,202 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 3,382,202
6,764,406 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 6,764,406
3,382,202 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 3,382,202
3,363,995 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 3,363,995
---------------
Total Short Term Investments (Identified Cost $96,215,539) 96,215,539
---------------
Total Investments -- 114.4%
(Identified Cost $627,327,599)(b) 727,659,739
Other assets less liabilities (91,364,392)
---------------
Total Net Assets -- 100% $ 636,295,347
===============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the
Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales):
At June 30, 2005, the net unrealized appreciation on investments based on cost of
$627,327,599 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost $ 110,643,305
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (10,311,165)
---------------
Net unrealized appreciation $ 100,332,140
===============
At December 31, 2004, the Fund had a capital loss carryover of approximately
$224,285,919 of which $161,817,021 expires on December 31, 2009 and
$62,468,898 expires on December 31, 2010. These amounts may be available to offset
future realized capital gains, if any, to the extent provided by regulations.
For the year ended December 31, 2004, the Fund has elected to defer $2,008 of
foreign currency losses attributable to Post-October losses.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2005.
(e) Represents investments of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing
the right to receive securities of the foreign issuer described. The values of ADRs are
significantly influenced by trading on exchanges not located in the United States.
REITs Real Estate Investment Trusts
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Retail 7.6%
Media 5.5
Health Care -- Products 5.2
Diversified Financial Services 4.6
Software 3.8
Commercial Services 3.8
Banks 3.8
Miscellaneous -- Manufacturing 3.5
Health Care -- Services 3.2
Oil & Gas 3.1
Telecommunications 3.1
Pharmaceuticals 3.0
Insurance 3.0
Lodging 2.4
Semiconductors 2.3
Food 2.3
Electric 2.3
Chemicals 2.2
Beverages 2.1
Computers 2.1
Electronics 2.0
Other, less than 2% each 28.4
See accompanying notes to financial statements.
39
IXIS VALUE FUND -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- -------------------------------------------------------------------
Common Stocks -- 96.6% of Total Net Assets
Aerospace & Defense -- 1.9%
4,600 General Dynamics Corp. $ 503,884
7,600 Lockheed Martin Corp. 493,012
14,650 Northrop Grumman Corp. 809,412
1,000 Raytheon Co. 39,120
10,900 United Technologies Corp. 559,715
---------------
2,405,143
---------------
Agriculture -- 1.2%
15,900 Altria Group, Inc. 1,028,094
22,400 Archer-Daniels-Midland Co. 478,912
---------------
1,507,006
---------------
Banks -- 5.1%
18,975 Bank of America Corp. 865,450
3,600 Bear Stearns Cos. (The), Inc. 374,184
900 Comerica, Inc. 52,020
9,000 First Bancorp Puerto Rico 361,350
2,100 M&T Bank Corp.(c) 220,836
5,850 SunTrust Banks, Inc.(c) 422,604
70,500 U.S. Bancorp(c) 2,058,600
16,576 Wachovia Corp. 822,170
21,200 Wells Fargo & Co. 1,305,496
---------------
6,482,710
---------------
Beverages -- 4.1%
10,100 Anheuser-Busch Cos., Inc. 462,075
55,000 Coca-Cola Co. (The) 2,296,250
65,000 Pepsi Bottling Group, Inc. 1,859,650
11,400 PepsiCo, Inc. 614,802
---------------
5,232,777
---------------
Biotechnology -- 0.3%
5,300 Amgen, Inc.(d) 320,438
---------------
Building Materials -- 1.0%
15,300 Masco Corp.(c) 485,928
7,900 USG Corp.(c)(d) 335,750
11,600 York International Corp. 440,800
---------------
1,262,478
---------------
Chemicals -- 0.6%
16,600 Praxair, Inc. 773,560
---------------
Coal -- 0.5%
11,250 Peabody Energy Corp. 585,450
---------------
Commercial Services -- 2.1%
23,050 Accenture, Ltd., Class A(d) 522,543
98,800 Cendant Corp.(c) 2,210,156
---------------
2,732,699
---------------
Computers -- 1.7%
74,525 Hewlett-Packard Co. 1,752,083
6,500 International Business Machines Corp. 482,300
---------------
2,234,383
---------------
Diversified Financial Services -- 8.6%
24,850 American Express Co. 1,322,765
19,125 CIT Group, Inc. 821,801
56,908 Citigroup, Inc. 2,630,857
90,597 JPMorgan Chase & Co. 3,199,886
11,600 Lehman Brothers Holdings, Inc.(c) 1,151,648
4,600 MBNA Corp. 120,336
21,500 Merrill Lynch & Co., Inc. 1,182,715
Shares Description Value (a)
- ------------------------------------------------------------------------
Diversified Financial Services -- continued
8,250 Morgan Stanley $ 432,877
2,100 SLM Corp. 106,680
---------------
10,969,565
---------------
Electric -- 4.5%
9,625 Constellation Energy Group, Inc. 555,266
12,200 Dominion Resources, Inc.(c) 895,358
6,300 Entergy Corp.(c) 475,965
21,075 Exelon Corp. 1,081,780
49,825 PG&E Corp. 1,870,430
4,500 TXU Corp. 373,905
12,300 Wisconsin Energy Corp. 479,700
---------------
5,732,404
---------------
Electrical Components & Equipment -- 0.4%
7,200 Energizer Holdings, Inc.(d) 447,624
---------------
Electronics -- 0.4%
11,400 Amphenol Corp., Class A 457,938
5,100 Applera Corp. -- Applied Biosystems Group 100,317
---------------
558,255
---------------
Engineering & Construction -- 0.3%
59,600 ABB, Ltd., Sponsored ADR(d) 385,612
---------------
Environmental Control -- 1.9%
87,000 Waste Management, Inc. 2,465,580
---------------
Food -- 0.6%
4,400 Supervalu, Inc. 143,484
36,100 Tyson Foods, Inc., Class A 642,580
---------------
786,064
---------------
Gas -- 0.1%
1,700 KeySpan Corp.(c) 69,190
2,400 UGI Corp. 66,960
---------------
136,150
---------------
Health Care -- Products -- 3.7%
67,000 Baxter International, Inc. 2,485,700
8,000 Becton Dickinson & Co. 419,760
21,100 Boston Scientific Corp.(c)(d) 569,700
3,000 Conmed Corp.(d) 92,310
7,300 Cooper, Cos. (The), Inc.(c) 444,278
11,700 Johnson & Johnson 760,500
---------------
4,772,248
---------------
Health Care -- Services -- 2.9%
1,800 Coventry Health Care, Inc.(d) 127,350
4,900 Genesis Healthcare Corp.(d) 226,772
11,500 Laboratory Corp. of America Holdings(d) 573,850
4,500 Pediatrix Medical Group, Inc.(d) 330,930
10,500 Quest Diagnostics 559,335
9,100 Triad Hospitals, Inc.(d) 497,224
10,900 UnitedHealth Group, Inc. 568,326
12,525 Universal Health Services, Inc., Class B(c) 778,804
---------------
3,662,591
---------------
Home Builders -- 0.4%
7,800 Beazer Homes USA, Inc.(c) 445,770
3,750 Technical Olympic USA, Inc. 91,050
---------------
536,820
---------------
Insurance -- 4.2%
9,900 Allmerica Financial Corp.(d) 367,191
19,900 Allstate Corp. (The) 1,189,025
See accompanying notes to financial statements.
40
IXIS VALUE FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------
Insurance -- continued
7,000 AMBAC Financial Group, Inc. $ 488,320
10,875 American International Group, Inc. 631,837
140 Berkshire Hathaway, Inc., Class B(c)(d) 389,690
5,200 Genworth Financial Inc., Class A 157,196
13,100 HCC Insurance Holdings, Inc. 496,097
9,100 Hilb, Rogal & Hobbs Co. 313,040
2,400 Loews Corp. 186,000
12,300 Old Republic International Corp. 311,067
6,500 Principal Financial Group 272,350
9,450 Prudential Financial, Inc. 620,487
---------------
5,422,300
---------------
Internet -- 0.1%
6,200 Internet Security Systems(d) 125,798
---------------
Iron & Steel -- 0.1%
7,000 Steel Dynamics, Inc. 183,750
---------------
Leisure Time -- 0.9%
20,000 Carnival Corp.(c) 1,091,000
---------------
Lodging -- 0.2%
2,900 Marriott International, Inc., Class A 197,838
---------------
Machinery--Construction & Mining -- 0.1%
3,200 Terex Corp.(d) 126,080
---------------
Media -- 7.8%
70,000 Cablevision Systems Corp., Class A(d) 2,254,000
6,000 Clear Channel Communications, Inc. 185,580
42,675 DIRECTV Group (The), Inc.(d) 661,462
12,000 Liberty Global Inc., Class A(d) 560,040
200,000 Liberty Media Corp., Class A(d) 2,038,000
12,600 McGraw-Hill Cos. (The), Inc. 557,550
44,350 News Corp., Inc., Class A 717,583
162,425 Time Warner, Inc.(d) 2,714,122
11,400 Walt Disney Co. (The) 287,052
---------------
9,975,389
---------------
Mining -- 0.7%
11,100 Inco, Ltd.(c) 419,025
900 Newmont Mining Corp. 35,127
4,200 Phelps Dodge Corp. 388,500
---------------
842,652
---------------
Miscellaneous -- Manufacturing -- 2.2%
34,500 General Electric Co. 1,195,425
21,600 Honeywell International, Inc. 791,208
26,925 Tyco International, Ltd. 786,210
---------------
2,772,843
---------------
Oil & Gas -- 7.5%
1,200 Anadarko Petroleum Corp. 98,580
8,400 BP PLC, Sponsored ADR 523,992
9,600 ChevronTexaco Corp. 536,832
12,300 Comstock Resources, Inc.(d) 311,067
32,300 ConocoPhillips 1,856,927
2,800 Devon Energy Corp. 141,904
69,650 Exxon Mobil Corp. 4,002,785
23,700 GlobalSantaFe Corp. 966,960
3,200 Houston Exploration Co.(d) 169,760
8,050 Quicksilver Resources, Inc.(c)(d) 514,637
9,200 Tesoro Corp. 427,984
---------------
9,551,428
---------------
Shares Description Value (a)
- ----------------------------------------------------------------------
Oil & Gas Services -- 1.3%
20,950 Halliburton Co. $ 1,001,829
8,000 Oil States International, Inc.(d) 201,360
12,600 Universal Compression Holdings, Inc.(d) 456,624
---------------
1,659,813
---------------
Pharmaceuticals -- 3.7%
24,100 Abbott Laboratories 1,181,141
6,900 AmerisourceBergen Corp. 477,135
3,100 Cardinal Health, Inc. 178,498
34,100 Merck & Co., Inc.(c) 1,050,280
67,317 Pfizer, Inc. 1,856,603
---------------
4,743,657
---------------
REITs -- Healthcare -- 0.4%
19,100 Health Care Property Investors, Inc.(c) 516,464
---------------
REITs -- Mortgage -- 0.6%
12,600 American Home Mortgage Investment Corp. 440,496
12,100 Ventas Inc. 365,420
---------------
805,916
---------------
REITs -- Regional Malls -- 0.4%
6,750 Simon Property Group, Inc.(c) 489,308
---------------
Restaurants -- 1.6%
40,000 Yum! Brands, Inc. 2,083,200
---------------
Retail -- 10.4%
35,000 Costco Wholesale Corp. 1,568,700
11,600 CVS Corp. 337,212
15,225 Federated Department Stores(c) 1,115,688
80,000 Gap (The), Inc. 1,580,000
15,000 Home Depot, Inc. 583,500
18,750 J.C. Penney Co., Inc. 985,875
9,900 Kohl's Corp.(d) 553,509
15,900 Limited Brands, Inc. 340,578
103,300 McDonald's Corp. 2,866,575
16,450 Office Depot, Inc.(d) 375,718
11,000 Outback Steakhouse, Inc. 497,640
8,000 Regis Corp. 312,640
52,000 Tiffany & Co. 1,703,520
15,100 United Auto Group, Inc.(c) 449,980
---------------
13,271,135
---------------
Savings & Loans -- 3.6%
5,300 Firstfed Financial Corp.(d) 315,933
24,000 People's Bank 725,760
80,000 Sovereign Bancorp, Inc.(c) 1,787,200
45,000 Washington Mutual, Inc.(c) 1,831,050
---------------
4,659,943
---------------
Semiconductors -- 2.1%
26,415 Freescale Semiconductor, Inc., Class B(d) 559,470
56,200 Intel Corp. 1,464,572
41,200 MEMC Electronic Materials, Inc.(d) 649,724
---------------
2,673,766
---------------
Software -- 1.1%
10,575 First Data Corp. 424,481
18,700 Microsoft Corp. 464,508
41,400 Oracle Corp.(d) 546,480
---------------
1,435,469
---------------
See accompanying notes to financial statements.
41
IXIS VALUE FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ----------------------------------------------------------------------------------------
Telecommunications -- 3.8%
7,700 Alltel Corp.(c) $ 479,556
49,850 Avaya, Inc.(d) 414,752
31,150 BellSouth Corp.(c) 827,656
12,050 CenturyTel, Inc. 417,292
43,100 Cisco Systems, Inc.(d) 823,641
36,400 Motorola, Inc. 664,664
25,300 Nokia OYJ, Sponsored ADR 420,992
34,500 SBC Communications, Inc.(c) 819,375
---------------
4,867,928
---------------
Toys, Games & Hobbies -- 0.5%
26,150 Hasbro, Inc.(c) 543,659
3,500 Jakks Pacific, Inc.(c)(d) 67,235
---------------
610,894
---------------
Transportation -- 1.0%
14,100 Burlington Northern Santa Fe Corp. 663,828
11,100 Norfolk Southern Corp. 343,656
5,100 Overseas Shipholding Group 304,215
---------------
1,311,699
---------------
Total Common Stocks (Identified Cost $100,516,846) 123,407,827
---------------
Principal
Amount
- ----------------------------------------------------------------------------------------
Short Term Investments --19.3%
$ 3,892,302 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at 2.01% to be repurchased at $3,892,519 on
07/01/2005, collateralized by $4,064,884 Federal National
Mortgage Association Bond, 4.125%, due 05/01/2033, valued at
$4,086,917 3,892,302
959,503 American Beacon Fund, 3.18%, due 7/01/2005(e) 959,503
1,372,070 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 1,372,070
308,330 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 308,330
770,825 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 770,825
1,262,540 BGI Institutional Money Market Fund(e) 1,262,540
1,259,980 Calyon, 3.09%, due 7/01/2005(e) 1,259,980
770,825 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 770,825
832,492 Compass Securitization, 3.16%, due 7/11/2005(e) 832,492
841,555 Fairway Finance, 3.26%, due 7/25/2005(e) 841,555
770,824 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 770,824
616,660 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 616,660
653,519 Goldman Sachs Financial Square Prime Obligations Fund(e) 653,519
793,642 Greyhawk Funding, 3.26%, due 8/01/2005(e) 793,642
770,824 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 770,824
770,824 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 770,824
98,673 Merrimac Cash Fund-Premium Class(e) 98,673
1,184,068 National Australia Bank, 3.26%, due 7/06/2005(e) 1,184,068
770,825 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 770,825
770,825 Prefco, 3.26%, due 7/26/2005(e) 770,825
602,605 Rabobank Nederland, 3.35%, due 7/01/2005(e) 602,605
758,595 Ranger Funding, 3.19%, due 7/15/2005(e) 758,595
770,824 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 770,824
1,541,650 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 1,541,650
770,824 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 770,824
766,675 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 766,675
---------------
Total Short Term Investments (Identified Cost $24,682,279) 24,682,279
---------------
Total Investments -- 115.9%
(Identified Cost $125,199,125)(b) $148,090,106
Other assets less liabilities (20,342,763)
------------
Total Net Assets -- 100% $127,747,343
============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at the end
of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to
wash sales):
At June 30, 2005, the net unrealized appreciation on investments based on
cost of $125,199,125 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an
excess of value over tax cost $ 24,360,776
Aggregate gross unrealized depreciation for all investments in which there is an
excess of tax cost over value (1,469,795)
------------
Net unrealized appreciation $ 22,890,981
============
(c) All or a portion of this security was on loan to brokers at June 30, 2005.
(d) Non-income producing security.
(e) Represents investments of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank
representing the right to receive securities of the foreign issuer described. The
values of ADRs are significantly influenced by trading on exchanges not located
in the United States.
REITs Real Estate Investment Trusts
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Retail 10.4%
Diversified Financial Services 8.6
Media 7.8
Oil & Gas 7.5
Banks 5.1
Electric 4.5
Insurance 4.2
Beverages 4.1
Telecommunications 3.8
Health Care -- Products 3.7
Pharmaceuticals 3.7
Savings & Loans 3.6
Health Care -- Services 2.9
Miscellaneous -- Manufacturing 2.2
Commercial Services 2.1
Semiconductors 2.1
Other, less than 2% each 20.3
See accompanying notes to financial statements.
42
VAUGHAN NELSON SMALL CAP VALUE FUND -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ----------------------------------------------------------------------
Common Stocks -- 98.9% of Total Net Assets
Aerospace & Defense -- 6.3%
30,125 Alliant Techsystems, Inc.(c)(d) $ 2,126,825
48,825 DRS Technologies, Inc.(d) 2,503,746
29,075 Esterline Technologies Corp.(c) 1,165,326
28,612 Moog, Inc., Class A(c)(d) 900,992
---------------
6,696,889
---------------
Automobiles -- 1.3%
77,925 Monaco Coach Corp.(d) 1,339,531
---------------
Banks -- 6.1%
18,775 City Holding Co. 685,663
26,976 MB Financial, Inc. 1,074,454
47,375 Provident Bankshares Corp. 1,511,736
138,240 Republic Bancorp, Inc. 2,070,835
40,850 WesBanco, Inc. 1,226,317
---------------
6,569,005
---------------
Building Materials -- 2.4%
182,800 U.S. Concrete, Inc.(c) 1,182,716
36,000 York International Corp. 1,368,000
---------------
2,550,716
---------------
Commercial Services -- 7.1%
34,300 Consolidated Graphics, Inc.(c) 1,398,411
51,150 Dollar Thrifty Automotive Group, Inc.(c) 1,942,677
64,050 McGrath Rentcorp 1,517,985
25,675 Monro Muffler, Inc.(c) 757,669
3,575 Strayer Education, Inc. 308,379
75,325 Team, Inc.(c) 1,619,487
---------------
7,544,608
---------------
Distribution & Wholesale -- 1.3%
32,700 Watsco, Inc. 1,393,020
---------------
Diversified Financial Services -- 3.3%
30,850 Financial Federal Corp. 1,192,044
83,975 Raymond James Financial, Inc. 2,372,294
---------------
3,564,338
---------------
Electric -- 1.6%
71,900 Westar Energy Inc. 1,727,757
---------------
Electrical Components & Equipment -- 1.8%
57,300 MTS Systems Corp. 1,924,134
---------------
Food -- 1.7%
48,125 Corn Products International, Inc. 1,143,450
32,050 Gold Kist, Inc.(c)(d) 691,639
---------------
1,835,089
---------------
Health Care -- Products -- 1.6%
38,800 Invacare Corp. 1,721,168
---------------
Health Care -- Services -- 5.2%
52,762 Healthcare Services Group, Inc. 1,059,461
28,300 Pediatrix Medical Group, Inc.(c) 2,081,182
45,175 Triad Hospitals, Inc.(c) 2,468,362
---------------
5,609,005
---------------
Household Products & Wares -- 1.5%
48,625 Yankee Candle Co. (The), Inc. 1,560,862
---------------
Insurance -- 5.7%
40,875 Allmerica Financial Corp.(c) 1,516,054
70,300 HCC Insurance Holdings, Inc. 2,662,261
54,275 Hilb, Rogal & Hobbs Co. 1,867,060
---------------
6,045,375
---------------
Shares Description Value (a)
- ---------------------------------------------------------------------
Investment Companies -- 5.0%
58,050 iShares Russell 2000 Value Index Fund(d) $ 3,732,615
96,100 MCG Capital Corp. 1,641,388
---------------
5,374,003
---------------
Iron & Steel -- 1.1%
60,862 Gibraltar Industries, Inc. 1,128,381
---------------
Leisure Time -- 1.7%
139,375 K2, Inc.(c) 1,767,275
---------------
Lodging -- 0.8%
90,775 La Quinta Corp.(c) 846,931
---------------
Machinery -- Diversified -- 3.2%
48,950 Briggs & Stratton Corp.(d) 1,694,649
50,300 Nordson Corp. 1,724,284
---------------
3,418,933
---------------
Media -- 1.3%
82,050 Journal Register Co.(c) 1,436,695
---------------
Miscellaneous -- Manufacturing -- 2.1%
209,725 Jacuzzi Brands, Inc.(c) 2,250,349
---------------
Oil & Gas -- 8.7%
86,025 Comstock Resources, Inc.(c) 2,175,572
39,425 GMX Resources, Inc.(c) 567,326
87,875 Oil States International, Inc.(c) 2,211,814
48,200 Petrohawk Energy Corp.(c)(d) 520,560
26,400 Southwestern Energy Co.(c)(d) 1,240,272
27,200 Ultra Petroleum Corp.(c)(d) 825,792
49,050 Whiting Petroleum Corp.(c) 1,781,005
---------------
9,322,341
---------------
Oil & Gas Services -- 2.0%
57,875 Universal Compression Holdings, Inc.(c) 2,097,390
---------------
Pipelines -- 1.7%
26,425 Equitable Resources, Inc. 1,796,900
---------------
Real Estate -- 2.0%
49,275 CB Richard Ellis Group, Inc., Class A(c) 2,161,202
---------------
REITs -- Healthcare -- 1.3%
37,425 Healthcare Realty Trust, Inc. 1,444,979
---------------
REITs -- Hotels -- 3.8%
224,825 Ashford Hospitality Trust, Inc. 2,428,110
153,300 Highland Hospitality Corp. 1,601,985
---------------
4,030,095
---------------
REITs -- Mortgage -- 1.0%
20,100 Redwood Trust, Inc.(d) 1,037,160
---------------
REITs -- Office Buildings -- 1.1%
79,425 American Financial Realty Trust 1,221,557
---------------
Retail -- 7.1%
43,850 Regis Corp. 1,713,658
143,450 Triarc Cos., Inc., Class B(d) 2,131,667
68,925 United Auto Group, Inc.(d) 2,053,965
54,000 Zale Corp.(c) 1,711,260
---------------
7,610,550
---------------
Semiconductors -- 1.1%
40,675 ATMI, Inc.(c)(d) 1,179,982
---------------
Software -- 1.4%
56,750 Reynolds & Reynolds Co. (The), Class A 1,533,953
---------------
See accompanying notes to financial statements.
43
VAUGHAN NELSON SMALL CAP VALUE FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------------------------------------
Transportation -- 4.1%
81,825 Arlington Tankers, Ltd. $ 1,782,967
81,650 Genesee & Wyoming, Inc., Class A(c)(d) 2,221,697
13,150 Landstar System, Inc.(c) 396,078
---------------
4,400,742
---------------
Trucking & Leasing -- 1.5%
29,860 AMERCO, Inc. 1,599,003
---------------
Total Common Stocks (Identified Cost $92,202,088) 105,739,918
---------------
Principal
Amount
- ---------------------------------------------------------------------------------------------------
Short Term Investments -- 18.7%
$ 1,424,573 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at $1,424,652 on 7/01/2005, collateralized by
$1,383,523 Small Business Administration Bond, 6.125% due
08/25/2026 valued at $1,495,801 1,424,573
858,806 American Beacon Fund, 3.18%, due 7/01/2005(e) 858,806
1,228,075 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 1,228,075
275,972 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 275,972
689,930 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 689,930
1,130,041 BGI Institutional Money Market Fund(e) 1,130,041
1,127,749 Calyon, 3.09%, due 7/01/2005(e) 1,127,749
689,930 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 689,930
745,124 Compass Securitization, 3.16%, due 7/11/2005(e) 745,124
753,237 Fairway Finance, 3.26%, due 7/25/2005(e) 753,237
689,930 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 689,930
551,944 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 551,944
584,935 Goldman Sachs Financial Square Prime Obligations Fund(e) 584,935
710,351 Greyhawk Funding, 3.26%, due 8/01/2005(e) 710,351
689,930 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 689,930
689,929 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 689,929
88,317 Merrimac Cash Fund-Premium Class(e) 88,317
1,059,802 National Australia Bank, 3.26%, due 7/06/2005(e) 1,059,802
689,929 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 689,929
689,929 Prefco, 3.26%, due 7/26/2005(e) 689,929
539,364 Rabobank Nederland, 3.35%, due 7/01/2005(e) 539,364
678,983 Ranger Funding, 3.19%, due 7/15/2005(e) 678,983
689,930 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 689,930
1,379,859 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 1,379,859
689,929 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 689,929
686,215 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 686,215
---------------
Total Short Term Investments (Identified Cost $20,032,713) 20,032,713
---------------
Total Investments -- 117.6%
(Identified Cost $112 ,234,801)(b) 125,772,631
Other assets less liabilities (18,866,193)
---------------
Total Net Assets -- 100% $ 106,906,438
===============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the
Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales):
At June 30, 2005, the net unrealized appreciation on investments based on cost of
$112,234,801 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $ 15,206,656
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (1,668,826)
---------------
Net unrealized appreciation $ 13,537,830
===============
At December 31, 2004, the Fund had a capital loss carryover of approximately $42,306,805 of
which $15,016,855 expires on December 31, 2009 and $27,289,950 expires on December 31,
2010. These amounts may be available to offset future realized capital gains, if any, to the extent
provided by regulations.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2005.
(e) Represents investments of securities lending collateral.
REITs Real Estate Investment Trusts
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Oil & Gas 8.7%
Retail 7.1
Commercial Services 7.1
Aerospace & Defense 6.3
Banks 6.1
Insurance 5.7
Health Care -- Services 5.2
Investment Companies 5.0
Transportation 4.1
REITs -- Hotels 3.8
Diversified Financial Services 3.3
Machinery -- Diversified 3.2
Building Materials 2.4
Miscellaneous -- Manufacturing 2.1
Real Estate 2.0
Oil & Gas Services 2.0
Other, less than 2% each 24.8
See accompanying notes to financial statements.
44
WESTPEAK CAPITAL GROWTH FUND -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ----------------------------------------------------------------------
Common Stocks -- 99.1% of Total Net Assets
Aerospace & Defense -- 2.3%
8,300 Boeing Co. (The) $ 547,800
5,800 General Dynamics Corp. 635,332
8,300 Teledyne Technologies, Inc.(c) 270,414
---------------
1,453,546
---------------
Apparel Retailers -- 0.5%
4,700 Abercrombie & Fitch Co.(d) 322,890
---------------
Banks -- 0.8%
17,700 U.S. Bancorp(d) 516,840
---------------
Beverages -- 2.5%
9,500 Anheuser-Busch Cos., Inc. 434,625
35,700 Pepsi Bottling Group, Inc. 1,021,377
2,900 PepsiCo, Inc. 156,397
---------------
1,612,399
---------------
Biotechnology -- 2.5%
27,000 Amgen, Inc.(c)(d) 1,632,420
---------------
Commercial Services -- 0.9%
26,500 Cendant Corp.(d) 592,805
---------------
Computers -- 3.7%
15,500 Dell, Inc.(c) 612,405
24,300 International Business Machines Corp. 1,803,060
---------------
2,415,465
---------------
Cosmetics & Personal Care -- 2.2%
20,100 Kimberly-Clark Corp. 1,258,059
3,300 Procter & Gamble Co.(d) 174,075
---------------
1,432,134
---------------
Diversified Financial Services -- 3.0%
24,700 American Express Co. 1,314,781
11,300 E*TRADE Financial Corp.(c) 158,087
2,500 Fannie Mae 146,000
3,800 Franklin Resources, Inc. 292,524
---------------
1,911,392
---------------
Electrical Components & Equipment -- 2.0%
20,400 Energizer Holdings, Inc.(c) 1,268,268
---------------
Electronics -- 3.0%
29,900 Applera Corp.--Applied Biosystems Group 588,133
47,500 Texas Instruments, Inc. 1,333,325
---------------
1,921,458
---------------
Food -- 2.2%
4,400 H.J. Heinz Co. 155,848
6,100 Hershey Co. (The)(d) 378,810
3,200 McCormick & Co., Inc. 104,576
11,900 Sanderson Farms, Inc. 540,736
3,300 WM Wrigley Jr. Co. 227,172
---------------
1,407,142
---------------
Health Care -- Products -- 9.4%
23,900 Becton Dickinson & Co. 1,254,033
38,700 Boston Scientific Corp.(c)(d) 1,044,900
51,900 Johnson & Johnson 3,373,500
7,600 Medtronic, Inc. 393,604
---------------
6,066,037
---------------
Health Care -- Services -- 5.7%
10,300 Aetna, Inc. 853,046
10,500 Coventry Health Care, Inc.(c) 742,875
Shares Description Value (a)
- -----------------------------------------------------------------------
Health Care -- Services -- continued
40,200 UnitedHealth Group, Inc. $ 2,096,028
---------------
3,691,949
---------------
Home Builders -- 3.3%
11,500 Meritage Homes Corp.(c)(d) 914,250
1,500 NVR, Inc.(c)(d) 1,215,000
---------------
2,129,250
---------------
Insurance -- 2.2%
5,000 AMBAC Financial Group, Inc. 348,800
12,200 Genworth Financial Inc., Class A 368,806
3,200 Prudential Financial, Inc. 210,112
2,600 Radian Group, Inc. 122,772
10,650 W.R. Berkley Corp. 379,992
---------------
1,430,482
---------------
Internet -- 0.8%
13,300 Internet Security Systems(c) 269,857
7,700 j2 Global Communications, Inc.(c)(d) 265,188
---------------
535,045
---------------
Machinery -- Construction & Mining -- 1.3%
22,100 Terex Corp.(c) 870,740
---------------
Media -- 1.3%
32,100 Walt Disney Co. (The) 808,278
---------------
Mining -- 0.2%
3,400 Newmont Mining Corp. 132,702
---------------
Oil & Gas -- 4.3%
5,900 Burlington Resources, Inc. 325,916
26,800 Oil States International, Inc.(c)(d) 674,556
37,700 Southwestern Energy Co.(c)(d) 1,771,146
---------------
2,771,618
---------------
Oil & Gas Services -- 0.6%
5,800 Lone Star Technologies(c) 263,900
4,800 Maverick Tube Corp.(c) 143,040
---------------
406,940
---------------
Pharmaceuticals -- 11.5%
19,800 AmerisourceBergen Corp.(d) 1,369,170
27,000 Cardinal Health, Inc. 1,554,660
7,100 Medco Health Solutions, Inc.(c) 378,856
51,600 Merck & Co., Inc.(d) 1,589,280
91,550 Pfizer, Inc. 2,524,949
---------------
7,416,915
---------------
REITs -- Mortgage -- 0.9%
16,400 American Home Mortgage Investment Corp. 573,344
---------------
Restaurants -- 0.5%
9,100 Darden Restaurants, Inc. 300,118
---------------
Retail -- 10.7%
21,400 American Eagle Outfitters 655,910
25,700 Best Buy Co., Inc. 1,761,735
55,450 Home Depot, Inc. 2,157,005
17,900 Limited Brands, Inc. 383,418
33,000 Target Corp. 1,795,530
3,900 Wal-Mart Stores, Inc. 187,980
---------------
6,941,578
---------------
Semiconductors -- 5.7%
26,100 Freescale Semiconductor, Inc., Class B(c) 552,798
120,200 Intel Corp. 3,132,412
---------------
3,685,210
---------------
See accompanying notes to financial statements.
45
WESTPEAK CAPITAL GROWTH FUND -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- -----------------------------------------------------------------------------------------
Software -- 8.1%
2,400 Fiserv, Inc.(c) $ 103,080
22,300 IMS Health, Inc. 552,371
111,800 Microsoft Corp. 2,777,112
138,400 Oracle Corp.(c) 1,826,880
---------------
5,259,443
---------------
Telecommunications -- 5.6%
142,000 Cisco Systems, Inc.(c) 2,713,620
14,600 NII Holdings, Inc., Class B(c)(d) 933,524
---------------
3,647,144
---------------
Transportation -- 1.4%
11,300 FedEx Corp. 915,413
---------------
Total Common Stocks (Identified Cost $65,833,137) 64,068,965
---------------
Principal
Amount
- -----------------------------------------------------------------------------------------
Short Term Investments -- 16.9%
$ 824,161 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at $824,207 on 7/01/2005, collateralized by $856,080
Federal Home Loan Mortgage Corporation Bond, 4.30% due
12/15/2023 valued at $865,369 824,161
466,844 American Beacon Fund, 3.18%, due 7/01/2005(e) 466,844
667,578 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 667,578
150,017 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 150,017
375,044 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 375,044
614,287 BGI Institutional Money Market Fund(e) 614,287
613,041 Calyon, 3.09%, due 7/01/2005(e) 613,041
375,044 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 375,044
405,047 Compass Securitization, 3.16%, due 7/11/2005(e) 405,047
409,459 Fairway Finance, 3.26%, due 7/25/2005(e) 409,459
375,044 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 375,044
300,035 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 300,035
317,969 Goldman Sachs Financial Square Prime Obligations Fund(e) 317,969
386,143 Greyhawk Funding, 3.26%, due 8/01/2005(e) 386,143
375,043 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 375,043
375,044 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 375,044
48,009 Merrimac Cash Fund-Premium Class(e) 48,009
576,105 National Australia Bank, 3.26%, due 7/06/2005(e) 576,105
375,044 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 375,044
375,044 Prefco, 3.26%, due 7/26/2005(e) 375,044
293,196 Rabobank Nederland, 3.35%, due 7/01/2005(e) 293,196
369,093 Ranger Funding, 3.19%, due 7/15/2005(e) 369,093
375,043 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 375,043
750,087 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 750,087
375,044 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 375,044
373,024 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 373,024
---------------
Total Short Term Investments (Identified Cost $10,939,489) 10,939,489
---------------
Total Investments -- 116.0%
(Identified Cost $76,772,626)(b) 75,008,454
Other assets less liabilities (10,345,838)
---------------
Total Net Assets -- 100% $ 64,662,616
===============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at the end of
the Fund's fiscal year for tax purposes. Such adjustments are primarily due to
wash sales):
At June 30, 2005, the net unrealized depreciation on investments based on cost of
$76,772,626 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which there is
an excess of value over tax cost $ 5,734,671
Aggregate gross unrealized depreciation for all investments in which there is
an excess of tax cost over value (7,498,843)
-----------
Net unrealized depreciation $(1,764,172)
===========
At December 31, 2004, the Fund had a capital loss carryover of approximately $53,439,207
of which $22,458,247 expires on December 31, 2009, $26,883,047 expires on December 31,
2010 and $4,097,913 expires on December 31, 2011. These amounts may be available to
offset future realized capital gains, if any, to the extent provided by regulations.
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2005.
(e) Represents investments of securities lending collateral.
REITs Real Estate Investment Trusts
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Pharmaceuticals 11.5%
Retail 10.7
Health Care -- Products 9.4
Software 8.1
Health Care -- Services 5.7
Semiconductors 5.7
Telecommunications 5.6
Oil & Gas 4.3
Computers 3.7
Home Builders 3.3
Electronics 3.0
Diversified Financial Services 3.0
Biotechnology 2.5
Beverages 2.5
Aerospace & Defense 2.3
Cosmetics & Personal Care 2.2
Insurance 2.2
Food 2.2
Electrical Components & Equipment 2.0
Other, less than 2% each 9.2
See accompanying notes to financial statements.
46
STATEMENTS OF ASSETS & LIABILITIES
June 30, 2005 (unaudited)
CGM Advisor Hansberger Harris Associates
Targeted Equity International Focused Value
Fund Fund Fund
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
ASSETS
Investments at cost $ 740,517,940 $ 135,233,237 $ 323,362,321
Net unrealized appreciation
(depreciation) 60,776,057 13,060,495 65,913,959
--------------------- --------------------- ---------------------
Investments at value (a) 801,293,997 148,293,732 389,276,280
Cash 31,735 24,785 1,503
Foreign cash at value (identified cost
$77,384) -- 77,236 --
Receivable for Fund shares sold 18,029 26,479 252,508
Receivable for securities sold 64,811,330 643,538 1,145,021
Dividends and interest receivable 1,689,029 324,490 361,912
Tax reclaims receivable 54,246 54,598 --
Securities lending income receivable 23,810 11,797 7,948
Prepaid insurance expense 3,919 671 1,768
--------------------- --------------------- ---------------------
TOTAL ASSETS 867,926,095 149,457,326 391,046,940
--------------------- --------------------- ---------------------
LIABILITIES
Collateral on securities loaned, at
value 64,654,350 19,407,485 58,227,858
Payable for securities purchased 63,722,768 1,033,971 128,064
Payable for Fund shares redeemed 842,733 272,857 1,595,192
Payable to custodian bank -- -- --
Management fees payable 423,643 85,491 273,723
Deferred Trustees' fees 575,055 76,080 46,543
Transfer agent fees payable 171,335 58,019 93,683
Administrative fees payable 40,321 6,189 21,610
Other accounts payable and accrued
expenses 113,127 54,537 57,651
--------------------- --------------------- ---------------------
TOTAL LIABILITIES 130,543,332 20,994,629 60,444,324
--------------------- --------------------- ---------------------
NET ASSETS $ 737,382,763 $ 128,462,697 $ 330,602,616
===================== ===================== =====================
NET ASSETS CONSIST OF:
Paid-in capital $ 755,336,207 $ 119,638,127 $ 254,369,912
Undistributed (overdistributed) net
investment income (loss) 2,558,977 386,388 (873,892)
Accumulated net realized gain (loss) (81,288,478) (4,613,348) 11,192,637
Net unrealized appreciation
(depreciation) of investments and
foreign currency translations 60,776,057 13,051,530 65,913,959
--------------------- --------------------- ---------------------
NET ASSETS $ 737,382,763 $ 128,462,697 $ 330,602,616
===================== ===================== =====================
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:
Class A shares:
Net assets $ 670,502,445 $ 75,539,705 $ 94,155,861
===================== ===================== =====================
Shares of beneficial interest 71,753,509 4,439,167 7,014,890
===================== ===================== =====================
Net asset value and redemption price
per share $ 9.34 $ 17.02 $ 13.42
===================== ===================== =====================
Offering price per share
(100/[100-maximum sales charge] of
net asset value) $ 9.91 $ 18.06 $ 14.24
===================== ===================== =====================
Class B shares: (redemption price is
equal to net asset value less any
applicable contingent deferred sales
charges)
Net assets $ 53,611,749 $ 35,949,764 $ 104,689,104
===================== ===================== =====================
Shares of beneficial interest 6,164,604 2,290,190 8,054,196
===================== ===================== =====================
Net asset value and offering price
per share $ 8.70 $ 15.70 $ 13.00
===================== ===================== =====================
Class C shares: (redemption price is
equal to net asset value less any
applicable contingent deferred sales
charges)
Net assets $ 3,403,221 $ 16,973,228 $ 131,757,651
===================== ===================== =====================
Shares of beneficial interest 391,401 1,080,861 10,135,332
===================== ===================== =====================
Net asset value and offering price
per share $ 8.69 $ 15.70 $ 13.00
===================== ===================== =====================
Class Y shares:
Net assets $ 9,865,348 -- --
===================== ===================== =====================
Shares of beneficial interest 1,033,556 -- --
===================== ===================== =====================
Net asset value, offering and
redemption price per share $ 9.55 -- --
===================== ===================== =====================
(a) Including securities on loan
with market values of $ 63,083,299 $ 18,597,626 $ 56,416,027
===================== ===================== =====================
See accompanying notes to financial statements.
47
Harris Associates Vaughan Nelson Westpeak
Large Cap Value IXIS U.S. Diversified IXIS Value Small Cap Capital Growth
Fund Portfolio Fund Value Fund Fund
- --------------------- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- --------------------- ---------------------
$ 287,652,577 $ 627,327,599 $ 125,199,125 $ 112,234,801 $ 76,772,626
41,468,141 100,332,140 22,890,981 13,537,830 (1,764,172)
- --------------------- --------------------- --------------------- --------------------- ---------------------
329,120,718 727,659,739 148,090,106 125,772,631 75,008,454
786 3,670 -- 2,678 328
-- -- -- -- --
126,247 264,343 10,161 20,913 6,660
8,476,143 7,977,393 1,721,974 -- --
264,435 594,297 157,800 226,378 58,253
-- 6,239 -- -- --
21,007 73,279 3,138 15,737 8,011
1,835 3,760 712 573 385
- --------------------- --------------------- --------------------- --------------------- ---------------------
338,011,171 736,582,720 149,983,891 126,038,910 75,082,091
- --------------------- --------------------- --------------------- --------------------- ---------------------
25,325,574 91,221,630 20,789,977 18,608,140 10,115,328
5,366,509 6,470,168 625,342 -- --
465,143 1,322,227 267,999 216,532 86,392
-- -- 223,914 -- --
143,178 554,673 79,464 78,797 40,184
232,588 311,395 162,254 81,007 84,669
84,325 243,984 28,040 62,499 34,894
23,406 44,857 8,172 6,405 5,353
55,812 118,439 51,386 79,092 52,655
- --------------------- --------------------- --------------------- --------------------- ---------------------
31,696,535 100,287,373 22,236,548 19,132,472 10,419,475
- --------------------- --------------------- --------------------- --------------------- ---------------------
$ 306,314,636 $ 636,295,347 $ 127,747,343 $ 106,906,438 $ 64,662,616
===================== ===================== ===================== ===================== =====================
$ 387,056,971 $ 728,961,626 $ 97,404,666 $ 131,926,158 $ 119,690,975
(40,983) (3,071,053) (136,045) (358,204) (388,794)
(122,169,493) (189,928,237) 7,587,741 (38,199,346) (52,875,393)
41,468,141 100,333,011 22,890,981 13,537,830 (1,764,172)
- --------------------- --------------------- --------------------- --------------------- ---------------------
$ 306,314,636 $ 636,295,347 $ 127,747,343 $ 106,906,438 $ 64,662,616
===================== ===================== ===================== ===================== =====================
$ 201,593,454 $ 377,214,685 $ 100,355,320 $ 48,676,743 $ 52,848,467
===================== ===================== ===================== ===================== =====================
15,695,002 20,189,894 11,374,515 2,941,830 4,649,871
===================== ===================== ===================== ===================== =====================
$ 12.84 $ 18.68 $ 8.82 $ 16.55 $ 11.37
===================== ===================== ===================== ===================== =====================
$ 13.62 $ 19.82 $ 9.36 $ 17.56 $ 12.06
===================== ===================== ===================== ===================== =====================
$ 66,840,585 $ 187,539,069 $ 24,337,737 $ 44,723,913 $ 10,868,857
===================== ===================== ===================== ===================== =====================
5,537,011 11,199,263 3,015,797 2,911,365 1,104,488
===================== ===================== ===================== ===================== =====================
$ 12.07 $ 16.75 $ 8.07 $ 15.36 $ 9.84
===================== ===================== ===================== ===================== =====================
$ 22,802,850 $ 50,236,869 $ 3,054,286 $ 13,505,782 $ 945,292
===================== ===================== ===================== ===================== =====================
1,891,536 2,996,716 378,498 878,711 96,238
===================== ===================== ===================== ===================== =====================
$ 12.06 $ 16.76 $ 8.07 $ 15.37 $ 9.82
===================== ===================== ===================== ===================== =====================
$ 15,077,747 $ 21,304,724 -- -- --
===================== ===================== ===================== ===================== =====================
1,141,260 1,076,801 -- -- --
===================== ===================== ===================== ===================== =====================
$ 13.21 $ 19.79 -- -- --
===================== ===================== ===================== ===================== =====================
$ 24,621,602 $ 88,651,474 $ 20,218,456 $ 18,018,961 $ 9,818,649
===================== ===================== ===================== ===================== =====================
48
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2005 (unaudited)
CGM Advisor Hansberger Harris Associates
Targeted Equity International Focused Value
Fund Fund Fund
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
NET INVESTMENT INCOME
Dividends $ 8,257,983 $ 2,498,881 $ 2,645,903
Interest 35,148 14,054 179,128
Securities lending income 139,678 81,506 24,901
Less net foreign taxes withheld (345,053) (282,333) --
--------------------- --------------------- ---------------------
8,087,756 2,312,108 2,849,932
--------------------- --------------------- ---------------------
Expenses
Management fees 2,565,105 525,751 1,687,318
Service fees - Class A 835,286 92,978 124,342
Service and distribution fees -
Class B 275,770 200,773 520,120
Service and distribution fees -
Class C 15,770 84,502 669,828
Trustees' fees and expenses 44,866 12,135 15,882
Administrative fees 235,514 41,228 111,773
Custodian fees 60,697 77,359 28,564
Transfer agent fees - Class A, Class
B, Class C 775,124 284,492 418,175
Transfer agent fees - Class Y 12,123 -- --
Audit and tax services 13,224 19,000 11,609
Legal fees 27,769 5,951 12,893
Shareholder reporting 59,909 23,626 46,236
Registration 32,086 20,791 22,839
Miscellaneous 34,483 10,417 17,392
--------------------- --------------------- ---------------------
Total expenses 4,987,726 1,399,003 3,686,971
Less reimbursement/waiver -- -- --
--------------------- --------------------- ---------------------
Net expenses 4,987,726 1,399,003 3,686,971
--------------------- --------------------- ---------------------
Net investment income (loss) 3,100,030 913,105 (837,039)
--------------------- --------------------- ---------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Realized gain (loss) on:
Investments - net 60,244,053 4,898,789 21,329,017
Foreign currency transactions - net -- (171,778) --
Change in unrealized appreciation
(depreciation) of:
Investments - net (39,021,813) (6,676,135) (12,814,122)
Foreign currency transactions - net -- (15,221) --
--------------------- --------------------- ---------------------
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 21,222,240 (1,964,345) 8,514,895
--------------------- --------------------- ---------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 24,322,270 $ (1,051,240) $ 7,677,856
===================== ===================== =====================
Harris Associates
Large Cap Value
Fund
---------------------
---------------------
NET INVESTMENT INCOME
Dividends $ 2,542,409
Interest 73,965
Securities lending income 32,916
Less net foreign taxes withheld (33,944)
---------------------
2,615,346
---------------------
Expenses
Management fees 1,096,496
Service fees - Class A 261,199
Service and distribution fees -
Class B 361,010
Service and distribution fees -
Class C 122,953
Trustees' fees and expenses 22,475
Administrative fees 107,284
Custodian fees 32,728
Transfer agent fees - Class A, Class
B, Class C 493,939
Transfer agent fees - Class Y 15,560
Audit and tax services 12,181
Legal fees 11,307
Shareholder reporting 42,638
Registration 28,551
Miscellaneous 18,591
---------------------
Total expenses 2,626,912
Less reimbursement/waiver (191,766)
---------------------
Net expenses 2,435,146
---------------------
Net investment income (loss) 180,200
---------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Realized gain (loss) on:
Investments - net 13,988,950
Foreign currency transactions - net --
Change in unrealized appreciation
(depreciation) of:
Investments - net (27,625,197)
Foreign currency transactions - net --
---------------------
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (13,636,247)
---------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (13,456,047)
=====================
See accompanying notes to financial statements.
49
Vaughan Nelson Westpeak
IXIS U.S. Diversified IXIS Value Small Cap Value Capital Growth
Portfolio Fund Fund Fund
- --------------------- --------------------- --------------------- ---------------------
$ 3,686,549 $ 1,105,921 $ 792,927 $ 334,086
90,700 34,393 31,402 6,985
108,415 8,480 31,928 17,697
(21,299) (2,954) -- --
- --------------------- --------------------- --------------------- ---------------------
3,864,365 1,145,840 856,257 358,768
- --------------------- --------------------- --------------------- ---------------------
3,408,166 487,865 473,901 245,923
469,250 126,664 56,794 66,535
995,545 128,698 235,090 57,075
264,235 15,133 64,292 4,682
33,296 15,339 11,747 10,962
214,556 42,338 34,352 22,504
80,929 39,275 29,753 24,397
1,115,615 213,292 279,583 182,025
18,552 -- -- --
18,505 15,034 18,505 12,181
26,779 6,943 4,760 3,075
88,788 18,381 23,358 17,133
33,447 19,939 23,946 18,634
32,696 9,721 10,116 7,558
- --------------------- --------------------- --------------------- ---------------------
6,800,359 1,138,622 1,266,197 672,684
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
6,800,359 1,138,622 1,266,197 672,684
- --------------------- --------------------- --------------------- ---------------------
(2,935,994) 7,218 (409,940) (313,916)
- --------------------- --------------------- --------------------- ---------------------
37,519,402 7,913,478 4,190,377 1,014,495
(15,148) -- -- --
(39,141,796) (6,101,624) (1,093,875) (1,338,958)
(590) -- -- --
- --------------------- --------------------- --------------------- ---------------------
(1,638,132) 1,811,854 3,096,502 (324,463)
- --------------------- --------------------- --------------------- ---------------------
$ (4,574,126) $ 1,819,072 $ 2,686,562 $ (638,379)
===================== ===================== ===================== =====================
50
STATEMENTS OF CHANGES IN NET ASSETS
CGM Advisor Targeted Equity Fund
--------------------------------------------
Six Months Ended
June 30, Year Ended
2005 December 31,
(unaudited) 2004
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 3,100,030 $ 775,706
Net realized gain (loss) on investments and
foreign currency transactions 60,244,053 186,920,714
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations (39,021,813) (91,588,409)
--------------------- ---------------------
Increase (decrease) in net assets resulting
from operations 24,322,270 96,108,011
--------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A (873,231) --
Class B (75,336) --
Class C (4,738) --
Class Y (12,467) --
Long-Term capital gain
Class A -- --
Class B -- --
Class C -- --
--------------------- ---------------------
(965,772) --
--------------------- ---------------------
INCREASE (DECREASE) IN NET ASSETS DERIVED
FROM CAPITAL SHARE TRANSACTIONS (NOTE 10) (45,831,221) (127,772,868)
--------------------- ---------------------
Redemption Fees
Class A 4,065 2,396
Class B 330 181
Class C 20 12
Class Y 57 27
--------------------- ---------------------
4,472 2,616
--------------------- ---------------------
Total increase (decrease) in net assets (22,470,251) (31,662,241)
--------------------- ---------------------
NET ASSETS
Beginning of period 759,853,014 791,515,255
--------------------- ---------------------
End of period $ 737,382,763 $ 759,853,014
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ 2,558,977 $ 424,719
===================== =====================
Hansberger International Fund
--------------------------------------------
Six Months Ended
June 30, Year Ended
2005 December 31,
(unaudited) 2004
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 913,105 $ (307,118)
Net realized gain (loss) on investments and
foreign currency transactions 4,727,011 25,636,223
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations (6,691,356) (9,265,743)
--------------------- ---------------------
Increase (decrease) in net assets resulting
from operations (1,051,240) 16,063,362
--------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A -- --
Class B -- --
Class C -- --
Class Y -- --
Long-Term capital gain
Class A -- --
Class B -- --
Class C -- --
--------------------- ---------------------
-- --
--------------------- ---------------------
INCREASE (DECREASE) IN NET ASSETS DERIVED
FROM CAPITAL SHARE TRANSACTIONS (NOTE 10) (6,452,528) (12,713,186)
--------------------- ---------------------
Redemption Fees
Class A 355 170
Class B 193 118
Class C 78 38
Class Y -- --
--------------------- ---------------------
626 326
--------------------- ---------------------
Total increase (decrease) in net assets (7,503,142) 3,350,502
--------------------- ---------------------
NET ASSETS
Beginning of period 135,965,839 132,615,337
--------------------- ---------------------
End of period $ 128,462,697 $ 135,965,839
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ 386,388 $ (526,717)
===================== =====================
See accompanying notes to financial statements.
51
Harris Associates Focused Value Fund Harris Associates Large Cap Value Fund
- -------------------------------------------- --------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended June 30, Year Ended
2005 December 31, 2005 December 31,
(unaudited) 2004 (unaudited) 2004
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
$ (837,039) $ (2,315,007) $ 180,200 $ 313,635
21,329,017 11,304,168 13,988,950 14,432,239
(12,814,122) 24,626,530 (27,625,197) 14,335,620
- --------------------- --------------------- --------------------- ---------------------
7,677,856 33,615,691 (13,456,047) 29,081,494
- --------------------- --------------------- --------------------- ---------------------
-- -- (231,035) --
-- -- (81,762) --
-- -- (28,415) --
-- -- (16,672) --
-- -- -- --
-- -- -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
-- -- (357,884) --
- --------------------- --------------------- --------------------- ---------------------
(40,194,938) 2,079,342 (26,673,578) (30,720,612)
- --------------------- --------------------- --------------------- ---------------------
6,658 149 -- --
6,927 149 -- --
8,955 194 -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
22,540 492 -- --
- --------------------- --------------------- --------------------- ---------------------
(32,494,542) (866,674) (40,487,509) (1,639,118)
- --------------------- --------------------- --------------------- ---------------------
363,097,158 327,401,633 346,802,145 348,441,263
- --------------------- --------------------- --------------------- ---------------------
$ 330,602,616 $ 363,097,158 $ 306,314,636 $ 346,802,145
===================== ===================== ===================== =====================
$ (873,892) $ (36,853) $ (40,983) $ 136,701
===================== ===================== ===================== =====================
IXIS U.S. Diversified Portfolio IXIS Value Fund
- -------------------------------------------- --------------------------------------------
Six Months Ended Six Months Ended
June 30, Year Ended June 30, Year Ended
2005 December 31, 2005 December 31,
(unaudited) 2004 (unaudited) 2004
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
$ (2,935,994) $ (7,230,862) $ 7,218 $ (187,922)
37,504,254 92,341,964 7,913,478 14,932,687
(39,142,386) (4,149,061) (6,101,624) (382,788)
- --------------------- --------------------- --------------------- ---------------------
(4,574,126) 80,962,041 1,819,072 14,361,977
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- (2,637,065) (1,926,692)
-- -- (697,616) (548,440)
-- -- (86,916) (60,195)
- --------------------- --------------------- --------------------- ---------------------
-- -- (3,421,597) (2,535,327)
- --------------------- --------------------- --------------------- ---------------------
(59,148,482) (116,500,139) (6,892,401) (17,975,676)
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
(63,722,608) (53,745,002) (8,494,926) (6,149,026)
- --------------------- --------------------- --------------------- ---------------------
700,017,955 735,556,053 136,242,269 142,391,295
- --------------------- --------------------- --------------------- ---------------------
$ 636,295,347 $ 700,017,955 $ 127,747,343 $ 136,242,269
===================== ===================== ===================== =====================
$ (3,071,053) $ (135,059) $ (136,045) $ (143,263)
===================== ===================== ===================== =====================
52
STATEMENTS OF CHANGES IN NET ASSETS (continued)
Vaughan Nelson
Small Cap Value Fund
--------------------------------------------
Six Months Ended
June 30, Year Ended
2005 December 31,
(unaudited) 2004
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment (loss) $ (409,940) $ (1,476,110)
Net realized gain (loss) on investments 4,190,377 19,642,237
Net change in unrealized appreciation (depreciation) on investments (1,093,875) (3,213,186)
--------------------- ---------------------
Increase (decrease) in net assets resulting from operations 2,686,562 14,952,941
--------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
-- --
--------------------- ---------------------
INCREASE (DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (9,119,411) (14,761,490)
--------------------- ---------------------
Redemption Fees
Class A 616 188
Class B 643 225
Class C 173 52
--------------------- ---------------------
1,432 465
--------------------- ---------------------
Total increase (decrease) in net assets (6,431,417) 191,916
--------------------- ---------------------
NET ASSETS
Beginning of period 113,337,855 113,145,939
--------------------- ---------------------
End of period $ 106,906,438 $ 113,337,855
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (358,204) $ 51,736
===================== =====================
Westpeak
Capital Growth Fund
--------------------------------------------
Six Months Ended
June 30, Year Ended
2005 December 31,
(unaudited) 2004
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment (loss) $ (313,916) $ (255,163)
Net realized gain (loss) on investments 1,014,495 3,895,820
Net change in unrealized appreciation (depreciation) on investments (1,338,958) (286,959)
--------------------- ---------------------
Increase (decrease) in net assets resulting from operations (638,379) 3,353,698
--------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
-- --
--------------------- ---------------------
INCREASE (DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (6,046,758) (13,044,934)
--------------------- ---------------------
Redemption Fees
Class A -- --
Class B -- --
Class C -- --
--------------------- ---------------------
-- --
--------------------- ---------------------
Total increase (decrease) in net assets (6,685,137) (9,691,236)
--------------------- ---------------------
NET ASSETS
Beginning of period 71,347,753 81,038,989
--------------------- ---------------------
End of period $ 64,662,616 $ 71,347,753
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (388,794) $ (74,878)
===================== =====================
See accompanying notes to financial statements.
53
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54
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
---------------------------------------------- ----------------------------------------------
Net asset
value, Net Net realized Dividends Distributions
beginning investment and unrealized Total from from from net
of income gain (loss) on investment net investment realized Total
period (loss) (b) investments operations income capital gains distributions
------------- -------------- -------------- -------------- -------------- -------------- --------------
CGM ADVISOR TARGETED EQUITY FUND
Class A
6/30/2005(g) $ 9.05 $ 0.04 $ 0.26 $ 0.30 $ (0.01) $ -- $ (0.01)
12/31/2004 7.94 0.01 1.10 1.11 -- -- --
12/31/2003 5.56 (0.03) 2.41 2.38 -- -- --
12/31/2002 7.81 (0.06) (2.19) (2.25) -- -- --
12/31/2001 9.36 (0.03) (1.49) (1.52) (0.03) -- (0.03)
12/31/2000 11.00 0.09 (0.60) (0.51) (0.06) (1.07) (1.13)
Class B
6/30/2005(g) 8.45 0.01 0.25 0.26 (0.01) -- (0.01)
12/31/2004 7.47 (0.04) 1.02 0.98 -- -- --
12/31/2003 5.28 (0.07) 2.26 2.19 -- -- --
12/31/2002 7.47 (0.11) (2.08) (2.19) -- -- --
12/31/2001 9.02 (0.09) (1.43) (1.52) (0.03) -- (0.03)
12/31/2000 10.67 0.01 (0.58) (0.57) (0.01) (1.07) (1.08)
Class C
6/30/2005(g) 8.45 0.01 0.24 0.25 (0.01) -- (0.01)
12/31/2004 7.47 (0.04) 1.02 0.98 -- -- --
12/31/2003 5.27 (0.07) 2.27 2.20 -- -- --
12/31/2002 7.47 (0.11) (2.09) (2.20) -- -- --
12/31/2001 9.02 (0.09) (1.43) (1.52) (0.03) -- (0.03)
12/31/2000 10.67 0.01 (0.58) (0.57) (0.01) (1.07) (1.08)
Class Y
6/30/2005(g) 9.23 0.05 0.28 0.33 (0.01) -- (0.01)
12/31/2004 8.07 0.04 1.12 1.16 -- -- --
12/31/2003 5.63 0.01 2.43 2.44 -- -- --
12/31/2002 7.85 (0.02) (2.20) (2.22) -- -- --
12/31/2001 9.37 0.01 (1.50) (1.49) (0.03) -- (0.03)
12/31/2000 11.01 0.12 (0.60) (0.48) (0.09) (1.07) (1.16)
HANSBERGER INTERNATIONAL FUND
Class A
6/30/2005(g) $ 17.12 $ 0.15 $ (0.25) $ (0.10) $ -- $ -- $ --
12/31/2004 15.07 0.02 2.03 2.05 -- -- --
12/31/2003 10.84 (0.04) 4.27 4.23 -- -- --
12/31/2002 13.02 (0.05) (2.08) (2.13) (0.05) -- (0.05)
12/31/2001 14.42 0.13 (1.42) (1.29) (0.03) (0.08) (0.11)
12/31/2000 19.90 (0.02) (2.43) (2.45) -- (3.03) (3.03)
Class B
6/30/2005(g) 15.85 0.07 (0.22) (0.15) -- -- --
12/31/2004 14.06 (0.09) 1.88 1.79 -- -- --
12/31/2003 10.19 (0.12) 3.99 3.87 -- -- --
12/31/2002 12.32 (0.14) (1.94) (2.08) (0.05) -- (0.05)
12/31/2001 13.74 0.03 (1.36) (1.33) (0.01) (0.08) (0.09)
12/31/2000 19.26 (0.16) (2.33) (2.49) -- (3.03) (3.03)
Redemption fee
Per Share
--------------
CGM ADVISOR TARGETED EQUITY FUND
Class A
6/30/2005(g) 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
Class B
6/30/2005(g) 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
Class C
6/30/2005(g) 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
Class Y
6/30/2005(g) 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
HANSBERGER INTERNATIONAL FUND
Class A
6/30/2005(g) 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
Class B
6/30/2005(g) 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004)
shares, and a contingent deferred sales charge for Class B and Class C
shares are not reflected in total return calculations. Periods less than one
year are not annualized.
(b)Per share net investment income (loss) has been calculated using the average
shares outstanding during the period.
(c)Had certain expenses not been reduced during the period total return would
have been lower.
(d)The investment adviser waived a portion of its advisory fee during the
period. Without this waiver, expense would have been higher
See accompanying notes to financial statements.
55
Ratios to average net assets:
-----------------------------------------------
Net asset Net assets, Expenses after
value, Total end of reimbursement/ Net investment Portfolio
end of return the period Expenses waiver income turnover
the period (%) (a) (000's) (%) (f) (h) (%) (h) (loss) (%) (h) rate (%)
- ------------- ------- --------------- -------------- -------------- -------------- --------------
$ 9.34 3.3 $ 670,502 1.30 N/A 0.90 154
9.05 14.0 689,967 1.42 N/A 0.16 265
7.94 42.8 724,214 1.57 N/A (0.40) 261
5.56 (28.8) 602,989 1.47 N/A (0.86) 223
7.81 (16.2) 1,012,161 1.38 N/A (0.39) 243
9.36 (4.6) 1,413,685 1.18 N/A 0.83 266
8.70 3.1 53,612 2.05 N/A 0.14 154
8.45 13.1 57,527 2.17 N/A (0.58) 265
7.47 41.5 56,880 2.32 N/A (1.14) 261
5.28 (29.3) 45,633 2.23 N/A (1.62) 223
7.47 (16.8) 78,744 2.13 N/A (1.14) 243
9.02 (5.2) 107,594 1.93 N/A 0.08 266
8.69 3.0 3,403 2.05 N/A 0.15 154
8.45 13.1 3,214 2.17 N/A (0.58) 265
7.47 41.8 2,647 2.32 N/A (1.14) 261
5.27 (29.5) 2,187 2.23 N/A (1.62) 223
7.47 (16.8) 4,162 2.13 N/A (1.14) 243
9.02 (5.2) 5,830 1.93 N/A 0.08 266
9.55 3.6 9,865 1.09 N/A 1.12 154
9.23 14.4 9,145 1.08 N/A 0.51 265
8.07 43.3 7,773 1.03 N/A 0.16 261
5.63 (28.3) 5,522 0.92 N/A (0.31) 223
7.85 (15.9) 8,785 0.87 N/A 0.13 243
9.37 (4.2) 12,260 0.85 N/A 1.16 266
$ 17.02 (0.6) $ 75,540 1.80 N/A 1.73 24
17.12 13.6(c) 73,707 1.92 1.91(d) 0.14 81
15.07 39.0(c) 59,762 2.32 2.30(d) (0.34) 92
10.84 (16.4) 50,053 2.19 N/A (0.45) 91
13.02 (9.0) 71,536 2.12 N/A 0.98 110
14.42 (12.2) 102,507 2.01 N/A (0.13) 175
15.70 (1.0) 35,950 2.55 N/A 0.92 24
15.85 12.7(c) 45,213 2.67 2.66(d) (0.60) 81
14.06 38.0(c) 60,296 3.07 3.05(d) (1.09) 92
10.19 (17.0) 53,306 2.94 N/A (1.20) 91
12.32 (9.7) 82,861 2.87 N/A 0.23 110
13.74 (12.8) 114,450 2.76 N/A (0.88) 175
(e)Amount rounds to less than $0.01 per share
(f)Represents total expenses prior to advisory fee waiver and/or reimbursement
of a portion of the Fund's expenses. Prior to 2004, expenses in this table
were presented net of such waivers and/or reimbursements.
(g)For the six months ended June 30, 2005 (unaudited)
(h)Computed on an annualized basis for periods less than one year.
56
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (loss) from investment operations:
---------------------------------------
Net asset Net Net realized
value, investment and unrealized Total from
beginning income gain (loss) on investment
of period (loss) (b) investments operations
---------- ---------- -------------- ----------
HANSBERGER INTERNATIONAL FUND (continued)
Class C
6/30/2005(j) 15.86 0.08 (0.24) (0.16)
12/31/2004 14.06 (0.09) 1.89 1.80
12/31/2003 10.19 (0.12) 3.99 3.87
12/31/2002 12.33 (0.14) (1.95) (2.09)
12/31/2001 13.75 0.03 (1.36) (1.33)
12/31/2000 19.27 (0.16) (2.33) (2.49)
HARRIS ASSOCIATES FOCUSED VALUE FUND
Class A
6/30/2005(j) $ 13.06 $ 0.00(h) $ 0.36 $ 0.36
12/31/2004 11.79 (0.02) 1.29 1.27
12/31/2003 9.24 (0.03) 2.58 2.55
12/31/2002 10.96 (0.03) (1.69) (1.72)
12/31/2001(f) 10.00 (0.01) 0.97 0.96
Class B
6/30/2005(j) 12.69 (0.04) 0.35 0.31
12/31/2004 11.55 (0.11) 1.25 1.14
12/31/2003 9.12 (0.10) 2.53 2.43
12/31/2002 10.90 (0.11) (1.67) (1.78)
12/31/2001(f) 10.00 (0.07) 0.97 0.90
Class C
6/30/2005(j) 12.69 (0.04) 0.35 0.31
12/31/2004 11.55 (0.11) 1.25 1.14
12/31/2003 9.12 (0.10) 2.53 2.43
12/31/2002 10.90 (0.11) (1.67) (1.78)
12/31/2001(f) 10.00 (0.07) 0.97 0.90
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Class A
6/30/2005(j) $ 13.37 $ 0.02 $ (0.54) $ (0.52)
12/31/2004 12.25 0.04 1.08 1.12
12/31/2003 9.42 0.01 2.82 2.83
12/31/2002 11.78 0.01 (2.37) (2.36)
12/31/2001 13.79 (0.01) (2.00) (2.01)
12/31/2000 15.33 0.01 (1.09) (1.08)
Class B
6/30/2005(j) 12.62 (0.03) (0.51) (0.54)
12/31/2004 11.64 (0.05) 1.03 0.98
12/31/2003 9.02 (0.07) 2.69 2.62
12/31/2002 11.37 (0.07) (2.28) (2.35)
12/31/2003 13.40 (0.10) (1.93) (2.03)
12/31/2000 15.03 (0.10) (1.07) (1.17)
Less distributions:
-----------------------------------------
Dividends Distributions
from from net
net investment realized Total Redemption fee
income capital gains distributions Per Share
-------------- ------------- ------------- --------------
HANSBERGER INTERNATIONAL FUND (continued)
Class C
6/30/2005(j) -- -- -- 0.00(h)
12/31/2004 -- -- -- 0.00(h)
12/31/2003 -- -- -- --
12/31/2002 (0.05) -- (0.05) --
12/31/2001 (0.01) (0.08) (0.09) --
12/31/2000 -- (3.03) (3.03) --
HARRIS ASSOCIATES FOCUSED VALUE FUND
Class A
6/30/2005(j) $ -- $ -- $ -- 0.00(h)
12/31/2004 -- -- -- 0.00(h)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001(f) -- -- -- --
Class B
6/30/2005(j) -- -- -- 0.00(h)
12/31/2004 -- -- -- 0.00(h)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001(f) -- -- -- --
Class C
6/30/2005(j) -- -- -- 0.00(h)
12/31/2004 -- -- -- 0.00(h)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001(f) -- -- -- --
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Class A
6/30/2005(j) $ (0.01) $ -- $ (0.01) --
12/31/2004 -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 -- -- -- --
12/31/2000 -- (0.46) (0.46) --
Class B
6/30/2005(j) (0.01) -- (0.01) --
12/31/2004 -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2003 -- -- -- --
12/31/2000 -- (0.46) (0.46) --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004)
shares and a contingent deferred sales charge for Class B and Class C shares
are not reflected in total return calculations. Periods less than one year
are not annualized.
(b)Per share net investment income (loss) has been calculated using the average
shares outstanding during the period.
(c)The investment adviser waived a portion of its advisory fee during the
period. Without this waiver, expense would have been higher
(d)Had certain expenses been reduced during the period, total return would have
been lower.
(e)Portfolio turnover excludes the impact of assets as a result of a merger
with another Fund.
See accompanying notes to financial statements.
57
Ratios to average net assets:
--------------------------------------
Net assets, Expenses after Net
Net asset Total end of reimbursement investment Portfolio
value, end return the period Expenses /waiver income (loss) turnover
of the period (%) (a) (000's) (%) (g)(i) (%) (g) (%) (g) rate (%)
- ------------- --------- ----------- ---------- -------------- ------------- ---------
15.70 (1.0) 16,973 2.55 N/A 0.98 24
15.86 12.8(d) 17,046 2.67 2.66(c) (0.63) 81
14.06 38.0(d) 12,557 3.07 3.05(c) (1.09) 92
10.19 (17.0) 11,013 2.94 N/A (1.20) 91
12.33 (9.7) 16,493 2.87 N/A 0.23 110
13.75 (12.8) 23,949 2.76 N/A (0.88) 175
$ 13.42 2.8 $ 94,156 1.66 N/A 0.04 12
13.06 10.8 108,042 1.70 N/A (0.15) 26
11.79 27.6(d) 95,957 1.84 1.70(c) (0.28) 30
9.24 (15.7)(d) 68,660 1.79 1.70(c) (0.35) 12
10.96 9.6(d) 45,987 2.08 1.70(c) (0.08) 10
13.00 2.4 104,689 2.41 N/A (0.72) 12
12.69 9.9 110,275 2.45 N/A (0.90) 26
11.55 26.6(d) 107,017 2.59 2.45(c) (1.03) 30
9.12 (16.3)(d) 85,794 2.54 2.45(c) (1.10) 12
10.90 9.0(d) 62,671 2.83 2.45(c) (0.83) 10
13.00 2.4 131,758 2.41 N/A (0.72) 12
12.69 9.9 144,780 2.45 N/A (0.90) 26
11.55 26.6(d) 124,427 2.59 2.45(c) (1.03) 30
9.12 (16.3)(d) 86,269 2.54 2.45(c) (1.10) 12
10.90 9.0(d) 34,406 2.83 2.45(c) (0.86) 10
$ 12.84 (3.9)(d) $ 201,593 1.43 1.30(c) 0.32 19
13.37 9.1(d) 222,434 1.49 1.30(c) 0.30 27
12.25 30.0(d) 215,259 1.62 1.45(c) 0.07 30(e)
9.42 (20.0) 130,751 1.56 N/A 0.07 195
11.78 (14.6) 211,138 1.46 N/A (0.05) 154
13.79 (7.3) 290,714 1.31 N/A 0.04 139
12.07 (4.2)(d) 66,841 2.18 2.05(c) (0.42) 19
12.62 8.4(d) 79,949 2.24 2.05(c) (0.46) 27
11.64 29.1(d) 91,085 2.37 2.20(c) (0.69) 30(e)
9.02 (20.7) 71,436 2.31 N/A (0.68) 195
11.37 (15.1) 120,361 2.21 N/A (0.80) 154
13.40 (8.1) 165,767 2.06 N/A (0.71) 139
(f)For the period March 15, 2001, (inception) through December 31, 2001.
(g)Computed on an annualized basis for periods less than one year.
(h)Amount rounds to less than $0.01 per share
(i)Represents total expenses prior to advisory fee waiver and/or reimbursement
of a portion of the Fund's expenses. Prior to 2004, expenses in this table
were presented net of such waivers and/or reimbursements.
(j)For the six months ended June 30, 2005 (unaudited)
58
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (loss) from investment operations:
----------------------------------------
Net asset
value, Net Net realized
beginning investment and unrealized Total from
of income gain (loss) on investment
period loss (b) investments operations
---------- ---------- -------------- ----------
HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued)
Class C
6/30/2005(g) 12.60 (0.03) (0.50) (0.53)
12/31/2004 11.63 (0.05) 1.02 0.97
12/31/2003 9.01 (0.07) 2.69 2.62
12/31/2002 11.36 (0.07) (2.28) (2.35)
12/31/2001 13.38 (0.10) (1.92) (2.02)
12/31/2000 15.01 (0.10) (1.07) (1.17)
Class Y
6/30/2005(g) 13.74 0.04 (0.56) (0.52)
12/31/2004 12.54 0.07 1.13 1.20
12/31/2003 9.59 0.06 2.89 2.95
12/31/2002 11.93 0.07 (2.41) (2.34)
12/31/2001 13.87 0.06 (2.00) (1.94)
12/31/2000 15.36 0.07 (1.10) (1.03)
IXIS U.S. DIVERSIFIED PORTFOLIO
Class A
6/30/2005(g) $ 18.75 $ (0.06) $ (0.01) $ (0.07)
12/31/2004 16.61 (0.12) 2.26 2.14
12/31/2003 12.43 (0.13) 4.31 4.18
12/31/2002 15.90 (0.11) (3.36) (3.47)
12/31/2001 17.55 (0.05) (1.59) (1.64)
12/31/2000 24.50 (0.06) (3.87) (3.93)
Class B
6/30/2005(g) 16.87 (0.11) (0.01) (0.12)
12/31/2004 15.06 (0.23) 2.04 1.81
12/31/2003 11.35 (0.22) 3.93 3.71
12/31/2002 14.64 (0.20) (3.09) (3.29)
12/31/2001 16.29 (0.16) (1.48) (1.64)
12/31/2000 23.14 (0.22) (3.61) (3.83)
Class C
6/30/2005(g) 16.89 (0.11) (0.02) (0.13)
12/31/2004 15.08 (0.23) 2.04 1.81
12/31/2003 11.37 (0.22) 3.93 3.71
12/31/2002 14.66 (0.20) (3.09) (3.29)
12/31/2001 16.30 (0.16) (1.47) (1.63)
12/31/2000 23.16 (0.22) (3.62) (3.84)
Class Y
6/30/2005(g) 19.82 (0.02) (0.01) (0.03)
12/31/2004 17.46 (0.05) 2.41 2.36
12/31/2003 12.98 (0.04) 4.52 4.48
12/31/2002 16.50 (0.02) (3.50) (3.52)
12/31/2001 18.13 0.04 (1.66) (1.62)
12/31/2000 25.08 0.03 (3.96) (3.93)
Less distributions:
-----------------------------------------
Dividends Distributions
from from net
net investment realized Total
income capital gains distributions
-------------- ------------- -------------
HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued)
Class C
6/30/2005(g) (0.01) -- (0.01)
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- -- --
12/31/2000 -- (0.46) (0.46)
Class Y
6/30/2005(g) (0.01) -- (0.01)
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- -- --
12/31/2000 -- (0.46) (0.46)
IXIS U.S. DIVERSIFIED PORTFOLIO
Class A
6/30/2005(g) -- $ -- $ --
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- (0.01) (0.01)
12/31/2000 -- (3.02) (3.02)
Class B
6/30/2005(g) -- -- --
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- (0.01) (0.01)
12/31/2000 -- (3.02) (3.02)
Class C
6/30/2005(g) -- -- --
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- (0.01) (0.01)
12/31/2000 -- (3.02) (3.02)
Class Y
6/30/2005(g) -- -- --
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- (0.01) (0.01)
12/31/2000 -- (3.02) (3.02)
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004)
shares and a contingent deferred sales charge for Class B and Class C shares
are not reflected in total return calculations. Periods less than one year
are not annualized.
(b)Per share net investment income (loss) has been calculated using the average
shares outstanding during the period.
(c)The investment adviser waived a portion of its advisory fee during the
period. Without this waiver, expense would have been higher
See accompanying notes to financial statements.
59
Ratios to average net assets:
-----------------------------------------
Net asset Net assets, Expenses after
value, Total end of reimbursement/ Net investment Portfolio
end of return the period Expenses waiver income turnover
the period (%) (a) (000's) (%) (h) (%) (h) (loss) (%) (h) rate (%)
- ---------- --------- ----------- --------- -------------- -------------- ---------
12.06 (4.2)(d) 22,803 2.18(f) 2.05(c) (0.43) 19
12.60 8.3(d) 26,392 2.24(f) 2.05(c) (0.42) 27
11.63 29.1(d) 15,553 2.37(f) 2.20(c) (0.69) 30(e)
9.01 (20.7) 6,440 2.31(f) N/A (0.68) 195
11.36 (15.1) 10,553 2.21(f) N/A (0.80) 154
13.38 (8.1) 19,373 2.06(f) N/A (0.71) 139
13.21 (3.8) 15,078 1.04(f) N/A 0.59 19
13.74 9.6 18,027 0.99(f) N/A 0.58 27
12.54 30.8 26,545 1.01(f) N/A 0.51 30(e)
9.59 (19.6) 10,569 0.96(f) N/A 0.66 195
11.93 (14.0) 11,918 0.91(f) N/A 0.52 154
13.87 (7.0) 10,131 0.87(f) N/A 0.48 139
$ 18.68 (0.4) $ 377,215 1.82 N/A (0.63) 49
18.75 12.9 392,726 1.87 N/A (0.71) 104
16.61 33.6 354,755 1.99 N/A (0.94) 102
12.43 (21.8) 269,180 1.89 N/A (0.75) 95
15.90 (9.4) 389,405 1.83 N/A (0.31) 183
17.55 (17.0) 525,479 1.62 N/A (0.25) 524
16.75 (0.7) 187,539 2.57 N/A (1.38) 49
16.87 12.0 223,349 2.62 N/A (1.50) 104
15.06 32.7 272,533 2.74 N/A (1.69) 102
11.35 (22.5) 282,361 2.64 N/A (1.50) 95
14.64 (10.1) 491,614 2.58 N/A (1.06) 183
16.29 (17.6) 649,107 2.37 N/A (1.00) 524
16.76 (0.8) 50,237 2.57 N/A (1.38) 49
16.89 12.0 58,883 2.62 N/A (1.48) 104
15.08 32.6 60,783 2.74 N/A (1.69) 102
11.37 (22.4) 54,291 2.64 N/A (1.50) 95
14.66 (10.0) 87,245 2.58 N/A (1.06) 183
16.30 (17.6) 118,921 2.37 N/A (1.00) 524
19.79 (0.2) 21,305 1.38 N/A (0.19) 49
19.82 13.5 25,060 1.33 N/A (0.27) 104
17.46 34.5 47,485 1.34 N/A (0.30) 102
12.98 (21.3) 37,911 1.29 N/A (0.15) 95
16.50 (9.0) 55,970 1.29 N/A 0.23 183
18.13 (16.6) 73,310 1.25 N/A 0.12 524
(d)Had certain expenses been reduced during the period, total return would have
been lower.
(e)Portfolio turnover excludes the impact of assets as a result of a merger
with another Fund.
(f)Represents total expenses prior to advisory fee waiver and/or reimbursement
of a portion of the Fund's expenses. Prior to 2004, expenses in this table
were presented net of such waivers and/or reimbursements.
(g)For the six months ended June 30, 2005 (unaudited)
(h)Computed on an annualized basis for periods less than one year.
60
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
------------------------------------------ ------------------------------------------
Net asset
value, Net Net realized Dividends Distributions
beginning investment and unrealized Total from from from net
of income gain (loss) on investment net investment realized Total
period (loss) investments operations income capital gains distributions
---------- ---------- -------------- ---------- -------------- ------------- -------------
IXIS VALUE FUND
Class A
6/30/2005(e) $ 8.92 $ 0.01(b) $ 0.13 $ 0.14 $ -- $ (0.24) $ (0.24)
12/31/2004 8.16 0.00(b)(c) 0.93 0.93 -- (0.17) (0.17)
12/31/2003 6.20 (0.01)(b) 1.97 1.96 -- -- --
12/31/2002 7.70 (0.01)(b) (1.49) (1.50) -- -- --
12/31/2001 7.60 (0.02)(b) 0.12 0.10 -- -- --
12/31/2000 7.45 0.01 0.14 0.15 0.00(c) -- 0.00
Class B
6/30/2005(e) 8.21 (0.02)(b) 0.12 0.10 -- (0.24) (0.24)
12/31/2004 7.57 (0.06)(b) 0.87 0.81 -- (0.17) (0.17)
12/31/2003 5.80 (0.06)(b) 1.83 1.77 -- -- --
12/31/2002 7.26 (0.06)(b) (1.40) (1.46) -- -- --
12/31/2001 7.22 (0.07)(b) 0.11 0.04 -- -- --
12/31/2000 7.13 (0.04) 0.13 0.09 0.00(c) -- 0.00
Class C
6/30/2005(e) 8.21 (0.02)(b) 0.12 0.10 -- (0.24) (0.24)
12/31/2004 7.57 (0.05)(b) 0.86 0.81 -- (0.17) (0.17)
12/31/2003 5.80 (0.06)(b) 1.83 1.77 -- -- --
12/31/2002 7.26 (0.06)(b) (1.40) (1.46) -- -- --
12/31/2001 7.22 (0.07)(b) 0.11 0.04 -- -- --
12/31/2000 7.14 (0.05) 0.13 0.08 0.00(c) -- 0.00
VAUGHAN NELSON SMALL CAP VALUE
Class A
6/30/2005(e) $ 16.07 $ (0.03)(b) $ 0.51 $ 0.48 $ -- $ -- $ --
12/31/2004 13.94 (0.13)(b) 2.26 2.13 -- -- --
12/31/2003 10.05 (0.19)(b) 4.08 3.89 -- -- --
12/31/2002 14.52 (0.21)(b) (4.26) (4.47) -- -- --
12/31/2001 16.51 (0.21)(b) (1.78) (1.99) -- -- --
12/31/2000 23.42 (0.28) (2.30) (2.58) -- (4.33) (4.33)
Class B
6/30/2005(e) 14.97 (0.08)(b) 0.47 0.39 -- -- --
12/31/2004 13.08 (0.22)(b) 2.11 1.89 -- -- --
12/31/2003 9.51 (0.26)(b) 3.83 3.57 -- -- --
12/31/2002 13.84 (0.28)(b) (4.05) (4.33) -- -- --
12/31/2001 15.86 (0.30)(b) (1.72) (2.02) -- -- --
12/31/2000 22.85 (0.44) (2.22) (2.66) -- (4.33) (4.33)
Class C
6/30/2005(e) 14.98 (0.08)(b) 0.47 0.39 -- -- --
12/31/2004 13.09 (0.22)(b) 2.11 1.89 -- -- --
12/31/2003 9.51 (0.26)(b) 3.84 3.58 -- -- --
12/31/2002 13.84 (0.28)(b) (4.05) (4.33) -- -- --
12/31/2001 15.86 (0.30)(b) (1.72) (2.02) -- -- --
12/31/2000 22.85 (0.44) (2.22) (2.66) -- (4.33) (4.33)
Redemption fee
Per Share
--------------
IXIS VALUE FUND
Class A
6/30/2005(e) --
12/31/2004 --
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
Class B
6/30/2005(e) --
12/31/2004 --
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
Class C
6/30/2005(e) --
12/31/2004 --
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
VAUGHAN NELSON SMALL CAP VALUE
Class A
6/30/2005(e) 0.00(c)
12/31/2004 0.00(c)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
Class B
6/30/2005(e) 0.00(c)
12/31/2004 0.00(c)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
Class C
6/30/2005(e) 0.00(c)
12/31/2004 0.00(c)
12/31/2003 --
12/31/2002 --
12/31/2001 --
12/31/2000 --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004)
shares and a contingent deferred sales charge for Class B and Class C shares
are not reflected in total return calculations. Periods less than one year
are not annualized.
(b)Per share net investment income (loss) has been calculated using the average
shares outstanding during the period.
See accompanying notes to financial statements.
61
Ratios to average net assets:
----------------------------
Net asset Net assets,
value, Total end of Net investment Portfolio
end of return the period Expenses income turnover
the period (%) (a) (000's) (%) (d) (loss) (%) (d) rate (%)
---------- --------- ----------- --------- -------------- ---------
$ 8.82 1.5 $ 100,355 1.58 0.18 30
8.92 11.4 105,359 1.66 0.03 56
8.16 31.6 110,228 1.81 (0.15) 75
6.20 (19.5) 99,894 1.68 (0.21) 67
7.70 1.3 137,855 1.64 (0.28) 77
7.60 2.0 154,179 1.62 0.10 129
8.07 1.2 24,338 2.33 (0.57) 30
8.21 10.7 27,804 2.41 (0.72) 56
7.57 30.5 30,029 2.56 (0.90) 75
5.80 (20.1) 27,808 2.43 (0.96) 67
7.26 0.6 44,325 2.39 (1.03) 77
7.22 1.3 45,364 2.37 (0.65) 129
8.07 1.2 3,054 2.33 (0.57) 30
8.21 10.7 3,079 2.41 (0.70) 56
7.57 30.5 2,134 2.56 (0.90) 75
5.80 (20.1) 2,047 2.43 (0.96) 67
7.26 0.6 2,833 2.39 (1.03) 77
7.22 1.1 2,496 2.40 (0.68) 129
$ 16.55 3.0 $ 48,677 1.98 (0.33) 36
16.07 15.3 45,138 2.01 (0.89) 172
13.94 38.7 45,442 2.33 (1.69) 156
10.05 (30.8) 38,441 2.13 (1.72) 160
14.52 (12.1) 69,873 2.08 (1.43) 174
16.51 (12.2) 89,714 1.88 (1.19) 216
15.36 2.6 44,724 2.73 (1.12) 36
14.97 14.5 54,652 2.76 (1.65) 172
13.08 37.5 55,662 3.08 (2.44) 156
9.51 (31.3) 46,215 2.88 (2.47) 160
13.84 (12.7) 82,060 2.83 (2.18) 174
15.86 (12.9) 107,083 2.63 (1.94) 216
15.37 2.6 13,506 2.73 (1.09) 36
14.98 14.4 13,549 2.76 (1.63) 172
13.09 37.6 12,042 3.08 (2.44) 156
9.51 (31.3) 10,930 2.88 (2.47) 160
13.84 (12.7) 22,047 2.83 (2.18) 174
15.86 (12.9) 28,090 2.63 (1.94) 216
(c)Amount rounds to less than $0.01 per share.
(d)Computed on an annualized basis for periods less than one year.
(e)For the six months ended June 30, 2005 (unaudited)
62
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
---------------------------------------- --------------------------
Net asset
value, Net realized Distributions
beginning Net and unrealized Total from from net
of investment gain (loss) on investment realized Total
period loss(b) investments operations capital gains distributions
---------- ---------- -------------- ---------- ------------- -------------
WESTPEAK CAPITAL GROWTH
Class A
6/30/2005(d) $ 11.43 $ (0.04) $ (0.02) $ (0.06) $ -- $ --
12/31/2004 10.87 (0.02)(c) 0.58 0.56 -- --
12/31/2003 8.58 (0.08) 2.37 2.29 -- --
12/31/2002 11.93 (0.09) (3.26) (3.35) -- --
12/31/2001 15.04 (0.13) (2.95) (3.08) (0.03) (0.03)
12/31/2000 22.86 (0.18) (4.14) (4.32) (3.50) (3.50)
Class B
6/30/2005(d) 9.94 (0.07) (0.03) (0.10) -- --
12/31/2004 9.52 (0.09)(c) 0.51 0.42 -- --
12/31/2003 7.56 (0.13) 2.09 1.96 -- --
12/31/2002 10.61 (0.15) (2.90) (3.05) -- --
12/31/2001 13.47 (0.20) (2.63) (2.83) (0.03) (0.03)
12/31/2000 21.06 (0.32) (3.77) (4.09) (3.50) (3.50)
Class C
6/30/2005(d) 9.92 (0.07) (0.03) (0.10) -- --
12/31/2004 9.50 (0.09)(c) 0.51 0.42 -- --
12/31/2003 7.56 (0.13) 2.07 1.94 -- --
12/31/2002 10.60 (0.14) (2.90) (3.04) -- --
12/31/2001 13.47 (0.20) (2.64) (2.84) (0.03) (0.03)
12/31/2000 21.06 (0.32) (3.77) (4.09) (3.50) (3.50)
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004)
shares and a contingent deferred sales charge for Class B and Class C shares
are not reflected in total return calculations. Periods less than one year
are not annualized.
(b)Per share net investment income (loss) has been calculated using the average
shares outstanding during the period.
See accompanying notes to financial statements.
63
Ratios to average net assets:
------------------------
Net assets,
Net asset Total end of Net investment Portfolio
value, end return the period Expenses income (loss) turnover
of the period (%) (a) (000) (%) (e) (%) (e) rate (%)
------------- --------- ----------- --------- -------------- ---------
$ 11.37 (0.5) $ 52,848 1.91 (0.82) 64
11.43 5.2 57,420 1.89 (0.18)(c) 121
10.87 26.7 63,380 1.93 (0.85) 107
8.58 (28.1) 58,729 1.75 (0.84) 103
11.93 (20.5) 98,412 1.62 (0.99) 90
15.04 (19.5) 143,425 1.40 (0.80) 118
9.84 (1.0) 10,869 2.66 (1.57) 64
9.94 4.4 12,916 2.64 (0.97)(c) 121
9.52 25.9 16,485 2.68 (1.60) 107
7.56 (28.8) 16,267 2.50 (1.59) 103
10.61 (21.0) 35,409 2.37 (1.74) 90
13.47 (20.1) 56,884 2.15 (1.55) 118
9.82 (1.0) 945 2.66 (1.57) 64
9.92 4.4 1,013 2.64 (0.94)(c) 121
9.50 25.7 1,174 2.68 (1.60) 107
7.56 (28.7) 847 2.50 (1.59) 103
10.60 (21.1) 1,745 2.37 (1.74) 90
13.47 (20.1) 2,487 2.15 (1.55) 118
(c)Includes special one-time distribution from Microsoft Corp. Without this
distribution, net investment loss per share would have been $(0.08), $(0.14)
and $(0.14) for Class A, Class B, Class C shares, respectively, and the
ratio of net investment loss to average net assets would have been (0.76)%,
(1.52)% and (1.51)% for Class A, Class B and Class C shares, respectively.
(d)For the six months ended June 30, 2005 (unaudited).
(e)Computed on an annual basis for periods less than one year.
64
NOTES TO FINANCIAL STATEMENTS
June 30, 2005 (unaudited)
1. Organization. IXIS Advisor Funds Trust I (formerly CDC Nvest Funds Trust I),
IXIS Advisor Funds Trust II (formerly CDC Nvest Funds Trust II) and IXIS
Advisor Funds Trust III (formerly CDC Nvest Funds Trust III) (the "Trusts" and
each a "Trust") are organized as Massachusetts business trusts. Each Trust is
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as an open-end management investment company. Each Declaration of Trust permits
the Board of Trustees to authorize the issuance of an unlimited number of
shares of the Trust in multiple series (individually, a "Fund" and
collectively, the "Funds"). Information presented in these financial statements
pertains to the equity funds of the Trusts; the financial statements of the
other Funds of the Trusts are presented in separate reports. The following
Funds are included in this report:
IXIS Advisor Funds Trust I:
IXIS U.S. Diversified Portfolio (the "U.S. Diversified Portfolio"), formerly
the CDC Nvest Star Advisers Fund
IXIS Value Fund (the "Value Fund"), formerly the CDC Nvest Star Value Fund
CGM Advisor Targeted Equity Fund (the "Targeted Equity Fund")
Hansberger International Fund (the "International Fund")
Vaughan Nelson Small Cap Value Fund (the "Small Cap Value Fund")
Westpeak Capital Growth Fund (the "Capital Growth Fund")
IXIS Advisor Funds Trust II:
Harris Associates Large Cap Value Fund (the "Large Cap Value Fund")
IXIS Advisor Funds Trust III:
Harris Associates Focused Value Fund (the "Focused Value Fund")
Each Fund offers Class A, Class B, and Class C shares. U.S. Diversified
Portfolio, Targeted Equity Fund and Large Cap Value Fund also offer Class Y
shares. Class A shares are sold with a maximum front end sales charge of 5.75%.
Class B shares do not pay a front end sales charge, but pay higher ongoing Rule
12b-1 fees than Class A shares for eight years (at which point they
automatically convert to Class A shares), and are subject to a contingent
deferred sales charge ("CDSC") if those shares are redeemed within six years of
purchase. Class C shares do not pay a front end sales charge, do not convert to
any other class of shares and pay a higher ongoing Rule 12b-1 fees than Class A
shares and may be subject to a CDSC of 1.00% if those shares are redeemed
within one year. Class Y shares do not pay a front end sales charge, a CDSC or
Rule 12b-1 fees. They are generally intended for institutional investors with a
minimum initial investment of $1,000,000, though some categories of investors
are excepted from the minimum investment amount.
Most expenses of the Trusts can be directly attributed to a Fund. Expenses
which cannot be directly attributed are generally apportioned based on the
relative net assets of each of the Funds in the Trusts. Expenses of a Fund are
borne pro rata by the holders of each class of shares, except that each class
bears expenses unique to that class (including the Rule 12b-1 service and
distribution fees and transfer agent fees applicable to such class), and votes
as a class only with respect to its own Rule 12b-1 Plan. Shares of each class
would receive their pro rata share of the net assets of a Fund if the Fund were
liquidated. The Trustees approve separate dividends from net investment income
on each class of shares.
2. Significant Accounting Policies. The following is a summary of significant
accounting policies consistently followed by each Fund in the preparation of
its financial statements. The Funds' financial statements are prepared in
accordance with accounting principles generally accepted in the United States
of America which require the use of management estimates that affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
a. Security Valuation. Equity securities for which market quotations are
readily available are valued at market price on the basis of valuations
furnished to the Fund by a pricing service which has been authorized by the
Board of Trustees. The pricing service provides the last reported sale price
for securities listed on an applicable securities exchange, or, if no sale was
reported and in the case of over-the-counter securities not so listed, the last
reported bid price. Securities traded on the NASDAQ National Market are valued
at the NASDAQ Official Closing Price ("NOCP"), or if lacking an NOCP, at the
most recent bid quotation on the NASDAQ National Market. Debt securities for
which market quotations are readily available (other than short-term
obligations with a remaining maturity of less than sixty days) are generally
valued at market price on the basis of valuations furnished by a pricing
service authorized by the Board of Trustees, which service determines
valuations for normal, institutional-size trading units of such securities
using market information, transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. Short-term obligations with a remaining maturity of less
than sixty days are stated at amortized cost, which approximates market value.
Securities traded on foreign exchanges are valued at the market price on the
non-U.S. exchange, unless a Fund believes that an occurrence after the closing
of that exchange will materially affect a security's value. In that case the
security may be fair valued at the time the Fund determines its net asset value
by or pursuant to procedures approved by the Board of Trustees. When fair
valuing their securities, the Funds may, among other things, use modeling tools
or other processes that may take into account factors such as securities market
activity and/or significant events that occur after the close of the local
market and before the time a Fund's net asset value is calculated. All other
securities and assets are valued at their fair value as determined in good
faith by the Funds' investment advisers and subadvisers, pursuant to the
procedures approved by the Board of Trustees.
b. Security Transactions and Related Investment Income. Security transactions
are accounted for on trade date. Dividend income is recorded on ex-dividend
date, or in the case of certain foreign securities, as soon thereafter as the
Fund is notified, and interest income is recorded on an accrual basis. Interest
income is increased by the accretion
65
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
of discount and decreased by the amortization of premium. Investment income is
recorded net of foreign taxes withheld when recovery of such taxes is
uncertain. In determining net gain or loss on securities sold, the cost of
securities has been determined on an identified cost basis. Investment income
and realized and unrealized gains and losses are allocated on a pro rata basis
to each class based on the relative net assets of each class to the total net
assets of the Fund.
c. Foreign Currency Translation. The books and records of the Funds are
maintained in U.S. dollars. The value of securities, currencies and other
assets and liabilities denominated in currencies other than U.S. dollars are
translated into U.S. dollars based upon foreign exchange rates prevailing at
the end of the period. Purchases and sales of investment securities, income and
expenses are translated on the respective dates of such transactions.
Since the values of investment securities are presented at the foreign exchange
rates prevailing at the end of the period, it is not practical to isolate that
portion of the results of operations arising from changes in exchange rates
from fluctuations arising from changes in market prices of the investment
securities. Such changes are included with the net realized and unrealized gain
or loss on investments.
Net realized foreign exchange gains or losses arise from: sales of foreign
currency, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Funds' books
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities at the end of the fiscal period, resulting from changes
in exchange rates.
d. Forward Foreign Currency Contracts. The U.S. Diversified Portfolio, the
Value Fund and the International Fund may use foreign currency contracts to
facilitate transactions in foreign securities and to manage their currency
exposure. Contracts to buy generally are used to acquire exposure to foreign
currencies, while contracts to sell are used to hedge the Funds' investments
against currency fluctuation. Also, a contract to buy or sell can offset a
previous contract. These contracts involve market risk in excess of the
unrealized gain or loss reflected in the Funds' Statement of Assets and
Liabilities. The U.S. dollar value of the currencies a Fund has committed to
buy or sell, if any, is shown in the portfolio composition under the caption
"Forward Currency Contracts Outstanding." These amounts represent the aggregate
exposure to each currency the Fund has acquired or hedged through currency
contracts outstanding at period end.
All contracts are "marked-to-market" daily at the applicable exchange rates and
any gains or losses are recorded for financial statement purposes as unrealized
until settlement date. Risks may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
e. Federal and Foreign Income Taxes. The Trusts treat each Fund as a separate
entity for federal income tax purposes. Each Fund intends to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies, and to distribute to its shareholders substantially all of its net
investment income and any net realized capital gains at least annually.
Accordingly, no provision for federal income tax has been made. A Fund may be
subject to foreign taxes on income and gains on investments that are accrued
based upon the Fund's understanding of the tax rules and regulations that exist
in the countries in which the Fund invests. Foreign governments may also impose
taxes or other payments on investments with respect to foreign securities. Such
taxes are accrued as applicable.
f. Dividends and Distributions to Shareholders. Dividends and distributions are
recorded on ex-dividend date. The timing and characterization of certain income
and capital gain distributions are determined in accordance with federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. These differences are primarily due to differing
treatments for book and tax purposes of items such as distributions from real
estate investment trusts, net operating losses, non-deductible expenses,
foreign currency transactions and gains realized from passive foreign
investment companies. Permanent book and tax basis differences relating to
shareholder distributions, net investment income, and net realized gains will
result in reclassifications to the capital accounts. Distributions from net
investment income and short-term capital gains are considered to be ordinary
income for tax purposes.
g. Repurchase Agreements. Each Fund, through its custodian, receives delivery
of the underlying securities collateralizing repurchase agreements. It is each
Fund's policy that the market value of the collateral be at least equal to 102%
of the repurchase price, including interest. Each Fund's subadviser (or adviser
for the Targeted Equity Fund) is responsible for determining that the value of
the collateral is at all times at least equal to 102% of the repurchase price,
including interest. Repurchase agreements could involve certain risks in the
event of default or insolvency of the counterparty including possible delays or
restrictions upon a Fund's ability to dispose of the underlying securities.
h. Indemnifications. Under the Funds' organizational documents, their officers
and trustees are indemnified against certain liability arising out of the
performance of their duties to the Funds. Additionally, in the normal course of
business, the Funds enter into contracts with service providers that contain
general indemnification clauses. The Funds' maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Funds that have not yet occurred. However, based on experience, the
Funds expect the risk of loss to be remote.
66
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
3. Purchases and Sales of Securities. For the six months ended June 30, 2005,
purchases and sales of securities (excluding short-term investments) were as
follows:
Fund Purchases Sales
---- -------------- --------------
Targeted Equity Fund $1,141,483,529 $1,186,301,955
International Fund 30,839,476 35,532,336
Focused Value Fund 36,756,416 69,102,579
Large Cap Value Fund 60,204,082 82,452,367
U.S. Diversified Portfolio 317,681,623 372,601,683
Value Fund 37,576,112 47,912,890
Small Cap Value Fund 37,279,170 46,335,275
Capital Growth Fund 41,724,340 47,492,819
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. IXIS Asset Management Advisors, L.P. ("IXIS Advisors"),
formerly CDC IXIS Asset Management Advisers, L.P., is the investment adviser to
each of the Funds except the Targeted Equity Fund. Capital Growth Management
Limited Partnership ("CGM") is the investment adviser to the Targeted Equity
Fund. Under the terms of the management agreements each Fund paid a management
fee at the following annual rates, calculated daily and payable monthly, based
on each Funds' average daily net assets:
Percentage of Average Daily Net Assets
- - ------------------------------------------------------------
First Next Next Next Over
Fund $200 million $300 million $500 million $1 billion $2 billion
- ---- ------------ ------------ ------------ ---------- ----------
Targeted Equity Fund 0.75% 0.70% 0.65% 0.65% 0.60%
International Fund 0.80% 0.75% 0.75% 0.75% 0.75%
Focused Value Fund 1.00% 1.00% 1.00% 0.95% 0.95%
Large Cap Value Fund 0.70% 0.65% 0.60% 0.60% 0.60%
Value Fund 0.75% 0.70% 0.65% 0.65% 0.65%
Small Cap Value Fund 0.90% 0.90% 0.90% 0.90% 0.90%
Capital Growth Fund 0.75% 0.70% 0.65% 0.65% 0.65%
During the period ended June 30, 2005, U.S. Diversified Portfolio paid
management fees at the annual rate of 1.05% of the first $750 million of the
Fund's average daily net assets and 0.95% of such assets in excess of $750
million. Effective July 1, 2005, the management fee was reduced to an annual
rate of 0.90% of the first $1 billion of the Fund's average daily net assets
and 0.80% of such assets in excess of $1 billion.
For the six months ended June 30, 2005, the management fees for each Fund were
as follows:
Gross Percentage of
Management Average
Fund Fee Daily Net Assets
---- ---------- ----------------
Targeted Equity Fund $2,565,105 0.70%
International Fund 525,751 0.80%
Focused Value Fund 1,687,318 1.00%
Large Cap Value Fund 1,096,496 0.68%
U.S. Diversified Portfolio 3,408,166 1.05%
Value Fund 487,865 0.75%
Small Cap Value Fund 473,901 0.90%
Capital Growth Fund 245,923 0.75%
67
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
IXIS Advisors has entered into subadvisory agreements for each Fund listed
below. Payments to IXIS Advisors are reduced in the amount of payments to the
subadvisers.
U.S. Diversified Portfolio Harris Associates L.P. ("Harris")
Loomis, Sayles & Company, L.P. ("Loomis Sayles")
Mercury Advisors
Value Fund Harris
Loomis Sayles
Vaughan Nelson Investment Management, L.P. ("Vaughan Nelson")
Westpeak Global Advisors, L.P. ("Westpeak")
International Fund Hansberger Global Investors, Inc. ("Hansberger")
Focused Value Fund Harris
Large Cap Value Fund Harris
Small Cap Value Fund Vaughan Nelson
Capital Growth Fund Westpeak
IXIS Advisors, CGM, Harris, Loomis Sayles, Vaughan Nelson and Westpeak are
subsidiaries of IXIS Asset Management North America, L.P. ("IXIS North
America"). Hansberger is an affiliated money manager of IXIS North America.
Certain officers and directors of IXIS Advisors and its affiliates are also
officers or Trustees of the Funds.
For the six months ended June 30, 2005, broker commissions paid to affiliated
broker/dealers by the Funds were as follows:
Fund Commission
---- ----------
U.S. Diversified Portfolio $62,478
b. Administrative Expense. During the period, IXIS Advisors performed certain
administrative services for the Funds and subcontracted with Investors Bank &
Trust Company ("IBT") to serve as subadministrator. Pursuant to an agreement
among IXIS Advisor Funds Trust I, IXIS Advisor Funds Trust II, IXIS Advisor
Funds Trust III, IXIS Advisor Funds Trust IV and IXIS Advisor Cash Management
Trust ("IXIS Advisor Funds Trusts") and Loomis Sayles Funds I and Loomis Sayles
Funds II ("Loomis Sayles Funds Trusts") and IXIS Advisors, each Fund pays IXIS
Advisors its pro rata portion of a group fee for these services representing
the higher amount based on the following calculations:
(1)Percentage of Eligible Average Daily Net Assets
First Next Over
$5 billion $5 billion $10 billion
- ---------- ---------- -----------
0.0675% 0.0625% 0.0500%
or
(2)Each Funds' pro rata portion, allocated based on the combined
assets of the IXIS Advisor Funds Trusts and Loomis Sayles Funds
Trusts, of the annual aggregate minimum fee of $5 million.
For the six months ended June 30, 2005, amounts paid to IXIS Advisors for
administrative expense were as follows:
Fund Administrative
---- --------------
Targeted Equity Fund $235,514
International Fund 41,228
Focused Value Fund 111,773
Large Cap Value Fund 107,284
U.S. Diversified Portfolio 214,556
Value Fund 42,338
Small Cap Value 34,352
Capital Growth Fund 22,504
c. Transfer Agent Fees. IXIS Asset Management Services Company ("IXIS
Services"), formerly CDC IXIS Asset Management Services, Inc., a wholly-owned
subsidiary of IXIS North America, is the transfer and shareholder servicing
agent for each Fund and has subcontracted with Boston Financial Data Services,
Inc. ("BFDS") to serve as sub-transfer agent. During the period, each Load
Equity Fund, for its Class A, B and C shares, paid service fees monthly equal
to $25.44 for each open account and $2.00 for each closed account, subject to a
monthly minimum of $1,500 per class and an annual aggregate minimum fee for all
Load Equity Funds of approximately $6.8 million.
68
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
Each Load Equity Fund, for its Class Y shares, paid service fees monthly equal
to $25.44 for each open account and $2.00 for each closed account, subject to a
monthly minimum of $1,500 per class and an aggregate minimum fee for all
No-Load Retail Funds* and Load Funds Class Y** of approximately $1million.
* No-Load Retail Funds consist of Loomis Sayles Aggressive Growth Fund, Loomis
Sayles Bond Fund, Loomis Sayles Global Bond Fund, Loomis Sayles Small Cap
Growth Fund, Loomis Sayles Small Cap Value Fund, Loomis Sayles Tax-Managed
Equity Fund, Loomis Sayles Value Fund and Loomis Sayles Worldwide Fund.
** Load Funds - Class Y consist of all Funds with Class Y offered within the
IXIS Advisor Funds Trusts and Loomis Sayles Funds Trusts.
In addition, pursuant to other servicing agreements, each class pays service
fees to other firms that provide similar services for their own shareholder
accounts.
IXIS Services, BFDS and other firms are also reimbursed by the Funds for
out-of-pocket expenses. For the six months ended June 30, 2005, amounts paid to
IXIS Services as compensation for its services as transfer agent were as
follows:
Transfer
Fund Agent Fee
---- ---------
Targeted Equity Fund $601,990
International Fund 229,460
Focused Value Fund 278,773
Large Cap Value Fund 410,149
U.S. Diversified Portfolio 914,493
Value Fund 179,213
Small Cap Value Fund 226,971
Capital Growth Fund 151,292
d. Service and Distribution Fees. Pursuant to Rule 12b-1 under the 1940 Act,
the Trusts have adopted a Service Plan relating to each Fund's Class A shares
(the "Class A Plan") and Service and Distribution Plans relating to each Fund's
Class B and Class C shares (the "Class B and Class C Plans").
Under the Class A Plan, each Fund pays IXIS Asset Management Distributors, L.P.
("IXIS Distributors"), the Fund's distributor (a wholly-owned subsidiary of
IXIS North America), a monthly service fee at the annual rate of 0.25% of the
average daily net assets attributable to the Fund's Class A shares, as
reimbursement for expenses incurred by IXIS Distributors in providing personal
services to investors in Class A shares and/or the maintenance of shareholder
accounts.
Under the Class B and Class C Plans, each Fund pays IXIS Distributors a monthly
service fee at the annual rate of 0.25% of the average daily net assets
attributable to the Fund's Class B and Class C shares, as compensation for
services provided and expenses incurred by IXIS Distributors in providing
personal services to investors in Class B and Class C shares and/or the
maintenance of shareholder accounts.
Also under the Class B and Class C Plans, each Fund pays IXIS Distributors a
monthly distribution fee at the annual rate of 0.75% of the average daily net
assets attributable to the Fund's Class B and Class C shares, as compensation
for services provided and expenses incurred by IXIS Distributors in connection
with the marketing or sale of Class B and Class C shares.
For the six months ended June 30, 2005, the Funds paid the following service
and distribution fees:
Service Fee Distribution Fee
- -------------------------- -----------------
Fund Class A Class B Class C Class B Class C
---- ------- ------- ------- ------- -------
Targeted Equity Fund $835,286 $ 68,943 $ 3,943 $206,827 $ 11,827
International Fund 92,978 50,193 21,126 150,580 63,376
Focused Value Fund 124,342 130,030 167,457 390,090 502,371
Large Cap Value Fund 261,199 90,253 30,738 270,757 92,215
U.S. Diversified Portfolio 469,250 248,886 66,059 746,659 198,176
Value Fund 126,664 32,175 3,783 96,523 11,350
Small Cap Value Fund 56,794 58,773 16,073 176,317 48,219
Capital Growth Fund 66,535 14,269 1,171 42,806 3,511
69
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
Commissions (including CDSC) on Fund shares paid to IXIS Distributors by
investors in shares of the Funds during the six months ended June 30, 2005 were
as follows:
Fund
---- -
Targeted Equity Fund $188,406
International Fund 56,910
Focused Value Fund 246,763
Large Cap Value Fund 112,590
U.S. Diversified Portfolio 346,821
Value Fund 49,771
Small Cap Value Fund 72,691
Capital Growth Fund 41,928
e. Trustees Fees and Expenses. The IXIS Advisor Funds Trusts and the Loomis
Sayles Funds Trusts do not pay any compensation directly to their officers or
Trustees who are directors, officers or employees of IXIS Advisors, IXIS
Distributors, IXIS North America, IXIS Services or their affiliates. Each
Trustee who is an independent Trustee of the IXIS Advisor Funds Trusts and the
Loomis Sayles Funds Trusts receives, in the aggregate, a retainer fee at the
annual rate of $50,000 and meeting attendance fees of $5,000 for each meeting
of the Board of Trustees attended. Each committee chairman receives an
additional retainer fee at the annual rate of $7,000. Each committee member
receives a meeting attendance fee of $3,750 per committee meeting attended. The
co-chairmen of the Board each receive an additional annual retainer of $25,000.
These fees are allocated to the various series of the IXIS Advisor Funds Trusts
and the Loomis Sayles Funds Trusts based on a formula that takes into account,
among other factors, the relative net assets of each Fund. Trustees are
reimbursed for travel expenses in connection with attendance at meetings.
A deferred compensation plan (the "Plan") is available to the Trustees on a
voluntary basis. Each participating Trustee will receive an amount equal to the
value that such deferred compensation would have been had it been invested in a
designated fund or certain other funds of the IXIS Advisor Funds Trusts and the
Loomis Sayles Funds Trusts on the normal payment date. Deferred amounts remain
in the Funds until distributed in accordance with the Plan.
Additionally, the Board of Trustees has approved the use of Fund assets to pay
its portion of the annual salary for 2005 of an employee of IXIS Advisors who
supports the Fund's Chief Compliance Officer. For the period ended June 30,
2005, each Fund's portion of such expense was $354.
f. Redemption fees. Class A shareholders of Targeted Equity Fund, Focused Value
Fund, Small Cap Value Fund, and International Fund are charged a 2% redemption
fee if they redeem, including redeeming by exchange, Class A shares of these
Funds within 60 days of their acquisition (including acquisition by exchange).
The redemption fee is intended to offset the costs to the Funds of short-term
trading, such as portfolio transaction and market impact costs associated with
redemption activity and administrative costs associated with processing
redemptions. The redemption fee is deducted from the shareholder's redemption
or exchange proceeds and is paid to the Fund. The "first-in, first-out" (FIFO)
method is used to determine the holding period of redeemed or exchange shares,
which means that if you acquired shares on different days, the shares acquired
first will be redeemed or exchanged first for purposes of determining whether
the redemption fee applies. A new holding period begins with each purchase or
exchange. These fees are broken out on the Statements of Changes in Net Assets.
g. Publishing Services. IXIS Services performs certain desktop publishing
services for the Funds. Fees for these services are presented in the Statements
of Operations as a part of shareholder reporting. For the six months ended June
30, 2005 there were no amounts paid to IXIS Services.
5. Line of Credit. Each Fund, along with certain other portfolios, participates
in a $50,000,000 committed line of credit provided by IBT under a credit
agreement (the "Agreement") dated April 30, 2002. Advances under the Agreement
are taken primarily for temporary or emergency purposes. Interest is charged to
each participating Fund based on its borrowings at a rate per annum equal to
the Federal Funds rate plus 0.45%. In addition, the Funds are charged a
facility fee equal to 0.10% per annum on the unused portion of the line of
credit. The annual cost of maintaining the line of credit and the facility fee
is apportioned pro rata among the participating Funds. There were no borrowings
during the six months ended June 30, 2005.
6. Security Lending. Each Fund has entered into an agreement with IBT, as an
agent of the Funds, to lend securities to certain designated borrowers. The
loans are collateralized at all times with cash or securities with a market
value at least equal to the market value of the securities on loan. The Funds
receive fees for lending their securities. The market value of securities on
loan to borrowers and the value of collateral held by the Funds with respect to
such loans at June 30, 2005 were as follows:
70
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
Market Value of Value of Collateral
Fund Securities on Loan Received
---- ------------------ --------
Targeted Equity Fund $63,083,299 $64,654,350
International Fund 18,597,626 19,407,485
Focused Value Fund 56,416,027 58,227,858
Large Cap Value Fund 24,621,602 25,325,574
U.S. Diversified Portfolio 88,651,474 91,221,630
Value Fund 20,218,456 20,789,977
Small Cap Value Fund 18,018,961 18,608,140
Capital Growth Fund 9,818,649 10,115,328
7. Brokerage Commission Recapture. Each Fund has entered into agreements with
certain brokers whereby the brokers will rebate a portion of brokerage
commissions. All amounts rebated by the brokers are returned to the Funds under
such agreements and are presented as realized gains in the Statements of
Operations. For the six months ended June 30, 2005, amounts rebated under these
agreements were as follows:
Fund Reductions
---- ----------
Targeted Equity Fund $274,367
International Fund 16,289
Focused Value Fund 18,549
Large Cap Value Fund 30,589
U.S. Diversified Portfolio 110,799
Value Fund 20,342
Small Cap Value Fund 33,715
Capital Growth Fund 10,623
Previously, such rebates were presented as a reduction of expenses in Statement
of Operations. This reclassification has no impact on total net assets of the
Funds.
8. Contingent Expense Obligations. IXIS Advisors has given binding undertakings
to certain Funds to defer its management fees and, if necessary, bear certain
expenses associated with these Funds to limit their operating expenses. These
undertakings are in effect until the dates under "Expiration of Waiver" below
and will be reevaluated on an annual basis. For the six months ended June 30,
2005, certain class level expenses have been reimbursed as follows: Large Cap
Value Fund: $191,766.
IXIS Advisors shall be permitted to recover expenses it has borne (whether
through reduction of its management fee or otherwise) in later periods to the
extent the Funds' expenses fall below the expense limits, provided, however,
that the Funds are not obligated to pay such deferred fees more than one year
after the end of the fiscal year in which the fee was deferred.
At June 30, 2005, the expense limits as a percentage of average daily net
assets and amounts subject to possible reimbursement under the expense
limitation agreements were as follows:
Expenses Expenses
Expense Limit as a Percentage of Average Subject to Subject to
Daily Net Assets Possible Possible
- - --------------------------------------- Expiration of Reimbursement Reimbursement
Fund Class A Class B Class C Class Y Waiver through 2005 through 2006
- ---- ------- ------- ------- ------- -------------- ------------- -------------
Focused Value Fund 1.70% 2.45% 2.45% --% April 30, 2006 $ -- $ --
Large Cap Value Fund 1.30% 2.05% 2.05% 1.05% April 30, 2006 613,592 191,766
9. Concentration of Risk. Focused Value Fund is a non-diversified Fund.
Compared with diversified mutual funds, the Fund may invest a greater
percentage of its assets in a particular company. Therefore, the Fund's returns
could be significantly affected by the performance of any one of the small
number of stocks in its portfolio.
International Fund had the following geographic concentrations in excess of 10%
of its total net assets at June 30, 2005: France 13.1%, Japan 16.7%, and the
United Kingdom 18.7%. The Fund pursues its objectives by investing in foreign
securities. There are certain risks involved in investing in foreign securities
that are in addition to the usual risks inherent in domestic investments. These
risks include those resulting from future adverse political or economic
developments and the possible imposition of currency exchange blockages or
other foreign governmental laws or restrictions.
71
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
10. Capital Shares. Each Fund may issue an unlimited number of shares of
beneficial interest. Transactions in capital shares were as follows:
Six Months Ended
June 30, 2005
-----------------------------------
CGM Advisor Targeted Equity Fund Shares Amount
- -------------------------------- ---------------- -----------------
Class A
Shares sold 988,835 $ 9,002,202
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 90,813 839,111
---------------- -----------------
1,079,648 9,841,313
Shares repurchased (5,573,352) (50,723,382)
---------------- -----------------
Net increase (decrease) (4,493,704) $ (40,882,069)
---------------- -----------------
Class B
Shares sold 234,073 $ 1,988,078
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 8,192 70,535
---------------- -----------------
242,265 2,058,613
Shares repurchased (882,103) (7,510,418)
---------------- -----------------
Net increase (decrease) (639,838) $ (5,451,805)
---------------- -----------------
Class C
Shares sold 60,368 $ 514,469
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 427 3,675
---------------- -----------------
60,795 518,144
Shares repurchased (49,593) (421,366)
---------------- -----------------
Net increase (decrease) 11,202 $ 96,778
---------------- -----------------
Class Y
Shares sold 91,867 $ 853,770
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 1,321 12,467
---------------- -----------------
93,188 866,237
Shares repurchased (50,091) (460,362)
---------------- -----------------
Net increase (decrease) 43,097 $ 405,875
---------------- -----------------
Increase (decrease) derived from capital shares transactions (5,079,243) $ (45,831,221)
================ =================
Year Ended
December 31, 2004
-----------------------------------
CGM Advisor Targeted Equity Fund Shares Amount
- -------------------------------- ---------------- -----------------
Class A
Shares sold 2,521,858 $ 20,870,954
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
---------------- -----------------
2,521,858 20,870,954
Shares repurchased (17,497,433) (142,925,716)
---------------- -----------------
Net increase (decrease) (14,975,575) $ (122,054,762)
---------------- -----------------
Class B
Shares sold 584,350 $ 4,509,878
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
---------------- -----------------
584,350 4,509,878
Shares repurchased (1,391,402) (10,654,125)
---------------- -----------------
Net increase (decrease) (807,052) $ (6,144,247)
---------------- -----------------
Class C
Shares sold 105,596 $ 786,319
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
---------------- -----------------
105,596 786,319
Shares repurchased (79,774) (611,842)
---------------- -----------------
Net increase (decrease) 25,822 $ 174,477
---------------- -----------------
Class Y
Shares sold 129,331 $ 1,094,935
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
---------------- -----------------
129,331 1,094,935
Shares repurchased (101,673) (843,271)
---------------- -----------------
Net increase (decrease) 27,658 $ 251,664
---------------- -----------------
Increase (decrease) derived from capital shares transactions (15,729,147) $ (127,772,868)
================ =================
72
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
10. Capital Shares (continued).
Six Months Ended
June 30, 2005
-----------------------------------
Hansberger International Fund Shares Amount
- ----------------------------- ---------------- -----------------
Class A
Shares sold 568,330 $ 9,750,800
Shares repurchased (434,015) (7,412,519)
---------------- -----------------
Net increase (decrease) 134,315 $ 2,338,281
---------------- -----------------
Class B
Shares sold 110,584 $ 1,754,922
Shares repurchased (672,203) (10,638,121)
---------------- -----------------
Net increase (decrease) (561,619) $ (8,883,199)
---------------- -----------------
Class C
Shares sold 92,590 $ 1,463,489
Shares repurchased (86,623) (1,371,099)
---------------- -----------------
Net increase (decrease) 5,967 $ 92,390
---------------- -----------------
Increase (decrease) derived from capital shares transactions (421,337) $ (6,452,528)
================ =================
Year Ended
December 31, 2004
-----------------------------------
Hansberger International Fund Shares Amount
- ----------------------------- ---------------- -----------------
Class A
Shares sold 1,378,026 $ 21,181,534
Shares repurchased (1,039,791) (15,979,778)
---------------- -----------------
Net increase (decrease) 338,235 $ 5,201,756
---------------- -----------------
Class B
Shares sold 234,404 $ 3,365,251
Shares repurchased (1,672,509) (23,865,174)
---------------- -----------------
Net increase (decrease) (1,438,105) $ (20,499,923)
---------------- -----------------
Class C
Shares sold 324,631 $ 4,638,364
Shares repurchased (142,798) (2,053,383)
---------------- -----------------
Net increase (decrease) 181,833 $ 2,584,981
---------------- -----------------
Increase (decrease) derived from capital shares transactions (918,037) $ (12,713,186)
================ =================
73
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
10. Capital Shares (continued).
Six Months Ended
June 30, 2005
-----------------------------------
Harris Associates Focused Value Fund Shares Amount
- ------------------------------------ ---------------- -----------------
Class A
Shares sold 641,417 $ 8,224,257
Shares repurchased (1,900,102) (24,582,855)
---------------- -----------------
Net increase (decrease) (1,258,685) $ (16,358,598)
---------------- -----------------
Class B
Shares sold 195,352 $ 2,434,884
Shares repurchased (829,149) (10,389,311)
---------------- -----------------
Net increase (decrease) (633,797) $ (7,954,427)
---------------- -----------------
Class C
Shares sold 429,381 $ 5,354,872
Shares repurchased (1,698,689) (21,236,785)
---------------- -----------------
Net increase (decrease) (1,269,308) $ (15,881,913)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (3,161,790) $ (40,194,938)
================ =================
Year Ended
December 31, 2004
-----------------------------------
Harris Associates Focused Value Fund Shares Amount
- ------------------------------------ ---------------- -----------------
Class A
Shares sold 2,211,604 $ 26,494,287
Shares repurchased (2,074,206) (24,982,274)
---------------- -----------------
Net increase (decrease) 137,398 $ 1,512,013
---------------- -----------------
Class B
Shares sold 773,815 $ 9,061,361
Shares repurchased (1,352,436) (15,825,604)
---------------- -----------------
Net increase (decrease) (578,621) $ (6,764,243)
---------------- -----------------
Class C
Shares sold 2,570,290 $ 30,041,268
Shares repurchased (1,937,670) (22,709,696)
---------------- -----------------
Net increase (decrease) 632,620 $ 7,331,572
---------------- -----------------
Increase (decrease) derived from capital shares transactions 191,397 $ 2,079,342
================ =================
74
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
10. Capital Shares (continued).
Six Months Ended
June 30, 2005
-----------------------------------
Harris Associates Large Cap Value Fund Shares Amount
- -------------------------------------- ---------------- -----------------
Class A
Shares sold 604,456 $ 7,859,481
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 14,687 191,231
---------------- -----------------
619,143 8,050,712
Shares repurchased (1,554,986) (20,198,445)
---------------- -----------------
Net decrease (935,843) $ (12,147,733)
---------------- -----------------
Class B
Shares sold 155,517 $ 1,902,126
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 6,033 73,844
---------------- -----------------
161,550 1,975,970
Shares repurchased (960,869) (11,757,194)
---------------- -----------------
Net decrease (799,319) $ (9,781,224)
---------------- -----------------
Class C
Shares sold 151,841 $ 1,857,251
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 976 11,938
---------------- -----------------
152,817 1,869,189
Shares repurchased (355,854) (4,350,287)
---------------- -----------------
Net increase (decrease) (203,037) $ (2,481,098)
---------------- -----------------
Class Y
Shares sold 45,250 $ 604,566
Shares issued in connection with the reinvestment of:
Dividends from net investment income 1,195 16,006
---------------- -----------------
46,445 620,572
Shares repurchased (217,392) (2,884,095)
---------------- -----------------
Net decrease (170,947) $ (2,263,523)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (2,109,146) $ (26,673,578)
================ =================
Year Ended
December 31, 2004
-----------------------------------
Harris Associates Large Cap Value Fund Shares Amount
- -------------------------------------- ---------------- -----------------
Class A
Shares sold 2,114,459 $ 26,293,904
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
---------------- -----------------
2,114,459 26,293,904
Shares repurchased (3,058,528) (38,152,674)
---------------- -----------------
Net decrease (944,069) $ (11,858,770)
---------------- -----------------
Class B
Shares sold 539,873 $ 6,373,696
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
---------------- -----------------
539,873 6,373,696
Shares repurchased (2,028,413) (23,942,400)
---------------- -----------------
Net decrease (1,488,540) $ (17,568,704)
---------------- -----------------
Class C
Shares sold 1,068,463 $ 12,555,826
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
---------------- -----------------
1,068,463 12,555,826
Shares repurchased (311,574) (3,687,561)
---------------- -----------------
Net increase (decrease) 756,889 $ 8,868,265
---------------- -----------------
Class Y
Shares sold 278,070 $ 3,599,061
Shares issued in connection with the reinvestment of:
Dividends from net investment income -- --
---------------- -----------------
278,070 3,599,061
Shares repurchased (1,082,092) (13,760,464)
---------------- -----------------
Net decrease (804,022) $ (10,161,403)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (2,479,742) $ (30,720,612)
================ =================
75
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
10. Capital Shares (continued).
Six Months Ended
June 30, 2005
-----------------------------------
IXIS U.S. Diversified Portfolio Shares Amount
- ------------------------------- ---------------- -----------------
Class A
Shares sold 1,437,447 $ 26,345,179
Shares repurchased (2,190,111) (40,175,338)
---------------- -----------------
Net decrease (752,664) $ (13,830,159)
---------------- -----------------
Class B
Shares sold 374,802 $ 6,156,108
Shares repurchased (2,414,955) (39,756,412)
---------------- -----------------
Net decrease (2,040,153) $ (33,600,304)
---------------- -----------------
Class C
Shares sold 56,183 $ 928,570
Shares repurchased (546,002) (8,991,129)
---------------- -----------------
Net increase (decrease) (489,819) $ (8,062,559)
---------------- -----------------
Class Y
Shares sold 68,927 $ 1,330,957
Shares repurchased (256,724) (4,986,417)
---------------- -----------------
Net decrease (187,797) $ (3,655,460)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (3,470,433) $ (59,148,482)
================ =================
Year Ended
December 31, 2004
-----------------------------------
IXIS U.S. Diversified Portfolio Shares Amount
- ------------------------------- ---------------- -----------------
Class A
Shares sold 3,621,946 $ 61,819,311
Shares repurchased (4,042,630) (69,134,083)
---------------- -----------------
Net decrease (420,684) $ (7,314,772)
---------------- -----------------
Class B
Shares sold 1,023,105 $ 15,892,084
Shares repurchased (5,878,024) (90,809,102)
---------------- -----------------
Net decrease (4,854,919) $ (74,917,018)
---------------- -----------------
Class C
Shares sold 189,049 $ 2,929,359
Shares repurchased (734,192) (11,393,435)
---------------- -----------------
Net increase (decrease) (545,143) $ (8,464,076)
---------------- -----------------
Class Y
Shares sold 218,190 $ 3,966,766
Shares repurchased (1,673,188) (29,771,039)
---------------- -----------------
Net decrease (1,454,998) $ (25,804,273)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (7,275,744) $ (116,500,139)
================ =================
76
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
10. Capital Shares (continued).
Six Months Ended
June 30, 2005
-----------------------------------
IXIS Value Fund Shares Amount
- --------------- ---------------- -----------------
Class A
Shares sold 415,947 $ 3,694,757
Shares Issued in connection with the reinvestment of:
Dividends from net investment income (22) --
Distributions from net realized gain 291,053 2,570,629
---------------- -----------------
706,978 6,265,386
Shares repurchased (1,145,811) (10,147,451)
---------------- -----------------
Net decrease (438,833) $ (3,882,065)
---------------- -----------------
Class B
Shares sold 141,027 $ 1,150,736
Shares Issued in connection with the reinvestment of:
Dividends from net investment income (2) --
Distributions from net realized gain 82,723 668,587
---------------- -----------------
223,748 1,819,323
Shares repurchased (595,455) (4,855,765)
---------------- -----------------
Net decrease (371,707) $ (3,036,442)
---------------- -----------------
Class C
Shares sold 29,804 $ 244,388
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
Distributions from net realized gain 7,866 63,582
---------------- -----------------
37,670 307,970
Shares repurchased (34,362) (281,864)
---------------- -----------------
Net increase (decrease) 3,308 $ 26,106
---------------- -----------------
Increase (decrease) derived from capital shares transactions (807,232) $ (6,892,401)
================ =================
Year Ended
December 31, 2004
-----------------------------------
IXIS Value Fund Shares Amount
- --------------- ---------------- -----------------
Class A
Shares sold 963,269 $ 8,089,262
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
Distributions from net realized gain 214,596 1,883,282
---------------- -----------------
1,177,865 9,972,544
Shares repurchased (2,880,533) (24,188,526)
---------------- -----------------
Net decrease (1,702,668) $ (14,215,982)
---------------- -----------------
Class B
Shares sold 406,698 $ 3,154,676
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
Distributions from net realized gain 65,280 527,181
---------------- -----------------
471,978 3,681,857
Shares repurchased (1,049,412) (8,162,688)
---------------- -----------------
Net decrease (577,434) $ (4,480,831)
---------------- -----------------
Class C
Shares sold 139,514 $ 1,078,896
Shares Issued in connection with the reinvestment of:
Dividends from net investment income -- --
Distributions from net realized gain 5,506 44,489
---------------- -----------------
145,020 1,123,385
Shares repurchased (51,629) (402,248)
---------------- -----------------
Net increase (decrease) 93,391 $ 721,137
---------------- -----------------
Increase (decrease) derived from capital shares transactions (2,186,711) $ (17,975,676)
================ =================
77
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
10. Capital Shares (continued).
Six Months Ended
June 30, 2005
-----------------------------------
Vaughan Nelson Small Cap Value Fund Shares Amount
- ----------------------------------- ---------------- -----------------
Class A
Shares sold 550,137 $ 8,668,939
Shares repurchased (417,386) (6,598,206)
---------------- -----------------
Net increase (decrease) 132,751 $ 2,070,733
---------------- -----------------
Class B
Shares sold 96,421 $ 1,411,516
Shares repurchased (834,949) (12,229,487)
---------------- -----------------
Net increase (decrease) (738,528) $ (10,817,971)
---------------- -----------------
Class C
Shares sold 92,260 $ 1,357,477
Shares repurchased (117,887) (1,729,650)
---------------- -----------------
Net increase (decrease) (25,627) $ (372,173)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (631,404) $ (9,119,411)
================ =================
Six Months Ended
June 30, 2005
-----------------------------------
Westpeak Capital Growth Fund Shares Amount
- ---------------------------- ---------------- -----------------
Class A
Shares sold 146,537 $ 1,620,890
Shares repurchased (518,334) (5,736,305)
---------------- -----------------
Net increase (decrease) (371,797) $ (4,115,415)
---------------- -----------------
Class B
Shares sold 55,996 $ 537,338
Shares repurchased (251,042) (2,413,268)
---------------- -----------------
Net increase (decrease) (195,046) $ (1,875,930)
---------------- -----------------
Class C
Shares sold 3,472 $ 33,048
Shares repurchased (9,294) (88,461)
---------------- -----------------
Net increase (decrease) (5,822) $ (55,413)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (572,665) $ (6,046,758)
================ =================
Year Ended
December 31, 2004
-----------------------------------
Vaughan Nelson Small Cap Value Fund Shares Amount
- ----------------------------------- ---------------- -----------------
Class A
Shares sold 397,634 $ 5,765,216
Shares repurchased (849,371) (12,182,549)
---------------- -----------------
Net increase (decrease) (451,737) $ (6,417,333)
---------------- -----------------
Class B
Shares sold 291,248 $ 3,924,012
Shares repurchased (895,799) (12,076,096)
---------------- -----------------
Net increase (decrease) (604,551) $ (8,152,084)
---------------- -----------------
Class C
Shares sold 171,240 $ 2,309,106
Shares repurchased (186,838) (2,501,179)
---------------- -----------------
Net increase (decrease) (15,598) $ (192,073)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (1,071,886) $ (14,761,490)
================ =================
Year Ended
December 31, 2004
-----------------------------------
Westpeak Capital Growth Fund Shares Amount
- ---------------------------- ---------------- -----------------
Class A
Shares sold 313,633 $ 3,392,393
Shares repurchased (1,124,317) (12,133,801)
---------------- -----------------
Net increase (decrease) (810,684) $ (8,741,408)
---------------- -----------------
Class B
Shares sold 142,812 $ 1,353,045
Shares repurchased (575,435) (5,454,484)
---------------- -----------------
Net increase (decrease) (432,623) $ (4,101,439)
---------------- -----------------
Class C
Shares sold 14,061 $ 133,009
Shares repurchased (35,626) (335,096)
---------------- -----------------
Net increase (decrease) (21,565) $ (202,087)
---------------- -----------------
Increase (decrease) derived from capital shares transactions (1,264,872) $ (13,044,934)
================ =================
78
ADDITIONAL INFORMATION
Shareholder Meetings (Unaudited)
At a special shareholders' meeting held on June 2, 2005, shareholders of IXIS
Advisor Funds Trust I of which the CGM Advisor Targeted Equity Fund, Hansberger
International Fund, IXIS U.S. Diversified Portfolio (formerly CDC Nvest Star
Advisers Fund), IXIS Value Fund (formerly CDC Nvest Star Value Fund), Vaughan
Nelson Small Cap Value Fund and Westpeak Capital Growth Fund are series, voted
for the following proposals:
1. Election of Trustees for IXIS Advisor Funds Trust I ("Trust I")
Votes
Votes For Withheld Total Votes
- --------- -------- -----------
Graham T. Allison, Jr. 131,745,061.272 3,213,785.211 134,958,846.483
Edward A. Benjamin 131,812,753.170 3,146,093.313 134,958,846.483
Daniel M. Cain 131,896,620.650 3,062,225.833 134,958,846.483
Paul G. Chenault 131,736,188.725 3,222,657.758 134,958,846.483
Kenneth J. Cowan 131,624,646.555 3,334,199.928 134,958,846.483
Richard Darman 131,920,983.533 3,037,862.950 134,958,846.483
Sandra O. Moose 131,873,816.605 3,085,029.878 134,958,846.483
John A. Shane 131,718.823.070 3,240,023.413 134,958,846.483
Charles D. Baker 131,824.162.901 3,134,683.582 134,958,846.483
Cynthia L. Walker 131,866.957.031 3,091,889.452 134,958,846.483
Robert J. Blanding 131,879,975.460 3,078,871.023 134,958,846.483
John T. Hailer 131,817,344.611 3,141,501.872 134,958,846.483
2. Approval of an Amended and Restated Agreement and Declaration of Trust for
Trust I
Voted
Voted For Against Abstained Votes Broker Non-Votes Total Votes
--------- ------- --------------- ---------------- -----------
96,227,281.438 3,171,004.690 3,467,338.355 32,093,222.000 134,958,846.483
At a special shareholders' meeting held on June 2, 2005, shareholders of IXIS
Advisor Funds Trust II of which the Harris Associates Large Cap Value Fund is a
series, voted for the following proposals:
1. Election of Trustees for IXIS Advisor Funds Trust II ("Trust II")
Votes
Votes For Withheld Total Votes
- --------- -------- -----------
Graham T. Allison, Jr. 22,764,239.374 514,958.204 23,279,197.578
Edward A. Benjamin 22,770,172.406 509,025.172 23,279,197.578
Daniel M. Cain 22,772,091.712 507,105.866 23,279,197.578
Paul G. Chenault 22,749,975.557 529,222.021 23,279,197.578
Kenneth J. Cowan 22,758,192.528 521,005.050 23,279,197.578
Richard Darman 22,761,355.077 517,842.501 23,279,197.578
Sandra O. Moose 22,783,421.156 495,776.422 23,279,197.578
John A. Shane 22,758,852.839 520,344.739 23,279,197.578
Charles D. Baker 22,746,708.764 532,488.814 23,279,197.578
Cynthia L. Walker 22,774,049.885 505,147.693 23,279,197.578
Robert J. Blanding 22,771,113.391 508,084.187 23,279,197.578
John T. Hailer 22,773,708.397 505,489.181 23,279,197.578
2. Approval of an Amended and Restated Agreement and Declaration of Trust for
Trust II
Voted
Voted For Against Abstained Votes Broker Non-Votes Total Votes
--------- ------- --------------- ---------------- -----------
16,078,256.237 402,230.847 539,405.494 6,259,305.000 23,279,197.578
79
ADDITIONAL INFORMATION
At a special shareholders' meeting held on June 2, 2005, shareholders of IXIS
Advisor Funds Trust III, of which the the Harris Associates Focused Value Fund
is a series, voted for the following proposals:
1. Election of Trustees for IXIS Advisor Funds Trust III ("Trust III")
Votes
Votes For Withheld Total
- --------- -------- -----
Graham T. Allison, Jr. 22,076,494.115 290,487.571 22,366,981.686
Edward A. Benjamin 22,073,775.314 293,206.372 22,366,981.686
Daniel M. Cain 22,085,370.115 281,611.571 22,366,981.686
Paul G. Chenault 22,032,781.880 334,199.806 22,366,981.686
Kenneth J. Cowan 22,018,840.798 348,140.888 22,366,981.686
Richard Darman 22,085,245.115 281,736.571 22,366,981.686
Sandra O. Moose 22,076,808.115 290,173.571 22,366,981.686
John A. Shane 22,049.440.364 317,541.322 22,366,981.686
Charles D. Baker 22,066,708.875 300,272.811 22,366,981.686
Cynthia L. Walker 22,060,761.741 306,219.945 22,366,981.686
Robert J. Blanding 22,080,201.115 286,780.571 22,366,981.686
John T. Hailer 22,063,445.448 303,536.238 22,366,981.686
2. Approval of an Amended and Restated Agreement and Declaration of Trust for
Trust III
Voted
Voted For Against Abstained Votes Broker Non-Votes Total Votes
--------- ------- --------------- ---------------- -----------
12,060,980.712 306,967.971 435,847.003 9,563,186.000 22,366,981.686
With respect to this proposal, the meeting was adjourned initially to June 22,
2005 and again to July 21, 2005 due to insufficient votes to pass the proposal.
80
[LOGO]
Semiannual Report
June 30, 2005
IXIS Equity Diversified Portfolio
Loomis Sayles Large Cap Growth Discipline
Harris Associates Large Cap Value Discipline
Reich & Tang Mid Cap Value Discipline
Hansberger International Developed Markets Discipline
IXIS Moderate Diversified Portfolio
Loomis Sayles Core Fixed Income Discipline
Loomis Sayles Large Cap Growth Discipline
Harris Associates Large Cap Value Discipline
Reich & Tang Mid Cap Value Discipline
Hansberger International Developed Markets Discipline
TABLE OF CONTENTS
Management Discussion
and Performance.........Page 1
Schedule of InvestmentsPage 11
Financial Statements...Page 19
IXIS EQUITY DIVERSIFIED PORTFOLIO
PORTFOLIO PROFILE
Objective:
Seeks long-term capital appreciation
- --------------------------------------------------------------------------------
Strategy:
Features U.S. growth and value as well as international investments through a
diversified portfolio of complementary equity investment disciplines from
specialized money managers
- --------------------------------------------------------------------------------
Inception Date:
January 31, 2005
- --------------------------------------------------------------------------------
Subadvisors:
Hansberger Global Investors, Inc.
Harris Associates, L.P.
Loomis, Sayles & Company, L.P.
Reich & Tang Asset Management, LLC
- --------------------------------------------------------------------------------
Symbols:
Class A AEDPX
Class C CEDPX
- --------------------------------------------------------------------------------
What You Should Know:
Growth stocks focus on future expectations of a security. The fund may be
exposed to greater volatility if the expectations are not met. Value stocks can
fall out of favor and underperform growth stocks during certain market
conditions. Foreign investments involve unique risks, such as currency
fluctuations, differing political and economic conditions, and different
accounting standards.
Management Discussion
- --------------------------------------------------------------------------------
Uncertainty seemed to dominate both U.S. and overseas markets during the first
half of 2005. U.S. stocks ended the period mixed, with value stocks generally
outperforming growth stocks. Overseas, many individual markets were modestly
higher in local currencies, but returns were eroded when converted back into
U.S. dollars, which gained strength. Since inception on January 31, 2005
through June 30, 2005, the total return on class A shares of IXIS Equity
Diversified Portfolio was 0.80% based on net asset value. The fund's benchmark,
the Standard & Poor's 500 Index, returned 1.67% and the average return on the
funds in Morningstar's Large Blend category was 1.69% for the same five-month
period.
IXIS Equity Diversified Portfolio is managed by four different investment
advisors, and invested in a broad range of growth and value stocks in the
United States and overseas. The Loomis Sayles Large Cap Growth Discipline
focuses on equity securities of large U.S. companies selected for their growth
potential, while the Harris Associates Large Cap Value Discipline emphasizes
large companies the manager believes to be undervalued. The Reich & Tang Mid
Cap Value Discipline concentrates on equities with small- to mid-sized market
capitalizations. International markets are the focus of the Hansberger
International Developed Markets Discipline.
LOOMIS SAYLES LARGE CAP GROWTH DISCIPLINE FAVORED NON-CYCLICALS
Because economic growth appeared to be slowing, Loomis focused on investments
in less-cyclical sectors, such as consumer staples and healthcare. Financial
stocks included asset managers and investment bankers, but Loomis avoided
institutions that might be adversely affected by rising interest rates. Energy
companies featured those active in exploration and production, which were
buoyed by higher natural gas and oil prices. Individual holdings that had the
most positive impact on performance included Google, the global Internet search
company, which benefited from strong earnings and sales growth; Legg Mason, a
diversified broker and investment manager, which gained market share; and
Chico's FAS, Inc., a specialty retailer of women's apparel enjoying strong
sales. Technology stocks were disappointing, as some of last year's
top-performers reversed course. However, rising demand for wireless equipment
and personal computers helped some technology stocks rebound in the second
quarter. Stocks with the most negative impact on performance included
pharmaceutical company Biogen Idec, which declined in price when one of its
major drugs was pulled from the market, and internet auctioneer eBay, which
experienced disappointing earnings. Symantec had been enjoying strong sales of
its security and problem-solving software when word of its planned acquisition
of Veritas Software prompted many investors to abandon the stock. Loomis sold
all three positions.
HARRIS ASSOCIATES LARGE CAP VALUE DISCIPLINE FOCUSED ON INDIVIDUAL STOCKS
Harris Associates' hallmark approach -- a process that stresses individual
selection rather than sector allocation -- led to an emphasis on
consumer-oriented stocks. The segment's relatively small exposure to energy
held back performance. Media selections were also weak because these stocks
received little notice from investors, even though Harris believes these
companies have attractive business prospects that should stimulate investor
demand over time. The best performing stocks included Kohl's, which operates
specialty department stores; Hewlett-Packard, an information technology
company; and Burlington Resources, one of the world's largest oil and natural
gas exploration and production companies. Kohl's is doing well after correcting
problems that were responsible for poor earnings in the past. A new CEO and
better-than-expected earnings helped boost Hewlett-Packard; and rising energy
prices and lower exploration costs aided Burlington Resources. Poor performers
included McDonald's Corporation; Masco Corporation, which makes, distributes
and installs home improvement and building products; and Viacom, a media
company. While McDonald's softer-than-expected growth in Europe depressed the
price of its stock, Harris Associates continues to like the company's long-term
business prospects. Viacom declined on the announcement that the company will
be divided into two separate units -- cable networks (MTV, Nickelodeon) and
CBS/Infinity.
1
IXIS EQUITY DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
REICH & TANG MID CAP VALUE DISCIPLINE CONCENTRATED ON RELATIVELY FEW STOCKS
A relatively small position in energy and the lack of exposure to utilities and
financials were negative for this segment. Investments in industrials also
hurt. Individual stocks that were weak included Harman International
Industries, a manufacturer of high-quality audio products. Shares fell when the
company announced lower-than-expected earnings, but the stock has a strong
history of positive momentum and Reich & Tang is holding a small position for
the time being, in anticipation of some lucrative new contracts. The stock
price of RadioShack, a consumer electronics retailer, also declined after
excess inventory caused the company to lower its earnings forecast for the
year. However, Reich & Tang believes management changes at Radio Shack bode
well for the future. Ball Corporation, a manufacturer of metal and plastic
packaging for the food and beverage industries, fell on concerns about waning
consumer confidence, but Reich & Tang believes Ball is attractively priced
relative to its prospects. The best performing stocks included Adtran, which
designs and markets high-speed network access products; Express Scripts, the
third-largest pharmacy benefits manager in the United States; and Martin
Marietta, a leading nationwide producer of construction materials.
HANSBERGER INTERNATIONAL DEVELOPED MARKETS DISCIPLINE YIELDED MIXED RETURNS
Overall, this segment's European holdings underperformed the benchmark,
although top contributors came from companies domiciled in Finland, France,
Italy and Switzerland. Canadian and Japanese holdings were also positive.
Detractors included holdings in the U.K., Singapore, and Hong Kong. On an
industry basis, energy, industrials, and healthcare benefited performance, but
financial holdings were negative. The best performing individual stocks
included ABB Ltd., a Swiss engineering group; GlaxoSmithKline, a U.K.-based
pharmaceutical company undergoing a recovery in earnings; and ENI S.p.a, an
Italian oil and gas exploration and production company. The weakest individual
stocks included the U.K.'s Kingfisher, the world's third-largest home
improvement retailer. Disappointing earnings hurt the stock, but Hansberger
believes Kingfisher may benefit from market growth and internal restructuring.
Shares of Japan's Pioneer Corporation, a manufacturer of home and auto
electronics products, also slumped, but Hansberger is optimistic for growth in
the sales of flat-panel televisions. Sony Corporation's weakness reflects poor
management and lack of innovation, but Hansberger believes the recently
announced restructuring plan and new business affiliations will provide a
catalyst for profit improvement in years to come.
2
IXIS EQUITY DIVERSIFIED PORTFOLIO
Investment Results through June 30, 2005
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The table comparing the fund's performance to an index provides you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, an index is unmanaged and does not have expenses that affect the results.
It is not possible to invest directly in an index. Investors would incur
transaction costs and other expenses if they purchased the securities necessary
to match the index.
Average Annual Total Returns -- June 30, 2005
SINCE
INCEPTION/7/
CLASS A (Inception 1/31/05)
Net Asset Value/1/ 0.80%
With Maximum Sales Charge/2/ -4.99
CLASS C (Inception 1/31/05)
Net Asset Value/1/ 0.50
With CDSC/3/ -0.50
- -------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE INCEPTION/6/
S&P 500 Index/4/ 1.67%
Morningstar Large Blend Fund Avg./5/ 1.69
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those noted. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com.
The table does not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets
as of
FUND COMPOSITION 6/30/05
- ------------------------------------------------
Common Stocks 93.4
- ------------------------------------------------
Short Term Investments and Other 6.6
- ------------------------------------------------
% of Net Assets
as of
TEN LARGEST HOLDINGS 6/30/05
- ------------------------------------------------
Intel Corp. 1.8
- ------------------------------------------------
Johnson & Johnson 1.6
- ------------------------------------------------
Texas Instruments, Inc. 1.6
- ------------------------------------------------
Google, Inc., Class A 1.4
- ------------------------------------------------
Liberty Media Corp., Class A 1.4
- ------------------------------------------------
McDonald's Corp. 1.3
- ------------------------------------------------
Abbott Laboratories 1.3
- ------------------------------------------------
General Electric Co. 1.2
- ------------------------------------------------
Legg Mason, Inc. 1.2
- ------------------------------------------------
JPMorgan Chase & Co. 1.2
- ------------------------------------------------
% of Net Assets
as of
FIVE LARGEST INDUSTRIES 6/30/05
- ------------------------------------------------
Retail 9.9
- ------------------------------------------------
Diversified Financial Services 6.9
- ------------------------------------------------
Media 6.3
- ------------------------------------------------
Health Care--Products 4.8
- ------------------------------------------------
Health Care--Services 4.7
- ------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes To Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Class C share performance assumes a 1.00% contingent deferred sales charge
("CDSC") applied when you sell shares within one year of purchase.
/4/S&P 500 Index is an unmanaged index of U.S. common stock performance.
/5/Morningstar Large Blend Fund Average is the average performance without
sales charges of funds with similar current investment objectives, as
calculated by Morningstar, Inc.
/6/The since-inception performance comparisons for Class A and C shares were
calculated from 1/31/05.
/7/Fund performance has been increased by expense waivers, without which
performance would have been lower.
3
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
IXIS MODERATE DIVERSIFIED PORTFOLIO
PORTFOLIO PROFILE
-----------------------------------------------------------------------------
Objective:
-----------------------------------------------------------------------------
Seeks long-term capital appreciation, with income as a secondary objective
- --------------------------------------------------------------------------------
Strategy:
-----------------------------------------------------------------------------
Combines both equity and fixed-income investments through a diversified
portfolio of complementary investment disciplines from specialized money
managers. Equity disciplines feature U.S. growth and value as well as
international investments. The fixed-income discipline focuses on U.S.
investment-grade, fixed-income securities
- --------------------------------------------------------------------------------
Inception Date:
July 15, 2004
- --------------------------------------------------------------------------------
Subadvisors:
-----------------------------------------------------------------------------
Hansberger Global Investors, Inc.
-----------------------------------------------------------------------------
Harris Associates, L.P.
-----------------------------------------------------------------------------
Loomis, Sayles & Company, L.P.
Reich & Tang Asset Management, LLC
- --------------------------------------------------------------------------------
Symbols:
Class A AMDPX
Class C CMDPX
- --------------------------------------------------------------------------------
What You Should Know:
-----------------------------------------------------------------------------
Growth stocks focus on future expectations of a security. The fund may be
exposed to greater volatility if the expectations are not met. Value stocks can
fall out of favor and underperform growth stocks during certain market
conditions. Foreign investments involve unique risks, such as currency
fluctuations, differing political and economic conditions, and different
accounting standards. Fixed-income securities are subject to credit risk,
interest rate risk and liquidity risk. Lower-rated securities are considered
riskier than investment-grade securities because there is a greater risk of
default.
Management Discussion
- --------------------------------------------------------------------------------
U.S. equities ended the first half of 2005 mixed, with value stocks doing
better than growth stocks. A rising U.S. dollar took a toll on overseas
investments. Many international markets ended the period with modest gains, but
when overseas investments were converted to U.S. dollars, they declined in
value. In the fixed-income area, most bond categories were positive. For the
six months ended June 30, 2005, the total return on class A shares of IXIS
Moderate Diversified Portfolio was -1.27% based on net asset value and $0.05 in
dividends and $0.01 in capital gains reinvested during the period. The fund's
equity benchmark, the Standard & Poor's 500 Index, returned -0.81%, and its
fixed-income benchmark, the Lehman Aggregate Bond Index, returned 2.51% for the
same period. The average return on the funds in Morningstar's Moderate
Allocation category was 0.48%.
Each of the fund's five segments uses a different investment discipline. Loomis
Sayles manages two segments: the Core Fixed Income Discipline, which invests in
U.S. investment-grade fixed-income securities; and the Large Cap Growth
Discipline, which emphasizes equity securities of large U.S. companies. The
Harris Associates Large Cap Value Discipline pursues large-cap companies that
appear to be undervalued, while the Reich & Tang Mid Cap Value Discipline
concentrates on equities with small- to mid-sized market capitalizations.
International stocks are the focus of the Hansberger International Developed
Markets Discipline.
LOOMIS SAYLES CORE FIXED INCOME DISCIPLINE SOUGHT INCOME WITH PRICE STABILITY
As the Federal Reserve Board continued raising interest rates during the first
half of 2005, yields on short-term securities rose, but yields on longer-term
securities declined. Consequently, Loomis maintained a "barbell" maturity
structure, with heavy weightings of both short- and long-term bonds, and
relatively few intermediate-term securities. Treasury bonds with long
maturities performed best on a total return basis because their prices rose as
yields fell. A substantial portion of the segment was in mortgage-backed bonds
and shorter-maturity corporate bonds in the automobile, basic materials,
energy, and telecommunications sectors. Most corporate bonds performed well,
with the notable exception of Ford; the automotive giant's bonds declined in
value after the company's bond rating was downgraded. Loomis eliminated the
position in Ford.
LOOMIS SAYLES LARGE CAP GROWTH DISCIPLINE FAVORED NON-CYCLICALS
Because economic growth appeared to be slowing, Loomis emphasized less-cyclical
areas, such as consumer staples and healthcare, which historically tend to be
less dependent on economic growth rates. Investments in the financial, energy,
and consumer discretionary sectors aided results. In financials, asset managers
and investment bankers were favored, but companies that could be adversely
affected by rising interest rates were avoided. A strong showing in energy came
from exploration and production companies, which were buoyed by higher natural
gas and oil prices. Holdings that made the biggest positive impact included
Google, the global Internet search company, which benefited from
stronger-than-expected earnings growth; Legg Mason, a diversified broker and
investment manager, which gained market share; and Chico's FAS, a specialty
retailer of women's apparel with strong sales. Technology was the most
disappointing sector, as some of 2004's top performers reversed course. The
weakest performers included Internet auctioneer eBay, which had disappointing
profits and was sold. Software companies Symantec and Autodesk also produced
negative returns. Although Symantec generated solid earnings, word of a pending
merger with Veritas Software caused investors to turn away from the stock and
it was sold. After a successful run in 2004, the price of Autodesk shares
declined significantly in the first half of 2005, but Loomis has retained the
stock.
4
IXIS MODERATE DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
HARRIS ASSOCIATES LARGE CAP VALUE DISCIPLINE FOCUSED ON INDIVIDUAL SECURITIES
Harris Associates' hallmark approach -- a process that focuses on individual
selection rather than sector allocation -- led to an emphasis on
consumer-oriented stocks, with relatively minor allocations to energy,
financials, utilities and materials. Since the energy sector led the market in
the first half of 2005, this segment's lack of exposure to energy and other
commodity-related stocks held back performance. Media stocks also impeded
results because the sector received little attention from investors, even
though Harris believes many media companies have attractive earnings prospects.
The best performers included Fortune Brands, a consumer products company;
Hewlett-Packard, an information technology company; and Texas Instruments, a
semiconductor manufacturer. Fortune Brands advanced on reorganization plans and
on the potential purchase of several high-quality liquor brands. A new CEO and
better-than-expected earnings helped boost Hewlett-Packard. Texas Instruments
was buoyed by an improving market environment for semiconductors and the
potential for increased market share for products used in wireless and cellular
telephones. Xerox Corporation, which declined on weak revenue growth, was among
the stocks that detracted from performance. Time Warner also disappointed; weak
revenues in two of its divisions caused the company to retrace some of its 2004
gains. However, Harris Associates elected to hold Time Warner based on its
attractive stable of assets and substantial cash flow. McDonald's stock also
fell on weak European sales, but Harris believes the restaurant chain's
fundamentals remain attractive.
REICH & TANG MID CAP VALUE DISCIPLINE CONCENTRATED ON RELATIVELY FEW STOCKS
Minimal representation in energy and the lack of exposure to utilities and
financials were negative for this segment. Investments in industrials also
penalized performance. Individual stocks that held back results included Harman
International Industries, a manufacturer of high-quality audio products. Shares
fell when the company announced lower-than-expected earnings, but the stock has
a strong history of positive momentum and Reich & Tang is holding a small
position for the time being, in anticipation of some lucrative new contracts.
They sold home appliance maker Maytag Corporation on weakness. However, the
managers have been using price weakness in Cambrex Corporation to add to the
segment's holdings in this life sciences company in anticipation of a possible
turnaround. The best-performing stocks included Adtran, a communications
equipment manufacturer; Express Scripts, a large U.S. pharmacy benefits
manager; and Martin Marietta, a nationwide producer of construction materials.
HANSBERGER INTERNATIONAL DEVELOPED MARKETS DISCIPLINE FOCUSED ON EUROPE AND
CANADA
Hansberger's European investments were led by companies in Finland, France,
Italy, and Switzerland. Canadian holdings were also positive. Investments in
the United Kingdom, Singapore, Hong Kong and Japan detracted. Energy and
industrials were the best performing sectors. The best performing individual
stocks included ABB Ltd., a Swiss engineering group; Kawasaki Heavy Industries,
a Japanese conglomerate with exposure to shipbuilding, gas turbines, and
consumer products; and France's Total, one of the world's largest oil and gas
production companies. The financial and healthcare sectors were negative.
Individual stocks that faltered included Pioneer Corporation in Japan, a
manufacturer of home and car electronics products. Hansberger believes the
company will benefit from growth in the sales of flat-panel televisions, so the
stock remains in this segment. The U.K.'s Kingfisher also hurt performance. One
of the world's largest home improvement retailers, Kingfisher's earnings
declined, but Hansberger believes the company is likely to benefit from market
growth and from internal restructuring. After it issued a profit warning,
Sumitomo Trust & Banking Company was trimmed, but a smaller position remains.
Sumitomo is one of the highest quality financial institutions in Japan.
5
IXIS MODERATE DIVERSIFIED PORTFOLIO
Investment Results through June 30, 2005
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The table comparing the fund's performance to an index provides you with a
general sense of how it performed. The fund's total return for the period shown
below appears with and without sales charges and includes fund expenses and
fees. An index measures the performance of a theoretical portfolio. Unlike a
fund, an index is unmanaged and does not have expenses that affect the results.
It is not possible to invest directly in an index. Investors would incur
transaction costs and other expenses if they purchased the securities necessary
to match the index.
Growth of a $10,000 Investment in Class A Shares
[CHART]
July 14, 2004 through June 30, 2005
Net Asset Maximum Sales S&P 500 Lehman Aggregate
Value/1/ Charge/2/ Index/4/ Bond Index/5/
----------- ---------------- -------------- ----------------
7/15/2004 $10,000 $ 9,425 $10,000 $10,000
7/31/2004 9,850 9,284 10,000 10,000
8/31/2004 9,870 9,302 10,040 10,191
9/30/2004 9,990 9,416 10,149 10,218
10/31/2004 10,150 9,566 10,304 10,304
11/30/2004 10,430 9,830 10,721 10,222
12/31/2004 10,721 10,105 11,086 10,316
1/31/2005 10,511 9,907 10,816 10,381
2/28/2005 10,531 9,925 11,043 10,319
3/31/2005 10,392 9,794 10,848 10,266
4/30/2005 10,241 9,652 10,642 10,405
5/31/2005 10,502 9,899 10,981 10,518
6/30/2005 10,585 9,977 10,996 10,575
Average Annual Total Returns -- June 30, 2005
SINCE
6 MONTHS INCEPTION/8/
CLASS A (Inception 7/15/04)
Net Asset Value/1/ -1.27% 5.85%
With Maximum Sales Charge/2/ -6.92 -0.24
CLASS C (Inception 7/15/04)
Net Asset Value/1/ -1.59 5.11
With CDSC/3/ -2.57 4.11
- ------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS INCEPTION/7/
S&P 500 Index/4/ -0.81% 9.96%
Lehman Aggregate Bond Index/5/ 2.51 5.75
Morningstar Moderate Allocation Fund Avg./6/ 0.48 9.53
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those noted. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com.
The table does not reflect taxes shareholders might owe on any fund
distributions or when they redeem their shares.
PORTFOLIO FACTS
% of Net Assets as of
FUND COMPOSITION 6/30/05 12/31/04
- ----------------------------------------------------
Common Stocks 63.1 63.1
- ----------------------------------------------------
Bonds and Notes 33.4 30.7
- ----------------------------------------------------
Short Term Investments
and Other 3.5 6.2
- ----------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/05 12/31/04
- ----------------------------------------------------
FNMA, 5.500%, with various
maturities to 2034 2.4 2.2
- ----------------------------------------------------
U.S. Treasury Bond,
5.375%, 2/15/2031 2.0 0.6
- ----------------------------------------------------
FNMA, 4.500%, with various
maturities to 2020 2.0 --
- ----------------------------------------------------
FHLMC, 4.000%, with various
maturities to 2020 1.8 0.6
- ----------------------------------------------------
FHLMC, 6.500%, with various
maturities to 2035 1.6 --
- ----------------------------------------------------
U.S. Treasury Note,
6.250%, 2/15/2007 1.3 0.9
- ----------------------------------------------------
FNMA, 6.500%, with various
maturities to 2034 1.3 2.0
- ----------------------------------------------------
U.S. Treasury Bond,
5.250%, with various
maturities to 2029 1.2 1.2
- ----------------------------------------------------
Intel Corp. 1.2 --
- ----------------------------------------------------
FNMA, 3.250%, 1/15/2008 1.2 --
- ----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/05 12/31/04
- ----------------------------------------------------
Government Agencies 14.2 9.5
- ----------------------------------------------------
Diversified Financial Services 9.6 10.7
- ----------------------------------------------------
Retail 7.7 7.9
- ----------------------------------------------------
Treasuries 5.5 6.1
- ----------------------------------------------------
Media 4.8 4.9
- ----------------------------------------------------
Portfolio holdings and asset allocations will vary.
Notes To Charts
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Class C share performance assumes a 1.00% contingent deferred sales charge
("CDSC") applied when you sell shares within one year of purchase.
/4/S&P 500 Index is an unmanaged index of U.S. common stock performance.
/5/Lehman Aggregate Bond Index is an unmanaged index of investment-grade bonds
with one-to ten-year maturities issued by the U.S. government, its agencies
and U.S. corporations.
/6/Morningstar Moderate Allocation Fund Average is the average performance
without sales charges of funds with similar current investment objectives,
as calculated by Morningstar, Inc.
/7/The since-inception performance comparisons for Class A and C shares were
calculated from 7/31/04.
/8/Fund performance has been increased by expense waivers, without which
performance would have been lower.
6
ADDITIONAL INFORMATION
The views expressed in this report reflect those of the portfolio managers as
of the dates indicated. The managers' views are subject to change at any time
without notice based on changes in market or other conditions. References to
specific securities or industries should not be regarded as investment advice.
Because the fund is actively managed, there is no assurance that they will
continue to invest in the securities or industries mentioned.
For more complete information on any IXIS Advisor Fund, contact your financial
professional or call IXIS Advisor Funds and ask for a free prospectus, which
contains more complete information including charges and other ongoing
expenses. Investors should consider a fund's objective, risks and expenses
carefully before investing. This and other fund information can be found in the
prospectus. Please read the prospectus carefully before investing.
PROXY VOTING INFORMATION
A description of the funds' proxy voting policies and procedures is available
without charge, upon request, by calling IXIS Advisor Funds at 800-225-5478; on
the funds' website at www.ixisadvisorfunds.com; and on the Securities and
Exchange Commission's website at www.sec.gov. Information regarding how the
funds voted proxies relating to portfolio securities during the 12-month period
ended June 30, 2005 is available from the funds' website and the SEC's website.
QUARTERLY PORTFOLIO SCHEDULES
The funds file a complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q
are available on the SEC's website at www.sec.gov and may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
7
UNDERSTANDING YOUR FUND'S EXPENSES
As a mutual fund shareholder, you incur different costs: transaction costs,
including sales charges (loads) on purchases, and certain exchange fees, and
ongoing costs, including management fees, sales and distribution fees (12b-1
fees), and other fund expenses. In addition, the fund assesses a minimum
balance fee of $20 on an annual basis for accounts that fall below the required
minimum to establish an account (Certain exceptions may apply). These costs are
described in more detail in the fund's prospectus. The examples below are
intended to help you understand the ongoing costs of investing in the fund and
help you compare these with the ongoing costs of investing in other mutual
funds.
The first line in the table shows the actual account values and actual fund
expenses you would have paid on a $1,000 investment in the fund from January 1,
2005 through June 30, 2005. It also shows how much a $1,000 investment would be
worth at the close of the period, assuming actual fund returns and expenses. To
estimate the expenses you paid over the period, simply divide your account
value by $1,000 (for example $8,600 account value divided by $1,000 = 8.6) and
multiply the result by the number in the Expenses Paid During the Period row as
shown below for your class.
The second line in the table provides information about hypothetical account
values and hypothetical expenses based on the fund's actual expense ratios and
an assumed rate of return of 5% per year before expenses, which is not the
fund's actual return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you paid on your
investment for the period. You may use this information to compare the ongoing
costs of investing in the fund and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown reflect ongoing costs only, and do not
include any transaction costs. Therefore, the second line in the table is
useful in comparing ongoing costs only, and will not help you determine the
relative costs of owning different funds. If transaction costs were included,
total costs would be higher.
Beginning Account Value Ending Account Value Expenses Paid During Period*
1/31/05 6/30/05 1/31/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
IXIS EQUITY DIVERSIFIED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,008.00 $6.81
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.80 $6.83
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,005.00 $9.89
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,010.70 $9.92
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio of 1.65% and 2.40%
for Class A and C, respectively, multiplied by the average account value over
the period, multiplied by the number of days in the most recent fiscal year,
divided by 365 (to reflect the half-year period).
Beginning Account Value Ending Account Value Expenses Paid During Period*
1/1/05 6/30/05 1/1/05 - 6/30/05
- ------------------------------------------------------------------------------------------------------------------
IXIS MODERATE DIVERSIFIED PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $987.30 $8.13
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,016.60 $8.25
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $984.10 $11.81
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.90 $11.98
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio of 1.65% and 2.40%
for Class A and C, respectively, multiplied by the average account value over
the period, multiplied by the number of days in the most recent fiscal year,
divided by 365 (to reflect the half-year period).
8
BOARD APPROVAL OF MANAGEMENT CONTRACTS
The Board of Trustees, including the Independent Trustees, considers matters
bearing on each Fund's advisory and sub-advisory agreements (collectively, the
"Agreements") at most of its meetings throughout the year. Once a year, usually
in the spring, the Contract Review and Governance Committee of the Board meets
to review the Agreements to determine whether to recommend that the full Board
approve the continuation of the Agreements for an additional one-year period.
After the Committee has made its recommendation, the full Board, including the
Independent Trustees, determines whether to approve the continuation of the
Agreements.
In connection with these meetings, the Trustees receive materials that the
Funds' investment advisers believe to be reasonably necessary for the Trustees
to evaluate the Agreements. These materials generally include, among other
items, (i) information on the investment performance of the Funds and the
performance of peer groups of funds and the Funds' performance benchmarks, (ii)
information on the Funds' advisory and sub-advisory fees and other expenses,
including information comparing the Funds' expenses to those of peer groups of
funds and information about any applicable expense caps and fee "breakpoints,"
(iii) sales and redemption data in respect of the Funds, (iv) information about
the profitability of the Agreements to the Funds' advisers and sub-advisers
(collectively, the "Advisers"), and (v) information obtained through the
completion of a questionnaire by the Advisers (the Trustees are consulted as to
the information requested through that questionnaire). The Board of Trustees,
including the Independent Trustees, may also consider other material facts such
as (i) each Adviser's financial results and financial condition, (ii) each
Fund's investment objective and strategies and the size, education and
experience of the Advisers' respective investment staffs and their use of
technology, external research and trading cost measurement tools, (iii)
arrangements in respect of the distribution of the Funds' shares, (iv) the
procedures employed to determine the value of the Funds' assets, (v) the
allocation of the Funds' securities transactions, including allocations to
brokers affiliated with the Advisers and the use of "soft" commission dollars
to pay Fund expenses and to pay for research and other similar services, (vi)
the resources devoted to, and the record of compliance with, the Funds'
investment policies and restrictions, policies on personal securities
transactions and other compliance policies, and (vii) the general economic
outlook with particular emphasis on the mutual fund industry. Throughout the
process, the Trustees are afforded the opportunity to ask questions of and
request additional materials from the Advisers.
The Board of Trustees most recently approved the continuation of the Agreements
at their meeting held in May, 2005. In considering whether to approve the
continuation of the Agreements, the Board of Trustees, including the
Independent Trustees, did not identify any single factor as determinative.
Matters considered by the Trustees, including the Independent Trustees, in
connection with their approval of the Agreements included the following:
The nature, extent and quality of the services provided to the Funds under the
Agreements. The Trustees considered the nature, extent and quality of the
services provided by the Advisers and their affiliates to the Funds and the
resources dedicated to the Funds by the Advisers and their affiliates. The
Trustees considered not only the advisory services provided by the Advisers to
the Funds, but also the monitoring and oversight services provided by IXIS
Advisors. For each Fund, the Trustees also considered the benefits to
shareholders of investing in a mutual fund that is part of a family of funds
offering a variety of investment disciplines and providing for a variety of
fund and shareholder services. After reviewing these and related factors, the
Trustees concluded, within the context of their overall conclusions regarding
each of the Agreements, that the nature, extent and quality of services
provided supported the renewal of the Agreements.
Investment performance of the Funds and the Advisers. As noted above, the
Trustees received information about the performance of the Moderate Diversified
Portfolio. (Because the Equity Diversified Portfolio was newly formed, the
Trustees did not receive performance information with respect to that Fund.)
The Trustees also noted that because both Funds were recently formed
performance comparisons were unavailable or related to a time period that was
too short for a comparison to be meaningful.
The Trustees also considered each Adviser's performance and reputation
generally, the performance of IXIS Advisors fund family generally, and the
historical responsiveness of the Advisers to Trustee concerns about performance
and the willingness of the Advisers to take steps intended to improve
performance.
After reviewing these and related factors, the Trustees concluded, within the
context of their overall conclusions regarding each of the Agreements, that the
performance of the Moderate Diversified Portfolio and the Advisers supported
the renewal of the Agreements.
The costs of the services to be provided and profits to be realized by the
Advisers and their affiliates from their respective relationships with the
Funds. The Trustees considered the fees charged to the Funds for advisory and
sub-advisory services as well as the total expense
9
BOARD APPROVAL OF MANAGEMENT CONTRACTS
levels of the Funds. This information included comparisons (provided both by
management and also by an independent third party) of the Funds' advisory fees
and total expense levels to those of their peer groups and information about
the advisory fees charged by the Advisers to comparable accounts. For the
Equity Diversified Portfolio, comparative fee and expense information had been
provided at their November, 2004 meeting. In considering the fees charged to
comparable accounts, the Trustees considered, among other things, management's
representations about the differences between managing mutual funds as compared
to other types of accounts, including the additional resources required to
effectively manage mutual fund assets. In evaluating each Fund's advisory and
sub-advisory fees, the Trustees also took into account the demands, complexity
and quality of the investment management of such Fund. The Trustees noted that
the IXIS Moderate Diversified Portfolio had a total expense ratio and advisory
fee rate that were at or above the median of a peer group of funds. The
Trustees noted that management had recently implemented a fee reduction for
this Fund. The Trustees also noted management's stated justification for the
fees charged to the Funds, which included information about the services
provided to the Funds and management's view as to why it was appropriate that
some funds bear advisory fees or total expenses greater than their peer group
median.
The Trustees also considered the compensation directly or indirectly received
by the Advisers and their affiliates from their relationships with the Funds.
The Trustees reviewed information provided by management as to the
profitability of the Advisers' and their affiliates' relationships with the
Funds, and information about the allocation of expenses used to calculate
profitability. (Because Equity Diversified Portfolio was newly formed, specific
profitability information for this Fund was not available.) When reviewing
profitability, the Trustees also considered information about court cases in
which adviser profitability was an issue in whole or in part, the performance
of the relevant Advisers for other Funds managed by them, the expense levels of
the Funds, and the breakpoints and expense caps that had been implemented for
the Funds.
After reviewing these and related factors, the Trustees concluded, within the
context of their overall conclusions regarding each of the Agreements, that the
advisory fees charged to each of the Funds were fair and reasonable, and that
the costs of these services generally and the related profitability of the
Advisers and their affiliates in respect of their relationships with the Funds
supported the renewal of the Agreements.
Economies of Scale. The Trustees considered the existence of any economies of
scale in the provision of services by the Advisers and whether those economies
are shared with the Funds through breakpoints in their investment advisory fees
or other means, such as expense waivers. The Trustees noted that the Funds
benefited from breakpoints and expense caps. In considering these issues, the
Trustees also took note of the costs of the services provided (both on an
absolute and a relative basis) and the profitability to the Advisers and their
affiliates of their relationships with the Funds, as discussed above.
After reviewing these and related factors, the Trustees considered, within the
context of their overall conclusions regarding each of the Agreements, that the
extent to which economies of scale were shared with the Funds supported the
renewal of the Agreements.
The Trustees also considered other factors, which included but were not limited
to the following:
.. whether each Fund has operated in accordance with its investment objective
and the Fund's record of compliance with its investment restrictions, and
the compliance programs of the Funds and the Advisers. They also considered
the compliance related resources the Advisers and their affiliates were
providing to the Funds.
.. the nature, quality, cost and extent of administrative and shareholder
services performed by the Advisers and their affiliates, both under the
Agreements and under separate agreements covering transfer agency and
administrative services.
.. so-called "fallout benefits" to the Advisers, such as the engagement of
affiliates of the Advisers to provide distribution, brokerage and transfer
agency services to the Funds, and the benefits of research made available
to the Advisers by reason of brokerage commissions generated by the Funds'
securities transactions. The Trustees also considered the fact that IXIS
Advisors' parent company benefits from the retention of affiliated
Advisers. The Trustees considered the possible conflicts of interest
associated with these fallout and other benefits, and the reporting,
disclosure and other processes in place to disclose and monitor such
possible conflicts of interest.
Based on their evaluation of all factors that they deemed to be material,
including those factors described above, and assisted by the advice of
independent counsel, the Trustees, including the Independent Trustees,
concluded that each of the existing advisory and sub-advisory agreements should
be continued through June 30, 2006.
10
IXIS EQUITY DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------------------
Common Stocks -- 93.4% of Total Net Assets
Advertising -- 0.4%
1,050 Getty Images, Inc. $ 77,973
-------------
Aerospace & Defense -- 1.1%
4,500 Raytheon Co. 176,040
1,270 Rolls-Royce Group PLC, Sponsored ADR 33,020
-------------
209,060
-------------
Airlines -- 0.1%
550 British Airways PLC, Sponsored ADR(c) 25,740
-------------
Apparel -- 1.2%
4,750 Coach, Inc.(c) 159,457
2,100 Jones Apparel Group, Inc. 65,184
-------------
224,641
-------------
Auto Manufacturers -- 0.1%
1,295 Nissan Motor Co., Ltd., Sponsored ADR 25,745
-------------
Auto Parts & Equipment -- 0.1%
200 Harman International Industries, Inc. 16,272
-------------
Banks -- 3.0%
2,300 ABN AMRO Holding NV, Sponsored ADR 56,419
4,250 Banco Santander Central Hispano SA, ADR 49,215
661 Bank of Yokohama, Ltd., Sponsored ADR 38,735
1,510 BNP Paribas, ADR 51,566
1,229 Credit Suisse Group, Sponsored ADR 48,103
1,140 DBS Group Holdings, Ltd., Sponsored ADR 38,190
610 Deutsche Bank AG 47,519
476 HSBC Holdings PLC, Sponsored ADR 37,913
750 Lloyds TSB Group PLC, Sponsored ADR 25,537
15,958 Sumitomo Trust & Banking Co., Ltd. (The), Sponsored ADR 98,860
2,040 U.S. Bancorp 59,568
-------------
551,625
-------------
Beverages -- 1.9%
1,750 Anheuser-Busch Cos., Inc. 80,062
880 Coca-Cola Co. (The) 36,740
2,900 Coca-Cola Enterprises, Inc. 63,829
2,800 Diageo PLC, Sponsored ADR 166,040
-------------
346,671
-------------
Biotechnology -- 0.6%
900 Cambrex Corp. 17,145
1,050 Genentech, Inc.(c) 84,294
-------------
101,439
-------------
Building Materials -- 1.8%
1,049 Lafarge SA, Sponsored ADR 23,907
1,600 Martin Marietta Materials, Inc. 110,592
6,100 Masco Corp. 193,736
-------------
328,235
-------------
Chemicals -- 1.6%
1,160 Akzo Nobel NV, Sponsored ADR 45,576
300 Cytec Industries, Inc. 11,940
2,000 Engelhard Corp. 57,100
1,100 FMC Corp.(c) 61,754
5,500 Hercules, Inc.(c) 77,825
700 Minerals Technologies, Inc. 43,120
-------------
297,315
-------------
Commercial Services -- 2.6%
3,400 Copart, Inc.(c) 80,920
3,300 DeVry, Inc.(c) 65,670
Shares Description Value (a)
- ------------------------------------------------------------------------------
Commercial Services -- continued
4,900 Gartner, Inc.(c) $ 52,038
1,500 ITT Educational Services, Inc.(c) 80,130
1,300 Keane, Inc.(c) 17,810
400 MoneyGram International, Inc. 7,648
3,550 Moody's Corp. 159,608
2,400 MPS Group, Inc.(c) 22,608
-------------
486,432
-------------
Computers -- 3.3%
2,050 Apple Computer, Inc.(c) 75,460
1,425 Cognizant Technology Solutions Corp.(c) 67,160
4,500 Dell, Inc.(c) 177,795
8,400 Hewlett-Packard Co. 197,484
25,700 Sun Microsystems, Inc.(c) 95,861
-------------
613,760
-------------
Cosmetics & Personal Care -- 1.1%
3,975 Procter & Gamble Co. 209,681
-------------
Distribution & Wholesale -- 0.8%
1,562 Marubeni Corp., ADR 53,889
2,000 United Stationers, Inc.(c) 98,200
-------------
152,089
-------------
Diversified Financial Services -- 6.9%
1,300 American Express Co. 69,199
350 Chicago Mercantile Exchange Holdings, Inc. 103,425
4,200 Citigroup, Inc. 194,166
2,600 Fannie Mae 151,840
6,120 JPMorgan Chase & Co. 216,158
2,150 Legg Mason, Inc. 223,836
1,175 Lehman Brothers Holdings, Inc. 116,654
1,700 Morgan Stanley 89,199
1,525 T. Rowe Price Group, Inc. 95,465
-------------
1,259,942
-------------
Electric -- 0.3%
1,590 E.ON AG, Sponsored ADR 47,080
-------------
Electrical Components & Equipment -- 0.5%
9,960 Johnson Electric Holdings, Ltd., Sponsored ADR 93,126
-------------
Electronics -- 1.5%
1,200 Applera Corp. - Applied Biosystems Group 23,604
3,306 Celestica, Inc.(c) 44,300
2,290 Koninklijke (Royal) Philips Electronics NV 57,685
7,490 NEC Corp., ADR 40,446
1,600 Symbol Technologies, Inc. 15,792
3,600 Thermo Electron Corp.(c) 96,732
-------------
278,559
-------------
Engineering & Construction -- 0.4%
11,310 ABB, Ltd., Sponsored ADR(c) 73,175
-------------
Environmental Control -- 1.2%
4,600 Allied Waste Industries, Inc.(c) 36,478
6,500 Waste Management, Inc. 184,210
-------------
220,688
-------------
Food -- 2.4%
2,050 General Mills, Inc. 95,919
2,300 Groupe Danone, Sponsored ADR 40,250
1,690 Nestle SA, Sponsored ADR 108,101
See accompanying notes to financial statements.
11
IXIS EQUITY DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------
Food -- continued
590 Unilever NV, ADR $ 38,250
1,325 Whole Foods Market, Inc. 156,747
-------------
439,267
-------------
Food Service -- 0.4%
16,160 Compass Group PLC, ADR 70,296
-------------
Forest Products & Paper -- 0.2%
1,770 UPM-Kymmene OYJ, Sponsored ADR 33,931
-------------
Health Care-Products -- 4.8%
5,100 Baxter International, Inc. 189,210
1,100 CR Bard, Inc. 73,161
4,620 Johnson & Johnson 300,300
3,025 St. Jude Medical, Inc.(c) 131,920
1,100 STERIS Corp. 28,347
1,450 Stryker Corp. 68,962
1,150 Zimmer Holdings, Inc.(c) 87,595
-------------
879,495
-------------
Health Care-Services -- 4.7%
1,800 Aetna, Inc. 149,076
3,075 Caremark Rx, Inc.(c) 136,899
1,370 Fresenius Medical Care AG, ADR 38,976
2,225 HCA, Inc. 126,091
3,600 Health Management Associates, Inc., Class A 94,248
350 Laboratory Corp. of America Holdings(c) 17,465
2,475 UnitedHealth Group, Inc. 129,046
2,575 WellPoint, Inc.(c) 179,323
-------------
871,124
-------------
Holding Companies - Diversified -- 0.3%
1,000 Hutchison Whampoa, Ltd., ADR 45,700
-------------
Home Builders -- 2.0%
3,100 DR Horton, Inc. 116,591
1,350 Pulte Homes, Inc. 113,737
1,300 Toll Brothers, Inc.(c) 132,015
-------------
362,343
-------------
Home Furnishings -- 1.1%
3,600 Furniture Brands International, Inc. 77,796
3,159 Pioneer Corp., ADR 47,922
2,145 Sony Corp., Sponsored ADR 73,874
-------------
199,592
-------------
Household Products & Wares -- 1.3%
1,900 Fortune Brands, Inc. 168,720
3,200 Newell Rubbermaid, Inc. 76,288
-------------
245,008
-------------
Insurance -- 3.0%
1,600 Aflac, Inc. 69,248
2,110 Axa, Sponsored ADR 52,560
1,075 Hartford Financial Services Group, Inc. 80,388
2,820 ING Groep NV, Sponsored ADR 79,101
1,875 Metlife, Inc. 84,262
950 MGIC Investment Corp. 61,959
1,750 Prudential Financial, Inc. 114,905
-------------
542,423
-------------
Internet -- 2.1%
875 Google, Inc., Class A(c) 257,381
3,825 Yahoo!, Inc.(c) 132,536
-------------
389,917
-------------
Shares Description Value (a)
- ------------------------------------------------------------------------
Leisure Time -- 1.7%
2,500 Carnival Corp. $ 136,375
3,400 Harley-Davidson, Inc. 168,640
-------------
305,015
-------------
Machinery -- Diversified -- 0.5%
2,800 Flowserve Corp.(c) 84,728
-------------
Media -- 6.3%
4,400 Comcast Corp., Special Class A(c) 131,780
6,700 DIRECTV Group (The), Inc.(c) 103,850
3,300 Entercom Communications Corp.(c) 109,857
24,500 Liberty Media Corp., Class A (c) 249,655
12,400 Time Warner, Inc.(c) 207,204
5,400 Viacom, Inc., Class B 172,908
6,900 Walt Disney Co. (The) 173,742
-------------
1,148,996
-------------
Metal Fabricate & Hardware -- 0.3%
2,300 Mueller Industries, Inc. 62,330
-------------
Metals -- 0.1%
800 Alcan, Inc. 24,000
-------------
Miscellaneous -- Manufacturing -- 3.8%
900 Carlisle Cos., Inc. 61,767
2,000 Crane Co. 52,600
3,900 Federal Signal Corp. 60,840
6,575 General Electric Co. 227,824
2,600 Honeywell International, Inc. 95,238
7,045 Kawasaki Heavy Industries, Ltd., Sponsored ADR 53,542
750 Teleflex, Inc. 44,527
3,400 Tyco International, Ltd. 99,280
-------------
695,618
-------------
Office & Business Equipment -- 0.7%
1,550 Canon, Inc., Sponsored ADR 81,577
3,060 Xerox Corp.(c) 42,197
-------------
123,774
-------------
Oil & Gas -- 2.3%
940 Burlington Resources, Inc. 51,926
580 ENI SpA, Sponsored ADR 74,356
1,225 EOG Resources, Inc. 69,580
1,475 Exxon Mobil Corp. 84,768
610 Total SA, Sponsored ADR 71,279
1,933 XTO Energy, Inc. 65,703
-------------
417,612
-------------
Packaging & Containers -- 0.7%
700 Aptargroup, Inc. 35,560
1,300 Ball Corp. 46,748
1,400 Sonoco Products Co. 37,100
-------------
119,408
-------------
Pharmaceuticals -- 3.9%
4,775 Abbott Laboratories 234,023
950 AstraZeneca PLC, Sponsored ADR 39,197
2,770 Bristol-Myers Squibb Co. 69,195
1,300 Express Scripts, Inc.(c) 64,974
1,260 GlaxoSmithKline PLC, ADR 61,123
2,250 Medco Health Solutions, Inc.(c) 120,060
983 Novartis AG, ADR 46,634
766 Sanofi-Aventis, ADR 31,398
940 Schering AG, ADR 57,989
-------------
724,593
-------------
See accompanying notes to financial statements.
12
IXIS EQUITY DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------------
Processing -- 0.3%
2,200 Acxiom Corp. $ 45,936
-------------
Retail -- 9.9%
2,850 American Eagle Outfitters 87,353
2,150 Bed Bath & Beyond, Inc.(c) 89,827
1,600 Best Buy Co., Inc. 109,680
3,900 Chico's FAS, Inc.(c) 133,692
1,840 Costco Wholesale Corp. 82,469
600 Dillard's, Inc., Class A 14,052
3,500 Foot Locker, Inc. 95,270
5,500 Home Depot, Inc. 213,950
4,230 Kingfisher PLC, Sponsored ADR 38,493
3,000 Kohl's Corp.(c) 167,730
8,600 McDonald's Corp. 238,650
2,800 NBTY, Inc.(c) 72,632
1,200 Office Depot, Inc.(c) 27,408
1,200 RadioShack Corp. 27,804
1,000 Regis Corp. 39,080
625 Sears Holdings Corp.(c) 93,669
1,630 Signet Group PLC, Sponsored ADR 32,046
2,900 Walgreen Co. 133,371
2,490 Wal-Mart Stores, Inc. 120,018
-------------
1,817,194
-------------
Semiconductors -- 4.0%
1,750 Broadcom Corp., Class A(c) 62,143
12,700 Intel Corp. 330,962
2,620 STMicroelectronics NV 41,763
10,350 Texas Instruments, Inc. 290,525
-------------
725,393
-------------
Software -- 2.2%
3,000 Adobe Systems, Inc. 85,860
1,350 Autodesk, Inc. 46,400
1,100 Fair Isaac Corp. 40,150
1,300 First Data Corp. 52,182
2,350 Microsoft Corp. 58,374
800 ProQuest Co.(c) 26,232
3,700 Reynolds & Reynolds Co. (The), Class A 100,011
-------------
409,209
-------------
Telecommunications -- 3.1%
1,200 ADTRAN, Inc. 29,748
3,350 Cisco Systems, Inc.(c) 64,019
5,025 Corning, Inc. 83,516
2,975 Juniper Networks, Inc.(c) 74,911
6,975 Motorola, Inc. 127,364
2,440 Nokia OYJ, Sponsored ADR 40,602
1,700 QUALCOMM, Inc. 56,117
2,140 Telefonica Moviles SA, ADR 22,705
2,980 Vodafone Group PLC, Sponsored ADR 72,474
-------------
571,456
-------------
Transportation -- 0.6%
1,800 Union Pacific Corp. 116,640
-------------
Water -- 0.2%
1,553 Suez SA, ADR 42,133
-------------
Total Common Stocks (Identified Cost $16,840,729) 17,152,379
-------------
Principal
Amount Description Value (a)
- ---------------------------------------------------------------------------------------------------
Short Term Investment -- 5.8%
$ 1,077,982 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at 2.01% to be repurchased at $1,078,042 on
7/01/2005, collateralized by $1,132,372 Federal National Mortgage
Association Bond, 3.864% due 1/25/2032 valued at $1,131,881 $ 1,077,982
-------------
Total Short Term Investment (Identified Cost $1,077,982) 1,077,982
-------------
Total Investments -- 99.2%
(Identified Cost $17,918,711)(b) 18,230,361
Other assets less liabilities 138,820
-------------
Total Net Assets -- 100% $ 18,369,181
=============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made
at the end of the Fund's fiscal year for tax purposes. Such
adjustments are primarily due to wash sales):
At June 30, 2005, the net unrealized appreciation on investments based on cost of
$17,918,711 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $ 670,362
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (358,712)
-------------
Net unrealized appreciation $ 311,650
=============
(c) Non-income producing security.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S.
bank representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading
on exchanges not located in the United States.
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Retail 9.9%
Diversified Financial Services 6.9
Media 6.3
Health Care -- Products 4.8
Health Care -- Services 4.7
Semiconductors 4.0
Pharmaceuticals 3.9
Miscellaneous--Manufacturing 3.8
Computers 3.3
Telecommunications 3.1
Banks 3.0
Insurance 3.0
Commercial Services 2.6
Food 2.4
Oil & Gas 2.3
Software 2.2
Internet 2.1
Home Builders 2.0
Other, less than 2% each 23.1
See accompanying notes to financial statements.
13
IXIS MODERATE DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------------------
Common Stocks -- 63.1% of Total Net Assets
Advertising -- 0.3%
4,800 Getty Images, Inc.(d) $ 356,448
---------------
Aerospace & Defense -- 0.8%
20,400 Raytheon Co. 798,048
5,930 Rolls-Royce Group PLC, Sponsored ADR 154,180
---------------
952,228
---------------
Airlines -- 0.1%
2,480 British Airways PLC, Sponsored ADR(e) 116,064
---------------
Apparel -- 0.8%
21,975 Coach, Inc.(e) 737,701
9,900 Jones Apparel Group, Inc. 307,296
---------------
1,044,997
---------------
Auto Manufacturers -- 0.1%
6,200 Nissan Motor Co., Ltd., Sponsored ADR 123,256
---------------
Auto Parts & Equipment -- 0.1%
1,100 Harman International Industries, Inc.(d) 89,496
---------------
Banks -- 1.9%
11,105 ABN AMRO Holding NV, Sponsored ADR 272,406
20,250 Banco Santander Central Hispano SA, ADR 234,495
7,270 BNP Paribas, ADR(d) 248,270
5,890 Credit Suisse Group, Sponsored ADR 230,535
5,225 DBS Group Holdings, Ltd., Sponsored ADR 175,037
2,830 Deutsche Bank AG 220,457
2,285 HSBC Holdings PLC, Sponsored ADR(d) 182,000
3,650 Lloyds TSB Group PLC, Sponsored ADR(d) 124,282
76,410 Sumitomo Trust & Banking Co., Ltd. (The), Sponsored ADR 473,360
9,400 U.S. Bancorp(d) 274,480
---------------
2,435,322
---------------
Beverages -- 1.2%
8,000 Anheuser-Busch Cos., Inc. 366,000
3,700 Coca-Cola Co. (The) 154,475
13,700 Coca-Cola Enterprises, Inc. 301,537
12,400 Diageo PLC, Sponsored ADR(d) 735,320
---------------
1,557,332
---------------
Biotechnology -- 0.4%
5,300 Cambrex Corp. 100,965
4,850 Genentech, Inc.(e) 389,358
---------------
490,323
---------------
Building Materials -- 1.1%
5,025 Lafarge SA, Sponsored ADR(d) 114,520
7,000 Martin Marietta Materials, Inc. 483,840
27,000 Masco Corp. 857,520
---------------
1,455,880
---------------
Chemicals -- 1.1%
5,330 Akzo Nobel NV, Sponsored ADR 209,416
1,600 Cytec Industries, Inc. 63,680
8,800 Engelhard Corp. 251,240
5,200 FMC Corp.(e) 291,928
25,100 Hercules, Inc.(e) 355,165
2,900 Minerals Technologies, Inc. 178,640
---------------
1,350,069
---------------
Commercial Services -- 1.8%
15,700 Copart, Inc.(e) 373,660
15,400 DeVry, Inc.(d)(e) 306,460
22,000 Gartner, Inc.(e) 233,640
Shares Description Value (a)
- ---------------------------------------------------------------------------
Commercial Services -- continued
7,100 ITT Educational Services, Inc.(d)(e) $ 379,282
7,000 Keane, Inc.(e) 95,900
2,400 MoneyGram International, Inc. 45,888
16,375 Moody's Corp.(d) 736,220
11,000 MPS Group, Inc.(e) 103,620
---------------
2,274,670
---------------
Computers -- 2.2%
9,475 Apple Computer, Inc.(e) 348,775
6,550 Cognizant Technology Solutions Corp.(e) 308,701
20,775 Dell, Inc.(e) 820,820
36,900 Hewlett-Packard Co. 867,519
116,800 Sun Microsystems, Inc.(e) 435,664
---------------
2,781,479
---------------
Cosmetics & Personal Care -- 0.8%
18,425 Procter & Gamble Co.(d) 971,919
---------------
Distribution & Wholesale -- 0.6%
7,480 Marubeni Corp., ADR 258,060
9,300 United Stationers, Inc.(d)(e) 456,630
---------------
714,690
---------------
Diversified Financial Services -- 4.5%
5,800 American Express Co. 308,734
1,575 Chicago Mercantile Exchange Holdings, Inc.(d) 465,412
18,800 Citigroup, Inc. 869,124
11,600 Fannie Mae 677,440
27,100 JPMorgan Chase & Co. 957,172
10,000 Legg Mason, Inc. 1,041,100
5,475 Lehman Brothers Holdings, Inc.(d) 543,558
7,500 Morgan Stanley 393,525
7,125 T. Rowe Price Group, Inc. 446,025
---------------
5,702,090
---------------
Electric -- 0.2%
7,700 E.ON AG, Sponsored ADR 227,997
---------------
Electrical Components & Equipment -- 0.4%
47,475 Johnson Electric Holdings, Ltd., Sponsored ADR 443,891
---------------
Electronics -- 1.1%
6,400 Applera Corp. - Applied Biosystems Group 125,888
15,830 Celestica, Inc.(e) 212,122
11,035 Koninklijke (Royal) Philips Electronics NV 277,972
35,955 NEC Corp., ADR 194,157
7,600 Symbol Technologies, Inc. 75,012
18,000 Thermo Electron Corp.(e) 483,660
---------------
1,368,811
---------------
Engineering & Construction -- 0.3%
54,375 ABB, Ltd., Sponsored ADR(e) 351,806
---------------
Environmental Control -- 0.8%
22,500 Allied Waste Industries, Inc.(d)(e) 178,425
29,300 Waste Management, Inc. 830,362
---------------
1,008,787
---------------
Food -- 1.4%
5,500 General Mills, Inc. 257,345
11,095 Groupe Danone, Sponsored ADR(d) 194,162
7,380 Nestle SA, Sponsored ADR 472,062
4,505 Unilever PLC, Sponsored ADR 175,019
6,100 Whole Foods Market, Inc. 721,630
---------------
1,820,218
---------------
See accompanying notes to financial statements.
14
IXIS MODERATE DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------------
Food Service -- 0.3%
77,400 Compass Group PLC, ADR $ 336,690
---------------
Forest Products & Paper -- 0.1%
8,700 UPM-Kymmene OYJ, Sponsored ADR 166,779
---------------
Health Care-Products -- 3.2%
22,900 Baxter International, Inc. 849,590
5,100 CR Bard, Inc. 339,201
22,025 Johnson & Johnson 1,431,625
13,975 St. Jude Medical, Inc.(e) 609,450
6,000 STERIS Corp. 154,620
6,675 Stryker Corp. 317,463
5,350 Zimmer Holdings, Inc.(d)(e) 407,509
---------------
4,109,458
---------------
Health Care-Services -- 2.7%
8,375 Aetna, Inc. 693,617
6,475 Fresenius Medical Care AG, ADR 184,214
10,275 HCA, Inc. 582,284
16,600 Health Management Associates, Inc., Class A(d) 434,588
1,900 Laboratory Corp. of America Holdings(e) 94,810
11,400 UnitedHealth Group, Inc. 594,396
11,875 WellPoint, Inc.(e) 826,975
---------------
3,410,884
---------------
Holding Companies -- Diversified -- 0.2%
4,980 Hutchison Whampoa, Ltd., ADR 227,586
---------------
Home Builders -- 1.3%
14,308 DR Horton, Inc.(d) 538,124
6,250 Pulte Homes, Inc.(d) 526,562
6,050 Toll Brothers, Inc.(d)(e) 614,377
---------------
1,679,063
---------------
Home Furnishings -- 0.7%
16,500 Furniture Brands International, Inc.(d) 356,565
15,130 Pioneer Corp., ADR 229,522
10,275 Sony Corp., Sponsored ADR 353,871
---------------
939,958
---------------
Household Products & Wares -- 0.9%
8,200 Fortune Brands, Inc. 728,160
14,700 Newell Rubbermaid, Inc.(d) 350,448
---------------
1,078,608
---------------
Insurance -- 2.0%
7,100 Aflac, Inc. 307,288
10,060 Axa, Sponsored ADR 250,595
5,000 Hartford Financial Services Group, Inc.(d) 373,900
13,435 ING Groep NV, Sponsored ADR 376,852
8,725 Metlife, Inc. 392,101
3,900 MGIC Investment Corp. 254,358
8,050 Prudential Financial, Inc. 528,563
---------------
2,483,657
---------------
Internet -- 1.4%
4,000 Google, Inc., Class A(d)(e) 1,176,600
17,700 Yahoo!, Inc.(e) 613,305
---------------
1,789,905
---------------
Leisure Time -- 1.1%
11,300 Carnival Corp.(d) 616,415
15,100 Harley-Davidson, Inc. 748,960
---------------
1,365,375
---------------
Shares Description Value (a)
- ---------------------------------------------------------------------------
Machinery -- Diversified -- 0.3%
13,500 Flowserve Corp.(e) $ 408,510
---------------
Media -- 4.1%
22,000 Comcast Corp., Special Class A(e) 658,900
30,200 DIRECTV Group (The), Inc.(e) 468,100
15,000 Entercom Communications Corp.(d)(e) 499,350
108,900 Liberty Media Corp., Class A(e) 1,109,691
56,000 Time Warner, Inc.(e) 935,760
24,100 Viacom, Inc., Class B 771,682
30,700 Walt Disney Co. (The) 773,026
---------------
5,216,509
---------------
Metal Fabricate & Hardware -- 0.2%
11,100 Mueller Industries, Inc.(d) 300,810
---------------
Metals -- 0.1%
3,880 Alcan, Inc.(d) 116,400
---------------
Miscellaneous -- Manufacturing -- 2.5%
4,000 Carlisle Cos., Inc. 274,520
10,100 Crane Co. 265,630
17,300 Federal Signal Corp. 269,880
30,425 General Electric Co. 1,054,226
11,500 Honeywell International, Inc.(d) 421,245
33,730 Kawasaki Heavy Industries, Ltd., Sponsored ADR 256,348
4,000 Teleflex, Inc. 237,480
14,500 Tyco International, Ltd. 423,400
---------------
3,202,729
---------------
Office & Business Equipment -- 0.9%
7,480 Canon, Inc., Sponsored ADR(d) 393,672
55,200 Xerox Corp.(e) 761,208
---------------
1,154,880
---------------
Oil & Gas -- 1.3%
2,665 ENI SpA, Sponsored ADR(d) 341,653
5,675 EOG Resources, Inc. 322,340
6,875 Exxon Mobil Corp. 395,106
2,810 Total SA, Sponsored ADR 328,349
9,000 XTO Energy, Inc. 305,910
---------------
1,693,358
---------------
Packaging & Containers -- 0.5%
3,700 Aptargroup, Inc. 187,960
6,000 Ball Corp. 215,760
7,700 Sonoco Products Co. 204,050
---------------
607,770
---------------
Pharmaceuticals -- 3.2%
22,575 Abbott Laboratories 1,106,401
4,680 AstraZeneca PLC, Sponsored ADR 193,097
13,000 Bristol-Myers Squibb Co. 324,740
14,275 Caremark Rx, Inc.(e) 635,523
6,400 Express Scripts, Inc.(d)(e) 319,872
5,865 GlaxoSmithKline PLC, ADR(d) 284,511
10,425 Medco Health Solutions, Inc.(d)(e) 556,278
4,710 Novartis AG, ADR 223,442
3,670 Sanofi-Aventis, ADR 150,433
4,665 Schering AG, ADR 287,784
---------------
4,082,081
---------------
Processing -- 0.2%
10,000 Acxiom Corp. 208,800
---------------
See accompanying notes to financial statements.
15
IXIS MODERATE DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------------
Retail -- 7.0%
13,200 American Eagle Outfitters $ 404,580
9,950 Bed Bath & Beyond, Inc.(e) 415,711
7,375 Best Buy Co., Inc. 505,556
18,025 Chico's FAS, Inc.(d)(e) 617,897
8,000 Costco Wholesale Corp. 358,560
3,200 Dillard's, Inc., Class A 74,944
17,900 Foot Locker, Inc. 487,238
16,000 Gap (The), Inc. 316,000
24,500 Home Depot, Inc. 953,050
20,130 Kingfisher PLC, Sponsored ADR 183,183
13,900 Kohl's Corp.(e) 777,149
3,800 Limited Brands, Inc. 81,396
39,800 McDonald's Corp. 1,104,450
14,200 NBTY, Inc.(e) 368,348
6,300 Office Depot, Inc.(e) 143,892
5,700 RadioShack Corp. 132,069
5,100 Regis Corp. 199,308
2,900 Sears Holdings Corp.(d)(e) 434,623
7,920 Signet Group PLC, Sponsored ADR 155,707
13,350 Walgreen Co. 613,967
11,300 Wal-Mart Stores, Inc. 544,660
---------------
8,872,288
---------------
Semiconductors -- 2.6%
8,050 Broadcom Corp., Class A(d)(e) 285,856
57,950 Intel Corp. 1,510,177
12,500 STMicroelectronics NV(d) 199,250
47,250 Texas Instruments, Inc. 1,326,308
---------------
3,321,591
---------------
Software -- 1.6%
13,875 Adobe Systems, Inc.(d) 397,103
6,225 Autodesk, Inc. 213,953
5,000 Fair Isaac Corp. 182,500
8,800 First Data Corp. 353,232
10,875 Microsoft Corp. 270,135
3,800 ProQuest Co.(e) 124,602
17,600 Reynolds & Reynolds Co. (The), Class A 475,728
---------------
2,017,253
---------------
Telecommunications -- 2.1%
5,700 ADTRAN, Inc. 141,303
15,525 Cisco Systems, Inc.(e) 296,683
23,225 Corning, Inc. 386,000
13,725 Juniper Networks, Inc.(d)(e) 345,596
32,225 Motorola, Inc. 588,429
11,890 Nokia OYJ, Sponsored ADR 197,850
7,850 QUALCOMM, Inc. 259,129
10,205 Telefonica Moviles SA, ADR 108,275
14,315 Vodafone Group PLC, Sponsored ADR 348,141
---------------
2,671,406
---------------
Transportation -- 0.4%
8,600 Union Pacific Corp. 557,280
---------------
Water -- 0.2%
7,440 Suez SA, ADR 201,847
---------------
Total Common Stocks (Identified Cost $77,298,997) 79,859,248
---------------
Principal
Amount Description Value (a)
- -------------------------------------------------------------------------------------------
Bonds and Notes -- 33.4%
Asset Backed Securities -- 0.3%
$ 100,000 Citibank Credit Card Issuance Trust, Series 2003-A3, Class A3
3.100%, 3/10/2010 $ 97,663
277,000 Citibank Credit Card Issuance Trust, Series 2003-A6, Class A6
2.900%, 5/17/2010 268,560
---------------
366,223
---------------
Auto Manufacturers -- 0.3%
420,000 DaimlerChrysler North America Holding Corp.
6.400%, 5/15/2006 428,201
---------------
Banks -- 0.7%
770,000 Bank of America Corp., Subordinated Note
7.400%, 1/15/2011 881,249
---------------
Diversified Financial Services -- 5.1%
450,000 CIT Group, Inc., Senior Note
4.000%, 5/08/2008 446,750
845,000 Countrywide Home Loans, Inc., (MTN)
5.500%, 2/01/2007 861,524
800,000 General Electric Capital Corp., (MTN)
6.000%, 6/15/2012 872,494
750,000 Household Finance Corp.
4.625%, 1/15/2008 757,538
90,000 Household Finance Corp.
8.000%, 7/15/2010 103,848
860,000 John Deere Capital Corp., Global Note
4.500%, 8/22/2007 866,030
838,000 Lehman Brothers Holdings, Inc., Global Note
6.250%, 5/15/2006 853,387
850,000 Morgan Stanley Dean Witter & Co., Global Note
6.100%, 4/15/2006 864,014
835,000 SLM Corp.
5.625%, 4/10/2007 856,084
---------------
6,481,669
---------------
Electric -- 1.8%
220,000 Carolina Power & Light
6.500%, 7/15/2012 242,848
815,000 Dominion Resources, Inc.
5.700%, 9/17/2012 859,434
860,000 Duke Energy Corp., Senior Note
4.200%, 10/01/2008 856,918
255,000 Progress Energy, Inc.
7.100%, 3/01/2011 284,061
---------------
2,243,261
---------------
Food -- 1.4%
780,000 ConAgra Foods, Inc.
6.750%, 9/15/2011 863,185
780,000 Kellogg Co.
6.600%, 4/01/2011 864,422
---------------
1,727,607
---------------
Government Agencies -- 14.2%
2,348,276 FHLMC
4.000%, with various maturities to 2020(c) 2,300,739
1,011,121 FHLMC
4.500%, with various maturities to 2020(c) 1,007,438
845,000 FHLMC
4.875%, 3/15/2007 860,378
See accompanying notes to financial statements.
16
IXIS MODERATE DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------
Government Agencies -- continued
$ 945,000 FHLMC
5.250%, 1/15/2006 $ 952,147
733,369 FHLMC
5.500%, with various maturities to 2020(c) 753,238
1,905,175 FHLMC
6.500%, with various maturities to 2035(c) 1,972,935
1,500,000 FNMA
3.250%, 1/15/2008 1,479,357
1,316,039 FNMA
4.000%, with various maturities to 2020(c) 1,289,793
2,525,001 FNMA
4.500%, with various maturities to 2020(c) 2,515,066
2,897,605 FNMA
5.500%, with various maturities to 2034(c) 2,975,742
1,565,880 FNMA
6.500%, with various maturities to 2034(c) 1,622,963
210,713 GNMA
6.500%, 10/20/2034 219,314
---------------
17,949,110
---------------
Media -- 0.7%
365,000 Comcast Cable Communications Corp.
6.750%, 1/30/2011 402,688
25,000 Comcast Corp.
5.500%, 3/15/2011 26,083
340,000 Time Warner, Inc.
7.625%, 4/15/2031 424,622
---------------
853,393
---------------
Metals -- 0.7%
860,000 Alcan, Inc., Senior Note
4.875%, 9/15/2012 866,968
---------------
Oil & Gas -- 0.7%
770,000 Transocean Sedco Forex, Inc.
6.625%, 4/15/2011 864,849
---------------
Pipelines -- 0.3%
395,000 Kinder Morgan, Inc., Senior Note
6.500%, 9/01/2012 435,111
---------------
Retail -- 0.7%
885,000 Target Corp.
3.375%, 3/01/2008 871,160
---------------
Telecommunications -- 1.0%
850,000 SBC Communications, Inc.
5.100%, 9/15/2014 869,093
405,000 Sprint Capital Corp.
6.125%, 11/15/2008 426,668
---------------
1,295,761
---------------
Treasuries -- 5.5%
1,325,000 U.S. Treasury Bond
5.250%, with various maturities to 2029(c) 1,514,636
2,180,000 U.S. Treasury Bond
5.375%, 2/15/2031(d) 2,572,400
870,000 U.S. Treasury Note
2.375%, 8/15/2006(d) 858,649
375,000 U.S. Treasury Note
3.250%, 1/15/2009(d) 369,653
Principal
Amount Description Value (a)
- -----------------------------------------------------------------------------------------
Treasuries -- continued
$ 1,615,000 U.S. Treasury Note
6.250%, 2/15/2007(d) $ 1,682,375
---------------
6,997,713
---------------
Total Bonds and Notes (Identified Cost $41,974,018) 42,262,275
---------------
Principal
Amount
- -----------------------------------------------------------------------------------------
Short Term Investments -- 18.2%
4,381,385 Repurchase Agreement with Investors Bank & Trust Co. dated
6/30/2005 at 2.01% to be repurchased at $4,381,629 on
7/01/2005, collateralized by $4,289,280 Small Business
Administration Bond, 6.25% due 1/25/2017 valued at
$4,600,454 4,381,385
864,542 American Beacon Fund, 3.18%, due 7/01/2005(f) 864,542
1,236,276 Bank of Nova Scotia, 3.11%, due 7/11/2005(f) 1,236,276
277,814 Bank of Nova Scotia, 3.16%, due 7/15/2005(f) 277,814
694,538 Bank of Nova Scotia, 3.30%, due 7/29/2005(f) 694,538
1,137,587 BGI Institutional Money Market Fund(f) 1,137,587
1,135,280 Calyon, 3.09%, due 7/01/2005(f) 1,135,280
694,538 Clipper Receivables Corp., 3.19%, due 7/14/2005(f) 694,538
750,099 Compass Securitization, 3.16%, due 7/11/2005(f) 750,099
758,267 Fairway Finance, 3.26%, due 7/25/2005(f) 758,267
694,538 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(f) 694,538
555,630 General Electric Capital Corp., 3.25%, due 7/08/2005(f) 555,630
588,842 Goldman Sachs Financial Square Prime Obligations Fund(f) 588,842
715,096 Greyhawk Funding, 3.26%, due 8/01/2005(f) 715,096
694,538 Jupiter Securitization Corp., 3.21%, due 7/15/2005(f) 694,538
694,538 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(f) 694,538
88,907 Merrimac Cash Fund-Premium Class(f) 88,907
1,066,880 National Australia Bank, 3.26%, due 7/06/2005(f) 1,066,880
694,538 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(f) 694,538
694,538 Prefco, 3.26%, due 7/26/2005(f) 694,538
542,965 Rabobank Nederland, 3.35%, due 7/01/2005(f) 542,965
683,517 Ranger Funding, 3.19%, due 7/15/2005(f) 683,517
694,538 Royal Bank of Canada, 3.25%, due 8/05/2005(f) 694,538
1,389,072 Royal Bank of Scotland, 3.29%, due 7/12/2005(f) 1,389,072
694,538 Sheffield Receivables Corp., 3.34%, due 7/15/2005(f) 694,538
690,798 Yorktown Capital LLC, 3.24%, due 7/20/2005(f) 690,798
---------------
Total Short Term Investments (Identified Cost $23,113,799) 23,113,799
---------------
Total Investments -- 114.7%
(Identified Cost $142,386,814)(b) 145,235,322
Other assets less liabilities (18,582,176)
---------------
Total Net Assets -- 100% $ 126,653,146
===============
See accompanying notes to financial statements.
17
IXIS MODERATE DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued)
Investments as of June 30, 2005 (unaudited)
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the
Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales):
At June 30, 2005, the net unrealized appreciation on investments based on cost of
$142,492,891 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in which
there is an excess of value over tax cost $ 4,998,833
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (2,256,402)
---------------
Net unrealized appreciation $ 2,742,431
===============
(c) The Portfolio's investment in mortgage related securities of the Federal Home Loan
Mortgage Corporation, Federal National Mortgage Association and the Government
National Mortgage Association are interests in separate pools of mortgages. All separate
investments in securities of each issuer and for United States Treasury Bonds which have
the same coupon rate have been aggregated for the purpose of presentation in the
schedule of investments.
(d) All or a portion of this security was on loan to brokers at June 30, 2005.
(e) Non-income producing security.
(f) Represents investments of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing
the right to receive securities of the foreign issuer described. The values of ADRs are
significantly influenced by trading on exchanges not located in the United States.
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
MTN Medium Term Note
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited)
Government Agencies 14.2
Diversified Financial Services 9.6
Retail 7.7
Treasuries 5.5
Media 4.8
Health Care-Products 3.2
Pharmaceuticals 3.2
Telecommunications 3.1
Food 2.8
Health Care-Services 2.7
Semiconductors 2.6
Banks 2.6
Miscellaneous--Manufacturing 2.5
Computers 2.2
Oil & Gas 2.0
Insurance 2.0
Electric 2.0
Other, less than 2% each 23.8
See accompanying notes to financial statements.
18
STATEMENTS OF ASSETS & LIABILITIES
June 30, 2005 (unaudited)
IXIS IXIS
Equity Moderate
Diversified Diversified
Portfolio Portfolio
----------- ------------
ASSETS
Investments at cost $17,918,711 $142,386,814
Net unrealized appreciation 311,650 2,848,508
----------- ------------
Investments at value (a) 18,230,361 145,235,322
Cash -- 2,650
Receivable for Fund shares sold 619,573 634,048
Receivable for securities sold 38,031 290,466
Dividends and interest receivable 15,934 578,211
Tax reclaims receivable 270 3,232
Receivable from investment adviser 128,072 --
Securities lending income receivable -- 4,497
----------- ------------
TOTAL ASSETS 19,032,241 146,748,426
----------- ------------
LIABILITIES
Collateral on securities loaned, at
value -- 18,732,414
Payable for securities purchased 578,045 1,031,994
Payable for Fund shares redeemed -- 24,427
Management fees payable 10,717 83,265
Deferred Trustees' fees 3,857 8,246
Transfer agent fees payable 5,308 15,394
Administrative fees payable 7,370 6,232
Deferred expense payable -- 56,685
Other accounts payable and accrued
expenses 57,763 136,623
----------- ------------
TOTAL LIABILITIES 663,060 20,095,280
----------- ------------
NET ASSETS $18,369,181 $126,653,146
=========== ============
NET ASSETS CONSIST OF:
Paid-in capital $18,205,884 $124,268,624
Undistributed (overdistributed) net
investment income (loss) (23,318) (257,493)
Accumulated net realized gain (loss)
on investments (125,035) (206,493)
Net unrealized appreciation
(depreciation) of investments 311,650 2,848,508
----------- ------------
NET ASSETS $18,369,181 $126,653,146
=========== ============
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:
Class A shares:
Net assets $ 8,321,267 $ 45,663,680
=========== ============
Shares of beneficial interest 825,844 4,347,857
=========== ============
Net asset value and redemption price
per share $ 10.08 $ 10.50
=========== ============
Offering price per share
(100/[100-maximum sales charge] of
net asset value) $ 10.69 $ 11.14
=========== ============
Class C shares:
Net assets $10,047,914 $ 80,989,466
=========== ============
Shares of beneficial interest 999,399 7,728,072
=========== ============
Net asset value and offering price
per share (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (See Note 1) $ 10.05 $ 10.48
=========== ============
(a) Including securities on loan with
market values of: $ -- $ 18,362,645
=========== ============
See accompanying notes to financial statements.
19
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2005 (unaudited)
IXIS IXIS
Equity Moderate
Diversified Diversified
Portfolio (a) Portfolio
--------------------- ---------------------
--------------------- ---------------------
NET INVESTMENT INCOME
Dividends $ 64,689 $ 483,318
Interest 5,948 695,890
Securities lending income -- 15,782
Less net foreign taxes withheld (4,026) (24,293)
--------------------- ---------------------
66,611 1,170,697
--------------------- ---------------------
Expenses
Management fees 35,074 393,874
Service fees - Class A 5,100 49,164
Service and distribution fees -
Class C 23,442 328,510
Trustees' fees and expenses 4,885 8,630
Administrative fees 44,356 32,636
Custodian fees 79,389 119,013
Transfer agent fees - Class A, Class
C 18,837 66,421
Audit and tax services 12,574 6,836
Legal fees 2,055 1,488
Shareholder reporting 22,455 24,795
Registration 10,779 22,080
Deferred expense reimbursement -- 56,685
Miscellaneous 6,736 2,824
--------------------- ---------------------
Total expenses before waiver 265,682 1,112,956
Less reimbursement/waiver (175,753) --
--------------------- ---------------------
Net expenses 89,929 1,112,956
--------------------- ---------------------
Net investment income (loss) (23,318) 57,741
--------------------- ---------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Realized gain (loss) on:
Investments - net (125,035) (189,131)
Change in unrealized appreciation
(depreciation) of:
Investments - net 311,650 (415,881)
--------------------- ---------------------
Net realized and unrealized gain
(loss) on investments 186,615 (605,012)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 163,297 $ (547,271)
===================== =====================
(a)Commenced operations on January 31, 2005.
See accompanying notes to financial statements.
20
STATEMENTS OF CHANGES IN NET ASSETS
IXIS Equity IXIS Moderate
Diversified Portfolio Diversified Portfolio
--------------------- --------------------------------------------
For the period For the period
January 31, 2005 Six Months July 15, 2004
through Ended to
June 30, 2005 June 30, 2005 December 31,
(unaudited) (unaudited) 2004
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ (23,318) $ 57,741 $ 49,574
Net realized gain (loss) on investments (125,035) (189,131) 141,889
Net change in unrealized appreciation
(depreciation) of investments 311,650 (415,881) 3,264,389
--------------------- --------------------- ---------------------
Increase (decrease) in net assets
resulting from operations 163,297 (547,271) 3,455,852
--------------------- --------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A -- (223,737) (45,390)
Class C -- (56,651) (43,309)
Long-Term capital gain
Class A -- (57,533) --
Class C -- (97,439) --
--------------------- --------------------- ---------------------
-- (435,360) (88,699)
--------------------- --------------------- ---------------------
INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM CAPITAL SHARE
TRANSACTIONS (Note 9) : 18,205,884 54,803,426 69,465,198
--------------------- --------------------- ---------------------
Total increase in net assets 18,369,181 53,820,795 72,832,351
NET ASSETS
Beginning of period -- 72,832,351 --
--------------------- --------------------- ---------------------
End of period $ 18,369,181 $ 126,653,146 $ 72,832,351
===================== ===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ (23,318) $ (257,493) $ (34,846)
===================== ===================== =====================
See accompanying notes to financial statements.
21
This Page Intentionally Left Blank
22
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
Income (loss) from investment operations:
----------------------------------------
Net asset
value, Net Net realized
beginning investment and unrealized Total from
of income gain (loss) on investment
period (loss) (b) investments operations
---------- ---------- -------------- ----------
IXIS EQUITY DIVERSIFIED PORTFOLIO
Class A
06/30/2005(g) $ 10.00 $ (0.01) $ 0.09 $ 0.08
Class C
06/30/2005(g) $ 10.00 $ (0.04) $ 0.09 $ 0.05
IXIS MODERATE DIVERSIFIED PORTFOLIO
Class A
06/30/2005(h) $ 10.70 $ 0.03 $ (0.17) $ (0.14)
12/31/2004(e) $ 10.00 $ 0.03(i) $ 0.69 $ 0.72
Class C
06/30/2005(h) $ 10.67 $ (0.00)(j) $ (0.17) $ (0.17)
12/31/2004(e) $ 10.00 $ 0.01(i) $ 0.67 $ 0.68
Less distributions:
-----------------------------------------
Dividends Distributions
from from net
net investment realized Total
income capital gains distributions
-------------- ------------- -------------
IXIS EQUITY DIVERSIFIED PORTFOLIO
Class A
06/30/2005(g) $ -- $ -- $ --
Class C
06/30/2005(g) $ -- $ -- $ --
IXIS MODERATE DIVERSIFIED PORTFOLIO
Class A
06/30/2005(h) $ (0.05) $ (0.01) $ (0.06)
12/31/2004(e) $ (0.02) $ -- $ (0.02)
Class C
06/30/2005(h) $ (0.01) $ (0.01) $ (0.02)
12/31/2004(e) $ (0.01) $ -- $ (0.01)
(a)A sales charge for Class A shares and a contingent deferred sales charge for
Class C shares are not reflected in total return calculations. Periods less
than one year are not annualized.
(b)Per share net investment income has been calculated using the average shares
outstanding during the period.
(c)The investment adviser agreed to reimburse a portion of the Portfolio's
expenses during the period. Without this reimbursement, expenses would have
been higher.
(d)Had certain expenses not been reduced during the period, total returns would
have been lower.
(e)For the period July 15, 2004 (inception) through December 31, 2004.
(f)Computed on an annualized basis for periods less than one year.
(g)For the period January 31, 2005 (inception) through June 30, 2005.
(h)For the six months ended June 30, 2005 (unaudited).
(i)Includes special one-time distribution from Microsoft Corp. Without this
distribution, net investment income (loss) per share would have been $0.02
and $(0.01) for Class A and Class C shares, respectively, and the ratio of
net investment income (loss) to average net assets would have been 0.51% and
(0.14)% for Class A and Class C shares, respectively.
(j)Amount rounds to less than ($0.01) per share.
See accompanying notes to financial statements.
23
Ratios to average net assets:
------------------------------------
Net asset Net assets, Expenses after
value, Total end of reimbursement/ Net investment Portfolio
end of return the period Expenses waiver income (loss) turnover
the period (%) (a) (000) (%)(f) (%) (f) (%) (f) rate (%)
- ---------- --------- ----------- --------- -------------- -------------- ---------
$ 10.08 0.8(d) $ 8,321 5.66 1.65(c) (0.15) 33
$ 10.05 0.5(d) $ 10,048 6.41 2.40(c) (0.87) 33
$ 10.50 (1.3) $ 45,664 1.65 N/A 0.66 51
$ 10.70 7.2(d) $ 25,660 3.51 1.65(c) 0.71(i) 33
$ 10.48 (1.6) $ 80,989 2.40 N/A (0.09) 51
$ 10.67 6.8(d) $ 47,173 4.26 2.40(c) 0.12(i) 33
24
NOTES TO FINANCIAL STATEMENTS
June 30, 2005 (unaudited)
1. Organization. IXIS Advisor Funds Trust III (formerly CDC Nvest Funds Trust
III) (the "Trust") is organized as a Massachusetts business trust. The Trust is
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as an open-end management investment company. The Declaration of Trust permits
the Board of Trustees to authorize the issuance of an unlimited number of
shares of the Trust in multiple series (individually, a "Fund" and,
collectively, the "Funds"). Information presented in these financial statements
pertains to IXIS Equity Diversified Portfolio and IXIS Moderate Diversified
Portfolio (collectively, the "Portfolios"); the financial statements of the
other Funds of the Trust are presented in separate reports. The Portfolios
commenced operations on January 31, 2005 and July 15, 2004, respectively.
The IXIS Equity Diversified Portfolio and IXIS Moderate Diversified Portfolio
each offer Class A and Class C shares. Class A shares are sold with a maximum
front end sales charge of 5.75%. Class C shares do not pay a front end sales
charge, pay a higher ongoing Rule 12b-1 fees than Class A shares and may be
subject to a contingent deferred sales charge ("CDSC") of 1.00% if those shares
are redeemed within one year.
Expenses of each Portfolio are borne pro rata by the holders of each class of
shares, except that each class bears expenses unique to that class (including
the Rule 12b-1 service and distribution fees and transfer agent fees applicable
to such class), and votes as a class only with respect to its own Rule 12b-1
Plan. Shares of each class would receive their pro rata share of the net assets
of the Portfolio, if the Portfolio were liquidated. The Trustees approve
separate dividends from net investment income on each class of shares.
2. Significant Accounting Policies. The following is a summary of significant
accounting policies consistently followed by each Portfolio in the preparation
of its financial statements. The Portfolios' financial statements are prepared
in accordance with accounting principles generally accepted in the United
States of America which require the use of management estimates that affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
a. Security Valuation. Equity securities for which market quotations are
readily available are valued at market price on the basis of valuations
furnished to the Portfolios by a pricing service which has been authorized by
the Board of Trustees. The pricing service provides the last reported sale
price for securities listed on an applicable securities exchange, or, if no
sale was reported and in the case of over-the-counter securities not so listed,
the last reported bid price. Securities traded on the NASDAQ National Market
are valued at the NASDAQ Official Closing Price ("NOCP"), or if lacking an
NOCP, at the most recent bid quotation on the NASDAQ National Market. Debt
securities for which market quotations are readily available (other than
short-term obligations with a remaining maturity of less than sixty days) are
generally valued at market price on the basis of valuations furnished by a
pricing service authorized by the Board of Trustees, which service determines
valuations for normal, institutional-size trading units of such securities
using market information, transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. Short-term obligations with a remaining maturity of less
than sixty days are stated at amortized cost, which approximates market value.
Securities traded on foreign exchanges are valued at the market price on the
non--U.S. exchange unless a Portfolio believes that an occurrence after the
closing of that exchange will materially affect a security's value. In that
case the security may be fair valued at the time the Portfolio determines its
net asset value by or pursuant to procedures approved by the Board of Trustees.
When fair valuing their securities, the Portfolios may, among other things, use
modeling tools or other processes that may take into account factors such as
securities market activity and/or significant events that occur after the close
of the local market and before the time a Portfolio's net asset value is
calculated. All other securities and assets are valued at their fair value as
determined in good faith by the Portfolios' investment adviser and subadvisers,
pursuant to procedures approved by the Board of Trustees.
b. Security Transactions and Related Investment Income. Security transactions
are accounted for on trade date. Dividend income is recorded on ex-dividend
date, or in the case of certain foreign securities, as soon as the Portfolio is
notified, and interest income is recorded on an accrual basis. Interest income
is increased by the accretion of discount and decreased by the amortization of
premium. Investment income is recorded net of foreign taxes withheld when
recovery of such taxes is uncertain. In determining net gain or loss on
securities sold, the cost of securities has been determined on an identified
cost basis. Investment income and realized and unrealized gains and losses are
allocated on a pro rata basis to each class based on the relative net assets of
each class to the total net assets of the Portfolio.
c. Foreign Currency Translation. The books and records of the Portfolios are
maintained in U.S. dollars. The value of securities, currencies and other
assets and liabilities denominated in currencies other than U.S. dollars are
translated into U.S. dollars based upon foreign exchange rates prevailing at
the end of the period. Purchases and sales of investment securities, income and
expenses are translated on the respective dates of such transactions.
Since the values of investment securities are presented at the foreign exchange
rates prevailing at the end of the period, it is not practical to isolate that
portion of the results of operations arising from changes in exchange rates
from fluctuations arising from changes in market prices of the investment
securities. Such changes are included with the net realized and unrealized gain
or loss on investments.
Net realized foreign exchange gains or losses arise from: sales of foreign
currency, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Portfolios'
books and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities at the end of the fiscal period, resulting from
changes in exchange rates.
d. Forward Foreign Currency Contracts. The Portfolios may use foreign currency
contracts to facilitate transactions in foreign securities and to manage the
Portfolios' currency exposure. Contracts to buy generally are used to acquire
exposure to foreign currencies, while contracts to sell are used to hedge the
Portfolios' investments against currency fluctuation. Also, a contract to buy
or sell can offset a previous contract. These contracts involve market risk in
excess of the unrealized gain or loss reflected in the
25
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
Portfolios' Statements of Assets and Liabilities. The U.S. dollar value of the
currencies the Portfolios have committed to buy or sell, if any, is shown in
the portfolio composition under the caption "Forward Currency Contracts
Outstanding." These amounts represent the aggregate exposure to each currency
the Portfolios have acquired or hedged through currency contracts outstanding
at period end.
All contracts are "marked-to-market" daily at the applicable exchange rates and
any gains or losses are recorded for financial statement purposes as unrealized
until settlement date. Risks may arise upon entering into these contracts from
the potential inability of counterparties to meet the terms of their contracts
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
e. Federal and Foreign Income Taxes. Each Portfolio intends to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies, and to distribute to its shareholders substantially all of its net
investment income and any net realized capital gain, at least annually.
Accordingly, no provision for federal income tax has been made. A Portfolio may
be subject to foreign taxes on income and gain on investments that are accrued
based upon the Portfolio's understanding of the tax rules and regulations that
exist in the countries in which the Portfolio invests. Foreign governments may
also impose taxes or other payments on investments with respect to foreign
securities. Such taxes are accrued as applicable.
f. Dividends and Distributions to Shareholders. Dividends and distributions are
recorded on ex-dividend date. The timing and characterization of certain income
and capital gain distributions are determined in accordance with federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. These differences are primarily due to differing
treatments for book and tax purposes of items such as distributions from real
estate investment trusts, net operating losses, non-deductible expenses,
foreign currency transactions and gains realized from passive foreign
investment companies. Permanent book and tax basis differences relating to
shareholder distributions, net investment income, and net realized gains will
result in reclassifications to the capital accounts. Distributions from net
investment income and short-term capital gains are considered to be ordinary
income for tax purposes.
g. Repurchase Agreements. Each Portfolio, through its custodian, receives
delivery of the underlying securities collateralizing repurchase agreements. It
is each Portfolio's policy that the market value of the collateral be at least
equal to 102% of the repurchase price, including interest. Each Portfolio's
subadvisers are responsible for determining that the value of the collateral is
at all times at least equal to 102% of the repurchase price, including
interest. Repurchase agreements could involve certain risks in the event of
default or insolvency of the counterparty including possible delays or
restrictions upon a Portfolio's ability to dispose of the underlying securities.
h. Delayed Delivery Commitments. Each Portfolio may purchase or sell securities
on a when-issued or forward commitment basis. Payment and delivery may take
place a month or more after the date of the transaction. The price of the
underlying securities and the date when the securities will be delivered and
paid for are fixed at the time the transaction is negotiated. Losses may arise
due to changes in the market value of the underlying securities or if the
counterparty does not perform under the contract. Collateral consisting of
liquid securities or cash and cash equivalents is maintained in an amount at
least equal to these commitments with the custodian.
i. Indemnifications. Under the Portfolios' organizational documents, their
officers and trustees are indemnified against certain liability arising out of
the performance of their duties to the Portfolios. Additionally, in the normal
course of business, the Portfolios enter into contracts with service providers
that contain general indemnification clauses. The Portfolios' maximum exposure
under these arrangements is unknown as this would involve future claims that
may be made against the Portfolios that have not yet occurred. However, based
on experience, the Portfolios expect the risk of loss to be remote.
3. Purchases and Sales of Securities. For the six months ended June 30, 2005,
purchases and sales of securities (excluding short-term investments) were as
follows:
U.S. Government and Agency Other Securities
-------------------------- -----------------------
Fund Purchases Sales Purchases Sales
---- --------- ----- --------- -----
Equity Diversified Portfolio $ -- $ -- $20,197,894 $ 3,227,863
Moderate Diversified Portfolio 31,281,683 19,655,305 73,252,661 30,227,099
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. IXIS Asset Management Advisors, L.P. ("IXIS Advisors"),
formerly CDC IXIS Asset Management Advisors L.P., is the investment adviser to
each of the Portfolios. Under the terms of the management agreements, Equity
Diversified Portfolio paid a management fee at the annual rate of 0.80% of the
first $1 billion of the Portfolio's average daily net assets and 0.75% of the
Portfolio's average daily net assets in excess of $1 billion, calculated daily
and payable monthly. Moderate Diversified Portfolio paid a management fee at
the annual rate of 0.75% of the first $1 billion of the Portfolio's average
daily net assets and 0.70% of the Portfolio's average daily net assets in
excess of $1 billion, calculated daily and payable monthly.
For the six months ended June 30, 2005, management fees for the Equity
Diversified Portfolio and Moderate Diversified Portfolio were $35,074 and
$393,874 (0.80% and 0.75% of average daily net assets, respectively).
26
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
IXIS Advisors has entered into subadvisory agreements with Loomis, Sayles &
Company, L.P. ("Loomis Sayles"), Harris Associates, L.P., ("Harris
Associates"), Reich & Tang Asset Management, LLC ("Reich & Tang"), and
Hansberger Global Investors, Inc. ("Hansberger"). Payments to IXIS Advisors are
reduced in the amount of payments to the subadvisers.
IXIS Advisors, Loomis Sayles, Harris Associates and Reich & Tang are
subsidiaries of IXIS Asset Management North America, L.P. ( "IXIS North
America."). Hansberger is an affiliated money manager of IXIS North America.
Certain officers and directors of IXIS Advisors and its affiliates are also
officers or Trustees of the Portfolios.
For the six months ended June 30, 2005, brokerage commissions paid to
affiliated broker/dealers by Equity Diversified Portfolio and Moderate
Diversified Portfolio were $1,209 and $3,525, respectively.
b. Administrative Expense. During the period, IXIS Advisors performed certain
administrative services for the Portfolios and subcontracted with Investors
Bank & Trust Company ("IBT") to serve as subadministrator. Pursuant to an
agreement among IXIS Advisor Funds Trust I, IXIS Advisor Funds Trust II, IXIS
Advisor Funds Trust III, IXIS Advisor Funds Trust IV and IXIS Advisor Cash
Management Trust ("IXIS Advisor Funds Trusts"), Loomis Sayles Funds I and
Loomis Sayles Funds II ("Loomis Sayles Trusts") and IXIS Advisors, Moderate
Diversified Portfolio paid IXIS Advisors monthly its pro rata portion of fees
equal to an annual rate of 0.0675% of the first $5 billion of the Trusts'
average daily net assets, 0.0625% of the next $5 billion, and 0.0500% of such
assets in excess of $10 billion, subject to an annual aggregate minimum fee for
the Trusts of $5 million.
For the six months ended June 30, 2005, Moderate Diversified Portfolio paid
$32,636, respectively, to IXIS Advisors for administrative services. Equity
Diversified Portfolio paid $44,356 to IXIS Advisors based on an annualized fee
of $112,500.
c. Transfer Agent Fees. IXIS Asset Management Services Company ("IXIS
Services"), formerly CDC IXIS Asset Management Services, Inc., a wholly-owned
subsidiary of IXIS North America, is the transfer and shareholder servicing
agent for each Portfolio and has subcontracted with Boston Financial Data
Services, Inc. ("BFDS") to serve as sub-transfer agent. During the period, each
Load Equity Fund for its Class A and C shares, paid service fees monthly equal
to $25.44 for each open account and $2.00 for each closed account, subject to a
monthly minimum of $1,500 per class and an annual aggregate minimum fee for all
Load Equity Funds of approximately $6.8 million. Load Equity Funds consist of
all equity funds within the IXIS Advisor Funds Trusts, Loomis Sayles Growth
Fund and Loomis Sayles Research Fund.
In addition, pursuant to other servicing agreements, each class pays service
fees to other firms that provide similar services for their own shareholder
accounts.
IXIS Services, BFDS and other firms are also reimbursed by the Portfolios for
out-of-pocket expenses. For the six months ended June 30, 2005, Equity
Diversified Portfolio and Moderate Diversified Portfolio paid $15,000 and
$18,000, respectively, to IXIS Services as compensation for its services as
transfer agent.
d. Service and Distribution Fees. Pursuant to Rule 12b-1 under the 1940 Act,
the Trust has adopted a Service Plan relating to each Portfolio's Class A
shares (the "Class A Plan") and a Service and Distribution Plan relating to
each Portfolio's Class C shares (the "Class C Plan").
Under the Class A Plan, each Portfolio pays IXIS Asset Management Distributors,
L.P. ("IXIS Distributors"), the Portfolio's distributor (a wholly-owned
subsidiary of IXIS North America), a monthly service fee at the annual rate of
0.25% of the average daily net assets attributable to the Portfolio's Class A
shares, as reimbursement for expenses incurred by IXIS Distributors in
providing personal services to investors in Class A shares and/or the
maintenance of shareholder accounts.
Under the Class C Plan, each Portfolio pays IXIS Distributors a monthly service
fee at the annual rate of 0.25% of the average daily net assets attributable to
the Portfolio's Class C shares, as compensation for services provided and
expenses incurred by IXIS Distributors in providing personal services to
investors in Class C shares and/or the maintenance of shareholder accounts.
Also under the Class C Plan, each Portfolio pays IXIS Distributors a monthly
distribution fee at the annual rate of 0.75% of the average daily net assets
attributable to the Portfolio's Class C shares, as compensation for services
provided and expenses incurred by IXIS Distributors in connection with the
marketing or sale of Class C shares.
For the six months ended June 30, 2005, Equity Diversified Portfolio paid
service fees of $5,100 and $5,861 on Class A and Class C, respectively, and
distribution fees of $17,581 on Class C. Moderate Diversified Portfolio paid
service fees of $49,164 and $82,128 on Class A and Class C, respectively, and
distribution fees of $246,382 on Class C.
Commissions (including CDSC) for the Equity Diversified Portfolio and Moderate
Diversified Portfolios' shares paid to IXIS Distributors by investors in shares
of the Portfolios during the six months ended June 30, 2005 were $57,735 and
$308,474, respectively.
e. Trustees Fees and Expenses. The IXIS Advisor Funds Trusts and the Loomis
Sayles Funds Trusts do not pay any compensation directly to their officers or
Trustees who are directors, officers or employees of IXIS Advisors, IXIS
Distributors, IXIS North America, IXIS Services or their affiliates. Each
Trustee who is an independent Trustee of the IXIS Advisor Funds Trusts and the
Loomis Sayles Funds Trusts receives, in the aggregate, a retainer fee at the
annual rate of $50,000 and meeting attendance fees of $5,000 for each meeting
of the Board of Trustees attended. Each committee chairman receives an
additional retainer fee at the annual rate of $7,000. Each committee member
27
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
receives a meeting attendance fee of $3,750 per committee meeting attended. The
co-chairmen of the Board each receive an additional annual retainer of $25,000.
These fees are allocated to the various series of the IXIS Advisor Funds Trusts
and the Loomis Sayles Funds Trusts based on a formula that takes into account,
among other factors, the relative net assets of each Fund. Trustees are
reimbursed for travel expenses in connection with attendance at meetings.
A deferred compensation plan (the "Plan") is available to the Trustees on a
voluntary basis. Each participating Trustee will receive an amount equal to the
value that such deferred compensation would have been had it been invested in a
designated Fund or certain other funds of the IXIS Advisor Funds Trusts and the
Loomis Sayles Funds Trusts on the normal payment date. Deferred amounts remain
in the Funds until distributed in accordance with the Plan.
Additionally, the Board of Trustees has approved the use of Portfolios' assets
to pay their portion of the annual salary for 2005 of an employee of IXIS
Advisors who supports the Portfolios' Chief Compliance Officer. For the period
ended June 30, 2005, the portion of such expense was $354 for each Portfolio.
f. Publishing Services. IXIS Services performs certain desktop publishing
services for the Portfolios. Fees for these services are presented in the
Statements of Operations as part of shareholder reporting. For the six months
ended June 30, 2005, there were no amounts paid to IXIS Services.
5. Line of Credit. Each Fund, along with certain other portfolios, participates
in a $50,000,000 committed line of credit provided by IBT under a credit
agreement (the "Agreement") dated April 30, 2002. Advances under the Agreement
are taken primarily for temporary or emergency purposes. Interest is charged to
each participating Fund based on its borrowings at a rate per annum equal to
the Federal Funds rate plus 0.45%. In addition, the Funds are charged a
facility fee equal to 0.10% per annum on the unused portion of the line of
credit. The annual cost of maintaining the line of credit and the facility fee
is apportioned pro rata among the participating Funds. There were no borrowings
during the six months ended June 30, 2005.
6. Security Lending. The Portfolios have entered into an agreement with IBT, as
agent of the Portfolios, to lend securities to certain designated borrowers.
The loans are collateralized at all times with cash or securities with a market
value at least equal to the market value of the securities on loan. The
Portfolios receive fees for lending their securities. The market value of
securities on loan to borrowers and the value of collateral held by the
Moderate Diversified Portfolio with respect to such loans at June 30, 2005, was
$18,362,645 and $18,732,414, respectively.
7. Broker Commission Recapture. Each Portfolio has entered into agreements with
certain brokers whereby the brokers will rebate a portion of brokerage
commissions. All amounts rebated by the brokers are returned to the Portfolios
under such agreements and are presented as realized gains in the Statements of
Operations. For the six months ended June 30, 2005, the amounts rebated under
these agreements for Equity Diversified Portfolio and Moderate Diversified
Portfolio were $4,265 and $15,994, respectively.
8. Contingent Expense Obligations. IXIS Advisors has given a binding
undertaking to the Portfolios to defer its management fees and, if necessary,
bear certain expenses associated with the Portfolios to limit their operating
expenses to 1.65% for Class A shares and 2.40% for Class C shares. The
undertakings are in effect until April 30, 2006 and will be reevaluated on an
annual basis. For the six months ended June 30, 2005, $175,753 of class level
expenses for Equity Diversified Portfolio were reimbursed.
IXIS Advisors shall be permitted to recover expenses it has borne (whether
through reduction of its management fee or otherwise) in later periods to the
extent the Portfolios' expenses fall below the expense limits, provided,
however, that the Portfolios are not obligated to pay such deferred fees more
than one year after the end of the fiscal year in which the fee was deferred.
As of June 30, 2005, IXIS Advisors is eligible to recover $56,685 of expenses
borne on behalf of Moderate Diversified Portfolio.
At June 30, 2005, the expense limits as a percentage of average daily net
assets and amounts subject to possible reimbursement under the expense
limitation agreements were as follows:
Expenses Subject Expenses Subject
to Possible to Possible
Expense Limit as a Percentage of Average Expiration of Reimbursement Reimbursement
Daily Net Assets Waiver through 2005 through 2006
- - --------------------------------------- -------------- ---------------- ----------------
Fund Class A Class C
- ---- ------- -------
Equity Diversified Portfolio 1.65% 2.40% April 30, 2006 $ -- $175,753
Moderate Diversified Portfolio 1.65% 2.40% April 30, 2006 263,368 --
28
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2005 (unaudited)
9. Shareholders. At June 30, 2005, IXIS Investor Services PLC owned 304,878
shares equating to 16.70% of Equity Diversified Portfolio Fund shares
outstanding.
10. Capital Shares. The Portfolios may issue an unlimited number of shares of
beneficial interest. Transactions in capital shares were as follows:
Equity Diversified Portfolio
- ----------------------------
For the period
January 31, 2005*
to June 30, 2005
----------------------
Shares Amount
--------- -----------
Class A
Shares sold 1,133,216 $11,287,428
Shares repurchased (307,372) (3,027,218)
--------- -----------
Net increase (decrease) 825,844 $ 8,260,210
--------- -----------
Class C
Shares sold 1,021,922 $10,163,587
Shares repurchased (22,523) (217,913)
--------- -----------
Net increase (decrease) 999,399 $ 9,945,674
--------- -----------
Increase (decrease) derived from capital shares transactions 1,825,243 $18,205,884
========= ===========
Moderate Diversified Portfolio
- ------------------------------
For the Period
Six Months Ended July 15, 2004*
June 30, 2005 to December 31, 2004
---------------------- ----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
Class A
Shares sold 2,583,507 $26,992,636 2,418,837 $24,714,691
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 3,265 34,209 849 8,967
Distributions from net realized gain 838 8,775 -- --
--------- ----------- --------- -----------
2,587,610 27,035,620 2,419,686 24,723,658
Shares repurchased (638,369) (6,689,079) (21,070) (222,356)
--------- ----------- --------- -----------
Net increase (decrease) 1,949,241 $20,346,541 2,398,616 $24,501,302
--------- ----------- --------- -----------
Class C
Shares sold 3,452,367 $35,968,215 4,441,511 $45,170,380
Shares Issued in connection with the reinvestment of:
Dividends from net investment income 245 2,558 252 2,656
Distributions from net realized gain 576 6,024 -- --
--------- ----------- --------- -----------
3,453,188 35,976,797 4,441,763 45,173,036
Shares repurchased (146,409) (1,519,912) (20,470) (209,140)
--------- ----------- --------- -----------
Net increase (decrease) 3,306,779 $34,456,885 4,421,293 $44,963,896
--------- ----------- --------- -----------
Increase (decrease) derived from capital shares transactions 5,256,020 $54,803,426 6,819,909 $69,465,198
========= =========== ========= ===========
* Commencement of operations
29
ADDITIONAL INFORMATION
Shareholder Meeting (unaudited)
At a special shareholders' meeting held on June 2, 2005, shareholders of IXIS
Advisor Funds Trust III, of which the IXIS Equity Diversified Portfolio and
IXIS Moderate Diversified Portfolio are series, voted for the following
proposals:
1. Election of Trustees for IXIS Advisor Funds Trust III (the "Trust")
Votes
Votes For Withheld Total
--------- -------- -----
Graham T. Allison, Jr. 22,076,494.115 290,487.571 22,366,981.686
Edward A. Benjamin 22,073,775.314 293,206.372 22,366,981.686
Daniel M. Cain 22,085,370.115 281,611.571 22,366,981.686
Paul G. Chenault 22,032,781.880 334,199.806 22,366,981.686
Kenneth J. Cowan 22,018,840.798 348,140.888 22,366,981.686
Richard Darman 22,085,245.115 281,736.571 22,366,981.686
Sandra O. Moose 22,076,808.115 290,173.571 22,366,981.686
John A. Shane 22,049,440.364 317,541.322 22,366,981.686
Charles D. Baker 22,066,708.875 300,272.811 22,366,981.686
Cynthia L. Walker 22,060,761.741 306,219.945 22,366,981.686
Robert J. Blanding 22,080,201.115 286,780.571 22,366,981.686
John T. Hailer 22,063,445.448 303,536.238 22,366,981.686
2. Approval of an Amended and Restated Agreement and Declaration of
Trust for the Trust
Voted Abstained
Voted For Against Votes Broker Non-Votes Total Votes
--------- ------- --------- ---------------- -----------
12,060,980.712 306,967.971 435,847.003 9,563,186.000 22,366,981.686
With respect to proposal 2, the meeting was adjourned twice but, ultimately,
there were insufficient votes to pass the proposal.
30
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included as part of the Report to Shareholders filed as Item 1 herewith.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Companies and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Securities Holders.
There were no material changes to the procedures by which shareholders may
recommend nominees to the Registrant's Board of Trustees.
Item 11. Controls and Procedures.
The Registrant's principal executive officer and principal financial officer
have concluded that the Registrant's disclosure controls and procedures are
sufficient to ensure that information required to be disclosed by the Registrant
in this Form N-CSR was recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms, based upon such officers' evaluation of these controls and procedures as
of a date within 90 days of the filing date of the report.
There were no changes in the Registrant's internal control over financial
reporting that occurred during the Registrant's last fiscal quarter of the
period covered by the report that has materially affected, or is reasonably
likely to materially affect, the Registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a) (1) Not applicable.
(a) (2) Certifications of Principal Executive Officer and Principal
Financial Officer pursuant to 30a-2 under the Investment Company
Act of 1940 (17 CFR 270.30a-2), as herewith as exhibit (a)(2)(1)
and a(2)(2), respectively.
(a) (3) Not applicable.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 are
filed herewith as Exhibit (b).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
IXIS Advisor Funds Trust III
By: /s/ John T. Hailer
----------------------------------------
Name: John T. Hailer
Title: President and Chief Executive Officer
Date: August 26, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.
By: /s/ John T. Hailer
----------------------------------------
Name: John T. Hailer
Title: President and Chief Executive Officer
Date: August 26, 2005
By: /s/ Michael C. Kardok
----------------------------------------
Name: Michael C. Kardok
Title: Treasurer
Date: August 26, 2005