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, 2006
Item 1. Reports to Stockholders.
The Registrant's semi-annual report transmitted to shareholders pursuant to
Rule 30e-1 under the Investment Company Act of 1940 is as follows:
[LOGO]
IXIS
ADVISOR FUNDS
Equity Funds
Semiannual Report
June 30, 2006
CGM Advisor Targeted Equity Fund
Hansberger International Fund
Harris Associates Focused Value Fund
Harris Associates Large Cap Value Fund
IXIS U.S. Diversified Portfolio
Harris Associates
Loomis, Sayles & Company
Mercury Advisors
IXIS 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
Portfolio of Investments...................Page 28
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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What 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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Positive stock selection and an emphasis on the energy sector fueled CGM
Advisor Targeted Equity Fund's performance during the first half of 2006. For
the six months ended June 30, 2006, the fund returned 4.41% based on the net
asset value of Class A shares. The fund outperformed its benchmark, the S&P 500
Index, which returned 2.71%, and came in above the 2.39% average return of the
funds in Morningstar's Large Blend category.
FUND POSITIONED FOR GLOBAL ECONOMIC GROWTH
During the first half of 2006, the fund was fully invested, seeking
opportunities created by continued global economic growth. The Federal Reserve
Board maintained upward pressure on interest rates during the period, in an
effort to curb inflation by reining in the U.S. economy. Although economic
growth is faster in other parts of the world, we are not concerned about
inflationary pressures or an economic slowdown there.
PORTFOLIO SHIFTED TOWARD CYCLICAL STOCKS, ADDED ENERGY
In order to increase exposure to economic growth, we sold stocks of some
companies whose profitability is less impacted by economic cycles. These
included insurance firms American International Group and AFLAC, soft drink
giant Pepsico, and several drug companies. We used the proceeds to establish
new positions in more economically sensitive companies, including aerospace
leader Boeing, computer giant Hewlett Packard, mining company Rio Tinto and
retailer JC Penney. Energy consumption in the developing world is also
cyclical, and we increased the fund's weighting in energy-related companies
during the period, from 29% to 40% of total assets. Continued growth in Asia,
India, the former Soviet Union, and the Middle East is expected to maintain
high energy prices in the face of limited supply growth.
Energy stocks drove the fund's positive results, including service companies
that generate profits by helping oil companies improve their efficiency. For
example, Schlumberger, the fund's top performer, helps increase oil well output
through pressure pumping and other processes. Both Schlumberger and
Halliburton, another leading oil service provider, benefited from strong growth
for their services and significant pricing flexibility. The market also
responded positively to Halliburton's decision to spin off its construction
subsidiary.
ConocoPhillips, a leading global oil and gas production company and a major
refiner, saw its stock price climb as a result of rising oil and gas prices and
increasing refinery margins. The company also recently purchased a major stake
in LUKOIL, the Russian oil company, and acquired the major domestic natural gas
producer, Burlington Resources.
Other positives included America Movil, the leading Latin American cellular
telephone company, which is enjoying widespread growth in Mexico and Latin
America. We sold the stock on strength. United Technologies, which provides a
broad range of high technology products and services, benefited from strong
growth in its diversified global businesses, including Otis (elevators), Pratt
& Whitney (aircraft engines), and Carrier (heating and air conditioning
systems).
SEVERAL ISSUES PROVED DISAPPOINTING
The fund's weakest stock was Apple Computer - a top performer last year.
Although iPod sales were strong, growth in the personal computer business
failed to meet expectations. Corning, Inc., a leader in fiber optic cables for
telephone communications and glass for flat panel television sets, also proved
disappointing, as growth in the flat panel business was lower than we had
anticipated. Diversified financial services giant General Electric also failed
to meet our expectations. All three positions were sold.
FORECAST IS FOR CONTINUED MODERATE ECONOMIC GROWTH
Although the world has been faced with significant increases in oil and gas
prices, and a moderate rise in interest rates, this does not appear to have
constrained economic activity. We believe that the global economy will continue
to expand in the coming year, with moderate inflation, which should provide a
positive environment for stocks.
1
CGM ADVISOR TARGETED EQUITY FUND
Investment Results through June 30, 2006
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PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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, 1996 through June 30, 2006
Month Cumulative Class A @M.S.C. S&P 500 Index
End Value Cumulative Value Cumulative Value
- ---------- ---------- ---------------- ----------------
6/30/1996 10,000 9,425 10,000
7/31/1996 9,415 8,874 9,558
8/31/1996 9,505 8,959 9,760
9/30/1996 10,157 9,573 10,309
10/31/1996 10,755 10,136 10,593
11/30/1996 11,593 10,926 11,394
12/31/1996 11,479 10,819 11,168
1/31/1997 12,515 11,796 11,866
2/28/1997 12,308 11,600 11,959
3/31/1997 11,785 11,107 11,468
4/30/1997 12,456 11,740 12,152
5/31/1997 13,068 12,317 12,892
6/30/1997 13,651 12,866 13,470
7/31/1997 14,974 14,113 14,542
8/31/1997 14,204 13,387 13,727
9/30/1997 14,931 14,073 14,479
10/31/1997 14,346 13,521 13,995
11/30/1997 14,182 13,367 14,643
12/31/1997 14,182 13,367 14,895
1/31/1998 14,413 13,585 15,059
2/28/1998 15,680 14,779 16,146
3/31/1998 16,689 15,729 16,972
4/30/1998 17,329 16,333 17,143
5/31/1998 17,057 16,077 16,848
6/30/1998 17,970 16,937 17,533
7/31/1998 18,065 17,026 17,346
8/31/1998 14,618 13,778 14,838
9/30/1998 14,722 13,876 15,789
10/31/1998 16,205 15,273 17,073
11/30/1998 17,553 16,544 18,108
12/31/1998 18,919 17,831 19,151
1/31/1999 20,201 19,040 19,952
2/28/1999 18,753 17,675 19,332
3/31/1999 19,203 18,099 20,105
4/30/1999 19,136 18,035 20,884
5/31/1999 18,519 17,455 20,391
6/30/1999 19,884 18,741 21,523
7/31/1999 19,417 18,301 20,851
8/31/1999 19,384 18,269 20,747
9/30/1999 18,235 17,186 20,179
10/31/1999 18,935 17,846 21,456
11/30/1999 19,651 18,521 21,892
12/31/1999 21,790 20,538 23,181
1/31/2000 20,086 18,932 22,016
2/29/2000 21,870 20,613 21,600
3/31/2000 22,109 20,837 23,713
4/30/2000 21,277 20,054 22,999
5/31/2000 20,426 19,252 22,527
6/30/2000 20,506 19,327 23,083
7/31/2000 19,852 18,710 22,722
8/31/2000 20,793 19,597 24,133
9/30/2000 20,040 18,888 22,859
10/31/2000 20,082 18,927 22,762
11/30/2000 19,893 18,749 20,968
12/31/2000 20,800 19,604 21,071
1/31/2001 18,955 17,865 21,818
2/28/2001 18,355 17,299 19,829
3/31/2001 17,888 16,860 18,573
4/30/2001 18,666 17,593 20,016
5/31/2001 18,289 17,238 20,150
6/30/2001 18,414 17,355 19,659
7/31/2001 17,878 16,850 19,466
8/31/2001 16,405 15,462 18,247
9/30/2001 14,820 13,968 16,774
10/31/2001 14,909 14,052 17,094
11/30/2001 16,494 15,545 18,405
12/31/2001 17,431 16,428 18,566
1/31/2002 17,966 16,933 18,295
2/28/2002 17,139 16,154 17,942
3/31/2002 17,429 16,427 18,617
4/30/2002 17,474 16,470 17,488
5/31/2002 17,296 16,302 17,360
6/30/2002 16,737 15,775 16,123
7/31/2002 14,885 14,029 14,867
8/31/2002 14,885 14,029 14,964
9/30/2002 13,969 13,166 13,338
10/31/2002 13,634 12,850 14,511
11/30/2002 13,299 12,534 15,366
12/31/2002 12,406 11,693 14,463
1/31/2003 12,406 11,693 14,084
2/28/2003 12,317 11,609 13,873
3/31/2003 12,606 11,881 14,007
4/30/2003 13,409 12,638 15,161
5/31/2003 14,569 13,732 15,960
6/30/2003 14,814 13,962 16,164
7/31/2003 14,524 13,689 16,449
8/31/2003 14,903 14,046 16,769
9/30/2003 15,082 14,214 16,591
10/31/2003 16,956 15,981 17,530
11/30/2003 17,626 16,613 17,684
12/31/2003 17,716 16,697 18,612
1/31/2004 17,314 16,318 18,953
2/29/2004 18,363 17,307 19,217
3/31/2004 19,211 18,107 18,927
4/30/2004 17,694 16,676 18,630
5/31/2004 18,118 17,076 18,885
6/30/2004 18,274 17,223 19,252
7/31/2004 17,404 16,404 18,615
8/31/2004 17,604 16,592 18,691
9/30/2004 18,698 17,623 18,893
10/31/2004 18,920 17,832 19,182
11/30/2004 19,768 18,631 19,958
12/31/2004 20,191 19,030 20,637
1/31/2005 20,013 18,862 20,134
2/28/2005 21,352 20,124 20,558
3/31/2005 20,415 19,241 20,193
4/30/2005 19,857 18,716 19,810
5/31/2005 20,415 19,241 20,441
6/30/2005 20,866 19,667 20,470
7/31/2005 21,939 20,678 21,231
8/31/2005 22,163 20,888 21,037
9/30/2005 22,989 21,668 21,208
10/31/2005 22,454 21,163 20,854
11/30/2005 22,811 21,499 21,643
12/31/2005 22,856 21,542 21,650
1/31/2006 23,839 22,469 22,224
2/28/2006 23,012 21,689 22,284
3/31/2006 23,661 22,300 22,561
4/30/2006 24,756 23,333 22,864
5/31/2006 23,907 22,533 22,206
6/30/2006 23,868 22,492 22,236
Average Annual Total Returns -- June 30, 2006
SINCE
6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION
Class A (Inception 11/27/68)
Net Asset Value/1/ 4.41% 14.36% 5.33% 9.09% --
With Maximum Sales Charge/2/ -1.56 7.79 4.10 8.44 --
Class B (Inception 2/28/97)
Net Asset Value/1/ 4.12 13.46 4.56 -- 6.55%
With CDSC/3/ -0.88 8.46 4.22 -- 6.55
Class C (Inception 9/1/98)
Net Asset Value/1/ 4.12 13.59 4.53 -- 4.94
With CDSC/3/ 3.12 12.59 4.53 -- 4.94
Class Y (Inception 6/30/99)
Net Asset Value/1/ 4.61 14.52 5.78 -- 3.04
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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/ 2.71% 8.63% 2.49% 8.32% 6.87% 5.30% 0.47%
Morningstar Large Blend Fund Avg./5/ 2.39 8.84 2.31 7.39 6.40 5.69 1.23
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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 6/30/06 12/31/05
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Common Stocks 99.4 99.0
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Commercial Paper 0.7 0.8
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Short-Term Investments and Other -0.1 0.2
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% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
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Schlumberger, Ltd. 6.8 5.1
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Total SA 6.4 6.2
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BP PLC 5.8 5.3
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ConocoPhillips 5.5 4.9
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Union Pacific Corp. 5.5 --
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Altria Group, Inc. 5.5 5.6
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Halliburton Co. 5.4 4.8
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CVS Corp. 5.4 1.4
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Toyota Motor Corp. 5.3 5.3
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Rio Tinto PLC 5.2 --
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% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
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Oil & Gas 24.7 19.3
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Oil & Gas Services 17.2 9.9
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Aerospace & Defense 9.6 3.2
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Retail 9.5 1.4
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Transportation 5.5 --
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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 comparative performance figures shown for each Class of
fund shares are calculated as follows: Class B from 3/1/97; Class C from
9/1/98; and Class Y from 7/1/99.
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 United States. Assets are diversified across developed and emerging
markets
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Inception Date:
December 29, 1995
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Managers:
Growth:
Trevor Graham
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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What 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's total return for the six months ended June 30,
2006 was 7.95%, based on the net asset value of Class A shares. For the same
period, the fund's benchmarks, the MSCI EAFE Index and the MSCI ACWI ex-U.S.
Index, returned 10.50% and 9.99%, respectively. The average performance of
Morningstar's Foreign Large Blend category was 8.90%. Neither the fund nor its
benchmarks includes U.S. stocks, and the Morningstar category has only limited
exposure to domestic equities.
Two teams of international equity specialists at Hansberger manage the fund -
one focuses on value and the other seeks growth potential. For the first half
of 2006, value stocks outperformed growth stocks. On a regional basis, Europe
took the lead.
DESPITE SOME STRONG HOLDINGS, GROWTH SELECTIONS GENERALLY LAGGED
Although European markets led the world during the period, and dominated the
fund's growth segment, some of the stocks selected proved disappointing. These
included Carnival Corporation, an international cruise line incorporated in
Great Britain, and Smith & Nephew, a British maker of orthopedic devices.
Standard & Poor's downgraded Carnival's credit rating based on a
softer-than-expected operating environment. Healthcare budget constraints in
the United States, United Kingdom, and Germany, combined with restructuring
activity, contributed to slow revenue growth for Smith & Nephew. Elsewhere,
Israeli-based drug manufacturer Teva Pharmaceuticals was hurt by concerns
regarding Teva's generic version of the anti-cholesterol drug, Zocor. In
addition, Japan's Nidec Corporation, a world leader in the production of
brushless disc drives, experienced seasonally weak results in the fiercely
competitive computer business.
The Pacific Ex-Japan region and Canada were this segment's best-performing
regions. Top performers included Canada's Suncor Energy, with its large
reserves of oil sands; Singapore's Keppel Corporation, a leader in offshore oil
rigs; and Hong Kong apparel and footwear manufacturer, Esprit Holdings. Other
strong performers included Denmark's Vestas Wind Systems, a world leader and
producer of giant wind turbines, and Aracruz Celulose, a Brazilian pulp
manufacturer benefiting from its manufacturing technology and reserves of
fast-growing eucalyptus trees.
Historically, growth stocks have performed best late in the business cycle. The
managers believe a flight to higher quality may be in the offing as the world
economies slow, which would benefit growth investors.
CANADIAN MINING HOLDINGS AND EUROPEAN BUSINESSES POWERED THE VALUE SEGMENT
Canada's Alcan Inc., a major aluminum producer with extensive bauxite mining
operations, and Inco Ltd, which mines nickel, copper and precious metals,
contributed handsomely to the value segment's performance. European holdings
were the second best group, including Germany's Schering AG, which was acquired
by another German pharmaceutical company, and Switzerland's ABB Limited, a
manufacturer of power and automation equipment whose restructuring efforts paid
off in increased orders early in 2006. ABB was sold at a profit. Still in the
portfolio is France's Carrefour S.A., a leading supermarket chain that is
expanding business in Europe, Asia and Latin America. One of the best
performing sectors was energy, including Russia's LUKOIL and Brazil's
Petrobras. Both stocks remain in the segment. Utility and healthcare selections
also did well.
Although the segment's industrial selections appreciated, this group was
relatively weak. Disappointments included Korea's LG Chemicals, which declined
with chemical companies generally, as high oil prices and the rising cost of
raw materials hurt profits. LG was sold. Hong Kong's Johnson Electric also hurt
performance, but it remains in the segment because the managers believe the
company's strong lead in the manufacture of micro-motors is not reflected in
the price of its shares. Materials and consumer discretionary companies were
also weak, but these groups, too, ended the period in positive territory.
The managers believe economic growth prospects seem positive for Canada,
Switzerland and Japan, as well as many emerging markets, and that international
markets in general are trading at attractive valuation levels relative to the
United States.
3
HANSBERGER INTERNATIONAL FUND
Investment Results through June 30, 2006
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PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/7/
[CHART]
June 30, 1996 through June 30, 2006
Class A MSCI MSCI
@ M.S.C. Index Index
Month Cumulative Cumulative Cumulative Cumulative
End Value Value Value Value
- ---------- ---------- ---------- ---------- ----------
6/30/1996 10,000 9,425 10,000 10,000
7/31/1996 9,542 8,993 9,710 9,668
8/31/1996 9,800 9,236 9,734 9,724
9/30/1996 9,964 9,391 9,995 9,966
10/31/1996 9,886 9,317 9,895 9,866
11/30/1996 10,286 9,694 10,291 10,246
12/31/1996 10,438 9,838 10,162 10,128
1/31/1997 10,859 10,234 9,808 9,942
2/28/1997 11,084 10,446 9,971 10,124
3/31/1997 10,975 10,344 10,010 10,103
4/30/1997 11,084 10,446 10,065 10,188
5/31/1997 11,657 10,986 10,723 10,817
6/30/1997 12,193 11,492 11,316 11,414
7/31/1997 12,656 11,928 11,502 11,645
8/31/1997 11,946 11,259 10,645 10,729
9/30/1997 12,600 11,875 11,244 11,309
10/31/1997 11,686 11,014 10,382 10,346
11/30/1997 11,549 10,885 10,279 10,217
12/31/1997 11,762 11,086 10,371 10,335
1/31/1998 11,724 11,050 10,847 10,644
2/28/1998 12,523 11,803 11,546 11,354
3/31/1998 13,032 12,283 11,904 11,746
4/30/1998 13,108 12,354 12,001 11,830
5/31/1998 12,842 12,103 11,945 11,616
6/30/1998 12,576 11,853 12,039 11,572
7/31/1998 12,538 11,817 12,163 11,682
8/31/1998 10,552 9,945 10,659 10,035
9/30/1998 10,453 9,852 10,335 9,823
10/31/1998 11,214 10,569 11,415 10,852
11/30/1998 11,815 11,136 12,003 11,435
12/31/1998 12,233 11,530 12,479 11,829
1/31/1999 12,659 11,931 12,445 11,816
2/28/1999 12,500 11,781 12,152 11,552
3/31/1999 13,010 12,262 12,662 12,109
4/30/1999 13,709 12,921 13,178 12,715
5/31/1999 13,367 12,598 12,502 12,118
6/30/1999 14,150 13,336 12,992 12,675
7/31/1999 13,990 13,186 13,381 12,972
8/31/1999 13,891 13,092 13,433 13,017
9/30/1999 13,571 12,791 13,571 13,105
10/31/1999 14,050 13,242 14,083 13,593
11/30/1999 15,100 14,232 14,575 14,136
12/31/1999 16,835 15,867 15,886 15,485
1/31/2000 16,209 15,277 14,879 14,644
2/29/2000 17,223 16,233 15,283 15,040
3/31/2000 17,273 16,280 15,878 15,606
4/30/2000 16,021 15,100 15,045 14,735
5/31/2000 15,294 14,414 14,681 14,358
6/30/2000 15,742 14,837 15,258 14,969
7/31/2000 15,318 14,437 14,622 14,378
8/31/2000 15,776 14,869 14,752 14,556
9/30/2000 15,183 14,310 14,036 13,749
10/31/2000 14,608 13,768 13,708 13,312
11/30/2000 13,943 13,141 13,196 12,715
12/31/2000 14,778 13,928 13,669 13,149
1/31/2001 15,065 14,199 13,662 13,346
2/28/2001 14,102 13,291 12,639 12,289
3/31/2001 13,180 12,422 11,802 11,421
4/30/2001 14,030 13,223 12,630 12,197
5/31/2001 14,194 13,378 12,194 11,861
6/30/2001 14,076 13,267 11,700 11,406
7/31/2001 13,819 13,024 11,488 11,152
8/31/2001 13,520 12,743 11,199 10,875
9/30/2001 12,109 11,413 10,068 9,721
10/31/2001 12,346 11,636 10,325 9,994
11/30/2001 13,047 12,297 10,706 10,451
12/31/2001 13,452 12,678 10,770 10,585
1/31/2002 13,132 12,377 10,199 10,132
2/28/2002 13,163 12,406 10,271 10,205
3/31/2002 13,949 13,147 10,881 10,802
4/30/2002 13,856 13,059 10,910 10,829
5/31/2002 13,939 13,137 11,058 10,947
6/30/2002 13,091 12,339 10,622 10,474
7/31/2002 11,836 11,155 9,574 9,454
8/31/2002 11,856 11,174 9,555 9,454
9/30/2002 10,393 9,795 8,531 8,452
10/31/2002 10,963 10,333 8,990 8,906
11/30/2002 11,752 11,076 9,399 9,334
12/31/2002 11,243 10,596 9,084 9,033
1/31/2003 10,848 10,225 8,705 8,715
2/28/2003 10,548 9,941 8,506 8,539
3/31/2003 10,413 9,814 8,346 8,373
4/30/2003 11,502 10,841 9,173 9,180
5/31/2003 12,321 11,612 9,737 9,765
6/30/2003 12,601 11,876 9,978 10,035
7/31/2003 12,860 12,121 10,221 10,303
8/31/2003 13,264 12,501 10,470 10,610
9/30/2003 13,440 12,668 10,795 10,907
10/31/2003 14,395 13,567 11,468 11,614
11/30/2003 14,644 13,802 11,725 11,867
12/31/2003 15,629 14,731 12,642 12,773
1/31/2004 15,982 15,063 12,821 12,978
2/29/2004 16,179 15,249 13,119 13,308
3/31/2004 16,024 15,102 13,198 13,390
4/30/2004 15,567 14,672 12,911 12,974
5/31/2004 15,618 14,720 12,951 13,003
6/30/2004 15,878 14,965 13,256 13,297
7/31/2004 15,162 14,290 12,828 12,909
8/31/2004 15,296 14,417 12,887 13,013
9/30/2004 15,691 14,789 13,226 13,431
10/31/2004 16,148 15,219 13,678 13,898
11/30/2004 17,091 16,108 14,616 14,863
12/31/2004 17,754 16,733 15,258 15,501
1/31/2005 17,370 16,372 14,979 15,234
2/28/2005 18,324 17,270 15,630 15,986
3/31/2005 17,816 16,792 15,243 15,552
4/30/2005 17,401 16,401 14,902 15,168
5/31/2005 17,464 16,460 14,925 15,263
6/30/2005 17,651 16,636 15,129 15,551
7/31/2005 18,325 17,271 15,594 16,124
8/31/2005 18,895 17,809 15,992 16,537
9/30/2005 19,403 18,288 16,708 17,390
10/31/2005 18,864 17,779 16,221 16,757
11/30/2005 19,434 18,316 16,622 17,320
12/31/2005 20,615 19,430 17,397 18,154
1/31/2006 22,118 20,846 18,466 19,420
2/28/2006 21,733 20,483 18,428 19,363
3/31/2006 22,418 21,129 19,044 19,926
4/30/2006 23,350 22,008 19,968 20,953
5/31/2006 22,395 21,108 19,217 19,987
6/30/2006 22,262 20,985 19,224 19,967
Average Annual Total Returns -- June 30, 2006
6 MONTHS 1 YEAR 5 YEARS/7/ 10 YEARS/7/
CLASS A (Inception 12/29/95)
Net Asset Value/1/ 7.95% 26.09% 9.60% 8.33%
With Maximum Sales Charge/2/ 1.76 18.83 8.31 7.69
CLASS B (Inception 12/29/95)
Net Asset Value/1/ 7.56 25.17 8.79 7.54
With CDSC/3/ 2.56 20.17 8.50 7.54
CLASS C (Inception 12/29/95)
Net Asset Value/1/ 7.56 25.23 8.78 7.54
With CDSC/3/ 6.56 24.23 8.78 7.54
- -----------------------------------------------------------------------------------
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
MSCI EAFE Index/4/ 10.50% 27.07% 10.45% 6.75%
MSCI ACWI ex-U.S. Index/5/ 9.99 28.40 11.85 7.16
Morningstar Foreign Large Blend Fund Avg./6/ 8.90 26.38 8.08 6.35
- -----------------------------------------------------------------------------------
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 6/30/06 12/31/05
- --------------------------------------------------------
Common Stocks 99.2 98.3
- --------------------------------------------------------
Preferred Stock 0.0 0.5
- --------------------------------------------------------
Short-Term Investments and Other 0.8 1.2
- --------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
- --------------------------------------------------------
UniCredito Italiano SpA 2.0 1.7
- --------------------------------------------------------
Novartis AG 1.9 1.5
- --------------------------------------------------------
British Sky Broadcasting PLC 1.7 1.4
- --------------------------------------------------------
DBS Group Holdings, Ltd. 1.5 1.2
- --------------------------------------------------------
Telefonica SA 1.4 0.9
- --------------------------------------------------------
HBOS PLC 1.3 1.7
- --------------------------------------------------------
Schneider Electric SA 1.2 1.3
- --------------------------------------------------------
Banco Santander Central Hispano SA 1.2 1.2
- --------------------------------------------------------
Banco Bilbao Vizcaya Argentaria SA 1.2 1.1
- --------------------------------------------------------
ORIX Corp. 1.2 1.2
- --------------------------------------------------------
% of Net Assets as of
FIVE LARGEST COUNTRIES 6/30/06 12/31/05
- --------------------------------------------------------
Japan 18.7 18.9
- --------------------------------------------------------
United Kingdom 18.4 19.8
- --------------------------------------------------------
France 11.1 10.2
- --------------------------------------------------------
Switzerland 9.4 8.3
- --------------------------------------------------------
Germany 4.2 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/Morgan Stanley Capital International Europe Australasia and Far East Index
(MSCI EAFE Index) 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/Fund performance has been increased by expense waivers/reimbursements,
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
- --------------------------------------------------------------------------------
What 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
- --------------------------------------------------------------------------------
Investors' appetite for riskier stocks with high valuations drove the kinds of
companies we emphasize from the spotlight over the past six months. However, as
the period ended, a shift toward stocks of more established companies appeared
to be underway.
Harris Associates Focused Value Fund's total return for the six months ended
June 30, 2006 was -0.07%, based on the net asset value of Class A shares.
Performance trailed the fund's benchmark, the Standard & Poor's 500 Index,
which returned 2.71% for the period, and the 4.70% return on Morningstar's
Large Value category.
MEDIA, CONSUMER, DEFENSE AND FINANCIAL ISSUES LED RESULTS
Cablevision was the fund's leading performer in the first half of 2006. After
weighing privatization and the possible sale of the company, management
retained the status quo and declared a sizeable cash dividend, helping to boost
shares. Cosmetics maker Estee Lauder benefited from increased sales beyond
traditional department stores as well as in overseas markets. Strong defense
spending fueled earnings growth at Raytheon, whose business aircraft division
is also growing. More reliance on fee income and less on mortgages improved
earnings at Washington Mutual, which rose despite near-term concerns over the
housing market.
Consumer staples and financial services also added to results. However, the
fund's limited exposure to strong-performing energy and utility stocks and the
absence of telecommunications holdings account for most of the fund's
under-performance during the period. Our buildup in technology also hurt, as
this sector underperformed.
STOCK-SPECIFIC ISSUES BROUGHT DECLINES
A rival company cost chipmaker Intel some market share and drove down the price
of its stock excessively, in our opinion. Intel dominates in an expanding
industry, with strong fundamentals and competitive new products on the way.
Price cuts tied to inventory reduction, plus European tariffs, cut earnings
expectations at Timberland, makers of shoes and apparel. Timberland is
reviewing its store operations and arrangements with other retailers. We
believe shareholders will be rewarded by management's skillful use of capital
and long-term business focus. Profit-taking drove down the stock price of
Omnicare, which provides prescription services for nursing homes. Omnicare
navigated the cumbersome transition to Medicare Part D prescription coverage
successfully, but incurred significant costs. EW Scripps, a diversified media
company, suffered when an unrelated newspaper chain was purchased for a
lower-than-expected price, depressing the price of most media stocks across the
board. Newspapers are a small portion of Scripps's operations and all other
segments are thriving.
PORTFOLIO CHANGES WERE DIVERSE
We sold the fund's positions in AutoNation, Burlington Resources and Liberty
Media at a profit, and eliminated H&R Block and R.R. Donnelly in favor of other
opportunities that seemed stronger. We added Bausch & Lomb after problems with
its contact lens solution drove shares down; the fallout from this incident
appears to be well contained and the stock price seems attractively low. We
also found the valuation of homebuilder D.R. Horton attractive despite a
housing slowdown, and added natural gas company EnCana, based on its potential
profitability in a range of pricing scenarios. New management, attractive value
and turnaround potential led us to International Flavors & Fragrances, whose
products are used in the cosmetics and food industries.
POSITIONED FOR A RISK-AVERSE MARKET
The Federal Reserve Board continues to walk a fine line, attempting to restrain
inflation by raising interest rates appropriately without stifling economic
growth. Any economic slowdown would add to uncertainty regarding smaller
companies and increase the attractiveness of large-cap issues. As investors
discover the risks inherent in smaller, unproven companies, we think they will
turn toward larger companies with dominant market share, solid financials and
stable outlooks - where this fund focuses. If valuations among small, mid, and
large companies remain roughly equal, we may be able to buy companies with
well-grounded fundamentals and established profit histories without the premium
that they traditionally command.
5
HARRIS ASSOCIATES FOCUSED VALUE FUND
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/7/
[CHART]
March 15, 2001 (inception) through June 30, 2006
Class A S&P 500
@ M.S.C. Index
Cumulative Cumulative Cumulative
Month End Value Value Value
- ---------- ---------- ---------- ----------
3/15/2001 10,000 9,425 10,000
3/31/2001 10,090 9,510 $10,000
4/30/2001 10,420 9,821 10,777
5/31/2001 10,690 10,075 10,849
6/30/2001 10,990 10,358 10,585
7/31/2001 11,310 10,660 10,481
8/31/2001 10,870 10,245 9,825
9/30/2001 10,240 9,651 9,032
10/31/2001 10,000 9,425 9,204
11/30/2001 10,680 10,066 9,910
12/31/2001 10,960 10,330 9,997
1/31/2002 10,890 10,264 9,851
2/28/2002 10,600 9,990 9,661
3/31/2002 10,910 10,282 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 13,415 12,644 11,022
7/31/2005 13,876 13,078 11,431
8/31/2005 13,856 13,059 11,327
9/30/2005 13,607 12,824 11,419
10/31/2005 13,156 12,400 11,229
11/30/2005 13,626 12,843 11,653
12/31/2005 13,806 13,012 11,657
1/31/2006 13,966 13,163 11,966
2/28/2006 14,023 13,217 11,998
3/31/2006 14,103 13,292 12,148
4/30/2006 14,366 13,540 12,311
5/31/2006 13,874 13,076 11,957
6/30/2006 13,800 13,006 11,973
Average Annual Total Returns -- June 30, 2006
SINCE
6 MONTHS 1 YEAR 5 YEARS/7/ INCEPTION/7/
CLASS A (Inception 3/15/01)
Net Asset Value/1/ -0.07% 2.83% 4.66% 6.27%
With Maximum Sales Charge/2/ -5.84 -3.09 3.43 5.09
CLASS B (Inception 3/15/01)
Net Asset Value/1/ -0.42 2.02 3.87 5.48
With CDSC/3/ -5.23 -2.26 3.52 5.33
CLASS C (Inception 3/15/01)
Net Asset Value/1/ -0.42 2.02 3.87 5.48
With CDSC/3/ -1.39 1.16 3.87 5.48
- ----------------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION/6/
S&P 500 Index/4/ 2.71% 8.63% 2.49% 3.49%
Morningstar Large Value Fund Avg./5/ 4.70 10.28 4.94 5.66
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 6/30/06 12/31/05
- ------------------------------------------------------
Common Stocks 94.7 93.9
- ------------------------------------------------------
Short-Term Investments and Other 5.3 6.1
- ------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
- ------------------------------------------------------
Washington Mutual, Inc. 6.7 5.5
- ------------------------------------------------------
Intel Corp. 4.5 2.5
- ------------------------------------------------------
Liz Claiborne, Inc. 4.2 3.6
- ------------------------------------------------------
McDonald's, Inc. 4.1 3.8
- ------------------------------------------------------
TJX Cos., Inc. 4.0 3.9
- ------------------------------------------------------
Yum! Brands, Inc. 4.0 4.4
- ------------------------------------------------------
Lauder Estee Co., Inc. (The) 3.9 3.0
- ------------------------------------------------------
National Semiconductor Corp. 3.8 2.3
- ------------------------------------------------------
Raytheon Co. 3.8 5.0
- ------------------------------------------------------
Morgan Stanley 3.7 1.6
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- ------------------------------------------------------
Media 12.9 17.8
- ------------------------------------------------------
Semiconductors 10.5 4.8
- ------------------------------------------------------
Savings & Loans 10.0 8.3
- ------------------------------------------------------
Restaurants 8.0 8.2
- ------------------------------------------------------
Insurance 4.8 3.7
- ------------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/S&P 500 Index is an unmanaged index of U.S. common 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 comparative performance figures shown are calculated
from 4/1/01.
/7/Fund performance has been increased by expense waivers/reimbursements,
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
- --------------------------------------------------------------------------------
What You Should Know:
Value stocks may fall out of favor with investors and underperform the overall
market during any given period.
Management Discussion
- --------------------------------------------------------------------------------
After a strong first quarter for the equity markets, uncertainty about the
direction of interest rates under a new Federal Reserve Board chairman, coupled
with record energy costs, combined to increase volatility late in the period.
Harris Associates Large Cap Value Fund's sub-par performance reflects issues at
individual companies and investors' failure to respond positively to strong
earnings at many portfolio holdings.
For the six months ended June 30, 2006, Class A shares of the fund provided a
total return of 0.93% at net asset value, significantly behind the Russell 1000
Value Index, which returned 6.56%. The average return on the funds in
Morningstar's Large Blend category was 2.39%.
DISNEY, UNION PACIFIC WERE AMONG TOP PERFORMERS
Walt Disney Company's acquisition of Pixar Studios, although costly, has
greatly strengthened Disney's animation franchise. More importantly, financial
results improved at the company's ABC and ESPN networks, as well as at its
resort properties. The turnaround continued at Union Pacific, thanks to strong
demand for coal hauling and better operations overall. In finance, Morgan
Stanley rebounded on strong earnings, as its new CEO revitalized the weakened
retail brokerage and investment banking divisions. Strong financial results
also boosted shares of Diageo, a major global distributor of alcoholic
beverages.
CONSUMER, HOMEBUILDING AND TECHNOLOGY STOCKS HURT RESULTS
The unfolding housing slowdown pressured shares of Home Depot despite good
current earnings and a large stock-repurchase program. Fortune Brands, a
conglomerate active in home and hardware products, also declined. Both holdings
have rewarded shareholders over the years, but lost ground to date in 2006.
Despite the housing slump, we purchased shares of premiere homebuilders Pulte
Homes and Lennar Corp., whose lowered valuations seem to reflect likely
industry challenges; shares of both are trading near book value. Carnival
Corp., another long-time success story, was hurt by higher fuel costs and lower
bookings for Caribbean cruises. Among media holdings, Time Warner continued to
disappoint, although earnings are in line with our expectations. The company
also accelerated its share purchase program following a failed restructuring
attempt by an outside investor. Strong advertising revenues, cost cutting, and
retention initiatives have improved the health of Time Warner's troubled AOL
division despite a shrinking subscriber list.
Computer maker Dell and chipmaker Intel declined as investors focused on
short-term pressures while each company goes through periods of transition.
Intel is rolling out newer, faster chips that will find their way into Dell
computers. Dell could also benefit from an upgrade cycle triggered by new
products from Microsoft (not in the portfolio). Both companies maintain strong
competitive positions. Our relatively small position in energy also detracted
from the fund's results, but less so than in earlier periods. We have recently
avoided commodity-oriented businesses with unpredictable earnings, instead
emphasizing businesses that we believe have more attractive valuations and
stronger long-term prospects.
FUND COULD BENEFIT FROM SHIFT IN MARKET'S TONE
We are always disappointed when strong profit performance for portfolio
companies is not rewarded with good stock performance. However, we are
encouraged by recent market trends. In our view, 12 straight quarters of
economic growth have led to investor complacency regarding riskier holdings. As
a result, valuations have not varied widely between quality issues and more
risky companies. The volatility in stock prices that began in May could signal
lackluster markets ahead, an environment more favorable to value investors and
unfriendly to speculative holdings. In addition, increasing corporate
profitability has led to numerous dividend increases and expanded buyback
programs, leaving investors flush with cash that could find its way into
attractively valued companies like those we favor. More broadly, we believe
economic expansion is likely to slow from its current pace, while productivity
increases plus a globally competitive world may help keep inflation in check.
7
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/7/
[CHART]
June 30, 1996 through June 30, 2006
. Russell 1000
Cumulative Class A @ M.S.C Value Index
Month End Value Cumulative Value Cumulative Value
- ---------- ---------- ---------------- ----------------
6/30/1996 10,000 9,425 10,000
7/31/1996 9,503 8,957 9,622
8/31/1996 9,731 9,172 9,897
9/30/1996 10,229 9,641 10,291
10/31/1996 10,544 9,938 10,689
11/30/1996 11,482 10,822 11,464
12/31/1996 11,283 10,634 11,317
1/31/1997 11,844 11,163 11,866
2/28/1997 11,991 11,301 12,040
3/31/1997 11,469 10,810 11,607
4/30/1997 12,072 11,378 12,095
5/31/1997 12,846 12,108 12,771
6/30/1997 13,476 12,701 13,319
7/31/1997 14,325 13,501 14,321
8/31/1997 13,916 13,116 13,810
9/30/1997 14,775 13,926 14,645
10/31/1997 14,128 13,316 14,236
11/30/1997 14,737 13,890 14,865
12/31/1997 15,055 14,190 15,299
1/31/1998 15,144 14,273 15,083
2/28/1998 16,360 15,419 16,098
3/31/1998 17,283 16,289 17,083
4/30/1998 17,371 16,372 17,197
5/31/1998 17,135 16,149 16,942
6/30/1998 17,851 16,824 17,159
7/31/1998 17,576 16,565 16,856
8/31/1998 14,919 14,061 14,348
9/30/1998 15,661 14,761 15,171
10/31/1998 16,792 15,827 16,347
11/30/1998 17,555 16,545 17,108
12/31/1998 18,657 17,584 17,690
1/31/1999 19,198 18,094 17,832
2/28/1999 18,737 17,660 17,580
3/31/1999 18,996 17,904 17,944
4/30/1999 20,122 18,965 19,620
5/31/1999 20,032 18,880 19,404
6/30/1999 20,657 19,469 19,967
7/31/1999 20,047 18,895 19,383
8/31/1999 19,777 18,640 18,664
9/30/1999 18,976 17,885 18,011
10/31/1999 19,737 18,602 19,048
11/30/1999 19,794 18,656 18,899
12/31/1999 20,423 19,249 18,990
1/31/2000 19,357 18,244 18,371
2/29/2000 18,705 17,629 17,006
3/31/2000 20,224 19,061 19,081
4/30/2000 19,890 18,746 18,859
5/31/2000 19,278 18,169 19,058
6/30/2000 19,530 18,407 18,187
7/31/2000 19,411 18,295 18,414
8/31/2000 20,713 19,522 19,439
9/30/2000 19,767 18,630 19,617
10/31/2000 19,822 18,682 20,099
11/30/2000 18,641 17,569 19,353
12/31/2000 18,930 17,841 20,322
1/31/2001 18,943 17,854 20,401
2/28/2001 17,818 16,793 19,833
3/31/2001 16,816 15,849 19,132
4/30/2001 18,189 17,143 20,071
5/31/2001 18,216 17,168 20,522
6/30/2001 17,584 16,573 20,066
7/31/2001 16,981 16,004 20,024
8/31/2001 15,938 15,022 19,222
9/30/2001 14,607 13,767 17,869
10/31/2001 15,129 14,259 17,715
11/30/2001 16,200 15,268 18,745
12/31/2001 16,172 15,242 19,186
1/31/2002 16,090 15,165 19,039
2/28/2002 15,663 14,763 19,069
3/31/2002 16,089 15,164 19,971
4/30/2002 15,636 14,737 19,286
5/31/2002 15,567 14,672 19,383
6/30/2002 14,633 13,792 18,270
7/31/2002 13,699 12,912 16,572
8/31/2002 14,042 13,234 16,697
9/30/2002 12,148 11,449 14,840
10/31/2002 12,601 11,876 15,940
11/30/2002 13,451 12,678 16,944
12/31/2002 12,929 12,186 16,208
1/31/2003 12,614 11,889 15,816
2/28/2003 12,215 11,513 15,394
3/31/2003 12,367 11,656 15,420
4/30/2003 13,533 12,755 16,777
5/31/2003 14,549 13,713 17,860
6/30/2003 14,865 14,010 18,083
7/31/2003 14,728 13,881 18,352
8/31/2003 15,223 14,348 18,638
9/30/2003 14,894 14,038 18,457
10/31/2003 15,594 14,698 19,586
11/30/2003 16,143 15,215 19,852
12/31/2003 16,816 15,849 21,075
1/31/2004 16,941 15,967 21,446
2/29/2004 17,339 16,342 21,906
3/31/2004 17,079 16,097 21,714
4/30/2004 17,079 16,097 21,183
5/31/2004 17,092 16,110 21,399
6/30/2004 17,340 16,343 21,905
7/31/2004 16,709 15,748 21,596
8/31/2004 16,791 15,826 21,904
9/30/2004 16,791 15,826 22,243
10/31/2004 17,149 16,163 22,613
11/30/2004 17,615 16,602 23,756
12/31/2004 18,357 17,301 24,552
1/31/2005 17,999 16,964 24,116
2/28/2005 17,930 16,899 24,915
3/31/2005 17,712 16,693 24,573
4/30/2005 17,354 16,356 24,133
5/31/2005 17,779 16,757 24,714
6/30/2005 17,647 16,633 24,985
7/31/2005 18,210 17,163 25,707
8/31/2005 17,923 16,892 25,596
9/30/2005 17,867 16,840 25,955
10/31/2005 17,633 16,619 25,296
11/30/2005 18,361 17,305 26,127
12/31/2005 18,321 17,267 26,283
1/31/2006 18,348 17,293 27,304
2/28/2006 18,554 17,487 27,471
3/31/2006 18,828 17,746 27,843
4/30/2006 18,938 17,849 28,551
5/31/2006 18,553 17,486 27,829
6/30/2006 18,486 17,420 28,007
Average Annual Total Returns -- June 30, 2006
SINCE
6 MONTHS/7/ 1 YEAR/7/ 5 YEARS/7/ 10 YEARS/7/ INCEPTION/7/
CLASS A (Inception 5/6/31)
Net Asset Value/1/ 0.93% 4.78% 1.01% 6.34% --
With Maximum Sales Charge/2/ -4.85 -1.22 -0.18 5.71 --
CLASS B (Inception 9/13/93)
Net Asset Value/1/ 0.51 3.92 0.24 5.55 --
With CDSC/3/ -4.49 -1.08 -0.16 5.55 --
CLASS C (Inception 5/1/95)
Net Asset Value/1/ 0.51 3.84 0.24 5.54 --
With CDSC/3/ -0.49 2.84 0.24 5.54 --
CLASS Y (Inception 11/18/98)
Net Asset Value/1/ 1.05 4.95 1.43 -- 1.31%
- -----------------------------------------------------------------------------------------------
SINCE CLASS Y
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/
Russell 1000 Value Index/4/ 6.56% 12.10% 6.90% 10.85% 6.72%
Morningstar Large Blend Fund Avg./5/ 2.39 8.84 2.31 7.39 3.35
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 6/30/06 12/31/05
- ------------------------------------------------------
Common Stocks 97.9 99.0
- ------------------------------------------------------
Short-Term Investments and Other 2.1 1.0
- ------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
- ------------------------------------------------------
Time Warner, Inc. 4.7 4.3
- ------------------------------------------------------
Morgan Stanley 4.7 4.2
- ------------------------------------------------------
McDonald's Corp. 4.6 4.6
- ------------------------------------------------------
Intel Corp. 4.3 4.0
- ------------------------------------------------------
Tyco International, Ltd. 4.1 4.3
- ------------------------------------------------------
Dell, Inc. 4.1 2.3
- ------------------------------------------------------
Hewlett-Packard Co. 4.1 4.7
- ------------------------------------------------------
JPMorgan Chase & Co. 3.8 4.4
- ------------------------------------------------------
Washington Mutual, Inc. 3.8 3.7
- ------------------------------------------------------
Wal-Mart Stores, Inc. 3.6 3.5
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- ------------------------------------------------------
Diversified Financial Services 14.4 15.0
- ------------------------------------------------------
Media 14.0 14.9
- ------------------------------------------------------
Computers 10.1 8.6
- ------------------------------------------------------
Retail 8.4 11.9
- ------------------------------------------------------
Semiconductors 6.8 6.7
- ------------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/Russell 1000 Value Index is an unmanaged index that measures the performance
of those Russell 1000 companies 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 comparative performance figures shown for Class Y are
calculated from 12/1/98.
/7/Fund performance has been increased by expense waivers/reimbursements,
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
- --------------------------------------------------------------------------------
After a strong start early in the year, U.S. equities lost value in May and
June, as concerns surfaced about rising interest rates and geopolitical issues.
For the six months ended June 30, 2006, value stocks outperformed growth, and
small-cap stocks outperformed large-caps. For this period, IXIS U.S.
Diversified Portfolio returned 4.71% based on the net asset value of Class A
shares. This was better than the 2.71% return of the Standard & Poor's 500
Index and above the 4.24% return of the Standard & Poor's Midcap 400 Index.
Although the portfolio fell short of the 5.51% return of the Dow Jones Wilshire
4500 Index, it outpaced the 2.88% average return of the funds in Morningstar's
Mid-Cap Growth category.
Each of the fund's four segments is managed using a different investment
discipline, providing investors with exposure to a wide spectrum of large-,
medium- and small-cap stocks, using both growth and value investment styles.
The segment managed by Harris Associates invests primarily in common stocks of
large- and mid-cap companies that the manager believes are trading at a
substantial discount to their "true business value." Loomis Sayles manages two
segments. One invests in mid-cap growth stocks, and the other focuses on
small-cap value stocks. The Mercury Advisors segment seeks long-term growth of
capital in companies of any size, with an emphasis on those with
capitalizations greater than $2 billion.
HARRIS ASSOCIATES SEES APPRECIATION POTENTIAL FROM LOW P/E RATIOS ON LARGER
COMPANIES
Noting that price/earnings ratios on the S&P 500 Index, which gives greatest
weight to larger companies, have declined significantly over the past five
years, Harris Associates believes this tier of the market offers attractive
opportunities. This segment's best performers during the period included Walt
Disney, Morgan Stanley and Hewlett-Packard (HP). Two quarters of relatively
strong earnings and improved business fundamentals boosted the price of Disney
stock, with a substantial portion of earnings coming from its Media Network
(ABC) and Disney's Parks & Resorts division. While expensive, Disney's recent
Pixar acquisition was viewed as positive because it has the potential to
solidify the company's animation franchise. Morgan Stanley was buoyed by a
sharp rise in earnings during the period and attractive business prospects. HP
reported strong first-quarter sales in personal computers and printers. The
company's emphasis on raising operating profits and building a more effective
sales organization - two areas that had not been a primary focus in the past -
also contributed to the rise in HP's stock price. On the negative side, Harris
Associates' small weighting in energy and other commodity-related stocks, and
its exposure to certain consumer stocks, detracted from the segment's
performance. Poor performers included Intel, Carnival Corp. and Dell.
Weaker-than-expected product demand and a slight loss in market share reduced
Intel's revenues and pushed its share price lower. Carnival shares weakened as
a result of higher fuel costs and reduced sales of Caribbean cruises. In both
cases, Harris Associates believes these companies' shares are undervalued and
expects them to appreciate over time. Dell's earnings and stock price also
declined, but Harris Associates believes the company's low-cost business model
will continue to drive healthy long-term profitability. They also believe the
personal computer industry is large and growing, and that Dell is poised to
remain a dominant player.
TECHNOLOGY AND FINANCIAL STOCKS POWERED LOOMIS SAYLES MID-CAP SEGMENT
Individual stock selections, particularly in the technology and financial
sectors, drove this segment's performance. The strong showing in technology was
broad-based, but company-specific factors rather than one over-riding theme was
responsible for results. Among financial companies, exposure to the capital
markets was positive, as investors anticipated increases in electronic trading
of publicly held stocks. The real estate services companies Loomis selected
benefited from a global upturn in commercial leasing, as well as from increased
money flows into real estate as an asset class. Top individual selections
included Akamai Technologies,
9
IXIS U.S. DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
which expedites the internet distribution of audio and video content; NII
Holdings (previously Nextel International), which provides wireless
telecommunications service to small businesses in Mexico, Brazil, Argentina and
Peru; and Chicago Mercantile Exchange Holdings, because of its near-monopoly
pricing power on its key interest-rate and equity products. Although two of
this segment's biotech holdings did well, most of its healthcare stocks were
weak. Notably, Omnicare, the largest provider of pharmacy services to nursing
homes, proved disappointing and the stock was sold. Confusion and extra costs
associated with the implementation of the new Medicare drug benefit and
inquiries from the Centers for Medicare and Medicaid Services into the
industry's drug rebate practices contributed to the decline in Omnicare shares.
Despite a strong start to the quarter, Trinity Industries, the largest supplier
of rail cars, lost value late in the quarter as investors became concerned that
capital goods companies were approaching peak earnings. The position was sold.
National Oilwell Varco (a leading manufacturer of drilling rigs and components)
detracted from the segment's performance because demand for its equipment is
largely tied to drilling for gas in North America, and gas prices were
weakening. The stock was sold.
STRONG STOCK SELECTION IN VARIOUS CATEGORIES BENEFITED LOOMIS SAYLES SMALL CAP
SEGMENT
The top-performing market sectors for the period - materials and processing,
and energy - were both areas this segment emphasized. Consumer discretionary
selections were also strong performers, including music publisher Warner Music
Group, and Aramark, an outsourcer of food and maintenance services. The
top-performing stocks for this segment included Chaparral Steel Company, FMC
Technologies, and Live Nation. Chaparral benefited from robust first-quarter
earnings, a strong forecast for the commercial construction market and stable
scrap metal prices. An energy company specializing in offshore exploration and
production of crude oil and natural gas, FMC was helped by increased demand for
deepwater and undersea drilling equipment. Live Nation, a spin-off from Clear
Channel Communications, promotes and produces live entertainment events in
North America and Europe. The stock did well after the company announced
several initiatives to create shareholder value and increase sales. Technology
and the producer durable sectors were the segment's weakest contributors.
Actuant Corp., a diversified industrial products manufacturer, declined after
near-term weakness in its trucking operations caused the company to issue a
conservative earnings forecast. However, Loomis believes the decline was an
overreaction to what may prove to be a temporary situation. The segment's
weakest stocks included Adtran, Inc., a manufacturer of communications
equipment, which gave back some of the double-digit gains it made in 2005
because of delays in customer orders; and Avnet Inc., an electronic components
distributor that fell from favor on concerns that the electronics spending
cycle was nearing an end. Although both Adtran and Avnet were weak, along with
the technology sector as a whole, Loomis believes the stocks are attractively
valued and both companies' long-term prospects appear solid. Shares of CBRL
Group, the operator of Cracker Barrel Old Country Store and Logan's Roadhouse
restaurants, declined because of a weak consumer environment and were sold.
MERCURY LOOKS FOR STRONG GLOBAL DEMAND FOR U.S. GOODS
This segment held relatively large positions in energy, industrials and
materials, each of which yielded positive results. Information technology,
consumer staples, finance and healthcare were underweighted relative to the
segment's benchmark. Although the segment's relatively minor position in
information technology was a positive, as the sector was weak during the
period, its underweight in consumer staples detracted from performance, as this
sector was strong. Mercury's energy selections were among the segment's
best-performing individual stocks. These included Schlumberger Ltd., one of the
world's largest oil field services companies; Baker Hughes, which provides
drilling services and equipment used to produce oil and natural gas; and
Halliburton, one of the largest engineering and construction companies in the
world. Healthcare, consumer staples, financials and technology were the
segment's weakest sectors. Individual stocks that detracted from results
included two healthcare companies: Alcon, an eye-care products company, and
UnitedHealth Group Inc., which provides healthcare plans and other services.
Internet giant Google was another disappointment during the period. Alcon and
Google remain in the segment, but UnitedHealth was sold. Mercury's strategies
reflect their confidence that real global economic growth should continue,
along with strong demand for U.S.-manufactured industrial and commercial goods,
especially from Asia. They cite China and India, in particular, as countries
that are generating real economic growth and contributing to Mercury's positive
outlook for global businesses.
10
IXIS U.S. DIVERSIFIED PORTFOLIO
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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, 1996 through June 30, 2006
Class A S&P 500 S&P 400 Wilshire
@ M.S.C. Index Index 4500 Index
Cumulative Cumulative Cumulative Cumulative Monthly
Month End Value Value Value Value Performance
- ---------- ---------- ---------- ---------- ---------- -----------
6/30/1996 10,000 9,425 10,000 $10,000 10,000
7/31/1996 9,233 8,702 9,558 9,323 9,249
8/31/1996 9,683 9,126 9,760 9,861 9,748
9/30/1996 10,221 9,633 10,309 10,291 10,213
10/31/1996 10,135 9,552 10,593 10,321 10,062
11/30/1996 10,636 10,024 11,394 10,902 10,487
12/31/1996 10,562 9,955 11,168 10,914 10,581
1/31/1997 11,034 10,399 11,866 11,324 10,923
2/28/1997 10,667 10,054 11,959 11,231 10,693
3/31/1997 10,220 9,633 11,468 10,752 10,134
4/30/1997 10,418 9,818 12,152 11,031 10,160
5/31/1997 11,202 10,558 12,892 11,996 11,171
6/30/1997 11,661 10,991 13,470 12,333 11,700
7/31/1997 12,596 11,872 14,542 13,554 12,505
8/31/1997 12,236 11,533 13,727 13,537 12,619
9/30/1997 12,828 12,091 14,479 14,315 13,493
10/31/1997 12,414 11,700 13,995 13,692 12,979
11/30/1997 12,510 11,790 14,643 13,895 12,983
12/31/1997 12,694 11,964 14,895 14,435 13,301
1/31/1998 12,749 12,016 15,059 14,160 13,111
2/28/1998 13,685 12,898 16,146 15,333 14,114
3/31/1998 14,257 13,437 16,972 16,025 14,844
4/30/1998 14,418 13,589 17,143 16,317 15,032
5/31/1998 14,020 13,214 16,848 15,583 14,330
6/30/1998 14,468 13,636 17,533 15,681 14,554
7/31/1998 14,035 13,228 17,346 15,073 13,729
8/31/1998 11,708 11,035 14,838 12,267 11,068
9/30/1998 12,559 11,837 15,789 13,412 11,867
10/31/1998 13,330 12,564 17,073 14,611 12,541
11/30/1998 13,996 13,191 18,108 15,340 13,321
12/31/1998 15,138 14,267 19,151 17,194 14,448
1/31/1999 15,849 14,938 19,952 16,524 14,681
2/28/1999 15,380 14,496 19,332 15,659 13,882
3/31/1999 16,303 15,365 20,105 16,097 14,424
4/30/1999 16,953 15,978 20,884 17,366 15,573
5/31/1999 16,484 15,536 20,391 17,441 15,438
6/30/1999 17,520 16,513 21,523 18,375 16,086
7/31/1999 16,939 15,965 20,851 17,985 15,599
8/31/1999 16,871 15,901 20,747 17,368 15,210
9/30/1999 16,932 15,958 20,179 16,832 15,092
10/31/1999 17,540 16,531 21,456 17,690 15,863
11/30/1999 19,032 17,938 21,892 18,618 17,202
12/31/1999 22,171 20,896 23,181 19,725 19,572
1/31/2000 21,898 20,639 22,016 19,169 19,337
2/29/2000 24,585 23,171 21,600 20,511 22,344
3/31/2000 24,332 22,932 23,713 22,228 21,517
4/30/2000 22,458 21,167 22,999 21,451 18,929
5/31/2000 20,612 19,427 22,527 21,184 17,532
6/30/2000 21,010 19,802 23,083 21,495 19,637
7/31/2000 20,468 19,291 22,722 21,834 19,080
8/31/2000 22,072 20,803 24,133 24,272 21,209
9/30/2000 21,423 20,192 22,859 24,106 20,346
10/31/2000 20,408 19,235 22,762 23,289 18,684
11/30/2000 17,941 16,909 20,968 21,531 15,504
12/31/2000 18,405 17,347 21,071 23,178 16,485
1/31/2001 18,930 17,841 21,818 23,694 17,382
2/28/2001 17,031 16,052 19,829 22,342 15,270
3/31/2001 15,878 14,965 18,573 20,681 13,870
4/30/2001 17,272 16,279 20,016 22,962 15,337
5/31/2001 17,440 16,437 20,150 23,497 15,701
6/30/2001 17,342 16,345 19,659 23,402 15,828
7/31/2001 17,039 16,059 19,466 23,054 15,092
8/31/2001 16,315 15,376 18,247 22,300 14,358
9/30/2001 14,584 13,745 16,774 19,526 12,512
10/31/2001 14,951 14,091 17,094 20,390 13,167
11/30/2001 16,179 15,248 18,405 21,906 14,191
12/31/2001 16,682 15,723 18,566 23,038 14,951
1/31/2002 16,535 15,584 18,295 22,918 14,660
2/28/2002 16,221 15,288 17,942 22,946 14,245
3/31/2002 17,019 16,040 18,617 24,587 15,211
4/30/2002 16,568 15,615 17,488 24,472 15,061
5/31/2002 16,347 15,407 17,360 24,059 14,729
6/30/2002 15,025 14,161 16,123 22,298 13,720
7/31/2002 13,703 12,915 14,867 20,136 12,385
8/31/2002 13,808 13,014 14,964 20,240 12,457
9/30/2002 12,423 11,709 13,338 18,609 11,617
10/31/2002 13,000 12,252 14,511 19,415 11,999
11/30/2002 13,765 12,974 15,366 20,539 12,828
12/31/2002 13,041 12,291 14,463 19,695 12,288
1/31/2003 12,706 11,976 14,084 19,119 12,023
2/28/2003 12,570 11,847 13,873 18,664 11,716
3/31/2003 12,665 11,936 14,007 18,821 11,890
4/30/2003 13,651 12,866 15,161 20,187 12,880
5/31/2003 14,659 13,816 15,960 21,861 14,104
6/30/2003 14,858 14,004 16,164 22,139 14,439
7/31/2003 15,235 14,359 16,449 22,925 15,114
8/31/2003 15,980 15,061 16,769 23,965 15,747
9/30/2003 15,582 14,686 16,591 23,598 15,552
10/31/2003 16,715 15,754 17,530 25,382 16,729
11/30/2003 17,135 16,150 17,684 26,266 17,301
12/31/2003 17,428 16,426 18,612 26,710 17,661
1/31/2004 17,837 16,812 18,953 27,288 18,293
2/29/2004 17,994 16,960 19,217 27,944 18,613
3/31/2004 18,036 16,999 18,927 28,062 18,692
4/30/2004 17,668 16,652 18,630 27,141 17,940
5/31/2004 17,940 16,908 18,885 27,704 18,213
6/30/2004 18,401 17,343 19,252 28,335 18,688
7/31/2004 17,352 16,354 18,615 27,013 17,647
8/31/2004 17,142 16,156 18,691 26,942 17,654
9/30/2004 17,687 16,670 18,893 27,740 18,375
10/31/2004 18,013 16,977 19,182 28,184 18,788
11/30/2004 18,904 17,817 19,958 29,862 20,066
12/31/2004 19,670 18,539 20,637 31,112 20,940
1/31/2005 19,125 18,025 20,134 30,318 20,254
2/28/2005 19,513 18,391 20,558 31,335 20,620
3/31/2005 19,156 18,055 20,193 30,988 20,255
4/30/2005 18,547 17,481 19,810 29,784 19,571
5/31/2005 19,324 18,213 20,441 31,578 20,731
6/30/2005 19,597 18,470 20,470 32,310 21,399
7/31/2005 20,520 19,340 21,231 34,007 22,576
8/31/2005 20,394 19,222 21,037 33,628 22,309
9/30/2005 20,645 19,458 21,208 33,886 22,448
10/31/2005 20,206 19,044 20,854 33,158 21,965
11/30/2005 21,119 19,905 21,643 34,778 22,993
12/31/2005 21,161 19,944 21,650 35,019 23,092
1/31/2006 22,190 20,914 22,224 37,082 24,544
2/28/2006 22,116 20,845 22,284 36,771 24,321
3/31/2006 22,767 21,457 22,561 37,689 25,230
4/30/2006 22,944 21,625 22,864 38,220 25,349
5/31/2006 22,052 20,784 22,206 36,496 24,325
6/30/2006 22,160 20,889 22,236 36,504 24,364
Average Annual Total Returns -- June 30, 2006
6 MONTHS 1 YEAR 5 YEARS 10 YEARS
CLASS A (Inception 7/7/94)
Net Asset Value/1/ 4.71% 13.06% 5.02% 8.28%
With Maximum Sales Charge/2/ -1.31 6.56 3.78 7.64
CLASS B (Inception 7/7/94)
Net Asset Value/1/ 4.33 12.18 4.22 7.47
With CDSC/3/ -0.67 7.18 3.88 7.47
CLASS C (Inception 7/7/94)
Net Asset Value/1/ 4.33 12.23 4.23 7.47
With CDSC/3/ 3.33 11.23 4.23 7.47
CLASS Y (Inception 11/15/94)
Net Asset Value/1/ 4.86 13.44 5.60 8.78
- ------------------------------------------------------------------------
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
S&P Midcap 400 Index/4/ 4.24% 12.98% 9.29% 13.82%
S&P 500 Index/5/ 2.71 8.63 2.49 8.32
Dow Jones Wilshire 4500 Index/6/ 5.51 13.86 9.01 9.32
Morningstar Mid-Cap Growth Fund Avg./7/ 2.88 12.66 3.23 7.69
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 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 6/30/06 12/31/05
- ----------------------------------------------------
Common Stocks 98.7 98.1
- ----------------------------------------------------
Short-Term Investments
and Other 1.3 1.9
- ----------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
- ----------------------------------------------------
Morgan Stanley 1.3 1.2
- ----------------------------------------------------
McDonald's Corp. 1.3 1.3
- ----------------------------------------------------
Time Warner, Inc. 1.2 1.2
- ----------------------------------------------------
Intel Corp. 1.2 1.1
- ----------------------------------------------------
Citigroup, Inc. 1.1 1.1
- ----------------------------------------------------
Dell, Inc. 1.1 0.8
- ----------------------------------------------------
Tyco International, Ltd. 1.1 1.1
- ----------------------------------------------------
Hewlett-Packard Co. 1.1 1.3
- ----------------------------------------------------
Exxon Mobil Corp. 1.1 1.1
- ----------------------------------------------------
JPMorgan Chase & Co. 1.0 1.2
- ----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- ----------------------------------------------------
Diversified Financial Services 7.3 8.3
- ----------------------------------------------------
Retail 5.5 6.4
- ----------------------------------------------------
Oil & Gas Services 5.0 4.0
- ----------------------------------------------------
Commercial Services 4.9 3.9
- ----------------------------------------------------
Computers 4.2 3.5
- ----------------------------------------------------
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 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/Dow Jones 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
- --------------------------------------------------------------------------------
Value stocks outperformed growth stocks during the first half of 2006. For the
six months ended June 30, 2006, the total return on IXIS Value Fund was 4.50%
based on the net asset value of Class A shares. The fund underperformed its
benchmark, the Russell 1000 Value Index, which returned 6.56% but its results
were above the 2.39% average return of funds in Morningstar's Large Blend
category.
Each of IXIS Value Fund's segments is managed by a different investment
manager, providing four distinct approaches to value investing. The segment
managed by Harris Associates focuses on large- and mid-cap value stocks that
Harris believes are trading at a substantial discount to their true business
value. The Loomis Sayles segment favors large-cap companies with attractive
valuations and positive earnings prospects. The segment managed by Vaughan
Nelson emphasizes established companies that appear to be undervalued because
they are misunderstood or out of favor. Westpeak Global Advisors invests across
the capitalization spectrum, employing proprietary research to select stocks
based on value and growth potential, while seeking to manage risk.
HARRIS ASSOCIATES FAVORED COMPANIES WITH BELOW-AVERAGE RISK PROFILES
This segment's emphasis on technology and exposure to certain consumer stocks
hurt performance, but Harris Associates believes the business fundamentals of
the companies they selected are solid. The segment also had relatively small
positions in energy, telecommunications, utilities and materials - all sectors
that performed well. Top-performing stocks for the Harris segment included
Cablevision Systems, Pepsi Bottling Group (PBG), and Morgan Stanley.
Cablevision, which provides service to three million subscribers in the New
York City area, benefited from its ability to maintain customers in its
"triple-play" bundle of services (cable, internet and telephone service). The
world's leading manufacturer and distributor of PepsiCola beverages, PBG
reported strong growth in revenues and operating earnings. Morgan Stanley's
earnings rose strongly and its business fundamentals remain attractive.
Carnival Corp. was one of the worst performers in the segment. Higher fuel
costs and reduced sales of Caribbean cruises cut into earnings. Computer maker
Dell also hurt the segment's return. While Dell's earnings and stock price
declined, Harris Associates believes the company's low-cost business model will
continue to drive long-term profitability, and that Dell is poised to be a
dominant player in the computer industry. Another segment holding, high-end
jewelry retailer Tiffany, had mixed results, with substantial operating
strength in Japan offset by weakness in U.S. sales. The company is focused on
reducing capital expenditures and has implemented a share-repurchase program.
The stock remains in the segment.
LOOMIS SAYLES SOUGHT STOCKS TRADING AT A DISCOUNT TO THEIR INTRINSIC VALUE
Loomis focused on companies that appeared to be well managed and likely to
benefit at this stage in the business cycle. Strength was broad-based and
individual companies in a variety of sectors performed well. Additions included
information technology and the consumer discretionary sector. In the latter
group, for example, Loomis added cable operator Comcast, which has been
building its subscriber lists. The segment's telecommunications holdings
performed well, in large part because of BellSouth, which moved considerably
higher after AT&T offered to acquire it. Swiss-based ABB Limited, an electrical
equipment manufacturer, was a major contributor to the segment's performance,
reflecting the industrial sector's efforts to strengthen infrastructure. The
segment's holdings were trimmed when Loomis took profits in Aramark, a global
outsourcer of food services. Individual stocks that proved weak included
Motorola, which experienced some pressure as investors became concerned that
global demand for handsets might slow after a strong start early in the year.
Loomis believes Motorola's array of new products and a seasonal gain in its
earnings should improve investor sentiment for the stock later this year.
Insurer American International Group underperformed slightly as interest rates
rose and the yield curve flattened.
12
IXIS VALUE FUND
Management Discussion
- --------------------------------------------------------------------------------
VAUGHAN NELSON LOOKED FOR STOCKS THAT SHOULD DO WELL IN ANY ENVIRONMENT
This segment's strong performance in the first quarter was partially offset by
a weak second quarter, as the Federal Reserve Board disappointed investors who
had expected an end to rising interest rates. Vaughan Nelson's emphasis on
consumer staples helped performance during a volatile market period. The
segment's best-performing individual stocks included WESCO International, an
electrical component distribution company that benefited from the company's
shift toward commercial construction and away from maintenance. Amphenol
Corporation enjoyed strong growth in its cable and connector businesses, which
serve a variety of markets; the position was sold at a profit. Integrated oil
giant Exxon Mobil also prospered as supply/demand imbalances worldwide pushed
up energy prices. Disappointments during the period included chip-maker Intel,
which experienced losses when a smaller competitor cut into its market share
and its plants were running below capacity, but Vaughan Nelson remains positive
about Intel's long-term prospects. Product delays and recalls from recently
acquired Guidant continued to haunt Boston Scientific, a medical device
manufacturer that may be best known for its cardiac stents. Vaughan Nelson
believes the ensuing price decline in Boston Scientific shares does not reflect
the company's potential. Product delays from its promising pipeline drugs,
coupled with new competition from traditional drug makers took a toll on Amgen,
one of the world's largest biotech companies, leaving the stock price at a
level that the manager feels is unduly low. For the next six to 12 months,
Vaughan Nelson believes the market should continue to struggle for leadership
and direction, and they plan to remain steadfast in their pursuit of stocks
that appear to be attractively valued. Their focus will be on companies with
the potential to provide positive returns regardless of the prevailing market
environment.
WESTPEAK EMPHASIZED REASONABLE VALUATIONS AND STRONG FUNDAMENTALS
Westpeak's emphasis on momentum stocks, and the segment's relatively minor
positions in high-growth and higher-yielding stocks, helped boost the segment's
performance. Railroads, energy reserves, mining and metals, and oil refining
industries were the primary contributors to return. Holdings in basic industry,
transportation and energy-related companies were also helpful. The
best-performing stocks in the segment included Commercial Metals Company, which
rallied with other commodity stocks on strong demand; Harvest Natural
Resources, an energy company whose shares rose in value with energy prices; and
USG Corporation, the world's largest wallboard maker, which emerged from
bankruptcy and rallied on plans to settle asbestos claims. Both Commercial
Metals and USG were sold. Poor timing in the electronic equipment industry held
back the segment's return, as did its emphasis on computer software, which was
trimmed during the period. Chip maker Intel was one of the segment's biggest
detractors. The stock declined as the company lost market share, experienced
poor earnings, and was downgraded by analysts. Although Westpeak still feels
the stock is worth holding, the position was trimmed. Another disappointment
was Intergraph, which provides spatial information management software. A
lowered earnings forecast caused the shares to decline sharply early in the
year; although they subsequently rallied, shares slid again and the position
was sold. Analysts' downgrades in the wake of earnings problems caused Aetna
shares to decline sharply. The position was pared back, but it remains in the
segment. Westpeak believes that, after a period when more speculative stocks
outperformed, investors are beginning to avoid the more risky parts of the
market. The segment is positioned to take advantage of what may be renewed
investor emphasis on higher-quality companies.
13
IXIS VALUE FUND
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/6/
[CHART]
June 30, 1996 through June 30, 2006
Russell
1000
Class A Value
@ M.S.C. Index
Month Cumulative Cumulative Cumulative
End Value Value Value
- --------- ---------- ---------- ----------
6/30/1996 10,000 9,425 10,000
7/31/1996 9,674 9,118 9,622
8/31/1996 9,958 9,386 9,897
9/30/1996 10,523 9,918 10,291
10/31/1996 10,849 10,225 10,689
11/30/1996 11,699 11,026 11,464
12/31/1996 11,674 11,003 11,317
1/31/1997 11,966 11,278 11,866
2/28/1997 12,100 11,404 12,040
3/31/1997 11,638 10,969 11,607
4/30/1997 11,857 11,175 12,095
5/31/1997 12,525 11,805 12,771
6/30/1997 13,182 12,424 13,319
7/31/1997 14,178 13,363 14,321
8/31/1997 13,631 12,847 13,810
9/30/1997 14,208 13,391 14,645
10/31/1997 13,595 12,813 14,236
11/30/1997 13,915 13,115 14,865
12/31/1997 14,119 13,307 15,299
1/31/1998 14,091 13,281 15,083
2/28/1998 15,038 14,173 16,098
3/31/1998 15,636 14,737 17,083
4/30/1998 15,622 14,724 17,197
5/31/1998 15,177 14,304 16,942
6/30/1998 15,163 14,292 17,159
7/31/1998 14,648 13,806 16,856
8/31/1998 12,169 11,470 14,348
9/30/1998 12,863 12,123 15,171
10/31/1998 13,942 13,141 16,347
11/30/1998 14,667 13,824 17,108
12/31/1998 15,116 14,247 17,690
1/31/1999 14,726 13,879 17,832
2/28/1999 14,461 13,630 17,580
3/31/1999 14,523 13,688 17,944
4/30/1999 15,647 14,748 19,620
5/31/1999 15,507 14,615 19,404
6/30/1999 15,913 14,998 19,967
7/31/1999 15,195 14,321 19,383
8/31/1999 14,539 13,703 18,664
9/30/1999 13,700 12,912 18,011
10/31/1999 14,370 13,543 19,048
11/30/1999 14,163 13,348 18,899
12/31/1999 14,071 13,262 18,990
1/31/2000 13,636 12,852 18,371
2/29/2000 12,465 11,748 17,006
3/31/2000 13,749 12,958 19,081
4/30/2000 13,711 12,923 18,859
5/31/2000 13,636 12,852 19,058
6/30/2000 13,316 12,550 18,187
7/31/2000 13,353 12,585 18,414
8/31/2000 14,167 13,353 19,439
9/30/2000 13,922 13,122 19,617
10/31/2000 14,300 13,477 20,099
11/30/2000 13,846 13,050 19,353
12/31/2000 14,356 13,530 20,322
1/31/2001 14,809 13,958 20,401
2/28/2001 14,413 13,584 19,833
3/31/2001 13,921 13,121 19,132
4/30/2001 14,790 13,939 20,071
5/31/2001 15,186 14,313 20,522
6/30/2001 14,922 14,064 20,066
7/31/2001 14,789 13,939 20,024
8/31/2001 14,147 13,334 19,222
9/30/2001 12,957 12,212 17,869
10/31/2001 13,354 12,586 17,715
11/30/2001 14,242 13,423 18,745
12/31/2001 14,544 13,708 19,186
1/31/2002 14,336 13,512 19,039
2/28/2002 14,185 13,370 19,069
3/31/2002 14,808 13,957 19,971
4/30/2002 14,355 13,530 19,286
5/31/2002 14,355 13,530 19,383
6/30/2002 13,241 12,480 18,270
7/31/2002 12,089 11,394 16,572
8/31/2002 12,278 11,572 16,697
9/30/2002 10,786 10,166 14,840
10/31/2002 11,485 10,824 15,940
11/30/2002 12,411 11,697 16,944
12/31/2002 11,712 11,038 16,208
1/31/2003 11,428 10,771 15,816
2/28/2003 11,164 10,522 15,394
3/31/2003 11,183 10,540 15,420
4/30/2003 12,222 11,520 16,777
5/31/2003 13,110 12,356 17,860
6/30/2003 13,355 12,587 18,083
7/31/2003 13,506 12,729 18,352
8/31/2003 13,846 13,050 18,638
9/30/2003 13,544 12,765 18,457
10/31/2003 14,433 13,603 19,586
11/30/2003 14,792 13,942 19,852
12/31/2003 15,415 14,529 21,075
1/31/2004 15,584 14,688 21,446
2/29/2004 15,924 15,009 21,906
3/31/2004 15,830 14,920 21,714
4/30/2004 15,585 14,689 21,183
5/31/2004 15,773 14,866 21,399
6/30/2004 16,076 15,152 21,905
7/31/2004 15,604 14,706 21,596
8/31/2004 15,566 14,671 21,904
9/30/2004 15,755 14,849 22,243
10/31/2004 15,962 15,045 22,613
11/30/2004 16,700 15,740 23,756
12/31/2004 17,168 16,180 24,552
1/31/2005 16,917 15,944 24,116
2/28/2005 17,340 16,343 24,915
3/31/2005 17,109 16,125 24,573
4/30/2005 16,724 15,763 24,133
5/31/2005 17,224 16,234 24,714
6/30/2005 17,428 16,425 24,985
7/31/2005 18,060 17,022 25,707
8/31/2005 17,961 16,928 25,596
9/30/2005 18,139 17,096 25,955
10/31/2005 17,703 16,685 25,296
11/30/2005 18,277 17,226 26,127
12/31/2005 18,233 17,185 26,283
1/31/2006 18,802 17,721 27,304
2/28/2006 18,845 17,762 27,471
3/31/2006 19,173 18,071 27,843
4/30/2006 19,589 18,463 28,551
5/31/2006 19,041 17,946 27,829
6/30/2006 19,053 17,957 28,007
Average Annual Total Returns -- June 30, 2006
6 MONTHS 1 YEAR/6/ 5 YEARS/6/ 10 YEARS/6/
CLASS A (Inception 6/5/70)
Net Asset Value/1/ 4.50% 9.33% 5.01% 6.66%
With Maximum Sales Charge/2/ -1.54 3.02 3.78 6.03
CLASS B (Inception 9/13/93)
Net Asset Value/1/ 3.92 8.41 4.23 5.85
With CDSC/3/ -1.08 3.67 3.89 5.85
CLASS C (Inception 12/30/94)
Net Asset Value/1/ 4.06 8.41 4.23 5.86
With CDSC/3/ 3.06 7.46 4.23 5.86
- ------------------------------------------------------------------------------
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
Russell 1000 Value Index/4/ 6.56% 12.10% 6.90% 10.85%
Morningstar Large Blend Fund Avg./5/ 2.39 8.84 2.31 7.39
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 6/30/06 12/31/05
- ------------------------------------------------------
Common Stocks 96.6 98.0
- ------------------------------------------------------
Short-Term Investments and Other 3.4 2.0
- ------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
- ------------------------------------------------------
Exxon Mobil Corp. 3.6 3.3
- ------------------------------------------------------
JPMorgan Chase & Co. 2.7 2.6
- ------------------------------------------------------
Citigroup, Inc. 2.5 2.2
- ------------------------------------------------------
Hewlett-Packard Co. 2.5 2.2
- ------------------------------------------------------
Time Warner, Inc. 2.4 2.4
- ------------------------------------------------------
McDonald's Corp. 2.3 2.4
- ------------------------------------------------------
Morgan Stanley 2.2 1.9
- ------------------------------------------------------
Intel Corp. 2.0 1.2
- ------------------------------------------------------
Tyco International, Ltd. 2.0 1.5
- ------------------------------------------------------
Yum! Brands, Inc. 1.7 1.5
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- ------------------------------------------------------
Diversified Financial Services 14.2 13.3
- ------------------------------------------------------
Oil & Gas 7.5 7.7
- ------------------------------------------------------
Media 6.6 6.7
- ------------------------------------------------------
Retail 6.4 8.0
- ------------------------------------------------------
Banks 5.8 6.3
- ------------------------------------------------------
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 that measures the
performance of those Russell 1000 companies 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/Fund performance has been increased by expense waivers/reimbursements,
without which performance would have been lower.
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
- --------------------------------------------------------------------------------
What 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
- --------------------------------------------------------------------------------
Vaughan Nelson Small Cap Value Fund's total return for the six months ended
June 30, 2006 was 8.99% based on the net asset value of Class A shares. This
was below its benchmark, the Russell 2000 Value Index, which returned 10.44%,
but above the 7.03% average return on the funds in Morningstar's Small Blend
category.
Adjustments to the Russell 2000 indexes affected the fund's second quarter
performance, as several holdings were moved from one index to the other at the
end of the reporting period. As some institutional investors with indexed funds
adjusted their portfolios accordingly, some of the fund's holdings experienced
selling pressure on trading volume well in excess of daily norms. However, this
was offset somewhat as some companies "graduated" from small-cap to mid-cap
indexes.
FUND SOLD SOME ENERGY HOLDINGS ON STRENGTH
The fund benefited from the strong market for energy stocks in 2004 and 2005,
and we continue to believe energy will do well over the long term. However, we
reduced the fund's energy holdings during the first half of 2006 in
anticipation of a near-term oversupply of natural gas. We took profits on sales
of Southwestern Energy, Petrohawk, and GMX Resources - all companies active in
the exploration and development of oil and natural gas. Two other oil and gas
exploration companies, Arena Resources and Gulfport Energy are both more
focused on oil, and they remain in the portfolio.
SOME ENERGY-RELATED COMPANIES MAY OUTPERFORM
Another stock that did well during the period was Universal Compression
Holdings, which provides compression services and products to the natural gas
industry domestically and internationally. Compressors are used to push natural
gas through gathering systems and pipelines. Universal's 16-18-month waiting
list gives it a predictable, growing business that does not seem to be fully
reflected in the stock's price. Universal's earnings tend to be less volatile
than earnings of production companies because they are not directly impacted by
natural gas prices.
Some companies that are not directly in the energy business may benefit from
increased exploration activity. A case in point is Birch Mountain Resources, a
Canadian company that owns industrial mineral rights in Alberta. Their assets
include limestone quarries near a large concentration of oil sands that is not
yet fully developed. Birch is developing a processing facility to produce
quicklime, cement and other products, but their current income is negligible.
We elected to hold the stock because Birch has a high-quality product and we
believe its proximity to potentially oil-rich areas in a politically stable
region may benefit investors with long-term perspectives.
MANAGER SEEKS OPPORTUNITIES IN OUT-OF-FAVOR STOCKS AND INDUSTRIES
Whenever possible, we look for situations where there is relatively little
competition from other investors. A case in point is Lennox International, a
global provider of climate control solutions for residences and industry. We
believe the stock is undervalued and we have been adding to it in the face of
reduced expectations for residential construction. In fact, replacement units
and commercial customers account for much of the company's growth.
We believe that the healthcare industry may be one of tomorrow's leaders,
although investors currently seem to be focused - not without justification -
on pricing pressures from Medicare. One of the fund's top performers during the
period was LHC Group, which provides post-acute healthcare services primarily
to Medicare patients in the rural South. The company is a low-cost provider
competing primarily with smaller providers. Overall, we anticipate relatively
thin trading volume in the coming quarter, with continued price volatility, as
investors wait to see what the Federal Reserve Board will do next. A "choppy"
market scenario like this tests investors' patience, but we try to take a
long-term approach.
15
VAUGHAN NELSON SMALL CAP VALUE FUND
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/6/
[CHART]
December 31, 1996 (inception) through June 30, 2006
Class A Russell 2000
@ M.S.C. Value
Cumulative Cumulative Cumulative
Month End Value Value Value
- ---------- ---------- ----------- ------------
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 18,853 17,769 27,135
7/31/2005 19,857 18,715 28,679
8/31/2005 19,708 18,574 28,020
9/30/2005 19,901 18,756 27,974
10/31/2005 19,308 18,197 27,271
11/30/2005 20,140 18,982 28,378
12/31/2005 20,152 18,993 28,160
1/31/2006 21,724 20,475 30,488
2/28/2006 21,609 20,366 30,486
3/31/2006 22,691 21,386 31,963
4/30/2006 22,782 21,472 32,048
5/31/2006 21,973 20,710 30,721
6/30/2006 21,967 20,708 31,099
Average Annual Total Returns -- June 30, 2006
SINCE
6 MONTHS/6/ 1 YEAR/6/ 5 YEARS/6/ INCEPTION/6/
CLASS A (Inception 12/31/96)
Net Asset Value/1/ 8.99% 16.50% 4.10% 8.64%
With Maximum Sales Charge/2/ 2.72 9.80 2.88 7.97
CLASS B (Inception 12/31/96)
Net Asset Value/1/ 8.62 15.69 3.32 7.83
With CDSC/3/ 3.62 10.69 2.97 7.83
CLASS C (Inception 12/31/96)
Net Asset Value/1/ 8.61 15.68 3.34 7.84
With CDSC/3/ 7.61 14.68 3.34 7.84
- ----------------------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION/7/
Russell 2000 Value Index/4/ 10.44% 14.61% 13.09% 12.69%
Morningstar Small Blend Fund Avg./5/ 7.03 14.11 9.84 10.81
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 6/30/06 12/31/05
- -----------------------------------------------------------
Common Stocks 94.2 95.1
- -----------------------------------------------------------
Short-Term Investments and Other 5.8 4.9
- -----------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
- -----------------------------------------------------------
Universal Compression Holdings, Inc. 3.1 2.9
- -----------------------------------------------------------
HCC Insurance Holdings, Inc. 2.4 1.9
- -----------------------------------------------------------
Alliant Techsystems, Inc. 2.3 2.1
- -----------------------------------------------------------
Pediatrix Medical Group, Inc. 2.3 2.5
- -----------------------------------------------------------
Waste Connections, Inc. 2.2 1.9
- -----------------------------------------------------------
Nordson Corp. 2.1 2.0
- -----------------------------------------------------------
Arena Resources, Inc. 2.0 --
- -----------------------------------------------------------
Lennox International, Inc. 2.0 --
- -----------------------------------------------------------
Dollar Thrifty Automotive Group, Inc. 2.0 1.9
- -----------------------------------------------------------
AMERCO, Inc. 1.9 2.0
- -----------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- -----------------------------------------------------------
Commercial Services 10.6 9.0
- -----------------------------------------------------------
Aerospace & Defense 8.2 7.4
- -----------------------------------------------------------
Health Care -- Services 7.4 5.8
- -----------------------------------------------------------
Insurance 5.2 4.0
- -----------------------------------------------------------
Retail 5.1 4.6
- -----------------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/Russell 2000 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 Blend Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
/6/Fund performance has been increased by expense waivers/reimbursements,
without which performance would have been lower.
/7/The since-inception comparative performance figures shown are calculated
from 1/1/97.
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
- --------------------------------------------------------------------------------
What You Should Know:
Growth stocks can be more sensitive to market movements because their prices
are based in part on future expectations.
Management Discussion
- --------------------------------------------------------------------------------
Stock-price trends were mixed during the first half of 2006, but Westpeak
Capital Growth Fund's results were generally favorable. For the six months
ended June 30, 2006, the fund's total return was 1.44%, based on the net asset
value of Class A shares, while the fund's benchmark, the Russell 1000 Growth
Index returned -0.93%, and the average return on the funds in Morningstar's
Large Growth category was -1.34%.
During the first quarter, small-cap stocks were stronger than other market
areas and the fund benefited from its holdings in that group. Times changed in
early May when value stocks - both large- and small-cap - took the lead over
growth stocks. Industry groups that had done well, including energy,
commodities, metals and heavy machinery, slumped until about mid June, when the
market began to stabilize.
ENERGY, TRANSPORTATION, FINANCIAL SERVICES BENEFITED THE FUND
On average, refining and oil services stocks continued to do well during the
first half of 2006, although the energy sector lost the lead it held in 2004
and 2005. Transportation took over as the best-performing sector, including
rails and trucking. Even when energy costs are high, a vital economy makes
transportation essential. Airlines also began to recover as rising demand made
it possible for the companies to raise prices.
Financial companies also did well, including asset management firms, which are
featured in the fund's portfolio. Despite a slowdown in the housing markets as
interest rates rose, REITs (Real Estate Investment Trusts) also performed well,
but the fund's participation in this group is limited. Utility companies,
including telephones, did well, but utilities are considered a value sector
and, here too, the fund's participation was limited. The fund also had
relatively little exposure to consumer staples, such as food and beverages,
which detracted from results.
TOP PERFORMERS INCLUDED A CASINO OPERATOR, AN AIRCRAFT COMPANY AND A STEEL MAKER
Although we sold the stock at a profit in March, Las Vegas Sands was one of the
fund's best-performing stocks. Its facilities include the Venetian Casino
Resort in the Las Vegas Strip, and it recently acquired the rights to build
Singapore's first casino-resort. Another top performer was Boeing, which builds
commercial and military aircraft. A steady climber for most of the year, the
company may profit from setbacks at one of its competitors. Management has been
cutting costs and strengthening operations, and the stock remains in the
portfolio. One of the fund's small-cap holdings, Reliance Steel & Aluminum, was
also among its top performers, rising in value on strong demand for steel and
positive sentiment following a stock split. It weakened toward the end of the
period, but not enough to erase its strong start for the year.
DISAPPOINTMENTS INCLUDED COMPUTER AND MEDICAL TECHNOLOGY COMPANIES
Disappointments during the period included Intel, which issued a negative
earnings announcement on declining market share in the competitive world of
computer chips. Although we trimmed the position shortly after the end of the
period, Intel is still a substantial holding because we believe it is modestly
valued, with decent earnings quality, in a sector where many stocks appear
over-priced. We also continue to hold Amgen, even though projected sales of its
new cancer drug were tempered when another company launched a competing
medication. We believe Amgen is reasonably valued for a biotech stock, with
good profitability and favorable analyst sentiment.
ENERGY, BASIC INDUSTRIES, REMAIN POSITIVE
Going forward, we believe investors are likely to focus on attractively valued
stocks. We continue to like the energy and basic industries sectors as well as
transportation, but we are less positive about technology over the near term.
17
WESTPEAK CAPITAL GROWTH FUND
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/6/
[CHART]
June 30, 1996 through June 30, 2006
Russell 1000
Class A Growth
@ M.S.C. Index
Cumulative Cumulative Cumulative
Month End Value Value Value
- ---------- ---------- ---------- ------------
6/30/1996 10,000 9,425 10,000
7/31/1996 9,311 8,776 9,414
8/31/1996 9,665 9,109 9,657
9/30/1996 10,467 9,865 10,360
10/31/1996 10,462 9,860 10,423
11/30/1996 10,983 10,351 11,205
12/31/1996 10,598 9,989 10,986
1/31/1997 11,198 10,554 11,756
2/28/1997 10,890 10,264 11,677
3/31/1997 10,077 9,497 11,045
4/30/1997 10,511 9,907 11,778
5/31/1997 11,435 10,777 12,628
6/30/1997 11,754 11,078 13,134
7/31/1997 12,579 11,856 14,295
8/31/1997 12,002 11,312 13,459
9/30/1997 12,364 11,653 14,121
10/31/1997 11,865 11,183 13,599
11/30/1997 12,176 11,475 14,177
12/31/1997 12,425 11,711 14,335
1/31/1998 12,525 11,804 14,764
2/28/1998 13,384 12,614 15,875
3/31/1998 13,982 13,178 16,507
4/30/1998 14,231 13,413 16,736
5/31/1998 13,888 13,089 16,261
6/30/1998 14,610 13,770 17,257
7/31/1998 14,473 13,641 17,143
8/31/1998 12,175 11,474 14,570
9/30/1998 12,905 12,163 15,689
10/31/1998 13,848 13,052 16,950
11/30/1998 14,679 13,835 18,240
12/31/1998 16,036 15,114 19,884
1/31/1999 16,842 15,874 21,052
2/28/1999 15,896 14,982 20,090
3/31/1999 16,245 15,311 21,148
4/30/1999 16,564 15,611 21,175
5/31/1999 16,261 15,326 20,524
6/30/1999 17,122 16,138 21,962
7/31/1999 16,742 15,780 21,264
8/31/1999 16,890 15,919 21,611
9/30/1999 16,643 15,686 21,157
10/31/1999 17,803 16,779 22,755
11/30/1999 18,332 17,278 23,983
12/31/1999 20,004 18,854 26,477
1/31/2000 18,876 17,790 25,236
2/29/2000 19,663 18,532 26,470
3/31/2000 21,238 20,016 28,364
4/30/2000 20,607 19,422 27,014
5/31/2000 19,645 18,515 25,654
6/30/2000 20,939 19,735 27,598
7/31/2000 20,397 19,224 26,448
8/31/2000 21,992 20,727 28,843
9/30/2000 19,960 18,812 26,114
10/31/2000 19,267 18,159 24,878
11/30/2000 16,668 15,710 21,211
12/31/2000 16,096 15,171 20,540
1/31/2001 16,867 15,897 21,959
2/28/2001 14,577 13,739 18,231
3/31/2001 13,217 12,457 16,247
4/30/2001 15,004 14,141 18,302
5/31/2001 14,833 13,980 18,033
6/30/2001 14,601 13,762 17,615
7/31/2001 13,830 13,035 17,175
8/31/2001 12,717 11,986 15,770
9/30/2001 11,411 10,755 14,196
10/31/2001 11,936 11,249 14,941
11/30/2001 12,974 12,228 16,376
12/31/2001 12,803 12,067 16,345
1/31/2002 12,749 12,016 16,056
2/28/2002 12,288 11,581 15,390
3/31/2002 12,707 11,976 15,922
4/30/2002 11,999 11,309 14,623
5/31/2002 11,741 11,066 14,269
6/30/2002 10,775 10,155 12,949
7/31/2002 9,937 9,366 12,237
8/31/2002 9,948 9,376 12,274
9/30/2002 8,897 8,385 11,001
10/31/2002 9,541 8,992 12,010
11/30/2002 9,852 9,286 12,662
12/31/2002 9,208 8,678 11,787
1/31/2003 8,972 8,456 11,501
2/28/2003 9,015 8,497 11,449
3/31/2003 9,197 8,668 11,662
4/30/2003 9,733 9,174 12,524
5/31/2003 10,270 9,679 13,149
6/30/2003 10,366 9,770 13,330
7/31/2003 10,506 9,902 13,662
8/31/2003 10,635 10,024 14,002
9/30/2003 10,678 10,064 13,852
10/31/2003 11,193 10,549 14,630
11/30/2003 11,321 10,670 14,783
12/31/2003 11,664 10,994 15,294
1/31/2004 11,836 11,155 15,606
2/29/2004 11,836 11,155 15,706
3/31/2004 11,622 10,953 15,414
4/30/2004 11,364 10,710 15,235
5/31/2004 11,567 10,902 15,519
6/30/2004 11,717 11,044 15,713
7/31/2004 11,181 10,538 14,825
8/31/2004 11,169 10,527 14,751
9/30/2004 11,234 10,588 14,892
10/31/2004 11,492 10,831 15,124
11/30/2004 11,921 11,236 15,644
12/31/2004 12,265 11,559 16,258
1/31/2005 11,910 11,225 15,715
2/28/2005 12,007 11,316 15,883
3/31/2005 11,685 11,013 15,593
4/30/2005 11,428 10,771 15,296
5/31/2005 12,051 11,358 16,036
6/30/2005 12,201 11,500 15,977
7/31/2005 12,824 12,086 16,758
8/31/2005 12,588 11,864 16,542
9/30/2005 12,630 11,904 16,619
10/31/2005 12,298 11,591 16,457
11/30/2005 12,857 12,117 17,167
12/31/2005 12,674 11,945 17,113
1/31/2006 13,092 12,339 17,414
2/28/2006 13,071 12,320 17,386
3/31/2006 13,350 12,582 17,643
4/30/2006 13,360 12,592 17,619
5/31/2006 12,791 12,056 17,022
6/30/2006 12,860 12,121 16,954
Average Annual Total Returns -- June 30, 2006
6 MONTHS/6/ 1 YEAR/6/ 5 YEARS/6/ 10 YEARS/6/
CLASS A (Inception 8/3/92)
Net Asset Value/1/ 1.44% 5.37% -2.51% 2.55%
With Maximum Sales Charge/2/ -4.39 -0.66 -3.66 1.94
CLASS B (Inception 9/13/93)
Net Asset Value/1/ 1.08 4.67 -3.23 1.74
With CDSC/3/ -3.92 -0.33 -3.62 1.74
CLASS C (Inception 12/30/94)
Net Asset Value/1/ 1.08 4.68 -3.26 1.73
With CDSC/3/ 0.08 3.68 -3.26 1.73
- ----------------------------------------------------------------------------------
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS
Russell 1000 Growth Index/4/ -0.93% 6.12% -0.76% 5.42%
Morningstar Large Growth Fund Avg./5/ -1.34 6.83 -0.56 5.68
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 6/30/06 12/31/05
- -----------------------------------------------------------
Common Stocks 99.6 99.1
- -----------------------------------------------------------
Short-Term Investments and Other 0.4 0.9
- -----------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
- -----------------------------------------------------------
Microsoft Corp. 5.1 5.7
- -----------------------------------------------------------
Intel Corp. 3.9 3.9
- -----------------------------------------------------------
Amgen, Inc. 3.2 3.1
- -----------------------------------------------------------
International Business Machines Corp. 3.2 3.0
- -----------------------------------------------------------
Boeing Co. (The) 3.0 2.9
- -----------------------------------------------------------
Cisco Systems, Inc. 2.9 2.7
- -----------------------------------------------------------
American Express Co. 2.9 2.9
- -----------------------------------------------------------
Texas Instruments, Inc. 2.6 2.8
- -----------------------------------------------------------
General Electric Co. 2.5 2.9
- -----------------------------------------------------------
Lowes Cos., Inc. 2.5 --
- -----------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- -----------------------------------------------------------
Retail 7.8 4.1
- -----------------------------------------------------------
Semiconductors 7.1 6.7
- -----------------------------------------------------------
Software 6.8 10.3
- -----------------------------------------------------------
Oil & Gas 5.9 4.6
- -----------------------------------------------------------
Aerospace & Defense 5.3 4.2
- -----------------------------------------------------------
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.
/6/Fund performance has been increased by expense waivers/reimbursements,
without which performance would have been lower.
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 1-800-225-5478;
on the funds' website at www.ixisadvisorfunds.com; and on the Securities and
Exchange Commission's (SEC) website at www.sec.gov. Information regarding how
the funds voted proxies relating to portfolio securities during the 12-month
period ended June 30, 2006 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 FUND 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, 2006 through June 30, 2006. 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 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,044.10 $6.13
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.79 $6.06
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,041.20 $9.92
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,015.08 $9.79
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,041.20 $9.92
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,015.08 $9.79
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,046.10 $4.57
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.33 $4.51
*Expenses are equal to the fund's annualized expense ratio: 1.21%, 1.96%, 1.96%
and 0.90% 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 FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
HANSBERGER INTERNATIONAL FUND 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,079.50 $8.25
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,016.86 $8.00
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,075.60 $12.09
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.14 $11.73
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,075.60 $12.09
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.14 $11.73
*Expenses are equal to the fund's annualized expense ratio : 1.60%,
2.35% and 2.35% 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 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $999.30 $8.08
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,016.71 $8.15
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $995.80 $11.78
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.99 $11.88
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $995.80 $11.78
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.99 $11.88
*Expenses are equal to the fund's annualized expense ratio : 1.63%,
2.38% and 2.38% 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 FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
HARRIS ASSOCIATES LARGE CAP VALUE FUND 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,009.30 $6.48
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.35 $6.51
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,005.10 $10.19
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.63 $10.24
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,005.10 $10.19
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.63 $10.24
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.50 $5.23
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.59 $5.26
*Expenses are equal to the fund's annualized expense ratio (after
waiver/reimbursement): 1.30%, 2.05%, 2.05% and 1.05% 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 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,047.10 $7.92
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.06 $7.80
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,043.30 $11.70
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.34 $11.53
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,043.30 $11.70
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.34 $11.53
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,048.60 $5.94
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.99 $5.86
*Expenses are equal to the fund's annualized expense ratio: 1.56%, 2.31%, 2.31%
and 1.17% 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 FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
IXIS VALUE FUND 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,045.00 $7.50
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.46 $7.40
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,039.20 $11.28
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.74 $11.13
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,040.60 $11.28
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.74 $11.13
*Expenses are equal to the fund's annualized expense ratio : 1.48%,
2.23% and 2.23% 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 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,089.90 $8.81
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,016.36 $8.50
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,086.20 $12.72
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.60 $12.28
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,086.10 $12.67
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.65 $12.23
*Expenses are equal to the fund's annualized expense ratio (after
waiver/reimbursement): 1.70%, 2.46% and 2.45% 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 FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
WESTPEAK CAPITAL GROWTH FUND 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,014.40 $8.54
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,016.31 $8.55
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.80 $12.26
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.60 $12.28
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,010.80 $12.26
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.60 $12.28
*Expenses are equal to the fund's annualized expense ratio (after
waiver/reimbursement): 1.71%, 2.46% and 2.46% 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 THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS
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, if any, 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, also
consider other matters 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' brokerage, if any, 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, (vii) 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 (viii) 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, 2006. 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,
including recent or planned investments by certain of the Advisers in
additional personnel or other resources. They also took note of the competitive
market for talented personnel, in particular, for personnel who have
contributed to the generation of strong investment performance. They also
considered the need for the Advisers to offer competitive compensation in order
to attract and retain capable personnel. 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 and the Funds for which IXIS Advisors provides advisory
oversight services. In particular, the Trustees noted that IXIS Advisors had
over the past year (i) recommended changes in certain of the Funds' advisory
arrangements as a result of performance-related issues, and (ii) negotiated
changes to the Funds' transfer agency and custodial arrangements, resulting in
significant cost savings for the Funds. The Trustees also noted that some of
these changes had resulted in increases in costs or decreases in revenues for
IXIS Advisors and its affiliates. They also considered the administrative
services provided by IXIS Advisors and its affiliates to the 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.
25
BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS
With respect to each Fund, the Board concluded that the Fund's performance or
other relevant factors 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 advisory fee had recently been, or is proposed to
be, reduced or the Fund's expenses capped, with the goal of helping the Fund's
net return to shareholders become more competitive; and (5) that reductions in
the Fund's expense levels resulting from decreased expenses and/or increased
assets were not yet fully reflected in the Fund's performance results.
The Trustees also considered each Adviser's performance and reputation
generally, the 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.
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
that over the past several years, management had made recommendations regarding
reductions in advisory fee rates, implementation of advisory fee breakpoints
and the institution of advisory fee waivers and expense caps. They noted that
currently four of the eight IXIS Advisor Equity Funds in this report have
expense caps in place, and they considered the amounts waived or reimbursed by
the Advisers under these caps. The Trustees noted that several Funds had total
expense ratios or advisory fee rates that were above the median of a peer group
of Funds. The Trustees considered the circumstances that accounted for such
relatively higher expenses. The Trustees noted that for several of these Funds,
the relatively higher expense ratios resulted to a significant extent from
relatively higher transfer agency expenses. The Trustees also noted that
management was proposing a reduction in the advisory fee for the Harris
Associates Focused Value Fund.
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. In this regard, the Funds, at the request of the Independent
Trustees, retained an independent accounting firm to review the cost allocation
methods used by several of the Advisers to determine profitability, and engaged
in extensive discussions with the Advisers regarding such methods and Adviser
profitability generally. The Trustees also considered that IXIS Advisors had
proposed changes to the Funds' transfer agency and custodial arrangements
which, although beneficial to the Funds, had resulted in increased costs and/or
decreased revenues to IXIS Advisors. They also reviewed information provided by
management about the effect of distribution costs and Fund growth on Adviser
profitability. When reviewing profitability, the Trustees also considered
information about court cases in which adviser profitability was an issue, 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.
26
BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY 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 seven Funds
had breakpoints in their advisory fees and that the remaining Fund, was subject
to an expense cap. The Trustees also noted that management's proposed reduction
in the advisory fee for Harris Associates Focused Value Fund would result in a
fee structure without any breakpoints but that the advisory fees would be
payable at a lower rate than under the former arrangements, even after giving
effect to the former breakpoints and the Fund would be subject to an expense
cap. The Trustees also considered management's representation that for certain
Funds the Funds' Advisers did not benefit from economies of scale in providing
services to the Funds (because of the investment style of the Fund, the small
size of the Fund or for other reasons) or were capacity constrained with
respect to the relevant investment strategy. 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 and brokerage 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, 2007.
27
CGM ADVISOR TARGETED EQUITY FUND -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- -------------------------------------------------------------------------------
Common Stocks -- 99.4% of Net Assets
Aerospace & Defense -- 9.6%
475,000 Boeing Co. (The) $ 38,907,250
540,000 United Technologies Corp. 34,246,800
---------------
73,154,050
---------------
Auto Manufacturers -- 5.3%
385,000 Toyota Motor Corp.(c) 40,267,150
---------------
Computers -- 4.0%
960,000 Hewlett-Packard Co. 30,412,800
---------------
Cosmetics & Personal Care -- 5.1%
700,000 Procter & Gamble Co. 38,920,000
---------------
Mining -- 5.2%
190,000 Rio Tinto PLC, Sponsored ADR(c) 39,844,900
---------------
Miscellaneous -- Manufacturing -- 4.1%
390,600 3M Co. 31,548,762
---------------
Oil & Gas -- 24.7%
630,000 BP PLC, Sponsored ADR 43,854,300
640,000 ConocoPhillips 41,939,200
630,000 Exxon Mobil Corp. 38,650,500
165,000 Petroleo Brasileiro SA, ADR 14,736,150
748,000 Total SA, Sponsored ADR 49,008,960
---------------
188,189,110
---------------
Oil & Gas Services -- 17.2%
459,000 Baker Hughes, Inc. 37,569,150
555,000 Halliburton Co. 41,186,550
800,000 Schlumberger, Ltd.(c) 52,088,000
---------------
130,843,700
---------------
Pharmaceuticals -- 3.7%
630,000 Wyeth Corp. 27,978,300
---------------
Retail -- 9.5%
1,330,000 CVS Corp. 40,831,000
460,000 JC Penney Co., Inc. 31,054,600
---------------
71,885,600
---------------
Tobacco -- 5.5%
568,000 Altria Group, Inc. 41,708,240
---------------
Transportation -- 5.5%
450,000 Union Pacific Corp. 41,832,000
---------------
Total Common Stocks (Identified Cost $646,441,711) 756,584,612
---------------
Principal
Amount/
Shares Description Value (a)
- ------------------------------------------------------------------------------------------------------
Short-Term Investments -- 3.0%
$ 5,675,000 American Express Credit Corp.,
5.10%, due 7/03/2006 $ 5,675,000
16,743,644 State Street Securities Lending Quality Trust(d) 16,743,644
---------------
Total Short-Term Investments (Identified Cost $22,418,644) 22,418,644
---------------
Total Investments -- 102.4% (Identified Cost $668,860,355)(b) 779,003,256
Other assets less liabilities -- (2.4)% (17,994,745)
---------------
Net Assets -- 100% $ 761,008,511
===============
(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, 2006, the net unrealized appreciation on investments
based on cost of $668,860,355 for federal income tax purposes
was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value of tax cost $ 113,729,767
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (3,586,866)
---------------
Net unrealized appreciation $ 110,142,901
===============
(c) All or a portion of this security was on loan to brokers at June 30, 2006.
(d) Represents investment 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, 2006 as a Percentage of Net Assets
Oil & Gas 24.7%
Oil & Gas Services 17.2
Aerospace & Defense 9.6
Retail 9.5
Transportation 5.5
Tobacco 5.5
Auto Manufacturers 5.3
Mining 5.2
Cosmetics & Personal Care 5.1
Miscellaneous -- Manufacturing 4.1
Computers 4.0
Pharmaceuticals 3.7
See accompanying notes to financial statements.
28
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------------
Common Stocks -- 99.2% of Net Assets
Australia -- 2.1%
148,000 Computershare, Ltd.(d) $ 863,334
65,778 Westpac Banking Corp. 1,137,918
37,097 Woodside Petroleum, Ltd. 1,212,938
---------------
3,214,190
---------------
Austria -- 0.6%
16,460 Erste Bank Der Oesterreichischen Sparkassen AG(d) 926,339
---------------
Belgium -- 0.7%
20,400 InBev NV 1,000,652
---------------
Brazil -- 2.5%
16,700 Aracruz Celulose SA(d) 875,414
46,800 Cia Vale do Rio Doce, Sponsored ADR(d) 963,144
20,400 Companhia Energetica de Minas Gerais, Sponsored ADR(d) 869,244
12,860 Petroleo Brasileiro SA, ADR(d) 1,148,527
---------------
3,856,329
---------------
Canada -- 3.8%
25,200 Alcan, Inc. 1,182,888
21,300 Cameco Corp.(d) 851,361
69,416 Celestica, Inc.(c)(d) 662,229
15,000 Inco, Ltd.(d) 988,500
34,000 Manulife Financial Corp.(d) 1,080,180
14,055 Suncor Energy, Inc. 1,138,595
---------------
5,903,753
---------------
China -- 2.3%
1,500,000 China Petroleum & Chemical Corp., Class A 859,483
2,204,410 Denway Motors, Ltd. 737,992
517,000 Foxconn International Holdings, Ltd.(c) 1,101,728
1,050,000 Yanzhou Coal Mining Co., Ltd. 777,397
---------------
3,476,600
---------------
Denmark -- 1.1%
59,800 Vestas Wind Systems A/S(c)(d) 1,635,519
---------------
Finland -- 1.0%
36,480 Nokia OYJ 744,690
56,680 Nokian Renkaat OYJ 745,265
---------------
1,489,955
---------------
France -- 11.1%
468 Arkema, Sponsored ADR(c) 18,100
29,920 Axa(c)(d) 981,987
13,830 BNP Paribas(d) 1,324,042
26,780 Carrefour SA(d) 1,570,156
7,941 Cie Generale d'Optique Essilor International SA(d) 799,351
32,000 Credit Agricole SA(d) 1,217,656
50,700 France Telecom SA(d) 1,090,092
8,109 LVMH Moet Hennessy Louis Vuitton SA 804,853
18,230 Schneider Electric SA(d) 1,900,343
45,400 STMicroelectronics NV(d) 731,087
19,340 Suez SA(d) 803,947
17,853 Technip SA 988,751
18,560 Total SA 1,221,381
18,800 Total SA, Sponsored ADR 1,231,776
18,800 Veolia Environnement(d) 971,705
36,700 Vivendi(d) 1,286,187
---------------
16,941,414
---------------
Shares Description Value (a)
- --------------------------------------------------------------------------------------
Germany -- 4.2%
34,600 Adidas-Salomon AG(d) $ 1,654,257
5,015 Allianz AG 792,311
11,010 E.ON AG 1,267,693
9,800 RWE AG, Sponsored ADR(d) 815,382
15,700 SAP AG, Sponsored ADR(d) 824,564
13,348 Siemens AG 1,161,460
---------------
6,515,667
---------------
Greece -- 0.4%
27,300 Folli-Follie SA 638,302
---------------
Hong Kong -- 2.4%
184,400 Esprit Holdings, Ltd. 1,507,719
64,950 Hutchison Whampoa, Ltd. 592,104
967,730 Johnson Electric Holdings, Ltd. 704,026
426,217 Shangri-La Asia, Ltd. 820,461
---------------
3,624,310
---------------
India -- 1.4%
15,100 HDFC Bank, Ltd., ADR(d) 823,705
11,600 Infosys Technologies, Ltd., Sponsored ADR(d) 886,356
34,800 Patni Computer Systems, Ltd., ADR 496,944
---------------
2,207,005
---------------
Israel -- 0.9%
34,700 Check Point Software Technologies, Ltd.(c) 610,026
24,800 Teva Pharmaceutical Industries, Ltd., Sponsored ADR(d) 783,432
---------------
1,393,458
---------------
Italy -- 3.2%
42,420 ENI-Ente Nazionale Idrocarburi SpA 1,249,546
28,340 Saipem SpA(d) 644,857
383,000 UniCredito Italiano SpA 2,998,043
---------------
4,892,446
---------------
Japan -- 18.7%
88,000 Ajinomoto Co., Inc., ADR 974,275
62,000 Asahi Glass Co., Ltd.(d) 786,106
106,000 Bank of Yokohama, Ltd. (The) 819,731
24,300 Canon, Inc.(d) 1,191,218
53,000 Chugoku Bank 722,475
44,700 Denso Corp. 1,460,835
20,200 Ibiden Co., Ltd.(d) 970,814
216,000 Isuzu Motors, Ltd.(d) 700,245
147,000 Joyo Bank, Ltd. (The)(d) 891,454
40,400 JS Group Corp. 849,021
161 KDDI Corp. 989,016
148,000 Marubeni Corp. 788,885
16,500 Nidec Corp.(d) 1,182,279
7,400 Nintendo Co., Ltd. 1,241,524
76,400 Nissan Motor Co., Ltd. 834,498
15,900 Nitto Denko Corp.(d) 1,132,340
49,000 Nomura Holdings, Inc.(d) 918,429
7,430 ORIX Corp. 1,814,650
77,000 Sharp Corp.(d) 1,216,498
65,000 Shionogi & Co., Ltd.(d) 1,158,686
8,800 SMC Corp. 1,244,949
61,000 Sumitomo Corp. 804,343
125 Sumitomo Mitsui Financial Group, Inc. 1,321,653
137,000 Sumitomo Trust & Banking Co., Ltd. (The) 1,496,417
See accompanying notes to financial statements.
29
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- -----------------------------------------------------------------------
Japan -- continued
16,100 Takeda Pharmaceutical Co., Ltd. $ 1,001,678
39,500 THK Co., Ltd.(d) 1,176,992
17,200 Toyota Motor Corp. 900,280
---------------
28,589,291
---------------
Mexico -- 1.1%
13,500 Cemex SA De CV, Sponsored ADR 769,095
30,576 Wal-Mart de Mexico SA de CV(d) 851,554
---------------
1,620,649
---------------
Netherlands -- 2.2%
28,761 ABN AMRO Holding NV 786,869
28,328 ING Groep NV 1,113,438
25,200 Koninklijke (Royal) Philips Electronics NV 784,728
17,300 Royal Numico NV 776,457
---------------
3,461,492
---------------
Norway -- 0.4%
42,000 Norske Skogindustrier ASA(d) 615,673
---------------
Republic of Korea -- 2.2%
10,500 Kookmin Bank, Sponsored ADR(c) 872,130
1,300 Samsung Electronics Co., Ltd. 826,245
2,574 Samsung Electronics Co., Ltd., GDR, 144A 808,880
1,840 Shinsegae Co., Ltd. 921,212
---------------
3,428,467
---------------
Russia -- 0.8%
21,400 Evraz Group SA, GDR 533,930
8,800 LUKOIL, Sponsored ADR 732,160
---------------
1,266,090
---------------
Singapore -- 2.2%
198,140 DBS Group Holdings, Ltd. 2,265,745
116,000 Keppel Corp., Ltd. 1,077,297
---------------
3,343,042
---------------
South Africa -- 0.2%
9,800 Sasol, Ltd. 375,872
---------------
Spain -- 3.8%
88,400 Banco Bilbao Vizcaya Argentaria SA(d) 1,818,134
127,525 Banco Santander Central Hispano SA 1,862,727
124,754 Telefonica SA 2,077,558
---------------
5,758,419
---------------
Sweden -- 1.1%
76,000 Eniro AB(d) 799,944
36,200 Svenska Handelsbanken(d) 933,074
---------------
1,733,018
---------------
Switzerland -- 9.4%
12,400 Ciba Specialty Chemicals AG 691,227
30,601 Credit Suisse Group(d) 1,712,084
15,100 Holcim, Ltd., ADR 1,157,311
14,580 Lonza Group AG 999,986
5,748 Nestle SA(d) 1,805,433
53,810 Novartis AG(d) 2,913,764
8,640 Roche Holding AG 1,428,280
1,300 Serono SA, Class B(d) 898,000
8,634 Syngenta AG(c) 1,147,622
7,038 Synthes, Inc. 849,131
7,290 UBS AG 799,035
---------------
14,401,873
---------------
Shares Description Value (a)
- ------------------------------------------------------------------------------------------------------
Taiwan -- 1.0%
430,589 Taiwan Semiconductor Manufacturing Co., Ltd. $ 776,662
87,960 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR 807,475
---------------
1,584,137
---------------
United Kingdom -- 18.4%
556,839 ARM Holdings PLC 1,166,144
23,000 AstraZeneca PLC 1,388,232
114,318 Barclays PLC 1,299,035
89,411 BHP Billiton PLC 1,734,405
57,939 BP PLC 675,523
16,400 BP PLC, Sponsored ADR 1,141,604
241,924 British Sky Broadcasting PLC 2,565,645
21,696 Carnival Corp. 883,850
153,728 Cattles PLC 935,972
35,858 GlaxoSmithKline PLC 1,001,924
344,277 Hays PLC 859,461
115,965 HBOS PLC 2,015,761
65,200 HSBC Holdings PLC 1,141,753
194,477 Kingfisher PLC 857,711
23,500 Man Group PLC 1,107,265
281,020 Old Mutual PLC 848,349
121,303 Prudential PLC 1,370,557
22,715 Reckitt Benckiser PLC 848,493
142,000 Reuters Group PLC 1,010,958
24,098 Royal Bank of Scotland Group PLC 792,313
384,270 Signet Group PLC 682,169
215,568 Smith & Nephew PLC 1,660,288
168,884 Tesco PLC 1,043,084
512,353 Vodafone Group PLC 1,091,929
---------------
28,122,425
---------------
Total Common Stocks (Identified Cost $125,246,361) 152,016,387
---------------
Shares/
Principal
Amount
- ------------------------------------------------------------------------------------------------------
Short-Term Investments -- 30.4% of Net Assets
45,792,193 State Street Securities Lending Quality Trust(e) 45,792,193
$ 868,993 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 6/30/2006 at 3.450% to be repurchased at
$869,243 on 7/03/2006, collateralized by $795,000 U.S.
Treasury Bond, 6.250% due 8/15/2023 valued at $889,055 868,993
---------------
Total Short-Term Investments (Identified Cost $46,661,186) 46,661,186
---------------
Total Investments -- 129.6% (Identified Cost $171,907,547)(b) 198,677,573
Other assets less liabilities -- (29.6)% (45,445,834)
---------------
Net Assets -- 100% $ 153,231,739
===============
(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, 2006, the net unrealized appreciation on investments based on cost of
$171,907,547 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value of tax cost $ 29,747,137
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (2,977,111)
---------------
Net unrealized appreciation $ 26,770,026
===============
See accompanying notes to financial statements.
30
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2006.
(e) Represents investment 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 registration, normally to qualified
institutional buyers. At June 30, 2006, the value of these securities amounted to $808,880
or 0.5% of net assets
Holdings at June 30, 2006 as a Percentage of Net Assets
Banking 19.6%
Oil & Gas 7.2
Pharmaceuticals 6.9
Telecommunications 4.6
Insurance 4.0
Food 4.0
Media 3.7
Electrical Components & Equipment 3.6
Semiconductors 3.3
Diversified Financial Services 3.1
Chemicals 2.6
Retail 2.6
Hand & Machine Tools 2.3
Building Materials 2.3
Mining 2.3
Healthcare -- Products 2.2
Auto Manufacturers 2.1
Distribution & Wholesale 2.0
Others, less than 2% each 20.8
See accompanying notes to financial statements.
31
HARRIS ASSOCIATES FOCUSED VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------
Common Stocks -- 94.7% of Net Assets
Aerospace & Defense -- 3.8%
205,700 Raytheon Co. $ 9,168,049
---------------
Apparel -- 4.2%
276,800 Liz Claiborne, Inc. 10,258,208
---------------
Apparel Retailers -- 3.6%
340,200 Timberland Co.(c)(d) 8,879,220
---------------
Beverages -- 2.6%
92,000 Molson Coors Brewing Co. 6,244,960
---------------
Chemicals -- 2.1%
142,700 International Flavors & Fragrances, Inc. 5,028,748
---------------
Cosmetics & Personal Care -- 3.9%
246,900 Estee Lauder Co., Inc. (The) 9,547,623
---------------
Distribution & Wholesale -- 3.7%
162,900 CDW Corp. 8,902,485
---------------
Diversified Financial Services -- 3.7%
143,900 Morgan Stanley 9,095,919
---------------
Food -- 2.0%
166,300 Smithfield Foods, Inc.(c) 4,794,429
---------------
Health Care -- Products -- 1.3%
65,000 Bausch & Lomb, Inc.(d) 3,187,600
---------------
Home Builders -- 2.2%
228,100 D.R. Horton, Inc. 5,433,342
---------------
Insurance -- 4.8%
367,700 Conseco, Inc.(c) 8,493,870
49,300 PartnerRe, Ltd. 3,157,665
---------------
11,651,535
---------------
Leisure Time -- 3.7%
162,200 Harley-Davidson, Inc. 8,903,158
---------------
Media -- 12.9%
370,700 Cablevision Systems Corp., Class A(c) 7,951,515
604,420 Discovery Holding Co.(c)(d) 8,842,664
208,800 EW Scripps Co.(d) 9,007,632
327,900 Time Warner, Inc. 5,672,670
---------------
31,474,481
---------------
Miscellaneous -- Manufacturing -- 3.4%
297,500 Tyco International, Ltd. 8,181,250
---------------
Oil & Gas -- 0.7%
30,000 EnCana Corp. 1,579,200
---------------
Pharmaceuticals -- 3.6%
186,900 Omnicare, Inc.(d) 8,862,798
---------------
Restaurants -- 8.0%
296,600 McDonald's Corp. 9,965,760
191,500 Yum! Brands, Inc. 9,626,705
---------------
19,592,465
---------------
Retail -- 4.0%
425,400 TJX Cos., Inc. 9,724,644
---------------
Savings & Loans -- 10.0%
399,315 Sovereign Bancorp, Inc. 8,110,088
358,900 Washington Mutual, Inc.(d) 16,358,662
---------------
24,468,750
---------------
Shares Description Value (a)
- --------------------------------------------------------------------------------------------------
Semiconductors -- 10.5%
583,900 Intel Corp. $ 11,064,905
133,800 International Rectifier Corp.(c) 5,228,904
391,900 National Semiconductor Corp. 9,346,815
---------------
25,640,624
---------------
Total Common Stocks (Identified Cost $212,993,888) 230,619,488
---------------
Shares/
Principal
Amount
- --------------------------------------------------------------------------------------------------
Short-Term Investments -- 19.8%
36,044,953 State Street Securities Lending Quality Trust(e) 36,044,953
$ 12,157,793 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 6/30/2006 at 3.450% to be repurchased at
$12,161,288 on 7/03/2006, collateralized by $9,095,000 U.S.
Treasury Bond, 8.750% due 8/15/2020 valued at $12,403,079 12,157,793
---------------
Total Short-Term Investments (Identified Cost $48,202,746) 48,202,746
---------------
Total Investments -- 114.5% (Identified Cost $261,196,634)(b) 278,822,234
Other assets less liabilities -- (14.5)% (35,262,305)
---------------
Net Assets -- 100% $ 243,559,929
===============
(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, 2006, the net unrealized appreciation on investments
based on cost of $261,196,634 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 $ 25,057,912
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (7,432,312)
---------------
Net unrealized appreciation $ 17,625,600
===============
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2006.
(e) Represents investment of securities lending collateral.
See accompanying notes to financial statements.
32
HARRIS ASSOCIATES FOCUSED VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Holdings at June 30, 2006 as a Percentage of Net Assets
Media 12.9%
Semiconductors 10.5
Savings & Loans 10.0
Restaurants 8.0
Insurance 4.8
Apparel 4.2
Retail 4.0
Cosmetics & Personal Care 3.9
Aerospace & Defense 3.8
Diversified Financial Services 3.7
Leisure Time 3.7
Distribution & Wholesale 3.7
Apparel Retailers 3.6
Pharmaceuticals 3.6
Miscellaneous -- Manufacturing 3.4
Beverages 2.6
Home Builders 2.2
Chemicals 2.1
Food 2.0
Other, Less than 2% each 2.0
See accompanying notes to financial statements.
33
HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- -------------------------------------------------------------------------------------
Common Stocks -- 97.9% of Net Assets
Aerospace & Defense -- 4.6%
97,000 Honeywell International, Inc. $ 3,909,100
174,500 Raytheon Co. 7,777,465
---------------
11,686,565
---------------
Banks -- 0.9%
77,500 U.S. Bancorp 2,393,200
---------------
Beverages -- 2.5%
63,200 Coca-Cola Co. (The) 2,718,864
54,100 Diageo PLC, Sponsored ADR 3,654,455
---------------
6,373,319
---------------
Chemicals -- 1.5%
100,500 Dow Chemical Co. 3,922,515
---------------
Computers -- 10.1%
428,500 Dell, Inc.(c) 10,459,685
326,800 Hewlett-Packard Co. 10,353,024
1,197,500 Sun Microsystems, Inc.(c)(d) 4,969,625
---------------
25,782,334
---------------
Diversified Financial Services -- 14.4%
141,100 American Express Co. 7,509,342
155,200 Citigroup, Inc. 7,486,848
230,800 JPMorgan Chase & Co. 9,693,600
188,100 Morgan Stanley 11,889,801
---------------
36,579,591
---------------
Health Care -- Products -- 3.6%
162,500 Baxter International, Inc. 5,973,500
53,000 Johnson & Johnson 3,175,760
---------------
9,149,260
---------------
Home Builders -- 1.7%
43,000 Lennar Corp., Class A(d) 1,907,910
87,200 Pulte Homes, Inc.(d) 2,510,488
---------------
4,418,398
---------------
Household Products & Wares -- 1.9%
69,300 Fortune Brands, Inc. 4,920,993
---------------
Insurance -- 1.9%
57,900 Aflac, Inc. 2,683,665
32,200 MGIC Investment Corp. 2,093,000
---------------
4,776,665
---------------
Leisure Time -- 6.2%
211,500 Carnival Corp. 8,828,010
125,300 Harley-Davidson, Inc.(d) 6,877,717
---------------
15,705,727
---------------
Media -- 14.0%
159,400 CBS Corp., Class B(d) 4,311,770
17,050 Liberty Media Holding Corp. -- Interactive -- Class A(c) 294,283
47,010 Liberty Media Holding Corp. -- Capital Series A(c) 3,938,027
691,500 Time Warner, Inc. 11,962,951
241,900 Viacom, Inc., Class B(c)(d) 8,669,696
212,400 Walt Disney Co. (The) 6,372,000
---------------
35,548,727
---------------
Miscellaneous -- Manufacturing -- 4.1%
380,600 Tyco International, Ltd. 10,466,500
---------------
Office & Business Equipment -- 1.4%
265,800 Xerox Corp.(c) 3,697,278
---------------
Shares Description Value (a)
- ---------------------------------------------------------------------------------------------------------
Pharmaceuticals -- 2.7%
50,000 Abbott Laboratories $ 2,180,500
247,500 Schering-Plough Corp. 4,709,925
---------------
6,890,425
---------------
Restaurants -- 4.6%
348,300 McDonald's Corp. 11,702,880
---------------
Retail -- 8.4%
209,200 Home Depot, Inc. 7,487,268
47,200 Kohl's Corp.(c) 2,790,464
71,800 Limited Brands, Inc. 1,837,362
192,000 Wal-Mart Stores, Inc. 9,248,640
---------------
21,363,734
---------------
Savings & Loans -- 3.8%
209,900 Washington Mutual, Inc.(d) 9,567,242
---------------
Semiconductors -- 6.8%
579,200 Intel Corp. 10,975,840
209,100 Texas Instruments, Inc. 6,333,639
---------------
17,309,479
---------------
Transportation -- 2.8%
76,900 Union Pacific Corp. 7,148,624
---------------
Total Common Stocks (Identified Cost $221,680,265) 249,403,456
---------------
Shares/
Principal
Amount
- ---------------------------------------------------------------------------------------------------------
Short-Term Investments -- 6.5%
13,010,211 State Street Securities Lending Quality Trust(e) 13,010,211
$ 3,547,839 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 6/30/2006 at 3.450% to be repurchased at
$3,548,859 on 7/03/2006, collateralized by $2,655,000 U.S.
Treasury Bond, 8.750% due 8/15/2020 valued at $3,620,690 3,547,839
---------------
Total Short-Term Investments (Identified Cost $16,558,050) 16,558,050
---------------
Total Investments -- 104.4% (Identified Cost $238,238,315)(b) 265,961,506
Other assets less liabilities -- (4.4)% (11,193,865)
---------------
Net Assets -- 100% $ 254,767,641
===============
(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, 2006, the net unrealized appreciation on investments
based on cost of $238,238,315 for federal income tax purposes
was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value of tax cost $ 36,872,230
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (9,149,039)
---------------
Net unrealized appreciation $ 27,723,191
===============
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2006.
(e) Represents investment of securities lending collateral.
ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing
the right to receive securities of the foreign issuer described. The values of ADRs are
significantly influenced by trading on exchanges not located in the United States.
See accompanying notes to financial statements.
34
HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Holdings at June 30, 2006 as a Percentage of Net Assets
Diversified Financial Services 14.4%
Media 14.0
Computers 10.1
Retail 8.4
Semiconductors 6.8
Leisure Time 6.2
Restaurants 4.6
Aerospace & Defense 4.6
Miscellaneous -- Manufacturing 4.1
Savings & Loans 3.8
Health Care -- Products 3.6
Transportation 2.8
Pharmaceuticals 2.7
Beverages 2.5
Others, less than 2% each 9.3
See accompanying notes to financial statements.
35
IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------------
Common Stocks -- 98.7% of Net Assets
Advertising -- 0.3%
2,100 Interpublic Group of Cos. (The), Inc.(c)(d) $ 17,535
31,350 R.H. Donnelley Corp.(c)(d) 1,695,095
---------------
1,712,630
---------------
Aerospace & Defense -- 2.6%
24,500 Boeing Co. (The) 2,006,795
63,700 Honeywell International, Inc. 2,567,110
25,900 Lockheed Martin Corp. 1,858,066
114,500 Raytheon Co. 5,103,265
46,625 Rockwell Collins, Inc. 2,604,939
26,900 United Technologies Corp. 1,705,998
---------------
15,846,173
---------------
Apparel -- 0.5%
54,200 Coach, Inc.(c) 1,620,580
18,000 Nike, Inc., Class B 1,458,000
---------------
3,078,580
---------------
Banks -- 3.9%
52,800 Bank of America Corp. 2,539,680
80,900 BOK Financial Corp.(d) 4,018,303
15,625 City National Corp.(d) 1,017,031
129,150 Colonial BancGroup, Inc. 3,316,572
53,475 Commerce Bancorp, Inc.(d) 1,907,453
80,231 Dearborn Bancorp, Inc. 1,781,117
74,225 East West Bancorp, Inc. 2,813,870
33,375 Northern Trust Corp. 1,845,638
87,325 Security Bank Corp.(d) 1,944,728
93,975 Superior Bancorp(c)(d) 1,033,725
51,000 U.S. Bancorp 1,574,880
---------------
23,792,997
---------------
Beverages -- 1.1%
41,700 Coca-Cola Co. (The) 1,793,934
35,700 Diageo PLC, Sponsored ADR 2,411,535
37,000 PepsiCo, Inc. 2,221,480
---------------
6,426,949
---------------
Biotechnology -- 1.0%
47,700 Amgen, Inc.(c) 3,111,471
35,400 Celgene Corp.(c) 1,679,022
26,500 Genzyme Corp.(c) 1,617,825
---------------
6,408,318
---------------
Building Materials -- 1.0%
227,975 Comfort Systems USA, Inc. 3,257,763
51,100 Texas Industries, Inc.(d) 2,713,410
---------------
5,971,173
---------------
Chemicals -- 2.4%
40,000 Air Products & Chemicals, Inc. 2,556,800
80,150 Airgas, Inc. 2,985,587
36,125 Cytec Industries, Inc. 1,938,468
66,400 Dow Chemical Co. (The) 2,591,592
36,100 Du Pont (E.I.) de Nemours & Co. 1,501,760
53,900 Praxair, Inc. 2,910,600
---------------
14,484,807
---------------
Coal -- 0.4%
43,750 Peabody Energy Corp. 2,439,063
---------------
Shares Description Value (a)
- --------------------------------------------------------------------------
Commercial Services -- 4.9%
33,375 Adesa, Inc. $ 742,260
73,725 Aramark Corp., Class B 2,441,035
39,275 Corporate Executive Board Co.(d) 3,935,355
149,900 Exponent, Inc.(c)(d) 2,533,310
95,175 FTI Consulting, Inc.(c)(d) 2,547,835
205,100 Live Nation, Inc.(c)(d) 4,175,836
98,425 Paychex, Inc. 3,836,607
78,325 Pharmaceutical Product Development, Inc. 2,750,774
191,025 Rent-A-Center, Inc.(c) 4,748,881
69,425 Sotheby's(c) 1,822,406
---------------
29,534,299
---------------
Computers -- 4.2%
85,950 Cognizant Technology Solutions Corp.(c) 5,790,451
282,200 Dell, Inc.(c) 6,888,502
214,900 Hewlett-Packard Co. 6,808,032
73,850 Network Appliance, Inc.(c) 2,606,905
786,100 Sun Microsystems, Inc.(c)(d) 3,262,315
---------------
25,356,205
---------------
Cosmetics & Personal Care -- 1.2%
68,050 Alberto-Culver Co. 3,315,396
76,600 Procter & Gamble Co. 4,258,960
---------------
7,574,356
---------------
Diversified Financial Services -- 7.3%
92,800 American Express Co. 4,938,816
19,625 BlackRock, Inc., Class A 2,731,211
115,000 Charles Schwab Corp. (The) 1,837,700
9,850 Chicago Mercantile Exchange Holdings, Inc. 4,837,827
143,100 Citigroup, Inc. 6,903,144
14,100 Franklin Resources, Inc. 1,224,021
52,925 Investment Technology Group, Inc.(c) 2,691,766
28,600 Janus Capital Group, Inc. 511,940
151,800 JPMorgan Chase & Co. 6,375,600
123,800 Morgan Stanley 7,825,398
109,850 Nuveen Investments, Class A(d) 4,729,043
---------------
44,606,466
---------------
Electric -- 1.7%
37,441 Allete, Inc.(d) 1,772,831
202,900 CMS Energy Corp.(c)(d) 2,625,526
73,900 MDU Resources Group, Inc. 2,705,479
34,525 NRG Energy, Inc.(c) 1,663,414
53,250 Portland General Electric Co.(d) 1,329,653
---------------
10,096,903
---------------
Electrical Components & Equipment -- 0.8%
69,925 AMETEK, Inc.(d) 3,313,047
15,700 Emerson Electric Co. 1,315,817
---------------
4,628,864
---------------
Electronics -- 2.6%
76,100 Amphenol Corp., Class A(d) 4,258,556
122,125 Avnet, Inc.(c) 2,444,942
42,225 Cymer, Inc.(c)(d) 1,961,774
23,050 Garmin, Ltd. 2,430,392
53,050 Mettler Toledo International, Inc.(c) 3,213,238
74,700 PerkinElmer, Inc. 1,561,230
---------------
15,870,132
---------------
See accompanying notes to financial statements.
36
IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------------
Energy-Alternate Sources -- 0.2%
12,775 Aventine Renewable Energy Holdings, Inc.(c) $ 496,948
32,050 VeraSun Energy Corp.(c)(d) 840,992
---------------
1,337,940
---------------
Engineering & Construction -- 0.6%
8,400 Fluor Corp. 780,612
6,700 Jacobs Engineering Group, Inc.(c) 533,588
47,575 Washington Group International, Inc.(c)(d) 2,537,651
---------------
3,851,851
---------------
Entertainment -- 0.3%
55,200 Warner Music Group Corp. 1,627,296
---------------
Environmental Control -- 0.6%
51,500 Nalco Holding Co.(c) 907,945
39,900 Stericycle, Inc.(c)(d) 2,597,490
---------------
3,505,435
---------------
Food -- 0.9%
117,925 Spartan Stores, Inc.(d) 1,725,243
21,000 Sysco Corp. 641,760
48,525 Whole Foods Market, Inc. 3,136,656
---------------
5,503,659
---------------
Forest Products & Paper -- 0.4%
69,688 Potlatch Corp.(d) 2,630,722
---------------
Gas -- 1.5%
99,275 Oneok, Inc. 3,379,321
222,250 UGI Corp. 5,471,795
---------------
8,851,116
---------------
Health Care -- Products -- 3.6%
40,800 Alcon, Inc. 4,020,840
106,900 Baxter International, Inc. 3,929,644
59,875 Beckman Coulter, Inc. 3,326,056
36,675 C.R. Bard, Inc. 2,686,810
20,775 Intuitive Surgical, Inc.(c) 2,450,827
35,000 Johnson & Johnson 2,097,200
29,600 Medtronic, Inc. 1,388,832
43,550 Ventana Medical Systems, Inc.(c)(d) 2,054,689
---------------
21,954,898
---------------
Health Care -- Services -- 1.6%
10,200 Covance, Inc.(c) 624,444
37,200 Humana, Inc.(c) 1,997,640
16,800 Sierra Health Services, Inc.(c) 756,504
72,125 Triad Hospitals, Inc.(c) 2,854,707
46,500 WellPoint, Inc.(c) 3,383,805
---------------
9,617,100
---------------
Home Builders -- 0.7%
28,000 Lennar Corp., Class A 1,242,360
57,700 Pulte Homes, Inc.(d) 1,661,183
44,900 Winnebago Industries(d) 1,393,696
---------------
4,297,239
---------------
Household Products & Wares -- 1.3%
57,225 Church & Dwight Co., Inc.(d) 2,084,134
46,100 Fortune Brands, Inc. 3,273,561
140,100 Fossil, Inc.(c)(d) 2,523,201
---------------
7,880,896
---------------
Shares Description Value (a)
- ---------------------------------------------------------------------------------
Insurance -- 2.7%
38,100 Aflac, Inc. $ 1,765,935
243,525 AmCOMP, Inc.(c) 2,566,753
92,525 Assurant, Inc. 4,478,210
21,200 MGIC Investment Corp.(d) 1,378,000
25,175 Navigators Group, Inc.(c) 1,103,169
74,075 Protective Life Corp. 3,453,376
60,600 United Fire & Casualty Co. 1,825,878
---------------
16,571,321
---------------
Internet -- 2.4%
124,375 Akamai Technologies, Inc.(c)(d) 4,501,131
28,275 Ctrip.com International Ltd., ADR(d) 1,443,439
2,900 Google, Inc., Class A(c) 1,216,057
95,600 McAfee, Inc.(c) 2,320,212
180,575 NetRatings, Inc.(c)(d) 2,508,187
80,100 Yahoo!, Inc.(c) 2,643,300
---------------
14,632,326
---------------
Iron & Steel -- 0.6%
50,075 Chaparral Steel Co.(c) 3,606,402
---------------
Leisure Time -- 1.7%
138,000 Carnival Corp. 5,760,120
82,500 Harley-Davidson, Inc.(d) 4,528,425
---------------
10,288,545
---------------
Lodging -- 1.1%
94,300 Hilton Hotels Corp. 2,666,804
54,475 Starwood Hotels & Resorts Worldwide, Inc. 3,287,021
6,400 Station Casinos, Inc. 435,712
---------------
6,389,537
---------------
Machinery -- Construction & Mining -- 0.3%
21,800 Caterpillar, Inc. 1,623,664
---------------
Machinery -- Diversified -- 1.4%
102,125 Albany International Corp., Class A(d) 4,329,079
118,075 Wabtec Corp. 4,416,005
---------------
8,745,084
---------------
Manufacturing -- 0.5%
62,250 Actuant Corp.(d) 3,109,388
---------------
Media -- 4.1%
104,900 CBS Corp., Class B 2,837,545
30,805 Liberty Media Holding Corp. - Capital Series A(c)(d) 2,580,535
11,025 Liberty Media Holding Corp. - Interactive A(c) 190,291
419,800 Time Warner, Inc. 7,262,540
162,500 Viacom, Inc., Class B(c) 5,824,000
202,000 Walt Disney Co. (The) 6,060,000
---------------
24,754,911
---------------
Metal Fabricate & Hardware -- 0.6%
57,100 Precision Castparts Corp. 3,412,296
---------------
Mining -- 0.6%
69,400 Glamis Gold, Ltd.(c)(d) 2,627,484
21,800 Rio Tinto, Ltd. 1,260,327
---------------
3,887,811
---------------
Miscellaneous -- Manufacturing -- 2.8%
30,900 3M Co. 2,495,793
158,400 General Electric Co. 5,220,864
24,600 ITT Industries, Inc. 1,217,700
See accompanying notes to financial statements.
37
IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------
Miscellaneous -- Manufacturing -- continued
42,600 Pall Corp.(d) $ 1,192,800
250,400 Tyco International, Ltd. 6,886,000
---------------
17,013,157
---------------
Office & Business Equipment -- 0.4%
174,800 Xerox Corp.(c) 2,431,468
---------------
Office Furnishings -- 0.5%
246,314 Interface, Inc., Class A(c) 2,820,295
---------------
Oil & Gas -- 3.1%
75,875 Denbury Resources, Inc.(c) 2,402,961
105,100 Exxon Mobil Corp. 6,447,885
35,475 GlobalSantaFe Corp. 2,048,681
23,600 Sunoco, Inc. 1,635,244
42,600 Transocean, Inc.(c) 3,421,632
44,900 Valero Energy Corp. 2,986,748
---------------
18,943,151
---------------
Oil & Gas Services -- 5.0%
30,600 Baker Hughes, Inc. 2,504,610
29,700 Dril-Quip, Inc.(c)(d) 2,448,468
62,825 FMC Technologies, Inc.(c) 4,238,174
43,200 Grant Prideco, Inc.(c) 1,933,200
39,900 Halliburton Co. 2,960,979
53,900 Helix Energy Solutions Group, Inc.(c)(d) 2,175,404
31,200 National Oilwell Varco, Inc.(c) 1,975,584
53,250 Oceaneering International, Inc.(c) 2,441,513
59,900 Schlumberger, Ltd. 3,900,089
45,700 Universal Compression Holdings, Inc.(c) 2,877,729
63,850 Weatherford International, Ltd.(c) 3,168,237
---------------
30,623,987
---------------
Pharmaceuticals -- 2.1%
33,000 Abbott Laboratories 1,439,130
23,800 Allergan, Inc. 2,552,788
23,175 Amylin Pharmaceuticals, Inc.(c)(d) 1,144,150
46,000 GlaxoSmithKline PLC 1,285,306
19,200 MGI Pharma, Inc.(c)(d) 412,800
34,500 Novartis AG 1,868,144
51,700 Perrigo Co. 832,370
162,500 Schering-Plough Corp. 3,092,375
---------------
12,627,063
---------------
Pipelines -- 0.2%
12,425 Questar Corp. 1,000,088
---------------
Real Estate -- 1.4%
108,550 CB Richard Ellis Group, Inc., Class A(c) 2,702,895
31,600 Jones Lang LaSalle, Inc.(d) 2,766,580
85,025 Trammell Crow Co.(c)(d) 2,990,329
---------------
8,459,804
---------------
REITs -- Shopping Centers -- 0.5%
66,425 Developers Diversified Realty Corp. 3,466,057
---------------
REITs -- Financial Services -- 0.4%
63,850 CBL & Associates Properties, Inc. 2,485,681
---------------
Restaurants -- 1.5%
229,700 McDonald's Corp. 7,717,920
27,100 Yum! Brands, Inc. 1,362,317
---------------
9,080,237
---------------
Shares Description Value (a)
- -------------------------------------------------------------------------------
Retail -- 5.5%
46,675 AnnTaylor Stores Corp.(c) $ 2,024,762
131,475 Applebee's International, Inc.(d) 2,526,950
94,125 Circuit City Stores, Inc. 2,562,082
124,912 Coldwater Creek, Inc.(c)(d) 3,342,645
136,400 Home Depot, Inc. (The) 4,881,756
31,000 Kohl's Corp.(c) 1,832,720
75,500 Limited Brands, Inc. 1,932,045
47,600 Office Depot, Inc.(c) 1,808,800
59,325 Petsmart, Inc.(d) 1,518,720
98,450 Staples, Inc. 2,394,304
69,000 Starbucks Corp.(c) 2,605,440
128,800 Wal-Mart Stores, Inc. 6,204,296
---------------
33,634,520
---------------
Savings & Loans -- 1.0%
138,100 Washington Mutual, Inc. 6,294,598
---------------
Semiconductors -- 2.8%
381,400 Intel Corp. 7,227,530
24,000 Marvell Technology Group, Ltd.(c) 1,063,920
87,475 MEMC Electronic Materials, Inc.(c) 3,280,312
273,025 ON Semiconductor Corp.(c)(d) 1,605,387
137,500 Texas Instruments, Inc. 4,164,875
---------------
17,342,024
---------------
Software -- 1.8%
94,525 Fidelity National Information Services, Inc. 3,346,185
17,900 Infosys Technologies, Ltd., Sponsored ADR(d) 1,367,739
25,000 SAP AG, Sponsored ADR 1,313,000
38,500 Satyam Computer Services, Ltd.(d) 1,275,890
93,800 Sybase, Inc.(c) 1,819,720
62,675 VeriFone Holdings, Inc.(c)(d) 1,910,334
---------------
11,032,868
---------------
Telecommunications -- 2.7%
93,425 ADTRAN, Inc. 2,095,523
63,750 Embarq Corp.(c) 2,613,113
56,975 Harris Corp. 2,365,032
50,325 Leap Wireless International, Inc.(c) 2,387,921
68,575 NII Holdings, Inc., Class B(c) 3,866,258
28,000 QUALCOMM, Inc. 1,121,960
57,600 Telefonaktiebolaget LM Ericsson, Sponsored ADR 1,903,104
---------------
16,352,911
---------------
Tobacco -- 0.4%
37,200 Altria Group, Inc. 2,731,596
---------------
Transportation -- 3.0%
68,225 CH Robinson Worldwide, Inc.(d) 3,636,392
69,500 Expeditors International of Washington, Inc. 3,892,695
74,050 Horizon Lines, Inc., Class A(d) 1,186,281
190,650 Laidlaw International, Inc. 4,804,380
50,600 Union Pacific Corp. 4,703,776
---------------
18,223,524
---------------
Total Common Stocks (Identified Cost $504,048,794) 600,470,381
---------------
See accompanying notes to financial statements.
38
IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares/
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------------------------------------
Short-Term Investments -- 14.0%
75,130,129 State Street Securities Lending Quality Trust(e) $ 75,130,129
$ 9,693,376 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 6/30/2006 at 3.450% to be repurchased at
$9,696,163 on 7/03/2006, collateralized by $3,240,000 U.S.
Treasury Bond, 8.750% due 8/15/2020 valued at $4,418,469
and $4,900,000 U.S. Treasury Bond, 6.250% due 8/15/2023
valued at $5,479,709 9,693,376
---------------
Total Short-Term Investments (Identified Cost $84,823,505) 84,823,505
---------------
Total Investments -- 112.7% (Identified Cost $588,872,299)(b) 685,293,886
Other assets less liabilities -- (12.7)% (77,000,982)
---------------
Total Net Assets -- 100% $ 608,292,904
===============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments
made at the end of the Portfolio's fiscal year for tax purposes.
Such adjustments are primarily due to wash sales.):
At June 30, 2006, the net unrealized appreciation on investments
based on cost of $588,872,299 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 $ 108,299,168
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (11,877,581)
---------------
Net unrealized appreciation $ 96,421,587
===============
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2006.
(e) Represents investment 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, 2006 as a Percentage of Net Assets
Diversified Financial Services 7.3%
Retail 5.5
Oil & Gas Services 5.0
Commercial Services 4.9
Computers 4.2
Media 4.1
Banks 3.9
Health Care -- Products 3.6
Oil & Gas 3.1
Transportation 3.0
Semiconductors 2.8
Miscellaneous -- Manufacturing 2.8
Insurance 2.7
Telecommunications 2.7
Electronics 2.6
Aerospace & Defense 2.6
Internet 2.4
Chemicals 2.4
Pharmaceuticals 2.1
Others, less than 2% each 31.0
See accompanying notes to financial statements.
39
IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------
Common Stocks -- 96.6% of Net Assets
Aerospace & Defense -- 2.8%
5,100 Boeing Co. (The) $ 417,741
5,950 General Dynamics Corp. 389,487
14,700 Northrop Grumman Corp. 941,682
17,725 Raytheon Co. 790,003
13,525 United Technologies Corp. 857,756
---------------
3,396,669
---------------
Banks -- 5.8%
22,150 Bank of America Corp. 1,065,415
8,925 BOK Financial Corp.(d) 443,305
2,600 Capital Crossing Bank(c)(d) 63,960
7,100 Comerica, Inc. 369,129
25,825 Mellon Financial Corp. 889,155
11,500 National City Corp. 416,185
4,100 State Street Corp. 238,169
53,650 U.S. Bancorp 1,656,712
20,075 UCBH Holdings, Inc.(d) 332,040
22,850 Wells Fargo & Co. 1,532,778
---------------
7,006,848
---------------
Beverages -- 2.5%
4,200 Anheuser-Busch Cos., Inc. 191,478
7,400 Coca-Cola Enterprises, Inc. 150,738
9,875 Molson Coors Brewing Co.(d) 670,315
35,000 Pepsi Bottling Group, Inc. (The) 1,125,250
8,200 PepsiAmericas, Inc.(d) 181,302
12,225 PepsiCo, Inc. 733,989
---------------
3,053,072
---------------
Biotechnology -- 0.6%
10,625 Amgen, Inc.(c) 693,069
---------------
Building Materials -- 0.5%
16,600 Lennox International, Inc. 439,568
2,700 Texas Industries, Inc.(d) 143,370
---------------
582,938
---------------
Chemicals -- 1.3%
16,475 Agrium, Inc. 382,549
15,000 Praxair, Inc. 810,000
5,900 Sherwin-Williams Co. (The) 280,132
1,700 Westlake Chemical Corp.(d) 50,660
---------------
1,523,341
---------------
Commercial Services -- 1.2%
8,200 Apollo Group, Inc. Class A(c) 423,694
9,950 Aramark Corp., Class B 329,445
5,300 Convergys Corp.(c) 103,350
11,525 Equifax, Inc.(d) 395,768
13,100 MPS Group, Inc.(c)(d) 197,286
---------------
1,449,543
---------------
Computers -- 4.2%
62,000 Dell, Inc.(c) 1,513,420
94,875 Hewlett-Packard Co. 3,005,640
7,200 International Business Machines Corp. 553,104
---------------
5,072,164
---------------
Distribution & Wholesale -- 0.3%
4,800 WESCO International, Inc.(c)(d) 331,200
---------------
Shares Description Value (a)
- -------------------------------------------------------------------------------
Diversified Financial Services -- 14.2%
33,675 American Express Co. $ 1,792,183
11,000 Ameriprise Financial, Inc. 491,370
11,600 Capital One Financial Corp. 991,220
23,925 CIT Group, Inc. 1,251,038
63,083 Citigroup, Inc. 3,043,124
4,050 Goldman Sachs Group, Inc. 609,242
18,800 Janus Capital Group, Inc. 336,520
78,025 JPMorgan Chase & Co. 3,277,050
12,000 Lehman Brothers Holdings, Inc. 781,800
22,775 Merrill Lynch & Co., Inc. 1,584,229
42,600 Morgan Stanley 2,692,746
4,700 Ocwen Financial Corp.(c)(d) 59,737
---------------
16,910,259
---------------
Electric -- 2.8%
5,800 Dominion Resources, Inc.(d) 433,782
12,825 Entergy Corp. 907,369
12,700 Exelon Corp. 721,741
6,000 IDACORP, Inc.(d) 205,740
10,625 NRG Energy, Inc.(c) 511,912
10,125 TXU Corp. 605,374
---------------
3,385,918
---------------
Electrical Components & Equipment -- 0.2%
3,300 Emerson Electric Co. 276,573
---------------
Electronics -- 0.7%
11,600 Agilent Technologies, Inc.(c) 366,096
43,075 Flextronics International, Ltd.(c) 457,457
---------------
823,553
---------------
Engineering & Construction -- 1.2%
73,800 ABB, Ltd., Sponsored ADR 956,448
17,725 Chicago Bridge & Iron Co., N.V.(d) 428,059
---------------
1,384,507
---------------
Environmental Control -- 0.2%
7,925 Waste Connections, Inc.(c)(d) 288,470
---------------
Forest Products & Paper -- 0.3%
15,900 Louisiana-Pacific Corp. 348,210
---------------
Hand & Machine Tools -- 0.5%
6,600 Black & Decker Corp. (The) 557,436
---------------
Health Care -- Capital Equipment -- 0.3%
12,600 Applera Corp. -- Applied Biosystems Group(d) 407,610
---------------
Health Care -- Products -- 3.3%
51,075 Baxter International, Inc. 1,877,517
8,050 Beckman Coulter, Inc. 447,177
2,900 Becton Dickinson & Co. 177,277
25,200 Boston Scientific Corp.(c) 424,368
18,275 Johnson & Johnson 1,095,038
---------------
4,021,377
---------------
Health Care -- Services -- 0.7%
3,400 Aetna, Inc. 135,762
11,725 Quest Diagnostics, Inc. 702,562
---------------
838,324
---------------
Home Builders -- 0.8%
21,000 Lennar Corp., Class A 931,770
---------------
Insurance -- 3.7%
18,775 Allstate Corp. (The) 1,027,556
14,375 American International Group, Inc. 848,844
See accompanying notes to financial statements.
40
IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- -------------------------------------------------------------------
Insurance -- continued
165 Berkshire Hathaway, Inc., Class B(c) $ 502,095
4,100 CIGNA Corp. 403,891
2,400 Genworth Financial, Inc., Class A 83,616
12,000 Loews Corp. 425,400
1,000 MGIC Investment Corp. 65,000
3,750 Old Republic International Corp.(d) 80,137
13,300 Prudential Financial, Inc.(d) 1,033,410
---------------
4,469,949
---------------
Internet -- 0.1%
200 Google, Inc., Class A(c) 83,866
---------------
Iron & Steel -- 0.8%
2,900 Nucor Corp.(d) 157,325
4,600 Reliance Steel & Aluminum Co. 381,570
6,000 United States Steel Corp. 420,720
---------------
959,615
---------------
Leisure Time -- 1.3%
36,000 Carnival Corp. 1,502,640
---------------
Lodging -- 0.2%
5,400 Marriott International, Inc., Class A 205,848
---------------
Machinery -- Diversified -- 0.2%
7,500 AGCO Corp.(c)(d) 197,400
---------------
Media -- 6.6%
50,000 Cablevision Systems Corp., Class A(c) 1,072,500
25,475 Comcast Corp., Class A(c) 834,052
56,025 DIRECTV Group (The), Inc.(c) 924,412
10,898 Liberty Global, Inc., Class A(d) 234,307
11,052 Liberty Global, Inc., Class C(c)(d) 227,340
3,600 Liberty Media Holding Corp.(c) 62,136
10,000 Liberty Media Holding Corp.(c) 837,700
44,350 News Corp., Inc., Class A 850,633
170,000 Time Warner, Inc. 2,941,000
---------------
7,984,080
---------------
Mining -- 0.0%
800 Newmont Mining Corp. 42,344
---------------
Miscellaneous -- Manufacturing -- 3.4%
40,700 General Electric Co. 1,341,472
5,100 Parker Hannifin Corp. 395,760
86,750 Tyco International, Ltd. 2,385,625
---------------
4,122,857
---------------
Oil & Gas -- 7.5%
7,350 ConocoPhillips 481,646
3,300 Devon Energy Corp. 199,353
70,000 Exxon Mobil Corp. 4,294,500
15,750 GlobalSantaFe Corp. 909,562
26,400 Harvest Natural Resources, Inc.(c)(d) 357,456
11,300 Occidental Petroleum Corp. 1,158,815
14,900 Southwestern Energy Co.(c)(d) 464,284
5,100 Todco, Class A(d) 208,335
6,900 Valero Energy Corp. 458,988
10,300 XTO Energy, Inc. 455,981
---------------
8,988,920
---------------
Oil & Gas Services -- 1.2%
20,100 Halliburton Co. 1,491,621
---------------
Shares Description Value (a)
- -------------------------------------------------------------
Pharmaceuticals -- 2.2%
13,500 Abbott Laboratories $ 588,735
5,800 AmerisourceBergen Corp. 243,136
6,500 Cardinal Health, Inc. 418,145
4,700 Hospira, Inc.(c) 201,818
14,600 Merck & Co., Inc. 531,878
29,425 Pfizer, Inc. 690,605
---------------
2,674,317
---------------
REITs -- Diversified -- 0.2%
5,700 Longview Fibre Co. 108,813
9,500 Newkirk Realty Trust, Inc.(d) 164,920
---------------
273,733
---------------
REITs -- Hotels -- 0.2%
11,500 FelCor Lodging Trust, Inc. 250,010
---------------
REITs -- Regional Malls -- 0.4%
5,200 Simon Property Group, Inc. 431,288
---------------
Restaurants -- 4.0%
82,500 McDonald's Corp. 2,772,000
40,000 Yum! Brands, Inc. 2,010,800
---------------
4,782,800
---------------
Retail -- 6.4%
17,900 AutoNation, Inc.(c) 383,776
4,650 AutoZone, Inc.(c) 410,130
13,550 Burger King Holdings, Inc.(c)(d) 213,413
19,375 CVS Corp. 594,812
4,600 Dollar Tree Stores, Inc.(c)(d) 121,900
18,250 Federated Department Stores 667,950
24,900 Gap (The), Inc. 433,260
900 J.C. Penney Co., Inc. 60,759
10,800 Kohl's Corp.(c) 638,496
7,300 Lowe's Cos., Inc. 442,891
21,600 Office Depot, Inc.(c) 820,800
10,975 OSI Restaurant Partners, Inc.(d) 379,735
45,000 Tiffany & Co. 1,485,900
21,250 Wal-Mart Stores, Inc. 1,023,612
---------------
7,677,434
---------------
Savings & Loans -- 1.3%
35,000 Washington Mutual, Inc.(d) 1,595,300
---------------
Semiconductors -- 3.1%
127,775 Intel Corp. 2,421,336
28,750 LSI Logic Corp.(c)(d) 257,313
28,000 National Semiconductor Corp. 667,800
13,400 Texas Instruments, Inc. 405,886
---------------
3,752,335
---------------
Software -- 2.1%
9,000 Fiserv, Inc.(c) 408,240
66,825 Microsoft Corp. 1,557,022
41,200 Oracle Corp.(c) 596,988
---------------
2,562,250
---------------
Telecommunications -- 4.7%
27,150 AT&T, Inc. 757,213
49,850 Avaya, Inc.(c)(d) 569,287
36,150 BellSouth Corp. 1,308,630
11,200 CenturyTel, Inc.(d) 416,080
52,075 Cisco Systems, Inc.(c) 1,017,025
10,400 Embarq Corp.(c) 426,296
See accompanying notes to financial statements.
41
IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------------------------------------
Telecommunications -- continued
34,400 Motorola, Inc. $ 693,160
19,825 Nokia OYJ, Sponsored ADR 401,655
---------------
5,589,346
---------------
Tobacco -- 0.6%
10,200 Altria Group, Inc. 748,986
---------------
Toys, Games & Hobbies -- 0.4%
28,300 Hasbro, Inc.(d) 512,513
---------------
Transportation -- 1.6%
9,650 Burlington Northern Santa Fe Corp. 764,762
2,600 FedEx Corp. 303,836
3,900 Norfolk Southern Corp. 207,558
7,725 Ryder System, Inc.(d) 451,372
2,300 Union Pacific Corp. 213,808
---------------
1,941,336
---------------
Total Common Stocks (Identified Cost $97,635,534) 116,123,639
---------------
Shares/
Principal
Amount
- ------------------------------------------------------------------------------------------------------
Short-Term Investments -- 9.9%
8,910,402 State Street Securities Lending Quality Trust(e) 8,910,402
$ 2,965,681 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 6/30/2006 at 3.450% to be repurchased at
$2,966,533 on 7/03/2006, collateralized by $1,840,000 U.S.
Treasury Bond, 7.875% due 2/15/2021 valued at $2,348,300
and $610,000 U.S. Treasury Bond, 6.250% due 8/15/2023
valued at $682,168 2,965,681
---------------
Total Short-Term Investments (Identified Cost $11,876,083) 11,876,083
---------------
Total Investments -- 106.5%
(Identified Cost $109,511,617)(b) 127,999,722
Other assets less liabilities -- (6.5)% (7,846,729)
---------------
Net Assets -- 100% $ 120,152,993
===============
(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, 2006, the net unrealized appreciation on investments
based on cost of $109,511,617 for federal income tax purposes
was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value of tax cost $ 21,311,464
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (2,823,359)
---------------
Net unrealized appreciation $ 18,488,105
===============
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2006.
(e) Represents investment 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, 2006 as a Percentage of Net Assets
Diversified Financial Services 14.2%
Oil & Gas 7.5
Media 6.6
Retail 6.4
Banks 5.8
Telecommunications 4.7
Computers 4.2
Restaurants 4.0
Insurance 3.7
Miscellaneous -- Manufacturing 3.4
Health Care -- Products 3.3
Semiconductors 3.1
Aerospace & Defense 2.8
Electric 2.8
Beverages 2.5
Pharmaceuticals 2.2
Software 2.1
Others, less than 2% each 17.3
See accompanying notes to financial statements.
42
VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ----------------------------------------------------------------------
Common Stocks -- 94.2% of Net Assets
Aerospace & Defense -- 8.2%
37,270 Alliant Techsystems, Inc.(c)(d) $ 2,845,564
36,500 DRS Technologies, Inc.(d) 1,779,375
57,275 EDO Corp.(d) 1,394,074
48,500 Esterline Technologies Corp.(c)(d) 2,017,115
59,137 Moog, Inc., Class A(c) 2,023,668
---------------
10,059,796
---------------
Banks -- 3.2%
51,326 MB Financial, Inc.(d) 1,814,888
9,425 PrivateBancorp, Inc.(d) 390,289
107,530 UCBH Holdings, Inc.(d) 1,778,546
---------------
3,983,723
---------------
Biotechnology -- 1.6%
63,725 Serologicals Corp.(c)(d) 2,003,514
---------------
Building Materials -- 2.0%
94,250 Lennox International, Inc.(d) 2,495,740
---------------
Chemicals -- 1.1%
25,025 Cytec Industries, Inc.(d) 1,342,842
---------------
Commercial Services -- 10.6%
70,415 Aaron Rents, Inc.(d) 1,892,755
61,325 ACE Cash Express, Inc.(c)(d) 1,794,983
54,950 Dollar Thrifty Automotive Group, Inc.(c) 2,476,596
69,585 McGrath Rentcorp(d) 1,935,159
26,680 Monro Muffler, Inc. 868,701
16,075 Strayer Education, Inc. 1,561,204
27,020 Team, Inc.(c)(d) 676,851
85,550 Universal Technical Institute, Inc.(c)(d) 1,883,811
---------------
13,090,060
---------------
Computer Services -- 0.9%
95,725 Tyler Technologies, Inc.(c)(d) 1,072,120
---------------
Computers -- 1.3%
35,345 MICROS Systems, Inc.(c)(d) 1,543,870
---------------
Distribution & Wholesale -- 2.4%
22,405 Watsco, Inc. 1,340,267
22,995 WESCO International, Inc.(c)(d) 1,586,655
---------------
2,926,922
---------------
Diversified Financial Services -- 4.1%
21,400 Affiliated Managers Group, Inc.(c)(d) 1,859,446
42,224 Financial Federal Corp.(d) 1,174,250
67,294 Raymond James Financial, Inc.(d) 2,036,989
---------------
5,070,685
---------------
Electric -- 3.1%
105,950 Pike Electric Corp.(c)(d) 2,040,597
86,280 Westar Energy, Inc.(d) 1,816,194
---------------
3,856,791
---------------
Electronics -- 0.5%
117,675 International DisplayWorks, Inc.(c)(d) 611,910
---------------
Engineering & Construction -- 1.0%
58,825 Dycom Industries, Inc.(c)(d) 1,252,384
---------------
Environmental Control -- 2.2%
73,485 Waste Connections, Inc.(c)(d) 2,674,854
---------------
Food -- 1.5%
61,425 Corn Products International, Inc.(d) 1,879,605
---------------
Shares Description Value (a)
- --------------------------------------------------------------------
Health Care -- Products -- 1.5%
36,740 Invacare Corp.(d) $ 914,091
40,071 Medical Action Industries, Inc.(c) 885,169
---------------
1,799,260
---------------
Health Care -- Services -- 7.4%
17,875 Amedisys, Inc.(c)(d) 677,463
78,712 Healthcare Services Group, Inc.(d) 1,649,016
157,700 Healthsouth Corp.(c)(d) 607,145
76,775 LHC Group, Inc.(c)(d) 1,529,358
61,925 Pediatrix Medical Group, Inc.(c)(d) 2,805,203
46,385 Triad Hospitals, Inc.(c) 1,835,918
---------------
9,104,103
---------------
Insurance -- 5.2%
99,237 HCC Insurance Holdings, Inc.(d) 2,921,537
48,975 Hilb, Rogal & Hobbs Co.(d) 1,825,298
53,145 United Fire & Casualty Co.(d) 1,601,259
---------------
6,348,094
---------------
Internet -- 0.5%
45,025 Vignette Corp.(c)(d) 656,465
---------------
Iron & Steel -- 1.7%
72,012 Gibraltar Industries, Inc.(d) 2,088,348
---------------
Machinery -- Diversified -- 3.6%
59,225 Briggs & Stratton Corp.(d) 1,842,490
51,565 Nordson Corp.(d) 2,535,966
---------------
4,378,456
---------------
Manufacturing -- 1.3%
30,900 Actuant Corp., Class A 1,543,455
---------------
Mining -- 0.6%
159,200 Birch Mountain Resources, Ltd.(c)(d) 792,816
---------------
Miscellaneous -- Manufacturing -- 1.2%
168,600 Jacuzzi Brands, Inc.(c)(d) 1,483,680
---------------
Oil & Gas -- 3.1%
73,550 Arena Resources, Inc.(c)(d) 2,522,029
118,975 Gulfport Energy Corp.(c) 1,313,484
---------------
3,835,513
---------------
Oil & Gas Services -- 3.1%
60,225 Universal Compression Holdings, Inc.(c) 3,792,368
---------------
REITs -- Health Care -- 1.2%
45,830 Healthcare Realty Trust, Inc.(d) 1,459,685
---------------
REITs -- Hotels -- 2.4%
95,400 Ashford Hospitality Trust, Inc.(d) 1,203,948
122,000 Highland Hospitality Corp.(d) 1,717,760
---------------
2,921,708
---------------
REITs -- Mortgage -- 2.3%
196,575 MFA Mortgage Investments, Inc. 1,352,436
30,220 Redwood Trust, Inc.(d) 1,475,643
---------------
2,828,079
---------------
Retail -- 5.1%
31,825 Regis Corp.(d) 1,133,288
74,252 Sonic Corp.(c)(d) 1,543,699
127,100 Triarc Cos., Inc., Class B(d) 1,986,573
74,000 United Auto Group, Inc.(d) 1,579,900
---------------
6,243,460
---------------
See accompanying notes to financial statements.
43
VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- -----------------------------------------------------------------------------------------------
Savings & Loans -- 1.2%
100,885 BankAtlantic Bancorp, Inc., Class A(d) $ 1,497,133
---------------
Semiconductors -- 0.9%
45,975 ATMI, Inc.(c)(d) 1,131,905
---------------
Software -- 1.2%
49,675 Reynolds & Reynolds Co. (The), Class A(d) 1,523,532
---------------
Telecommunications -- 1.2%
115,250 Tekelec(c)(d) 1,423,338
---------------
Transportation -- 3.9%
89,250 Arlington Tankers, Ltd.(d) 2,024,190
26,585 Genesee & Wyoming, Inc., Class A(c)(d) 942,970
40,080 Landstar System, Inc.(d) 1,892,978
---------------
4,860,138
---------------
Trucking & Leasing -- 1.9%
23,660 AMERCO, Inc.(d) 2,381,616
---------------
Total Common Stocks (Identified Cost $103,337,358) 115,957,968
---------------
Shares/
Principal
Amount
- -----------------------------------------------------------------------------------------------
Short-Term Investments -- 30.2%
31,207,203 State Street Securities Lending Quality Trust(e) 31,207,203
$ 6,013,151 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 6/30/2006 at 3.450% to be repurchased at
$6,014,880 on 7/03/2006, collateralized by $5,485,000 U.S.
Treasury Bond, 6.250% due 8/15/2023 valued at $6,133,919 6,013,151
---------------
Total Short-Term Investments (Identified Cost $37,220,354) 37,220,354
---------------
Total Investments -- 124.4%
(Identified Cost $140,557,712)(b) 153,178,322
Other assets less liabilities -- (24.4)% (30,014,019)
---------------
Net Assets -- 100% $ 123,164,303
---------------
(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, 2006, the net unrealized appreciation on investments
based on cost of $140,557,712 for federal income tax purposes
was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value of tax cost $ 16,697,396
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (4,076,786)
---------------
Net unrealized appreciation $ 12,620,610
===============
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2006.
(e) Represents investment of securities lending collateral.
REITs Real Estate Investment Trusts
Holdings at June 30, 2006 as a Percentage of Net Assets
Commercial Services 10.6%
Aerospace & Defense 8.2
Health Care -- Services 7.4
Insurance 5.2
Retail 5.1
Diversified Financial Services 4.1
Transportation 3.9
Machinery -- Diversified 3.6
Banks 3.2
Electric 3.1
Oil & Gas 3.1
Oil & Gas Services 3.1
Distribution & Wholesale 2.4
REITs -- Hotels 2.4
REITs -- Mortgage 2.3
Environmental Control 2.2
Building Materials 2.0
Other, less than 2% each 22.3
See accompanying notes to financial statements.
44
WESTPEAK CAPITAL GROWTH FUND -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------
Common Stocks -- 99.6% of Net Assets
Aerospace & Defense -- 5.3%
21,100 Boeing Co. (The) $ 1,728,301
9,400 Lockheed Martin Corp. 674,356
14,100 Raytheon Co. 628,437
---------------
3,031,094
---------------
Agriculture -- 1.5%
10,200 Monsanto Co. 858,738
---------------
Banks -- 0.4%
7,100 Mellon Financial Corp. 244,453
---------------
Beverages -- 1.5%
11,400 Anheuser-Busch Cos., Inc. 519,726
10,300 Pepsi Bottling Group, Inc. (The) 331,145
---------------
850,871
---------------
Biotechnology -- 3.2%
27,900 Amgen, Inc.(c) 1,819,917
---------------
Building Materials -- 0.9%
10,000 NCI Building Systems, Inc.(c)(d) 531,700
---------------
Commercial Services -- 1.0%
34,700 Cendant Corp. 565,263
---------------
Computers -- 3.7%
5,300 Affiliated Computer Services, Inc.(c) 273,533
23,600 International Business Machines Corp. 1,812,952
---------------
2,086,485
---------------
Cosmetics & Personal Care -- 1.7%
17,600 Procter & Gamble Co. 978,560
---------------
Distribution & Wholesale -- 5.1%
16,500 Tech Data Corp.(c) 632,115
23,400 United Stationers, Inc.(c) 1,154,088
15,900 WESCO International, Inc.(c) 1,097,100
---------------
2,883,303
---------------
Diversified Financial Services -- 4.9%
30,800 American Express Co. 1,639,176
7,700 Goldman Sachs Group, Inc. 1,158,311
---------------
2,797,487
---------------
Electrical Components & Equipment -- 1.0%
6,800 Emerson Electric Co. 569,908
---------------
Electronics -- 1.6%
28,100 Agilent Technologies, Inc.(c) 886,836
---------------
Food -- 1.2%
513 Seaboard Corp.(d) 656,640
---------------
Health Care -- Products -- 4.9%
6,600 Beckman Coulter, Inc. 366,630
14,600 Becton Dickinson & Co. 892,498
14,300 IDEXX Laboratories, Inc.(c) 1,074,359
7,700 Johnson & Johnson 461,384
---------------
2,794,871
---------------
Health Care -- Services -- 5.3%
23,200 Humana, Inc.(c) 1,245,840
13,500 UnitedHealth Group, Inc. 604,530
22,600 Universal Health Services, Inc., Class B(d) 1,135,876
---------------
2,986,246
---------------
Shares Description Value (a)
- ----------------------------------------------------------------------
Internet -- 3.2%
1,500 Google, Inc., Class A(c) $ 628,995
50,900 VeriSign, Inc.(c) 1,179,353
---------------
1,808,348
---------------
Iron & Steel -- 2.0%
13,400 Reliance Steel & Aluminum Co. 1,111,530
---------------
Machinery -- Diversified -- 2.3%
9,000 Deere & Co. 751,410
7,600 Rockwell Automation, Inc. 547,276
---------------
1,298,686
---------------
Miscellaneous -- Manufacturing -- 4.6%
43,400 General Electric Co. 1,430,464
17,000 Illinois Tool Works, Inc. 807,500
4,500 Parker Hannifin Corp. 349,200
---------------
2,587,164
---------------
Oil & Gas -- 5.9%
18,500 EOG Resources, Inc. 1,282,790
14,300 Sunoco, Inc. 990,847
26,000 Todco, Class A(d) 1,062,100
---------------
3,335,737
---------------
Pharmaceuticals -- 5.0%
7,900 AmerisourceBergen Corp. 331,168
17,600 Cardinal Health, Inc. 1,132,208
38,100 Merck & Co., Inc. 1,387,983
---------------
2,851,359
---------------
REITs -- Hotels -- 1.2%
11,500 Starwood Hotels & Resorts Worldwide, Inc. 693,910
---------------
REITs -- Storage -- 0.7%
4,800 Public Storage, Inc. 364,320
---------------
Restaurants -- 0.6%
7,900 Darden Restaurants, Inc. 311,260
---------------
Retail -- 7.8%
44,600 Dollar Tree Stores, Inc.(c)(d) 1,181,900
23,800 Home Depot, Inc. (The) 851,802
14,700 JC Penney Co., Inc. 992,397
23,500 Lowe's Cos, Inc. 1,425,745
---------------
4,451,844
---------------
Semiconductors -- 7.1%
116,100 Intel Corp. 2,200,095
23,400 Micron Technology, Inc.(c) 352,404
49,500 Texas Instruments, Inc. 1,499,355
---------------
4,051,854
---------------
Software -- 6.8%
22,200 Fiserv, Inc.(c) 1,006,992
123,500 Microsoft Corp. 2,877,550
---------------
3,884,542
---------------
Telecommunications -- 4.3%
84,100 Cisco Systems, Inc.(c) 1,642,473
32,200 Corning, Inc.(c) 778,918
---------------
2,421,391
---------------
Tobacco -- 1.1%
8,200 Altria Group, Inc. 602,126
---------------
See accompanying notes to financial statements.
45
WESTPEAK CAPITAL GROWTH FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- -----------------------------------------------------------------------------------------------
Transportation -- 3.8%
14,700 Arkansas Best Corp.(d) $ 738,087
18,700 Norfolk Southern Corp. 995,214
13,900 Swift Transportation Co., Inc.(c)(d) 441,464
---------------
2,174,765
---------------
Total Common Stocks (Identified Cost $56,339,068) 56,491,208
---------------
Shares/
Principal
Amount
- -----------------------------------------------------------------------------------------------
Short-Term Investments -- 10.5%
5,455,932 State Street Securities Lending Quality Trust(e) 5,455,932
$ 528,631 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 6/30/2006 at 3.450% to be repurchased at
$528,783 on 7/03/2006, collateralized by $485,000 U.S.
Treasury Bond, 6.25% due 8/15/2023 valued at $542,379 528,631
---------------
Total Short-Term Investments (Identified Cost $5,984,563) 5,984,563
---------------
Total Investments -- 110.1% (Identified Cost $62,323,631)(b) 62,475,771
Other assets less liabilities -- (10.1)% (5,728,679)
---------------
Net Assets -- 100% $ 56,747,092
===============
(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, 2006, the net unrealized appreciation on investments
based on cost of $62,323,631 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 $ 2,915,558
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (2,763,418)
---------------
Net unrealized appreciation $ 152,140
===============
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2006.
(e) Represents investment of securities lending collateral.
REITs Real Estate Investment Trusts
Holdings at June 30, 2006 as a Percentage of Net Assets
Retail 7.8%
Semiconductors 7.1
Software 6.8
Oil & Gas 5.9
Aerospace & Defense 5.3
Health Care -- Services 5.3
Distribution & Wholesale 5.1
Pharmaceuticals 5.0
Diversified Financial Services 4.9
Health Care -- Products 4.9
Miscellaneous -- Manufacturing 4.6
Telecommunications 4.3
Transportation 3.8
Computers 3.7
Biotechnology 3.2
Internet 3.2
Machinery --Diversified 2.3
Iron & Steel 2.0
Others, less than 2% each 14.4
See accompanying notes to financial statements.
46
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2006 (unaudited)
CGM Advisor Hansberger Harris Associates
Targeted Equity International Focused Value
Fund Fund Fund
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
ASSETS
Investments at cost $ 668,860,355 $ 171,907,547 $ 261,196,634
Net unrealized appreciation 110,142,901 26,770,026 17,625,600
--------------------- --------------------- ---------------------
Investments at value (a) 779,003,256 198,677,573 278,822,234
Cash 4,886 79,883 468,930
Foreign currency at value (identified
cost $0, $100,643, $0, $0, $2,998,
$0, $0 and $0) -- 101,568 --
Receivable for Fund shares sold 302,287 161,859 105,868
Receivable for securities sold -- 500,893 2,557,163
Receivable from investment advisor
(Note 4) -- -- --
Dividends and interest receivable 760,604 334,436 78,554
Tax reclaims receivable 9,439 59,589 --
Securities lending income receivable 3,519 6,422 2,229
Other assets -- -- 584
--------------------- --------------------- ---------------------
TOTAL ASSETS 780,083,991 199,922,223 282,035,562
--------------------- --------------------- ---------------------
LIABILITIES
Collateral on securities loaned, at
value (Note 2) 16,743,644 45,792,193 36,044,953
Payable for securities purchased -- 129,154 1,052,164
Payable for Fund shares redeemed 799,371 381,504 859,714
Management fees payable 425,152 97,653 202,234
Deferred Trustees' fees 657,828 94,969 67,340
Administrative fees payable 35,970 7,200 11,934
Other accounts payable and accrued
expenses 413,515 187,811 237,294
--------------------- --------------------- ---------------------
TOTAL LIABILITIES 19,075,480 46,690,484 38,475,633
--------------------- --------------------- ---------------------
NET ASSETS $ 761,008,511 $ 153,231,739 $ 243,559,929
===================== ===================== =====================
NET ASSETS CONSIST OF:
Paid-in capital $ 682,657,562 $ 115,565,227 $ 205,010,742
Undistributed (overdistributed) net
investment income (loss) 1,957,721 (442,544) (1,289,166)
Accumulated net realized gain (loss)
on investments and foreign currency
transactions (33,749,673) 11,331,680 22,212,753
Net unrealized appreciation on
investments and foreign currency
translations 110,142,901 26,777,376 17,625,600
--------------------- --------------------- ---------------------
NET ASSETS $ 761,008,511 $ 153,231,739 $ 243,559,929
===================== ===================== =====================
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:
Class A shares:
Net assets $ 691,662,658 $ 99,463,020 $ 65,192,507
===================== ===================== =====================
Shares of beneficial interest 65,239,643 4,731,261 5,581,473
===================== ===================== =====================
Net asset value and redemption price
per share $ 10.60 $ 21.02 $ 11.68
===================== ===================== =====================
Offering price per share
(100/[100-maximum sales charge] of
net asset value) (Note 1) $ 11.25 $ 22.30 $ 12.39
===================== ===================== =====================
Class B shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (Note 1)
Net assets $ 49,948,603 $ 32,392,315 $ 81,668,959
===================== ===================== =====================
Shares of beneficial interest 5,097,397 1,686,028 7,324,444
===================== ===================== =====================
Net asset value and offering price
per share $ 9.80 $ 19.21 $ 11.15
===================== ===================== =====================
Class C shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (Note 1)
Net assets $ 7,663,995 $ 21,376,404 $ 96,698,463
===================== ===================== =====================
Shares of beneficial interest 782,367 1,112,353 8,670,901
===================== ===================== =====================
Net asset value and offering price
per share (Note 1) $ 9.80 $ 19.22 $ 11.15
===================== ===================== =====================
Class Y shares:
Net assets $ 11,733,255 $ -- $ --
===================== ===================== =====================
Shares of beneficial interest 1,082,890 -- --
===================== ===================== =====================
Net asset value, offering and
redemption price per share $ 10.84 $ -- $ --
===================== ===================== =====================
(a) Including securities on loan with
market values of: $ 16,573,677 $ 44,666,859 $ 35,003,399
===================== ===================== =====================
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
- --------------------- --------------------- --------------------- --------------------- ---------------------
--------------------- --------------------- --------------------- ---------------------
$ 238,238,315 $ 588,872,299 $ 109,511,617 $ 140,557,712 $ 62,323,631
27,723,191 96,421,587 18,488,105 12,620,610 152,140
- --------------------- --------------------- --------------------- --------------------- ---------------------
265,961,506 685,293,886 127,999,722 153,178,322 62,475,771
282 -- 116,001 -- 73
-- 3,048 -- -- --
19,174 134,728 51,958 613,748 4,742
4,554,814 5,557,356 1,573,370 2,217,555 --
2,737 -- -- 4,968 7,568
192,809 426,688 151,340 155,694 40,294
-- 6,375 43 -- --
584 13,913 920 2,487 358
-- -- 4,690 15,597 2,899
- --------------------- --------------------- --------------------- --------------------- ---------------------
270,731,906 691,435,994 129,898,044 156,188,371 62,531,705
- --------------------- --------------------- --------------------- --------------------- ---------------------
13,010,211 75,130,129 8,910,402 31,207,203 5,455,932
1,789,825 5,346,621 169,989 1,134,790 --
427,498 1,281,885 270,052 322,320 85,562
146,904 443,856 73,635 88,192 34,485
269,792 366,153 188,450 99,425 101,920
12,327 29,091 5,789 5,780 2,712
307,708 545,355 126,734 166,358 104,002
- --------------------- --------------------- --------------------- --------------------- ---------------------
15,964,265 83,143,090 9,745,051 33,024,068 5,784,613
- --------------------- --------------------- --------------------- --------------------- ---------------------
$ 254,767,641 $ 608,292,904 $ 120,152,993 $ 123,164,303 $ 56,747,092
===================== ===================== ===================== ===================== =====================
$ 323,016,007 $ 618,610,018 $ 93,690,710 $ 130,256,584 $ 107,812,326
(187,938) (1,289,799) (105,758) (528,311) (357,510)
(95,783,619) (105,448,952) 8,079,936 (19,184,580) (50,859,864)
27,723,191 96,421,637 18,488,105 12,620,610 152,140
- --------------------- --------------------- --------------------- --------------------- ---------------------
$ 254,767,641 $ 608,292,904 $ 120,152,993 $ 123,164,303 $ 56,747,092
===================== ===================== ===================== ===================== =====================
$ 178,291,004 $ 384,343,282 $ 98,624,292 $ 71,618,358 $ 46,916,709
===================== ===================== ===================== ===================== =====================
13,289,475 18,199,330 11,567,187 3,714,184 3,915,220
===================== ===================== ===================== ===================== =====================
$ 13.42 $ 21.12 $ 8.53 $ 19.28 $ 11.98
===================== ===================== ===================== ===================== =====================
$ 14.24 $ 22.41 $ 9.05 $ 20.46 $ 12.71
===================== ===================== ===================== ===================== =====================
$ 46,242,497 $ 157,225,937 $ 18,768,218 $ 35,799,684 $ 9,044,574
===================== ===================== ===================== ===================== =====================
3,695,901 8,368,563 2,456,381 2,014,328 878,411
===================== ===================== ===================== ===================== =====================
$ 12.51 $ 18.79 $ 7.64 $ 17.77 $ 10.30
===================== ===================== ===================== ===================== =====================
$ 17,370,142 $ 46,329,626 $ 2,760,483 $ 15,746,261 $ 785,809
===================== ===================== ===================== ===================== =====================
1,390,277 2,463,227 361,274 885,652 76,459
===================== ===================== ===================== ===================== =====================
$ 12.49 $ 18.81 $ 7.64 $ 17.78 $ 10.28
===================== ===================== ===================== ===================== =====================
$ 12,863,998 $ 20,394,059 $ -- $ -- $ --
===================== ===================== ===================== ===================== =====================
929,926 908,257 -- -- --
===================== ===================== ===================== ===================== =====================
$ 13.83 $ 22.45 $ -- $ -- $ --
===================== ===================== ===================== ===================== =====================
$ 12,744,565 $ 74,028,354 $ 8,733,294 $ 30,408,314 $ 5,474,635
===================== ===================== ===================== ===================== =====================
48
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2006 (unaudited)
CGM Advisor Hansberger Harris Associates
Targeted Equity International Focused Value
Fund Fund Fund
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
INVESTMENT INCOME
Dividends $ 7,272,824 $ 2,525,356 $ 1,496,617
Interest 268,137 32,480 245,574
Securities lending income 60,049 56,627 13,285
Less net foreign taxes withheld (136,345) (263,278) (450)
--------------------- --------------------- ---------------------
7,464,665 2,351,185 1,755,026
--------------------- --------------------- ---------------------
Expenses
Management fees 2,670,520 610,461 1,369,577
Service fees - Class A 871,919 121,616 91,843
Service and distribution fees -
Class B 262,391 171,502 451,968
Service and distribution fees -
Class C 32,405 105,112 550,238
Trustees' fees and expenses 33,519 12,104 13,904
Administrative fees 234,514 41,301 99,349
Custodian fees and expenses 32,573 64,951 16,843
Transfer agent fees and expenses -
Class A, Class B, Class C 572,015 227,310 290,594
Transfer agent fees and expenses -
Class Y 4,899 -- --
Audit fees 13,877 19,504 11,827
Legal fees 24,181 4,979 13,317
Shareholder reporting expenses 73,811 24,276 43,013
Registration fees 29,776 20,590 26,442
Expense waiver recapture - Class Y
(Note 4) -- -- --
Miscellaneous expenses 10,718 6,177 6,552
--------------------- --------------------- ---------------------
Total expenses 4,867,118 1,429,883 2,985,467
Less reimbursement/waiver (Note 4) -- -- --
--------------------- --------------------- ---------------------
Net expenses 4,867,118 1,429,883 2,985,467
--------------------- --------------------- ---------------------
Net investment income (loss) 2,597,547 921,302 (1,230,441)
--------------------- --------------------- ---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Realized gain (loss) on:
Investments - net 23,387,677 11,582,491 22,212,904
Foreign currency transactions - net -- (66,794) --
Change in unrealized appreciation
(depreciation) on:
Investments - net 7,508,077 (1,285,911) (20,895,004)
Foreign currency translations - net -- 10,148 --
--------------------- --------------------- ---------------------
Net realized and unrealized gain on
investments and foreign currency
transactions 30,895,754 10,239,934 1,317,900
--------------------- --------------------- ---------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 33,493,301 $ 11,161,236 $ 87,459
===================== ===================== =====================
Harris Associates
Large Cap Value
Fund
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 2,012,289
Interest 54,327
Securities lending income 2,969
Less net foreign taxes withheld --
---------------------
2,069,585
---------------------
Expenses
Management fees 923,193
Service fees - Class A 229,439
Service and distribution fees -
Class B 264,234
Service and distribution fees -
Class C 94,379
Trustees' fees and expenses 17,503
Administrative fees 90,441
Custodian fees and expenses 18,151
Transfer agent fees and expenses -
Class A, Class B, Class C 370,555
Transfer agent fees and expenses -
Class Y 9,098
Audit fees 12,047
Legal fees 15,639
Shareholder reporting expenses 44,852
Registration fees 30,863
Expense waiver recapture - Class Y
(Note 4) 2,887
Miscellaneous expenses 7,074
---------------------
Total expenses 2,130,355
Less reimbursement/waiver (Note 4) (131,071)
---------------------
Net expenses 1,999,284
---------------------
Net investment income (loss) 70,301
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Realized gain (loss) on:
Investments - net 14,596,229
Foreign currency transactions - net --
Change in unrealized appreciation
(depreciation) on:
Investments - net (12,087,667)
Foreign currency translations - net --
---------------------
Net realized and unrealized gain on
investments and foreign currency
transactions 2,508,562
---------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,578,863
=====================
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
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
$ 4,509,067 $ 1,029,917 $ 689,348 $ 271,415
165,909 42,402 78,798 11,016
92,639 4,176 16,614 1,683
(15,037) (4,215) -- --
- --------------------- --------------------- --------------------- ---------------------
4,752,578 1,072,280 784,760 284,114
- --------------------- --------------------- --------------------- ---------------------
2,843,572 462,137 539,361 222,387
490,920 124,224 82,883 61,072
849,960 105,035 193,636 47,699
240,858 14,251 74,121 4,530
26,148 13,120 11,478 10,375
194,087 39,463 32,495 19,282
37,737 15,569 12,419 10,830
823,465 160,793 222,701 135,929
14,329 -- -- --
18,788 14,925 13,028 12,101
23,884 5,984 4,090 2,497
92,915 19,537 24,453 17,432
29,151 21,680 19,621 17,886
-- -- -- --
8,333 5,802 4,537 4,066
- --------------------- --------------------- --------------------- ---------------------
5,694,147 1,002,520 1,234,823 566,086
-- -- (13,780) (19,670)
- --------------------- --------------------- --------------------- ---------------------
5,694,147 1,002,520 1,221,043 546,416
- --------------------- --------------------- --------------------- ---------------------
(941,569) 69,760 (436,283) (262,302)
- --------------------- --------------------- --------------------- ---------------------
36,022,385 8,601,412 10,124,490 2,042,829
9,674 -- -- --
(6,324,777) (3,338,936) 130,174 (888,908)
50 -- -- --
- --------------------- --------------------- --------------------- ---------------------
29,707,332 5,262,476 10,254,664 1,153,921
- --------------------- --------------------- --------------------- ---------------------
$ 28,765,763 $ 5,332,236 $ 9,818,381 $ 891,619
===================== ===================== ===================== =====================
50
STATEMENTS OF CHANGES IN NET ASSETS
CGM Advisor Targeted Equity Fund
--------------------------------------------
Six Months Ended Year Ended
June 30, 2006 December 31,
(unaudited) 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 2,597,547 $ 5,455,563
Net realized gain on investments and foreign
currency transactions 23,387,677 84,395,181
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations 7,508,077 2,836,954
--------------------- ---------------------
Net increase (decrease) in net assets resulting
from operations 33,493,301 92,687,698
--------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A (4,328,157) (1,593,713)
Class B (344,673) (75,336)
Class C (50,730) (4,738)
Class Y (72,922) (49,839)
Net realized capital gain
Class A -- --
Class B -- --
Class C -- --
--------------------- ---------------------
Total distributions (4,796,482) (1,723,626)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 8) (31,127,555) (87,386,245)
--------------------- ---------------------
Redemption fees
Class A 125 7,519
Class B 10 600
Class C 1 39
Class Y 2 110
--------------------- ---------------------
138 8,268
--------------------- ---------------------
Net increase (decrease) in net assets (2,430,598) 3,586,095
--------------------- ---------------------
NET ASSETS
Beginning of the period 763,439,109 759,853,014
--------------------- ---------------------
End of the period $ 761,008,511 $ 763,439,109
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT
INCOME (LOSS) $ 1,957,721 $ 4,156,656
===================== =====================
Hansberger International Fund
--------------------------------------------
Six Months Ended Year Ended
June 30, 2006 December 31,
(unaudited) 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 921,302 $ 460,052
Net realized gain on investments and foreign
currency transactions 11,515,697 10,947,858
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations (1,275,763) 8,310,253
--------------------- ---------------------
Net increase (decrease) in net assets resulting
from operations 11,161,236 19,718,163
--------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A (748,398) --
Class B (278,489) --
Class C (176,990) --
Class Y -- --
Net realized capital gain
Class A (1,171,107) --
Class B (436,300) --
Class C (277,416) --
--------------------- ---------------------
Total distributions (3,088,700) --
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 8) 2,718,085 (13,245,555)
--------------------- ---------------------
Redemption fees
Class A 1,259 411
Class B 425 216
Class C 272 88
Class Y -- --
--------------------- ---------------------
1,956 715
--------------------- ---------------------
Net increase (decrease) in net assets 10,792,577 6,473,323
--------------------- ---------------------
NET ASSETS
Beginning of the period 142,439,162 135,965,839
--------------------- ---------------------
End of the period $ 153,231,739 $ 142,439,162
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT
INCOME (LOSS) $ (442,544) $ (159,969)
===================== =====================
See accompanying notes to financial statements.
51
Harris Associates Focused Value Fund Harris Associates Large Cap Value Fund
- -------------------------------------------- --------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
June 30, 2006 December 31, June 30, 2006 December 31,
(unaudited) 2005 (unaudited) 2005
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- ---------------------
$ (1,230,441) $ (1,906,104) $ 70,301 $ 595,285
22,212,904 57,991,221 14,596,229 25,778,595
(20,895,004) (40,207,477) (12,087,667) (29,282,480)
- --------------------- --------------------- --------------------- ---------------------
87,459 15,877,640 2,578,863 (2,908,600)
- --------------------- --------------------- --------------------- ---------------------
-- -- (435,185) (231,035)
-- -- (124,956) (81,761)
-- -- (46,052) (28,415)
-- -- (30,568) (16,672)
(2,111,684) (10,494,877) -- --
(2,779,035) (12,897,474) -- --
(3,271,855) (16,300,067) -- --
- --------------------- --------------------- --------------------- ---------------------
(8,162,574) (39,692,418) (636,761) (357,883)
- --------------------- --------------------- --------------------- ---------------------
(50,665,114) (37,006,144) (29,506,069) (61,204,054)
- --------------------- --------------------- --------------------- ---------------------
283 6,748 -- --
353 7,032 -- --
419 9,087 -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
1,055 22,867 -- --
- --------------------- --------------------- --------------------- ---------------------
(58,739,174) (60,798,055) (27,563,967) (64,470,537)
- --------------------- --------------------- --------------------- ---------------------
302,299,103 363,097,158 282,331,608 346,802,145
- --------------------- --------------------- --------------------- ---------------------
$ 243,559,929 $ 302,299,103 $ 254,767,641 $ 282,331,608
===================== ===================== ===================== =====================
$ (1,289,166) $ (58,725) $ (187,938) $ 378,522
===================== ===================== ===================== =====================
IXIS U.S. Diversified Portfolio IXIS Value Fund
- -------------------------------------------- --------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
June 30, 2006 December 31, June 30, 2006 December 31,
(unaudited) 2005 (unaudited) 2005
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
$ (941,569) $ (5,426,695) $ 69,760 $ 36,516
36,032,059 85,718,676 8,601,412 14,669,814
(6,324,727) (36, 729,033) (3,338,936) (7,165,564)
- --------------------- --------------------- --------------------- ---------------------
28,765,763 43,562,948 5,332,236 7,540,766
- --------------------- --------------------- --------------------- ---------------------
-- -- (34,389) --
-- -- (10,477) --
-- -- (1,244) --
-- -- -- --
-- -- (1,779,572) (12,510,896)
-- -- (389,601) (3,162,413)
-- -- (55,512) (411,818)
- --------------------- --------------------- --------------------- ---------------------
-- -- (2,270,795) (16,085,127)
- --------------------- --------------------- --------------------- ---------------------
(50,008,495) (114,045,267) (6,635,801) (3,970,555)
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
(21,242,732) (70,482,319) (3,574,360) (12,514,916)
- --------------------- --------------------- --------------------- ---------------------
629,535,636 700,017,955 123,727,353 136,242,269
- --------------------- --------------------- --------------------- ---------------------
$ 608,292,904 $ 629,535,636 $ 120,152,993 $ 123,727,353
===================== ===================== ===================== =====================
$ (1,289,799) $ (348,230) $ (105,758) $ (129,408)
===================== ===================== ===================== =====================
52
STATEMENTS OF CHANGES IN NET ASSETS (continued)
Vaughan Nelson Small Cap Value Fund
--------------------------------------------
Six Months Ended Year Ended
June 30, 2006 December 31,
(unaudited) 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ (436,283) $ (950,930)
Net realized gain on investments and foreign
currency transactions 10,124,490 12,955,895
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations 130,174 (2,141,269)
--------------------- ---------------------
Net increase (decrease) in net assets resulting
from operations 9,818,381 9,863,696
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 8) 1,979,597 (11,845,326)
--------------------- ---------------------
Redemption fees
Class A 2,676 2,646
Class B 1,501 2,033
Class C 595 649
Class Y -- --
--------------------- ---------------------
4,772 5,328
--------------------- ---------------------
Net increase (decrease) in net assets 11,802,750 (1,976,302)
--------------------- ---------------------
NET ASSETS
Beginning of the period 111,361,553 113,337,855
--------------------- ---------------------
End of the period $ 123,164,303 $ 111,361,553
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT
INCOME (LOSS) $ (528,311) $ (92,028)
===================== =====================
Westpeak Capital Growth Fund
--------------------------------------------
Six Months Ended Year Ended
June 30, 2006 December 31,
(unaudited) 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ (262,302) $ (632,456)
Net realized gain on investments and foreign
currency transactions 2,042,829 984,436
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations (888,908) 1,466,262
--------------------- ---------------------
Net increase (decrease) in net assets resulting
from operations 891,619 1,818,242
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 8) (4,624,460) (12,686,062)
--------------------- ---------------------
Redemption fees
Class A -- --
Class B -- --
Class C -- --
Class Y -- --
--------------------- ---------------------
-- --
--------------------- ---------------------
Net increase (decrease) in net assets (3,732,841) (10,867,820)
--------------------- ---------------------
NET ASSETS
Beginning of the period 60,479,933 71,347,753
--------------------- ---------------------
End of the period $ 56,747,092 $ 60,479,933
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT
INCOME (LOSS) $ (357,510) $ (95,208)
===================== =====================
See accompanying notes to financial statements.
53
This Page Intentionally Left Blank
54
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
---------------------------------------- -----------------------------------------
Net asset
value, Net Dividends Distributions
beginning investment Net realized Total from from from net
of income and unrealized investment net investment realized Total
period (loss) (b) gain (loss) operations income capital gains distributions
---------- ---------- -------------- ---------- -------------- ------------- -------------
CGM ADVISOR TARGETED EQUITY FUND
Class A
06/30/2006(g) $ 10.22 $ 0.04 $ 0.41 $ 0.45 $ (0.07) $ -- $ (0.07)
12/31/2005 9.05 0.07 1.12 1.19 (0.02) -- (0.02)
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)
Class B
06/30/2006(g) 9.48 (0.00)(e) 0.39 0.39 (0.07) -- (0.07)
12/31/2005 8.45 0.00(e) 1.04 1.04 (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)
Class C
06/30/2006(g) 9.48 0.00(e) 0.39 0.39 (0.07) -- (0.07)
12/31/2005 8.45 0.00(e) 1.04 1.04 (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)
Class Y
06/30/2006(g) 10.42 0.06 0.43 0.49 (0.07) -- (0.07)
12/31/2005 9.23 0.10 1.14 1.24 (0.05) -- (0.05)
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)
HANSBERGER INTERNATIONAL FUND
Class A
06/30/2006(g) $ 19.88 $ 0.16 $ 1.39 $ 1.55 $ (0.16) $ (0.25) $ (0.41)
12/31/2005 17.12 0.11 2.65 2.76 -- -- --
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)
Class B
06/30/2006(g) 18.27 0.07 1.28 1.35 (0.16) (0.25) (0.41)
12/31/2005 15.85 0.00(e) 2.42 2.42 -- -- --
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)
Redemption
fee
----------
CGM ADVISOR TARGETED EQUITY FUND
Class A
06/30/2006(g) $ 0.00(e)
12/31/2005 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
Class B
06/30/2006(g) 0.00(e)
12/31/2005 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
Class C
06/30/2006(g) 0.00(e)
12/31/2005 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
Class Y
06/30/2006(g) 0.00(e)
12/31/2005 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
HANSBERGER INTERNATIONAL FUND
Class A
06/30/2006(g) $ 0.00(e)
12/31/2005 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
Class B
06/30/2006(g) 0.00(e)
12/31/2005 0.00(e)
12/31/2004 0.00(e)
12/31/2003 --
12/31/2002 --
12/31/2001 --
(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 agreed to reimburse a portion of the Fund's expenses
and/or waive its management fee during the period. Without this
reimbursement/waiver, expenses would have been higher. See Note 4.
See accompanying notes to financial statements.
55
Ratios to average net assets:
---------------------------------------
Net asset Net assets,
value, Total end of Gross Net Net investment Portfolio
end of return period expenses expenses income (loss) turnover
period (%) (a) (000's) (%) (h) (%) (h) (%) (h) rate (%)
- ---------- --------- ----------- --------- --------- -------------- ---------
$ 10.60 4.4 $ 691,663 1.21 N/A 0.73 55
10.22 13.2 694,121 1.28 N/A 0.78 196
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
9.80 4.1 49,949 1.96 N/A (0.02) 55
9.48 12.4 53,005 2.03 N/A 0.03 196
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
9.80 4.1 7,664 1.96 N/A 0.02 55
9.48 12.4 5,133 2.04 N/A 0.03 196
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
10.84 4.6 11,733 0.90 N/A 1.05 55
10.42 13.4 11,181 1.07 N/A 0.99 196
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
$ 21.02 8.0 $ 99,463 1.60 N/A 1.48 29
19.88 16.1 89,663 1.81 N/A 0.62 45
17.12 13.6(c) 73,707 1.92(f) 1.91(d) 0.14 81
15.07 39.0(c) 59,762 2.32(f) 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
19.21 7.6 32,392 2.35 N/A 0.71 29
18.27 15.3 33,388 2.55 N/A (0.02) 45
15.85 12.7(c) 45,213 2.67(f) 2.66(d) (0.60) 81
14.06 38.0(c) 60,296 3.07(f) 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
(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.
(g)For the six months ended June 30, 2006 (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
value, Net
beginning investment Net realized Total from
of income and unrealized investment
period (loss) (b) gain (loss) operations
---------- ---------- -------------- ----------
HANSBERGER INTERNATIONAL FUND (continued)
Class C
06/30/2006(j) $ 18.28 $ 0.07 $ 1.28 $ 1.35
12/31/2005 15.86 (0.02) 2.44 2.42
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)
HARRIS ASSOCIATES FOCUSED VALUE FUND
Class A
06/30/2006(j) $ 12.08 $ (0.02) $ 0.00(h) $ (0.02)
12/31/2005 13.06 0.00(h) 0.76 0.76
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
06/30/2006(j) 11.59 (0.06) 0.00(h) (0.06)
12/31/2005 12.69 (0.10) 0.74 0.64
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
06/30/2006(j) 11.59 (0.06) 0.00(h) (0.06)
12/31/2005 12.69 (0.10) 0.74 0.64
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
06/30/2006(j) $ 13.33 $ 0.02 $ 0.10 $ 0.12
12/31/2005 13.37 0.05 (0.08) (0.03)
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)
Class B
06/30/2006(j) 12.48 (0.03) 0.09 0.06
12/31/2005 12.62 (0.04) (0.09) (0.13)
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)
12/31/2001 13.40 (0.10) (1.93) (2.03)
Less distributions:
-----------------------------------------
Dividends Distributions
from from net
net investment realized Total Redemption
income capital gains distributions fee
-------------- ------------- ------------- ----------
HANSBERGER INTERNATIONAL FUND (continued)
Class C
06/30/2006(j) $ (0.16) $ (0.25) $ (0.41) $ 0.00(h)
12/31/2005 -- -- -- 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) --
HARRIS ASSOCIATES FOCUSED VALUE FUND
Class A
06/30/2006(j) $ -- $ (0.38) $ (0.38) $ 0.00(h)
12/31/2005 -- (1.74) (1.74) 0.00(h)
12/31/2004 -- -- -- 0.00(h)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001(f) -- -- -- --
Class B
06/30/2006(j) -- (0.38) (0.38) 0.00(h)
12/31/2005 -- (1.74) (1.74) 0.00(h)
12/31/2004 -- -- -- 0.00(h)
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001(f) -- -- -- --
Class C
06/30/2006(j) -- (0.38) (0.38) 0.00(h)
12/31/2005 -- (1.74) (1.74) 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
06/30/2006(j) $ (0.03) $ -- $ (0.03) $ --
12/31/2005 (0.01) -- (0.01) --
12/31/2004 -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 -- -- -- --
Class B
06/30/2006(j) (0.03) -- (0.03) --
12/31/2005 (0.01) -- (0.01) --
12/31/2004 -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
12/31/2001 -- -- -- --
(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 agreed to reimburse a portion of the Fund's expenses
and/or waive its management fee during the period. Without this
reimbursement/waiver, expenses would have been higher. See Note 4.
(d)Had certain expenses not been reduced during the period, total return would
have been lower.
See accompanying notes to financial statements.
57
Ratios to average net assets:
---------------------------------------
Net assets,
Net asset Total end of Gross Net Net investment Portfolio
value, end return period expenses expenses income (loss) turnover
of period (%) (a) (000's) (%) (g) (%) (g) (%) (g) rate (%)
- ---------- --------- ----------- --------- --------- -------------- ---------
$19.22 7.6 $ 21,376 2.35 N/A 0.75 29
18.28 15.3 19,388 2.56 N/A (0.11) 45
15.86 12.8(d) 17,046 2.67(i) 2.66(c) (0.63) 81
14.06 38.0(d) 12,557 3.07(i) 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
$11.68 (0.1) $ 65,193 1.63 N/A (0.35) 25
12.08 5.7 82,298 1.68 N/A (0.04) 39
13.06 10.8 108,042 1.70 N/A (0.15) 26
11.79 27.6(d) 95,957 1.84(i) 1.70(c) (0.28) 30
9.24 (15.7)(d) 68,660 1.79(i) 1.70(c) (0.35) 12
10.96 9.6(d) 45,987 2.08(i) 1.70(c) (0.08) 10
11.15 (0.4) 81,669 2.38 N/A (1.10) 25
11.59 5.0 97,256 2.43 N/A (0.80) 39
12.69 9.9 110,275 2.45 N/A (0.90) 26
11.55 26.6(d) 107,017 2.59(i) 2.45(c) (1.03) 30
9.12 (16.3)(d) 85,794 2.54(i) 2.45(c) (1.10) 12
10.90 9.0(d) 62,671 2.83(i) 2.45(c) (0.83) 10
11.15 (0.4) 96,698 2.38 N/A (1.10) 25
11.59 5.0 122,745 2.43 N/A (0.79) 39
12.69 9.9 144,780 2.45 N/A (0.90) 26
11.55 26.6(d) 124,427 2.59(i) 2.45(c) (1.03) 30
9.12 (16.3)(d) 86,269 2.54(i) 2.45(c) (1.10) 12
10.90 9.0(d) 34,406 2.83(i) 2.45(c) (0.86) 10
$13.42 0.9(d) $ 178,291 1.40(i) 1.30(c) 0.24 13
13.33 (0.2)(d) 188,763 1.46(i) 1.30(c) 0.40 39
13.37 9.1(d) 222,434 1.49(i) 1.30(c) 0.30 27
12.25 30.0(d) 215,259 1.62(i) 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
12.51 0.5(d) 46,242 2.15(i) 2.05(c) (0.51) 13
12.48 (1.0)(d) 59,035 2.21(i) 2.05(c) (0.35) 39
12.62 8.4(d) 79,949 2.24(i) 2.05(c) (0.46) 27
11.64 29.1(d) 91,085 2.37(i) 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
(e)Portfolio turnover excludes the impact of assets as a result of a merger
with another Fund.
(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.
(j)For the six months ended June 30, 2006 (unaudited).
58
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (loss) from investment operations:
----------------------------------------
Net asset
value, Net
beginning investment Net realized Total from
of income and unrealized investment
period (loss) (b) gain (loss) operations
---------- ---------- -------------- ----------
HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued)
Class C
06/30/2006(g) $ 12.46 $ (0.03) $ 0.09 $ 0.06
12/31/2005 12.60 (0.04) (0.09) (0.13)
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)
Class Y
06/30/2006(g) 13.72 0.03 0.11 0.14
12/31/2005 13.74 0.09 (0.10) (0.01)
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)
IXIS U.S. DIVERSIFIED PORTFOLIO
Class A
06/30/2006(g) $ 20.17 $ (0.01) $ 0.96 $ 0.95
12/31/2005 18.75 (0.11) 1.53 1.42
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)
Class B
06/30/2006(g) 18.01 (0.07) 0.85 0.78
12/31/2005 16.87 (0.22) 1.36 1.14
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)
Class C
06/30/2006(g) 18.03 (0.07) 0.85 0.78
12/31/2005 16.89 (0.22) 1.36 1.14
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)
Class Y
06/30/2006(g) 21.41 0.04 1.00 1.04
12/31/2005 19.82 (0.03) 1.62 1.59
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)
Less distributions:
-----------------------------------------
Dividends Distributions
from from net
net investment realized Total
income capital gains distributions
-------------- ------------- -------------
HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued)
Class C
06/30/2006(g) $ (0.03) $ -- $ (0.03)
12/31/2005 (0.01) -- (0.01)
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- -- --
Class Y
06/30/2006(g) (0.03) -- (0.03)
12/31/2005 (0.01) -- (0.01)
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- -- --
IXIS U.S. DIVERSIFIED PORTFOLIO
Class A
06/30/2006(g) $ -- $ -- $ --
12/31/2005 -- -- --
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- (0.01) (0.01)
Class B
06/30/2006(g) -- -- --
12/31/2005 -- -- --
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- (0.01) (0.01)
Class C
06/30/2006(g) -- -- --
12/31/2005 -- -- --
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- (0.01) (0.01)
Class Y
06/30/2006(g) -- -- --
12/31/2005 -- -- --
12/31/2004 -- -- --
12/31/2003 -- -- --
12/31/2002 -- -- --
12/31/2001 -- (0.01) (0.01)
(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 agreed to reimburse a portion of the Fund's expenses
and/or waive its management fee during the period. Without this
reimbursement/waiver, expenses would have been higher. See Note 4.
(d)Had certain expenses not been reduced during the period, total return would
have been lower.
See accompanying notes to financial statements.
59
Ratios to average net assets:
---------------------------------------
Net asset Net assets,
value, Total end of Gross Net Net investment Portfolio
end of return period expenses expenses income turnover
period (%) (a) (000's) (%) (h) (%) (h) (loss) (%) (h) rate (%)
- ---------- --------- ----------- --------- --------- -------------- ---------
$ 12.49 0.5(d) $ 17,370 2.15(f) 2.05(c) (0.51) 13
12.46 (1.0)(d) 20,308 2.21(f) 2.05(c) (0.35) 39
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 N/A (0.68) 195
11.36 (15.1) 10,553 2.21 N/A (0.80) 154
13.83 1.10(d) 12,864 1.05(i) N/A 0.49 13
13.72 (0.0)(d) 14,226 1.09(f) 1.05(c) 0.65 39
13.74 9.6 18,027 0.99 N/A 0.58 27
12.54 30.8 26,545 1.01 N/A 0.51 30(e)
9.59 (19.6) 10,569 0.96 N/A 0.66 195
11.93 (14.0) 11,918 0.91 N/A 0.52 154
$ 21.12 4.7 $ 384,343 1.56 N/A (0.05) 37
20.17 7.6 386,084 1.73 N/A (0.57) 97
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
18.79 4.3 157,226 2.31 N/A (0.80) 37
18.01 6.8 174,745 2.48 N/A (1.32) 97
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
18.81 4.3 46,330 2.31 N/A (0.80) 37
18.03 6.8 48,262 2.48 N/A (1.32) 97
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
22.45 4.9 20,394 1.17 N/A 0.33 37
21.41 8.0 20,445 1.32 N/A (0.16) 97
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
(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.
(g)For the six months ended June 30, 2006 (unaudited).
(h)Computed on an annualized basis for periods less than one year.
(i)Includes expense waiver recapture of 0.04%. See Note 4.
60
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
--------------------------------------- --------------------------
Net asset
value, Net Distributions
beginning investment Net realized Total from from net
of income and unrealized investment realized Total Redemption
period (loss) (b) gain (loss) operations capital gains distributions fee
--------- ---------- -------------- ---------- ------------- ------------- ----------
IXIS VALUE FUND
Class A
06/30/2006(e) $ 8.32 $ 0.01 $ 0.36 $ 0.37 $(0.16) $(0.16) $ --
12/31/2005 8.92 0.02 0.54 0.56 (1.16) (1.16) --
12/31/2004 8.16 0.00(c) 0.93 0.93 (0.17) (0.17) --
12/31/2003 6.20 (0.01) 1.97 1.96 -- -- --
12/31/2002 7.70 (0.01) (1.49) (1.50) -- -- --
12/31/2001 7.60 (0.02) 0.12 0.10 -- -- --
Class B
06/30/2006(e) 7.51 (0.02) 0.31 0.29 (0.16) (0.16) --
12/31/2005 8.21 (0.05) 0.51 0.46 (1.16) (1.16) --
12/31/2004 7.57 (0.06) 0.87 0.81 (0.17) (0.17) --
12/31/2003 5.80 (0.06) 1.83 1.77 -- -- --
12/31/2002 7.26 (0.06) (1.40) (1.46) -- -- --
12/31/2001 7.22 (0.07) 0.11 0.04 -- -- --
Class C
06/30/2006(e) 7.50 (0.02) 0.32 0.30 (0.16) (0.16) --
12/31/2005 8.21 (0.05) 0.50 0.45 (1.16) (1.16) --
12/31/2004 7.57 (0.05) 0.86 0.81 (0.17) (0.17) --
12/31/2003 5.80 (0.06) 1.83 1.77 -- -- --
12/31/2002 7.26 (0.06) (1.40) (1.46) -- -- --
12/31/2001 7.22 (0.07) 0.11 0.04 -- -- --
VAUGHAN NELSON SMALL CAP VALUE FUND
Class A
06/30/2006(e) $17.69 $(0.04) $ 1.63 $ 1.59 $ -- $ -- $0.00(c)
12/31/2005 16.07 (0.08) 1.70 1.62 -- -- 0.00(c)
12/31/2004 13.94 (0.13) 2.26 2.13 -- -- 0.00(c)
12/31/2003 10.05 (0.19) 4.08 3.89 -- -- --
12/31/2002 14.52 (0.21) (4.26) (4.47) -- -- --
12/31/2001 16.51 (0.21) (1.78) (1.99) -- -- --
Class B
06/30/2006(e) 16.36 (0.10) 1.51 1.41 -- -- 0.00(c)
12/31/2005 14.97 (0.19) 1.58 1.39 -- -- 0.00(c)
12/31/2004 13.08 (0.22) 2.11 1.89 -- -- 0.00(c)
12/31/2003 9.51 (0.26) 3.83 3.57 -- -- --
12/31/2002 13.84 (0.28) (4.05) (4.33) -- -- --
12/31/2001 15.86 (0.30) (1.72) (2.02) -- -- --
Class C
06/30/2006(e) 16.37 (0.10) 1.51 1.41 -- -- 0.00(c)
12/31/2005 14.98 (0.19) 1.58 1.39 -- -- 0.00(c)
12/31/2004 13.09 (0.22) 2.11 1.89 -- -- 0.00(c)
12/31/2003 9.51 (0.26) 3.84 3.58 -- -- --
12/31/2002 13.84 (0.28) (4.05) (4.33) -- -- --
12/31/2001 15.86 (0.30) (1.72) (2.02) -- -- --
(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 year are
not annualized.
(b)Per share net investment income (loss) has been calculated using the average
shares outstanding during the period.
(c)Amount rounds to less than $0.01 per share.
(d)Effect of voluntary waiver of expenses by advisor was less than 0.005%.
(e)For the six months ended June 30, 2006 (unaudited).
See accompanying notes to financial statements.
61
Ratios to average net assets
---------------------------------------
Net asset Net assets,
value, Total end of Gross Net Net investment Portfolio
end of return period expenses expenses income (loss) turnover
period (%) (a) (000's) (%) (f) (%) (f) (%) (f) rate (%)
- ---------- --------- ----------- --------- --------- -------------- ---------
$ 8.53 4.5 $ 98,624 1.48 N/A 0.26 30
8.32 6.2 98,353 1.60(d) N/A 0.19 62
8.92 11.4 105,359 1.66 N/A 0.03 56
8.16 31.6 110,228 1.81 N/A (0.15) 75
6.20 (19.5) 99,894 1.68 N/A (0.21) 67
7.70 1.3 137,855 1.64 N/A (0.28) 77
7.64 3.9 18,768 2.23 N/A (0.50) 30
7.51 5.5 22,458 2.35(d) N/A (0.56) 62
8.21 10.7 27,804 2.41 N/A (0.72) 56
7.57 30.5 30,029 2.56 N/A (0.90) 75
5.80 (20.1) 27,808 2.43 N/A (0.96) 67
7.26 0.6 44,325 2.39 N/A (1.03) 77
7.64 4.1 2,760 2.23 N/A (0.50) 30
7.50 5.4 2,916 2.35(d) N/A (0.56) 62
8.21 10.7 3,079 2.41 N/A (0.70) 56
7.57 30.5 2,134 2.56 N/A (0.90) 75
5.80 (20.1) 2,047 2.43 N/A (0.96) 67
7.26 0.6 2,833 2.39 N/A (1.03) 77
$ 19.28 9.0(h) $ 71,618 1.72(i) 1.70(g) (0.38) 40
17.69 10.1 58,963 1.92 N/A (0.47) 80
16.07 15.3 45,138 2.01 N/A (0.89) 172
13.94 38.7 45,442 2.33 N/A (1.69) 156
10.05 (30.8) 38,441 2.13 N/A (1.72) 160
14.52 (12.1) 69,873 2.08 N/A (1.43) 174
17.77 8.6(h) 35,800 2.48(i) 2.46(g) (1.17) 40
16.36 9.3 38,732 2.66 N/A (1.24) 80
14.97 14.5 54,652 2.76 N/A (1.65) 172
13.08 37.5 55,662 3.08 N/A (2.44) 156
9.51 (31.3) 46,215 2.88 N/A (2.47) 160
13.84 (12.7) 82,060 2.83 N/A (2.18) 174
17.78 8.6(h) 15,746 2.47(i) 2.45(g) (1.14) 40
16.37 9.3 13,667 2.67 N/A (1.23) 80
14.98 14.4 13,549 2.76 N/A (1.63) 172
13.09 37.6 12,042 3.08 N/A (2.44) 156
9.51 (31.3) 10,930 2.88 N/A (2.47) 160
13.84 (12.7) 22,047 2.83 N/A (2.18) 174
(f)Computed on an annualized basis for periods less than one year.
(g)The investment adviser agreed to reimburse a portion of the Fund's expenses
and/or waive its management fee during the period. Without this
reimbursement/waiver, expenses would have been higher. See Note 4.
(h)Had certain expenses not been reduced during the period, total return would
have been lower.
(i)Represents total expenses prior to advisory fee waiver and/or reimbursement
of a portion of the Fund's expenses.
62
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions:
---------------------------------------- --------------------------
Net asset
value, Net Distributions
beginning investment Net realized Total from from net
of income and unrealized investment realized Total
period (loss) (b) gain (loss) operations capital gains distributions
---------- ---------- -------------- ---------- ------------- -------------
WESTPEAK CAPITAL GROWTH FUND
Class A
06/30/2006(d) $ 11.81 $ (0.05) $ 0.22 $ 0.17 $ -- $ --
12/31/2005 11.43 (0.10) 0.48 0.38 -- --
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)
Class B
06/30/2006(d) 10.19 (0.08) 0.19 0.11 -- --
12/31/2005 9.94 (0.16) 0.41 0.25 -- --
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)
Class C
06/30/2006(d) 10.17 (0.08) 0.19 0.11 -- --
12/31/2005 9.92 (0.16) 0.41 0.25 -- --
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)
(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)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 and 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, 2006 (unaudited).
See accompanying notes to financial statements.
63
Ratios to average net assets:
-------------------------------------
Net asset Net assets,
value, Total end of Gross Net Net investment Portfolio
end of return period Expenses Expenses income (loss) turnover
period (%) (a) (000's) (%) (h) (%) (e) (%) (e) rate (%)
- ---------- --------- ----------- --------- --------- -------------- ---------
$ 11.98 1.4(g) $ 46,917 1.78(e) 1.71(f) (0.75) 76
11.81 3.3 49,680 1.88 N/A (0.84) 132
11.43 5.2 57,420 1.89 N/A (0.18)(c) 121
10.87 26.7 63,380 1.93 N/A (0.85) 107
8.58 (28.1) 58,729 1.75 N/A (0.84) 103
11.93 (20.5) 98,412 1.62 N/A (0.99) 90
10.30 1.1(g) 9,045 2.53(e) 2.46(f) (1.50) 76
10.19 2.5 9,864 2.63 N/A (1.59) 132
9.94 4.4 12,916 2.64 N/A (0.97)(c) 121
9.52 25.9 16,485 2.68 N/A (1.60) 107
7.56 (28.8) 16,267 2.50 N/A (1.59) 103
10.61 (21.0) 35,409 2.37 N/A (1.74) 90
10.28 1.1(g) 786 2.53(e) 2.46(f) (1.50) 76
10.17 2.5 936 2.63 N/A (1.59) 132
9.92 4.4 1,013 2.64 N/A (0.94)(c) 121
9.50 25.7 1,174 2.68 N/A (1.60) 107
7.56 (28.7) 847 2.50 N/A (1.59) 103
10.60 (21.1) 1,745 2.37 N/A (1.74) 90
(e)Computed on an annualized basis for periods less than one year.
(f)The investment adviser agreed to reimburse a portion of the Fund's expenses
and/or waive its management fee during the period. Without this
reimbursement/waiver, expenses would have been higher. See Note 4.
(g)Had certain expenses not been reduced during the period, total return would
have been lower.
(h)Represents total expenses prior to advisory fee waiver and/or reimbursement
of a portion of the Fund's expenses.
64
NOTES TO FINANCIAL STATEMENTS
June 30, 2006 (Unaudited)
1. Organization. IXIS Advisor Funds Trust I, IXIS Advisor Funds Trust II and
IXIS Advisor Funds Trust III (the "Trusts" and each a "Trust") are each
organized as a Massachusetts business trust. 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
certain equity Funds of the Trusts; the financial statements for the other
funds of the Trusts are presented in separate reports. The following Funds are
included in this report:
IXIS Advisor Funds Trust I:
CGM Advisor Targeted Equity Fund (the "Targeted Equity Fund")
Hansberger International Fund (the "International Fund")
IXIS U.S. Diversified Portfolio (the "U.S. Diversified Portfolio")
IXIS Value Fund (the "Value 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. Targeted Equity Fund,
Large Cap Value Fund and U.S. Diversified Portfolio 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 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 higher 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 to a Fund 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, for those Funds that offer Class Y shares,
transfer agent fees applicable to such class). In addition, each Class 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 value, as reported by pricing services
recommended by the investment adviser's pricing committee and approved by the
Board of Trustees. Such pricing services generally use the security's last sale
price on the exchange or market where primarily traded or, if there is no
reported sale during the day, the closing bid price. Securities traded on the
NASDAQ National Market are valued at the NASDAQ Official Closing Price
("NOCP"), or if lacking a 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 to the Funds 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 60 days or less are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Funds' investment adviser using consistently applied procedures under the
general supervision of the Board of Trustees. Investments in other open-end
investment companies are valued at the net asset value each day.
The Funds may hold securities traded in foreign markets. Foreign securities are
valued at the market price in the foreign market. However, if events occurring
after the close of the foreign market (but before the close of regular trading
on the New York Stock Exchange) are believed to materially affect the value of
those securities, such securities are fair valued pursuant to procedures
approved by the Board of Trustees. When fair valuing equity securities, a Fund
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 foreign market and before the Fund
calculates its net asset value.
65
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
b. Security Transactions and Related Investment Income. Security transactions
are accounted for on trade date. Dividend income is recorded on ex-dividend
date, or in the case of certain foreign securities, as soon as the Fund is
notified, and interest income is recorded on an accrual basis. Interest income
is increased by the accretion of discount and decreased by the amortization of
premium. Investment income is recorded net of foreign taxes withheld when
applicable. 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 and 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, other than investment securities, at the end of the
fiscal period, resulting from changes in exchange rates.
The Funds use foreign currency exchange contracts to facilitate transactions in
foreign-denominated investments. Losses may arise from changes in the value of
the foreign currency or if the counterparties do not perform under the
contracts' terms.
Each Fund may purchase investments of foreign issuers. Investing in securities
of foreign issuers involves special risks and considerations not typically
associated with investing in U.S. companies and securities of the U.S.
government. These risks include revaluation of currencies and the risk of
appropriation. Moreover, the markets for securities of many foreign issuers may
be less liquid and the price of such securities may be more volatile that those
of comparable U.S. companies and the U.S. government.
d. Forward Foreign Currency Contracts. The International Fund, the U.S.
Diversified Portfolio and the Value Fund may enter into forward foreign
currency contracts. Contracts to buy generally are used to acquire exposure to
foreign currencies, while contracts to sell are used to hedge a Fund's
investments against currency fluctuation. Also, a contract to buy or sell can
offset a previous contract. These contracts involve market risk in excess of
the unrealized gain or loss reflected in the Funds' Statement of Assets and
Liabilities. 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. At June 30, 2006, there were no open forward currency
contracts.
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. Permanent differences are primarily due to
differing treatments for book and tax purposes of items such as net operating
losses and foreign currency transactions. Permanent book and tax basis
differences relating to shareholder distributions, net investment income, and
net realized gains will result in reclassifications to capital accounts.
Temporary differences between book and tax distributable earnings are primarily
due to deferred Trustees' fees, capital loss carryforwards, wash sales,
distributions from REITs and gains realized from passive foreign investment
companies. Distributions from net investment income and short-term capital
gains are considered to be ordinary income for tax purposes.
66
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
Tax characterization of distributions is determined on an annual basis. The tax
character of distributions paid to shareholders during the year ended
December 31, 2005 was as follows:
2005 Distributions Paid From:
- ------------------------------------
Ordinary Long-Term
Fund Income Capital Gains Total
---- ------ ------------- -----
Targeted Equity Fund $1,723,626 $ -- $ 1,723,626
International Fund -- -- --
Focused Value Fund -- 39,692,418 39,692,418
Large Cap Value Fund 357,883 -- 357,883
U.S. Diversified Portfolio -- -- --
Value Fund 2,535,529 13,549,598 16,085,127
Small Cap Value Fund -- -- --
Capital Growth Fund -- -- --
As of December 31, 2005, capital loss carryforwards and post-October losses
were as follows:
Targeted International Focused Large Cap U.S. Diversified Value
Equity Fund Fund Value Fund Value Fund Portfolio Fund
- - ----------- ---- ---------- ---------- --------- ----
Capital loss carryforward:
Expires December 31, 2009 $ -- $ -- $ -- $ (75,393,915) $ (77,008,343) $ --
Expires December 31, 2010 (55,280,538) -- -- (24,633,843) (62,468,898) --
Expires December 31, 2011 -- -- -- (9,965,466) -- --
------------ ----------- ----------- ------------- ------------- -----------
Total capital loss carryforward (55,280,538) -- -- (109,993,224) (139,477,241) --
------------ ----------- ----------- ------------- ------------- -----------
Deferred net capital losses (post-October) -- -- -- -- -- --
============ =========== =========== ============= ============= ===========
Small Cap Capital
Value Fund Growth Fund
- - ---------- -----------
Capital loss carryforward:
Expires December 31, 2009 $ (1,984,150) $(21,116,910)
Expires December 31, 2010 (27,289,950) (26,883,047)
Expires December 31, 2011 -- (4,097,913)
------------ ------------
Total capital loss carryforward (29,274,100) (52,097,870)
------------ ------------
Deferred net capital losses (post-October) -- (314,439)
============ ============
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. The repurchase agreements are
tri-party agreements whereby the collateral is held at the custodian bank in a
segregated account for the benefit of the Fund and on behalf of the
counterparty. 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. Securities Lending. The Funds have entered into an agreement with State
Street Bank and Trust Company ("State Street Bank"), as agent of the Funds, to
lend securities to certain designated borrowers. The loans are collateralized
with cash or securities in an amount equal to at least 105% or 102% of the
market value of the loaned international or domestic securities, respectively,
when the loan is initiated. Thereafter, the value of the collateral must remain
at least 102% of the market value of loaned securities for U.S. equities and
U.S. corporate debt; at least 105% of the market value of loaned securities for
non-U.S. equities; and at least 100% of the market value of loaned securities
for U.S. government securities, sovereign debt issued by non-U.S. governments
and non-U.S. corporate debt. In the event that the market value of the
collateral falls below the required percentages described above, the borrower
will deliver additional collateral on the next business day. As with other
extensions of credit, the Funds may bear the risk of loss with respect to the
investment of the collateral. The Funds invest cash collateral in short-term
investments, a portion of the income from which is remitted to the borrowers
and the remainder allocated between the Funds and State Street Bank as lending
agent. 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, 2006 were
as follows:
Market Value of Value of Collateral
Fund Securities on Loan Received
---- ------------------ --------
Targeted Equity Fund $16,573,677 $16,743,644
International Fund 44,666,859 45,792,193
Focused Value Fund 35,003,399 36,044,953
Large Cap Value Fund 12,744,565 13,010,211
U.S. Diversified Portfolio 74,028,354 75,130,129
Value Fund 8,733,294 8,910,402
Small Cap Value Fund 30,408,314 31,207,203
Capital Growth Fund 5,474,635 5,455,932
67
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
i. 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.
3. Purchases and Sales of Securities. For the six months ended June 30, 2006,
purchases and sales of securities (excluding short-term investments) were as
follows:
Fund Purchases Sales
---- --------- -----
Targeted Equity Fund $419,536,583 $449,378,438
International Fund 44,342,789 43,370,924
Focused Value Fund 63,319,887 113,861,420
Large Cap Value Fund 34,317,144 66,858,455
U.S. Diversified Portfolio 234,066,061 280,708,587
Value Fund 36,172,521 46,092,174
Small Cap Value Fund 45,948,153 46,090,952
Capital Growth Fund 45,099,321 49,682,090
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. IXIS Asset Management Advisors, L.P. ("IXIS Advisors")
serves as investment adviser to each Fund except the Targeted Equity Fund.
Capital Growth Management Limited Partnership ("CGM") is the investment adviser
to the Targeted Equity Fund. Under the terms of the management agreements, each
Fund pays a management fee at the following annual rates, calculated daily and
payable monthly, based on each Fund's average daily net assets:
Percentage of Average Daily Net Assets
- - ------------------------------------------------------------
First Next Next Next Over
Fund $200 million $300 million $500 million $1 billion $2 billion
- ---- ------------ ------------ ------------ ---------- ----------
Targeted Equity Fund 0.75% 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%
U.S. Diversified Portfolio 0.90% 0.90% 0.90% 0.80% 0.80%
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%
Effective July 1, 2006, the management fee for Focused Value Fund was reduced
to an annual rate of 0.90% of the Fund's average daily net assets.
IXIS Advisors has entered into subadvisory agreements for each Fund as listed
below.
International Fund Hansberger Global Investors, Inc. ("Hansberger")
Focused Value Fund Harris Associates L.P. ("Harris")
Large Cap Value Fund Harris
U.S. Diversified Portfolio 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")
Small Cap Value Fund Vaughan Nelson
Capital Growth Fund Westpeak
Payments to IXIS Advisors are reduced in the amount of payments to the
subadvisers.
Mercury Advisors serves as a subadviser to a segment of the U.S. Diversified
Portfolio. "Mercury Advisors" is the name under which Fund Asset Management,
L.P., a wholly owned subsidiary of Merrill Lynch & Co., Inc. conducts certain
business. Merrill Lynch & Co., Inc. and BlackRock, Inc. have announced that
they have reached an agreement to merge Fund Asset Management, BlackRock, Inc.,
and certain other affiliates of Merrill Lynch & Co., Inc., in order to create a
new independent company. The transaction is expected to be closed in the third
quarter of 2006.
68
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
IXIS Advisors has given binding undertakings to the Funds to defer its
management fees and/or reimburse certain expenses associated with these Funds
to limit their operating expenses. These undertakings are in effect until
April 30, 2007 and will be reevaluated on an annual basis. At June 30, 2006,
the expense limits as a percentage of average daily net assets under the
expense limitation agreements were as follows:
Expense Limit as a Percentage of Average
Daily Net Assets
- ----------------------------------------
Fund Class A Class B Class C Class Y
---- ------- ------- ------- -------
Focused Value Fund 1.70% 2.45% 2.45% --%
Large Cap Value Fund 1.30% 2.05% 2.05% 1.05%
Small Cap Value Fund 1.60% 2.35% 2.35% --%
Capital Growth Fund 1.50% 2.25% 2.25% --%
Prior to May 1, 2006, Small Cap Value Fund and Capital Growth Fund had no
expense limit.
For the six months ended June 30, 2006, the management fees and waivers of
management fees for each Fund were as follows:
Percentage of
Average
Gross Waiver of Net Daily Net Assets
- Management Management Management ----------------
Fund Fee Fee Fee Gross Net
---- ---------- ---------- ---------- ----- ---
Targeted Equity Fund $2,670,520 $-- 2,670,520 0.70% 0.70%
International Fund 610,461 -- 610,461 0.80% 0.80%
Focused Value Fund 1,369,577 -- 1,369,577 1.00% 1.00%
Large Cap Value Fund 923,193 -- 923,193 0.69% 0.69%
U.S. Diversified Portfolio 2,843,572 -- 2,843,572 0.90% 0.90%
Value Fund 462,137 -- 462,137 0.75% 0.75%
Small Cap Value Fund 539,361 -- 539,361 0.90% 0.90%
Capital Growth Fund 222,387 -- 222,387 0.75% 0.75%
For the six months ended June 30, 2006, expenses have been reimbursed as
follows: Large Cap Value Fund $131,071, Small Cap Value Fund $13,780 and
Capital Growth Fund $19,670.
IXIS Advisors shall be permitted to recover expenses it has borne under the
expense limitation agreement (whether through reduction of its management fees
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, 2006, the amounts subject to possible
reimbursement under the expense limitation agreements were as follows:
Expenses Subject Expenses Subject
to Possible to Possible
Reimbursement Reimbursement
Fund until December 31, 2006 until December 31, 2007
---- ----------------------- -----------------------
Large Cap Value Fund $479,821 $131,071
Small Cap Value Fund -- 13,780
Capital Growth Fund -- 19,670
Certain officers and directors of IXIS Advisors and its affiliates are also
officers or Trustees of the Funds. IXIS Advisors, CGM, Harris, Loomis Sayles,
Vaughan Nelson and Westpeak are subsidiaries of IXIS Asset Management US Group,
L.P. ("IXIS US Group") (formerly, IXIS Asset Management North America, L.P.),
which is part of IXIS Asset Management Group, an international asset management
group based in Paris, France. IXIS Asset Management Group is ultimately owned
principally, directly or indirectly by three large affiliated French financial
services entities: the Caisse Nationale des Caisses d'Epargne, a financial
institution owned by CDC (as defined below) and by French regional savings
banks known as Caisses d'Epargne; the Caisse des Depots et Consignations
("CDC"), a public sector financial institution created by the French government
in 1816; and CNP Assurances, a large French life insurance company. Hansberger
is an affiliated money manager of IXIS US Group.
b. Administrative Expense. IXIS Advisors performs certain administrative
services for the Funds and has subcontracted with State Street Bank to serve as
sub-administrator. 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, IXIS Advisor
69
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
Cash Management Trust ("IXIS Advisor Funds Trusts"), Loomis Sayles Funds I,
Loomis Sayles Funds II ("Loomis Sayles Funds Trusts") and IXIS Advisors, each
Fund pays IXIS Advisors monthly its pro rata portion of fees equal to an annual
rate of 0.0675% of the first $5 billion of the average daily net assets of the
IXIS Advisor Funds Trusts and Loomis Sayles Funds Trusts, 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 IXIS Advisor Funds Trusts and Loomis
Sayles Funds Trusts of $5 million, which is reevaluated on an annual basis.
For the six months ended June 30, 2006, amounts paid to IXIS Advisors for
administrative fees were as follows:
Administrative
Fund Fees
---- ----
Targeted Equity Fund $234,514
International Fund 41,301
Focused Value Fund 99,349
Large Cap Value Fund 90,441
U.S. Diversified Portfolio 194,087
Value Fund 39,463
Small Cap Value Fund 32,495
Capital Growth Fund 19,282
c. Service and Distribution Fees. The Trusts have entered into a distribution
agreement with IXIS Asset Management Distributors, L.P. ("IXIS Distributors"),
a wholly-owned subsidiary of IXIS US Group. Pursuant to this agreement, IXIS
Distributors serves as principal underwriter of the Funds.
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 Distributors a monthly service fee
at the annual rate not to exceed 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, 2006, 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 $871,919 $ 65,598 $ 8,101 $196,793 $ 24,304
International Fund 121,616 42,875 26,278 128,627 78,834
Focused Value Fund 91,843 112,992 137,559 338,976 412,679
Large Cap Value Fund 229,439 66,059 23,595 198,175 70,784
U.S. Diversified Portfolio 490,920 212,490 60,214 637,470 180,644
Value Fund 124,224 26,259 3,563 78,776 10,688
Small Cap Value Fund 82,883 48,409 18,530 145,227 55,591
Capital Growth Fund 61,072 11,925 1,132 35,774 3,398
70
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
d. Commissions. The Funds have been informed that commissions (including CDSC)
on Fund shares paid to IXIS Distributors by investors in shares of the Funds
during the six months ended June 30, 2006 were as follows:
Fund Commission
---- ----------
Targeted Equity Fund $217,086
International Fund 68,155
Focused Value Fund 225,259
Large Cap Value Fund 86,641
U.S. Diversified Portfolio 285,125
Value Fund 76,179
Small Cap Value Fund 73,749
Capital Growth Fund 34,588
For the six months ended June 30, 2006, brokerage commissions for portfolio
transactions paid to affiliated broker/dealers by the Funds were as follows:
Fund Commissions
---- -----------
U.S. Diversified Portfolio $451
e. Trustees Fees and Expenses. The Funds do not pay any compensation directly
to their officers or Trustees who are directors, officers or employees of IXIS
Advisors, IXIS Distributors, IXIS US Group, or their affiliates. The
Chairperson of the Board receives a retainer fee at the annual rate of
$200,000. The Chairperson does not receive any meeting attendance fees for
Board of Trustees meetings or committee meetings that she attends. Each
independent Trustee (other than the Chairperson) receives, in the aggregate, a
retainer fee at the annual rate of $55,000. Each independent Trustee also
receives a meeting attendance fee of $6,000 for each meeting of the Board of
Trustees that he or she attends in person and $3,000 for each meeting of the
Board of Trustees that he or she attends telephonically. In addition, each
committee chairman receives an additional retainer fee at the annual rate of
$10,000. Each Contract Review and Governance Committee member is compensated
$4,000 for each Committee meeting that he or she attends in person and $2,000
for each meeting that he or she attends telephonically. Each Audit Committee
member is compensated $5,000 for each Committee meeting that he or she attends
in person and $2,500 for each meeting that he or she attends telephonically.
These fees are allocated among the Funds in the 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.
f. Redemption Fees. Shareholders of Class A shares of Targeted Equity Fund,
International Fund, Focused Value Fund and Small Cap Value Fund are charged a
2% redemption fee if they redeem, including redeeming by exchange, Class A
shares and Class Y shares within 60 days of their acquisition (including
acquisition by exchange). The redemption fee is intended to offset the costs to
the Funds of short-term trading, such as portfolio transaction and market
impact costs associated with redemption activity and administrative costs
associated with processing redemptions. The redemption fee is deducted from the
shareholder's redemption or exchange proceeds and is paid to the Fund. The
"first-in, first-out" (FIFO) method is used to determine the holding period of
redeemed or exchanged shares, which means that if a shareholder 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 accounted
for as an addition to paid-in capital and are presented in the Statements of
Changes in Net Assets.
5. Line of Credit. Each Fund, together with certain other Funds of IXIS Advisor
Funds Trusts and Loomis Sayles Funds Trusts, participates in a $75,000,000
committed line of credit provided by State Street Bank. Interest is charged to
each participating Portfolio or Fund based on its borrowing at a rate per annum
equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of
0.09% per annum, payable at the end of each calendar quarter, is accrued and
apportioned among the participating Portfolios or Funds based on their average
daily unused portion of the line of credit. For the six months ended June 30,
2006, the Funds had no borrowings under this agreement.
71
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
6. 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 included in realized gains on investments in the
Statements of Operations. For the six months ended June 30, 2006, amounts
rebated under these agreements were as follows:
Fund Rebates
---- -------
Targeted Equity Fund $208,144
International Fund 9,876
Focused Value Fund 81,744
Large Cap Value Fund 38,753
U.S. Diversified Portfolio 97,472
Value Fund 28,638
Small Cap Value Fund 15,988
Capital Growth Fund 10,545
7. Concentration of Risk. Focused Value Fund is a non-diversified Fund.
Compared with diversified mutual funds, the Focused Value Fund may invest a
greater percentage of its assets in a particular company. Therefore, the
Focused Value 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, 2006: France 11.1%, Japan 18.7%, and the
United Kingdom 18.4%. The International 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.
72
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
8. Capital Shares. The Funds may issue an unlimited number of shares of
beneficial interest without par value. Transactions in capital shares were as
follows:
Six Months Ended
June 30, 2006
-----------------------------------
Targeted Equity Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 1,531,700 $ 16,304,478
Shares issued in connection with the reinvestment of distributions 415,904 4,138,251
---------------- -----------------
1,947,604 20,442,729
Shares repurchased (4,636,901) (49,214,698)
---------------- -----------------
Net increase (decrease) (2,689,297) $ (28,771,969)
---------------- -----------------
Class B
Shares sold 319,383 $ 3,136,658
Shares issued in connection with the reinvestment of distributions 34,317 315,721
---------------- -----------------
353,700 3,452,379
Shares repurchased (844,946) (8,300,591)
---------------- -----------------
Net increase (decrease) (491,246) $ (4,848,212)
---------------- -----------------
Class C
Shares sold 308,153 $ 3,045,220
Shares issued in connection with the reinvestment of distributions 3,355 30,834
---------------- -----------------
311,508 3,076,054
Shares repurchased (70,483) (686,327)
---------------- -----------------
Net increase (decrease) 241,025 $ 2,389,727
---------------- -----------------
Class Y
Shares sold 81,283 $ 869,813
Shares issued in connection with the reinvestment of distributions 7,177 72,922
---------------- -----------------
88,460 942,735
Shares repurchased (78,094) (839,836)
---------------- -----------------
Net increase (decrease) 10,366 $ 102,899
---------------- -----------------
Increase (decrease) from capital share transactions (2,929,152) $ (31,127,555)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Targeted Equity Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 2,114,436 $ 20,342,978
Shares issued in connection with the reinvestment of distributions 157,595 1,531,634
---------------- -----------------
2,272,031 21,874,612
Shares repurchased (10,590,304) (100,805,465)
---------------- -----------------
Net increase (decrease) (8,318,273) $ (78,930,853)
---------------- -----------------
Class B
Shares sold 479,091 $ 4,271,772
Shares issued in connection with the reinvestment of distributions 8,192 70,535
---------------- -----------------
487,283 4,342,307
Shares repurchased (1,703,082) (15,113,085)
---------------- -----------------
Net increase (decrease) (1,215,799) $ (10,770,778)
---------------- -----------------
Class C
Shares sold 247,891 $ 2,279,688
Shares issued in connection with the reinvestment of distributions 427 3,675
---------------- -----------------
248,318 2,283,363
Shares repurchased (87,175) (772,409)
---------------- -----------------
Net increase (decrease) 161,143 $ 1,510,954
---------------- -----------------
Class Y
Shares sold 154,883 $ 1,499,898
Shares issued in connection with the reinvestment of distributions 4,853 49,839
---------------- -----------------
159,736 1,549,737
Shares repurchased (77,671) (745,305)
---------------- -----------------
Net increase (decrease) 82,065 $ 804,432
---------------- -----------------
Increase (decrease) from capital share transactions (9,290,864) $ (87,386,245)
================ =================
Six Months Ended
June 30, 2006
-----------------------------------
International Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 499,394 $ 10,570,553
Shares issued in connection with the reinvestment of distributions 87,076 1,724,970
---------------- -----------------
586,470 12,295,523
Shares repurchased (365,278) (7,767,963)
---------------- -----------------
Net increase (decrease) 221,192 $ 4,527,560
---------------- -----------------
Class B
Shares sold 164,693 $ 3,212,037
Shares issued in connection with the reinvestment of distributions 36,329 657,916
---------------- -----------------
201,022 3,869,953
Shares repurchased (342,160) (6,657,762)
---------------- -----------------
Net increase (decrease) (141,138) $ (2,787,809)
---------------- -----------------
Class C
Shares sold 109,274 $ 2,134,472
Shares issued in connection with the reinvestment of distributions 18,744 339,625
---------------- -----------------
128,018 2,474,097
Shares repurchased (76,434) (1,495,763)
---------------- -----------------
Net increase (decrease) 51,584 $ 978,334
---------------- -----------------
Increase (decrease) from capital share transactions 131,638 $ 2,718,085
================ =================
Year Ended
December 31, 2005
-----------------------------------
International Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 1,043,158 $ 18,504,622
Shares issued in connection with the reinvestment of distributions 0 0
---------------- -----------------
1,043,158 18,504,622
Shares repurchased (837,941) (14,808,970)
---------------- -----------------
Net increase (decrease) 205,217 $ 3,695,652
---------------- -----------------
Class B
Shares sold 203,605 $ 3,346,613
Shares issued in connection with the reinvestment of distributions 0 0
---------------- -----------------
203,605 3,346,613
Shares repurchased (1,228,248) (20,075,132)
---------------- -----------------
Net increase (decrease) (1,024,643) $ (16,728,519)
---------------- -----------------
Class C
Shares sold 171,446 $ 2,829,915
Shares issued in connection with the reinvestment of distributions 0 0
---------------- -----------------
171,446 2,829,915
Shares repurchased (185,571) (3,042,603)
---------------- -----------------
Net increase (decrease) (14,125) $ (212,688)
---------------- -----------------
Increase (decrease) from capital share transactions (833,551) $ (13,245,555)
================ =================
73
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
8. Capital Shares (continued).
Six Months Ended
June 30, 2006
-----------------------------------
Focused Value Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 347,189 $ 4,211,868
Shares issued in connection with the reinvestment of distributions 127,832 1,459,839
---------------- -----------------
475,021 5,671,707
Shares repurchased (1,707,898) (20,906,354)
---------------- -----------------
Net increase (decrease) (1,232,877) $ (15,234,647)
---------------- -----------------
Class B
Shares sold 174,599 $ 1,997,007
Shares issued in connection with the reinvestment of distributions 177,886 1,938,952
---------------- -----------------
352,485 3,935,959
Shares repurchased (1,419,269) (16,611,781)
---------------- -----------------
Net increase (decrease) (1,066,784) $ (12,675,822)
---------------- -----------------
Class C
Shares sold 350,162 $ 4,017,349
Shares issued in connection with the reinvestment of distributions 160,499 1,751,028
---------------- -----------------
510,661 5,768,377
Shares repurchased (2,428,667) (28,523,022)
---------------- -----------------
Net increase (decrease) (1,918,006) $ (22,754,645)
---------------- -----------------
Increase (decrease) from capital share transactions (4,217,667) $ (50,665,114)
================ =================
Six Months Ended
June 30, 2006
-----------------------------------
Large Cap Value Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 714,388 $ 9,704,788
Shares issued in connection with the reinvestment of distributions 27,510 358,466
---------------- -----------------
741,898 10,063,254
Shares repurchased (1,616,243) (21,922,659)
---------------- -----------------
Net increase (decrease) (874,345) $ (11,859,405)
---------------- -----------------
Class B
Shares sold 97,283 $ 1,235,928
Shares issued in connection with the reinvestment of distributions 9,192 111,771
---------------- -----------------
106,475 1,347,699
Shares repurchased (1,141,785) (14,481,128)
---------------- -----------------
Net increase (decrease) (1,035,310) $ (13,133,429)
---------------- -----------------
Class C
Shares sold 80,799 $ 1,021,076
Shares issued in connection with the reinvestment of distributions 1,655 20,078
---------------- -----------------
82,454 1,041,154
Shares repurchased (322,035) (4,073,558)
---------------- -----------------
Net increase (decrease) (239,581) $ (3,032,404)
---------------- -----------------
Class Y
Shares sold 37,913 $ 528,666
Shares issued in connection with the reinvestment of distributions 2,239 30,077
---------------- -----------------
40,152 558,743
Shares repurchased (146,805) (2,039,574)
---------------- -----------------
Net increase (decrease) (106,653) $ (1,480,831)
---------------- -----------------
Increase (decrease) from capital share transactions (2,255,889) $ (29,506,069)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Focused Value Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 1,278,667 $ 16,573,289
Shares issued in connection with the reinvestment of distributions 580,779 7,068,077
---------------- -----------------
1,859,446 23,641,366
Shares repurchased (3,318,671) (43,905,787)
---------------- -----------------
Net increase (decrease) (1,459,225) $ (20,264,421)
---------------- -----------------
Class B
Shares sold 576,120 $ 7,060,801
Shares issued in connection with the reinvestment of distributions 766,254 8,949,845
---------------- -----------------
1,342,374 16,010,646
Shares repurchased (1,639,139) (21,010,935)
---------------- -----------------
Net increase (decrease) (296,765) $ (5,000,289)
---------------- -----------------
Class C
Shares sold 1,319,958 $ 16,274,937
Shares issued in connection with the reinvestment of distributions 758,307 8,857,031
---------------- -----------------
2,078,265 25,131,968
Shares repurchased (2,893,997) (36,873,402)
---------------- -----------------
Net increase (decrease) (815,732) $ (11,741,434)
---------------- -----------------
Increase (decrease) from capital share transactions (2,571,722) $ (37,006,144)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Large Cap Value Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 1,068,733 $ 13,952,739
Shares issued in connection with the reinvestment of distributions 14,688 191,232
---------------- -----------------
1,083,421 14,143,971
Shares repurchased (3,550,446) (46,275,347)
---------------- -----------------
Net increase (decrease) (2,467,025) $ (32,131,376)
---------------- -----------------
Class B
Shares sold 262,250 $ 3,214,063
Shares issued in connection with the reinvestment of distributions 6,033 73,844
---------------- -----------------
268,283 3,287,907
Shares repurchased (1,873,402) (22,992,338)
---------------- -----------------
Net increase (decrease) (1,605,119) $ (19,704,431)
---------------- -----------------
Class C
Shares sold 233,814 $ 2,864,911
Shares issued in connection with the reinvestment of distributions 976 11,942
---------------- -----------------
234,790 2,876,853
Shares repurchased (699,505) (8,571,119)
---------------- -----------------
Net increase (decrease) (464,715) $ (5,694,266)
---------------- -----------------
Class Y
Shares sold 68,963 $ 925,029
Shares issued in connection with the reinvestment of distributions 1,195 16,006
---------------- -----------------
70,158 941,035
Shares repurchased (345,786) (4,615,016)
---------------- -----------------
Net increase (decrease) (275,628) $ (3,673,981)
---------------- -----------------
Increase (decrease) from capital share transactions (4,812,487) $ (61,204,054)
================ =================
74
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
8. Capital Shares (continued).
Six Months Ended
June 30, 2006
-----------------------------------
U.S. Diversified Portfolio Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 958,991 $ 20,372,247
Shares repurchased (1,898,038) (40,136,455)
---------------- -----------------
Net increase (decrease) (939,047) $ (19,764,208)
---------------- -----------------
Class B
Shares sold 331,164 $ 6,281,315
Shares repurchased (1,663,170) (31,456,529)
---------------- -----------------
Net increase (decrease) (1,332,006) $ (25,175,214)
---------------- -----------------
Class C
Shares sold 52,348 $ 993,575
Shares repurchased (265,401) (5,034,839)
---------------- -----------------
Net increase (decrease) (213,053) $ (4,041,264)
---------------- -----------------
Class Y
Shares sold 65,140 $ 1,468,518
Shares repurchased (111,879) (2,496,327)
---------------- -----------------
Net increase (decrease) (46,739) $ (1,027,809)
---------------- -----------------
Increase (decrease) from capital share transactions (2,530,845) $ (50,008,495)
================ =================
Six Months Ended
June 30, 2006
-----------------------------------
Value Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 463,574 $ 4,012,291
Shares issued in connection with the reinvestment of distributions 214,251 1,776,460
---------------- -----------------
677,825 5,788,751
Shares repurchased (926,136) (8,009,858)
---------------- -----------------
Net increase (decrease) (248,311) $ (2,221,107)
---------------- -----------------
Class B
Shares sold 113,022 $ 875,825
Shares issued in connection with the reinvestment of distributions 50,525 375,430
---------------- -----------------
163,547 1,251,255
Shares repurchased (699,431) (5,450,636)
---------------- -----------------
Net increase (decrease) (535,884) $ (4,199,381)
---------------- -----------------
Class C
Shares sold 14,782 $ 114,703
Shares issued in connection with the reinvestment of distributions 5,804 43,128
---------------- -----------------
20,586 157,831
Shares repurchased (47,929) (373,144)
---------------- -----------------
Net increase (decrease) (27,343) $ (215,313)
---------------- -----------------
Increase (decrease) from capital share transactions (811,538) $ (6,635,801)
================ =================
Year Ended
December 31, 2005
-----------------------------------
U.S. Diversified Portfolio Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 2,385,720 $ 44,954,334
Shares repurchased (4,189,901) (79,262,654)
---------------- -----------------
Net increase (decrease) (1,804,181) $ (34,308,320)
---------------- -----------------
Class B
Shares sold 669,095 $ 11,320,578
Shares repurchased (4,207,942) (71,182,972)
---------------- -----------------
Net increase (decrease) (3,538,847) $ (59,862,394)
---------------- -----------------
Class C
Shares sold 102,734 $ 1,746,851
Shares repurchased (912,989) (15,415,642)
---------------- -----------------
Net increase (decrease) (810,255) $ (13,668,791)
---------------- -----------------
Class Y
Shares sold 142,301 $ 2,842,762
Shares repurchased (451,903) (9,048,524)
---------------- -----------------
Net increase (decrease) (309,602) $ (6,205,762)
---------------- -----------------
Increase (decrease) from capital share transactions (6,462,885) $ (114,045,267)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Value Fund Shares Amount
- --------------------------------------------------------------------- ---------------- -----------------
Class A
Shares sold 752,413 $ 6,758,994
Shares issued in connection with the reinvestment of distributions 1,432,023 12,200,602
---------------- -----------------
2,184,436 18,959,596
Shares repurchased (2,182,286) (19,556,017)
---------------- -----------------
Net increase (decrease) 2,150 $ (596,421)
---------------- -----------------
Class B
Shares sold 229,964 $ 1,881,852
Shares issued in connection with the reinvestment of distributions 393,062 3,030,283
---------------- -----------------
623,026 4,912,135
Shares repurchased (1,018,265) (8,370,264)
---------------- -----------------
Net increase (decrease) (395,239) $ (3,458,129)
---------------- -----------------
Class C
Shares sold 51,464 $ 417,159
Shares issued in connection with the reinvestment of distributions 39,420 303,708
---------------- -----------------
90,884 720,867
Shares repurchased (77,457) (636,872)
---------------- -----------------
Net increase (decrease) 13,427 $ 83,995
---------------- -----------------
Increase (decrease) from capital share transactions (379,662) $ (3,970,555)
================ =================
75
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
8. Capital Shares (continued).
Six Months Ended
June 30, 2006
-----------------------------------
Small Cap Value Fund Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Shares sold 806,988 $ 15,491,762
Shares repurchased (426,569) (8,170,923)
---------------- -----------------
Net increase (decrease) 380,419 $ 7,320,839
---------------- -----------------
Class B
Shares sold 84,641 $ 1,503,322
Shares repurchased (437,483) (7,769,319)
---------------- -----------------
Net increase (decrease) (352,842) $ (6,265,997)
---------------- -----------------
Class C
Shares sold 219,691 $ 3,917,142
Shares repurchased (168,959) (2,992,387)
---------------- -----------------
Net increase (decrease) 50,732 $ 924,755
---------------- -----------------
Increase (decrease) from capital share transactions 78,309 $ 1,979,597
================ =================
Six Months Ended
June 30, 2006
-----------------------------------
Capital Growth Fund Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Shares sold 112,648 $ 1,375,864
Shares repurchased (403,482) (4,907,319)
---------------- -----------------
Net increase (decrease) (290,834) $ (3,531,455)
---------------- -----------------
Class B
Shares sold 42,210 $ 444,951
Shares repurchased (131,918) (1,377,931)
---------------- -----------------
Net increase (decrease) (89,708) $ (932,980)
---------------- -----------------
Class C
Shares sold 2,010 $ 21,084
Shares repurchased (17,619) (181,109)
---------------- -----------------
Net increase (decrease) (15,609) $ (160,025)
---------------- -----------------
Increase (decrease) from capital share transactions (396,151) $ (4,624,460)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Small Cap Value Fund Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Shares sold 1,322,502 $ 21,908,202
Shares repurchased (797,816) (13,154,538)
---------------- -----------------
Net increase (decrease) 524,686 $ 8,753,664
---------------- -----------------
Class B
Shares sold 172,453 $ 2,628,609
Shares repurchased (1,455,176) (22,158,268)
---------------- -----------------
Net increase (decrease) (1,282,723) $ (19,529,659)
---------------- -----------------
Class C
Shares sold 177,290 $ 2,719,736
Shares repurchased (246,708) (3,789,067)
---------------- -----------------
Net increase (decrease) (69,418) $ (1,069,331)
---------------- -----------------
Increase (decrease) from capital share transactions (827,455) $ (11,845,326)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Capital Growth Fund Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Shares sold 241,489 $ 2,743,935
Shares repurchased (1,057,103) (12,074,125)
---------------- -----------------
Net increase (decrease) (815,614) $ (9,330,190)
---------------- -----------------
Class B
Shares sold 93,730 $ 919,070
Shares repurchased (425,145) (4,178,212)
---------------- -----------------
Net increase (decrease) (331,415) $ (3,259,142)
---------------- -----------------
Class C
Shares sold 5,876 $ 57,428
Shares repurchased (15,868) (154,158)
---------------- -----------------
Net increase (decrease) (9,992) $ (96,730)
---------------- -----------------
Increase (decrease) from capital share transactions (1,157,021) $ (12,686,062)
================ =================
76
[LOGO]
Semiannual Report
June 30, 2006
IXIS Equity Diversified Portfolio
Loomis Sayles Large Cap Growth Discipline
Harris Associates Large Cap Value Discipline
Dreman Mid Cap Value Discipline
Hansberger International Value Discipline
IXIS Income Diversified Portfolio
AEW Diversified REIT Discipline
Active Dividend Equity Discipline
Loomis Sayles Inflation Protected Securities Discipline
Loomis Sayles Multi-Sector Bond Discipline
IXIS Moderate Diversified Portfolio
Loomis Sayles Core Fixed Income Discipline
Loomis Sayles Large Cap Growth Discipline
Harris Associates Large Cap Value Discipline
Dreman Mid Cap Value Discipline
Hansberger International Value Discipline
TABLE OF CONTENTS
Management Discussion
and Performance..........Page 1
Portfolio of InvestmentsPage 16
Financial Statements....Page 31
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:
Dreman Value Management, LLC
Hansberger Global Investors, Inc.
Harris Associates, L.P.
Loomis, Sayles & Company, L.P.
- --------------------------------------------------------------------------------
Symbols:
Class A AEDPX
Class C CEDPX
- --------------------------------------------------------------------------------
What You Should Know:
Growth stocks focus on future expectations of a security. The portfolio 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
- --------------------------------------------------------------------------------
Despite a volatile six months for the equity markets, most domestic and
overseas equity market indexes ended the period in positive territory. For the
six-months ended June 30, 2006, the total return on Class A shares of IXIS
Equity Diversified Portfolio was -0.09% at net asset value. The portfolio's
benchmark, the Standard & Poor's 500 Index, returned 2.71% for the same period
and the average return of the funds in Morningstar's Large Growth category was
- -1.34%.
Each of IXIS Equity Diversified Portfolio's four segments is managed by a
separate advisor and each emphasizes a distinct style of investing or class of
equities. This gives investors access to a 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-cap U.S. companies selected for their
growth potential, while the Harris Associates Large Cap Value Discipline uses a
value orientation to invest in large-cap companies. The Dreman Mid Cap Value
Discipline concentrates on equities with mid-sized market capitalizations.
Effective April 3, 2006, Dreman Value Management, LLC replaced Reich & Tang
Asset Management, LLC as the subadviser of the Mid Cap Value segment of the
portfolio. The Hansberger International Value Discipline focuses outside the
United States for small-, mid- and large-cap companies that appear to be
undervalued. Effective March 31, 2006, the segment may invest in emerging as
well as developed markets.
LOOMIS SAYLES LARGE CAP GROWTH DISCIPLINE FOCUSED ON BUSINESS FUNDAMENTALS
In a volatile period, Loomis sought to reduce risk by focusing on attractively
valued stocks of companies with strong business fundamentals. Investments in
specialty finance companies made the biggest contribution to performance.
Certain consumer discretionary, healthcare and energy stocks detracted from
results. Among consumer stocks, apparel retailer Chico's FAS and internet giant
eBay both declined on slowing earnings forecasts and both were sold.
Lower-than-anticipated iPod sales and uncertainty surrounding iMac's product
transition depressed the price of Apple Computer stock, but Loomis believes
planned product launches improve Apple's outlook. UnitedHealth Group, which
provides healthcare plans and other services, and St. Jude Medical, a
manufacturer of cardiovascular devices, are largely responsible for the poor
performance of the segment's healthcare holdings. Both stocks were sold. In
energy, independent oil and gas companies EOG Resources and Southwestern Energy
hurt performance when the supply/demand equation caused natural gas prices to
decline early in 2006. Both stocks were sold. Individual stocks that had the
biggest positive impact on performance included Chicago Mercantile Exchange
(CME), coffee retailer Starbucks, and CB Richard Ellis Group, a global property
management company. CME, a major U.S. securities and commodities exchange,
benefited from growth in the volume of trading in equity and interest-rate
futures, and it plans to begin trading futures contracts on the Chinese yuan.
Starbucks went up in value after raising its full-year earnings forecast and
announcing that sales have been increasing at a higher-than-expected rate. CB
Richard Ellis did well because of broad strength in the global commercial real
estate markets.
HARRIS ASSOCIATES LARGE CAP VALUE DISCIPLINE SOUGHT STOCKS TRADING AT A DISCOUNT
Technology holdings and the segment's exposure to certain consumer stocks hurt
results. Its relatively small positions in energy, telecommunications,
utilities, and materials also held the segment back as these sectors proved to
be strong during the period. Walt Disney was one of the best performing stocks
in the segment. Disney produced two quarters of strong earnings, notably from
its Media Networks (ABC) and its Parks and Resorts division. While expensive,
Disney's Pixar acquisition was viewed as positive because it has the potential
to solidify the company's animation franchise. Hewlett-Packard's new CEO is
determined to boost the company's operating profits and build a more effective
sales organization - two areas that had not been a primary focus in the past -
and this led to increased sales of PCs and printers.
1
IXIS EQUITY DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
Morgan Stanley was also among the segment's top performers, reflecting a major
increase in earnings over the six-month period and attractive business
prospects. Stocks that detracted from results included Intel, Carnival Corp.
and Dell. Intel announced lower-than-expected revenues on weak demand and some
loss of market share for servers in this highly competitive market. Carnival
shares also declined after the company reported lower earnings on reduced sales
of Caribbean cruises. In both cases, Harris Associates believes these
companies' shares are undervalued and expects them to appreciate over time.
While Dell's earnings and stock price declined, Harris believes that the
company's low-cost business model will continue to drive healthy long-term
profitability. The personal computer industry is large and growing, and Harris
Associates believes Dell is poised to become a dominant player.
DREMAN MID CAP VALUE DISCIPLINE SOUGHT UNDERVALUED STOCKS WITH APPRECIATION
POTENTIAL
Dreman Value Management became the manager of the Mid Cap Value segment
effective on April 3, 2006 replacing Reich & Tang Asset Management, LLC. For
the period January 1, 2006 through March 31, 2006, the portfolio constructed by
Reich & Tang contributed positively to the segment's overall performance. This
discussion is based substantially on the portfolio constructed by Dreman. The
portfolio Dreman constructed emphasizes healthcare, energy and industrials,
with relatively small positions in the financial, consumer discretionary, and
utilities sectors. One of the segment's top-performing stocks was
Archer-Daniels-Midland (ADM), which processes oilseeds, corn and wheat. ADM
benefited from higher energy prices and increased emphasis on the production of
ethanol. Global mining company Inco Ltd., which produces nickel and other
metals, was another standout. The rise in the stock's price reflected profits
from rising commodity prices and speculation that it was a potential takeover
target, and Dreman sold the position on strength. Quest Diagnostics was also a
strong contributor. A leader in laboratory testing services, Quest posted solid
earnings. Disappointments included Cooper Companies, an eye-care company, which
had to reduce its earnings forecast for the year. While the short-term
reduction in earnings was disappointing, Cooper has six new product offerings
in its pipeline and Dreman believes the stock is attractively valued. R&G
Financial Corp. (RGF) was another disappointment. A bank holding company with
substantial exposure in Puerto Rico, RGF took several write-downs in its
mortgage portfolio. Recent price weakness in the natural gas industry had a
negative impact on Oil States International, but the stock remains in the
segment because Dreman likes the company's international business portfolio and
believes the stock is undervalued.
HANSBERGER INTERNATIONAL VALUE DISCIPLINE SOUGHT OPPORTUNITIES AROUND THE WORLD
Effective March 31, 2006, this segment's mandate was changed to allow it to
invest in emerging markets as well as developed markets. Since the new mandate
was not in effect during the first three months of 2006, when emerging market
performance was strongest, the effects of this change have yet to be felt. The
segment benefited from its emphasis on information technology, healthcare, and
the consumer discretionary sector, but its relatively small exposure to
materials, consumer staples and energy detracted from results. From a regional
standpoint, the segment emphasized Europe and Japan, both of which were strong,
but it had relatively little exposure to the United Kingdom, which proved to be
a negative. German pharmaceutical company Schering AG was the best performer
after receiving a takeover offer from Bayer AG. Swiss-based ABB Limited, which
makes power and automation equipment, also did well as the company's
restructuring efforts began to pay off. Japan's Nintendo was another notable
contributor. The company is expected to benefit from its new console named
"Wii" and from a robust line-up of software titles. Disappointments included
Johnson Electric Holdings, a Hong-Kong manufacturer of micro-motors. Although
the company's earnings were impacted by higher raw materials costs, Hansberger
believes this high quality industry leader continues to offer promise. China's
Yanzhou Coal Mining Company, a leading coal producer, also proved
disappointing. Government efforts to cool the economy and investors' increasing
risk aversion made the stock volatile, but it remains in the segment. Cattles
PLC, a leading sub-prime lender in the United Kingdom, was also weak. The
company has a solid track record and the recent price decline may reflect a
change in financial reporting standards. Hansberger took advantage of the price
drop to add to the position.
2
IXIS EQUITY DIVERSIFIED PORTFOLIO
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/6/
Net Asset Maximum Sales S&P 500
Month End Value/1/ Charge/2/ Index
---------- --------- ------------- -------
1/31/2005 10,000 9,425 10,000
2/28/2005 10,080 9,500 10,210
3/31/2005 9,889 9,321 10,030
4/30/2005 9,610 9,057 9,839
5/31/2005 9,959 9,387 10,152
6/30/2005 10,080 9,500 10,167
7/31/2005 10,430 9,830 10,545
8/31/2005 10,310 9,717 10,449
9/30/2005 10,450 9,849 10,533
10/31/2005 10,310 9,717 10,358
11/30/2005 10,759 10,141 10,750
12/31/2005 10,829 10,207 10,753
1/31/2006 11,169 10,527 11,038
2/28/2006 11,129 10,489 11,068
3/31/2006 11,330 10,678 11,206
4/30/2006 11,369 10,715 11,356
5/31/2006 10,839 10,216 11,029
6/30/2006 10,820 10,198 11,044
Average Annual Total Returns -- June 30, 2006
SINCE
6 MONTHS 1 YEAR/6/ INCEPTION/6/
CLASS A (Inception 1/31/05)
Net Asset Value/1/ -0.09% 7.34% 5.74%
With Maximum Sales Charge/2/ -5.83 1.22 1.40
CLASS C (Inception 1/31/05)
Net Asset Value/1/ -0.56 6.57 4.98
With CDSC/3/ -1.55 5.57 4.98
- ---------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR INCEPTION/7/
S&P 500 Index/4/ 2.71% 8.63% 7.26%
Morningstar Large Growth Fund Avg./5/ -1.34 6.83 5.98
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 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 6/30/06 12/31/05
- ------------------------------------------------------
Common Stocks 96.2 98.2
- ------------------------------------------------------
Short-Term Investments and Other 3.8 1.8
- ------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 6/30/06 12/31/05
- ------------------------------------------------------
Wal-Mart Stores, Inc. 2.0 1.3
- ------------------------------------------------------
Hewlett-Packard Co. 2.0 2.5
- ------------------------------------------------------
JP Morgan Chase & Co. 1.7 1.6
- ------------------------------------------------------
Morgan Stanley 1.6 1.5
- ------------------------------------------------------
McDonald's Corp. 1.6 1.6
- ------------------------------------------------------
Texas Instruments, Inc. 1.5 0.9
- ------------------------------------------------------
Intel Corp. 1.4 1.8
- ------------------------------------------------------
Tyco International, Ltd. 1.4 1.4
- ------------------------------------------------------
Time Warner, Inc. 1.4 1.5
- ------------------------------------------------------
Dell, Inc. 1.4 1.0
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- ------------------------------------------------------
Diversified Financial Services 10.3 10.8
- ------------------------------------------------------
Retail 7.8 8.5
- ------------------------------------------------------
Computers 6.6 6.5
- ------------------------------------------------------
Media 5.8 6.2
- ------------------------------------------------------
Banks 4.5 3.6
- ------------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/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 stocks.
/5/Morningstar Large Growth Fund Average is the average performance without
sales charges of funds with similar current investment objectives, as
calculated by Morningstar, Inc.
/6/Fund performance has been increased by expense waivers, without which
performance would have been lower.
/7/The since-inception comparative performance figures shown for Class A and C
shares were calculated from 2/1/05.
3
IXIS INCOME DIVERSIFIED PORTFOLIO
PORTFOLIO PROFILE
Objective:
Seeks current income with a secondary objective of capital appreciation
- --------------------------------------------------------------------------------
Strategy:
Focuses on income-producing fixed-income and equity securities through a
diversified portfolio of complementary income-producing investment disciplines
from specialized money managers
- --------------------------------------------------------------------------------
Inception Date:
November 17, 2005
- --------------------------------------------------------------------------------
Subadvisors:
AEW Management and Advisors, L.P.
Loomis, Sayles & Company, L.P.
- --------------------------------------------------------------------------------
Symbols:
Class A IIDPX
Class C CIDPX
- --------------------------------------------------------------------------------
What You Should Know:
Value stocks can fall out of favor and underperform growth stocks during
certain market conditions. The fixed-income discipline may invest in U.S.
government and high-yield securities. The U.S. government guarantees the timely
payment of principal and interest on some of these securities; however, the
value of fund shares is not guaranteed and will fluctuate. Lower-rated
securities are considered riskier than investment-grade securities because
there is a greater risk of default. Mutual funds that invest in bonds can lose
their value as interest rates rise and an investor can lose principal. A
portion of the fund invests in real estate investment trusts (REITs). While the
fund offers the diversification benefits of real estate investments, it is also
subject to the risks unique to that market, including fluctuating property
values and interest rates, along with changing tax laws.
Management Discussion
- --------------------------------------------------------------------------------
Brisk economic growth in the United States and overseas, rising interest rates,
and some slowing in the domestic housing market created challenges for each of
the four specialized investment teams that managed IXIS Income Diversified
Portfolio during the six months ended June 30, 2006. The fund's four segments
are: AEW Diversified REIT Discipline, composed of Real Estate Investment Trusts
(REITs) and managed by AEW Management and Advisors, a specialist in this
income-producing equity field; Active Dividend Equity Discipline, an indexed
portfolio of dividend-paying common stocks based on the Dow Jones Select
Dividend Index, tracked by Active Investment Advisors (AIA), a division of IXIS
Advisors; and two bond portfolios managed by specialized fixed-income teams at
Loomis Sayles. One team manages Loomis Sayles Inflation Protected Securities
Discipline, a portfolio of Treasury Inflation-Protected Securities (TIPS), and
the other is responsible for Loomis Sayles Multi-Sector Bond Discipline, a
diversified portfolio of domestic and foreign bonds.
For the six months ended June 30, 2006, the combined return on the fund's four
segments was 3.89% based on the net asset value of Class A shares and $0.15 in
reinvested dividends. For the same period, the fund's primary benchmark, the
Lehman Aggregate Bond Index, returned -0.72% and its secondary benchmark
returned 0.81%. The secondary benchmark is an aggregate index based on 55% of
the Lehman Aggregate Bond Index (a broad index of U.S. corporate and government
bonds) and 45% of the Standard & Poor's 500 Index (an index of U.S. common
stocks). The average return on Morningstar's Conservative Allocation category
for this period was 1.37%.
STRONG SELECTION IN APARTMENT AND REGIONAL MALL SECTORS BENEFITED AEW'S REIT
DISCIPLINE
AEW seeks to provide a broad exposure to all major sectors of the U.S. real
estate market. REIT performance was bolstered during the period by a continued,
healthy flow of investor capital into the market, which had a positive impact
on valuations. The segment's best results during the period came from the
regional mall and apartment sectors. The largest individual holdings within the
regional mall sector included Simon Property Group and Taubman Centers. The
largest holdings in the apartment sector included Avalon Bay Communities and
Camden Property Trust. All four holdings were strong performers during the
period. The segment had a relatively small position in healthcare, which proved
to be a positive because this sector underperformed the overall REIT market.
These positives were partially offset by the segment's relatively small
position in the office sector, where performance was strong, and its emphasis
on industrials, which lagged the market. Individual securities that detracted
from the segment's results relative to its benchmark included three office
companies: Brookfield Properties Corp., Brandywine Realty Trust, and Equity
Office Properties. In general, AEW believes that investor demand for commercial
property remains strong and that this demand should continue to provide price
support to REITs. However, they caution REIT investors to prepare for lower
total returns than in previous years and continued high price volatility for
the balance of 2006.
AIA'S ACTIVE DIVIDEND EQUITY DISCIPLINE MATCHED ITS BENCHMARK
This segment's benchmark, the Dow Jones Select Dividend Index, is composed of
equity securities issued by companies that have provided relatively high
dividend yield on a consistent basis over time. It includes 100 of the
highest-yielding stocks (other than REITs) in the Dow Jones U.S. Total Market
Index - a broad-based index that represents the total market for U.S. equity
securities as a whole.
For the six months ended June 30, 2006, this segment's results were in line
with its benchmark. There was only one change of note to the index during the
six months ended June 30, 2006: supermarket chain Albertsons was replaced with
bank holding company Fulton Financial, after the once-leading grocery chain
sold itself to a retail consortium. The only buy or sell decisions made in this
segment are designed to mirror its benchmark; such decisions do not make this
an actively managed portfolio.
4
IXIS INCOME DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
LOOMIS SAYLES TIPS DISCIPLINE FEATURED SHORTER MATURITIES
As the name indicates, this segment invests primarily in TIPS - income
investments that are substantially the same as treasury bonds except that
principal and interest payments are adjusted to reflect the rate of inflation.
During the six months ended June 30, 2006, the Federal Reserve Board raised the
federal funds rate (the interest rates that banks charge one another on
overnight loans) four times in increments of 0.25%, bringing the rate up to
5.25% from 4.25% at the beginning of the year. The real yield (adjusted for
inflation) on TIPS with 10-year maturities ended the period at 2.53%. TIPS with
longer maturities rose more than rates on shorter-term securities.
Rising interest rates cause bond prices to fall, so Loomis held the segment's
duration below that of the benchmark during most of the period, helping the
segment to outperform its benchmark. Duration is a measure of a portfolio's
price sensitivity to changes in interest rates. A portfolio with a short
duration tends to be less volatile in price, but typically provides a lower
yield; a longer duration generates more income but may be less advantageous
when rates are fluctuating.
Economic activity slowed during the period, with growth slower in the second
quarter than it was in the first. Loomis believes the federal funds rate may be
near a peak for this cycle, assuming domestic economic growth continues at a
moderate rate. If this proves to be the case, Loomis expects to see interest
rates fluctuate within a modest range through the balance of 2006.
LOOMIS SAYLES MULTI-SECTOR BOND DISCIPLINE MAINTAINED FLEXIBILITY
During the six-month period, this segment's exposure to a broad range of
markets and strategies provided generally favorable results. As of June 30,
2006, the segment's duration stood at approximately 6.6 years, which was
slightly longer than 6.2 years at the beginning of the period. Long-duration,
high-yield issues gave back some ground in May and June, although their net
effect for the segment for the six-month period was positive.
Higher-quality securities (rated AAA and AA by Moody's) led results during the
period, helped by a flight to quality in the final two months of the period,
when investors generally shied away from lower-rated bonds (BB and below). At
the end of June 2006, securities ranked by Moody's Investor Services as
"investment grade" (AA and up) accounted for approximately 44% of the segment's
total net assets, with 41% in high-yielding bonds rated below that level. The
segment's lowest-rated bonds lagged other tiers of the market, as spreads (the
difference in yields on high- and low-quality bonds) widened during the period.
Securities denominated in foreign currencies accounted for approximately 13% of
total net assets. The segment's foreign bonds generally boosted performance,
especially among such regions as Canada and the Pacific Rim (Korea and
Singapore), where strong economic growth supported the currencies.
Loomis is anticipating steady, but slower growth in the United States during
the second half of 2006, with a somewhat brisker pace globally. They also
believe the Fed's rate tightening cycle may be nearing an end, and that yields
may fluctuate within the range that we've seen within the past 18 months.
5
IXIS INCOME DIVERSIFIED PORTFOLIO
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/8/
[CHART]
November 17, 2005 (Inception) through June 30, 2006
Net Asset Maximum Sales Lehman Aggregate Blended Bond/
Month End Value/1/ Charge/2/ Bond Index/4/ Stock Index/5/
- ---------- --------- ------------- -------- ----------------
11/17/2005 10,000 9,550
11/30/2005 10,072 9,619 10,000 10,000
12/31/2005 10,115 9,660 10,054 10,095
1/31/2006 10,355 9,889 10,174 10,096
2/28/2006 10,454 9,984 10,204 10,129
3/31/2006 10,540 10,066 10,207 10,030
4/30/2006 10,484 10,013 10,260 10,012
5/31/2006 10,376 9,909 10,118 10,001
6/30/2006 10,508 10,037 10,136 10,022
Average Annual Total Returns -- June 30, 2006
SINCE
6 MONTHS/8/ INCEPTION/8/
CLASS A (Inception 11/17/05)
Net Asset Value/1/ 3.89% 5.08%
With Maximum Sales Charge/2/ -0.75 0.36
CLASS C (Inception 11/17/05)
Net Asset Value/1/ 3.28 4.43
With CDSC/3/ 2.28 3.43
- -----------------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS INCEPTION/7/
Lehman Aggregate Bond Index/4/ -0.72% 0.22%
55% Lehman Aggregate Bond Index/45% S&P 500 Index/5/ 0.81 1.35
Morningstar Conservative Allocation Fund Avg./6/ 1.37 2.09
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 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 6/30/06 12/31/05
- ---------------------------------------------------------
Bond and Notes 49.8 52.2
- ---------------------------------------------------------
Common Stocks 44.9 44.5
- ---------------------------------------------------------
Preferred Stocks 0.3 0.2
- ---------------------------------------------------------
Short Term Investments and Other 5.0 3.1
- ---------------------------------------------------------
% of Net Assets as of
LARGEST HOLDINGS 6/30/06 12/31/05
- ---------------------------------------------------------
Equities
- ---------------------------------------------------------
Simon Property Group, Inc. 1.9 1.8
- ---------------------------------------------------------
Boston Properties, Inc. 1.3 1.3
- ---------------------------------------------------------
ProLogis Trust 1.3 1.5
- ---------------------------------------------------------
Avalonbay Communities, Inc. 1.2 1.2
- ---------------------------------------------------------
Equity Residential Properties Trust 1.1 1.1
- ---------------------------------------------------------
Fixed-Income
- ---------------------------------------------------------
FNMA, 3.250%, 08/15/2008 5.4 18.9
- ---------------------------------------------------------
U.S. Treasury Bond,
5.375%, 02/15/2031 3.5 1.8
- ---------------------------------------------------------
U.S. Treasury Bond,
3.375%, 04/15/2032 2.5 3.0
- ---------------------------------------------------------
FHLMC, 4.375%, 11/16/2007 1.2 1.5
- ---------------------------------------------------------
U.S. Treasury Note,
0.875%, 04/15/2010 1.1 --
- ---------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- ---------------------------------------------------------
Treasuries 19.1 14.5
- ---------------------------------------------------------
Government Agencies 7.9 20.3
- ---------------------------------------------------------
Banks 6.4 5.6
- ---------------------------------------------------------
REITs--Apartments 4.8 4.6
- ---------------------------------------------------------
REITs--Office 4.7 4.4
- ---------------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 4.50%.
/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/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.
/5/55% Lehman Aggregate Bond Index/45% S&P 500 Index is an unmanaged blended
index which measures the performance of domestic debt issued by the U.S.
government, its agencies, and U.S. corporations, as well as U.S. common
stock performance.
/6/Morningstar Conservative 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 comparative performance figures shown for Class A and C
shares were calculated from 12/1/05.
/8/Fund performance has been increased by expense waivers, without which
performance would have been lower.
6
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:
Dreman Value Management, LLC
Hansberger Global Investors, Inc.
Harris Associates, L.P.
Loomis, Sayles & Company, L.P.
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
The potential for accelerating inflation, rising global interest rates and
higher oil prices led to volatility in the domestic and international equity
and fixed-income markets during the first half of 2006. In this environment,
most U.S. and overseas equity markets finished the semiannual period with
positive returns. The U.S. fixed-income markets ended the six-month period
either flat or slightly down.
For the six-months ended June 30, 2006, Class A shares of IXIS Moderate
Diversified Portfolio returned -0.40% at net asset value, with $0.10 in
dividends and $0.04 in capital gains reinvested during the period. The
portfolio's combination of bonds and stocks underperformed the 2.71% return of
its equity benchmark, the Standard & Poor's 500 Index, but outperformed the
- -0.72% return of its fixed-income benchmark, the Lehman Aggregate Bond Index.
The portfolio's return was also below the 2.24% average return on the funds in
Morningstar's Moderate Allocation category.
Each of the portfolio's five segments features a different asset class and is
managed by one of four advisors. This multi-advisor approach provides
shareholders with exposure to fixed-income, U.S. equity and international
securities. Loomis Sayles manages two segments. The Loomis Sayles Core
Fixed-Income Discipline invests primarily in U.S. investment-grade fixed-income
securities, including government, corporate, mortgage- and asset-backed
securities. Equity securities issued by large-cap U.S. corporations are the
primary focus of Loomis Sayles Large Cap Growth Discipline. Harris Associates
Large Cap Value Discipline focuses on undervalued large- and mid-cap companies
that the manager believes are trading at a substantial discount to their "true
business value." The Dreman Mid Cap Value Discipline emphasizes common stocks
of mid-sized companies that Dreman believes to be undervalued, with favorable
prospects for appreciation. Effective April 3, 2006, Dreman Value Management,
LLC replaced Reich & Tang Asset Management, LLC as subadviser of the Mid Cap
Value segment of the portfolio. Hansberger International Value Discipline
invests substantially all of its assets in companies of any size headquartered
outside of the United States. Effective March 31, 2006, the segment may invest
in emerging as well as developed markets.
LOOMIS SAYLES CORE FIXED INCOME DISCIPLINE TOOK ADVANTAGE OF HIGHER YIELDS
This segment's duration strategy, which determines its sensitivity to
interest-rate changes, played a significant role in its positive performance.
For much of the period, duration was relatively short in anticipation of rising
interest rates. As interest rates appeared to be nearing a peak, Loomis
adjusted the duration strategy. The segment assumed a "barbell" maturity
structure, with more assets focused in the short and long end of the yield
curve and less in the intermediate range. Greater emphasis was put on
higher-yielding corporate bonds to secure more income. Bonds issued by Time
Warner were among the strongest individual performers. Efforts to split up Time
Warner - a move that would have hurt bond holders - were successfully avoided.
One energy-related holding had a negative impact on performance: outstanding
bonds issued by Kinder Morgan (KMI), a natural gas pipeline company, declined
in value when KMI announced plans for a management-led leveraged buyout that
would increase its debt levels.
LOOMIS SAYLES LARGE CAP GROWTH DISCIPLINE FOCUSED ON FUNDAMENTALS AND VALUATIONS
In the volatile environment of the first half of 2006, Loomis reduced the
segment's risk by eliminating businesses with weakening fundamentals and adding
stocks whose valuations had become more attractive. Investments in specialty
finance companies made the biggest contribution to performance. Certain
consumer discretionary, healthcare and energy stocks detracted from results. In
the consumer sector, ladies apparel retailer Chico's FAS and internet giant
eBay both declined on slowing earnings forecasts and both were sold.
Lower-than-anticipated iPod sales and uncertainty surrounding iMac's product
transition depressed the price of Apple Computer stock, but Loomis believes
planned product launches improve Apple's outlook. UnitedHealth Group, which
provides healthcare plans and other services, and St. Jude Medical, a
manufacturer of cardiovascular devices, are largely responsible for the poor
performance of the segment's healthcare holdings. Both stocks were sold. In
energy, independent oil and gas companies EOG Resources and Southwestern Energy
held back the
7
IXIS MODERATE DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
segment's results and were sold. Individual stocks that had the biggest
positive impact included Chicago Mercantile Exchange Holdings (CME), coffee
retailer Starbucks, and CB Richard Ellis Group, a global property management
company. CME, a major securities and commodities exchange, benefited from
growth in volume of trading in equities and interest-rate futures; the company
plans to begin trading futures contracts on the Chinese yuan. Starbucks rose in
value after raising its full-year earnings forecast and announcing that sales
have been increasing at a higher-than-expected rate. CB Richard Ellis did well
because of broad strength in the global commercial real estate markets.
HARRIS ASSOCIATES LARGE CAP VALUE DISCIPLINE SOUGHT STOCKS TRADING AT A DISCOUNT
Technology holdings and the segment's exposure to certain consumer stocks hurt
results. Its relatively small positions in energy, telecommunications,
utilities and materials also held the segment back as these sectors proved to
be strong during the period. Walt Disney was one of the best performing stocks
in the segment. Disney produced two quarters of strong earnings, notably from
its Media Networks (ABC) and its Parks & Resorts division. Hewlett-Packard's
new CEO is determined to boost the company's operating profits and build a more
effective sales organization - two areas that had not been a primary focus in
the past - and this led to increased sales of PCs and printers. Morgan Stanley
was also among the segment's top performers, reflecting a major increase in
earnings over the six-month period and attractive business prospects. Stocks
that detracted from results included Intel, Carnival Corp. and Dell. Intel
announced lower-than-expected revenues on weak demand and some loss of market
share for servers in this highly competitive market. Carnival shares also
declined after the company reported lower earnings on reduced sales of
Caribbean cruises. In both cases, Harris Associates believes these companies'
shares are undervalued and expects them to appreciate over time. While Dell's
earnings and stock price declined, Harris believes that the company's low-cost
business model will continue to drive healthy long-term profitability. The
personal computer industry is large and growing, and Harris believes Dell is
poised to become a dominant player.
DREMAN MID CAP VALUE DISCIPLINE SOUGHT UNDERVALUED STOCKS WITH APPRECIATION
POTENTIAL
Dreman Value Management became the manager of the Mid Cap Value segment
effective on April 3, 2006 replacing Reich & Tang Asset Management, LLC. For
the period January 1, 2006 through March 31, 2006, the portfolio constructed by
Reich & Tang contributed positively to the segment's overall performance. This
discussion is based substantially on the portfolio constructed by Dreman. The
portfolio Dreman constructed emphasizes healthcare, energy and industrials,
with relatively small positions in the financial, consumer discretionary, and
utilities sectors. One of the segment's top-performing stocks was
Archer-Daniels-Midland (ADM), which processes oilseeds, corn and wheat. ADM
benefited from higher energy prices and increased emphasis on the production of
ethanol. Global mining company Inco Ltd., which produces nickel and other
metals, was another standout. The rise in the stock's price reflected profits
from rising commodity prices and speculation that it was a potential takeover
target, and Dreman sold the segment's position on strength. Quest Diagnostics
was also a strong contributor. A leader in laboratory testing services, Quest
posted solid earnings. Disappointments included Cooper Companies, an eye-care
company, which had to reduce its earnings forecast for the year. While the
short-term reduction in earnings was disappointing, Cooper has six new product
offerings in its pipeline and Dreman believes the stock is attractively valued.
R&G Financial Corp. (RGF) was another disappointment. A bank holding company
with substantial exposure in Puerto Rico, RGF took several write-downs in its
mortgage portfolio. Recent price weakness in the natural gas industry had a
negative impact on Oil States International, but the stock remains in the
segment because Dreman likes the company's international business portfolio and
believes the stock is undervalued.
HANSBERGER INTERNATIONAL VALUE DISCIPLINE SOUGHT OPPORTUNITIES AROUND THE WORLD
Effective March 31, 2006, this segment's mandate was changed to allow it to
invest in emerging markets as well as developed markets. Since the new mandate
was not in effect during the first three months of 2006, when emerging market
performance was strongest, the effects of this change have yet to be felt. The
segment benefited from its emphasis on information technology, healthcare, and
the consumer discretionary sectors, but its relatively small exposure to
materials, consumer staples, and energy detracted from results. From a regional
standpoint, the segment emphasized Europe and Japan, both of which were strong,
but it had relatively little exposure to the United Kingdom, which proved to be
a negative. German pharmaceutical company Schering AG was the best performer
after receiving a takeover offer from Bayer AG. Swiss-based ABB Limited, which
makes power and automation equipment, also did well, as the company's
restructuring efforts began to pay off. Japan's Nintendo was another notable
contributor. The company is expected to benefit from its new console named
"Wii" and from a robust line-up of software titles. Disappointments included
Johnson Electric Holdings, a Hong-Kong manufacturer of micro-motors. Although
the company's earnings were impacted by higher raw materials costs, Hansberger
believes this high quality industry leader continues to offer promise. China's
Yanzhou Coal Mining Company, a leading coal producer, also proved
disappointing. Government efforts to cool the economy and investors' increasing
risk aversion made the stock volatile, but it remains in the segment. Cattles
PLC, a leading sub-prime lender in the United Kingdom, was also weak. The
company has a solid track record and the recent price decline may reflect a
change in financial reporting standards. Hansberger took advantage of the price
drop to add to the position.
8
IXIS MODERATE DIVERSIFIED PORTFOLIO
Investment Results through June 30, 2006
- --------------------------------------------------------------------------------
PERFORMANCE IN PERSPECTIVE
The charts comparing the fund's performance to an index provide 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/8/
[Chart]
July 15, 2004 (Inception) through June 30, 2006
Lehman
Net Asset Maximum Sales S&P 500 Aggregate
Month End Value/1/ Charge/2/ Index Bond Index
- --------- -------- --------- ----- ----------
7/15/2004 10,000 9,425 10,000 10,000
7/31/2004 9,850 9,284
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
7/31/2005 10,797 10,176 11,405 10,479
8/31/2005 10,757 10,139 11,301 10,613
9/30/2005 10,820 10,197 11,393 10,504
10/31/2005 10,689 10,074 11,203 10,421
11/30/2005 11,022 10,388 11,626 10,467
12/31/2005 11,099 10,461 11,630 10,567
1/31/2006 11,332 10,681 11,938 10,567
2/28/2006 11,322 10,671 11,971 10,602
3/31/2006 11,424 10,767 12,120 10,498
4/30/2006 11,445 10,787 12,283 10,479
5/31/2006 11,068 10,432 11,929 10,468
6/30/2006 11,054 10,419 11,945 10,490
[Chart]
July 15, 2004 (Inception) through June 30, 2006
Lehman
Net Asset Maximum Sales S&P 500 Aggregate
Month End Value/1/ Charge/2/ Index Bond Index
- --------- -------- --------- ----- ----------
7/15/2004 10,000 9,425 10,000 10,000
7/31/2004 9,850 9,284
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
7/31/2005 10,797 10,176 11,405 10,479
8/31/2005 10,757 10,139 11,301 10,613
9/30/2005 10,820 10,197 11,393 10,504
10/31/2005 10,689 10,074 11,203 10,421
11/30/2005 11,022 10,388 11,626 10,467
12/31/2005 11,099 10,461 11,630 10,567
1/31/2006 11,332 10,681 11,938 10,567
2/28/2006 11,322 10,671 11,971 10,602
3/31/2006 11,424 10,767 12,120 10,498
4/30/2006 11,445 10,787 12,283 10,479
5/31/2006 11,068 10,432 11,929 10,468
6/30/2006 11,054 10,419 11,945 10,490
Average Annual Total Returns -- June 30, 2006
SINCE
6 MONTHS/8/ 1 YEAR/8/ INCEPTION/8/
CLASS A (Inception 7/15/04)
Net Asset Value/1/ -0.40% 4.43% 5.25%
With Maximum Sales Charge/2/ -6.14 -1.57 2.11
CLASS C (Inception 7/15/04)
Net Asset Value/1/ -0.68 3.68 4.49
With CDSC/3/ -1.66 2.68 4.49
- -------------------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR INCEPTION/7/
S&P 500 Index/4/ 2.71% 8.63% 9.72%
Lehman Aggregate Bond Index/5/ -0.72 -0.81 2.53
Morningstar Moderate Allocation Fund Avg./6/ 2.24 7.01 8.64
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 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 6/30/06 12/31/05
- ----------------------------------------------------
Common Stocks 67.1 66.8
- ----------------------------------------------------
Bonds and Notes 31.3 32.2
- ----------------------------------------------------
Short-Term Investments
and Other 1.6 1.0
- ----------------------------------------------------
% of Net Assets as of
LARGEST HOLDINGS 6/30/06 12/31/05
- ----------------------------------------------------
Equities
- ----------------------------------------------------
Hewlett-Packard Co. 1.3 1.7
- ----------------------------------------------------
Wal-Mart Stores, Inc. 1.3 0.8
- ----------------------------------------------------
JP Morgan Chase & Co. 1.2 1.0
- ----------------------------------------------------
Texas Instruments, Inc. 1.0 0.6
- ----------------------------------------------------
Morgan Stanley 1.0 1.0
- ----------------------------------------------------
Fixed-Income
- ----------------------------------------------------
FNMA, 5.000%, 08/01/2035 1.8 1.5
- ----------------------------------------------------
U.S. Treasury Note,
4.500%, 02/15/2016 1.4 --
- ----------------------------------------------------
FNMA, 4.000%, 02/01/2020 1.4 1.2
- ----------------------------------------------------
FNMA, 3.250%, 01/15/2008 1.3 1.1
- ----------------------------------------------------
FNMA, 4.500%, 09/01/2035 1.0 0.9
- ----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 6/30/06 12/31/05
- ----------------------------------------------------
Government Agencies 14.5 13.4
- ----------------------------------------------------
Diversified Financial Services 12.5 12.5
- ----------------------------------------------------
Retail 5.4 5.9
- ----------------------------------------------------
Computers 4.5 4.3
- ----------------------------------------------------
Media 4.3 4.4
- ----------------------------------------------------
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 stocks.
/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 comparative performance figures shown for Class A and C
shares were calculated from 8/1/04.
/8/Fund performance has been increased by expense waivers, without which
performance would have been lower.
9
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 1-800-225-5478;
on the funds' website at www.ixisadvisorfunds.com; and on the Securities and
Exchange Commission's (SEC) website at www.sec.gov. Information regarding how
the funds voted proxies relating to portfolio securities during the 12-month
period ended June 30, 2006 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
10
UNDERSTANDING FUND 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, 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 exceptions 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 for 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, 2006 through June 30, 2006. 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 column as shown
below for your Class.
The second line in the table for 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 or exchange fees.
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*
IXIS EQUITY DIVERSIFIED PORTFOLIO 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $999.10 $8.18
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,016.61 $8.25
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $994.40 $11.82
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.94 $11.93
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio: 1.65% and 2.39% for
Class A and Class 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*
IXIS INCOME DIVERSIFIED PORTFOLIO 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,038.90 $6.32
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.60 $6.26
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,032.80 $10.08
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.88 $9.99
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio (after advisory
waiver): 1.25% and 2.00% for Class A and Class 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).
11
UNDERSTANDING FUND EXPENSES
12
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
IXIS MODERATE DIVERSIFIED PORTFOLIO 1/1/06 6/30/06 1/1/06 - 6/30/06
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $996.00 $6.48
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.30 $6.56
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $993.20 $10.18
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.58 $10.29
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio (after advisory
waiver): 1.31% and 2.06% for Class A and Class 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).
BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees, including the Independent Trustees, considers matters
bearing on each Portfolio'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
Portfolios' investment adviser believes 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 Portfolios
and the performance of peer groups of funds and the Portfolios' performance
benchmarks, (ii) information on the Portfolios' advisory and sub-advisory fees,
if any, and other expenses, including information comparing the Portfolios'
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 Portfolios, (iv) information about the profitability of the Agreements
to the Portfolios' adviser 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,
also consider other matters such as (i) each Adviser's financial results and
financial condition, (ii) each Portfolio'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
Portfolios' shares, (iv) the procedures employed to determine the value of the
Portfolios' assets, (v) the allocation of the Portfolios' brokerage, if any,
including allocations to brokers affiliated with the Advisers and the use of
"soft" commission dollars to pay Portfolio expenses and to pay for research and
other similar services, (vii) the resources devoted to, and the record of
compliance with, the Portfolios' investment policies and restrictions, policies
on personal securities transactions and other compliance policies, and
(viii) 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, 2006. 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 Portfolios under
the Agreements. The Trustees considered the nature, extent and quality of the
services provided by the Advisers and their affiliates to the Portfolios and
the resources dedicated to the Portfolios by the Advisers and their affiliates,
including recent or planned investments by certain of the Advisers in
additional personnel or other resources. They also took note of the competitive
market for talented personnel, in particular, for personnel who have
contributed to the generation of strong investment performance. They also
considered the need for the Advisers to offer competitive compensation in order
to attract and retain capable personnel. The Trustees considered not only the
advisory services provided by the Advisers to the Portfolios, but also the
monitoring and oversight services provided by IXIS Advisors with respect to
sub-advised Portfolios and the Portfolios for which IXIS Advisors provides
advisory oversight services. In particular, the Trustees noted that IXIS
Advisors had over the past year (i) recommended changes in certain of the
Portfolios' advisory arrangements as a result of performance-related issues,
and (ii) negotiated changes to the Portfolios' transfer agency and custodial
arrangements, resulting in significant cost savings for the Portfolios. The
Trustees also noted that some of these changes had resulted in increases in
costs or decreases in revenues for IXIS Advisors and its affiliates. They also
considered the administrative services provided by IXIS Advisors and its
affiliates to the Portfolios. For each Portfolio, 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 Portfolios and the Advisers. As noted above, the
Trustees received information about the performance of the Portfolios over
various time periods, including information which compared the performance of
the Portfolios to the performance of peer groups of funds and the Portfolios'
respective performance benchmarks. In addition, the Trustees also reviewed data
prepared by an independent third party which analyzed the performance of the
Portfolios using a variety of performance metrics, including metrics which also
measured the performance of the Portfolios on a risk adjusted basis.
13
BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS
With respect to each Portfolio, the Board concluded that the Portfolio's
performance or other relevant factors supported the renewal of the Agreement(s)
relating to that Portfolio. In the case of each Portfolio 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 Portfolios' Agreements. These factors varied from
Portfolio to Portfolio, but included one or more of the following: (1) that the
underperformance was attributable, to a significant extent, to investment
decisions by the Portfolio's Advisers that were reasonable and consistent with
the Portfolio's investment objective and policies; (2) that the Portfolio's
advisory fee had recently been, or is proposed to be, reduced or the
Portfolio's expenses capped, with the goal of helping the Portfolio's net
return to shareholders become more competitive; and (3) that reductions in the
Portfolio's expense levels resulting from decreased expenses and/or increased
assets were not yet fully reflected in the Portfolio's performance results.
The Trustees also noted that some Portfolios were recently formed and therefore
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 Portfolios' 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.
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 Portfolios 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
Portfolios. The Trustees considered the fees charged to the Portfolios for
advisory and sub-advisory services as well as the total expense levels of the
Portfolios. This information included comparisons (provided both by management
and also by an independent third party) of the Portfolios' 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
Portfolio's advisory and sub-advisory fees, the Trustees also took into account
the demands, complexity and quality of the investment management of such
Portfolio. The Trustees considered that over the past several years, management
had made recommendations regarding reductions in advisory fee rates,
implementation of advisory fee breakpoints and the institution of advisory fee
waivers and expense caps. They noted that the Portfolios have expense caps in
place, and they considered the amounts waived or reimbursed by the Advisers
under these caps. The Trustees noted that two Portfolios had total expense
ratios or advisory fee rates that were above the median of a peer group of
Portfolios. The Trustees considered the circumstances that accounted for such
relatively higher expenses. The Trustees also noted that management was
proposing to refine the advisory fee waivers that previously had been
established for the IXIS Moderate Diversified Portfolio and IXIS Equity
Diversified Portfolio, and establish an advisory fee waiver for the IXIS Income
Diversified Portfolio.
The Trustees also considered the compensation directly or indirectly received
by the Advisers and their affiliates from their relationships with the
Portfolios. The Trustees reviewed information provided by management as to the
profitability of the Advisers' and their affiliates' relationships with the
Portfolios, and information about the allocation of expenses used to calculate
profitability. In this regard, the Portfolios, at the request of the
Independent Trustees, retained an independent accounting firm to review the
cost allocation methods used by several of the Advisers to determine
profitability, and engaged in extensive discussions with the Advisers regarding
such methods and Adviser profitability generally. The Trustees also considered
that IXIS Advisors had proposed changes to the Portfolios' transfer agency and
custodial arrangements which, although beneficial to the Portfolios, had
resulted in increased costs and/or decreased revenues to IXIS Advisors. They
also reviewed information provided by management about the effect of
distribution costs and Portfolio growth on Adviser profitability. When
reviewing profitability, the Trustees also considered information about court
cases in which adviser profitability was an issue, the performance of the
relevant Portfolios, the expense levels of the Portfolios, and whether the
Advisers had implemented breakpoints and/or expense caps with respect to such
Portfolios.
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 Portfolios 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
Portfolios supported the renewal of the Agreements.
14
BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY 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 Portfolios through breakpoints in their investment advisory
fees or other means, such as expense waivers. The Trustees noted that the
Portfolios had breakpoints in their advisory fees and were subject to expense
caps. The Trustees also considered management's representation that for certain
Portfolios the Portfolios' Advisers did not benefit from economies of scale in
providing services to the Portfolios (because of the investment style of the
Portfolio, the small size of the Portfolio or for other reasons) or were
capacity constrained with respect to the relevant investment strategy. 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 Portfolios, 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 Portfolios supported
the renewal of the Agreements.
The Trustees also considered other factors, which included but were not limited
to the following:
.. whether each Portfolio has operated in accordance with its investment
objective and the Portfolio's record of compliance with its investment
restrictions, and the compliance programs of the Portfolios and the
Advisers. They also considered the compliance related resources the Advisers
and their affiliates were providing to the Portfolios.
.. 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 administrative services.
.. so-called "fallout benefits" to the Advisers, such as the engagement of
affiliates of the Advisers to provide distribution and brokerage services to
the Portfolios, and the benefits of research made available to the Advisers
by reason of brokerage commissions generated by the Portfolios' 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, 2007.
15
IXIS EQUITY DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------------------
Common Stocks -- 96.2% of Net Assets
Aerospace & Defense -- 2.8%
650 Alliant Techsystems, Inc.(c) $ 49,627
2,600 CAE, Inc. 19,864
4,300 Honeywell International, Inc. 173,290
650 L-3 Communications Holdings, Inc. 49,023
7,500 Raytheon Co. 334,275
4,800 United Technologies Corp. 304,416
---------------
930,495
---------------
Agriculture -- 0.7%
5,400 Archer-Daniels-Midland Co. 222,912
---------------
Apparel -- 0.0%
250 Columbia Sportswear Co.(c) 11,315
---------------
Auto Manufacturers -- 0.6%
152,000 Denway Motors, Ltd. 50,886
4,013 Nissan Motor Co., Ltd., Sponsored ADR(d) 88,206
600 PACCAR, Inc. 49,428
---------------
188,520
---------------
Auto Parts & Equipment -- 0.3%
1,300 Johnson Controls, Inc. 106,886
---------------
Banks -- 4.5%
2,300 ABN AMRO Holding NV, Sponsored ADR 62,928
6,630 Banco Santander Central Hispano SA, ADR 96,931
1,750 Bank of America Corp. 84,175
1,467 Bank of Yokohama, Ltd., ADR(d) 108,558
1,750 BNP Paribas, ADR(d) 83,300
1,400 Credit Agricole SA 53,272
2,140 DBS Group Holdings, Ltd., Sponsored ADR 96,835
750 First Horizon National Corp. 30,150
550 Hancock Holding Co. 30,800
3,900 HBOS PLC 67,792
1,023 HSBC Holdings PLC, Sponsored ADR(d) 90,382
9,000 Joyo Bank, Ltd. (The) 54,579
300 Keycorp 10,704
1,300 Marshall & Ilsley Corp. 59,462
2,800 R&G Financial Corp., Class B 24,052
2,650 State Street Corp. 153,938
9,533 Sumitomo Trust & Banking Co., Ltd. (The), Sponsored ADR 103,433
3,440 U.S. Bancorp 106,227
1,450 Wachovia Corp. 78,416
919 Westpac Banking Corp., Sponsored ADR(d) 79,356
---------------
1,475,290
---------------
Beverages -- 2.2%
2,780 Coca-Cola Co. (The) 119,596
500 Constellation Brands, Inc.(c) 12,500
2,400 Diageo PLC, Sponsored ADR 162,120
650 Hansen Natural Corp.(c)(d) 123,740
5,200 PepsiCo, Inc. 312,208
---------------
730,164
---------------
Biotechnology -- 0.9%
700 Charles River Laboratories International, Inc.(c) 25,760
3,075 Genentech, Inc.(c) 251,535
300 Invitrogen Corp.(c) 19,821
---------------
297,116
---------------
Building Materials -- 0.2%
2,800 JS Group Corp. 58,843
---------------
Shares Description Value (a)
- ----------------------------------------------------------------------------
Chemicals -- 1.7%
500 Agrium, Inc. $ 11,610
850 Ashland, Inc. 56,695
2,213 Ciba Specialty Chemicals AG, Sponsored ADR(d) 61,809
4,400 Dow Chemical Co. (The) 171,732
1,040 Lonza Group AG 71,330
1,600 Lyondell Chemical Co. 36,256
2,350 Sherwin-Williams Co. (The) 111,578
600 Sigma-Aldrich Corp. 43,584
---------------
564,594
---------------
Coal -- 0.3%
300 Massey Energy Co. 10,800
2,230 Yanzhou Coal Mining Co., Ltd., Sponsored ADR(d) 82,309
---------------
93,109
---------------
Commercial Services -- 0.6%
2,200 Convergys Corp.(c) 42,900
2,900 Monster Worldwide, Inc.(c) 123,714
1,300 R. R. Donnelley & Sons Co. 41,535
---------------
208,149
---------------
Computers -- 6.6%
3,500 Apple Computer, Inc.(c) 199,920
2,700 Cognizant Technology Solutions Corp.(c)(d) 181,899
18,500 Dell, Inc.(c) 451,585
1,400 Diebold, Inc. 56,868
1,250 DST Systems, Inc.(c) 74,375
20,375 Hewlett-Packard Co. 645,480
6,475 Network Appliance, Inc.(c)(d) 228,567
2,800 SanDisk Corp.(c)(d) 142,744
50,800 Sun Microsystems, Inc.(c) 210,820
---------------
2,192,258
---------------
Cosmetics & Personal Care -- 1.0%
6,025 Procter & Gamble Co. 334,990
---------------
Distribution & Wholesale -- 0.4%
1,742 Marubeni Corp., ADR 91,978
3,770 Sumitomo Corp., Sponsored ADR 49,010
---------------
140,988
---------------
Diversified Financial Services -- 10.3%
6,300 American Express Co. 335,286
650 Bear Stearns Cos. (The), Inc. 91,052
1,000 BlackRock, Inc., Class A(d) 139,170
13,100 Cattles PLC 79,759
575 Chicago Mercantile Exchange Holdings, Inc. 282,411
2,050 CIT Group, Inc. 107,195
7,000 Citigroup, Inc. 337,680
1,446 Credit Suisse Group, Sponsored ADR 80,962
2,400 Eaton Vance Corp. 59,904
950 Federated Investors, Inc., Class B 29,925
2,550 Goldman Sachs Group, Inc. 383,596
13,570 JPMorgan Chase & Co. 569,940
350 Legg Mason, Inc. 34,832
2,275 Lehman Brothers Holdings, Inc. 148,216
8,500 Morgan Stanley 537,285
3,300 Nomura Holdings, Inc. 62,040
1,450 Nuveen Investments, Class A 62,423
1,500 T. Rowe Price Group, Inc. 56,715
---------------
3,398,391
---------------
See accompanying notes to financial statements.
16
IXIS Equity Diversified Portfolio -- Portfolio of Investments (continued)
IXIS EQUITY DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- -----------------------------------------------------------------------------
Electric -- 1.0%
2,000 AES Corp. (The)(c) $ 36,900
1,780 Cia Energetica de Minas Gerais, Sponsored ADR(d) 75,846
1,850 E.ON AG, Sponsored ADR 70,947
2,550 Mirant Corp.(c) 68,340
650 PG&E Corp. 25,532
750 PPL Corp. 24,225
500 Progress Energy, Inc. 21,435
---------------
323,225
---------------
Electrical Components & Equipment -- 1.2%
1,250 AMETEK, Inc. 59,225
3,175 Emerson Electric Co. 266,097
900 General Cable Corp.(c) 31,500
6,800 Johnson Electric Holdings, Ltd., Sponsored ADR 48,280
---------------
405,102
---------------
Electronics -- 0.9%
8,106 Celestica, Inc.(c) 77,331
1,600 Fisher Scientific International, Inc.(c) 116,880
1,000 Mettler Toledo International, Inc.(c) 60,570
1,300 PerkinElmer, Inc. 27,170
---------------
281,951
---------------
Engineering & Construction -- 0.3%
4,460 ABB, Ltd., Sponsored ADR 57,802
1,300 Chicago Bridge & Iron Co., N.V. 31,395
---------------
89,197
---------------
Food -- 1.9%
800 Ajinomoto Co., Inc., ADR 87,800
1,900 Carrefour SA 111,400
650 Hormel Foods Corp. 24,141
1,170 Nestle SA, Sponsored ADR 91,143
1,200 Royal Numico NV 53,858
800 Smithfield Foods, Inc.(c) 23,064
3,400 Whole Foods Market, Inc.(d) 219,776
---------------
611,182
---------------
Gas -- 0.3%
4,000 Southern Union Co. 108,240
---------------
Health Care -- Products -- 2.6%
1,150 Bausch & Lomb, Inc. 56,396
7,400 Baxter International, Inc. 272,024
1,300 Beckman Coulter, Inc. 72,215
1,250 Biomet, Inc. 39,113
1,050 Cooper Cos. (The), Inc. 46,505
2,270 Johnson & Johnson 136,018
3,300 Kinetic Concepts, Inc.(c) 145,695
1,180 Smith & Nephew PLC, Sponsored ADR(d) 45,465
950 Zimmer Holdings, Inc.(c) 53,884
---------------
867,315
---------------
Health Care -- Services -- 1.8%
3,225 DaVita, Inc.(c)(d) 160,282
1,500 Lifepoint Hospitals, Inc.(c) 48,195
2,875 Quest Diagnostics, Inc. 172,270
1,600 Triad Hospitals, Inc.(c) 63,328
2,200 WellPoint, Inc.(c) 160,094
---------------
604,169
---------------
Holding Companies -- Diversified -- 0.2%
1,310 Hutchison Whampoa, Ltd., ADR 59,409
---------------
Shares Description Value (a)
- ----------------------------------------------------------------------------
Home Builders -- 0.6%
1,800 Lennar Corp. $ 79,866
3,800 Pulte Homes, Inc. 109,402
---------------
189,268
---------------
Household Products & Wares -- 0.8%
3,000 Fortune Brands, Inc. 213,030
750 Fossil, Inc.(c) 13,507
1,200 Scotts Miracle-Gro Co., (The), Class A 50,784
---------------
277,321
---------------
Insurance -- 3.8%
2,600 Aflac, Inc. 120,510
500 Ambac Financial Group, Inc. 40,550
1,000 Arch Capital Group, Ltd.(c) 59,460
2,600 Axa, Sponsored ADR 85,228
2,850 Chubb Corp. 142,215
1,650 Cincinnati Financial Corp. 77,566
2,000 Hartford Financial Services Group, Inc. 169,200
2,580 ING Groep NV, Sponsored ADR 101,446
1,450 MGIC Investment Corp. 94,250
2,050 Ohio Casualty Corp. 60,947
700 PMI Group, Inc. (The) 31,206
3,375 Prudential Financial, Inc.(d) 262,237
450 Willis Group Holdings, Ltd. 14,445
---------------
1,259,260
---------------
Internet -- 1.9%
3,100 Akamai Technologies, Inc.(c)(d) 112,189
2,430 Check Point Software Technologies, Ltd.(c) 42,719
975 Google, Inc., Class A(c) 408,847
3,900 Symantec Corp.(c) 60,606
---------------
624,361
---------------
Iron & Steel -- 0.0%
300 Oregon Steel Mills, Inc.(c) 15,198
---------------
Leisure Time -- 2.1%
9,300 Carnival Corp. 388,182
5,600 Harley-Davidson, Inc.(d) 307,384
350 Royal Caribbean Cruises, Ltd. 13,387
---------------
708,953
---------------
Machinery -- Construction & Mining -- 0.8%
3,725 Caterpillar, Inc. 277,438
---------------
Media -- 5.8%
2,750 British Sky Broadcasting PLC, Sponsored ADR(d) 116,847
6,800 CBS Corp., Class B 183,940
4,700 Eniro AB 49,470
700 Liberty Media Holding Corp.-Interactive A(c) 12,082
2,000 Liberty Media Holding Corp.-Capital Series A(c) 167,540
2,100 McGraw-Hill Cos (The), Inc. 105,483
1,760 Reuters Group PLC, Sponsored ADR(d) 74,818
26,200 Time Warner, Inc. 453,260
10,600 Viacom, Inc., Class B(c) 379,904
2,500 Vivendi Universal 87,615
9,200 Walt Disney Co. (The) 276,000
---------------
1,906,959
---------------
Metal Fabricate & Hardware -- 0.5%
2,975 Precision Castparts Corp. 177,786
---------------
See accompanying notes to financial statements.
17
IXIS EQUITY DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ----------------------------------------------------------------------
Metals -- 0.5%
2,310 Alcan, Inc. $ 108,431
1,025 Inco, Ltd. 67,548
---------------
175,979
---------------
Mining -- 0.8%
1,250 BHP Billiton, Ltd., Sponsored ADR(d) 53,838
4,080 Companhia Vale do Rio Doce, ADR 83,966
2,600 Companhia Vale do Rio Doce, Sponsored ADR 62,504
900 Phelps Dodge Corp.(d) 73,944
---------------
274,252
---------------
Miscellaneous -- Manufacturing -- 3.1%
650 Cooper Industries, Ltd., Class A 60,398
1,000 Eaton Corp. 75,400
9,775 General Electric Co. 322,184
1,050 ITT Industries, Inc. 51,975
550 Parker Hannifin Corp. 42,680
16,900 Tyco International, Ltd. 464,750
---------------
1,017,387
---------------
Office & Business Equipment -- 0.4%
1,390 Canon, Inc., Sponsored ADR 101,845
3,060 Xerox Corp.(c) 42,565
---------------
144,410
---------------
Oil & Gas -- 4.1%
950 Anadarko Petroleum Corp. 45,306
900 Apache Corp. 61,425
1,240 BP PLC, Sponsored ADR 86,316
3,450 Chesapeake Energy Corp. 104,363
1,950 ConocoPhillips 127,783
1,979 ENI SpA, Sponsored ADR(d) 116,266
600 Hess Corp. 31,710
870 LUKOIL, Sponsored ADR 72,384
800 Murphy Oil Corp. 44,688
550 Noble Energy, Inc. 25,773
900 Occidental Petroleum Corp. 92,295
1,400 Oil States International, Inc.(c) 47,992
1,220 Petroleo Brasileiro S.A., ADR 108,958
650 Pogo Producing Co. 29,965
700 Range Resources Corp. 19,033
1,400 Sasol, Ltd., Sponsored ADR(d) 54,096
750 Sunoco, Inc. 51,968
950 Tesoro Corp. 70,642
1,400 Total SA, Sponsored ADR 91,728
900 Valero Energy Corp. 59,868
---------------
1,342,559
---------------
Oil & Gas Services -- 1.3%
3,700 Halliburton Co. 274,577
2,675 National Oilwell Varco, Inc.(c) 169,381
---------------
443,958
---------------
Pharmaceuticals -- 4.2%
2,200 Abbott Laboratories 95,942
1,530 AstraZeneca PLC, Sponsored ADR 91,525
2,900 Caremark Rx, Inc. 144,623
3,825 Gilead Sciences, Inc.(c) 226,287
1,480 GlaxoSmithKline PLC, ADR 82,584
1,550 Medco Health Solutions, Inc.(c) 88,784
1,581 Novartis AG, ADR 85,247
10,600 Schering-Plough Corp. 201,718
Shares Description Value (a)
- --------------------------------------------------------------------------
Pharmaceuticals -- continued
3,776 Serono SA(d) $ 64,758
4,000 Shionogi & Co., Ltd. 71,304
1,100 Takeda Pharmaceutical Co., Ltd. 68,438
3,625 Wyeth Corp. 160,986
---------------
1,382,196
---------------
Processing/Business Services -- 0.3%
1,575 Express Scripts, Inc.(c) 112,991
---------------
Real Estate -- 0.5%
6,950 CB Richard Ellis Group, Inc., Class A(c) 173,055
---------------
REITs -- Healthcare -- 0.3%
3,100 Ventas, Inc. 105,028
---------------
REITs -- Hotels -- 0.5%
2,725 Starwood Hotels & Resorts Worldwide, Inc. 164,426
---------------
REITs -- Mortgage -- 0.5%
1,500 Annaly Mortgage Management, Inc. 19,215
2,950 KKR Financial Corp. 61,390
750 Newcastle Investment Corp. 18,990
2,400 NovaStar Financial, Inc. 75,864
---------------
175,459
---------------
Restaurants -- 1.6%
15,400 McDonald's Corp. 517,440
---------------
Retail -- 7.8%
350 AutoZone, Inc.(c) 30,870
2,775 Best Buy Co., Inc. 152,181
3,550 CVS Corp. 108,985
1,800 Folli -- Follie SA 42,086
9,100 Home Depot, Inc. (The) 325,689
12,190 Kingfisher PLC, Sponsored ADR(d) 107,272
2,000 Kohl's Corp.(c) 118,240
3,100 Lowe's Cos, Inc. 188,077
4,375 Nordstrom, Inc.(d) 159,687
2,750 Office Depot, Inc.(c)(d) 104,500
1,050 Pacific Sunwear of California, Inc.(c) 18,827
1,850 PETCO Animal Supplies, Inc.(c) 37,795
4,475 Staples, Inc. 108,832
9,275 Starbucks Corp.(c) 350,224
3,400 TJX Cos., Inc. 77,724
13,415 Wal-Mart Stores, Inc. 646,201
---------------
2,577,190
---------------
Savings & Loans -- 1.5%
2,415 Sovereign Bancorp, Inc. 49,049
9,500 Washington Mutual, Inc. 433,010
---------------
482,059
---------------
Semiconductors -- 3.3%
25,000 Intel Corp. 473,750
4,450 STMicroelectronics NV 71,511
6,891 Taiwan Semiconductor Manufacturing Co., Ltd.,
Sponsored ADR 63,256
16,075 Texas Instruments, Inc. 486,912
---------------
1,095,429
---------------
Software -- 0.2%
1,450 Avid Technology, Inc.(c) 48,329
---------------
Telecommunications -- 2.8%
500 Anixter International, Inc. 23,730
11,525 Cisco Systems, Inc.(c) 225,083
7,175 Corning, Inc.(c) 173,563
See accompanying notes to financial statements.
18
IXIS EQUITY DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------------------------
Telecommunications -- continued
3,500 France Telecom SA, Sponsored ADR $ 76,510
11 KDDI Corp. 67,573
5,300 Motorola, Inc. 106,795
3,850 QUALCOMM, Inc. 154,270
4,400 Vodafone Group PLC, Sponsored ADR 93,720
---------------
921,244
---------------
Textiles -- 0.1%
350 Mohawk Industries, Inc.(c) 24,623
---------------
Tobacco -- 0.7%
1,850 Loews Corp. - Carolina Group 95,035
750 Reynolds American, Inc. 86,475
1,400 UST, Inc. 63,266
---------------
244,776
---------------
Toys, Games & Hobbies -- 0.4%
6,500 Nintendo Co., Ltd., ADR 134,875
---------------
Transportation -- 1.4%
500 CSX Corp. 35,220
1,650 Expeditors International of Washington, Inc. 92,416
3,500 Union Pacific Corp. 325,360
---------------
452,996
---------------
Water -- 0.3%
2,022 Suez SA, ADR(d) 84,418
---------------
Total Common Stocks (Identified Cost $31,348,692) 31,835,433
---------------
Shares/
Principal
Amount
- --------------------------------------------------------------------------------------------------
Short-Term Investments -- 13.0%
3,232,103 State Street Securities Lending Quality Trust(e) 3,232,103
$ 1,063,563 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 06/30/2006 at 3.45% to be repurchased at
$1,063,869 on 7/03/2006, collateralized by $975,000 U.S.
Treasury Bond, 6.25% due 8/15/2023 valued at $1,090,350 1,063,563
---------------
Total Short-Term Investments (Identified Cost $4,295,666) 4,295,666
---------------
Total Investments -- 109.2%
(Identified Cost $35,644,358)(b) 36,131,099
Other assets less liabilities -- (9.2)% (3,041,038)
---------------
Net Assets -- 100% $ 33,090,061
===============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments
made at the end of the Portfolio's fiscal year for tax purposes.
Such adjustments are primarily due to wash sales.):
At June 30, 2006, the net unrealized appreciation on investments
based on cost of $35,644,358 for federal income tax purposes
was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value of tax cost $ 1,716,943
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (1,230,202)
---------------
Net unrealized appreciation $ 486,741
===============
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30, 2006.
(e) Represents investment 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, 2006 as a Percentage of Net Assets
Diversified Financial Services 10.3%
Retail 7.8
Computers 6.6
Media 5.8
Banks 4.5
Pharmaceuticals 4.2
Oil & Gas 4.1
Insurance 3.8
Semiconductors 3.3
Miscellaneous -- Manufacturing 3.1
Aerospace & Defense 2.8
Telecommunications 2.8
Health Care -- Products 2.6
Beverages 2.2
Leisure Time 2.1
Others, less than 2% each 30.2
See accompanying notes to financial statements.
19
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------
Common Stocks -- 44.9% of Net Assets
Agriculture -- 0.2%
1,356 Universal Corp. $ 50,470
---------------
Auto Manufacturers -- 0.4%
2,855 General Motors Corp. 85,050
---------------
Banks -- 5.7%
1,402 AmSouth Bancorporation 37,083
1,197 Associated Banc Corp. 37,741
1,564 Bank of America Corp. 75,228
881 Bank of Hawaii Corp. 43,698
947 Bank of New York Co., Inc. 30,493
1,193 BB&T Corp. 49,617
1,414 Citizens Banking Corp. 34,516
730 Colonial BancGroup, Inc. 18,746
1,387 Comerica, Inc. 72,110
955 Compass Bancshares, Inc. 53,098
1,581 F N B Corp. 24,932
1,331 Fifth Third Bancorp 49,181
1,550 First Horizon National Corp. 62,310
1,563 FirstMerit Corp. 32,729
1,129 Fulton Financial Corp. 17,974
1,294 Huntington Bancshares, Inc. 30,513
1,344 KeyCorp 47,954
1,443 National City Corp. 52,222
1,151 North Fork Bancorporation, Inc. 34,726
1,143 PNC Financial Services Group, Inc. 80,204
1,139 Provident Bankshares Corp. 41,448
1,367 Regions Financial Corp. 45,275
1,294 Republic Bancorp, Inc. 16,033
993 Sky Financial Group, Inc. 23,445
945 Suntrust Banks, Inc. 72,066
765 Synovus Financial Corp. 20,487
923 TCF Financial Corp. 24,413
1,350 U.S. Bancorp 41,688
1,303 Wachovia Corp. 70,466
1,189 Wells Fargo & Co. 79,758
---------------
1,320,154
---------------
Beverages -- 0.2%
997 Coca-Cola Co. (The) 42,891
---------------
Chemicals -- 1.2%
1,089 Dow Chemical Co. (The) 42,503
1,151 Eastman Chemical Co. 62,154
882 Lubrizol Corp. 35,148
1,112 Lyondell Chemical Co. 25,198
1,210 PPG Industries, Inc. 79,860
1,036 RPM International, Inc. 18,648
977 Sensient Technologies Corp. 20,429
---------------
283,940
---------------
Commercial Services -- 0.3%
1,871 Deluxe Corp. 32,705
1,092 R. R. Donnelley & Sons Co. 34,890
---------------
67,595
---------------
Cosmetics & Personal Care -- 0.3%
1,033 Kimberly Clark Corp. 63,736
---------------
Distribution & Wholesale -- 0.2%
1,040 Genuine Parts Co. 43,326
---------------
Shares Description Value (a)
- ----------------------------------------------------------------------
Diversified Financial Services -- 0.5%
1,201 Citigroup, Inc. $ 57,936
1,187 JPMorgan Chase & Co. 49,854
817 Waddell & Reed Financial, Inc. 16,798
---------------
124,588
---------------
Electric -- 3.2%
1,269 Black Hills Corp. 43,565
1,342 DPL, Inc. 35,966
1,701 DTE Energy Co. 69,299
2,154 Duquesne Light Holdings, Inc. 35,412
1,820 Energy East Corp. 43,553
1,118 Entergy Corp. 79,099
994 Exelon Corp. 56,489
1,345 Firstenergy Corp. 72,912
1,140 FPL Group, Inc. 47,173
824 MDU Resources Group, Inc. 30,167
1,294 Northeast Utilities 26,747
1,584 Pinnacle West Capital Corp. 63,217
1,150 PNM Resources, Inc. 28,704
1,214 PPL Corp. 39,212
1,309 SCANA Corp. 50,501
723 Unisource Energy Corp. 22,521
---------------
744,537
---------------
Electrical Components & Equipment -- 0.3%
841 Emerson Electric Co. 70,484
---------------
Environmental Control -- 0.2%
950 Waste Management, Inc. 34,086
---------------
Food -- 0.3%
910 General Mills, Inc. 47,010
1,342 Sara Lee Corp. 21,499
---------------
68,509
---------------
Forest Products & Paper -- 0.1%
1,181 Meadwestvaco Corp. 32,985
---------------
Gas -- 0.9%
1,445 AGL Resources, Inc. 55,084
1,510 Nicor, Inc. 62,665
1,556 Nisource, Inc. 33,983
1,377 Oneok, Inc. 46,873
---------------
198,605
---------------
Health Care -- Services -- 0.0%
75 HCA, Inc. 3,236
---------------
Home Builders -- 0.1%
375 KB HOME 17,194
---------------
Home Furnishings -- 0.3%
898 La-Z-Boy, Inc. 12,572
688 Whirlpool Corp. 56,863
---------------
69,435
---------------
Household Products & Wares -- 0.2%
930 Avery Dennison Corp. 53,996
---------------
Insurance -- 0.8%
1,313 Arthur J Gallagher & Co. 33,272
921 Cincinnati Financial Corp. 43,296
1,001 Lincoln National Corp. 56,500
1,240 Unitrin, Inc. 54,052
---------------
187,120
---------------
See accompanying notes to financial statements.
20
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ---------------------------------------------------------------------------
Office & Business Equipment -- 0.2%
1,013 Pitney Bowes, Inc. $ 41,837
---------------
Oil & Gas -- 0.6%
1,111 Chevron Corp. 68,948
696 Marathon Oil Corp. 57,977
---------------
126,925
---------------
Packaging & Containers -- 0.2%
1,116 Sonoco Products Co. 35,321
---------------
Pharmaceuticals -- 1.0%
1,020 Abbott Laboratories 44,482
1,762 Bristol-Myers Squibb Co. 45,565
921 Eli Lilly & Co. 50,904
1,765 Merck & Co., Inc. 64,299
1,029 Pfizer, Inc. 24,151
---------------
229,401
---------------
Pipelines -- 0.5%
661 Equitable Resources, Inc. 22,144
1,025 Kinder Morgan, Inc. 102,387
---------------
124,531
---------------
Real Estate Investment Trusts -- 25.0%
REITs -- Apartments -- 4.8%
1,100 Apartment Investment & Management Co., Class A 47,795
4,200 Archstone-Smith Trust 213,654
2,600 AvalonBay Communities, Inc. 287,612
2,300 Camden Property Trust 169,165
5,900 Equity Residential Properties Trust 263,907
800 Home Properties, Inc. 44,408
2,800 United Dominion Realty Trust, Inc. 78,428
---------------
1,104,969
---------------
REITs -- Diversified -- 1.0%
1,500 BioMed Realty Trust, Inc. 44,910
2,000 Vornado Realty Trust 195,100
---------------
240,010
---------------
REITs -- Healthcare -- 0.7%
2,100 Healthcare Realty Trust, Inc. 66,885
2,000 Nationwide Health Properties, Inc. 45,020
3,500 Omega Healthcare Investors, Inc. 46,270
---------------
158,175
---------------
REITs -- Hotels -- 2.1%
4,500 Hilton Hotels Corp. 127,260
700 Hospitality Properties Trust 30,744
10,200 Host Hotels & Resorts 223,074
1,300 Strategic Hotels & Resorts, Inc. 26,962
1,500 Starwood Hotels & Resorts Worldwide, Inc. 90,510
---------------
498,550
---------------
REITs -- Industrial -- 3.4%
2,100 AMB Property Corp. 106,155
1,800 Duke Realty Corp. 63,270
1,200 First Potomac Realty Trust 35,748
4,600 Liberty Property Trust 203,320
5,800 ProLogis 302,296
1,100 PS Business Parks, Inc. 64,900
---------------
775,689
---------------
REITs -- Office -- 4.7%
3,400 Boston Properties, Inc. 307,360
3,700 Brandywine Realty Trust, Inc. 119,029
Shares Description Value (a)
- ------------------------------------------------------------------------------
REITs -- Office -- continued
3,700 Brookfield Properties Corp. $ 119,029
500 CarrAmerica Realty Corp. 22,275
1,300 Corporate Office Properties Trust 54,704
2,700 Equity Office Properties Trust 98,577
3,200 Highwoods Properties, Inc. 115,776
1,400 Kilroy Realty Corp. 101,150
700 Mack-Cali Realty Corp. 32,144
3,800 Trizec Properties, Inc. 108,832
---------------
1,078,876
---------------
REITs -- Regional Malls -- 3.4%
3,500 General Growth Properties, Inc. 157,710
1,200 Macerich Co. (The) 84,240
5,200 Simon Property Group, Inc. 431,288
2,800 Taubman Centers, Inc. 114,520
---------------
787,758
---------------
REITs -- Shopping Centers -- 3.1%
3,700 Developers Diversified Realty Corp. 193,066
1,800 Federal Realty Investment Trust 126,000
3,000 Kimco Realty Corp. 109,470
2,000 Kite Realty Group Trust 31,180
1,900 Pan Pacific Retail Properties, Inc. 131,803
2,000 Regency Centers Corp. 124,300
---------------
715,819
---------------
REITs -- Storage -- 1.3%
2,500 Public Storage, Inc. 189,750
800 Shurgard Storage Centers, Inc., Class A 50,000
2,300 Extra Space Storage, Inc. 37,352
1,000 U-Store-It Trust 18,860
---------------
295,962
---------------
REITs -- Triple Net Lease -- 0.5%
1,400 iStar Financial, Inc. 52,850
1,400 Realty Income Corp. 30,660
3,400 Spirit Finance Corp. 38,284
---------------
121,794
---------------
Total Real Estate Investment Trusts 5,777,602
---------------
Retail -- 0.0%
1,174 Pier 1 Imports, Inc. 8,195
---------------
Savings & Loans -- 0.9%
992 Astoria Financial Corp. 30,206
2,134 New York Community Bancorp, Inc. 35,232
1,004 Peoples Bank 32,982
1,019 Washington Federal, Inc. 23,631
1,623 Washington Mutual, Inc. 73,976
---------------
196,027
---------------
Telecommunications -- 0.7%
822 Alltel Corp. 52,468
1,790 AT&T, Inc. 49,923
1,423 BellSouth Corp. 51,513
---------------
153,904
---------------
Tobacco -- 0.4%
1,390 Altria Group, Inc. 102,068
---------------
Total Common Stocks (Identified Cost $10,021,768) 10,357,748
---------------
See accompanying notes to financial statements.
21
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Principal
Amount (+) Description Value (a)
- -------------------------------------------------------------------------------------------
Bonds and Notes -- 49.8%
Airlines -- 0.1%
$ 2,609 Continental Airlines, Inc., Series 1999-1, Class C,
6.954%, 8/02/2009 $ 2,494
16,196 Continental Airlines, Inc., Series 2002-2, Class B,
8.307%, 10/02/2019 15,531
---------------
18,025
---------------
Auto Manufacturers -- 0.1%
30,000 Ford Motor Co.,
6.375%, 2/01/2029 20,700
---------------
Auto Parts & Equipment -- 0.2%
40,000 Goodyear Tire & Rubber Co.,
7.000%, 3/15/2028 31,600
10,000 Goodyear Tire & Rubber Co.,
9.000%, 7/01/2015 9,550
---------------
41,150
---------------
Banks -- 0.7%
123,800,000 Barclays Financial LLC, 144A,
1.000%, 3/23/2009 (KRW) 130,836
35,000 Wells Fargo & Co.,
4.899%, 5/01/2033(e), 34,956
---------------
165,792
---------------
Biotechnology -- 0.0%
5,000 Invitrogen Corp.,
1.500%, 2/15/2024 4,188
---------------
Chemicals -- 0.2%
25,000 Borden, Inc.,
7.875%, 2/15/2023 20,313
20,000 Hercules, Inc., Subordinated Note,
6.500%, 6/30/2029 15,825
---------------
36,138
---------------
Commercial Services -- 0.0%
10,000 United Rentals North America, Inc., Senior Subordinated Note,
7.000%, 2/15/2014 9,138
---------------
Computers -- 0.0%
10,000 Affiliated Computer Services, Inc.,
5.200%, 6/01/2015 8,750
---------------
Diversified Financial Services -- 1.4%
20,000 Capital One Bank,
5.125%, 2/15/2014 18,805
65,000 Ford Motor Credit Co.,
5.700%, 1/15/2010 56,936
60,000 General Electric Capital Corp., (MTN),
4.750%, 9/15/2014 56,062
200,000 General Electric Capital Corp.,
6.500%, 9/28/2015 (NZD) 120,763
45,000 General Motors Acceptance Corp., (MTN),
6.750%, 12/01/2014 41,797
20,000 Goldman Sachs Group, Inc.,
4.750%, 7/15/2013 18,608
10,000 JPMorgan Chase & Co.,
5.125%, 9/15/2014 9,445
10,000 Merrill Lynch & Co., Inc., (MTN),
4.500%, 11/04/2010 9,594
---------------
332,010
---------------
Principal
Amount (+) Description Value (a)
- ------------------------------------------------------------------------------
Electric -- 1.3%
$ 100,000 Constellation Energy Group, Inc.,
4.550%, 6/15/2015 $ 88,554
20,000 Dominion Resources, Inc.,
5.000%, 3/15/2013 18,711
60,000 Dominion Resources, Inc., Senior Note, Series B,
5.950%, 6/15/2035 53,795
70,000 Exelon Generation Co. LLC,
5.350%, 1/15/2014 66,872
75,000 Nisource Finance Corp.,
3.200%, 11/01/2006 74,389
---------------
302,321
---------------
Electrical Components & Equipment -- 0.3%
70,000 Arrow Electronics, Inc.,
6.875%, 6/01/2018 68,797
---------------
Food -- 0.8%
35,000 Albertson's, Inc.,
7.450%, 8/01/2029 30,062
110,000 Albertson's, Inc.,
7.750%, 6/15/2026 97,825
15,000 Albertson's, Inc.,
8.000%, 5/01/2031 13,519
10,000 Albertson's, Inc.,
8.700%, 5/01/2030 9,473
40,000 Albertson's, Inc., Series C, (MTN),
6.625%, 6/01/2028 31,773
---------------
182,652
---------------
Government Agencies -- 7.9%
275,000 FHLMC, (MTN),
4.375%, 11/16/2007 270,931
200,000 FHLMC,
4.625%, 2/21/2008 197,316
200,000 FNMA,
2.290%, 2/19/2009 (SGD) 121,592
1,300,000 FNMA,
3.250%, 8/15/2008 1,243,124
---------------
1,832,963
---------------
Health Care -- Services -- 0.6%
20,000 Columbia/HCA, Inc.,
7.050%, 12/01/2027 17,516
110,000 HCA, Inc.,
7.500%, 11/06/2033 100,538
10,000 WellPoint, Inc.,
5.250%, 1/15/2016 9,372
---------------
127,426
---------------
Home Builders -- 1.5%
5,000 Centex Corp.,
5.250%, 6/15/2015 4,490
30,000 K Hovnanian Enterprises, Inc., Senior Note,
6.250%, 1/15/2016 26,025
20,000 K Hovnanian Enterprises, Inc., Senior Note,
6.500%, 1/15/2014 18,000
20,000 K Hovnanian Enterprises, Inc.,
7.500%, 5/15/2016 18,550
30,000 KB Home, Senior Note,
5.875%, 1/15/2015 26,165
105,000 KB Home,
7.250%, 6/15/2018 97,947
See accompanying notes to financial statements.
22
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Principal
Amount (+) Description Value (a)
- ------------------------------------------------------------------------------------------
Home Builders -- continued
$ 10,000 Pulte Homes, Inc.,
5.200%, 2/15/2015 $ 8,918
70,000 Pulte Homes, Inc.,
6.000%, 2/15/2035 58,441
80,000 Pulte Homes, Inc.,
6.375%, 5/15/2033 69,119
15,000 Toll Brothers Financial Corp.,
5.150%, 5/15/2015 13,091
---------------
340,746
---------------
Insurance -- 0.5%
65,000 Berkshire Hathaway Finance Corp.,
4.125%, 1/15/2010 61,840
55,000 Fund American Cos, Inc.,
5.875%, 5/15/2013 52,772
---------------
114,612
---------------
Lodging & Gaming -- 0.5%
50,000 Harrah's Operating Co., Inc.,
5.750%, 10/01/2017 45,549
80,000 Harrah's Operating Co., Inc.,
5.625%, 6/01/2015 73,994
---------------
119,543
---------------
Machinery -- Diversified -- 0.1%
15,000 Cummins, Inc.,
7.125%, 3/01/2028 14,795
---------------
Media -- 0.8%
70,000 British Sky Broadcasting Finance PLC, 144A,
6.500%, 10/15/2035 64,850
70,000 Time Warner, Inc.,
6.625%, 5/15/2029 67,259
20,000 Time Warner, Inc.,
6.950%, 1/15/2028 19,935
35,000 Viacom, Inc., 144A,
6.875%, 4/30/2036 33,777
---------------
185,821
---------------
Media Cable -- 1.1%
70,000 Comcast Corp.,
5.650%, 6/15/2035 59,410
60,000 Comcast Corp.,
6.450%, 3/15/2037 56,357
80,000 Comcast Corp.,
6.500%, 11/15/2035 75,518
10,000 CSC Holdings, Inc., Senior Note,
7.625%, 7/15/2018 9,900
75,000 Shaw Communications, Inc.,
6.150%, 5/09/2016 (CAD) 63,347
---------------
264,532
---------------
Mining -- 0.1%
30,000 Glencore Funding LLC, Guaranteed Note, 144A,
6.000%, 4/15/2014 27,399
---------------
Miscellaneous -- Manufacturing -- 0.3%
70,000 Bombardier, Inc., 144A,
7.450%, 5/01/2034 58,450
---------------
Municipal -- 0.2%
50,000 Michigan Tobacco Settlement Finance Authority, Taxable Turbo
Series A,
7.309%, 6/01/2034 49,953
---------------
Principal
Amount (+) Description Value (a)
- ---------------------------------------------------------------------------------------
Oil & Gas -- 0.8%
$ 90,000 Chesapeake Energy Corp.,
6.500%, 8/15/2017 $ 82,125
110,000 XTO Energy, Inc.,
6.100%, 4/01/2036 99,567
---------------
181,692
---------------
Paper -- 0.9%
20,000 Abitibi-Consolidated, Inc.,
7.500%, 4/01/2028 15,800
5,000 Georgia-Pacific Corp.,
7.250%, 6/01/2028 4,425
20,000 Georgia-Pacific Corp.,
7.375%, 12/01/2025 18,100
40,000 Georgia-Pacific Corp.,
7.750%, 11/15/2029 36,600
50,000 Georgia-Pacific Corp.,
8.000%, 1/15/2024 47,250
80,000 Georgia-Pacific Corp.,
8.875%, 5/15/2031 79,600
---------------
201,775
---------------
Pharmaceuticals -- 0.3%
25,000 Elan Finance Corp., Senior Note,
7.750%, 11/15/2011 23,875
5,000 EPIX Pharmaceuticals, Inc., Senior Note, Convertible,
3.000%, 6/15/2024 3,350
50,000 Teva Pharmaceutical Finance LLC,
6.150%, 2/01/2036 44,896
10,000 Valeant Pharmaceuticals International, Subordinated Note,
4.000%, 11/15/2013 8,650
---------------
80,771
---------------
Pipelines -- 0.9%
25,000 El Paso Energy Corp., (MTN),
7.750%, 1/15/2032 24,344
20,000 Kinder Morgan Energy Partners, LP,
5.000%, 12/15/2013 18,329
100,000 Kinder Morgan Energy Partners, LP, Senior Note,
5.800%, 3/15/2035 85,335
20,000 NGC Corp. Capital Trust, Series B,
8.316%, 6/01/2027 17,100
60,000 Transcontinental Gas Pipe Line Corp., 144A,
6.400%, 4/15/2016 57,450
---------------
202,558
---------------
Real Estate Investment Trusts -- 0.7%
50,000 Archstone-Smith Trust,
5.750%, 3/15/2016 48,277
20,000 EOP Operating, LP, Guaranteed Note,
4.650%, 10/01/2010 18,963
10,000 EOP Operating, LP, Guaranteed Note,
4.750%, 3/15/2014 9,070
30,000 ERP Operating, LP,
5.375%, 8/01/2016 28,156
10,000 FelCor Lodging, LP, Senior Note,
8.500%, 6/01/2011 10,600
20,000 Host Marriott, LP, Guaranteed Note, Series O,
6.375%, 3/15/2015 18,800
20,000 Simon Property Group, LP,
4.875%, 8/15/2010 19,336
---------------
153,202
---------------
See accompanying notes to financial statements.
23
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Principal
Amount (+) Description Value (a)
- -------------------------------------------------------------
Retail -- 0.2%
$ 75,000 Toys R US, Inc.,
7.375%, 10/15/2018 $ 53,156
---------------
Sovereigns -- 3.3%
160,000 Province of Manitoba,
5.750%, 6/02/2008 (CAD) 146,464
160,000 Province of Ontario,
5.700%, 12/01/2008 (CAD) 146,938
335,000 Queensland Treasury Corp,
6.000%, 7/14/2009 (AUD) 249,674
500,000 United Mexican States,
8.000%, 12/07/2023 (MXN) 38,576
2,000,000 United Mexican States,
9.000%, 12/20/2012 (MXN) 178,164
---------------
759,816
---------------
Technology -- 1.3%
55,000 Avnet, Inc.,
6.000%, 9/01/2015 52,068
35,000 Lucent Technologies, Inc.,
6.450%, 3/15/2029 29,750
25,000 Nortel Networks Corp.,
6.875%, 9/01/2023 20,000
20,000 Nortel Networks, Ltd, 144A,
10.125%, 7/15/2013 20,350
40,000 Northern Telecom Capital Corp.,
7.875%, 6/15/2026 32,800
170,000 Xerox Corp.,
6.400%, 3/15/2016 160,437
---------------
315,405
---------------
Telecommunications -- 2.2%
30,000 AT&T, Inc.,
6.150%, 9/15/2034 27,533
25,000 AT&T, Inc.,
6.500%, 3/15/2029 23,588
50,000 Corning, Inc.,
5.900%, 3/15/2014 49,436
75,000 Corning, Inc.,
6.200%, 3/15/2016 74,507
45,000 JDS Uniphase Corp.,
Zero Coupon Bond, 11/15/2010 41,006
80,000 Level 3 Communications, Inc.,
2.875%, 7/15/2010 72,400
5,000 Level 3 Communications, Inc.,
6.000%, 9/15/2009 4,363
100,000 Telefonica Emisiones S A U,
7.045%, 6/20/2036 99,946
30,000 Verizon New York, Inc.,
7.375%, 4/01/2032 29,573
85,000 Verizon Global Funding Corp.,
5.850%, 9/15/2035 73,945
15,000 Verizon Maryland, Inc.,
5.125%, 6/15/2033 11,466
---------------
507,763
---------------
Toys, Games & Hobbies -- 0.1%
20,000 Hasbro, Inc., Senior Debenture,
6.600%, 7/15/2028 18,894
---------------
Principal
Amount (+) Description Value (a)
- ---------------------------------------------------------------------------------
Treasuries -- 19.1%
$ 106,569 U.S. Treasury Bond,
2.000%, 1/15/2026(c) $ 97,569
251,140 U.S. Treasury Bond,
2.375%, 1/15/2025(c) 244,430
482,328 U.S. Treasury Bond,
3.375%, 4/15/2032(c) 569,373
250,000 U.S. Treasury Bond,
4.500%, 2/15/2036 224,160
785,000 U.S. Treasury Bond,
5.375%, 2/15/2031 798,554
276,467 U.S. Treasury Note,
0.875%, 4/15/2010(c) 260,797
189,897 U.S. Treasury Note,
1.625%, 1/15/2015(c) 177,027
384,148 U.S. Treasury Note
1.875%, with various maturities to 2015(c)(d) 366,898
506,986 U.S. Treasury Note
2.000%, with various maturities to 2016(c)(d) 487,969
412,871 U.S. Treasury Note
3.000%, with various maturities to 2012(c)(d) 416,966
79,414 U.S. Treasury Note,
3.375%, 1/15/2012(c) 83,186
104,169 U.S. Treasury Note,
3.500%, 1/15/2011(c) 108,958
99,752 U.S. Treasury Note,
3.625%, 1/15/2008(c) 101,467
128,975 U.S. Treasury Note,
3.875%, 1/15/2009(c) 133,590
337,760 U.S. Treasury Note
4.250%, with various maturities to 2015(c)(d) 329,681
---------------
4,400,625
---------------
Wireless -- 0.2%
50,000 Sprint Capital Corp.,
6.875%, 11/15/2028 50,370
---------------
Wirelines -- 1.1%
60,000 BellSouth Corp.,
6.000%, 11/15/2034 53,318
160,000 Qwest Capital Funding, Inc.,
6.500%, 11/15/2018 140,800
20,000 Qwest Corp.,
6.875%, 9/15/2033 17,300
45,000 Qwest Capital Funding, Inc.,
7.750%, 2/15/2031 42,075
---------------
253,493
---------------
Total Bonds and Notes (Identified Cost $11,760,839) 11,505,421
---------------
Shares
- ---------------------------------------------------------------------------------
Preferred Stocks -- 0.3%
Diversified Financial Services -- 0.1%
625 Newell Financial Trust I 27,578
---------------
Electric -- 0.1%
300 AES Trust III, Convertible 14,178
---------------
Pipelines -- 0.1%
850 El Paso Energy Capital Trust I 30,795
---------------
Total Preferred Stocks (Identified Cost $71,073) 72,551
---------------
See accompanying notes to financial statements.
24
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Principal
Amount (+) Description Value (a)
- --------------------------------------------------------------------------------------------------
Short-Term Investments -- 4.8%
$ 1,107,097 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 06/30/2006 at 3.450% to be repurchased at
$1,107,415 on 7/03/2006, collateralized by $265,000 U.S.
Treasury Bond, 8.750% due 08/15/2020 valued at $361,387
and $700,000 U.S. Treasury Bond, 6.250% due 08/15/2023
valued at $782,816.
(Identified Cost $1,107,097) $ 1,107,097
---------------
Total Investments -- 99.8%
(Identified Cost $22,960,777)(b) 23,042,817
Other assets less liabilities -- 0.2% 35,687
---------------
Net Assets -- 100% $ 23,078,504
===============
(a) See Note 2a of Notes to Financial Statements.
(b) Federal Tax Information (Amounts exclude certain adjustments
made at the end of the Portfolio's fiscal year for tax purposes.
Such adjustments are primarily due to wash sales and return of
capital included in dividends received from the Portfolio's
investments in REITs. Amortization of premium on debt securities is
excluded for tax purposes.):
At June 30, 2006, the net unrealized appreciation on investments
based on cost of $22,965,590 for federal income tax purposes
was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value of tax cost $ 481,175
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (403,948)
---------------
Net unrealized appreciation $ 77,227
===============
(c) Treasury Inflation Protected Security (TIPS).
(d) All separate investments in United States Treasury Notes which
have the same coupon rate have been aggregated for the purpose
of presentation in the Portfolio of Investments.
(e) Variable rate security whose interest rate varies with changes in a
designated base rate (such as the prime interest rate) on a
specified date (such as coupon date or interest payment date).
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 June 30, 2006, the value of these
amounted to $393,112 or 1.7% of net assets.
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
MTN Medium Term Note
REITs Real Estate Investment Trusts
(+) Principal amount is in U.S. dollars unless otherwise noted.
AUD Australian Dollar
CAD Canadian Dollar
KRW South Korean Won
MXN Mexican Peso
NZD New Zealand Dollar
SGD Singapore Dollar
Holdings at June 30, 2006 as a Percentage of Net Assets
Treasuries 19.1%
Government Agencies 7.9
Banks 6.4
REITs -- Apartments 4.8
REITs -- Office 4.7
Electric 4.6
REITs -- Regional Malls 3.4
REITs -- Industrial 3.4
Sovereigns 3.3
REITs -- Shopping Centers 3.1
Telecommunications 2.9
REITs -- Hotels 2.1
Diversified Financial Services 2.0
Others, less than 2% each 27.3
See accompanying notes to financial statements.
25
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ------------------------------------------------------------------------------
Common Stocks -- 67.1% of Net Assets
Aerospace & Defense -- 2.0%
1,800 Alliant Techsystems, Inc.(c) $ 137,430
7,000 CAE, Inc. 53,480
9,600 Honeywell International, Inc. 386,880
1,700 L-3 Communications Holdings, Inc. 128,214
17,100 Raytheon Co. 762,147
11,375 United Technologies Corp. 721,402
---------------
2,189,553
---------------
Agriculture -- 0.5%
12,950 Archer-Daniels-Midland Co. 534,576
---------------
Apparel -- 0.0%
500 Columbia Sportswear Co.(c) 22,630
---------------
Auto Manufacturers -- 0.4%
390,000 Denway Motors, Ltd. 130,564
10,573 Nissan Motor Co., Ltd., Sponsored ADR(d) 232,395
1,400 PACCAR, Inc. 115,332
---------------
478,291
---------------
Auto Parts & Equipment -- 0.2%
3,050 Johnson Controls, Inc. 250,771
---------------
Banks -- 3.3%
6,077 ABN AMRO Holding NV, Sponsored ADR 166,267
17,450 Banco Santander Central Hispano SA, ADR 255,119
3,200 Bank of America Corp. 153,920
3,875 Bank of Yokohama, Ltd., ADR(d) 286,750
4,630 BNP Paribas, ADR(d) 220,388
3,407 Credit Agricole SA 129,642
5,605 DBS Group Holdings, Ltd., Sponsored ADR 253,626
1,850 First Horizon National Corp. 74,370
1,500 Hancock Holding Co. 84,000
9,700 HBOS PLC 168,610
2,702 HSBC Holdings PLC, Sponsored ADR(d) 238,722
25,000 Joyo Bank, Ltd. (The) 151,608
700 KeyCorp 24,976
3,400 Marshall & Ilsley Corp. 155,516
6,200 R&G Financial Corp., Class B 53,258
6,250 State Street Corp. 363,062
24,154 Sumitomo Trust & Banking Co., Ltd. (The),
Sponsored ADR(d) 262,071
7,300 U.S. Bancorp 225,424
3,800 Wachovia Corp. 205,504
2,414 Westpac Banking Corp., Sponsored ADR(d) 208,449
---------------
3,681,282
---------------
Beverages -- 1.6%
7,000 Coca-Cola Co. (The) 301,140
1,200 Constellation Brands, Inc.(c) 30,000
5,800 Diageo PLC, Sponsored ADR 391,790
1,575 Hansen Natural Corp.(c)(d) 299,833
12,300 PepsiCo, Inc. 738,492
---------------
1,761,255
---------------
Biotechnology -- 0.7%
1,800 Charles River Laboratories International, Inc.(c) 66,240
7,275 Genentech, Inc.(c) 595,095
1,000 Invitrogen Corp.(c) 66,070
---------------
727,405
---------------
Shares Description Value (a)
- ----------------------------------------------------------------------------
Chemicals -- 1.2%
1,300 Agrium, Inc. $ 30,186
2,150 Ashland, Inc. 143,405
5,832 Ciba Specialty Chemicals AG, Sponsored ADR(d) 162,888
9,500 Dow Chemical Co. (The) 370,785
2,600 Lonza Group AG 178,324
4,200 Lyondell Chemical Co. 95,172
4,600 Sherwin-Williams Co. (The) 218,408
1,400 Sigma-Aldrich Corp. 101,696
---------------
1,300,864
---------------
Coal -- 0.2%
800 Massey Energy Co. 28,800
5,870 Yanzhou Coal Mining Co., Ltd., Sponsored ADR(d) 216,662
---------------
245,462
---------------
Commercial Services -- 0.4%
5,700 Convergys Corp.(c) 111,150
6,900 Monster Worldwide, Inc.(c) 294,354
800 R. R. Donnelley & Sons Co. 25,560
---------------
431,064
---------------
Computers -- 4.5%
8,300 Apple Computer, Inc.(c) 474,096
6,400 Cognizant Technology Solutions Corp.(c)(d) 431,168
40,800 Dell, Inc.(c) 995,928
3,050 Diebold, Inc. 123,891
2,800 DST Systems, Inc.(c) 166,600
45,450 Hewlett-Packard Co. 1,439,856
15,350 Network Appliance, Inc.(c)(d) 541,855
6,725 SanDisk Corp.(c)(d) 342,840
123,500 Sun Microsystems, Inc.(c)(d) 512,525
---------------
5,028,759
---------------
Cosmetics & Personal Care -- 0.7%
14,275 Procter & Gamble Co. 793,690
---------------
Distribution & Wholesale -- 0.3%
4,595 Marubeni Corp., ADR 242,616
9,900 Sumitomo Corp., Sponsored ADR(d) 128,700
---------------
371,316
---------------
Diversified Financial Services -- 7.0%
14,300 American Express Co. 761,046
1,450 Bear Stearns Cos. (The), Inc. 203,116
2,375 BlackRock, Inc., Class A 330,529
33,295 Cattles PLC 202,716
1,375 Chicago Mercantile Exchange Holdings, Inc. 675,331
4,800 CIT Group, Inc. 250,992
14,600 Citigroup, Inc. 704,304
3,816 Credit Suisse Group, Sponsored ADR 213,658
6,600 Eaton Vance Corp. 164,736
2,300 Federated Investors, Inc.,Class B 72,450
6,050 Goldman Sachs Group, Inc. 910,102
30,300 JPMorgan Chase & Co. 1,272,600
800 Legg Mason, Inc. 79,616
5,400 Lehman Brothers Holdings, Inc.(d) 351,810
17,700 Morgan Stanley 1,118,817
8,240 Nomura Holdings, Inc. 154,912
3,800 Nuveen Investments, Class A 163,590
4,000 T. Rowe Price Group, Inc. 151,240
---------------
7,781,565
---------------
See accompanying notes to financial statements.
26
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- -----------------------------------------------------------------------------------
Electric -- 0.8%
5,200 AES Corp. (The)(c) $ 95,940
4,720 Companhia Energetica de Minas Gerais, Sponsored ADR(d) 201,119
4,900 E.ON AG, Sponsored ADR 187,915
6,600 Mirant Corp.(c) 176,880
1,400 PG&E Corp. 54,992
1,900 PPL Corp. 61,370
1,400 Progress Energy, Inc. 60,018
---------------
838,234
---------------
Electrical Components & Equipment -- 0.9%
3,100 AMETEK, Inc. 146,878
7,525 Emerson Electric Co. 630,670
2,200 General Cable Corp.(c) 77,000
17,905 Johnson Electric Holdings, Ltd., Sponsored ADR 127,126
---------------
981,674
---------------
Electronics -- 0.6%
21,369 Celestica, Inc.(c) 203,860
3,500 Fisher Scientific International, Inc.(c) 255,675
2,050 Mettler Toledo International, Inc.(c) 124,169
3,300 PerkinElmer, Inc. 68,970
---------------
652,674
---------------
Engineering & Construction -- 0.2%
11,515 ABB, Ltd., Sponsored ADR 149,234
2,800 Chicago Bridge & Iron Co., N.V. 67,620
---------------
216,854
---------------
Food -- 1.4%
2,060 Ajinomoto Co., Inc., ADR 226,085
4,740 Carrefour SA 277,914
1,600 Hormel Foods Corp. 59,424
3,060 Nestle SA, Sponsored ADR 238,374
3,000 Royal Numico NV 134,646
1,900 Smithfield Foods, Inc.(c) 54,777
8,025 Whole Foods Market, Inc. 518,736
---------------
1,509,956
---------------
Gas -- 0.2%
10,000 Southern Union Co. 270,600
---------------
Health Care -- Products -- 1.8%
2,250 Bausch & Lomb, Inc. 110,340
16,700 Baxter International, Inc. 613,892
2,900 Beckman Coulter, Inc. 161,095
2,700 Biomet, Inc. 84,483
2,700 Cooper Cos. (The), Inc. 119,583
5,000 Johnson & Johnson 299,600
8,400 Kinetic Concepts, Inc.(c) 370,860
3,100 Smith & Nephew PLC, Sponsored ADR(d) 119,443
2,200 Zimmer Holdings, Inc.(c) 124,784
---------------
2,004,080
---------------
Health Care -- Services -- 1.3%
7,675 DaVita, Inc.(c)(d) 381,448
3,700 Lifepoint Hospitals, Inc.(c) 118,881
6,850 Quest Diagnostics, Inc.(d) 410,452
3,650 Triad Hospitals, Inc.(c) 144,467
5,250 WellPoint, Inc.(c) 382,042
---------------
1,437,290
---------------
Holding Companies -- Diversified -- 0.1%
3,460 Hutchison Whampoa, Ltd., ADR 156,911
---------------
Shares Description Value (a)
- ---------------------------------------------------------------------------------
Home Builders -- 0.4%
4,100 Lennar Corp., Class A $ 181,917
8,500 Pulte Homes, Inc.(d) 244,715
---------------
426,632
---------------
Household Products & Wares -- 0.6%
6,900 Fortune Brands, Inc. 489,969
1,600 Fossil, Inc.(c) 28,816
3,000 Scotts Miracle-Gro Co., (The), Class A 126,960
---------------
645,745
---------------
Insurance -- 2.8%
5,900 Aflac, Inc. 273,465
1,200 Ambac Financial Group, Inc. 97,320
2,650 Arch Capital Group, Ltd.(c) 157,569
6,830 Axa, Sponsored ADR 223,887
6,725 Chubb Corp. 335,578
4,500 Cincinnati Financial Corp. 211,545
4,775 Hartford Financial Services Group, Inc. 403,965
6,785 ING Groep NV, Sponsored ADR 266,786
3,500 MGIC Investment Corp.(d) 227,500
4,950 Ohio Casualty Corp. 147,164
1,900 PMI Group, Inc. (The) 84,702
7,975 Prudential Financial, Inc. 619,657
1,200 Willis Group Holdings, Ltd. 38,520
---------------
3,087,658
---------------
Internet -- 1.3%
7,325 Akamai Technologies, Inc.(c)(d) 265,092
6,380 Check Point Software Technologies, Ltd.(c) 112,160
2,300 Google, Inc., Class A(c) 964,459
7,550 Symantec Corp.(c) 117,327
---------------
1,459,038
---------------
Iron & Steel -- 0.0%
700 Oregon Steel Mills, Inc.(c) 35,462
---------------
Leisure Time -- 1.4%
20,900 Carnival Corp. 872,366
12,300 Harley-Davidson, Inc.(d) 675,147
850 Royal Caribbean Cruises, Ltd. 32,512
---------------
1,580,025
---------------
Lodging -- 0.4%
6,450 Starwood Hotels & Resorts Worldwide, Inc. 389,193
---------------
Machinery -- Construction & Mining -- 0.6%
8,850 Caterpillar, Inc. 659,148
---------------
Media -- 3.9%
7,260 British Sky Broadcasting PLC, Sponsored ADR(d) 308,477
15,000 CBS Corp., Class B 405,750
11,700 Eniro AB 123,149
4,665 Liberty Media Holding Corp. - Capital Series A(c) 390,787
1,625 Liberty Media Holding Corp. - Interactive Class A(c) 28,048
4,950 McGraw-Hill Cos (The), Inc. 248,638
4,654 Reuters Group PLC, Sponsored ADR(d) 197,842
58,200 Time Warner, Inc. 1,006,860
23,300 Viacom, Inc., Class B(c) 835,072
6,300 Vivendi Universal SA 220,790
20,400 Walt Disney Co. (The)(d) 612,000
---------------
4,377,413
---------------
Metal Fabricate & Hardware -- 0.4%
7,050 Precision Castparts Corp. 421,308
---------------
See accompanying notes to financial statements.
27
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- ----------------------------------------------------------------------------
Metals -- 0.3%
6,070 Alcan, Inc. $ 284,926
1,400 Inco, Ltd. 92,260
---------------
377,186
---------------
Mining -- 0.6%
1,700 BHP Billiton, Ltd., Sponsored ADR(d) 73,219
6,600 Companhia Vale do Rio Doce, ADR 158,664
10,820 Companhia Vale do Rio Doce, Sponsored ADR 222,676
2,150 Phelps Dodge Corp. 176,644
---------------
631,203
---------------
Miscellaneous -- Manufacturing -- 2.1%
1,600 Cooper Industries, Ltd., Class A 148,672
2,200 Eaton Corp. 165,880
23,150 General Electric Co. 763,024
2,800 ITT Industries, Inc. 138,600
1,500 Parker Hannifin Corp. 116,400
36,300 Tyco International, Ltd. 998,250
---------------
2,330,826
---------------
Office & Business Equipment -- 0.6%
3,650 Canon, Inc., Sponsored ADR 267,435
26,000 Xerox Corp.(c)(d) 361,660
---------------
629,095
---------------
Oil & Gas -- 3.0%
2,150 Anadarko Petroleum Corp. 102,533
2,100 Apache Corp. 143,325
3,260 BP PLC, Sponsored ADR 226,929
8,900 Chesapeake Energy Corp. 269,225
5,200 ConocoPhillips 340,756
5,257 ENI SpA, Sponsored ADR(d) 308,849
1,500 Hess Corp. 79,275
2,240 LUKOIL, Sponsored ADR 186,368
1,700 Murphy Oil Corp. 94,962
1,500 Noble Energy, Inc. 70,290
2,200 Occidental Petroleum Corp. 225,610
3,400 Oil States International, Inc.(c) 116,552
3,190 Petroleo Brasileiro S.A., ADR 284,899
1,900 Pogo Producing Co. 87,590
1,700 Range Resources Corp. 46,223
1,800 Sasol, Ltd., Sponsored ADR(d) 69,552
1,800 Sunoco, Inc. 124,722
2,600 Tesoro Corp. 193,336
3,718 Total SA, Sponsored ADR 243,603
2,200 Valero Energy Corp. 146,344
---------------
3,360,943
---------------
Oil & Gas Services -- 0.9%
8,650 Halliburton Co. 641,916
6,375 National Oilwell Varco, Inc.(c)(d) 403,665
---------------
1,045,581
---------------
Pharmaceuticals -- 3.3%
5,600 Abbott Laboratories 244,216
4,040 AstraZeneca PLC, Sponsored ADR 241,673
7,250 Caremark Rx, Inc. 361,557
3,725 Express Scripts, Inc.(c) 267,232
9,100 Gilead Sciences, Inc.(c) 538,356
3,905 GlaxoSmithKline PLC, ADR 217,899
3,300 Medco Health Solutions, Inc.(c) 189,024
4,176 Novartis AG, ADR 225,170
23,800 Schering-Plough Corp. 452,914
Shares Description Value (a)
- -----------------------------------------------------------------------------
Pharmaceuticals -- continued
9,969 Serono SA(d) $ 170,968
12,000 Shionogi & Co., Ltd. 213,911
2,700 Takeda Pharmaceutical Co., Ltd. 167,983
8,575 Wyeth Corp. 380,816
---------------
3,671,719
---------------
Real Estate -- 0.4%
16,450 CB Richard Ellis Group, Inc., Class A(c) 409,605
---------------
REITs -- Health Care -- 0.2%
6,500 Ventas, Inc. 220,220
---------------
REITs -- Mortgage -- 0.4%
3,700 Annaly Mortgage Management, Inc. 47,397
7,900 KKR Financial Corp. 164,399
2,100 Newcastle Investment Corp. 53,172
6,300 NovaStar Financial, Inc. 199,143
---------------
464,111
---------------
Restaurants -- 1.0%
33,000 McDonald's Corp. 1,108,800
---------------
Retail -- 5.4%
150 AutoZone, Inc.(c) 13,230
6,600 Best Buy Co., Inc. 361,944
8,425 CVS Corp. 258,648
4,580 Folli - Follie SA 107,085
20,600 Home Depot, Inc. (The) 737,274
32,110 Kingfisher PLC, Sponsored ADR(d) 282,568
4,600 Kohl's Corp.(c)(d) 271,952
3,700 Limited Brands, Inc. 94,683
7,375 Lowe's Cos, Inc. 447,441
10,400 Nordstrom, Inc.(d) 379,600
6,550 Office Depot, Inc.(c) 248,900
2,200 Pacific Sunwear of California, Inc.(c) 39,446
3,700 PETCO Animal Supplies, Inc.(c) 75,591
10,625 Staples, Inc. 258,400
22,000 Starbucks Corp.(c) 830,720
8,150 TJX Cos., Inc. 186,309
29,200 Wal-Mart Stores, Inc. 1,406,564
---------------
6,000,355
---------------
Savings & Loans -- 0.4%
5,670 Sovereign Bancorp, Inc. 115,158
6,500 Washington Mutual, Inc.(d) 296,270
---------------
411,428
---------------
Semiconductors -- 2.3%
55,200 Intel Corp. 1,046,040
11,760 STMicroelectronics NV 188,983
18,148 Taiwan Semiconductor Manufacturing Co., Ltd.,
Sponsored ADR 166,603
37,325 Texas Instruments, Inc. 1,130,574
---------------
2,532,200
---------------
Software -- 0.1%
3,650 Avid Technology, Inc.(c) 121,655
---------------
Telecommunications -- 2.0%
900 Anixter International, Inc. 42,714
27,300 Cisco Systems, Inc.(c) 533,169
17,000 Corning, Inc.(c) 411,230
9,219 France Telecom SA, Sponsored ADR 201,527
27 KDDI Corp. 165,860
12,550 Motorola, Inc. 252,882
See accompanying notes to financial statements.
28
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a)
- --------------------------------------------------------------------------------------------
Telecommunications -- continued
9,100 QUALCOMM, Inc. $ 364,637
11,615 Vodafone Group PLC, Sponsored ADR 247,400
---------------
2,219,419
---------------
Textiles -- 0.0%
700 Mohawk Industries, Inc.(c) 49,245
---------------
Tobacco -- 0.6%
4,750 Loews Corp. - Carolina Group 244,008
1,900 Reynolds American, Inc. 219,070
3,500 UST, Inc. 158,165
---------------
621,243
---------------
Toys, Games & Hobbies -- 0.3%
17,134 Nintendo Co., Ltd., ADR 355,531
---------------
Transportation -- 0.9%
1,100 CSX Corp. 77,484
3,950 Expeditors International of Washington, Inc. 221,239
7,300 Union Pacific Corp. 678,608
---------------
977,331
---------------
Water -- 0.2%
5,345 Suez SA, ADR(d) 223,154
---------------
Total Common Stocks (Identified Cost $72,697,796) 74,509,228
---------------
Principal
Amount
- --------------------------------------------------------------------------------------------
Bonds and Notes -- 31.3%
Asset Backed Securities -- 0.3%
$ 277,000 Citibank Credit Card Issuance Trust, Series 2003-A6, Class A6,
2.900%, 5/17/2010 264,018
100,000 Citibank Credit Card Issuance Trust, Series 2003-A3, Class A3,
3.100%, 3/10/2010 96,020
---------------
360,038
---------------
Auto Manufacturers -- 0.4%
460,000 DaimlerChrysler NA Holding Corp.,
4.050%, 6/04/2008 444,754
---------------
Banks -- 0.8%
820,000 Bank of America Corp., Subordinated Note,
7.400%, 1/15/2011 872,494
---------------
Diversified Financial Services -- 5.5%
450,000 American General Finance Corp.,
5.375%, 10/01/2012(d) 437,825
475,000 CIT Group, Inc., Senior Note,
4.000%, 5/08/2008(d) 461,084
895,000 Countrywide Home Loans, Inc., (MTN),
5.500%, 2/01/2007 893,807
850,000 General Electric Capital Corp., (MTN),
6.000%, 6/15/2012 859,764
825,000 Household Finance Corp.,
4.625%, 1/15/2008 813,215
90,000 Household Finance Corp.,
8.000%, 7/15/2010 97,020
910,000 John Deere Capital Corp., Global Note,
4.500%, 8/22/2007 898,142
835,000 Morgan Stanley,
4.750%, 4/01/2014 765,545
885,000 USA Education, Inc.,
5.625%, 4/10/2007 883,926
---------------
6,110,328
---------------
Principal
Amount Description Value (a)
- ------------------------------------------------------------------------
Electric -- 2.0%
$ 220,000 Carolina Power & Light,
6.500%, 7/15/2012 $ 226,058
865,000 Dominion Resources, Inc.,
5.700%, 9/17/2012 846,449
910,000 Duke Energy Corp., Senior Note,
4.200%, 10/01/2008 879,012
255,000 Progress Energy, Inc.,
7.100%, 3/01/2011 266,004
---------------
2,217,523
---------------
Government Agencies -- 14.5%
401,588 FHLMC,
4.000%, 5/01/2020 370,229
1,180,706 FHLMC,
4.500%, 6/01/2035 1,071,162
950,000 FHLMC,
4.625%, 2/21/2008(d) 937,251
845,000 FHLMC,
4.875%, 3/15/2007 841,039
285,773 FHLMC,
5.500%, with various maturities to 2019(f) 280,577
30,250 FHLMC,
6.000%, 6/01/2035 29,874
1,078,144 FHLMC,
6.500%, with various maturities to 2035(f) 1,085,950
1,500,000 FNMA,
3.250%, 1/15/2008(d) 1,451,264
2,117,061 FNMA,
4.000%, with various maturities to 2020(f) 1,953,933
1,207,536 FNMA,
4.500%, 9/01/2035 1,094,732
3,211,164 FNMA,
5.000%, with various maturities to 2035(f) 3,003,642
2,737,800 FNMA,
5.500%, with various maturities to 2034(f) 2,688,096
1,211,081 FNMA,
6.500%, with various maturities to 2036(f) 1,219,861
134,996 GNMA,
6.500%, 10/20/2034 136,218
---------------
16,163,828
---------------
Insurance -- 0.8%
900,000 Marsh & McLennan Cos, Inc.,
5.750%, 9/15/2015 849,579
---------------
Media -- 0.4%
390,000 Time Warner, Inc.,
7.625%, 4/15/2031 419,923
---------------
Metals -- 0.8%
910,000 Alcan, Inc., Senior Note,
4.875%, 9/15/2012 864,196
---------------
Pipelines -- 0.3%
370,000 Kinder Morgan, Inc., Senior Note,
6.500%, 9/01/2012 351,572
---------------
REITs -- Regional Malls -- 0.4%
450,000 Simon Property Group LP,
4.600%, 6/15/2010 431,251
---------------
Telecommunications -- 0.7%
900,000 SBC Communications,
5.100%, 9/15/2014 834,943
---------------
See accompanying notes to financial statements.
29
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of June 30, 2006 (Unaudited)
Principal
Amount Description Value (a)
- ---------------------------------------------------------------------------------------------------
Treasuries -- 4.0%
$ 750,000 U.S. Treasury Bond,
4.500%, 2/15/2036(d) $ 672,481
805,000 U.S. Treasury Bond,
5.250%, 2/15/2029(d) 801,478
775,000 U.S. Treasury Bond,
6.000%, 2/15/2026(d) 839,482
550,000 U.S. Treasury Note,
4.250%, 11/15/2013(d) 520,480
1,610,000 U.S. Treasury Note,
4.500%, 2/15/2016(d) 1,531,764
135,000 U.S. Treasury Note,
5.000%, 2/15/2011(d) 134,668
---------------
4,500,353
---------------
Wireless -- 0.4%
415,000 Sprint Capital Corp.,
6.875%, 11/15/2028 418,073
---------------
Total Bonds and Notes (Identified Cost $36,297,679) 34,838,855
---------------
Shares/
Principal
Amount
- ---------------------------------------------------------------------------------------------------
Short-Term Investments -- 14.9%
15,505,717 State Street Securities Lending Quality Trust(e) 15,505,717
$ 1,013,656 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 06/30/2006 at 3.45% to be repurchased at
$1,013,947 on 7/3/2006, collateralized by $930,000 U.S.
Treasury Bond, 6.25% due 8/15/2023 valued at $1,040,026 1,013,656
---------------
Total Short-Term Investments (Identified Cost $16,519,373) 16,519,373
---------------
Total Investments -- 113.3%
(Identified Cost $125,514,848)(b) 125,867,456
Other assets less liabilities -- (13.3)% (14,796,795)
---------------
Net Assets -- 100% $ 111,070,661
===============
(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. Amortization of
premium on debt securities is excluded for tax purposes.):
At June 30, 2006, the net unrealized appreciation on investments
based on cost of $125,663,586 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 $ 4,736,547
Aggregate gross unrealized depreciation for all investments in
which there is an excess tax cost over value of (4,532,677)
---------------
Net unrealized appreciation $ 203,870
===============
(c) Non-income producing security.
(d) All or a portion of this security was on loan to brokers at June 30,
2006.
(e) Represents investment of security lending collateral.
(f) All separate investments in mortgage related securities of the
Federal Home Loan Mortgage Corporation and Federal National
Mortgage Association which are interests in separate pools of
mortgages have been aggregated for the purpose of presentation
in the Portfolio of Investments.
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
REITs Real Estate Investment Trusts
Holdings at June 30, 2006 as a Percentage of Net Assets
Government Agencies 14.5%
Diversified Financial Services 12.5
Retail 5.4
Computers 4.5
Media 4.3
Banks 4.1
Treasuries 4.0
Insurance 3.6
Pharmaceuticals 3.3
Oil & Gas 3.0
Electric 2.8
Telecommunications 2.7
Semiconductors 2.3
Miscellaneous -- Manufacturing 2.1
Aerospace & Defense 2.0
Others, less than 2% each 27.3
See accompanying notes to financial statements.
30
STATEMENTS OF ASSETS & LIABILITIES
June 30, 2006 (Unaudited)
IXIS IXIS IXIS
Equity Income Moderate
Diversified Diversified Diversified
Portfolio Portfolio Portfolio
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
ASSETS
Investments at cost $ 35,644,358 $ 22,960,777 $ 125,514,848
Net unrealized appreciation 486,741 82,040 352,608
--------------------- --------------------- ---------------------
Investments at value (a) 36,131,099 23,042,817 125,867,456
Cash 48,950 -- --
Receivable for Fund shares sold 114,118 294,929 194,615
Receivable for securities sold 247,147 176,939 1,036,990
Dividends and interest receivable 45,417 192,326 522,814
Tax reclaims receivable 1,989 -- 5,512
Securities lending income receivable 422 -- 1,653
--------------------- --------------------- ---------------------
TOTAL ASSETS 36,589,142 23,707,011 127,629,040
--------------------- --------------------- ---------------------
LIABILITIES
Collateral on securities loaned, at
value (Note 2) 3,232,103 -- 15,505,717
Payable for securities purchased 172,950 523,998 367,370
Payable for Fund shares redeemed 26,282 9,865 492,581
Payable to custodian bank -- -- 64,206
Management fees payable 45,722 54,360 67,896
Deferred Trustees' fees 12,778 4,681 20,553
Administrative fees payable 1,565 1,032 5,395
Other accounts payable and accrued
expenses 7,681 34,571 34,661
--------------------- --------------------- ---------------------
TOTAL LIABILITIES 3,499,081 628,507 16,558,379
--------------------- --------------------- ---------------------
NET ASSETS $ 33,090,061 $ 23,078,504 $ 111,070,661
===================== ===================== =====================
NET ASSETS CONSIST OF:
Paid-in capital $ 31,463,940 $ 22,996,507 $ 104,909,622
Overdistributed net investment income (56,423) (4,456) (125,690)
Accumulated net realized gain on
investments and foreign currency
transactions 1,195,802 4,593 5,934,106
Net unrealized appreciation on
investments and foreign currency
translations 486,742 81,860 352,623
--------------------- --------------------- ---------------------
NET ASSETS $ 33,090,061 $ 23,078,504 $ 111,070,661
===================== ===================== =====================
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:
Class A shares:
Net assets $ 12,292,363 $ 13,009,728 $ 30,727,104
===================== ===================== =====================
Shares of beneficial interest 1,136,473 1,262,429 2,854,485
===================== ===================== =====================
Net asset value and redemption price
per share $ 10.82 $ 10.31 $ 10.76
===================== ===================== =====================
Offering price per share
(100/[100-maximum sales charge] of
net asset value) (Note 1) $ 11.48 $ 10.80 $ 11.42
===================== ===================== =====================
Class C shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (Note 1)
Net assets $ 20,797,698 $ 10,068,776 $ 80,343,557
===================== ===================== =====================
Shares of beneficial interest 1,941,632 979,033 7,488,503
===================== ===================== =====================
Net asset value and offering price
per share (Note 1) $ 10.71 $ 10.28 $ 10.73
===================== ===================== =====================
(a) Including securities on loan with
market values of: $ 3,189,465 $ -- $ 15,291,136
===================== ===================== =====================
See accompanying notes to financial statements.
31
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2006 (Unaudited)
IXIS
Equity
Diversified
Portfolio
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 284,531
Interest 16,357
Securities lending income 2,982
Less net foreign taxes withheld (9,283)
---------------------
294,587
---------------------
Expenses
Management fees 130,235
Service fees - Class A 15,378
Service and distribution fees - Class C 101,284
Trustees' fees and expenses 8,454
Administrative fees 15,000
Custodian fees and expenses 28,765
Transfer agent fees and expenses 11,335
Audit fees 13,020
Legal fees 834
Shareholder reporting expenses 10,596
Registration fees 7,494
Miscellaneous expenses 748
---------------------
Total expenses 343,143
Less reimbursement/waiver (Note 4) --
---------------------
Net expenses 343,143
---------------------
Net investment income (loss) (48,556)
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 1,260,212
Foreign currency transactions - net (6,115)
Change in unrealized appreciation (depreciation) on:
Investments - net (1,458,055)
Foreign currency translations - net 1
---------------------
Total net realized and unrealized gain (loss) on investments and foreign currency transactions (203,957)
---------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (252,513)
=====================
IXIS
Income
Diversified
Portfolio
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 115,769
Interest 206,997
Securities lending income --
Less net foreign taxes withheld (197)
---------------------
322,569
---------------------
Expenses
Management fees 37,462
Service fees - Class A 10,764
Service and distribution fees - Class C 25,055
Trustees' fees and expenses 6,406
Administrative fees 13,613
Custodian fees and expenses 33,836
Transfer agent fees and expenses 2,725
Audit fees 16,450
Legal fees 150
Shareholder reporting expenses 7,500
Registration fees 335
Miscellaneous expenses 844
---------------------
Total expenses 155,140
Less reimbursement/waiver (Note 4) (51,208)
---------------------
Net expenses 103,932
---------------------
Net investment income (loss) 218,637
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 5,027
Foreign currency transactions - net 66
Change in unrealized appreciation (depreciation) on:
Investments - net 48,496
Foreign currency translations - net (180)
---------------------
Total net realized and unrealized gain (loss) on investments and foreign currency transactions 53,409
---------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 272,046
=====================
IXIS
Moderate
Diversified
Portfolio
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 761,275
Interest 947,229
Securities lending income 15,215
Less net foreign taxes withheld (25,030)
---------------------
1,698,689
---------------------
Expenses
Management fees 464,310
Service fees - Class A 47,617
Service and distribution fees - Class C 428,610
Trustees' fees and expenses 10,413
Administrative fees 39,962
Custodian fees and expenses 26,985
Transfer agent fees and expenses 67,561
Audit fees 12,300
Legal fees 4,802
Shareholder reporting expenses 20,266
Registration fees 16,067
Miscellaneous expenses 2,134
---------------------
Total expenses 1,141,027
Less reimbursement/waiver (Note 4) (9,983)
---------------------
Net expenses 1,131,044
---------------------
Net investment income (loss) 567,645
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 6,284,911
Foreign currency transactions - net (14,411)
Change in unrealized appreciation (depreciation) on:
Investments - net (7,231,914)
Foreign currency translations - net 15
---------------------
Total net realized and unrealized gain (loss) on investments and foreign currency transactions (961,399)
---------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (393,754)
=====================
See accompanying notes to financial statements.
32
STATEMENTS OF CHANGES IN NET ASSETS
IXIS Equity
Diversified Portfolio
--------------------------------------------
For the Period
January 31, 2005 (a)
Six Months Ended through
June 30, 2006 December 31,
(unaudited) 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ (48,556) $ (140,277)
Net realized gain on investments and
foreign currency transactions 1,254,097 9,421
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations (1,458,054) 1,944,796
--------------------- ---------------------
Net increase (decrease) in net assets
resulting from operations (252,513) 1,813,940
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A -- --
Class C -- --
Net realized capital gain
Class A -- --
Class C -- --
--------------------- ---------------------
Total distributions -- --
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) 4,286,083 27,242,551
--------------------- ---------------------
Net increase (decrease) in net assets 4,033,570 29,056,491
--------------------- ---------------------
NET ASSETS
Beginning of the period 29,056,491 --
--------------------- ---------------------
End of the period $ 33,090,061 $ 29,056,491
===================== =====================
UNDISTRIBUTED
(OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ (56,423) $ (7,867)
===================== =====================
IXIS Income
Diversified Portfolio
--------------------------------------------
For the Period
November 17, 2005 (a)
Six Months Ended through
June 30, 2006 December 31,
(unaudited) 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 218,637 $ 22,153
Net realized gain on investments and
foreign currency transactions 5,093 2,634
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations 48,316 33,544
--------------------- ---------------------
Net increase (decrease) in net assets
resulting from operations 272,046 58,331
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A (142,698) (22,662)
Class C (80,395) (103)
Net realized capital gain
Class A (2,294) --
Class C (1,784) --
--------------------- ---------------------
Total distributions (227,171) (22,765)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) 17,921,381 5,076,682
--------------------- ---------------------
Net increase (decrease) in net assets 17,966,256 5,112,248
--------------------- ---------------------
NET ASSETS
Beginning of the period 5,112,248 --
--------------------- ---------------------
End of the period $ 23,078,504 $ 5,112,248
===================== =====================
UNDISTRIBUTED
(OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ (4,456) $ --
===================== =====================
IXIS Moderate
Diversified Portfolio
--------------------------------------------
Six Months Ended Year Ended
June 30, 2006 December 31,
(unaudited) 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 567,645 $ 171,767
Net realized gain on investments and
foreign currency transactions 6,270,500 890,157
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations (7,231,899) 4,320,133
--------------------- ---------------------
Net increase (decrease) in net assets
resulting from operations (393,754) 5,382,057
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A (314,411) (360,094)
Class C (447,197) (74,730)
Net realized capital gain
Class A (106,023) (221,549)
Class C (268,211) (402,202)
--------------------- ---------------------
Total distributions (1,135,842) (1,058,575)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) (23,576,547) 59,020,971
--------------------- ---------------------
Net increase (decrease) in net assets (25,106,143) 63,344,453
--------------------- ---------------------
NET ASSETS
Beginning of the period 136,176,804 72,832,351
--------------------- ---------------------
End of the period $ 111,070,661 $ 136,176,804
===================== =====================
UNDISTRIBUTED
(OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ (125,690) $ 68,273
===================== =====================
(a)Commencement of operations.
See accompanying notes to financial statements.
33
This Page Intentionally Left Blank
34
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) investments operations
---------- ---------- -------------- ----------
IXIS EQUITY DIVERSIFIED PORTFOLIO
Class A
6/30/2006(k) $ 10.83 $ 0.01(b) $ (0.02) $ (0.01)
12/31/2005(g) 10.00 (0.04)(b) 0.87 0.83
Class C
6/30/2006(k) 10.77 (0.03)(b) (0.03) (0.06)
12/31/2005(g) 10.00 (0.11)(b) 0.88 0.77
IXIS INCOME DIVERSIFIED PORTFOLIO
Class A
6/30/2006(k) $ 10.07 $ 0.12 $ 0.24 $ 0.36
12/31/2005(i) 10.00 0.04(b) 0.08 0.12
Class C
6/30/2006(k) 10.07 0.10 0.21 0.31
12/31/2005(i) 10.00 0.04(b) 0.07 0.11
IXIS MODERATE DIVERSIFIED PORTFOLIO
Class A
6/30/2006(k) $ 10.94 $ 0.08(b) $ (0.12) $ (0.04)
12/31/2005 10.70 0.07(b) 0.30 0.37
12/31/2004(e) 10.00 0.03(b)(h) 0.69 0.72
Class C
6/30/2006(k) 10.90 0.04 (b) (0.11) (0.07)
12/31/2005 10.67 (0.01)(b) 0.30 0.29
12/31/2004(e) 10.00 0.01(b)(h) 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
6/30/2006(k) $ -- $ -- $ --
12/31/2005(g) -- -- --
Class C
6/30/2006(k) -- -- --
12/31/2005(g) -- -- --
IXIS INCOME DIVERSIFIED PORTFOLIO
Class A
6/30/2006(k) $ (0.12) $ (0.00)(l) $ (0.12)
12/31/2005(i) (0.05) -- (0.05)
Class C
6/30/2006(k) (0.10) (0.00 (l) (0.10)
12/31/2005(i) (0.04) -- (0.04)
IXIS MODERATE DIVERSIFIED PORTFOLIO
Class A
6/30/2006(k) $ (0.10) $ (0.04) $ (0.14)
12/31/2005 (0.08) (0.05) (0.13)
12/31/2004(e) (0.02) -- (0.02)
Class C
6/30/2006(k) (0.06) (0.04) (0.10)
12/31/2005 (0.01) (0.05) (0.06)
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 (loss) 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 and/or waive its management fee during the period. Without this
reimbursement/waiver, expenses would have been higher. See Note 4.
(d)Had certain expenses not been reduced during the period, total return 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 December 31, 2005.
(h)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.
(i)For the period November 17, 2005 (inception) through December 31, 2005.
(j)Includes payment of expense waiver recapture of 0.22%. See Note 4.
(k)For the six months ended June 30, 2006 (unaudited)
(l)Amount rounds to less than $.01 per share.
See accompanying notes to financial statements.
35
Ratios to average net assets:
-------------------------------------
Net assets,
Net asset Total end of Gross Net Net investment Portfolio
value, end return period expenses expenses income (loss) turnover
of period (%) (a) (000's) (%) (f) (%) (f) (%) (f) rate (%)
- ---------- --------- ----------- --------- --------- -------------- ---------
$ 10.82 (0.1) $ 12,292 1.65 N/A 0.16 67
10.83 8.3(d) 11,652 3.15 1.65(c) (0.41) 72
10.71 (0.6) 20,798 2.39 N/A (0.58) 67
10.77 7.7(d) 17,405 3.61 2.40(c) (1.17) 72
$ 10.31 3.9(d) $ 13,010 2.28 1.25(c) 3.36 16
10.07 1.2(d) 5,074 9.57 1.25(c) 3.61 2
10.28 3.3(d) 10,069 2.27 2.00(c) 2.96 16
10.07 1.1(d) 39 10.31 2.00(c) 3.25 2
$ 10.76 (0.4)(d) $ 30,727 1.32 1.31(c) 1.43 54
10.94 3.5(d) 47,908 1.59(j) 1.58(c) 0.62 88
10.70 7.2(d) 25,660 3.51 1.65(c) 0.71(h) 33
10.73 (0.7)(d) 80,344 2.07 2.06(c) 0.69 54
10.90 2.7(d) 88,269 2.33(j) 2.32(c) (0.13) 88
10.67 6.8(d) 47,173 4.26 2.40(c) 0.12(h) 33
36
NOTES TO FINANCIAL STATEMENTS
June 30, 2006 (Unaudited)
1. Organization. IXIS Advisor Funds Trust I and IXIS Advisor Funds Trust III
(the "Trusts" and each a "Trust") are each organized as a Massachusetts
business trust. Each Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end investment management 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 "Portfolio" and collectively, the "Portfolios"). Information
presented in these financial statements pertains to certain Diversified
Portfolios of the Trusts; the financial statements for the other funds of the
Trusts are presented in separate reports. The following Portfolios are included
in this report:
IXIS Advisor Funds Trust I:
IXIS Income Diversified Portfolio (the "Income Diversified Portfolio")
IXIS Advisor Funds Trust III:
IXIS Equity Diversified Portfolio (the "Equity Diversified Portfolio")
IXIS Moderate Diversified Portfolio (the "Moderate Diversified Portfolio")
Each Portfolio offers Class A and Class C shares. Class A shares are sold with
a maximum front-end sales charge of 5.75%, except Class A shares of Income
Diversified Portfolio which are sold with a maximum front-end sales charge of
4.50%. Class C shares do not pay a front-end sales charge, pay higher ongoing
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.
Most expenses of the Trusts can be directly attributed to a fund. Expenses
which cannot be directly attributed to a fund 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). In addition, each Class 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 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 value, as reported by pricing services
recommended by the investment adviser's pricing committee and approved by the
Board of Trustees. Such pricing services generally use the security's last sale
price on the exchange or market where primarily traded or, if there is no
reported sale during the day, the closing bid price. Securities traded on the
NASDAQ National Market are valued at the NASDAQ Official Closing Price
("NOCP"), or if lacking a 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 to the Funds 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 60 days or less are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Portfolios' investment adviser using consistently applied procedures under the
general supervision of the Board of Trustees. Investments in other open-end
investment companies are valued at the net asset value each day.
The Portfolios may hold securities traded in foreign markets. Foreign
securities are valued at the market price in the foreign market. However, if
events occurring after the close of the foreign market (but before the close of
regular trading on the New York Stock Exchange) are believed to materially
affect the value of those securities, such securities are fair valued pursuant
to procedures approved by the Board of Trustees. When fair valuing equity
securities, a Portfolio 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 foreign market and
before the Portfolio calculates its net asset value.
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
applicable. In determining net gain or loss on securities sold, the cost of
securities has been determined on an identified cost basis. Investment income
and non-class specific expenses are allocated on a pro rata basis to each Class
based on the relative value of settled shares of each Class to the total
Portfolio for the Income Diversified Portfolio and are allocated on a pro rata
basis to each Class based on the relative net assets of each Class to the total
net assets for the Equity Diversified Portfolio and Moderate Diversified
Portfolio. 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.
37
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
Since the values of investment securities are presented at the foreign exchange
rates prevailing at the end of the period, it is not practical to isolate that
portion of the results of operations arising from changes in exchange rates
from fluctuations arising from changes in market prices of the investment
securities. Such changes are included with the net realized and unrealized gain
or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign
currency, currency gains or losses realized between the trade and settlement
dates on securities transactions and 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, other than investment securities, at the end
of the fiscal period, resulting from changes in exchange rates.
The Portfolios may use foreign currency exchange contracts to facilitate
transactions in foreign-denominated investments. Losses may arise from changes
in the value of the foreign currency or if the counterparties do not perform
under the contracts' terms.
Each Portfolio may purchase investments of foreign issuers. Investing in
securities of foreign issuers involves special risks and considerations not
typically associated with investing in U.S. companies and securities of the
U.S. government. These risks include revaluation of currencies and the risk of
appropriation. Moreover, the markets for securities of many foreign issuers may
be less liquid and the price of such securities may be more volatile that those
of comparable U.S. companies and the U.S. government.
d. Forward Foreign Currency Contracts. Each Portfolio may enter into forward
foreign currency contracts. Contracts to buy generally are used to acquire
exposure to foreign currencies, while contracts to sell are used to hedge a
Portfolio's investments against currency fluctuation. Also, a contract to buy
or sell can offset a previous contract. These contracts involve market risk in
excess of the unrealized gain or loss reflected in the Portfolio's Statements
of Assets and Liabilities. These amounts represent the aggregate exposure to
each currency the Portfolio 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. At June 30, 2006, there were no open forward currency
contracts.
e. Federal and Foreign Income Taxes. The Trusts treat each Portfolio as a
separate entity for federal income tax purposes. 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 gains, at least
annually. Accordingly, no provision for federal income tax has been made. A
Portfolio may be subject to foreign taxes on income and gains 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. Permanent differences are primarily due to
differing treatments for book and tax purposes of items such as paydowns on
mortgage-backed securities and net operating losses. Permanent book and tax
basis differences relating to shareholder distributions, net investment income,
and net realized gains will result in reclassifications to capital accounts.
Temporary differences between book and tax distributable earnings are primarily
due to deferred Trustees' fees, wash sales, distributions from REITs, gains
realized from passive foreign investment companies, and premium amortization.
Distributions from net investment income and short-term capital gains are
considered to be ordinary income for tax purposes.
Tax characterization of distributions is determined on an annual basis. The tax
character of distributions paid to shareholders during the year ended
December 31, 2005 was as follows:
2005 Distributions Paid From:
- ---------------------------------
Ordinary Long-Term
Fund Income Capital Gains Total
---- ------ ------------- -----
Equity Diversified Portfolio $ -- $ -- $ --
Income Diversified Portfolio 22,765 -- 22,765
Moderate Diversified Portfolio 966,317 92,258 1,058,575
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. The repurchase
agreements are tri-party agreements whereby the collateral is held at the
custodian bank in a segregated account for the benefit of the Portfolio and on
behalf of the counterparty. 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.
38
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
h. Securities Lending. The Portfolios have entered into an agreement with State
Street Bank and Trust Company ("State Street Bank"), as agent of the
Portfolios, to lend securities to certain designated borrowers. The loans are
collateralized with cash or securities in an amount equal to at least 105% or
102% of the market value of the loaned international or domestic securities,
respectively, when the loan is initiated. Thereafter, the value of the
collateral must remain at least 102% of the market value of loaned securities
for U.S. equities and U.S. corporate debt; at least 105% of the market value of
loaned securities for non-U.S. equities; and at least 100% of the market value
of loaned securities for U.S. government securities, sovereign debt issued by
non- U.S. governments and non-U.S. corporate debt. In the event that the market
value of the collateral falls below the required percentages described above,
the borrower will deliver additional collateral on the next business day. As
with other extensions of credit, the Portfolios may bear the risk of loss with
respect to the investment of the collateral. The Portfolios invest cash
collateral in short-term investments, a portion of the income from which is
remitted to the borrowers and the remainder allocated between the Portfolios
and State Street Bank as lending agent. The market value of securities on loan
to borrowers and the value of collateral held by the Portfolios with respect to
such loans at June 30, 2006 were as follows:
Market Value of Value of Collateral
Fund Securities on Loan Received
---- ------------------ -------------------
Equity Diversified Portfolio $ 3,189,465 $ 3,232,103
Income Diversified Portfolio -- --
Moderate Diversified Portfolio 15,291,136 15,505,717
i. 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.
j. 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, 2006,
purchases and sales of securities (excluding short-term investments and
including paydowns) were as follows:
U.S. Government and Agency Securities Other Securities
- ------------------------------------- ----------------
Fund Purchases Sales Purchases Sales
---- --------- ----- --------- -----
Equity Diversified Portfolio $ -- $ -- $24,640,933 $21,120,647
Income Diversified Portfolio 5,447,763 671,758 13,499,340 1,390,972
Moderate Diversified Portfolio 11,413,172 16,820,200 54,740,197 73,716,842
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. IXIS Asset Management Advisors, L.P. ("IXIS Advisors")
serves as investment adviser to each Portfolio. Under the terms of the
management agreements, each Portfolio pays a management fee at the following
annual rates, calculated daily and payable monthly, based on each Portfolio's
average daily net assets:
Percentage of Average Daily Net Assets
-------------------------------------
First Over
Fund $1 billion $1 billion
---- ---------- ----------
Equity Diversified Portfolio 0.80% 0.75%
Income Diversified Portfolio 0.55% 0.50%
Moderate Diversified Portfolio 0.75% 0.70%
39
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
IXIS Advisors has entered into subadvisory agreements for each Portfolio as
listed below.
Equity Diversified Portfolio Dreman Value Management, LLC ("Dreman")
Hansberger Global Investors, Inc. ("Hansberger")
Harris Associates, L.P. ("Harris Associates")
Loomis, Sayles & Company, L.P. ("Loomis Sayles")
Income Diversified Portfolio AEW Management and Advisors, L.P. ("AEW")
Loomis Sayles
Moderate Diversified Portfolio Dreman
Hansberger
Harris Associates
Loomis Sayles
Effective April 3, 2006, IXIS Advisors entered into subadvisory agreements for
the mid cap value segments of Equity Diversified Portfolio and Moderate
Diversified Portfolio with Dreman. Prior to that Reich & Tang Asset Management,
LLC served as subadvisor to the mid cap value segments of those funds. Payments
to IXIS Advisors are reduced in the amount of payments to the subadvisers. IXIS
Advisors voluntarily agreed to waive a portion of the management fee it retains
for the Moderate Diversified Portfolio after payment to subadvisers.
IXIS Advisors has given binding undertakings to the Portfolios to defer its
management fees, and/or reimburse certain expenses associated with these
Portfolios to limit their operating expenses. These undertakings are in effect
until April 30, 2007 and will be reevaluated on an annual basis. At June 30,
2006, the expense limits as a percentage of average daily net assets under the
expense limitation agreements were as follows:
Expense Limit as a Percentage of Average Daily Net Assets
- ---------------------------------------------------------
Fund Class A Class C
---- ------- -------
Equity Diversified Portfolio 1.50% 2.25%
Income Diversified Portfolio 1.25% 2.00%
Moderate Diversified Portfolio 1.45% 2.20%
Prior to May 1, 2006, the expense limits as a percentage of average daily net
assets were as follows:
Expense Limit as a Percentage of Average Daily Net Assets
- ---------------------------------------------------------
Fund Class A Class C
---- ------- -------
Equity Diversified Portfolio 1.65% 2.40%
Income Diversified Portfolio 1.25% 2.00%
Moderate Diversified Portfolio 1.65% 2.40%
For the six months ended June 30, 2006, the management fees and waivers of
management fees for each Portfolio were as follows:
Percentage of Average Daily
Gross Waiver of Net Net Assets
Management Management Management ---------------------------
Fund Fee Fee Fee Gross Net
- ---- ------------- ------------- ------------- ----- ---
Equity Diversified Portfolio $ 130,235 $ -- $ 130,235 0.80% 0.80%
Income Diversified Portfolio 37,462 37,462 -- 0.55% 0.00%
Moderate Diversified Portfolio 464,310 9,983 454,327 0.75% 0.74%
For the six months ended June 30, 2006, in addition to the waiver of management
fees, expenses have been reimbursed as follows:
Fund Amount
---- -------
Income Diversified Portfolio $13,746
40
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
IXIS Advisors is permitted to recover expenses it has borne under the expense
limitation agreement (whether through reduction of its management fees 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. At June 30, 2006, the amounts subject to possible
reimbursement under the expense limitation agreements were as follows:
Expenses Subject to Possible Expenses Subject to Possible
Reimbursement Until Reimbursement Until
Fund December 31, 2006 December 31, 2007
- ---- ----------------- -----------------
Equity Diversified Portfolio $223,494 $ --
Income Diversified Portfolio 51,035 51,208
Certain officers and directors of IXIS Advisors and its affiliates are also
officers or Trustees of the Funds. IXIS Advisors, Loomis Sayles, Harris
Associates and Reich & Tang Asset Management, LLC are subsidiaries of IXIS
Asset Management US Group, L.P. ("IXIS US Group") (formerly, IXIS Asset
Management North America, L.P.), which is part of IXIS Asset Management Group,
an international asset management group based in Paris, France. IXIS Asset
Management Group is ultimately owned principally, directly or indirectly by
three large affiliated French financial services entities: the Caisse Nationale
des Caisses d'Epargne, a financial institution owned by CDC (as defined below)
and by French regional savings banks known as Caisses d'Epargne; the Caisse des
Depots et Consignations ("CDC"), a public sector financial institution created
by the French government in 1816; and CNP Assurances, a large French life
insurance company.
b. Administrative Expense. IXIS Advisors performs certain administrative
services for the Portfolios and has subcontracted with State Street Bank to
serve as sub-administrator. 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, IXIS Advisor Cash Management Trust ("IXIS Advisor Funds
Trusts"), Loomis Sayles Funds I, Loomis Sayles Funds II ("Loomis Sayles Funds
Trusts") and IXIS Advisors, each Fund pays IXIS Advisors monthly its pro rata
portion of fees equal to an annual rate of 0.0675% of the first $5 billion of
the average daily net assets of the IXIS Advisor Funds Trusts and Loomis Sayles
Funds Trusts, 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 IXIS
Advisor Funds Trusts and Loomis Sayles Funds Trusts of $5 million, which is
reevaluated on an annual basis.
For the six months ended June 30, 2006, amounts paid to IXIS Advisors for
administrative fees were as follows:
Administrative
Fund Fees
---- --------------
Equity Diversified Portfolio $15,000
Income Diversified Portfolio 13,613
Moderate Diversified Portfolio 39,962
c. Service and Distribution Fees. The Trusts have entered into a distribution
agreement with IXIS Asset Management Distributors, L.P. ("IXIS Distributors"),
a wholly-owned subsidiary of IXIS US Group. Pursuant to this agreement, IXIS
Distributors serves as principal underwriter of the Portfolios.
Pursuant to Rule 12b-1 under the 1940 Act, the Trusts have 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 Distributors a monthly service
fee at the annual rate not to exceed 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.
41
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
For the six months ended June 30, 2006, the Portfolios paid the following
service and distribution fees:
Service Fee Distribution Fee
- --------------------------- ----------------
Fund Class A Class C Class C
---- ------- ------- -------
Equity Diversified Portfolio $ 15,378 $ 25,321 $ 75,963
Income Diversified Portfolio 10,764 6,264 18,791
Moderate Diversified Portfolio 47,617 107,152 321,458
d. Commissions. The Portfolios have been informed that commissions (including
CDSC) on Portfolio shares paid to IXIS Distributors by investors in shares of
the Portfolios during the six months ended June 30, 2006 were as follows:
Fund Commission
---- ----------
Equity Diversified Portfolio $33,221
Income Diversified Portfolio 76,446
Moderate Diversified Portfolio 87,555
e. Trustees Fees and Expenses. The Portfolios do not pay any compensation
directly to their officers or Trustees who are directors, officers or employees
of IXIS Advisors, IXIS Distributors, IXIS US Group, or their affiliates. The
Chairperson of the Board receives a retainer fee at the annual rate of
$200,000. The Chairperson does not receive any meeting attendance fees for
Board of Trustees meetings or committee meetings that she attends. Each
independent Trustee (other than the Chairperson) receives, in the aggregate, a
retainer fee at the annual rate of $55,000. Each independent Trustee also
receives a meeting attendance fee of $6,000 for each meeting of the Board of
Trustees that he or she attends in person and $3,000 for each meeting of the
Board of Trustees that he or she attends telephonically. In addition, each
committee chairman receives an additional retainer fee at the annual rate of
$10,000. Each Contract Review and Governance Committee member is compensated
$4,000 for each Committee meeting that he or she attends in person and $2,000
for each meeting that he or she attends telephonically. Each Audit Committee
member is compensated $5,000 for each Committee meeting that he or she attends
in person and $2,500 for each meeting that he or she attends telephonically.
These fees are allocated among the Portfolios in the Trusts based on a formula
that takes into account, among other factors, the relative net assets of each
Portfolio. 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 Portfolio 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 Portfolios until distributed in accordance with the Plan.
5. Line of Credit. Each Portfolio, together with certain other Funds of IXIS
Advisor Funds Trusts and Loomis Sayles Funds Trusts, participates in a
$75,000,000 committed line of credit provided by State Street Bank. Interest is
charged to each participating Portfolio based on its borrowing at a rate per
annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee
of 0.09% per annum, payable at the end of each calendar quarter, is accrued and
apportioned among the participating Portfolios based on their average daily
unused portion of the line of credit. For the six months ended June 30, 2006,
the Portfolios had no borrowings under this agreement.
6. 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 included in realized gains in the Statements of
Operations. For the six months ended June 30, 2006, amounts rebated under these
agreements were as follows:
Fund Rebates
---- -------
Equity Diversified Portfolio $ 7,937
Income Diversified Portfolio 42
Moderate Diversified Portfolio 28,285
7. Shareholders. At June 30, 2006, IXIS Asset Management Group and its
affiliates owned shares equating to 9.97% and 22.34% of Equity Diversified
Portfolio's and Income Diversified Portfolio's net assets, respectively.
42
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 2006 (Unaudited)
8. Capital Shares. The Portfolios may issue an unlimited number of shares of
beneficial interest without par value. Transactions in capital shares were as
follows:
Six Months Ended
June 30, 2006
-----------------------------
Equity Diversified Portfolio Shares Amount
- --------------------------------------------------------------------- ---------- -----------------
Class A
Shares sold 138,586 $ 1,538,360
Shares repurchased (77,878) (857,870)
---------- -----------------
Net increase (decrease) 60,708 $ 680,490
---------- -----------------
Class C
Shares sold 445,221 $ 4,935,685
Shares repurchased (120,336) (1,330,092)
---------- -----------------
Net increase (decrease) 324,885 $ 3,605,593
---------- -----------------
Increase (decrease) from capital share transactions 385,593 $ 4,286,083
========== =================
Six Months Ended
June 30, 2006
-----------------------------
Income Diversified Portfolio Shares Amount
- --------------------------------------------------------------------- ---------- -----------------
Class A
Shares sold 783,588 $ 8,089,760
Shares issued in connection with the reinvestment of distributions 2,971 30,348
---------- -----------------
786,559 8,120,108
Shares repurchased (27,909) (288,337)
---------- -----------------
Net increase (decrease) 758,650 $ 7,831,771
---------- -----------------
Class C
Shares sold 986,131 $ 10,201,035
Shares issued in connection with the reinvestment of distributions 1,178 11,989
---------- -----------------
987,309 10,213,024
Shares repurchased (12,124) (123,414)
---------- -----------------
Net increase (decrease) 975,185 $ 10,089,610
---------- -----------------
Increase (decrease) from capital share transactions 1,733,835 $ 17,921,381
========== =================
Six Months Ended
June 30, 2006
-----------------------------
Moderate Diversified Portfolio Shares Amount
- --------------------------------------------------------------------- ---------- -----------------
Class A
Shares sold 250,498 $ 2,769,395
Shares issued in connection with the reinvestment of distributions 10,629 112,957
---------- -----------------
261,127 2,882,352
Shares repurchased (1,785,547) (19,750,330)
---------- -----------------
Net increase (decrease) (1,524,420) $ (16,867,978)
---------- -----------------
Class C
Shares sold 623,549 $ 6,882,931
Shares issued in connection with the reinvestment of distributions 5,319 56,133
---------- -----------------
628,868 6,939,064
Shares repurchased (1,234,822) (13,647,633)
---------- -----------------
Net increase (decrease) (605,954) $ (6,708,569)
---------- -----------------
Increase (decrease) from capital share transactions (2,130,374) $ (23,576,547)
========== =================
For the Period
January 31, 2005*
through
December 31, 2005
-----------------------------
Equity Diversified Portfolio Shares Amount
- --------------------------------------------------------------------- ---------- -----------------
Class A
Shares sold 1,433,489 $ 14,431,086
Shares repurchased (357,724) (3,555,004)
---------- -----------------
Net increase (decrease) 1,075,765 $ 10,876,082
---------- -----------------
Class C
Shares sold 1,675,129 $ 16,957,327
Shares repurchased (58,382) (590,858)
---------- -----------------
Net increase (decrease) 1,616,747 $ 16,366,469
---------- -----------------
Increase (decrease) from capital share transactions 2,692,512 $ 27,242,551
========== =================
For the Period
November 17, 2005*
through
December 31, 2005
-----------------------------
Income Diversified Portfolio Shares Amount
- --------------------------------------------------------------------- ---------- -----------------
Class A
Shares sold 503,771 $ 50,038,040
Shares issued in connection with the reinvestment of distributions 8 77
---------- -----------------
503,779 5,038,117
Shares repurchased -- --
---------- -----------------
Net increase (decrease) 503,779 $ 5,038,117
---------- -----------------
Class C
Shares sold 3,838 $ 38,462
Shares issued in connection with the reinvestment of distributions 10 103
---------- -----------------
3,848 38,565
Shares repurchased -- --
---------- -----------------
Net increase (decrease) 3,848 $ 38,565
---------- -----------------
Increase (decrease) from capital share transactions 507,627 $ 5,076,682
========== =================
Year Ended
December 31, 2005
-----------------------------
Moderate Diversified Portfolio Shares Amount
- --------------------------------------------------------------------- ---------- -----------------
Class A
Shares sold 3,027,859 $ 31,745,974
Shares issued in connection with the reinvestment of distributions 9,030 96,760
---------- -----------------
3,036,889 31,842,734
Shares repurchased (1,056,600) (11,146,771)
---------- -----------------
Net increase (decrease) 1,980,289 $ 20,695,963
---------- -----------------
Class C
Shares sold 4,541,434 $ 47,600,241
Shares issued in connection with the reinvestment of distributions 2,815 30,460
---------- -----------------
4,544,249 47,630,701
Shares repurchased (871,085) (9,305,693)
---------- -----------------
Net increase (decrease) 3,673,164 $ 38,325,008
---------- -----------------
Increase (decrease) from capital share transactions 5,653,453 $ 59,020,971
========== =================
* Commencement of operations
43
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 23, 2006
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 23, 2006
By: /s/ Michael C. Kardok
---------------------------------
Name: Michael C. Kardok
Title: Treasurer
Date: August 23, 2006