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: 811-07345
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: December 31, 2006
Item 1. Reports to Stockholders.
The Registrant's 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
Annual Report
December 31, 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
BlackRock Investment Management
Harris Associates
Loomis, Sayles & Company
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 25
Financial Statements.......................Page 43
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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While energy stocks rose along with oil prices in the first half of 2006, the
fund's energy position hurt relative performance in the second half of 2006
when oil prices retreated. However, for the full year, price appreciation from
the stocks we selected in other sectors offset some of this decline and helped
the fund post positive results.
For the year ended December 31, 2006, CGM Advisor Targeted Equity Fund's total
return was 8.52% based on the net asset value of Class A shares, with $0.07 in
dividends and $0.31 in capital gains reinvested during the period. The fund
lagged its benchmark, the S&P 500 Index, which had a return of 15.79%, and
trailed the average of funds in Morningstar's Large Blend category, which
returned 14.15%.
ENERGY STOCKS HURT PERFORMANCE IN 2006
We began 2006 with just under 30% of the fund's net assets in energy-related
securities. This weighting rose to more than 40% of assets at midyear through a
combination of price appreciation and additional purchases. Unfortunately,
energy stocks fell sharply when the price of crude oil retreated from record
highs of $78 a barrel in the summer to $60 in the fall. The impact of these
price declines was greatest during the third quarter. By year-end 2006 we had
reduced the fund's energy-related securities to less than 12% of net assets.
EMPHASIS SHIFTED TO FINANCIAL SECTOR AND GLOBALLY ORIENTED COMPANIES
During the second half of 2006, the fund established a substantial position in
financial companies, including commercial and investment banks that we believe
will benefit from moderate growth and a low interest rate environment in the
United States.
Stocks of foreign companies also have a significant weighting because we
believe other countries will experience faster growth than the U.S. economy.
The fund's international holdings include Japanese auto giant Toyota; Ryanair
Holdings, Europe's largest low-fare carrier; and America Movil, the leading
Latin American cellular telephone company. The fund is also positioned to
benefit from global economic strength through multi-national companies,
including fast-food giant McDonald's; insurance firm American International
Group; and Procter & Gamble, a world leader in personal care and household
cleaning products.
PERFORMANCE STRENGTH FROM SOME HOLDINGS UNDERCUT BY WEAKER ISSUES
Toyota, mentioned above, was the fund's top performer in 2006, as the company
continued to gain market share in Europe and the United States. Aerospace and
defense giant Boeing also contributed to the fund's results. Boeing had been
lagging its principal competitor, Airbus, but Boeing vaulted ahead
competitively with its pioneering design for its 787 Dreamliner jets. At the
same time, Airbus lost market share when the company found itself two years
behind schedule in the production of its A380 jumbo jetliner.
Merrill Lynch was another strong positive for the fund. This leading investment
bank saw its stock price rise on favorable industry trends as well as
revitalized management, which assumed leadership of the company several years
ago. AT&T was also a plus for the fund. This venerable giant provides local and
long-distance telephone and wireless services, as well as internet access; it
is active in acquisitions and benefiting from consolidation in the industry.
One of the fund's weaker stocks was Walgreens, a leading retail pharmacy. We
purchased the stock in September and sold it in November as the price declined
after Wal-Mart's controversial $4 generic drug prescription offer. We also sold
the fund's holdings in Rio Tinto, a major Australian mining company that
declined in value with commodities prices.
FOREIGN ECONOMIES EXPECTED TO GROW FASTER THAN U.S. BUSINESSES
Going forward, we anticipate continued global growth and low inflation, with
foreign economies growing faster than the U.S. economy in 2007. We will
continue to look for stocks of established companies with prospects for
above-average earnings growth.
1
CGM ADVISOR TARGETED EQUITY FUND
Investment Results through December 31, 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]
December 31, 1996 through December 31, 2006
Month Cumulative Class A @M.S.C. S&P 500 Index
End Value Cumulative Value Cumulative Value
- ---------- ---------- ---------------- ----------------
12/31/1996 10,000 9,425 10,000
1/31/1997 10,903 10,276 10,625
2/28/1997 10,722 10,105 10,708
3/31/1997 10,266 9,676 10,268
4/30/1997 10,852 10,228 10,881
5/31/1997 11,384 10,730 11,544
6/30/1997 11,892 11,208 12,061
7/31/1997 13,044 12,294 13,020
8/31/1997 12,374 11,662 12,291
9/30/1997 13,007 12,260 12,964
10/31/1997 12,498 11,779 12,531
11/30/1997 12,355 11,645 13,111
12/31/1997 12,355 11,645 13,336
1/31/1998 12,556 11,834 13,484
2/28/1998 13,660 12,875 14,456
3/31/1998 14,539 13,703 15,197
4/30/1998 15,097 14,229 15,350
5/31/1998 14,860 14,005 15,086
6/30/1998 15,655 14,755 15,698
7/31/1998 15,738 14,833 15,531
8/31/1998 12,735 12,003 13,286
9/30/1998 12,825 12,088 14,137
10/31/1998 14,117 13,305 15,287
11/30/1998 15,291 14,412 16,213
12/31/1998 16,481 15,533 17,148
1/31/1999 17,599 16,587 17,865
2/28/1999 16,337 15,397 17,310
3/31/1999 16,729 15,767 18,002
4/30/1999 16,670 15,712 18,699
5/31/1999 16,134 15,206 18,258
6/30/1999 17,323 16,326 19,271
7/31/1999 16,915 15,943 18,669
8/31/1999 16,887 15,916 18,577
9/30/1999 15,885 14,972 18,068
10/31/1999 16,495 15,547 19,211
11/30/1999 17,119 16,135 19,601
12/31/1999 18,983 17,892 20,756
1/31/2000 17,499 16,492 19,713
2/29/2000 19,052 17,957 19,340
3/31/2000 19,260 18,153 21,232
4/30/2000 18,536 17,470 20,593
5/31/2000 17,795 16,771 20,171
6/30/2000 17,864 16,837 20,668
7/31/2000 17,294 16,300 20,345
8/31/2000 18,114 17,072 21,608
9/30/2000 17,458 16,454 20,468
10/31/2000 17,495 16,489 20,381
11/30/2000 17,330 16,334 18,774
12/31/2000 18,121 17,079 18,866
1/31/2001 16,513 15,564 19,535
2/28/2001 15,990 15,070 17,754
3/31/2001 15,584 14,688 16,629
4/30/2001 16,262 15,327 17,922
5/31/2001 15,933 15,017 18,042
6/30/2001 16,041 15,119 17,603
7/31/2001 15,575 14,679 17,429
8/31/2001 14,291 13,470 16,338
9/30/2001 12,911 12,168 15,019
10/31/2001 12,988 12,241 15,305
11/30/2001 14,369 13,543 16,479
12/31/2001 15,185 14,312 16,624
1/31/2002 15,651 14,751 16,381
2/28/2002 14,931 14,073 16,065
3/31/2002 15,184 14,310 16,669
4/30/2002 15,223 14,348 15,659
5/31/2002 15,068 14,201 15,543
6/30/2002 14,581 13,743 14,436
7/31/2002 12,967 12,221 13,311
8/31/2002 12,967 12,221 13,398
9/30/2002 12,169 11,470 11,942
10/31/2002 11,877 11,194 12,993
11/30/2002 11,585 10,919 13,758
12/31/2002 10,808 10,186 12,950
1/31/2003 10,808 10,186 12,611
2/28/2003 10,730 10,113 12,421
3/31/2003 10,982 10,351 12,542
4/30/2003 11,682 11,010 13,575
5/31/2003 12,692 11,962 14,290
6/30/2003 12,905 12,163 14,473
7/31/2003 12,653 11,925 14,728
8/31/2003 12,983 12,236 15,015
9/30/2003 13,139 12,383 14,856
10/31/2003 14,772 13,922 15,696
11/30/2003 15,355 14,472 15,834
12/31/2003 15,433 14,546 16,664
1/31/2004 15,083 14,216 16,970
2/29/2004 15,997 15,077 17,206
3/31/2004 16,736 15,774 16,947
4/30/2004 15,414 14,528 16,681
5/31/2004 15,784 14,876 16,909
6/30/2004 15,920 15,004 17,238
7/31/2004 15,162 14,290 16,668
8/31/2004 15,336 14,454 16,735
9/30/2004 16,289 15,352 16,916
10/31/2004 16,483 15,535 17,175
11/30/2004 17,221 16,231 17,870
12/31/2004 17,589 16,578 18,478
1/31/2005 17,435 16,432 18,027
2/28/2005 18,601 17,532 18,407
3/31/2005 17,784 16,762 18,081
4/30/2005 17,299 16,304 17,738
5/31/2005 17,785 16,762 18,302
6/30/2005 18,178 17,133 18,328
7/31/2005 19,112 18,014 19,010
8/31/2005 19,307 18,197 18,836
9/30/2005 20,028 18,876 18,989
10/31/2005 19,561 18,436 18,672
11/30/2005 19,872 18,729 19,379
12/31/2005 19,912 18,767 19,385
1/31/2006 20,768 19,574 19,899
2/28/2006 20,047 18,895 19,953
3/31/2006 20,613 19,427 20,201
4/30/2006 21,567 20,327 20,472
5/31/2006 20,827 19,630 19,883
6/30/2006 20,790 19,594 19,910
7/31/2006 20,908 19,706 20,033
8/31/2006 20,751 19,558 20,510
9/30/2006 20,320 19,151 21,038
10/31/2006 21,007 19,799 21,724
11/30/2006 21,065 19,854 22,137
12/31/2006 21,609 20,366 22,447
Average Annual Total Returns -- December 31, 2006
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
Class A (Inception 11/27/68)
Net Asset Value/1/ 8.52% 7.32% 8.01% --
With Maximum Sales Charge/2/ 2.31 6.04 7.37 --
Class B (Inception 2/28/97)
Net Asset Value/1/ 7.83 6.50 -- 6.58%
With CDSC/3/ 2.83 6.19 -- 6.58
Class C (Inception 9/1/98)
Net Asset Value/1/ 7.72 6.48 -- 5.06
With CDSC/3/ 6.72 6.48 -- 5.06
Class Y (Inception 6/30/99)
Net Asset Value/1/ 8.99 7.76 -- 3.39
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SINCE SINCE SINCE
CLASS B CLASS C CLASS Y
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ INCEPTION/6/ INCEPTION/6/
S&P 500 Index/4/ 15.79% 6.19% 8.42% 7.82% 6.50% 2.06%
Morningstar Large Blend Fund Avg./5/ 14.15 5.92 7.79 7.35 6.85 2.76
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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 only available to
certain investors, as outlined in the prospectus.
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 12/31/06 12/31/05
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Common Stocks 99.0 99.0
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Short-Term Investments and Other 1.0 1.0
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% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/06 12/31/05
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Toyota Motor Corp. 7.0 5.3
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Merrill Lynch & Co., Inc. 6.3 --
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Morgan Stanley 5.4 --
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JC Penney Co., Inc. 5.4 --
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AT&T, Inc. 5.3 --
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Lehman Brothers Holdings, Inc. 5.3 --
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Deere & Co. 5.1 --
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America Movil SAB de CV 5.1 3.5
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Citigroup, Inc. 5.1 --
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Boeing Co. (The) 5.1 --
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% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
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Diversified Financial Services 22.0 1.8
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Oil & Gas Services 11.5 9.9
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Telecommunications 10.4 3.5
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Banks 10.1 --
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Auto Manufacturers 7.0 5.3
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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 and economic conditions and
different 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 was 24.08% for the year ended
December 31, 2006 based on the net asset value of Class A shares, including
$0.35 in dividends and $2.70 in capital gains reinvested during the period. By
comparison, the fund's benchmarks, the MSCI EAFE Index and the MSCI ACWI
ex-U.S. Index, returned 26.86% and 27.16%, respectively. The average
performance of Morningstar's Foreign Large Blend category was 24.82%. Neither
the fund nor its benchmarks include U.S. stocks, and the Morningstar category
has only limited exposure to domestic equities.
Two teams of Hansberger's international equity specialists manage the fund. One
focuses on value and the other seeks growth potential. As they have for the
past few years, value stocks outperformed growth stocks in 2006.
GROWTH SEGMENT'S TOP PERFORMERS CAME FROM DENMARK AND TAIWAN
On an absolute basis, the Pacific ex-Japan region was the strongest area for
the growth segment. Europe and the Emerging Markets regions were also strong on
an absolute basis, but the fund's holdings in these regions underperformed its
benchmarks. Telecommunications and utilities were the best-performing sectors.
This segment's top performer in 2006 was Denmark's Vestas Wind Systems, the
world's dominant player in the wind turbine industry and a long-time portfolio
holding. Increasing demand for wind turbines and sound management had a
positive impact on the company's earnings and stock price. The segment got a
strong boost late in the year from Foxconn International Holdings, a subsidiary
of Taiwan's Hon Hai Precision Industry. Foxconn is principally engaged in the
manufacture and design of mobile handset systems and modules for mobile phones.
Two Japanese stocks that held this segment back were Yamada Denki Co., a
Japan-based retailer comparable to Best Buy, and Nitto Denko, a diversified
specialty chemicals company comparable to 3M. Yamada Denki failed to beat
analysts' earnings estimates again this year. Key areas for growth at Nitto
Denko include specialty films for LCD panels, but demand slowed in 2006 and
competition increased, causing the industry to lag. Hansberger's growth team
continues to have confidence in both Yamada Denki and Nitto Denko.
VALUE SEGMENT FOUND TOP PERFORMERS IN JAPAN, THE U.K., AND RUSSIA
Geographically, the value segment's emphasis was on Japan and Europe. Japanese
selections were positive, but the segment's European stocks lagged those in the
benchmark. Top performers included Nintendo in Japan, Man Group PLC in the
U.K., and Russian oil company LUKOIL. Nintendo benefited from the introduction
of "Wii," a new game console. Man Group is a financial services company with
hedge fund and futures brokerage operations, and a track record of consistently
outperforming competitors. LUKOIL benefited from cyclically high oil prices and
investor interest in Russian equities.
Although the stock price of Hong Kong's Johnson Electric Holdings declined
during the year, as the rising cost of raw materials cut into earnings for this
leading manufacturer of micro-motors, it remains in the segment. Hansberger's
value team believes the cost of raw materials will eventually revert to more
normal levels. LG Chemical Ltd, Korea's leading manufacturer of chemicals and
auto parts, declined on concerns over the effects of high oil prices on its
operations and was sold. Canada's Celestica, Inc, an electronics manufacturing
services company, has been actively restructuring and the stock price fell. The
team was in the process of selling off Celestica in the last few weeks of 2006
as the company's fundamentals deteriorated.
OUTLOOK FOR INTERNATIONAL INVESTING SEEMS POSITIVE
Hansberger believes consumers in many emerging markets, especially Asia, may
offset slower consumer activity in the United States. We believe Japan's
economic recovery will continue in fits and starts, and look for increasing
corporate merger and acquisition activity worldwide to contribute to increasing
shareholder value. Historically speaking, international stocks are trading at
attractive valuations, reinforcing our confidence in international investing.
3
HANSBERGER INTERNATIONAL FUND
Investment Results through December 31, 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]
December 31, 1996 through December 31, 2006
Class A MSCI MSCI
@ M.S.C. Index Index
Month Cumulative Cumulative Cumulative Cumulative
End Value Value Value Value
- ---------- ---------- ---------- ---------- ----------
12/31/1996 $10,000 $ 9,425 $10,000 $10,000
1/31/1997 10,403 9,805 9,652 9,816
2/28/1997 10,618 10,008 9,813 9,996
3/31/1997 10,514 9,910 9,850 9,975
4/30/1997 10,618 10,008 9,905 10,059
5/31/1997 11,167 10,525 10,552 10,681
6/30/1997 11,681 11,009 11,136 11,270
7/31/1997 12,125 11,428 11,319 11,498
8/31/1997 11,445 10,787 10,476 10,594
9/30/1997 12,071 11,377 11,065 11,167
10/31/1997 11,196 10,552 10,217 10,216
11/30/1997 11,065 10,428 10,115 10,088
12/31/1997 11,268 10,620 10,206 10,204
1/31/1998 11,232 10,586 10,675 10,510
2/28/1998 11,997 11,307 11,362 11,211
3/31/1998 12,485 11,767 11,715 11,598
4/30/1998 12,558 11,836 11,810 11,681
5/31/1998 12,303 11,595 11,756 11,469
6/30/1998 12,048 11,355 11,847 11,426
7/31/1998 12,012 11,321 11,970 11,535
8/31/1998 10,109 9,528 10,490 9,908
9/30/1998 10,014 9,438 10,171 9,699
10/31/1998 10,743 10,126 11,234 10,715
11/30/1998 11,319 10,668 11,812 11,291
12/31/1998 11,720 11,046 12,281 11,680
1/31/1999 12,128 11,430 12,247 11,667
2/28/1999 11,975 11,286 11,958 11,406
3/31/1999 12,463 11,747 12,460 11,957
4/30/1999 13,134 12,379 12,968 12,555
5/31/1999 12,806 12,069 12,303 11,965
6/30/1999 13,556 12,777 12,786 12,515
7/31/1999 13,403 12,632 13,169 12,808
8/31/1999 13,308 12,543 13,220 12,853
9/30/1999 13,002 12,254 13,356 12,940
10/31/1999 13,461 12,687 13,859 13,421
11/30/1999 14,466 13,634 14,343 13,958
12/31/1999 16,128 15,201 15,633 15,289
1/31/2000 15,528 14,635 14,643 14,460
2/29/2000 16,500 15,552 15,040 14,850
3/31/2000 16,548 15,597 15,626 15,409
4/30/2000 15,348 14,466 14,806 14,549
5/31/2000 14,652 13,809 14,448 14,177
6/30/2000 15,081 14,214 15,016 14,780
7/31/2000 14,675 13,831 14,389 14,197
8/31/2000 15,114 14,245 14,517 14,373
9/30/2000 14,546 13,709 13,813 13,575
10/31/2000 13,995 13,190 13,490 13,144
11/30/2000 13,358 12,590 12,987 12,554
12/31/2000 14,158 13,344 13,451 12,983
1/31/2001 14,433 13,603 13,445 13,178
2/28/2001 13,510 12,733 12,438 12,134
3/31/2001 12,627 11,901 11,615 11,277
4/30/2001 13,441 12,668 12,429 12,044
5/31/2001 13,598 12,817 12,000 11,711
6/30/2001 13,486 12,710 11,514 11,262
7/31/2001 13,239 12,478 11,305 11,011
8/31/2001 12,953 12,208 11,021 10,738
9/30/2001 11,601 10,934 9,908 9,599
10/31/2001 11,828 11,148 10,161 9,868
11/30/2001 12,500 11,781 10,536 10,319
12/31/2001 12,887 12,146 10,599 10,452
1/31/2002 12,581 11,857 10,037 10,004
2/28/2002 12,611 11,886 10,107 10,076
3/31/2002 13,364 12,595 10,708 10,665
4/30/2002 13,274 12,511 10,736 10,693
5/31/2002 13,354 12,586 10,882 10,809
6/30/2002 12,542 11,821 10,453 10,342
7/31/2002 11,339 10,687 9,422 9,334
8/31/2002 11,358 10,705 9,403 9,335
9/30/2002 9,957 9,384 8,395 8,346
10/31/2002 10,503 9,899 8,847 8,793
11/30/2002 11,258 10,611 9,250 9,216
12/31/2002 10,771 10,152 8,939 8,919
1/31/2003 10,393 9,795 8,567 8,606
2/28/2003 10,105 9,524 8,371 8,431
3/31/2003 9,976 9,402 8,213 8,268
4/30/2003 11,019 10,386 9,027 9,064
5/31/2003 11,804 11,125 9,583 9,642
6/30/2003 12,072 11,378 9,820 9,909
7/31/2003 12,320 11,612 10,059 10,173
8/31/2003 12,707 11,977 10,304 10,476
9/30/2003 12,876 12,136 10,623 10,769
10/31/2003 13,790 12,997 11,286 11,467
11/30/2003 14,029 13,222 11,539 11,717
12/31/2003 14,973 14,112 12,441 12,612
1/31/2004 15,312 14,431 12,617 12,814
2/29/2004 15,500 14,609 12,911 13,140
3/31/2004 15,351 14,468 12,989 13,221
4/30/2004 14,914 14,056 12,706 12,810
5/31/2004 14,963 14,102 12,745 12,839
6/30/2004 15,211 14,337 13,046 13,129
7/31/2004 14,525 13,690 12,624 12,747
8/31/2004 14,654 13,812 12,683 12,849
9/30/2004 15,032 14,168 13,016 13,262
10/31/2004 15,470 14,580 13,461 13,723
11/30/2004 16,373 15,432 14,384 14,675
12/31/2004 17,009 16,031 15,016 15,306
1/31/2005 16,641 15,684 14,741 15,042
2/28/2005 17,555 16,545 15,381 15,784
3/31/2005 17,069 16,087 15,001 15,356
4/30/2005 16,671 15,712 14,665 14,977
5/31/2005 16,731 15,769 14,688 15,071
6/30/2005 16,910 15,938 14,888 15,355
7/31/2005 17,556 16,546 15,346 15,921
8/31/2005 18,102 17,061 15,738 16,329
9/30/2005 18,589 17,520 16,442 17,171
10/31/2005 18,072 17,033 15,963 16,546
11/30/2005 18,618 17,547 16,358 17,102
12/31/2005 19,750 18,614 17,120 17,925
1/31/2006 21,190 19,971 18,172 19,175
2/28/2006 20,821 19,624 18,135 19,119
3/31/2006 21,477 20,242 18,742 19,675
4/30/2006 22,370 21,084 19,651 20,689
5/31/2006 21,455 20,222 18,911 19,735
6/30/2006 21,318 20,092 18,918 19,715
7/31/2006 21,561 20,321 19,108 19,917
8/31/2006 22,139 20,866 19,638 20,482
9/30/2006 22,300 21,018 19,672 20,495
10/31/2006 23,121 21,792 20,439 21,330
11/30/2006 23,872 22,500 21,056 22,104
12/31/2006 24,500 23,092 21,718 22,793
Average Annual Total Returns -- December 31, 2006
1 YEAR 5 YEARS/7/ 10 YEARS/7/
CLASS A (Inception 12/29/95)
Net Asset Value/1/ 24.08% 13.72% 9.38%
With Maximum Sales Charge/2/ 16.96 12.39 8.73
CLASS B (Inception 12/29/95)
Net Asset Value/1/ 23.15 12.89 8.58
With CDSC/3/ 18.15 12.65 8.58
CLASS C (Inception 12/29/95)
Net Asset Value/1/ 23.14 12.89 8.57
With CDSC/3/ 22.14 12.89 8.57
- --------------------------------------------------------------------------
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS
MSCI EAFE Index/4/ 26.86% 15.43% 8.06%
MSCI ACWI ex-U.S. Index/5/ 27.16 16.87 8.59
Morningstar Foreign Large Blend Fund Avg./6/ 24.82 13.19 7.37
- --------------------------------------------------------------------------
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 12/31/06 12/31/05
- --------------------------------------------------------
Common Stocks 99.1 98.3
- --------------------------------------------------------
Preferred Stock -- 0.5
- --------------------------------------------------------
Short-Term Investments and Other 0.9 1.2
- --------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/06 12/31/05
- --------------------------------------------------------
UniCredito Italiano SpA 1.9 1.7
- --------------------------------------------------------
Novartis AG 1.7 1.5
- --------------------------------------------------------
Saipem SpA 1.6 0.6
- --------------------------------------------------------
Smith & Nephew PLC 1.5 0.8
- --------------------------------------------------------
British Sky Broadcasting Group PLC 1.4 1.4
- --------------------------------------------------------
Telefonica SA 1.3 0.9
- --------------------------------------------------------
DBS Group Holdings, Ltd. 1.3 1.2
- --------------------------------------------------------
HBOS PLC 1.3 1.7
- --------------------------------------------------------
Credit Suisse Group 1.2 0.8
- --------------------------------------------------------
Nestle SA 1.2 1.2
- --------------------------------------------------------
% of Net Assets as of
FIVE LARGEST COUNTRIES 12/31/06 12/31/05
- --------------------------------------------------------
Japan 18.3 18.9
- --------------------------------------------------------
United Kingdom 17.0 19.8
- --------------------------------------------------------
Switzerland 10.4 8.3
- --------------------------------------------------------
France 8.7 10.2
- --------------------------------------------------------
Italy 4.3 3.1
- --------------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/Morgan Stanley Capital International 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:
Robert M. Levy
Michael Mangan
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Energy and other commodity-based companies led equities higher early in 2006,
but then stocks meandered into early summer. By fall, large-cap, high-quality
issues began to take the lead in a powerful rally fueled by declining energy
costs and stabilizing interest rates. Disappointing results in technology and
healthcare caused the fund to trail its benchmark over the period, as did its
lack of exposure to strong-performing telecommunications and utility issues.
Harris Associates Focused Value Fund's total return for the year ended December
31, 2006 was 12.72%, based on the net asset value of the fund's Class A shares,
including $2.00 in reinvested capital gains distributions. Performance trailed
the fund's benchmark, the Standard & Poor's 500 Index, which returned 15.79%
for the period, and the 14.15% average return on Morningstar's Large Blend
category.
CONSUMER STOCKS AND INDUSTRIALS LED RETURNS
Fast-food giant McDonald's was one of the portfolio's biggest gainers in 2006,
propelled by its successful turnaround. In addition to building revenues
through better store operations and a revised menu, McDonald's is allocating
capital more effectively. Shares of Cablevision Systems moved higher thanks to
solid operating results and a move by its founders to privatize the company.
Cablevision has led the way in bundling internet, cable and telephone services,
increasing revenue from each subscriber while strengthening customer ties.
Strong sales also boosted Harley-Davidson. Steady demand for its motorcycles
makes Harley less sensitive to economic downturns than other high-end consumer
businesses. Harrah's Entertainment, a worldwide operator of casino hotels,
contributed to the fund's results when it became the subject of intense buyout
speculation. Directors eventually chose to sell the company to private
investors in one of the largest deals of its kind.
Among industrials, Raytheon was a leading performer in the wake of
management-led initiatives that introduced operational efficiencies and
expanded margins during favorable defense procurement cycles. Investors also
concluded that the company's recent business slump was related to the defense
cycle and not due to missteps, such as those seen under former management.
HEALTHCARE, TECHNOLOGY, AND INSURANCE WERE DISAPPOINTING
Omnicare, a distributor of pharmaceutical products to nursing homes, led
decliners. Unfavorable developments pressured shares, including a costly
settlement with several states over disputed Medicaid billings. In addition, a
lawsuit seeks to lower prices paid by Omnicare's customers. If the company
loses the suit, we believe the impact on earnings would only be temporary, so
it remains in the portfolio.
Weakness in the semiconductor industry hurt National Semiconductor amid
concerns over the cyclicality of consumer electronics. We think demand will
remain strong for devices that rely on National Semi's specialized analog chips
to perform key functions. Intel, the world's largest chipmaker, declined when a
competitor captured some of its market share. We believe investor reaction was
excessive and that Intel is moving to fill competitive gaps in its product
line. Both stocks remain in the portfolio.
Life and health insurer Conseco has been strengthening its finances as it
recovers from bankruptcy, but delay of a ratings upgrade has weighed on shares.
A new CEO has been using capital for stock buybacks and other
shareholder-friendly initiatives, while working to turn investor focus from
ratings to business progress.
FOCUSED ON QUALITY COMPANIES THAT APPEAR TO BE UNDERVALUED
Overall, we believe equity valuations are reasonable. Better-quality companies
like those we favor appear to be regaining their edge and seem poised to
outperform next year. In technology, we are seeking an advantage in areas like
semiconductors that we feel have been overlooked or oversold. In fact, our tech
holdings are doing better in business terms than their stock performance
suggests. The fund's large weighting in consumer stocks reflects our confidence
in each company's ability to do well on its own, independent of external
factors. As always, we try to make money for our shareholders through
bottom-up, value-based stock selection rather than relying on economic
forecasting.
5
HARRIS ASSOCIATES FOCUSED VALUE FUND
Investment Results through December 31, 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 December 31, 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 13,795 13,002 11,973
7/31/2006 13,653 12,868 12,047
8/31/2006 13,983 13,179 12,333
9/30/2006 14,444 13,613 12,651
10/31/2006 15,010 14,147 13,063
11/30/2006 15,422 14,536 13,312
12/31/2006 15,560 14,665 13,498
Average Annual Total Returns -- December 31, 2006
SINCE
1 YEAR 5 YEARS/7/ INCEPTION/7/
CLASS A (Inception 3/15/01)
Net Asset Value/1/ 12.72% 7.27% 7.93%
With Maximum Sales Charge/2/ 6.22 6.01 6.84
CLASS B (Inception 3/15/01)
Net Asset Value/1/ 11.85 6.45 7.12
With CDSC/3/ 7.15 6.14 6.99
CLASS C (Inception 3/15/01)
Net Asset Value/1/ 11.85 6.45 7.12
With CDSC/3/ 10.91 6.45 7.12
- -------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS INCEPTION/6/
S&P 500 Index/4/ 15.79% 6.19% 5.36%
Morningstar Large Blend Fund Avg./5/ 14.15 5.92 5.12
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 12/31/06 12/31/05
- ------------------------------------------------------
Common Stocks 100.2 93.9
- ------------------------------------------------------
Short-Term Investments and Other -0.2 6.1
- ------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/06 12/31/05
- ------------------------------------------------------
Timberland Co. 5.0 3.4
- ------------------------------------------------------
CDW Corp. 5.0 3.1
- ------------------------------------------------------
Intel Corp. 5.0 2.5
- ------------------------------------------------------
Liz Claiborne, Inc. 4.9 3.6
- ------------------------------------------------------
National Semiconductor Corp. 4.7 2.3
- ------------------------------------------------------
Yum! Brands, Inc. 4.5 4.4
- ------------------------------------------------------
McDonald's Corp. 4.5 3.8
- ------------------------------------------------------
Sovereign Bancorp, Inc. 4.4 2.7
- ------------------------------------------------------
EW Scripps Co. 4.2 4.4
- ------------------------------------------------------
Bausch & Lomb, Inc. 3.9 --
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTIES 12/31/06 12/31/05
- ------------------------------------------------------
Media 14.1 17.8
- ------------------------------------------------------
Semiconductors 11.9 4.8
- ------------------------------------------------------
Restaurants 9.0 8.2
- ------------------------------------------------------
Savings & Loans 8.1 8.3
- ------------------------------------------------------
Apparel Retailers 5.0 3.4
- ------------------------------------------------------
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/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 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 Report
- --------------------------------------------------------------------------------
After a volatile first half, equity markets sprinted ahead through the end of
2006, as interest rates stabilized and energy prices receded from record highs.
Lack of representation in energy hurt performance comparisons during the first
half, when oil prices were rising, and its underweight to telecom stocks caused
Harris Associates Large Cap Value Fund to lag its benchmark. Most of the
shortfall occurred early in the year, before oil prices retreated. Since then
the market appears to have gravitated toward higher-quality issues of the kind
we emphasize.
For the year ended December 31, 2006, Class A shares of the fund provided a
total return of 16.50% at net asset value, including $0.03 in reinvested
dividends. For the same period, the Russell 1000 Value Index returned 22.25%,
while the average return on comparable funds in Morningstar's Large Blend
category was 14.15%.
CONSUMER, FINANCIAL AND HEALTHCARE ISSUES BOOSTED RETURNS
Consumer discretionary stocks, which have languished for years, achieved solid
gains in 2006 as investors took note of their attractive valuations. McDonald's
advanced further in its successful operational turnaround, while
Hewlett-Packard's revamping under a new CEO was reflected in strong stock
performance. Stock prices of Walt Disney and Time Warner also rose, after
lagging the market for years. We hold each of these investments for its
individual potential, and not because of such external factors as anticipated
consumer spending patterns.
Mellon Financial, a major banking and money management firm, rose sharply
following its decision to merge with Bank of New York. JPMorgan Chase also
moved higher, thanks to strong financial markets and high volumes of investment
banking activity. New management as well as buoyancy on Wall Street rewarded
our decision to invest in Morgan Stanley at a time when we believed it was
undervalued. And after shedding non-core divisions, American Express enjoyed
solid results from its rebounding credit card and travel businesses. In
healthcare, Schering-Plough's new CEO has brought renewed impetus; we sold
Baxter International on strength.
LACK OF EXPOSURE TO TELECOM, DECLINES IN INTEL AND DELL, WERE NEGATIVES
One factor that held the fund back relative to its benchmark was its lack of
exposure to telecommunications, a leading market sector. An exception was
Sprint Nextel, a recent addition to the fund's portfolio. In general, we prefer
to avoid businesses that are dependent on volatile commodity prices so we also
avoided energy.
Competition from Applied Micro Devices (AMD, not in the portfolio) took market
share away from Intel, the world's dominant microprocessor maker. Intel is
addressing vulnerabilities in its product line while expanding capital outlays
and devoting substantial resources to research and development. Sales of Dell's
all-Intel-based computers also suffered when AMD processors gained popularity,
giving Hewlett-Packard an opening; Dell has since added AMD-driven machines and
is implementing solutions that address customer service problems. We are
capitalizing on price weakness to add to both Intel and Dell.
Forecasts of an active hurricane season in 2006 (that failed to materialize)
held down bookings with Carnival Corp., which also faced rising fuel costs.
Medtronic's stock declined as concern grew over its stents and other cardiac
devices. Both remain in the portfolio.
OUTLOOK FOR LARGE-CAP STOCKS SEEMS FAVORABLE
Despite the vigorous rally in the latter part of 2006, Harris Associates
believes the market is reasonably valued. Investors who quit equities in
frustration in recent years may return to stocks as other choices lose luster.
In addition, investors seem more risk averse than they have been; quality
stocks appear to be gaining in popularity, signaling added potential for the
commitments we made during the past several quarters. The pace of economic
expansion may slow in 2007, and we believe there are likely to be periods of
volatility as earnings retreat from record highs. But we think our focus on
quality companies selling at attractive valuations will continue to reward
shareholders over the long run.
7
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Investment Results through December 31, 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]
December 31, 1996 through December 31, 2006
. Russell 1000
Cumulative Class A @ M.S.C Value Index
Month End Value Cumulative Value Cumulative Value
- ---------- ---------- ---------------- ----------------
12/31/1996 $10,000 $ 9,425 $10,000
1/31/1997 10,497 9,893 10,485
2/28/1997 10,627 10,016 10,639
3/31/1997 10,165 9,580 10,256
4/30/1997 10,700 10,084 10,687
5/31/1997 11,385 10,731 11,284
6/30/1997 11,943 11,257 11,768
7/31/1997 12,696 11,966 12,654
8/31/1997 12,334 11,625 12,203
9/30/1997 13,095 12,342 12,940
10/31/1997 12,521 11,801 12,579
11/30/1997 13,061 12,310 13,135
12/31/1997 13,343 12,576 13,518
1/31/1998 13,422 12,650 13,327
2/28/1998 14,500 13,666 14,224
3/31/1998 15,317 14,437 15,094
4/30/1998 15,396 14,510 15,195
5/31/1998 15,186 14,313 14,970
6/30/1998 15,821 14,911 15,162
7/31/1998 15,577 14,682 14,894
8/31/1998 13,222 12,462 12,678
9/30/1998 13,880 13,082 13,405
10/31/1998 14,883 14,027 14,444
11/30/1998 15,558 14,664 15,117
12/31/1998 16,535 15,585 15,631
1/31/1999 17,015 16,037 15,756
2/28/1999 16,607 15,652 15,534
3/31/1999 16,836 15,868 15,855
4/30/1999 17,834 16,809 17,336
5/31/1999 17,754 16,733 17,145
6/30/1999 18,308 17,255 17,643
7/31/1999 17,768 16,746 17,127
8/31/1999 17,528 16,520 16,491
9/30/1999 16,818 15,851 15,915
10/31/1999 17,492 16,486 16,831
11/30/1999 17,543 16,534 16,699
12/31/1999 18,101 17,060 16,780
1/31/2000 17,156 16,170 16,232
2/29/2000 16,578 15,625 15,026
3/31/2000 17,924 16,893 16,860
4/30/2000 17,628 16,615 16,664
5/31/2000 17,085 16,103 16,839
6/30/2000 17,309 16,314 16,070
7/31/2000 17,204 16,214 16,271
8/31/2000 18,358 17,302 17,176
9/30/2000 17,519 16,512 17,333
10/31/2000 17,568 16,558 17,759
11/30/2000 16,521 15,571 17,100
12/31/2000 16,777 15,812 17,957
1/31/2001 16,789 15,823 18,026
2/28/2001 15,791 14,883 17,525
3/31/2001 14,904 14,047 16,905
4/30/2001 16,120 15,193 17,734
5/31/2001 16,144 15,216 18,133
6/30/2001 15,584 14,688 17,731
7/31/2001 15,050 14,184 17,693
8/31/2001 14,126 13,313 16,984
9/30/2001 12,946 12,202 15,789
10/31/2001 13,408 12,637 15,653
11/30/2001 14,358 13,532 16,563
12/31/2001 14,333 13,509 16,953
1/31/2002 14,260 13,440 16,822
2/28/2002 13,882 13,084 16,849
3/31/2002 14,260 13,440 17,647
4/30/2002 13,858 13,061 17,041
5/31/2002 13,797 13,003 17,127
6/30/2002 12,969 12,223 16,143
7/31/2002 12,141 11,443 14,643
8/31/2002 12,445 11,729 14,753
9/30/2002 10,766 10,147 13,113
10/31/2002 11,168 10,526 14,084
11/30/2002 11,922 11,236 14,972
12/31/2002 11,459 10,800 14,321
1/31/2003 11,179 10,537 13,975
2/28/2003 10,826 10,204 13,602
3/31/2003 10,960 10,330 13,625
4/30/2003 11,994 11,304 14,824
5/31/2003 12,895 12,153 15,781
6/30/2003 13,174 12,417 15,978
7/31/2003 13,053 12,303 16,216
8/31/2003 13,492 12,716 16,469
9/30/2003 13,200 12,441 16,308
10/31/2003 13,821 13,026 17,306
11/30/2003 14,307 13,485 17,541
12/31/2003 14,904 14,047 18,622
1/31/2004 15,014 14,151 18,950
2/29/2004 15,367 14,483 19,356
3/31/2004 15,137 14,266 19,186
4/30/2004 15,137 14,266 18,717
5/31/2004 15,149 14,278 18,908
6/30/2004 15,368 14,485 19,355
7/31/2004 14,809 13,957 19,083
8/31/2004 14,882 14,026 19,354
9/30/2004 14,882 14,026 19,654
10/31/2004 15,198 14,325 19,981
11/30/2004 15,612 14,714 20,991
12/31/2004 16,269 15,334 21,694
1/31/2005 15,952 15,035 21,309
2/28/2005 15,891 14,978 22,015
3/31/2005 15,697 14,795 21,713
4/30/2005 15,380 14,496 21,324
5/31/2005 15,757 14,851 21,837
6/30/2005 15,641 14,741 22,076
7/31/2005 16,139 15,211 22,715
8/31/2005 15,884 14,971 22,616
9/30/2005 15,835 14,925 22,934
10/31/2005 15,628 14,729 22,351
11/30/2005 16,273 15,338 23,086
12/31/2005 16,237 15,304 23,224
1/31/2006 16,262 15,327 24,126
2/28/2006 16,444 15,498 24,273
3/31/2006 16,687 15,728 24,602
4/30/2006 16,784 15,819 25,227
5/31/2006 16,443 15,498 24,590
6/30/2006 16,387 15,445 24,747
7/31/2006 16,253 15,319 25,349
8/31/2006 16,716 15,755 25,773
9/30/2006 17,547 16,538 26,287
10/31/2006 18,158 17,114 27,147
11/30/2006 18,426 17,367 27,767
12/31/2006 18,915 17,827 28,390
Average Annual Total Returns -- December 31, 2006
SINCE
1 YEAR/7/ 5 YEARS/7/ 10 YEARS/7/ INCEPTION/7/
CLASS A (Inception 5/6/31)
Net Asset Value/1/ 16.50% 5.71% 6.58% --
With Maximum Sales Charge/2/ 9.82 4.46 5.95 --
CLASS B (Inception 9/13/93)
Net Asset Value/1/ 15.61 4.91 5.78 --
With CDSC/3/ 10.61 4.57 5.78 --
CLASS C (Inception 5/1/95)
Net Asset Value/1/ 15.64 4.89 5.79 --
With CDSC/3/ 14.64 4.89 5.79 --
CLASS Y (Inception 11/18/98)
Net Asset Value/1/ 16.97 6.13 -- 3.07%
- -----------------------------------------------------------------------------------
SINCE CLASS Y
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/
Russell 1000 Value Index/4/ 22.25% 10.86% 11.00% 8.11%
Morningstar Large Blend Fund Avg./5/ 14.15 5.92 7.79 4.66
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. Class Y shares are only available to
certain investors, as outlined in the prospectus.
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 12/31/06 12/31/05
- ------------------------------------------------------
Common Stocks 97.8 99.0
- ------------------------------------------------------
Short-Term Investments and Other 2.2 1.0
- ------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/06 12/31/05
- ------------------------------------------------------
McDonald's Corp. 5.3 4.6
- ------------------------------------------------------
Time Warner, Inc. 4.4 4.3
- ------------------------------------------------------
Dell, Inc. 4.3 2.3
- ------------------------------------------------------
Viacom, Inc., Class B 4.3 2.6
- ------------------------------------------------------
Union Pacific Corp. 4.2 2.5
- ------------------------------------------------------
Tyco International, Ltd. 4.2 4.3
- ------------------------------------------------------
Morgan Stanley 4.1 4.2
- ------------------------------------------------------
Hewlett-Packard Co. 4.0 4.7
- ------------------------------------------------------
Intel Corp. 4.0 4.0
- ------------------------------------------------------
JPMorgan Chase & Co. 3.8 4.4
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
- ------------------------------------------------------
Diversified Financial Services 13.8 15.0
- ------------------------------------------------------
Media 12.8 14.9
- ------------------------------------------------------
Computers 10.4 8.6
- ------------------------------------------------------
Retail 6.9 11.9
- ------------------------------------------------------
Semiconductors 6.1 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:
BlackRock Investment Management, LLC
Harris Associates, L.P.
Loomis, Sayles & Company, L.P.
- --------------------------------------------------------------------------------
Symbols:
Class A NEFSX
Class B NESBX
Class C NECCX
Class Y NESYX
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
The U.S. equity markets posted strong returns in 2006, as relatively strong
economic growth, tame inflation and historically low interest rates provided a
positive environment for stocks. Most of the stock market's return came during
the second half of the year, when oil prices began to decline and the Federal
Reserve Board paused in its cycle of raising interest rates. For the year ended
December 31, 2006, IXIS U.S. Diversified Portfolio returned 13.68% based on the
net asset value of Class A shares. This was less than the 15.79% return of the
Standard & Poor's 500 Index, but ahead of the 10.32% return of the Standard &
Poor's MidCap 400 Index. The portfolio's return fell short of the 16.07% return
of the Dow Jones Wilshire 4500 Index, but outpaced the 9.01% return of the
funds in the Morningstar 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
Portfolio's BlackRock* 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' segment 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 that invests in mid-cap growth stocks, and one that focuses on
small-cap value stocks.
BLACKROCK SOUGHT RETURNS IN A VARIETY OF ECONOMIC SECTORS
A significant shift in market leadership occurred in the second half of 2006,
reflecting growing concerns about the pace of growth in the United States. As
of December 31, 2006, energy was the largest sector in BlackRock's segment,
with an emphasis on the drilling and services industries. The manager's focus
on the oil and gas drilling and services industries stems from their belief
that the outlook for the companies selected is as strong as it has been in
almost 30 years. Materials and industrials were also areas of emphasis.
Although materials and energy produced strong results, the industrials sector
had relatively little impact, up or down. The segment had a relatively small
position in information technology, reflecting BlackRock's concern about the
fundamentals of the sector as a whole. However, individual stocks selected in
this sector had a positive impact. Top performers included Schlumberger, an
oilfield services company; Cognizant Technology Solutions, a developer of
business software and services; and Lockheed Martin, a manufacturer of defense
and aerospace products. An underweight position in consumer discretionary
stocks had a slightly negative impact on return, as did consumer staples,
healthcare and financials. Individual stocks that proved disappointing included
Alcon, a developer of eye-care products; Medtronic, a medical device
manufacturer; and Yahoo, an internet service provider. Alcon and Yahoo remain,
but Medtronic was sold from this segment.
HARRIS ASSOCIATES SOUGHT QUALITY BUSINESSES WITH STRONG BALANCE SHEETS
Some of the stocks that previously had held back Harris Associates' segment
became its strongest holdings in 2006. Healthcare, consumer discretionary, and
financial stocks became leaders, and Hewlett Packard, Morgan Stanley, and
McDonald's provided strong returns. Hewlett Packard's personal computer and
printer businesses gained market share. Morgan Stanley's positive results were
driven by its Institutional Securities and Wealth Management Divisions. Board
approval of the spin-off of the Discover Card unit was another positive.
McDonald's achieved a successful business turnaround, leading to higher
earnings and improved valuations for its stock. A lack of exposure to energy
early in the year, and relatively small positions in telecommunications, hurt
this segment's performance in 2006. Certain technology holdings also limited
return. Among technology holdings, Intel detracted from
*In September 2006, Merrill Lynch's investment management business, including
Mercury Advisors, merged with BlackRock, Inc. to create BlackRock Investment
Management, LLC ("BlackRock"). Effective October 2, 2006, BlackRock became
subadvisor to this segment of the U.S. Diversified Portfolio, replacing
Mercury Advisors.
9
IXIS U.S. DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
results. While Intel was down at year-end, it reported encouraging financial
results. Dell Inc. was another disappointment. The company's 2006 earnings
reports were lower than the previous year, although its fourth-quarter earnings
came in better than expected. Cruise ship company Carnival Corp. also held back
results. Higher fuel prices increased costs while bookings declined as a result
of concerns about a bad hurricane season that did not occur; both factors
reduced the cruise line's earnings. All three stocks remain in the segment
because Harris Associates believes they are attractively valued, solid
businesses.
FINANCE, TECHNOLOGY AND UTILITIES BENEFITED LOOMIS SAYLES MID-CAP GROWTH SEGMENT
This Loomis segment enjoyed strong performance in the first and fourth quarters
of 2006, but mid-year performance was relatively weak. The best returns came
from the financial, technology, and utilities sectors. Financial holdings were
diverse, but the emphasis was on the capital markets, including publicly traded
futures and stock exchanges, brokers and merchant banking firms that had
demonstrated increasing levels of profitability. Financial holdings also
included commercial real estate companies that benefited from a worldwide
upturn in commercial leasing and increased inflows of money into real estate
investments. Most of the strength in technology came in the first quarter, and
Loomis trimmed this position in the spring in anticipation of a seasonal
correction. In utilities, the segment focused on wireless telecommunications
companies that serve under-penetrated overseas markets, especially Latin
America, which is experiencing vigorous growth. Top performers included Akamai
Technologies, whose products expedite audio and video content through the
internet; Intercontinental Exchange, an electronic exchange for trading oil and
gas futures and swaps; and NII Holdings (formerly Nextel International), which
provides wireless communications to small business customers in Mexico,
Argentina and Peru. The segment's weakest sectors were energy, consumer
staples, and healthcare. Energy was challenging as geopolitical events and
weather anomalies contributed to the sector's volatility. The segment's
exposure to consumer staples was minimal, and most of the poor performance came
from Whole Foods, a natural and organic food supermarket chain. Loomis believes
Whole Foods is a great franchise, but it has been experiencing growing pains
and earnings expectations have fallen steadily. The weakness in healthcare was
broad-based. Omnicare, the largest provider of pharmacy services to nursing
homes, was disappointing because of the confusion and extra costs associated
with the implementation of the new Medicare drug benefit. Meridian Gold also
detracted from results. The company has mining operations in Nevada, Mexico and
South America, and the stock declined as commodities lost value in the third
quarter. All three positions were sold.
LOOMIS SAYLES SMALL-CAP VALUE SEGMENT FOCUSED ON INDIVIDUAL STOCKS RATHER THAN
SECTORS
This segment's best-performing stocks were in the materials and processing,
consumer discretionary, and financial sectors. Star performers included
Chaparral Steel, a producer of structural steel, and Trammel Crow, a
diversified real estate services company that rose in value when it accepted a
buyout offer. Both benefited from strength in the non-residential area of the
construction market. Among consumer discretionary companies, the best results
came from relatively large positions in Live Nation, a producer and promoter of
live entertainment, and Rent-A-Center, the largest chain of rent-to-own stores
in the country. Although the segment's financial holdings were not as strong as
the overall small-cap market, several of its larger financial holdings
generated positive results. These included Nuveen Investments, an asset
management company, and Developers Diversified Realty, a real estate investment
trust (REIT) that invests primarily in shopping centers. Merger and acquisition
activity was a theme in this segment, and several companies benefited from
buyout offers during the year. These included Trammel Crow, mentioned above;
Aramark, an outsourcer of food and maintenance services; Sybron Dental
Specialties, a dental equipment manufacturer; NetRatings, an internet services
company; and Realogy Corporation, which finances real estate brokerage
companies. The weakest stocks in this segment were ADTRAN, a manufacturer of
high-speed network products, and Helix Energy Solutions, a deep-water drilling
company. ADTRAN was hurt by a delay in orders from North American telecom
service providers. Helix Energy declined as oil and gas prices fell in the
second half of 2006. Loomis trimmed its ADTRAN position and is awaiting better
market conditions in the industry before adding back shares. Given its current
low valuation, Helix stock remains in the portfolio in anticipation of a price
recovery once the energy markets improve.
10
IXIS U.S. DIVERSIFIED PORTFOLIO
Investment Results through December 31, 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]
December 31, 1996 through December 31, 2006
Class A S&P 400 S&P 500 Wilshire
@ M.S.C. Index Index 4500 Index
Cumulative Cumulative Cumulative Cumulative Monthly
Month End Value Value Value Value Performance
- ---------- ---------- ---------- ---------- ---------- -----------
12/31/1996 $10,000 $ 9,425 $10,000 $10,000 $10,000
1/31/1997 10,446 9,845 10,375 10,625 10,323
2/28/1997 10,099 9,518 10,290 10,708 10,105
3/31/1997 9,676 9,120 9,851 10,268 9,577
4/30/1997 9,863 9,296 10,107 10,881 9,601
5/31/1997 10,605 9,996 10,991 11,544 10,556
6/30/1997 11,040 10,405 11,299 12,061 11,056
7/31/1997 11,926 11,240 12,418 13,020 11,817
8/31/1997 11,585 10,919 12,403 12,291 11,925
9/30/1997 12,145 11,447 13,116 12,964 12,751
10/31/1997 11,753 11,077 12,545 12,531 12,266
11/30/1997 11,844 11,163 12,731 13,111 12,269
12/31/1997 12,018 11,327 13,225 13,336 12,569
1/31/1998 12,071 11,376 12,974 13,484 12,390
2/28/1998 12,956 12,211 14,048 14,456 13,337
3/31/1998 13,498 12,722 14,682 15,197 14,027
4/30/1998 13,651 12,866 14,950 15,350 14,205
5/31/1998 13,274 12,511 14,277 15,086 13,541
6/30/1998 13,697 12,910 14,367 15,698 13,752
7/31/1998 13,288 12,524 13,810 15,531 12,973
8/31/1998 11,085 10,447 11,240 13,286 10,459
9/30/1998 11,890 11,207 12,289 14,137 11,214
10/31/1998 12,621 11,895 13,387 15,287 11,851
11/30/1998 13,250 12,488 14,055 16,213 12,588
12/31/1998 14,332 13,507 15,753 17,148 13,654
1/31/1999 15,005 14,142 15,140 17,865 13,873
2/28/1999 14,561 13,724 14,347 17,310 13,118
3/31/1999 15,435 14,547 14,748 18,002 13,630
4/30/1999 16,050 15,128 15,911 18,699 14,717
5/31/1999 15,606 14,709 15,980 18,258 14,590
6/30/1999 16,587 15,634 16,836 19,271 15,203
7/31/1999 16,037 15,115 16,478 18,669 14,743
8/31/1999 15,973 15,054 15,913 18,577 14,376
9/30/1999 16,030 15,108 15,422 18,068 14,265
10/31/1999 16,606 15,651 16,208 19,211 14,994
11/30/1999 18,019 16,983 17,058 19,601 16,259
12/31/1999 20,990 19,783 18,072 20,756 18,499
1/31/2000 20,732 19,540 17,563 19,713 18,278
2/29/2000 23,276 21,937 18,792 19,340 21,120
3/31/2000 23,036 21,711 20,365 21,232 20,339
4/30/2000 21,262 20,040 19,654 20,593 17,892
5/31/2000 19,514 18,392 19,409 20,171 16,572
6/30/2000 19,891 18,747 19,694 20,668 18,562
7/31/2000 19,378 18,264 20,005 20,345 18,035
8/31/2000 20,897 19,695 22,239 21,608 20,048
9/30/2000 20,283 19,116 22,086 20,468 19,232
10/31/2000 19,321 18,210 21,337 20,381 17,660
11/30/2000 16,985 16,009 19,727 18,774 14,655
12/31/2000 17,425 16,423 21,236 18,866 15,582
1/31/2001 17,922 16,891 21,709 19,535 16,430
2/28/2001 16,124 15,197 20,470 17,754 14,434
3/31/2001 15,033 14,168 18,948 16,629 13,110
4/30/2001 16,353 15,412 21,038 17,922 14,497
5/31/2001 16,511 15,562 21,528 18,042 14,841
6/30/2001 16,419 15,475 21,441 17,603 14,961
7/31/2001 16,131 15,204 21,122 17,429 14,265
8/31/2001 15,446 14,558 20,431 16,338 13,572
9/30/2001 13,807 13,013 17,890 15,019 11,827
10/31/2001 14,155 13,341 18,681 15,305 12,446
11/30/2001 15,317 14,436 20,071 16,479 13,413
12/31/2001 15,793 14,885 21,108 16,624 14,132
1/31/2002 15,654 14,754 20,998 16,381 13,857
2/28/2002 15,357 14,474 21,024 16,065 13,465
3/31/2002 16,113 15,186 22,527 16,669 14,378
4/30/2002 15,686 14,784 22,421 15,659 14,237
5/31/2002 15,477 14,587 22,043 15,543 13,922
6/30/2002 14,225 13,407 20,430 14,436 12,968
7/31/2002 12,973 12,227 18,449 13,311 11,707
8/31/2002 13,073 12,321 18,544 13,398 11,775
9/30/2002 11,762 11,085 17,050 11,942 10,981
10/31/2002 12,308 11,600 17,789 12,993 11,342
11/30/2002 13,032 12,283 18,818 13,758 12,126
12/31/2002 12,347 11,637 18,044 12,950 11,615
1/31/2003 12,030 11,338 17,517 12,611 11,365
2/28/2003 11,901 11,217 17,100 12,421 11,075
3/31/2003 11,990 11,301 17,244 12,542 11,239
4/30/2003 12,924 12,181 18,496 13,575 12,175
5/31/2003 13,878 13,080 20,029 14,290 13,331
6/30/2003 14,067 13,258 20,284 14,473 13,649
7/31/2003 14,424 13,595 21,004 14,728 14,286
8/31/2003 15,129 14,259 21,957 15,015 14,885
9/30/2003 14,753 13,904 21,621 14,856 14,700
10/31/2003 15,825 14,915 23,255 15,696 15,813
11/30/2003 16,222 15,290 24,066 15,834 16,354
12/31/2003 16,500 15,551 24,472 16,664 16,694
1/31/2004 16,888 15,916 25,002 16,970 17,292
2/29/2004 17,036 16,057 25,602 17,206 17,594
3/31/2004 17,075 16,093 25,711 16,947 17,668
4/30/2004 16,727 15,765 24,867 16,681 16,958
5/31/2004 16,985 16,008 25,383 16,909 17,216
6/30/2004 17,421 16,419 25,961 17,238 17,665
7/31/2004 16,428 15,483 24,749 16,668 16,681
8/31/2004 16,229 15,296 24,684 16,735 16,688
9/30/2004 16,745 15,783 25,416 16,916 17,369
10/31/2004 17,054 16,073 25,822 17,175 17,759
11/30/2004 17,898 16,869 27,360 17,870 18,967
12/31/2004 18,623 17,552 28,505 18,478 19,794
1/31/2005 18,107 17,066 27,778 18,027 19,145
2/28/2005 18,474 17,412 28,710 18,407 19,491
3/31/2005 18,136 17,093 28,392 18,081 19,146
4/30/2005 17,559 16,550 27,288 17,738 18,499
5/31/2005 18,295 17,243 28,932 18,302 19,596
6/30/2005 18,553 17,486 29,603 18,328 20,227
7/31/2005 19,427 18,310 31,157 19,010 21,340
8/31/2005 19,308 18,198 30,810 18,836 21,088
9/30/2005 19,546 18,422 31,047 18,989 21,218
10/31/2005 19,130 18,030 30,380 18,672 20,762
11/30/2005 19,994 18,845 31,864 19,379 21,734
12/31/2005 20,034 18,882 32,085 19,385 21,827
1/31/2006 21,008 19,800 33,975 19,899 23,200
2/28/2006 20,939 19,735 33,690 19,953 22,989
3/31/2006 21,554 20,315 34,532 20,201 23,849
4/30/2006 21,722 20,473 35,017 20,472 23,961
5/31/2006 20,877 19,677 33,438 19,883 22,993
6/30/2006 20,978 19,771 33,446 19,910 23,030
7/31/2006 20,531 19,350 32,492 20,033 22,385
8/31/2006 20,818 19,621 32,863 20,510 22,880
9/30/2006 21,274 20,051 33,084 21,038 23,141
10/31/2006 22,078 20,809 34,460 21,724 24,293
11/30/2006 22,643 21,341 35,568 22,137 25,206
12/31/2006 22,773 21,463 35,395 22,447 25,335
Average Annual Total Returns -- December 31, 2006
1 YEAR 5 YEARS 10 YEARS
CLASS A (Inception 7/7/94)
Net Asset Value/1/ 13.68% 7.60% 8.58%
With Maximum Sales Charge/2/ 7.15 6.33 7.94
CLASS B (Inception 7/7/94)
Net Asset Value/1/ 12.88 6.79 7.77
With CDSC/3/ 7.88 6.48 7.77
CLASS C (Inception 7/7/94)
Net Asset Value/1/ 12.87 6.78 7.77
With CDSC/3/ 11.87 6.78 7.77
CLASS Y (Inception 11/15/94)
Net Asset Value/1/ 14.20 8.18 9.06
- ---------------------------------------------------------------
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS
S&P MidCap 400 Index/4/ 10.32% 10.89% 13.47%
S&P 500 Index/5/ 15.79 6.19 8.42
Dow Jones Wilshire 4500 Index/6/ 16.07 12.38 9.74
Morningstar Mid-Cap Growth Fund Avg./7/ 9.01 6.48 8.31
All returns represent past performance and do not guarantee future results.
Periods of less than one year are not annualized. Share price and return will
vary, and you may have a gain or loss when you sell your shares. All results
include reinvestment of dividends and capital gains. Current returns may be
higher or lower than those shown. For performance current to the most recent
month-end, visit www.ixisadvisorfunds.com. Class Y shares are only available to
certain investors, as outlined in the prospectus.
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 12/31/06 12/31/05
- ------------------------------------------------------
Common Stocks 99.0 98.1
- ------------------------------------------------------
Short-Term Investments and Other 1.0 1.9
- ------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/06 12/31/05
- ------------------------------------------------------
McDonald's Corp. 1.6 1.3
- ------------------------------------------------------
JPMorgan Chase & Co. 1.4 1.2
- ------------------------------------------------------
Time Warner, Inc. 1.3 1.2
- ------------------------------------------------------
Dell, Inc. 1.3 0.8
- ------------------------------------------------------
Viacom, Inc., Class B 1.3 0.8
- ------------------------------------------------------
Union Pacific Corp. 1.2 0.7
- ------------------------------------------------------
Tyco International, Ltd. 1.2 1.1
- ------------------------------------------------------
Morgan Stanley 1.2 1.2
- ------------------------------------------------------
Hewlett-Packard Co. 1.2 1.3
- ------------------------------------------------------
Intel Corp. 1.2 1.1
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
- ------------------------------------------------------
Diversified Financial Services 9.4 8.3
- ------------------------------------------------------
Retail 5.9 6.4
- ------------------------------------------------------
Media 5.0 5.1
- ------------------------------------------------------
Telecommunications 4.8 2.5
- ------------------------------------------------------
Banks 4.3 3.9
- ------------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/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
- --------------------------------------------------------------------------------
Against a backdrop of relatively strong global economic growth, domestic and
overseas equity markets generated positive returns in 2006. In virtually all
markets, value stocks solidly outperformed their growth counterparts, and
small-cap stocks maintained their edge over large-cap stocks. For the year
ended December 31, 2006, IXIS Value Fund's total return was 19.72% based on the
net asset value of Class A shares, including $0.02 in dividends and $1.13 in
capital gains reinvested during the period. The fund underperformed its
benchmark, the Russell 1000 Value Index, which returned 22.25%, but it beat the
14.15% average return of funds in Morningstar's Large Blend category.
IXIS Value Fund's four segments combine the expertise of four separate
investment managers, each using a distinct approach to value investing. Harris
Associates favors large- and mid-cap companies with positive cash flows,
competitive returns and favorable growth potential that are trading at what the
managers believe are substantial discounts to their true business value.
Loomis, Sayles & Company and Vaughan Nelson Investment Management focus on
large-cap value stocks. Loomis Sayles seeks companies with below-average
valuations and above-average earnings prospects. Vaughan Nelson emphasizes
established, undervalued companies that the manager believes will rebound
within 12 to 18 months. Westpeak Global Advisors invests across the
capitalization spectrum, using proprietary research to select stocks based on
value and growth potential, while seeking to avoid unnecessary risk.
HARRIS SOUGHT HIGH QUALITY BUSINESSES SELLING AT ATTRACTIVE PRICES
In the course of 2006, some of the stocks that had previously held back Harris
Associates' segment became its best performers. Consumer discretionary,
healthcare and financial holdings benefited results; Hewlett-Packard,
Cablevision Systems and Morgan Stanley had the most significant impact on
return. Hewlett Packard's personal computer and printer businesses gained
market share. Cablevision reported strong operating and financial results, and
its above-average growth is expected to continue as new services help the
company gain further market share. Morgan Stanley's positive results were
driven by its Institutional Securities and Wealth Management Divisions. Board
approval of the spin-off of the Discover Card unit was another positive. A lack
of exposure to energy early in the year, and a relatively small position in
telecommunications hurt this segment's performance in 2006. Dell, Inc., Liberty
Media Corporation, and National Semiconductor had the most significant negative
impact on performance. Dell's 2006 earnings reports were lower than the
previous year, although its fourth-quarter earnings came in better than
expected. Liberty Media split into two entities: Liberty Capital Group and
Liberty Interactive Group. The portfolio continues to hold Liberty Capital
Group, but Liberty Media Interactive was sold. National Semiconductor reported
weak earnings primarily because of lower-than-expected shipments of wireless
handsets. Handset sales have been weak and there is an abundance of inventory.
Despite these headwinds, Harris Associates believes National Semiconductor has
room to improve profit margins.
LOOMIS SAYLES SOUGHT COMPANIES THAT WERE UNDER-APPRECIATED BY INVESTORS
During a period of solid global economic growth, stocks related to the capital
markets performed well, including brokerage firms, investment banks, custody
and money center banks, and asset managers. Investments in utilities, another
strong area, also played an important part in the segment's performance, as two
of its major holdings, AT&T and BellSouth, agreed to merge. The stock price of
both companies rallied on the news, and created the largest contribution to
return, as earnings estimates for the combined entity rose on the prospect of
cost-cutting opportunities. In the energy sector, investors were faced with
declining oil prices, and shifted to a more defensive posture. As a result,
ExxonMobil was supportive, outperforming companies whose stock price is more
closely tied to commodity prices. ABB Ltd., an industrial equipment
manufacturer based in Switzerland, was another solid contributor, as the
12
IXIS VALUE FUND
Management Discussion
- --------------------------------------------------------------------------------
company continued to be a major beneficiary of the infrastructure build-out in
the power industry. There were no sectors that detracted from performance in
2006, yet individual stocks did underperform. For example, investors turned
sour on restaurant stocks in the wake of Burger King's initial public offering
of stock earlier in the year. Burger King had two big constraints: the overhang
from the private equity holders' large remaining stake and the generally poor
outlook for consumer and restaurant sales trends. In healthcare, Omnicare also
slightly detracted from performance after reporting disappointing third-quarter
results. Burger King was sold, but Omnicare remains in the segment.
VAUGHAN NELSON FOCUSED ON STOCKS WITH THE POTENTIAL FOR STRONG RETURNS
Vaughan Nelson's research team uses bottom-up stock selection rather than
relying on economic forecasts. Relative to its bench-mark, this segment had
smaller positions in financial companies (particularly insurance),
telecommunications, and the utilities and materials sectors. The segment also
had relatively large positions in industrial companies, technology, healthcare,
and consumer discretionary stocks. Both the consumer discretionary and
technology areas were performance leaders. However, the segment's positions in
telecommunications, utilities, and industrials held back results. Stock
selection in the healthcare sector was also disappointing. The best-performing
stocks included ExxonMobil, Cisco Systems, and Merrill Lynch. Exxon provided a
safe haven for energy investors in the face of volatile energy prices. Cisco
benefited from a recovery in spending in telecommunications services, and
Merrill Lynch was supported by strong performance in the trading and banking
areas of Wall Street. Boston Scientific, Intel and Capital One Financial proved
disappointing. Product delays and safety issues regarding its cardiac stents
hurt Boston Scientific's performance. Its acquisition of Guidant, a developer
of cardiovascular medical products, was another negative. Investor concern that
technology spending would be weak in 2006 depressed Intel. Investors were also
waiting for Intel's new Centrino Duo processor to come to market. Capital One
declined on concerns for a potential consumer recession and deteriorating
credit quality. All three companies remain in the portfolio, but Vaughan Nelson
reduced positions in Intel and Capital One. The manager believes price declines
in each of these stocks has made them attractively valued in light of their
prospects for earnings growth in 2007.
WESTPEAK FOCUSED ON STOCKS WITH LOW PRICE-EARNINGS AND PRICE-TO-BOOK RATIOS
Westpeak seeks stocks of high-quality, growing companies that they believe to
be attractively valued. This segment had a significant position in the oil
refining industry - companies with reasonable valuations and strong momentum -
and these boosted results. Good timing and relatively large positions in the
securities and asset management industry, as well as in aerospace and defense,
were also helpful. Poor timing in the computer software and medical services
industries worked against the segment, as did a relatively large commitment to
the truck/sea/air freight industry and a smaller position in home products
companies. Commercial Metals, a mining company that enjoyed sharp gains early
in 2006, was one of the best performers, and Westpeak sold the position on
strength. Harvest Natural Resources, an energy reserves company, also aided
return. The company entered an agreement with Venezuela and the stock rallied
in anticipation of good earnings. Wespeak sold the position before problems
with Venezuela arose. USG Corp., a building materials producer, was also
positive and Westpeak sold it on strength. Stocks that detracted included
Intel, a semiconductor manufacturer, Reliance Steel & Aluminum, a metals
processing company, and Todco, an oil services company. Intel was hampered by
weaker-than-expected sales of semiconductor chips for desktop computers. After
sinking lower through mid-year, Intel shares recovered and the stock remains in
the portfolio. Reliance Steel & Aluminum was purchased because of its strong
momentum and reasonable valuation. Shares declined along with its industry and
the position was sold. Todco was pared back, but the stock remains in the
portfolio because it is highly ranked by Westpeak's quantitative analysis team.
13
IXIS VALUE FUND
Investment Results through December 31, 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 through December 31, 2006
Russell
1000
Class A Value
@ M.S.C. Index
Month Cumulative Cumulative Cumulative
End Value Value Value
- --------- ---------- ---------- ----------
12/31/1996 $10,000 $ 9,425 $10,000
1/31/1997 10,250 9,661 10,485
2/28/1997 10,365 9,769 10,639
3/31/1997 9,969 9,396 10,256
4/30/1997 10,156 9,572 10,687
5/31/1997 10,729 10,112 11,284
6/30/1997 11,291 10,642 11,768
7/31/1997 12,145 11,447 12,654
8/31/1997 11,676 11,005 12,203
9/30/1997 12,170 11,470 12,940
10/31/1997 11,645 10,976 12,579
11/30/1997 11,919 11,234 13,135
12/31/1997 12,094 11,399 13,518
1/31/1998 12,070 11,376 13,327
2/28/1998 12,881 12,141 14,224
3/31/1998 13,394 12,624 15,094
4/30/1998 13,382 12,612 15,195
5/31/1998 13,001 12,253 14,970
6/30/1998 12,989 12,242 15,162
7/31/1998 12,547 11,826 14,894
8/31/1998 10,424 9,825 12,678
9/30/1998 11,018 10,385 13,405
10/31/1998 11,943 11,256 14,444
11/30/1998 12,564 11,841 15,117
12/31/1998 12,948 12,204 15,631
1/31/1999 12,614 11,889 15,756
2/28/1999 12,387 11,675 15,534
3/31/1999 12,440 11,725 15,855
4/30/1999 13,403 12,633 17,336
5/31/1999 13,283 12,519 17,145
6/30/1999 13,631 12,847 17,643
7/31/1999 13,016 12,268 17,127
8/31/1999 12,454 11,738 16,491
9/30/1999 11,735 11,060 15,915
10/31/1999 12,309 11,601 16,831
11/30/1999 12,132 11,434 16,699
12/31/1999 12,053 11,360 16,780
1/31/2000 11,680 11,009 16,232
2/29/2000 10,677 10,063 15,026
3/31/2000 11,777 11,100 16,860
4/30/2000 11,745 11,070 16,664
5/31/2000 11,680 11,009 16,839
6/30/2000 11,406 10,750 16,070
7/31/2000 11,438 10,780 16,271
8/31/2000 12,136 11,438 17,176
9/30/2000 11,926 11,240 17,333
10/31/2000 12,249 11,545 17,759
11/30/2000 11,861 11,179 17,100
12/31/2000 12,297 11,590 17,957
1/31/2001 12,686 11,956 18,026
2/28/2001 12,346 11,636 17,525
3/31/2001 11,925 11,239 16,905
4/30/2001 12,669 11,940 17,734
5/31/2001 13,008 12,260 18,133
6/30/2001 12,782 12,047 17,731
7/31/2001 12,668 11,940 17,693
8/31/2001 12,118 11,422 16,984
9/30/2001 11,099 10,461 15,789
10/31/2001 11,439 10,781 15,653
11/30/2001 12,200 11,498 16,563
12/31/2001 12,458 11,742 16,953
1/31/2002 12,280 11,574 16,822
2/28/2002 12,151 11,452 16,849
3/31/2002 12,684 11,955 17,647
4/30/2002 12,296 11,589 17,041
5/31/2002 12,296 11,589 17,127
6/30/2002 11,342 10,690 16,143
7/31/2002 10,355 9,760 14,643
8/31/2002 10,517 9,912 14,753
9/30/2002 9,239 8,708 13,113
10/31/2002 9,838 9,272 14,084
11/30/2002 10,631 10,019 14,972
12/31/2002 10,032 9,455 14,321
1/31/2003 9,789 9,227 13,975
2/28/2003 9,563 9,013 13,602
3/31/2003 9,580 9,029 13,625
4/30/2003 10,470 9,868 14,824
5/31/2003 11,230 10,584 15,781
6/30/2003 11,440 10,782 15,978
7/31/2003 11,569 10,904 16,216
8/31/2003 11,860 11,178 16,469
9/30/2003 11,602 10,935 16,308
10/31/2003 12,363 11,652 17,306
11/30/2003 12,671 11,942 17,541
12/31/2003 13,204 12,445 18,622
1/31/2004 13,349 12,582 18,950
2/29/2004 13,640 12,856 19,356
3/31/2004 13,560 12,780 19,186
4/30/2004 13,350 12,582 18,717
5/31/2004 13,511 12,734 18,908
6/30/2004 13,771 12,979 19,355
7/31/2004 13,366 12,597 19,083
8/31/2004 13,334 12,567 19,354
9/30/2004 13,495 12,719 19,654
10/31/2004 13,673 12,887 19,981
11/30/2004 14,305 13,482 20,991
12/31/2004 14,706 13,860 21,694
1/31/2005 14,491 13,658 21,309
2/28/2005 14,853 13,999 22,015
3/31/2005 14,656 13,813 21,713
4/30/2005 14,326 13,502 21,324
5/31/2005 14,754 13,906 21,837
6/30/2005 14,928 14,070 22,076
7/31/2005 15,470 14,581 22,715
8/31/2005 15,385 14,500 22,616
9/30/2005 15,537 14,644 22,934
10/31/2005 15,164 14,293 22,351
11/30/2005 15,656 14,756 23,086
12/31/2005 15,618 14,720 23,224
1/31/2006 16,106 15,179 24,126
2/28/2006 16,143 15,214 24,273
3/31/2006 16,423 15,479 24,602
4/30/2006 16,780 15,815 25,227
5/31/2006 16,310 15,372 24,590
6/30/2006 16,318 15,380 24,747
7/31/2006 16,375 15,434 25,349
8/31/2006 16,739 15,776 25,773
9/30/2006 17,236 16,245 26,287
10/31/2006 17,982 16,948 27,147
11/30/2006 18,383 17,326 27,767
12/31/2006 18,694 17,619 28,390
Average Annual Total Returns -- December 31, 2006
1 YEAR 5 YEARS/6/ 10 YEARS/6/
CLASS A (Inception 6/5/70)
Net Asset Value/1/ 19.72% 8.46% 6.46%
With Maximum Sales Charge/2/ 12.81 7.18 5.83
CLASS B (Inception 9/13/93)
Net Asset Value/1/ 18.62 7.63 5.66
With CDSC/3/ 13.62 7.33 5.66
CLASS C (Inception 12/30/94)
Net Asset Value/1/ 18.78 7.63 5.66
With CDSC/3/ 17.78 7.63 5.66
- ------------------------------------------------------------------
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS
Russell 1000 Value Index/4/ 22.25% 10.86% 11.00%
Morningstar Large Blend Fund Avg./5/ 14.15 5.92 7.79
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 12/31/06 12/31/05
- ----------------------------------------------------
Common Stocks 97.2 98.1
- ----------------------------------------------------
Short-Term Investments and
Other 2.8 1.9
- ----------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/06 12/31/05
- ----------------------------------------------------
ExxonMobil Corp. 3.3 3.3
- ----------------------------------------------------
JPMorgan Chase & Co. 3.1 2.6
- ----------------------------------------------------
Time Warner, Inc. 3.1 2.4
- ----------------------------------------------------
Hewlett-Packard Co. 2.7 2.2
- ----------------------------------------------------
Citigroup, Inc. 2.7 2.2
- ----------------------------------------------------
McDonald's Corp. 2.6 2.4
- ----------------------------------------------------
Morgan Stanley 2.3 1.9
- ----------------------------------------------------
Intel Corp. 2.2 1.2
- ----------------------------------------------------
Tyco International, Ltd. 1.9 1.5
- ----------------------------------------------------
Mellon Financial Corp. 1.7 0.2
- ----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
- ----------------------------------------------------
Diversified Financial Services 13.1 13.3
- ----------------------------------------------------
Oil & Gas 7.6 7.7
- ----------------------------------------------------
Media 7.3 6.7
- ----------------------------------------------------
Retail 6.2 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:
Chris D. Wallis
Scott J. Weber
- --------------------------------------------------------------------------------
Symbols:
Class A NEFJX
Class B NEJBX
Class C NEJCX
Class Y NEJYX
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Early in 2006 investor sentiment swung from optimism regarding the economy to
concern about slowing growth, as short-term interest rates rose steadily. In
the closing quarter, optimism took hold again as the economy remained vigorous
and the Federal Reserve Board paused in its tightening policy. These shifts in
sentiment were reflected in stock prices, with strong rallies in the opening
and closing quarters and weakness in the middle of the year.
Vaughan Nelson Small Cap Value Fund's total return for the year ended December
31, 2006 was 18.09% based on the net asset value of Class A shares. For the
same period, the fund's benchmark, the Russell 2000 Value Index, returned
23.48%, while the funds in Morningstar's Small Blend category had a total
return of 15.06%.
Small-cap stocks continued to outperform mid- and large-cap stocks, although
their lead was slimmer than it has been, and value-oriented stocks continued to
outperform growth stocks. The fund's performance was similar to its benchmark
until the third quarter, when it fell behind because we had positioned the
portfolio less defensively than the index. However, it bounced back when
investor optimism returned in the fourth quarter.
ENERGY HOLDINGS WERE TRIMMED ON STRENGTH, ADDED BACK ON WEAKNESS
Energy stocks got off to a strong start in 2006 and then declined along with
oil prices. We took profits on some of the fund's natural gas holdings in the
spring as their valuations rose, but later in the year we began adding to
energy again, seeking attractively valued service and exploration companies
likely to be able to expand their reserves. Additions included Rosetta
Resources, an exploration and production company whose stock is trading below
liquidation value, and Oil States International, an energy services company.
Oil States' earnings stream is more stable than most energy-services companies
because it provides well-site services both on and offshore. The company also
has a strong history of value-driven acquisitions. We continue to like
Universal Compression Holdings, one of the fund's best-performing stocks this
year. The company provides compression services and products to natural gas
companies worldwide, and its two-year backlog should give it predictable growth
that still does not seem to be reflected in the price of the stock.
MANAGER FOCUSES ON INDIVIDUAL COMPANIES RATHER THAN INDUSTRIES
The fund's best performers came from diverse industries. In addition to
Universal Compression, mentioned above, Century Aluminum was a standout. We
took profits on the sale of stock of this custom producer of high-quality
aluminum extrusions after it rose to our target price. Another strong stock was
LHC Group, which provides healthcare services primarily in the southern United
States through home nursing agencies, hospices and long-term care facilities.
This low-cost provider has little competition in its service area, and it
remains in the portfolio.
Birch Mountain Resources, a Canadian company that owns industrial mineral
rights in Alberta, failed to meet our earnings expectations and we closed out
the position. We also sold Healthsouth after its earnings outlook deteriorated.
Healthsouth provides outpatient surgery, diagnostic and rehabilitative
services. Weaker-than-expected earnings also hurt the stock price of Briggs &
Stratton Corporation, a leading manufacturer of small engines for outdoor power
equipment, but it remains in the portfolio because we look for an improvement
going forward.
PACE OF ECONOMIC GROWTH MAY SLOW
We believe the U.S. economy is in the middle of a cyclical slowdown, with
relatively little inflation potential. If the Fed becomes concerned about a
possible slowdown, it has ample latitude to lower rates a notch or two. Any
such decrease would add the prospect of stronger earnings and rising stock
prices. Given the market's strength in the last part of 2006, some weakness is
possible in the first half of 2007. However, as long as economic growth
continues at a moderate pace, we believe corporate earnings should continue to
grow in 2007.
15
VAUGHAN NELSON SMALL CAP VALUE FUND
Investment Results through December 31, 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]
December 31, 1996 through December 31, 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 21,962 20,699 31,099
7/31/2006 21,462 20,227 30,667
8/31/2006 21,668 20,422 31,584
9/30/2006 21,860 20,603 31,892
10/31/2006 22,988 21,667 33,516
11/30/2006 23,524 22,171 34,471
12/31/2006 23,797 22,429 34,772
Average Annual Total Returns -- December 31, 2006
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION/6/
CLASS A (Inception 12/31/96)
Net Asset Value/1/ 18.09% 7.55% 9.06% --
With Maximum Sales Charge/2/ 11.30 6.27 8.42 --
CLASS B (Inception 12/31/96)
Net Asset Value/1/ 17.24 6.74 8.24 --
With CDSC/3/ 12.24 6.43 8.24 --
CLASS C (Inception 12/31/96)
Net Asset Value/1/ 17.23 6.75 8.25 --
With CDSC/3/ 16.23 6.75 8.25 --
CLASS Y (Inception 8/31/06)
Net Asset Value/1/ -- -- -- 9.94%
- -------------------------------------------------------------------------
SINCE
CLASS Y
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEAR INCEPTION/7/
Russell 2000 Value Index/4/ 23.48% 15.37% 13.27% 10.09%
Morningstar Small Blend Fund Avg./5/ 15.06 11.72 11.24 9.19
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. Class Y shares are only available to
certain investors, as outlined in the prospectus.
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 12/31/06 12/31/05
- -----------------------------------------------------------
Common Stocks 93.8 95.1
- -----------------------------------------------------------
Investment Companies 2.7 --
- -----------------------------------------------------------
Short-Term Investments and Other 3.5 4.9
- -----------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/06 12/31/05
- -----------------------------------------------------------
iShares Russell 2000 Value Index Fund 2.7 4.6
- -----------------------------------------------------------
Alliant Techsystems, Inc. 2.5 2.1
- -----------------------------------------------------------
Universal Compression Holdings, Inc. 2.2 2.9
- -----------------------------------------------------------
Triarc Cos., Inc. 2.1 1.6
- -----------------------------------------------------------
Affiliated Managers Group, Inc. 2.1 --
- -----------------------------------------------------------
Waste Connections, Inc. 2.1 1.9
- -----------------------------------------------------------
Lennox International, Inc. 2.0 --
- -----------------------------------------------------------
Pediatrix Medical Group, Inc. 2.0 2.5
- -----------------------------------------------------------
Arena Resources, Inc. 1.9 --
- -----------------------------------------------------------
Healthcare Services Group, Inc. 1.8 1.3
- -----------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
- -----------------------------------------------------------
Retail 10.4 4.6
- -----------------------------------------------------------
Commercial Services 6.1 9.0
- -----------------------------------------------------------
Diversified Financial Services 5.6 4.6
- -----------------------------------------------------------
Health Care--Services 5.4 5.8
- -----------------------------------------------------------
Aerospace & Defense 4.9 7.4
- -----------------------------------------------------------
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/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 9/1/06.
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
- --------------------------------------------------------------------------------
All the major stock market indexes performed well in 2006, but value-oriented
investors once again out-performed those who focus on growth, and small-cap
stocks beat large caps. Westpeak Capital Growth Fund provided a total return of
10.84% based on the net asset value of Class A shares. It outperformed its
benchmark, the Russell 1000 Growth Index, which returned 9.07%, and came out
ahead of its peers, measured by Morningstar's Large Growth category, which
averaged 6.93%. Our bias for this fund is that we seek attractively valued
growth stocks, and we think this approach gave the fund its competitive edge.
SECTOR STRENGTH SHIFTED DURING THE YEAR
Stock prices got off to a strong start in 2006, but fell off in May and June.
The rally later resumed when it appeared that the Federal Reserve Board might
be finished raising short-term interest rates, at least for this cycle.
Utilities, including telephones, were the best performers. Energy and basic
industries were also dominant early in the year, but retreated as prices of oil
and other commodities fell. Freight and railroads were strong early in the year
but did relatively poorly for the remainder of the year. Banks and other
financial services companies were weak early in the year, but performed well
later in 2006.
SEVERAL OF THE FUND'S STOCKS WERE ESPECIALLY STRONG
One of our best performers during the year was Merck. Negative publicity
surrounding its anti-arthritic drug, Vioxx, had hurt the stock of this giant
pharmaceutical company in 2004. We entered 2006 with a relatively small
position in Merck, and added to it early in the year because we believed it was
attractively valued. The stock price rose in February and March and we later
trimmed the position, but we continue to hold it.
Another strong performer was Goldman Sachs. We bought the stock in March,
attracted by the company's relatively low price-earnings ratio. The firm had a
profitable year, reflecting its participation in the merger and acquisitions
markets and its successes in Asia. Toward the end of the year, investors'
growing perception that the Fed may be finished raising interest rates gave the
stock an additional boost. We believe Goldman Sachs still has upward potential
and it remains in the portfolio.
Boeing is another of the highest-rated stocks in our universe. We began buying
it in 2005, trimming and adding more shares at intervals. The stock rallied
sharply in 2006 as Boeing benefited from some problems at its biggest
competitor.
SOME STOCKS PROVED DISAPPOINTING
We entered 2006 with a small position in Intel and added to it early in the
year, buying on weakness as the price declined. However, even though consumer
spending was stronger than most analysts had expected, Intel's earnings
continued to lag expectations. We sold some of the stock in July and closed out
the position in December.
Sunoco was another disappointment. We continue to like this world leader in oil
refining services, although we apparently have more faith in the company than
many investors. We trimmed the position early in the year but continued to hold
it even after September, when analyst downgrades caused shares to decline
further. Based on our perception of their long-term potential, we believe
shares of some of the world's strongest energy companies, including Sunoco, are
under-valued.
WESTPEAK IS NOT THE "GROWTHIEST" OF GROWTH FUND MANAGERS
By definition, growth investors look for companies with above-average growth
potential, but we strive to avoid over-paying for that potential. The equity
markets have enjoyed several years of positive performance, and it is natural
to wonder how long it can continue. While we do not look for a banner year in
2007, we believe a value-conscious pursuit of capital growth should reward
long-term investors.
17
WESTPEAK CAPITAL GROWTH FUND
Investment Results through December 31, 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 through December 31, 2006
Russell 1000
Class A Growth
@ M.S.C. Index
Cumulative Cumulative Cumulative
Month End Value Value Value
- ---------- ---------- ---------- ------------
12/31/1996 $10,000 $ 9,425 $10,000
1/31/1997 10,566 9,958 10,701
2/28/1997 10,275 9,685 10,629
3/31/1997 9,508 8,961 10,054
4/30/1997 9,918 9,347 10,721
5/31/1997 10,789 10,169 11,495
6/30/1997 11,090 10,453 11,955
7/31/1997 11,869 11,187 13,012
8/31/1997 11,324 10,673 12,251
9/30/1997 11,666 10,995 12,854
10/31/1997 11,195 10,551 12,379
11/30/1997 11,488 10,828 12,904
12/31/1997 11,724 11,050 13,049
1/31/1998 11,817 11,138 13,439
2/28/1998 12,628 11,902 14,450
3/31/1998 13,193 12,434 15,026
4/30/1998 13,427 12,655 15,234
5/31/1998 13,104 12,350 14,802
6/30/1998 13,785 12,993 15,708
7/31/1998 13,656 12,870 15,604
8/31/1998 11,487 10,827 13,262
9/30/1998 12,176 11,476 14,281
10/31/1998 13,066 12,315 15,429
11/30/1998 13,850 13,054 16,603
12/31/1998 15,130 14,260 18,100
1/31/1999 15,891 14,978 19,162
2/28/1999 14,998 14,136 18,287
3/31/1999 15,328 14,447 19,250
4/30/1999 15,629 14,730 19,275
5/31/1999 15,343 14,460 18,682
6/30/1999 16,156 15,227 19,991
7/31/1999 15,797 14,889 19,356
8/31/1999 15,936 15,020 19,672
9/30/1999 15,703 14,801 19,259
10/31/1999 16,798 15,832 20,713
11/30/1999 17,297 16,302 21,831
12/31/1999 18,874 17,789 24,101
1/31/2000 17,810 16,786 22,971
2/29/2000 18,553 17,486 24,094
3/31/2000 20,039 18,886 25,819
4/30/2000 19,443 18,325 24,590
5/31/2000 18,535 17,470 23,352
6/30/2000 19,757 18,621 25,122
7/31/2000 19,245 18,139 24,074
8/31/2000 20,750 19,557 26,254
9/30/2000 18,833 17,750 23,771
10/31/2000 18,179 17,134 22,646
11/30/2000 15,727 14,823 19,308
12/31/2000 15,188 14,314 18,697
1/31/2001 15,915 15,000 19,988
2/28/2001 13,754 12,963 16,595
3/31/2001 12,471 11,753 14,789
4/30/2001 14,157 13,343 16,660
5/31/2001 13,995 13,190 16,414
6/30/2001 13,777 12,985 16,034
7/31/2001 13,049 12,299 15,634
8/31/2001 11,999 11,309 14,355
9/30/2001 10,767 10,148 12,922
10/31/2001 11,262 10,614 13,600
11/30/2001 12,242 11,538 14,906
12/31/2001 12,080 11,386 14,878
1/31/2002 12,029 11,338 14,615
2/28/2002 11,594 10,927 14,009
3/31/2002 11,989 11,300 14,493
4/30/2002 11,321 10,670 13,311
5/31/2002 11,078 10,441 12,989
6/30/2002 10,166 9,582 11,787
7/31/2002 9,376 8,837 11,139
8/31/2002 9,387 8,847 11,172
9/30/2002 8,395 7,912 10,013
10/31/2002 9,002 8,485 10,932
11/30/2002 9,296 8,761 11,526
12/31/2002 8,688 8,188 10,730
1/31/2003 8,465 7,979 10,469
2/28/2003 8,506 8,017 10,421
3/31/2003 8,678 8,179 10,615
4/30/2003 9,184 8,656 11,400
5/31/2003 9,690 9,133 11,969
6/30/2003 9,781 9,219 12,134
7/31/2003 9,913 9,343 12,436
8/31/2003 10,035 9,458 12,745
9/30/2003 10,075 9,496 12,609
10/31/2003 10,561 9,953 13,317
11/30/2003 10,682 10,068 13,456
12/31/2003 11,006 10,373 13,922
1/31/2004 11,168 10,525 14,206
2/29/2004 11,168 10,525 14,296
3/31/2004 10,965 10,335 14,031
4/30/2004 10,722 10,105 13,868
5/31/2004 10,914 10,286 14,126
6/30/2004 11,056 10,420 14,303
7/31/2004 10,549 9,943 13,494
8/31/2004 10,539 9,933 13,428
9/30/2004 10,600 9,991 13,555
10/31/2004 10,843 10,219 13,767
11/30/2004 11,248 10,601 14,240
12/31/2004 11,572 10,907 14,799
1/31/2005 11,238 10,592 14,305
2/28/2005 11,329 10,677 14,457
3/31/2005 11,025 10,391 14,194
4/30/2005 10,783 10,163 13,924
5/31/2005 11,370 10,716 14,597
6/30/2005 11,512 10,850 14,543
7/31/2005 12,100 11,404 15,254
8/31/2005 11,877 11,194 15,058
9/30/2005 11,917 11,232 15,127
10/31/2005 11,604 10,937 14,980
11/30/2005 12,131 11,433 15,626
12/31/2005 11,958 11,271 15,577
1/31/2006 12,353 11,643 15,851
2/28/2006 12,333 11,624 15,826
3/31/2006 12,596 11,872 16,059
4/30/2006 12,606 11,881 16,038
5/31/2006 12,069 11,375 15,494
6/30/2006 12,129 11,432 15,433
7/31/2006 11,866 11,184 15,139
8/31/2006 12,099 11,403 15,611
9/30/2006 12,444 11,728 16,040
10/31/2006 12,859 12,120 16,604
11/30/2006 13,244 12,482 16,934
12/31/2006 13,254 12,492 16,991
Average Annual Total Returns -- December 31, 2006
1 YEAR/6/ 5 YEARS/6/ 10 YEARS/6/
CLASS A (Inception 8/3/92)
Net Asset Value/1/ 10.84% 1.87% 2.86%
With Maximum Sales Charge/2/ 4.47 0.67 2.25
CLASS B (Inception 9/13/93)
Net Asset Value/1/ 9.91 1.09 2.04
With CDSC/3/ 4.91 0.70 2.04
CLASS C (Inception 12/30/94)
Net Asset Value/1/ 9.93 1.07 2.03
With CDSC/3/ 8.93 1.07 2.03
- ----------------------------------------------------------------------
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS
Russell 1000 Growth Index/4/ 9.07% 2.69% 5.44%
Morningstar Large Growth Fund Avg./5/ 6.93 2.88 5.88
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 12/31/06 12/31/05
- ------------------------------------------------------
Common Stocks 99.4 99.1
- ------------------------------------------------------
Short-Term Investments and Other 0.6 0.9
- ------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/06 12/31/05
- ------------------------------------------------------
Cisco Systems, Inc. 5.4 2.7
- ------------------------------------------------------
General Electric Co. 4.3 2.9
- ------------------------------------------------------
Hewlett-Packard Co. 4.1 --
- ------------------------------------------------------
Boeing Co. (The) 3.9 2.9
- ------------------------------------------------------
Goldman Sachs Group, Inc. 3.8 --
- ------------------------------------------------------
Amgen, Inc. 3.3 3.1
- ------------------------------------------------------
ExxonMobil Corp. 3.3 --
- ------------------------------------------------------
McGraw-Hill Cos., Inc. (The) 3.2 --
- ------------------------------------------------------
American Express Co. 3.1 2.9
- ------------------------------------------------------
Microsoft Corp. 3.0 5.7
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
- ------------------------------------------------------
Retail 17.0 4.1
- ------------------------------------------------------
Diversified Financial Services 6.9 6.7
- ------------------------------------------------------
Aerospace & Defense 6.9 4.2
- ------------------------------------------------------
Oil & Gas 6.5 4.6
- ------------------------------------------------------
Computers 6.3 5.5
- ------------------------------------------------------
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 that measures the
performance of those Russell 1000 companies 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 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 July 1, 2006 through December 31, 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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,039.30 $5.65
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.66 $5.60
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,035.60 $9.49
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,015.88 $9.40
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,034.60 $9.54
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,015.83 $9.45
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,041.80 $4.37
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.92 $4.33
*Expenses are equal to the fund's annualized expense ratio: 1.10%, 1.85%, 1.86%
and 0.85% 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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,149.40 $7.58
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.15 $7.12
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,144.90 $11.62
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.37 $10.92
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,144.90 $11.62
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.37 $10.92
*Expenses are equal to the fund's annualized expense ratio: 1.40%, 2.15% and
2.15% 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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,128.10 $7.40
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.25 $7.02
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,123.30 $11.40
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.47 $10.82
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,123.30 $11.40
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.47 $10.82
*Expenses are equal to the fund's annualized expense ratio: 1.38%, 2.13% and
2.13% 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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,154.30 $7.06
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.65 $6.61
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,150.30 $11.11
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.87 $10.41
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,150.50 $11.11
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.87 $10.41
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,157.60 $4.19
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,021.32 $3.92
*Expenses are equal to the fund's annualized expense ratio (after
waiver/reimbursement): 1.30%, 2.05%, 2.05% and 0.77% 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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,085.70 $7.20
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.30 $6.97
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,082.00 $11.13
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.52 $10.76
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,081.90 $11.12
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.52 $10.76
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,089.10 $4.69
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.72 $4.53
*Expenses are equal to the fund's annualized expense ratio: 1.37%, 2.12%, 2.12%
and 0.89% 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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,145.70 $6.98
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.70 $6.56
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,141.50 $11.01
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.92 $10.36
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,141.50 $11.01
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.92 $10.36
*Expenses are equal to the fund's annualized expense ratio: 1.29%, 2.04% and
2.04% 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 7/1/2006/1/ 12/31/2006 7/1/2006 - 12/31/2006/1/
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,083.50 $7.88
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.64 $7.63
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,079.40 $11.90
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.76 $11.52
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,079.30 $11.84
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.81 $11.47
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,099.40 $4.74
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.20 $4.54
/1/Class Y commenced operations on August 31, 2006.
*Expenses are equal to the fund's annualized expense ratio (after
waiver/reimbursement): 1.50%, 2.27%, 2.26% and 1.35% 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, or from
commencement of operations for Class Y, 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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,092.60 $7.91
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.64 $7.63
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,087.40 $11.84
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.86 $11.42
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,087.50 $11.84
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.86 $11.42
*Expenses are equal to the fund's annualized expense ratio (after
waiver/reimbursement): 1.50%, 2.25% and 2.25% 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
CGM ADVISOR TARGETED EQUITY FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- -------------------------------------------------------------------------------
Common Stocks -- 99.0% of Net Assets
Aerospace & Defense -- 5.1%
425,000 Boeing Co .(The) $ 37,757,000
---------------
Airlines -- 4.6%
420,000 Ryanair Holdings PLC, Sponsored ADR(b)(c) 34,230,000
---------------
Auto Manufacturers -- 7.0%
385,000 Toyota Motor Corp., Sponsored ADR(c) 51,709,350
---------------
Banks -- 10.1%
690,000 Bank of America Corp. 36,839,100
680,000 Citigroup, Inc. 37,876,000
---------------
74,715,100
---------------
Cosmetics & Personal Care -- 4.2%
490,000 Procter & Gamble Co. 31,492,300
---------------
Diversified Financial Services -- 22.0%
505,000 Lehman Brothers Holdings, Inc. 39,450,600
380,000 MasterCard, Inc., Class A(c) 37,426,200
500,000 Merrill Lynch & Co., Inc. 46,550,000
495,000 Morgan Stanley(c) 40,307,850
---------------
163,734,650
---------------
Insurance -- 3.7%
380,000 American International Group, Inc. 27,230,800
---------------
Machinery -- Diversified -- 5.1%
400,000 Deere & Co. 38,028,000
---------------
Oil & Gas Services -- 11.5%
260,000 Baker Hughes, Inc. 19,411,600
410,000 ConocoPhillips 29,499,500
580,000 Schlumberger, Ltd. 36,632,800
---------------
85,543,900
---------------
Restaurants -- 5.0%
840,000 McDonald's Corp. 37,237,200
---------------
Retail -- 5.4%
520,000 J.C. Penney Co., Inc. 40,227,200
---------------
Technology -- 4.9%
1,333,000 Cisco Systems, Inc.(b) 36,430,890
---------------
Telecommunications -- 10.4%
840,000 America Movil SA de C.V., Series L, ADR 37,984,800
1,110,000 AT&T, Inc.(c) 39,682,500
---------------
77,667,300
---------------
Total Common Stocks (Identified Cost $674,945,990) 736,003,690
---------------
Principal
Amount/
Shares Description Value (+)
- ------------------------------------------------------------------------------------------------------
Short-Term Investments -- 16.4%
$ 14,255,000 American Express Credit Corp.,
5.260%, due 1/02/2007 $ 14,255,000
107,341,167 State Street Securities Lending Quality Trust(d) 107,341,167
---------------
Total Short-Term Investments (Identified Cost $121,596,167) 121,596,167
---------------
Total Investments -- 115.4%
(Identified Cost $796,542,157)(a) 857,599,857
Other assets less liabilities -- (15.4)% (114,268,474)
---------------
Total Net Assets -- 100% $ 743,331,383
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information :
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $796,542,157 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 $ 65,757,727
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (4,700,027)
---------------
Net unrealized appreciation $ 61,057,700
===============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
(d) Represents investment of securities lending collateral.
ADR An American Depositary Receipt is a certificate issued by a custodian bank representing
the right to receive securities of the foreign issuer described. The values of ADR's are
significantly influenced by trading on exchanges not located in the United States.
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Diversified Financial Services 22.0%
Oil & Gas Services 11.5
Telecommunications 10.4
Banks 10.1
Auto Manufacturers 7.0
Retail 5.4
Machinery -- Diversified 5.1
Aerospace & Defense 5.1
Restaurants 5.0
Technology 4.9
Airlines 4.6
Cosmetics & Personal Care 4.2
Insurance 3.7
See accompanying notes to financial statements.
25
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- -------------------------------------------------------------------------------------
Common Stocks -- 99.1% of Net Assets
Australia -- 2.2%
17,953 Rio Tinto, Ltd.(c) $ 1,045,203
67,419 Westpac Banking Corp. 1,286,366
47,739 Woodside Petroleum, Ltd. 1,430,206
---------------
3,761,775
---------------
Austria -- 0.7%
15,843 Erste Bank Der Oesterreichischen Sparkassen AG 1,213,057
---------------
Belgium -- 0.6%
14,629 InBev NV 962,567
---------------
Brazil -- 3.1%
17,900 Aracruz Celulose SA, Sponsored ADR(c) 1,096,196
20,400 Cia Energetica de Minas Gerais, Sponsored ADR(c) 983,280
46,800 Cia Vale do Rio Doce, Sponsored ADR 1,228,500
19,259 Petroleo Brasileiro SA, ADR 1,983,484
---------------
5,291,460
---------------
Canada -- 3.2%
28,438 Cameco Corp. 1,150,317
12,630 Celestica, Inc.(b) 98,640
18,400 IGM Financial, Inc. 774,720
20,000 Loblaw Cos., Ltd. 836,771
44,000 Manulife Financial Corp.(c) 1,486,760
13,528 Suncor Energy, Inc. 1,067,495
---------------
5,414,703
---------------
China -- 2.0%
1,408,000 China Petroleum & Chemical Corp., Class H 1,304,374
896,000 Datang International Power Generation Co., Ltd., Class H 932,233
353,000 Foxconn International Holdings, Ltd.(b) 1,158,118
---------------
3,394,725
---------------
Denmark -- 0.9%
35,600 Vestas Wind Systems A/S(b)(c) 1,498,213
---------------
Finland -- 1.0%
36,480 Nokia Oyj 740,803
46,380 Nokian Renkaat OYJ(c) 947,281
---------------
1,688,084
---------------
France -- 8.7%
27,920 Axa(c) 1,125,498
11,830 BNP Paribas(c) 1,286,970
26,780 Carrefour SA(c) 1,620,852
19,500 Credit Agricole SA(c) 817,402
14,069 Electricite de France(c) 1,023,005
50,700 France Telecom SA(c) 1,398,824
10,677 Iliad SA(c) 922,794
8,975 LVMH Moet Hennessy Louis Vuitton SA(c) 944,129
7,130 Schneider Electric SA(c) 789,092
17,740 Suez SA(c) 916,869
17,360 Total SA(c) 1,249,185
19,000 Total SA, Sponsored ADR 1,366,480
34,700 Vivendi(c) 1,353,454
---------------
14,814,554
---------------
Germany -- 3.2%
33,896 Adidas AG 1,688,202
22,000 Commerzbank AG 831,913
9,144 RWE AG(c) 1,002,822
17,500 SAP AG, Sponsored ADR 929,250
7,166 Wacker Chemie AG(b) 929,938
---------------
5,382,125
---------------
Shares Description Value (+)
- --------------------------------------------------------------------------------
Greece -- 1.1%
25,300 Folli-Follie SA $ 996,494
19,304 National Bank of Greece SA 885,439
---------------
1,881,933
---------------
Hong Kong -- 2.7%
410,000 Cosco Pacific, Ltd. 954,948
2,204,410 Denway Motors, Ltd. 892,287
177,400 Esprit Holdings, Ltd. 1,980,513
1,193,730 Johnson Electric Holdings, Ltd. 816,742
---------------
4,644,490
---------------
India -- 1.8%
15,500 HDFC Bank, Ltd. ADR(c) 1,169,940
22,800 Infosys Technologies, Ltd., Sponsored ADR(c) 1,243,968
34,800 Patni Computer Systems, Ltd. ADR(c) 709,224
---------------
3,123,132
---------------
Indonesia -- 0.5%
2,500,000 PT Bank Mandiri 810,101
---------------
Ireland -- 0.6%
51,797 Anglo Irish Bank Corp. PLC 1,066,422
---------------
Israel -- 1.1%
34,700 Check Point Software Technologies, Ltd.(b) 760,624
33,100 Teva Pharmaceutical Industries, Ltd., Sponsored ADR 1,028,748
---------------
1,789,372
---------------
Italy -- 4.3%
39,920 ENI SpA 1,342,719
104,882 Saipem SpA(c) 2,721,307
362,020 UniCredito Italiano SpA 3,164,690
---------------
7,228,716
---------------
Japan -- 18.3%
88,000 Ajinomoto Co., Inc., ADR 1,163,193
131,000 Bank of Yokohama, Ltd. (The) 1,023,109
24,300 Canon, Inc.(c) 1,368,094
53,000 Chugoku Bank, Ltd. (The) 693,578
43,000 Denso Corp. 1,704,983
21,300 Ibiden Co., Ltd. 1,071,340
216,000 Isuzu Motors, Ltd.(c) 1,009,276
174,000 Joyo Bank, Ltd. (The) 960,209
40,400 JS Group Corp. 849,576
161 KDDI Corp. 1,092,968
52,000 Marui Co., Ltd.(c) 605,413
20,500 Millea Holdings, Inc. 726,075
14,700 Nidec Corp.(c) 1,137,698
5,200 Nintendo Co., Ltd.(c) 1,346,220
76,400 Nissan Motor Co., Ltd. 921,896
19,000 Nitto Denko Corp.(c) 949,126
49,000 Nomura Holdings, Inc.(c) 924,373
56,000 Onward Kashiyama Co., Ltd. 713,904
5,690 ORIX Corp. 1,650,054
230,000 Osaka Gas Co., Ltd.(c) 854,877
53,000 Sharp Corp.(c) 911,286
52,000 Shionogi & Co., Ltd.(c) 1,021,236
8,400 SMC Corp. 1,188,803
61,000 Sumitomo Corp. 913,153
120 Sumitomo Mitsui Financial Group, Inc. 1,228,623
86,000 Sumitomo Trust & Banking Co., Ltd. (The) 900,455
12,700 Takeda Pharmaceutical Co., Ltd. 870,407
47,400 THK Co., Ltd.(c) 1,220,111
14,500 Toyota Motor Corp. 970,441
11,000 Yamada Denki Co., Ltd.(c) 933,695
---------------
30,924,172
---------------
See accompanying notes to financial statements.
26
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- ----------------------------------------------------------------------------------------------
Luxembourg -- 0.6%
15,200 Millicom International Cellular SA(b)(c) $ 936,928
---------------
Mexico -- 1.8%
27,000 Cemex SAB de CV, Sponsored ADR(b) 914,760
8,600 Fomento Economico Mexicano, SA de CV, Sponsored ADR 995,536
25,976 Wal-Mart de Mexico SA de CV, Sponsored ADR, Series V(c) 1,139,048
---------------
3,049,344
---------------
Netherlands -- 2.3%
27,497 ABN AMRO Holding NV 881,518
20,428 ING Groep NV 902,680
29,700 Koninklijke (Royal) Philips Electronics NV 1,116,126
17,300 Royal Numico NV 929,016
---------------
3,829,340
---------------
Republic of Korea -- 2.2%
23,000 Kookmin Bank, Sponsored ADR(b) 1,854,720
1,300 Samsung Electronics Co., Ltd. 852,811
3,066 Samsung Electronics Co., Ltd., GDR, 144A 1,008,714
---------------
3,716,245
---------------
Russia -- 0.8%
33,100 Evraz Group SA, GDR, 144A 850,339
6,060 LUKOIL, Sponsored ADR 529,644
---------------
1,379,983
---------------
Singapore -- 1.9%
150,000 DBS Group Holdings, Ltd. 2,202,146
94,000 Keppel Corp., Ltd. 1,074,768
---------------
3,276,914
---------------
South Africa -- 0.4%
19,800 Sasol, Ltd. 729,055
---------------
Spain -- 3.5%
73,758 Banco Bilbao Vizcaya Argentaria SA 1,772,081
100,816 Banco Santander Central Hispano SA 1,877,309
104,781 Telefonica SA 2,224,582
---------------
5,873,972
---------------
Sweden -- 0.5%
69,500 Eniro AB 916,717
---------------
Switzerland -- 10.4%
70,260 ABB, Ltd. 1,258,184
12,400 Ciba Specialty Chemicals AG 823,234
30,055 Credit Suisse Group 2,095,372
14,530 Holcim, Ltd., ADR 1,328,807
13,600 Lonza Group AG 1,172,249
5,856 Nestle SA 2,077,165
51,541 Novartis AG 2,960,836
8,918 Roche Holding AG 1,595,551
65,900 STMicroelectronics NV(c) 1,216,642
7,612 Syngenta AG(b) 1,414,007
7,471 Synthes, Inc. 888,173
14,040 UBS AG 849,668
---------------
17,679,888
---------------
Taiwan -- 1.2%
430,590 Taiwan Semiconductor Manufacturing Co., Ltd. 884,079
103,259 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR(c) 1,128,621
---------------
2,012,700
---------------
Thailand -- 0.5%
237,500 Bangkok Bank PCL 796,657
---------------
Shares Description Value (+)
- -----------------------------------------------------------------------------------------------
United Kingdom -- 17.0%
496,085 ARM Holdings PLC $ 1,216,680
17,000 AstraZeneca PLC 911,063
111,740 Barclays PLC 1,595,436
40,000 BHP Billiton PLC 732,525
236,724 British Sky Broadcasting Group PLC 2,420,195
20,884 Carnival PLC 1,055,004
145,629 Cattles PLC 1,249,113
42,958 GlaxoSmithKline PLC 1,130,700
96,152 HBOS PLC 2,125,597
65,200 HSBC Holdings PLC 1,192,465
194,477 Kingfisher PLC 906,785
141,000 Man Group PLC 1,439,211
136,603 Michael Page International PLC 1,206,493
281,020 Old Mutual PLC 956,442
116,755 Prudential PLC 1,595,144
20,484 Reckitt Benckiser PLC 934,429
142,000 Reuters Group PLC 1,234,334
24,407 Royal Bank of Scotland Group PLC 949,885
384,270 Signet Group PLC 895,437
241,870 Smith & Nephew PLC 2,523,075
122,476 Tesco PLC 967,866
544,183 Vodafone Group PLC 1,502,867
---------------
28,740,746
---------------
Total Common Stocks (Identified Cost $128,438,127) 167,828,090
---------------
Shares/
Principal
Amount
- -----------------------------------------------------------------------------------------------
Short-Term Investments -- 22.7%
37,301,240 State Street Securities Lending Quality Trust(d) 37,301,240
$ 1,199,826 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$1,200,392 on 1/02/2007, collateralized by $970,000 U.S.
Treasury Bond, 7.125% due 2/15/2023 valued at $1,230,312
including accrued interest 1,199,826
---------------
Total Short-Term Investments (Identified Cost $38,501,066) 38,501,066
---------------
Total Investments -- 121.8%
(Identified Cost $166,939,193)(a) 206,329,156
Other assets less liabilities--(21.8)% (36,957,217)
---------------
Net Assets -- 100% $ 169,371,939
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $169,028,170 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 $ 38,671,591
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (1,370,605)
---------------
Net unrealized appreciation $ 37,300,986
===============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
(d) Represents investment of securities lending collateral.
See accompanying notes to financial statements.
27
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
ADR/GDR An American Depositary Receipt or Global Depositary Receipt is a
certificate issued by a custodian 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 period
end, the value of these amounted to $1,859,053 or 1.1% of net
assets.
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Banks 20.5%
Oil & Gas 6.5
Pharmaceuticals 5.6
Telecommunications 5.4
Food 4.5
Diversified Financial Services 4.1
Insurance 4.0
Semiconductors 3.7
Media 3.5
Retail 3.2
Chemicals 3.1
Electrical Components & Equipment 2.4
Electric 2.3
Auto Manufacturers 2.2
Hand & Machine Tools 2.1
Health Care -- Products 2.0
Other, less than 2% each 24.0
See accompanying notes to financial statements.
28
HARRIS ASSOCIATES FOCUSED VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- ------------------------------------------------------------------------
Common Stocks -- 100.2% of Net Assets
Aerospace & Defense -- 2.7%
117,400 Raytheon Co. $ 6,198,720
---------------
Apparel -- 4.9%
257,600 Liz Claiborne, Inc. 11,195,296
---------------
Apparel Retailers -- 5.0%
363,600 Timberland Co.(b) 11,482,488
---------------
Beverages -- 3.1%
92,000 Molson Coors Brewing Co. 7,032,480
---------------
Chemicals -- 3.1%
142,700 International Flavors & Fragrances, Inc.(c) 7,015,132
---------------
Cosmetics & Personal Care -- 3.5%
193,700 Estee Lauder Cos., Inc. (The), Class A 7,906,834
---------------
Distribution & Wholesale -- 5.0%
162,900 CDW Corp. 11,455,128
---------------
Diversified Financial Services -- 3.0%
85,800 Morgan Stanley 6,986,694
---------------
Hand & Machine Tools -- 1.3%
36,000 Black & Decker Corp. (The) 2,878,920
---------------
Health Care -- Products -- 3.9%
173,100 Bausch & Lomb, Inc.(c) 9,011,586
---------------
Health Care -- Services -- 2.3%
754,600 Tenet Healthcare Corp.(b)(c) 5,259,562
---------------
Home Builders -- 3.4%
293,100 D.R. Horton, Inc. 7,764,219
---------------
Insurance -- 4.7%
367,700 Conseco, Inc.(b) 7,346,646
49,300 PartnerRe, Ltd.(c) 3,501,779
---------------
10,848,425
---------------
Leisure Time -- 1.5%
47,300 Harley-Davidson, Inc. 3,333,231
---------------
Lodging & Gaming -- 2.0%
55,800 Harrah's Entertainment, Inc. 4,615,776
---------------
Manufacturing -- 3.7%
276,400 Tyco International, Ltd. 8,402,560
---------------
Media -- 14.1%
260,700 Cablevision Systems Corp., Class A 7,424,736
504,220 Discovery Holding Co.(b) 8,112,900
192,400 EW Scripps Co.(c) 9,608,456
327,900 Time Warner, Inc. 7,141,662
---------------
32,287,754
---------------
Oil & Gas -- 1.1%
54,000 EnCana Corp. 2,481,300
---------------
Pharmaceuticals -- 2.9%
173,500 Omnicare, Inc.(c) 6,702,305
---------------
Restaurants -- 9.0%
231,700 McDonald's Corp. 10,271,261
176,200 Yum! Brands, Inc. 10,360,560
---------------
20,631,821
---------------
Savings & Loans - 8.1%
399,315 Sovereign Bancorp, Inc. 10,138,608
183,300 Washington Mutual, Inc. 8,338,317
---------------
18,476,925
---------------
Shares Description Value (+)
- ----------------------------------------------------------------------------------------------
Semiconductors -- 11.9%
561,000 Intel Corp. $ 11,360,250
133,800 International Rectifier Corp.(b) 5,155,314
470,100 National Semiconductor Corp. 10,671,270
---------------
27,186,834
---------------
Total Common Stocks (Identified Cost $193,888,141) 229,153,990
---------------
Shares
- ----------------------------------------------------------------------------------------------
Short-Term Investments -- 14.6%
33,336,293 State Street Securities Lending Quality Trust(d)
(Identified Cost $33,336,293) 33,336,293
---------------
Total Investments -- 114.8%
(Identified Cost $227,224,434)(a) 262,490,283
Other assets less liabilities -- (14.8)% (33,903,964)
---------------
Total Net Assets -- 100% $ 228,586,319
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the unrealized appreciation on investments
based on cost of $227,235,315 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 $ 38,677,691
Aggregate gross unrealized depreciation for
all investments in which there is an excess
of tax cost over value (3,422,723)
---------------
Net unrealized appreciation $ 35,254,968
===============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
(d) Represents investment of securities lending collateral.
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Media 14.1%
Semiconductors 11.9
Restaurants 9.0
Savings & Loans 8.1
Apparel Retailers 5.0
Distribution & Wholesale 5.0
Apparel 4.9
Insurance 4.7
Health Care -- Products 3.9
Manufacturing 3.7
Cosmetics & Personal Care 3.5
Home Builders 3.4
Beverages 3.1
Chemicals 3.1
Diversified Financial Services 3.0
Pharmaceuticals 2.9
Aerospace & Defense 2.7
Health Care -- Services 2.3
Lodging & Gaming 2.0
Others, less than 2% each 3.9
See accompanying notes to financial statements.
29
HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- --------------------------------------------------------------------------
Common Stocks -- 97.8% of Net Assets
Aerospace & Defense -- 4.5%
87,200 Honeywell International, Inc. $ 3,944,928
155,000 Raytheon Co. 8,184,000
---------------
12,128,928
---------------
Athletic Footwear -- 1.7%
47,600 NIKE, Inc., Class B 4,713,828
---------------
Banks -- 2.8%
119,700 Mellon Financial Corp. 5,045,355
71,200 U.S. Bancorp 2,576,728
---------------
7,622,083
---------------
Beverages -- 2.1%
58,900 Coca-Cola Co. (The) 2,841,925
34,300 Diageo PLC, Sponsored ADR 2,720,333
---------------
5,562,258
---------------
Chemicals -- 1.9%
129,700 Dow Chemical Co. (The) 5,180,218
---------------
Computers -- 10.4%
462,100 Dell, Inc.(b) 11,594,089
261,500 Hewlett-Packard Co. 10,771,185
1,081,800 Sun Microsystems, Inc.(b) 5,863,356
---------------
28,228,630
---------------
Diversified Financial Services -- 13.8%
129,900 American Express Co. 7,881,033
143,300 Citigroup, Inc. 7,981,810
212,000 JPMorgan Chase & Co. 10,239,600
136,600 Morgan Stanley 11,123,338
---------------
37,225,781
---------------
Health Care -- Products -- 1.3%
68,000 Medtronic, Inc. 3,638,680
---------------
Home Builders -- 1.8%
39,900 Lennar Corp., Class A 2,093,154
87,200 Pulte Homes, Inc.(c) 2,888,064
---------------
4,981,218
---------------
Household Products & Wares -- 2.0%
63,200 Fortune Brands, Inc. 5,396,648
---------------
Insurance -- 1.9%
54,300 Aflac, Inc. 2,497,800
114,500 Progressive Corp. 2,773,190
---------------
5,270,990
---------------
Leisure Time -- 5.8%
188,000 Carnival Corp. 9,221,400
92,200 Harley-Davidson, Inc.(c) 6,497,334
---------------
15,718,734
---------------
Manufacturing -- 4.2%
370,100 Tyco International, Ltd. 11,251,040
---------------
Media -- 12.8%
45,510 Liberty Media Corp. - Capital, Series A(b) 4,459,070
550,400 Time Warner, Inc. 11,987,712
282,200 Viacom, Inc., Class B(b) 11,578,666
196,700 Walt Disney Co. (The) 6,740,909
---------------
34,766,357
---------------
Shares Description Value (+)
- -----------------------------------------------------------------------------------------------
Office & Business Equipment -- 1.0%
164,500 Xerox Corp.(b) $ 2,788,275
---------------
Pharmaceuticals -- 3.0%
47,100 Abbott Laboratories 2,294,241
248,900 Schering-Plough Corp. 5,883,996
---------------
8,178,237
---------------
Restaurants -- 5.3%
320,800 McDonald's Corp. 14,221,064
---------------
Retail -- 6.9%
200,200 Home Depot, Inc. 8,040,032
71,800 Limited Brands, Inc. 2,077,892
184,500 Wal-Mart Stores, Inc. 8,520,210
---------------
18,638,134
---------------
Savings & Loans -- 3.3%
197,500 Washington Mutual, Inc. 8,984,275
---------------
Semiconductors -- 6.1%
530,100 Intel Corp. 10,734,525
196,200 Texas Instruments, Inc. 5,650,560
---------------
16,385,085
---------------
Telecommunications -- 1.0%
140,000 Sprint Nextel Corp. 2,644,600
---------------
Transportation -- 4.2%
122,400 Union Pacific Corp. 11,263,248
---------------
Total Common Stocks (Identified Cost $210,769,135) 264,788,311
---------------
Shares/
Principal
Amount
- -----------------------------------------------------------------------------------------------
Short-Term Investments -- 3.0%
1,558,900 State Street Securities Lending Quality Trust(d) 1,558,900
$ 6,664,902 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$6,668,050 on 1/2/2007, collateralized by $5,360,000 U.S.
Treasury Note, 7.125% due 2/15/2023 valued at $6,798,426
including accrued interest 6,664,902
---------------
Total Short-Term Investments (Identified Cost $8,223,802) 8,223,802
---------------
Total Investments -- 100.8%
(Identified Cost $218,992,937)(a) 273,012,113
Other assets less liabilities -- (0.8)% (2,258,670)
---------------
Total Net Assets -- 100% $ 270,753,443
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $219,055,011 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. $ 58,779,493
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value. (4,822,391)
---------------
Net unrealized appreciation $ 53,957,102
===============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
See accompanying notes to financial statements.
30
HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
(d) Represents investment of securities lending collateral.
ADR An American Depositary Receipt is a certificate issued by a custodian 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 December 31, 2006 as a Percentage of Net Assets (unaudited)
Diversified Financial Services 13.8%
Media 12.8
Computers 10.4
Retail 6.9
Semiconductors 6.1
Leisure Time 5.8
Restaurants 5.3
Aerospace & Defense 4.5
Transportation 4.2
Manufacturing 4.2
Savings & Loans 3.3
Pharmaceuticals 3.0
Banks 2.8
Beverages 2.1
Household Products & Wares 2.0
Other, less than 2% each 10.6
See accompanying notes to financial statements.
31
IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- ------------------------------------------------------------------------
Common Stocks -- 99.0% of Net Assets
Advertising -- 0.3%
2,200 Interpublic Group of Co., Inc. (The)(b)(c) $ 26,928
29,700 Lamar Advertising Co., Class A(b) 1,942,083
-------------
1,969,011
-------------
Aerospace & Defense -- 2.3%
58,100 Honeywell International, Inc. 2,628,444
13,300 Lockheed Martin Corp. 1,224,531
103,300 Raytheon Co. 5,454,240
31,000 Rockwell Collins, Inc. 1,961,990
48,850 Spirit Aerosystems Holdings, Inc., Class A(b) 1,635,009
20,600 United Technologies Corp. 1,287,912
-------------
14,192,126
-------------
Apparel -- 1.6%
67,800 Coach, Inc.(b) 2,912,688
45,825 Guess ?, Inc.(b) 2,906,680
81,750 Hanesbrands, Inc.(b) 1,930,935
23,500 Polo Ralph Lauren Corp. 1,825,010
-------------
9,575,313
-------------
Athletic Footwear -- 0.8%
47,300 NIKE, Inc., Class B 4,684,119
-------------
Banks -- 4.3%
42,600 Bank of America Corp. 2,274,414
55,200 BOK Financial Corp. 3,034,896
131,000 Colonial BancGroup, Inc. 3,371,940
95,188 Dearborn Bancorp, Inc.(b) 1,808,567
67,925 East West Bancorp, Inc.(c) 2,405,903
33,650 Greenhill & Co., Inc.(c) 2,483,370
79,600 Mellon Financial Corp. 3,355,140
87,325 Security Bank Corp.(c) 1,992,757
24,900 State Street Corp. 1,679,256
159,500 Superior Bancorp(b)(c) 1,808,730
47,500 U.S. Bancorp 1,719,025
-------------
25,933,998
-------------
Beverages -- 0.9%
39,200 Coca-Cola Co. (The) 1,891,400
23,200 Diageo PLC, Sponsored ADR 1,839,992
23,300 PepsiCo, Inc. 1,457,415
-------------
5,188,807
-------------
Biotechnology -- 1.3%
21,000 Amgen, Inc.(b) 1,434,510
35,400 Celgene Corp.(b) 2,036,562
31,100 Genentech, Inc.(b) 2,523,143
42,800 PDL BioPharma, Inc.(b)(c) 861,992
22,300 Vertex Pharmaceuticals, Inc.(b) 834,466
-------------
7,690,673
-------------
Building Materials -- 1.3%
58,325 Armstrong World Industries, Inc.(b) 2,472,397
177,225 Comfort Systems USA, Inc. 2,240,124
51,100 Texas Industries, Inc.(c) 3,282,153
-------------
7,994,674
-------------
Chemicals -- 2.5%
32,700 Air Products & Chemicals, Inc. 2,298,156
51,775 Airgas, Inc. 2,097,923
141,925 Chemtura Corp. 1,366,738
29,350 Cytec Industries, Inc. 1,658,568
85,200 Dow Chemical Co. (The) 3,402,888
Shares Description Value (+)
- ---------------------------------------------------------------------
Chemicals -- continued
40,875 Ecolab, Inc. $ 1,847,550
42,100 Praxair, Inc.(c) 2,497,793
-------------
15,169,616
-------------
Commercial Services -- 2.3%
16,335 Avis Budget Group, Inc. 354,306
13,625 Corporate Executive Board Co.(c) 1,194,913
110,900 Exponent, Inc.(b)(c) 2,069,394
82,950 Interactive Data Corp. 1,994,118
188,050 Live Nation, Inc.(b)(c) 4,212,320
37,400 Paychex, Inc. 1,478,796
95,375 Rent-A-Center, Inc.(b) 2,814,516
-------------
14,118,363
-------------
Computers -- 4.0%
72,925 Cognizant Technology Solutions Corp.(b) 5,626,893
307,900 Dell, Inc.(b) 7,725,211
174,300 Hewlett-Packard Co. 7,179,417
719,500 Sun Microsystems, Inc.(b) 3,899,690
-------------
24,431,211
-------------
Computers & Peripherals -- 0.2%
22,800 Seagate Technology(c) 604,200
28,300 Western Digital Corp.(b) 579,018
-------------
1,183,218
-------------
Cosmetics & Personal Care -- 0.7%
114,150 Alberto-Culver Co. 2,448,518
29,300 Procter & Gamble Co. 1,883,111
-------------
4,331,629
-------------
Diversified Financial Services -- 9.4%
24,175 Affiliated Managers Group, Inc.(b)(c) 2,541,518
86,600 American Express Co. 5,254,022
119,300 Charles Schwab Corp. (The) 2,307,262
7,875 Chicago Mercantile Exchange Holdings, Inc. 4,014,281
118,800 Citigroup, Inc. 6,617,160
13,800 Franklin Resources, Inc. 1,520,346
8,800 Goldman Sachs Group, Inc. 1,754,280
35,725 Intercontinental Exchange, Inc.(b) 3,854,727
25,550 International Securities Exchange, Inc.(c) 1,195,485
178,900 JPMorgan Chase & Co. 8,640,870
41,300 Lazard, Ltd., Class A(c) 1,955,142
91,000 Morgan Stanley 7,410,130
81,550 Nasdaq Stock Market, Inc.(b) 2,510,925
63,650 National Financial Partners Corp. 2,798,690
43,650 Nuveen Investments, Class A(c) 2,264,562
8,075 Nymex Holdings, Inc.(b)(c) 1,001,381
18,800 NYSE Group, Inc.(b)(c) 1,827,360
-------------
57,468,141
-------------
Electric -- 2.8%
104,350 AES Corp. (The)(b) 2,299,874
53,516 Allete, Inc. 2,490,635
203,775 CMS Energy Corp.(b) 3,403,042
80,475 MDU Resources Group, Inc. 2,063,379
76,600 NRG Energy, Inc.(b)(c) 4,290,366
79,850 Portland General Electric Co.(c) 2,175,913
-------------
16,723,209
-------------
Electrical Components & Equipment -- 1.5%
104,887 AMETEK, Inc. 3,339,602
41,200 Emerson Electric Co. 1,816,508
See accompanying notes to financial statements.
32
IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- -------------------------------------------------------------------------
Electrical Components & Equipment -- continued
58,075 General Cable Corp.(b) $ 2,538,458
37,750 Hubbell, Inc., Class B 1,706,678
-------------
9,401,246
-------------
Electronics -- 2.1%
54,350 Amphenol Corp., Class A(c) 3,374,048
136,525 Avnet, Inc.(b) 3,485,483
43,350 Mettler Toledo International, Inc.(b) 3,418,148
114,575 PerkinElmer, Inc. 2,547,002
-------------
12,824,681
-------------
Engineering & Construction -- 1.2%
8,700 Fluor Corp. 710,355
7,000 Jacobs Engineering Group, Inc.(b) 570,780
48,435 KBR, Inc.(b)(c) 1,267,060
61,900 McDermott International, Inc.(b) 3,148,234
28,375 Washington Group International, Inc.(b) 1,696,541
-------------
7,392,970
-------------
Entertainment -- 0.5%
66,100 International Game Technology 3,053,820
-------------
Environmental Control -- 0.6%
51,500 Nalco Holding Co.(b) 1,053,690
35,350 Stericycle, Inc.(b) 2,668,925
-------------
3,722,615
-------------
Food -- 0.6%
75,850 Spartan Stores, Inc. 1,587,541
172,550 Winn-Dixie Stores, Inc.(b) 2,329,425
-------------
3,916,966
-------------
Forest Products & Paper -- 0.5%
69,688 Potlatch Corp.(c) 3,053,728
-------------
Gas -- 1.0%
46,050 Oneok, Inc. 1,985,676
141,850 UGI Corp. 3,869,668
-------------
5,855,344
-------------
Health Care - Capital Equipment -- 0.3%
40,200 Thermo Fisher Scientific, Inc.(b) 1,820,658
-------------
Health Care - Products -- 2.1%
15,900 Alcon, Inc. 1,777,143
53,525 Beckman Coulter, Inc.(c) 3,200,795
23,775 C.R. Bard, Inc. 1,972,612
46,775 Hologic, Inc.(b) 2,211,522
5,900 Intuitive Surgical, Inc.(b)(c) 565,810
45,000 Medtronic, Inc. 2,407,950
12,100 Varian Medical Systems, Inc.(b) 575,597
-------------
12,711,429
-------------
Health Care - Services -- 0.6%
10,600 Covance, Inc.(b) 624,446
8,800 Laboratory Corp. of America Holdings(b)(c) 646,536
9,300 Quest Diagnostics, Inc. 492,900
41,175 Triad Hospitals, Inc.(b) 1,722,350
-------------
3,486,232
-------------
Home Builders -- 0.8%
26,600 Lennar Corp., Class A(c) 1,395,436
57,700 Pulte Homes, Inc. 1,911,024
44,900 Winnebago Industries(c) 1,477,659
-------------
4,784,119
-------------
Shares Description Value (+)
- ---------------------------------------------------------------------
Household Products & Wares -- 1.6%
57,225 Church & Dwight Co., Inc. $ 2,440,646
42,100 Fortune Brands, Inc. 3,594,919
165,550 Fossil, Inc.(b)(c) 3,738,119
-------------
9,773,684
-------------
Insurance -- 2.9%
36,100 Aflac, Inc. 1,660,600
243,525 AmCOMP, Inc.(b) 2,676,340
24,800 American International Group, Inc. 1,777,168
65,125 Assurant, Inc. 3,598,156
25,175 Navigators Group, Inc.(b) 1,212,931
76,500 Progressive Corp. 1,852,830
52,100 Protective Life Corp. 2,474,750
60,600 United Fire & Casualty Co. 2,136,150
-------------
17,388,925
-------------
Internet -- 3.4%
106,200 Akamai Technologies, Inc.(b)(c) 5,641,344
19,200 Ctrip.com International, Ltd., ADR(c) 1,199,616
39,975 F5 Networks, Inc.(b) 2,966,545
5,800 Google, Inc., Class A(b) 2,670,784
131,500 McAfee, Inc.(b) 3,731,970
186,400 NetRatings, Inc.(b)(c) 3,263,864
47,400 Yahoo!, Inc.(b) 1,210,596
-------------
20,684,719
-------------
Iron & Steel -- 0.2%
30,975 Chaparral Steel Co. 1,371,263
-------------
Leisure Time -- 1.7%
125,100 Carnival Corp. 6,136,155
61,400 Harley-Davidson, Inc.(c) 4,326,858
-------------
10,463,013
-------------
Lodging & Gaming -- 1.3%
59,127 Melco PBL Entertainment, Ltd., ADR(b)(c) 1,257,040
135,870 Wyndham Worldwide Corp.(b) 4,350,557
22,475 Wynn Resorts, Ltd.(c) 2,109,279
-------------
7,716,876
-------------
Machinery - Diversified -- 1.0%
79,450 Albany International Corp., Class A 2,614,699
12,000 Textron, Inc. 1,125,240
80,500 Wabtec Corp. 2,445,590
-------------
6,185,529
-------------
Manufacturing -- 2.7%
65,000 Actuant Corp., Class A(c) 3,097,250
122,400 General Electric Co. 4,554,504
42,600 Pall Corp. 1,471,830
246,200 Tyco International, Ltd. 7,484,480
-------------
16,608,064
-------------
Media -- 5.0%
89,850 Idearc, Inc.(b) 2,574,202
30,305 Liberty Media Corp. - Capital, Series A(b) 2,969,284
42,300 Rogers Communications, Inc., Class B 2,521,080
366,400 Time Warner, Inc. 7,980,192
187,900 Viacom, Inc., Class B(b) 7,709,537
189,700 Walt Disney Co. (The) 6,501,019
-------------
30,255,314
-------------
Metal Fabricate & Hardware -- 0.6%
48,100 Precision Castparts Corp. 3,765,268
-------------
See accompanying notes to financial statements.
33
IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- ------------------------------------------------------------------
Metals -- 0.5%
34,775 Allegheny Technologies, Inc.(c) $ 3,153,397
-------------
Mining -- 0.3%
140,300 Yamana Gold, Inc.(c) 1,849,154
-------------
Office & Business Equipment -- 0.3%
109,500 Xerox Corp.(b) 1,856,025
-------------
Office Furnishings -- 0.4%
176,889 Interface, Inc., Class A(b) 2,515,362
-------------
Oil & Gas -- 0.7%
47,175 Delta Petroleum Corp.(b)(c) 1,092,573
55,100 Southwestern Energy Co.(b) 1,931,255
18,300 Transocean, Inc.(b) 1,480,287
-------------
4,504,115
-------------
Oil & Gas Services -- 3.2%
16,200 Baker Hughes, Inc. 1,209,492
10,500 Cameron International Corp.(b)(c) 557,025
28,150 Dril-Quip, Inc.(b) 1,102,354
37,875 FMC Technologies, Inc.(b)(c) 2,334,236
44,800 Grant Prideco, Inc.(b)(c) 1,781,696
37,100 Halliburton Co. 1,151,955
101,150 Helix Energy Solutions Group, Inc.(b) 3,173,075
32,400 National Oilwell Varco, Inc.(b) 1,982,232
25,000 Noble Corp. 1,903,750
21,200 Schlumberger, Ltd. 1,338,992
28,450 Universal Compression Holdings, Inc.(b) 1,767,030
26,600 Weatherford International, Ltd.(b) 1,111,614
-------------
19,413,451
-------------
Pharmaceuticals -- 2.5%
31,400 Abbott Laboratories 1,529,494
22,100 GlaxoSmithKline PLC, ADR 1,165,996
64,025 Hospira, Inc.(b) 2,149,960
39,025 Medicines Co.(b) 1,237,873
35,000 Novartis AG, (CHF) 2,017,850
10,400 Novartis AG, ADR 597,376
6,700 Roche Holding AG, (CHF) 1,201,436
165,900 Schering-Plough Corp. 3,921,876
22,275 Shire PLC, ADR 1,375,704
-------------
15,197,565
-------------
Pipelines -- 0.2%
15,925 Questar Corp. 1,322,571
-------------
Real Estate -- 0.8%
20,850 Jones Lang LaSalle, Inc. 1,921,744
100,662 Realogy Corp.(b)(c) 3,052,072
-------------
4,973,816
-------------
REITs -- Financial Services -- 0.5%
63,850 CBL & Associates Properties, Inc. 2,767,898
-------------
REITs -- Shopping Centers -- 0.6%
62,225 Developers Diversified Realty Corp.(c) 3,917,064
-------------
Restaurants -- 1.9%
213,500 McDonald's Corp. 9,464,455
35,600 Yum! Brands, Inc. 2,093,280
-------------
11,557,735
-------------
Retail -- 5.9%
38,100 American Eagle Outfitters, Inc.(c) 1,189,101
73,825 Applebee's International, Inc.(c) 1,821,263
25,600 Best Buy Co., Inc.(c) 1,259,264
Shares Description Value (+)
- --------------------------------------------------------------------------------------
Retail -- continued
100,675 CEC Entertainment, Inc.(b) $ 4,052,169
47,575 GameStop Corp., Class A(b)(c) 2,621,858
132,400 Home Depot, Inc. 5,317,184
26,000 Kohl's Corp.(b) 1,779,180
71,900 Limited Brands, Inc. 2,080,786
24,200 Nordstrom, Inc. 1,194,028
73,225 Petsmart, Inc. 2,113,273
85,450 Staples, Inc. 2,281,515
71,200 Starbucks Corp.(b) 2,521,904
34,900 Target Corp. 1,991,045
123,200 Wal-Mart Stores, Inc. 5,689,376
-------------
35,911,946
-------------
Savings & Loans -- 1.0%
131,500 Washington Mutual, Inc. 5,981,935
-------------
Semiconductors -- 2.5%
352,900 Intel Corp. 7,146,225
56,425 NVIDIA Corp.(b) 2,088,289
273,025 ON Semiconductor Corp.(b)(c) 2,066,799
130,800 Texas Instruments, Inc. 3,767,040
-------------
15,068,353
-------------
Software -- 3.7%
35,400 Activision, Inc.(b) 610,296
28,500 Adobe Systems, Inc.(b) 1,171,920
61,400 Autodesk, Inc.(b) 2,484,244
27,850 Dun & Bradstreet Corp.(b) 2,305,701
20,100 Electronic Arts, Inc.(b) 1,012,236
86,700 Fidelity National Information Services, Inc. 3,475,803
37,100 Infosys Technologies, Ltd., Sponsored ADR(c) 2,024,176
101,600 Oracle Corp.(b) 1,741,424
62,550 Salesforce.com, Inc.(b) 2,279,947
32,600 SAP AG, Sponsored ADR 1,731,060
79,800 Satyam Computer Services, Ltd.(c) 1,915,998
80,175 Sybase, Inc.(b) 1,980,323
-------------
22,733,128
-------------
Telecommunications -- 4.8%
68,125 ADTRAN, Inc.(c) 1,546,438
48,675 American Tower Corp., Class A(b) 1,814,604
130,900 Cisco Systems, Inc.(b) 3,577,497
111,100 Corning, Inc.(b) 2,078,681
64,725 Embarq Corp. 3,401,946
67,325 Harris Corp. 3,087,524
53,125 Hutchison Telecommunications International, Ltd., ADR(b)(c) 2,035,750
33,125 Leap Wireless International, Inc.(b) 1,969,944
24,475 Millicom International Cellular SA(b)(c) 1,508,639
52,200 Motorola, Inc. 1,073,232
47,550 NII Holdings, Inc., Class B(b)(c) 3,064,122
55,000 QUALCOMM, Inc. 2,078,450
93,500 Sprint Nextel Corp. 1,766,215
-------------
29,003,042
-------------
Transportation -- 2.2%
62,425 Horizon Lines, Inc., Class A(c) 1,682,978
135,800 Laidlaw International, Inc. 4,132,394
81,500 Union Pacific Corp. 7,499,631
-------------
13,315,003
-------------
Water -- 0.1%
16,000 Connecticut Water Service, Inc. 364,000
-------------
Total Common Stocks (Identified Cost $490,547,239) 602,296,131
-------------
See accompanying notes to financial statements.
34
IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares/
Principal
Amount Description Value (+)
- -----------------------------------------------------------------------------------------------------
Short-Term Investments -- 13.2%
73,222,927 State Street Securities Lending Quality Trust(d) $ 73,222,927
$ 6,997,760 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$7,001,064 on 1/2/2007, collateralized by $5,630,000 U.S.
Treasury Bond, 7.125% due 2/15/2023 valued at $7,140,884
including accrued interest 6,997,760
-------------
Total Short-Term Investments (Identified Cost $80,220,687) 80,220,687
-------------
Total Investments -- 112.2%
(Identified Cost $570,767,926)(a) 682,516,818
Other assets less liabilities -- (12.2)% (74,047,945)
-------------
Total Net Assets -- 100% $ 608,468,873
=============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $571,768,615 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 $ 118,723,749
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (7,975,546)
-------------
Net unrealized appreciation $ 110,748,203
=============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
(d) Represents investment of securities lending collateral.
ADR An American Depositary Receipt is a certificate issued by a custodian 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.
CHF Swiss Franc
REITs Real Estate Investment Trusts
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Diversified Financial Services 9.4%
Retail 5.9
Media 5.0
Telecommunications 4.8
Banks 4.3
Computers 4.0
Software 3.7
Internet 3.4
Oil & Gas Services 3.2
Insurance 2.9
Electric 2.8
Manufacturing 2.7
Pharmaceuticals 2.5
Chemicals 2.5
Semiconductors 2.5
Aerospace & Defense 2.3
Commercial Services 2.3
Transportation 2.2
Electronics 2.1
Health Care -- Products 2.1
Other, less than 2% each 28.4
See accompanying notes to financial statements.
35
IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- --------------------------------------------------------------------
Common Stocks -- 97.2% of Net Assets
Aerospace & Defense -- 2.5%
5,100 Boeing Co. (The) $ 453,084
6,100 General Dynamics Corp. 453,535
14,875 Northrop Grumman Corp. 1,007,037
19,500 Raytheon Co.(c) 1,029,600
6,450 United Technologies Corp. 403,254
---------------
3,346,510
---------------
Airlines -- 0.0%
1,500 UAL Corp.(b)(c) 66,000
---------------
Apparel -- 0.6%
8,500 Jones Apparel Group, Inc. 284,155
22,300 Warnaco Group, Inc. (The)(b) 565,974
---------------
850,129
---------------
Athletic Footwear -- 0.1%
1,625 NIKE, Inc., Class B 160,924
---------------
Banks -- 5.8%
19,775 Bank of America Corp. 1,055,787
9,125 BOK Financial Corp.(c) 501,692
6,700 Comerica, Inc. 393,156
54,400 Mellon Financial Corp. 2,292,960
14,900 National City Corp. 544,744
48,025 U.S. Bancorp 1,738,025
30,725 Wells Fargo & Co. 1,092,581
---------------
7,618,945
---------------
Beverages -- 1.7%
1,700 Anheuser-Busch Cos., Inc. 83,640
26,250 Coca-Cola Enterprises, Inc. 536,025
8,900 Molson Coors Brewing Co.(c) 680,316
8,200 PepsiAmericas, Inc.(c) 172,036
11,975 PepsiCo, Inc. 749,036
---------------
2,221,053
---------------
Biotechnology -- 0.6%
11,025 Amgen, Inc.(b) 753,118
---------------
Building Materials -- 0.6%
28,100 Lennox International, Inc.(c) 860,141
---------------
Chemicals -- 0.9%
12,500 E.I. Du Pont de Nemours & Co.(c) 608,875
4,700 Georgia Gulf Corp.(c) 90,757
7,300 Praxair, Inc. 433,109
---------------
1,132,741
---------------
Commercial Services -- 0.9%
8,050 Apollo Group, Inc., Class A(b)(c) 313,709
10,925 Equifax, Inc. 443,555
11,450 R. R. Donnelley & Sons Co. 406,933
---------------
1,164,197
---------------
Computers -- 4.9%
70,000 Dell, Inc.(b) 1,756,300
87,300 Hewlett-Packard Co. 3,595,887
11,525 International Business Machines Corp. 1,119,654
---------------
6,471,841
---------------
Consumer Products -- 0.1%
1,200 Kimberly-Clark Corp. 81,540
---------------
Cosmetics & Personal Care -- 0.1%
4,200 Estee Lauder Cos., Inc., (The), Class A 171,444
---------------
Shares Description Value (+)
- ----------------------------------------------------------------------
Distribution & Wholesale -- 0.9%
23,500 Building Materials Holding Corp.(c) $ 580,215
9,800 WESCO International, Inc.(b)(c) 576,338
---------------
1,156,553
---------------
Diversified Financial Services -- 13.1%
18,025 American Express Co. 1,093,577
9,000 Ameriprise Financial, Inc. 490,500
7,325 Capital One Financial Corp. 562,707
10,200 CIT Group, Inc. 568,854
63,483 Citigroup, Inc. 3,536,003
6,100 Goldman Sachs Group, Inc. 1,216,035
85,425 JPMorgan Chase & Co. 4,126,027
3,000 Knight Capital Group, Inc., Class A(b)(c) 57,510
9,850 Lehman Brothers Holdings, Inc. 769,482
19,825 Merrill Lynch & Co., Inc. 1,845,707
37,700 Morgan Stanley 3,069,911
---------------
17,336,313
---------------
Electric -- 1.8%
18,450 Duke Energy Corp. 612,725
1,437 Dynegy, Inc., Class A(b) 10,404
8,900 Exelon Corp. 550,821
600 FirstEnergy Corp. 36,180
11,325 NRG Energy, Inc.(b)(c) 634,313
7,100 PG&E Corp.(c) 336,043
3,000 TXU Corp. 162,630
---------------
2,343,116
---------------
Electrical Components & Equipment -- 0.5%
10,575 Rockwell Automation, Inc.(c) 645,921
---------------
Electronics -- 1.1%
10,525 Arrow Electronics, Inc.(b)(c) 332,064
11,775 Avnet, Inc.(b)(c) 300,616
31,650 Flextronics International, Ltd.(b) 363,342
10,800 Sony Corp., Sponsored ADR 462,564
---------------
1,458,586
---------------
Engineering & Construction -- 0.8%
30,450 ABB, Ltd., Sponsored ADR 547,491
9,150 Foster Wheeler Ltd.(b) 504,531
---------------
1,052,022
---------------
Food -- 0.7%
7,000 Kraft Foods, Inc., Class A(c) 249,900
19,200 Safeway, Inc.(c) 663,552
2,200 Smithfield Foods, Inc.(b)(c) 56,452
---------------
969,904
---------------
Hand & Machine Tools -- 0.5%
8,400 Black & Decker Corp. (The) 671,748
---------------
Health Care - Capital Equipment -- 0.3%
11,300 Applera Corp. - Applied Biosystems Group 414,597
---------------
Health Care - Products -- 2.7%
20,000 Baxter International, Inc. 927,800
6,675 Beckman Coulter, Inc.(c) 399,165
29,200 Boston Scientific Corp.(b) 501,656
27,000 Johnson & Johnson 1,782,540
---------------
3,611,161
---------------
Health Care - Services -- 1.3%
14,975 Aetna, Inc. 646,620
26,825 Omnicare, Inc.(c) 1,036,250
---------------
1,682,870
---------------
See accompanying notes to financial statements.
36
IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- -------------------------------------------------------------------------
Home Builders -- 1.1%
28,000 Lennar Corp., Class A(c) $ 1,468,880
---------------
Home Furnishings -- 0.3%
5,000 Whirlpool Corp.(c) 415,100
---------------
Household Products & Wares -- 0.3%
7,975 Scotts Miracle-Gro Co. (The), Class A(c) 411,909
---------------
Insurance -- 4.2%
15,525 Allstate Corp. (The) 1,010,833
11,800 American International Group, Inc. 845,588
165 Berkshire Hathaway, Inc., Class B(b)(c) 604,890
4,800 CIGNA Corp. 631,536
6,100 Genworth Financial, Inc., Class A 208,681
3,900 Hartford Financial Services Group, Inc. 363,909
14,400 Loews Corp. 597,168
1,300 MGIC Investment Corp.(c) 81,302
1,000 PMI Group, Inc. (The)(c) 47,170
12,650 Prudential Financial, Inc. 1,086,129
1,900 Radian Group, Inc. 102,429
---------------
5,579,635
---------------
Internet -- 0.1%
4,000 VeriSign, Inc.(b)(c) 96,200
---------------
Iron & Steel -- 0.3%
600 Nucor Corp. 32,796
10,400 Schnitzer Steel Industries, Inc., Class A(c) 412,880
---------------
445,676
---------------
Leisure Time -- 1.5%
38,000 Carnival Corp.(c) 1,863,900
2,350 Harley-Davidson, Inc.(c) 165,604
---------------
2,029,504
---------------
Lodging -- 0.1%
3,200 Marriott International, Inc., Class A 152,704
---------------
Manufacturing -- 3.9%
45,100 General Electric Co. 1,678,171
9,525 Illinois Tool Works, Inc. 439,960
5,850 Parker Hannifin Corp. 449,748
83,600 Tyco International, Ltd. 2,541,440
---------------
5,109,319
---------------
Media -- 7.3%
50,000 Cablevision Systems Corp., Class A 1,424,000
14,825 Comcast Corp., Class A(b)(c) 627,542
24,275 DIRECTV Group, Inc. (The)(b) 605,418
14,400 EchoStar Communications Corp., Class A(b)(c) 547,632
10,898 Liberty Global, Inc., Class A(b)(c) 317,677
11,052 Liberty Global, Inc., Class C(b) 309,456
11,000 Liberty Media Corp. - Capital, Series A(b) 1,077,780
31,000 News Corp., Class A 665,880
186,600 Time Warner, Inc. 4,064,148
---------------
9,639,533
---------------
Mining -- 0.0%
800 Newmont Mining Corp. 36,120
---------------
Office Furnishings -- 0.5%
13,450 HNI Corp.(c) 597,315
---------------
Oil & Gas -- 7.6%
4,600 Anadarko Petroleum Corp. 200,192
9,800 Chevron Corp. 720,594
11,225 ConocoPhillips 807,639
57,300 ExxonMobil Corp. 4,390,899
Shares Description Value (+)
- --------------------------------------------------------------------
Oil & Gas -- continued
11,825 Hess Corp. $ 586,165
32,025 Occidental Petroleum Corp. 1,563,781
14,075 Southwestern Energy Co.(b) 493,329
14,400 Todco, Class A(b)(c) 492,048
5,300 Valero Energy Corp. 271,148
10,750 XTO Energy, Inc. 505,787
---------------
10,031,582
---------------
Oil & Gas Services -- 1.3%
5,575 Baker Hughes, Inc. 416,230
12,375 BJ Services Co. 362,835
8,175 Schlumberger, Ltd. 516,333
8,425 Tidewater, Inc.(c) 407,433
---------------
1,702,831
---------------
Pharmaceuticals -- 2.4%
12,000 Abbott Laboratories 584,520
8,300 AmerisourceBergen Corp. 373,168
17,775 Bristol-Myers Squibb Co. 467,838
6,400 Cardinal Health, Inc. 412,352
1,700 Hospira, Inc.(b)(c) 57,086
15,100 Merck & Co., Inc. 658,360
26,000 Pfizer, Inc. 673,400
---------------
3,226,724
---------------
REITs - Diversified -- 0.2%
16,700 Newkirk Realty Trust, Inc. 301,268
---------------
REITs - Mortgage -- 0.3%
20,800 Deerfield Triarc Capital Corp.(c) 352,144
---------------
Restaurants -- 4.3%
77,700 McDonald's Corp. 3,444,441
37,200 Yum! Brands, Inc. 2,187,360
---------------
5,631,801
---------------
Retail -- 6.2%
33,475 AutoNation, Inc.(b)(c) 713,687
4,775 AutoZone, Inc.(b) 551,799
32,475 Dollar General Corp.(c) 521,548
7,125 Federated Department Stores 271,676
36,000 Gap, Inc. (The) 702,000
11,750 Home Depot, Inc. 471,880
19,925 Lowe's Cos., Inc. 620,664
13,075 Office Depot, Inc.(b) 499,073
9,825 OSI Restaurant Partners, Inc.(c) 385,140
45,000 Tiffany & Co.(c) 1,765,800
37,350 Wal-Mart Stores, Inc. 1,724,823
---------------
8,228,090
---------------
Savings & Loans -- 1.4%
7,225 People's Bank(c) 322,379
35,000 Washington Mutual, Inc. 1,592,150
---------------
1,914,529
---------------
Semiconductors -- 3.6%
144,275 Intel Corp. 2,921,569
60,000 National Semiconductor Corp. 1,362,000
15,475 Texas Instruments, Inc. 445,680
---------------
4,729,249
---------------
Software -- 1.3%
10,300 Intuit, Inc.(b) 314,253
47,675 Microsoft Corp. 1,423,575
---------------
1,737,828
---------------
See accompanying notes to financial statements.
37
IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- -----------------------------------------------------------------------------------------------------
Telecommunications -- 4.1%
19,775 AT&T, Inc. $ 706,956
37,350 Avaya, Inc.(b) 522,153
21,175 BellSouth Corp. 997,554
13,500 CenturyTel, Inc.(c) 589,410
40,525 Cisco Systems, Inc.(b) 1,107,549
11,800 Embarq Corp. 620,208
26,575 Motorola, Inc. 546,382
19,825 Nokia OYJ, Sponsored ADR 402,844
---------------
5,493,056
---------------
Tobacco -- 0.6%
9,300 Altria Group, Inc. 798,126
---------------
Transportation -- 1.8%
4,600 Burlington Northern Santa Fe Corp. 339,527
10,100 Overseas Shipholding Group, Inc.(c) 568,630
16,000 Union Pacific Corp. 1,472,320
---------------
2,380,477
---------------
Total Common Stocks (Identified Cost $101,522,410) 128,750,974
---------------
Shares/
Principal
Amount
- -----------------------------------------------------------------------------------------------------
Short-Term Investments -- 16.0%
17,278,289 State Street Securities Lending Quality Trust(d) 17,278,289
$ 3,860,928 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$3,862,752 on 1/02/2007, collateralized by $3,110,000 U.S.
Treasury Bond, 7.125% due 2/15/2023 valued at $3,944,609
including accrued interest 3,860,928
---------------
Total Short-Term Investments (Identified Cost $21,139,217) 21,139,217
---------------
Total Investments -- 113.2%
(Identified Cost $122,661,627)(a) 149,890,191
Other assets less liabilities--(13.2)% (17,521,358)
---------------
Total Net Assets -- 100% $ 132,368,833
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $123,059,759 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 $ 28,678,373
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (1,847,941)
---------------
Net unrealized appreciation $ 26,830,432
===============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
(d) Represents investment of securities lending collateral.
ADR An American Depositary Receipt is a certificate issued by a custodian 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 December 31, 2006 as a Percentage of Net Assets (unaudited)
Diversified Financial Services 13.1%
Oil & Gas 7.6
Media 7.3
Retail 6.2
Banks 5.8
Computers 4.9
Restaurants 4.3
Insurance 4.2
Telecommunications 4.1
Manufacturing 3.9
Semiconductors 3.6
Health Care -- Products 2.7
Aerospace & Defense 2.5
Pharmaceuticals 2.4
Other, less than 2% each 24.6
See accompanying notes to financial statements.
38
VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- ------------------------------------------------------------------------
Common Stocks -- 93.8% of Net Assets
Aerospace & Defense -- 4.9%
42,870 Alliant Techsystems, Inc.(b)(c) $ 3,352,005
18,025 DRS Technologies, Inc.(b) 949,557
60,837 Moog, Inc., Class A(b)(c) 2,323,365
---------------
6,624,927
---------------
Banks -- 3.3%
53,551 MB Financial, Inc.(b) 2,014,053
26,700 PrivateBancorp, Inc.(b) 1,111,521
40,650 Sterling Financial Corp.(b) 1,374,377
---------------
4,499,951
---------------
Building Materials -- 2.0%
89,050 Lennox International, Inc. 2,725,820
---------------
Chemicals -- 3.7%
34,925 Cytec Industries, Inc.(b) 1,973,612
19,050 FMC Corp.(b) 1,458,277
60,125 Valspar Corp.(b) 1,661,855
---------------
5,093,744
---------------
Commercial Services -- 6.1%
82,465 Aaron Rents, Inc.(b) 2,373,343
20,900 Dollar Thrifty Automotive Group, Inc.(b)(c) 953,249
45,060 McGrath Rentcorp(b) 1,380,188
42,030 Monro Muffler, Inc.(b) 1,475,253
13,125 On Assignment, Inc.(b)(c) 154,219
37,645 Team, Inc.(b)(c) 1,311,175
28,050 Universal Technical Institute, Inc.(b)(c) 622,990
---------------
8,270,417
---------------
Computer Services -- 0.5%
49,125 Tyler Technologies, Inc.(b)(c) 690,698
---------------
Computers -- 1.5%
37,620 MICROS Systems, Inc.(c) 1,982,574
---------------
Distribution & Wholesale -- 3.2%
48,200 Brightpoint, Inc.(b)(c) 648,290
38,480 Watsco, Inc.(b) 1,814,717
32,545 WESCO International, Inc.(b)(c) 1,913,971
---------------
4,376,978
---------------
Diversified Financial Services -- 5.6%
26,825 Affiliated Managers Group, Inc.(b)(c) 2,820,112
30,650 CompuCredit Corp.(b)(c) 1,220,177
49,749 Financial Federal Corp.(b) 1,463,118
70,469 Raymond James Financial, Inc. 2,135,915
---------------
7,639,322
---------------
Electric -- 2.2%
79,650 Pike Electric Corp.(b)(c) 1,300,684
64,480 Westar Energy, Inc.(b) 1,673,901
---------------
2,974,585
---------------
Electrical Components & Equipment -- 1.3%
40,150 General Cable Corp.(b)(c) 1,754,957
---------------
Environmental Control -- 2.1%
67,360 Waste Connections, Inc.(b)(c) 2,798,808
---------------
Food -- 0.6%
24,050 Corn Products International, Inc.(b) 830,687
---------------
Gas -- 1.6%
27,075 Northwest Natural Gas Co.(b) 1,149,063
38,325 Vectren Corp. 1,083,831
---------------
2,232,894
---------------
Shares Description Value (+)
- -------------------------------------------------------------------------------
Health Care - Products -- 1.1%
46,946 Medical Action Industries, Inc.(c) $ 1,513,539
---------------
Health Care - Services -- 5.4%
24,800 Amedisys, Inc.(b)(c) 815,176
84,137 Healthcare Services Group, Inc.(b) 2,436,607
49,125 LHC Group, Inc.(b)(c) 1,400,554
54,900 Pediatrix Medical Group, Inc.(b)(c) 2,684,610
---------------
7,336,947
---------------
Home Builders -- 0.6%
22,625 M/I Homes, Inc.(b) 864,049
---------------
Household Products & Wares -- 1.5%
39,950 Scotts Miracle-Gro Co., (The), Class A(b) 2,063,418
---------------
Insurance -- 3.6%
66,937 HCC Insurance Holdings, Inc.(b) 2,148,008
14,025 Hilb, Rogal & Hobbs Co.(b) 590,733
60,195 United Fire & Casualty Co.(b) 2,121,874
---------------
4,860,615
---------------
Internet -- 0.6%
51,250 Vignette Corp.(c) 874,838
---------------
Iron & Steel -- 1.2%
34,025 Cleveland-Cliffs, Inc.(b) 1,648,171
---------------
Leisure Time -- 0.5%
21,400 Brunswick Corp. 682,660
---------------
Machinery - Diversified -- 3.3%
28,225 Briggs & Stratton Corp.(b) 760,664
33,175 IDEX Corp. 1,572,827
43,040 Nordson Corp. 2,144,683
---------------
4,478,174
---------------
Manufacturing -- 2.9%
26,350 Actuant Corp., Class A(b) 1,255,578
52,750 Jacuzzi Brands, Inc.(b)(c) 655,682
32,050 Teleflex, Inc.(b) 2,069,148
---------------
3,980,408
---------------
Office Furnishings -- 1.3%
39,850 HNI Corp.(b) 1,769,739
---------------
Oil & Gas -- 4.1%
60,750 Arena Resources, Inc.(b)(c) 2,594,632
101,675 Gulfport Energy Corp.(b)(c) 1,381,763
87,350 Rosetta Resources, Inc.(b)(c) 1,630,825
---------------
5,607,220
---------------
Oil & Gas Services -- 3.8%
27,925 Hornbeck Offshore Services, Inc.(b)(c) 996,923
34,750 Oil States International, Inc.(b)(c) 1,119,992
48,800 Universal Compression Holdings, Inc.(b)(c) 3,030,968
---------------
5,147,883
---------------
REITs - Financial Services -- 1.0%
172,975 Friedman, Billings, Ramsey Group, Inc., Class A(b) 1,383,800
---------------
REITs - Hotels -- 1.0%
53,925 Ashford Hospitality Trust(b) 671,366
43,900 Highland Hospitality Corp.(b) 625,575
---------------
1,296,941
---------------
REITs - Mortgage -- 3.6%
79,700 Alesco Financial, Inc. 852,790
34,725 JER Investors Trust, Inc.(b) 717,766
See accompanying notes to financial statements.
39
VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- -------------------------------------------------------------------------------------------
REITs - Mortgage -- continued
202,075 MFA Mortgage Investments, Inc. $ 1,553,957
31,145 Redwood Trust, Inc. 1,808,901
---------------
4,933,414
---------------
Retail -- 10.4%
68,500 First Cash Financial Services, Inc.(b)(c) 1,772,095
46,000 Guitar Center, Inc.(b)(c) 2,091,160
35,400 Men's Wearhouse, Inc. (The)(b) 1,354,404
41,225 Regis Corp.(b) 1,630,037
76,602 Sonic Corp.(b)(c) 1,834,618
22,275 Stage Stores, Inc. 676,937
145,125 Triarc Cos., Inc., Class B(b) 2,902,500
83,425 United Auto Group, Inc.(b) 1,966,327
---------------
14,228,078
---------------
Semiconductors -- 1.8%
57,525 ATMI, Inc.(b)(c) 1,756,238
33,125 Microsemi Corp.(b)(c) 650,906
---------------
2,407,144
---------------
Software -- 0.5%
27,875 Blackbaud, Inc.(b) 724,750
---------------
Telecommunications -- 2.9%
55,900 Arris Group, Inc.(b)(c) 699,309
22,300 Ciena Corp.(c) 617,933
36,275 CommScope, Inc.(b)(c) 1,105,662
107,575 Tekelec(b)(c) 1,595,337
---------------
4,018,241
---------------
Transportation -- 3.2%
75,650 Arlington Tankers, Ltd.(b) 1,767,941
31,660 Genesee & Wyoming, Inc., Class A(b)(c) 830,758
47,080 Landstar System, Inc.(b) 1,797,514
---------------
4,396,213
---------------
Trucking & Leasing -- 0.9%
14,710 AMERCO, Inc.(b)(c) 1,279,917
---------------
Total Common Stocks (Identified Cost $109,648,824) 127,992,521
---------------
Investment Companies -- 2.7%
46,741 iShares Russell 2000 Value Index Fund(b)
(Identified Cost $3,751,440) 3,740,215
---------------
Shares/
Principal
Amount
- -------------------------------------------------------------------------------------------
Short-Term Investments -- 29.4%
34,905,193 State Street Securities Lending Quality Trust(d) $ 34,905,193
$ 5,189,023 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$5,191,473 on 1/2/2007, collateralized by $4,175,000 U.S.
Treasury Bond, 7.125% due 2/15/2023 valued at $5,295,416
including accrued interest 5,189,023
---------------
Total Short-Term Investments (Identified Cost $40,094,216) 40,094,216
---------------
Total Investments -- 125.9%
(Identified Cost $153,494,480)(a) 171,826,952
Other assets less liabilities -- (25.9)% (35,322,204)
---------------
Total Net Assets -- 100% $ 136,504,748
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the unrealized appreciation on investments
based on cost of $153,547,071 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 $ 19,064,219
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (784,338)
---------------
Net unrealized appreciation $ 18,279,881
===============
(b) All or a portion of this security was on loan to brokers at December 31, 2006.
(c) Non-income producing security.
(d) Represents investment of securities lending collateral.
REITs Real Estate Investment Trusts
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Retail 10.4%
Commercial Services 6.1
Diversified Financial Services 5.6
Health Care -- Services 5.4
Aerospace & Defense 4.9
Oil & Gas 4.1
Oil & Gas Services 3.8
Chemicals 3.7
REITs -- Mortgage 3.6
Insurance 3.6
Banks 3.3
Machinery -- Diversified 3.3
Transportation 3.2
Distribution & Wholesale 3.2
Telecommunications 2.9
Manufacturing 2.9
Investment Companies 2.7
Electric 2.2
Environmental Control 2.1
Building Materials 2.0
Others, less than 2% each 17.5
See accompanying notes to financial statements.
40
WESTPEAK CAPITAL GROWTH FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- ----------------------------------------------------------------------
Common Stocks -- 99.4% of Net Assets
Aerospace & Defense -- 6.9%
25,200 Boeing Co. (The) $ 2,238,768
10,000 Lockheed Martin Corp. 920,700
14,100 Raytheon Co. 744,480
---------------
3,903,948
---------------
Agriculture -- 1.5%
16,600 Monsanto Co. 871,998
---------------
Beverages -- 1.5%
11,400 Anheuser-Busch Cos., Inc. 560,880
10,300 Pepsi Bottling Group, Inc. (The) 318,373
---------------
879,253
---------------
Biotechnology -- 3.3%
27,700 Amgen, Inc.(b) 1,892,187
---------------
Building Materials -- 0.9%
10,000 NCI Building Systems, Inc.(b) 517,500
---------------
Commercial Services -- 1.4%
11,100 Moody's Corp. 766,566
---------------
Computers -- 6.3%
5,300 Affiliated Computer Services, Inc.(b) 258,852
35,400 Dell, Inc.(b) 888,186
56,400 Hewlett-Packard Co. 2,323,116
1,100 International Business Machines Corp. 106,865
---------------
3,577,019
---------------
Distribution & Wholesale -- 2.0%
3,000 Tech Data Corp.(b) 113,610
17,600 WESCO International, Inc.(b) 1,035,056
---------------
1,148,666
---------------
Diversified Financial Services -- 6.9%
29,400 American Express Co. 1,783,698
10,700 Goldman Sachs Group, Inc. 2,133,045
---------------
3,916,743
---------------
Electrical Components & Equipment -- 1.2%
15,600 Emerson Electric Co. 687,804
---------------
Electronics -- 1.7%
28,100 Agilent Technologies, Inc.(b) 979,285
---------------
Engineering & Construction -- 1.7%
19,700 Granite Construction, Inc.(c) 991,304
---------------
Food -- 1.3%
16,600 HJ Heinz Co. 747,166
---------------
Health Care - Products -- 1.7%
11,900 IDEXX Laboratories, Inc.(b)(c) 943,670
---------------
Health Care - Services -- 1.9%
19,000 Humana, Inc.(b) 1,050,890
---------------
Internet -- 2.2%
50,900 VeriSign, Inc.(b)(c) 1,224,145
---------------
Machinery - Construction & Mining -- 1.5%
13,300 Terex Corp.(b)(c) 858,914
---------------
Manufacturing -- 4.9%
65,200 General Electric Co. 2,426,092
4,500 Parker Hannifin Corp. 345,960
---------------
2,772,052
---------------
Media -- 3.2%
26,500 McGraw-Hill Cos., Inc. (The) 1,802,530
---------------
Shares Description Value (+)
- ------------------------------------------------------------------------------------------
Mining -- 0.3%
3,700 Newmont Mining Corp. $ 167,055
---------------
Oil & Gas -- 6.5%
24,600 ExxonMobil Corp. 1,885,098
13,800 Sunoco, Inc. 860,568
27,400 Todco, Class A(b)(c) 936,258
---------------
3,681,924
---------------
Pharmaceuticals -- 5.9%
7,900 AmerisourceBergen Corp. 355,184
17,600 Cardinal Health, Inc. 1,133,968
14,400 Forest Laboratories, Inc.(b) 728,640
25,800 Merck & Co., Inc. 1,124,880
---------------
3,342,672
---------------
Retail -- 17.0%
36,800 Dollar Tree Stores, Inc.(b) 1,107,680
13,800 DSW, Inc., Class A(b)(c) 532,266
8,500 Federated Department Stores, Inc. 324,105
16,200 Gap, Inc. (The) 315,900
14,700 J.C. Penney Co., Inc. 1,137,192
23,600 Kohl's Corp.(b) 1,614,948
33,400 NBTY, Inc.(b)(c) 1,388,438
25,000 Nordstrom, Inc. 1,233,500
25,500 Office Depot, Inc.(b) 973,335
29,300 Starbucks Corp.(b) 1,037,806
---------------
9,665,170
---------------
Semiconductors -- 1.1%
21,300 Texas Instruments, Inc. 613,440
---------------
Software -- 5.1%
22,200 Fiserv, Inc.(b) 1,163,724
57,000 Microsoft Corp. 1,702,020
---------------
2,865,744
---------------
Telecommunications -- 5.4%
111,500 Cisco Systems, Inc.(b) 3,047,295
---------------
Tobacco -- 1.0%
1,200 Altria Group, Inc. 102,984
7,900 UST, Inc.(c) 459,780
---------------
562,764
---------------
Toys, Games & Hobbies -- 2.0%
41,600 Marvel Entertainment, Inc.(b)(c) 1,119,456
---------------
Transportation -- 3.1%
11,000 Burlington Northern Santa Fe Corp. 811,910
18,700 Norfolk Southern Corp. 940,423
---------------
1,752,333
---------------
Total Common Stocks (Identified Cost $50,512,842) 56,349,493
---------------
Shares/
Principal
Amount
- ------------------------------------------------------------------------------------------
Short-Term Investments -- 14.9%
7,840,726 State Street Securities Lending Quality Trust(d) $ 7,840,726
$ 618,603 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$618,896 on 1/02/2007, collateralized by $500,000 U.S.
Treasury Bond, 7.125% due 2/15/2023 valued at $634,182
including accrued interest. 618,603
---------------
Total Short-Term Investments (Identified Cost $8,459,329) 8,459,329
---------------
See accompanying notes to financial statements.
41
WESTPEAK CAPITAL GROWTH FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Total Investments -- 114.3%
(Identified Cost $58,972,171)(a) $ 64,808,822
Other assets less liabilities -- (14.3)% (8,119,565)
---------------
Net Assets -- 100% $ 56,689,257
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $59,044,195 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 $ 6,603,687
Aggregate gross unrealized depreciation for all investments in which
there is an excess of tax cost over value (839,060)
---------------
Net unrealized appreciation $ 5,764,627
===============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
(d) Represents investment of securities lending collateral.
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Retail 17.0%
Diversified Financial Services 6.9
Aerospace & Defense 6.9
Oil & Gas 6.5
Computers 6.3
Pharmaceuticals 5.9
Telecommunications 5.4
Software 5.1
Manufacturing 4.9
Biotechnology 3.3
Media 3.2
Transportation 3.1
Internet 2.2
Distribution & Wholesale 2.0
Toys, Games & Hobbies 2.0
Others, less than 2% each 18.7
See accompanying notes to financial statements.
42
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2006
CGM Advisor Hansberger Harris Associates
Targeted Equity Fund International Fund Focused Value Fund
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
ASSETS
Investments at cost $ 796,542,157 $ 166,939,193 $ 227,224,434
Net unrealized appreciation 61,057,700 39,389,963 35,265,849
--------------------- --------------------- ---------------------
Investments at value(a) 857,599,857 206,329,156 262,490,283
Cash 666 -- --
Foreign currency at value (identified
cost $0, $260,273, $0, $0, $0, $0,
$0 and $0) -- 260,869 --
Receivable for Fund shares sold 145,935 227,828 4,372,142
Receivable for securities sold 2,044,873 390,837 1,026,976
Dividends and interest receivable 247,252 126,487 126,564
Tax reclaims receivable 12,973 54,768 --
Securities lending income receivable 29,117 6,551 2,811
--------------------- --------------------- ---------------------
TOTAL ASSETS 860,080,673 207,396,496 268,018,776
--------------------- --------------------- ---------------------
LIABILITIES
Collateral on securities loaned, at
value (Note 2) 107,341,167 37,301,240 33,336,293
Payable for securities purchased 7,344,108 178,322 --
Payable for Fund shares redeemed 710,611 157,591 576,209
Payable to custodian bank -- 13,139 5,126,112
Management fees payable (Note 4) 438,438 113,064 174,968
Deferred Trustees' fees (Note 4) 708,618 105,757 77,212
Administrative fees payable (Note 4) 48,246 5,647 20,627
Other accounts payable and accrued
expenses 158,102 149,797 121,036
--------------------- --------------------- ---------------------
TOTAL LIABILITIES 116,749,290 38,024,557 39,432,457
--------------------- --------------------- ---------------------
NET ASSETS $ 743,331,383 $ 169,371,939 $ 228,586,319
===================== ===================== =====================
NET ASSETS CONSIST OF:
Paid-in capital $ 657,862,165 $ 128,248,868 $ 191,203,129
Undistributed (overdistributed) net
investment income (loss) 4,251,080 (828,914) (77,212)
Accumulated net realized gain (loss)
on investments, written options and
foreign currency transactions 20,160,438 2,559,014 2,194,553
Net unrealized appreciation on
investments and foreign currency
translations 61,057,700 39,392,971 35,265,849
--------------------- --------------------- ---------------------
NET ASSETS $ 743,331,383 $ 169,371,939 $ 228,586,319
===================== ===================== =====================
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:
Class A shares:
Net assets $ 679,896,888 $ 112,814,220 $ 62,603,387
===================== ===================== =====================
Shares of beneficial interest 63,519,422 5,247,790 5,415,377
===================== ===================== =====================
Net asset value and redemption price
per share $ 10.70 $ 21.50 $ 11.56
===================== ===================== =====================
Offering price per share
(100/[100-maximum sales charge] of
net asset value) (Note 1) $ 11.35 $ 22.81 $ 12.27
===================== ===================== =====================
Class B shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (Note 1)
Net assets $ 43,032,455 $ 33,016,473 $ 78,950,332
===================== ===================== =====================
Shares of beneficial interest 4,372,959 1,692,553 7,232,270
===================== ===================== =====================
Net asset value and offering price
per share $ 9.84 $ 19.51 $ 10.92
===================== ===================== =====================
Class C shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (Note 1)
Net assets $ 8,687,620 $ 23,541,246 $ 87,032,600
===================== ===================== =====================
Shares of beneficial interest 883,296 1,208,196 7,971,486
===================== ===================== =====================
Net asset value and offering price
per share $ 9.84 $ 19.48 $ 10.92
===================== ===================== =====================
Class Y shares:
Net assets $ 11,714,420 $ -- $ --
===================== ===================== =====================
Shares of beneficial interest 1,072,245 -- --
===================== ===================== =====================
Net asset value, offering and
redemption price per share $ 10.93 $ -- $ --
===================== ===================== =====================
(a) Including securities on loan with
market values of: $ 105,389,588 $ 35,697,604 $ 32,309,413
===================== ===================== =====================
See accompanying notes to financial statements.
43
Harris Associates Vaughan Nelson Westpeak
Large Cap Value IXIS U.S. Diversified IXIS Value Small Cap Value Capital Growth
Fund Portfolio Fund Fund Fund
- --------------------- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- --------------------- ---------------------
$ 218,992,937 $ 570,767,926 $ 122,661,627 $ 153,494,480 $ 58,972,171
54,019,176 111,748,892 27,228,564 18,332,472 5,836,651
- --------------------- --------------------- --------------------- --------------------- ---------------------
273,012,113 682,516,818 149,890,191 171,826,952 64,808,822
-- 53,212 -- -- --
-- -- -- -- --
41,206 152,099 147,197 175,943 2,252
112,443 1,407,569 602,159 531,248 --
340,977 576,087 168,914 178,025 52,834
-- 6,566 50 -- --
145 16,616 5,875 19,658 587
- --------------------- --------------------- --------------------- --------------------- ---------------------
273,506,884 684,728,967 150,814,386 172,731,826 64,864,495
- --------------------- --------------------- --------------------- --------------------- ---------------------
1,558,900 73,222,927 17,278,289 34,905,193 7,840,726
-- 1,152,805 548,856 686,404 --
316,598 678,932 185,013 255,194 29,793
-- -- 44,437 -- --
346,519 469,284 83,593 147,673 101,180
292,212 397,708 204,615 110,177 112,145
16,613 36,256 6,437 4,960 3,496
222,599 302,182 94,313 117,477 87,898
- --------------------- --------------------- --------------------- --------------------- ---------------------
2,753,441 76,260,094 18,445,553 36,227,078 8,175,238
- --------------------- --------------------- --------------------- --------------------- ---------------------
$ 270,753,443 $ 608,468,873 $ 132,368,833 $ 136,504,748 $ 56,689,257
===================== ===================== ===================== ===================== =====================
$ 301,870,583 $ 569,496,525 $ 102,677,999 $ 132,389,809 $ 102,507,502
446,071 (404,299) (63,059) (110,178) (112,145)
(85,582,387) (72,372,538) 2,525,329 (14,107,355) (51,542,751)
54,019,176 111,749,185 27,228,564 18,332,472 5,836,651
- --------------------- --------------------- --------------------- --------------------- ---------------------
$ 270,753,443 $ 608,468,873 $ 132,368,833 $ 136,504,748 $ 56,689,257
===================== ===================== ===================== ===================== =====================
$ 195,713,670 $ 393,430,197 $ 110,588,026 $ 85,285,228 $ 47,331,760
===================== ===================== ===================== ===================== =====================
12,634,975 17,148,830 12,606,618 4,081,393 3,617,155
===================== ===================== ===================== ===================== =====================
$ 15.49 $ 22.94 $ 8.77 $ 20.90 $ 13.09
===================== ===================== ===================== ===================== =====================
$ 16.44 $ 24.34 $ 9.31 $ 22.18 $ 13.89
===================== ===================== ===================== ===================== =====================
$ 42,893,574 $ 147,818,826 $ 18,794,626 $ 32,605,853 $ 8,599,429
===================== ===================== ===================== ===================== =====================
2,980,584 7,269,536 2,426,218 1,699,373 767,718
===================== ===================== ===================== ===================== =====================
$ 14.39 $ 20.33 $ 7.75 $ 19.19 $ 11.20
===================== ===================== ===================== ===================== =====================
$ 18,088,795 $ 46,064,359 $ 2,986,181 $ 18,186,476 $ 758,068
===================== ===================== ===================== ===================== =====================
1,258,706 2,263,016 385,494 947,473 67,805
===================== ===================== ===================== ===================== =====================
$ 14.37 $ 20.36 $ 7.75 $ 19.19 $ 11.18
===================== ===================== ===================== ===================== =====================
$ 14,057,404 $ 21,155,491 $ -- $ 427,191 $ --
===================== ===================== ===================== ===================== =====================
877,865 865,223 -- 20,430 --
===================== ===================== ===================== ===================== =====================
$ 16.01 $ 24.45 $ -- $ 20.91 $ --
===================== ===================== ===================== ===================== =====================
$ 1,525,254 $ 71,332,377 $ 16,764,688 $ 33,826,317 $ 7,609,915
===================== ===================== ===================== ===================== =====================
44
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2006
CGM Advisor Hansberger Harris Associates
Targeted Equity International Focused Value
Fund Fund Fund
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
INVESTMENT INCOME
Dividends $ 14,079,597 $ 3,692,855 $ 3,098,322
Interest 653,306 72,714 410,617
Securities lending income (Note 2) 153,455 92,310 24,558
Less net foreign taxes withheld (276,656) (330,856) (1,710)
--------------------- --------------------- ---------------------
14,609,702 3,527,023 3,531,787
--------------------- --------------------- ---------------------
Expenses
Management fees (Note 4) 5,291,650 1,250,812 2,425,826
Service fees - Class A (Note 4) 1,728,516 252,677 171,625
Service and distribution fees -
Class B (Note 4) 495,409 336,226 852,125
Service and distribution fees -
Class C (Note 4) 74,953 216,585 1,004,564
Trustees' fees and expenses (Note 4) 97,767 24,966 29,063
Administrative fees (Note 4) 429,903 96,502 145,192
Custodian fees and expenses 54,949 105,279 26,727
Transfer agent fees and expenses -
Class A 673,518 203,774 105,500
Transfer agent fees and expenses -
Class B 49,560 69,890 130,315
Transfer agent fees and expenses -
Class C 6,857 43,876 155,861
Transfer agent fees and expenses -
Class Y 7,508 -- --
Audit fees 42,586 47,847 40,185
Legal fees 29,426 4,957 7,755
Shareholder reporting expenses 103,801 38,632 80,503
Registration fees 57,593 41,767 43,061
Expense waiver recapture - Class Y
(Note 4) -- -- --
Miscellaneous expenses 49,828 20,484 25,684
--------------------- --------------------- ---------------------
Total expenses 9,193,824 2,754,274 5,243,986
Less reimbursement/waiver (Note 4) -- -- --
--------------------- --------------------- ---------------------
Net expenses 9,193,824 2,754,274 5,243,986
--------------------- --------------------- ---------------------
Net investment income (loss) 5,415,878 772,749 (1,712,199)
--------------------- --------------------- ---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, WRITTEN OPTIONS AND
FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 98,076,120 21,386,335 32,289,793
Written options - net -- -- --
Foreign currency transactions - net -- (85,610) --
Change in unrealized appreciation
(depreciation) on:
Investments - net (41,577,124) 11,334,026 (3,254,755)
Foreign currency translations - net -- 5,806 --
--------------------- --------------------- ---------------------
Net realized and unrealized gain on
investments, written options and
foreign currency transactions 56,498,996 32,640,557 29,035,038
--------------------- --------------------- ---------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 61,914,874 $ 33,413,306 $ 27,322,839
===================== ===================== =====================
Harris Associates
Large Cap Value
Fund
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 4,429,839
Interest 163,974
Securities lending income (Note 2) 5,495
Less net foreign taxes withheld --
---------------------
4,599,308
---------------------
Expenses
Management fees (Note 4) 1,822,308
Service fees - Class A (Note 4) 461,466
Service and distribution fees -
Class B (Note 4) 487,110
Service and distribution fees -
Class C (Note 4) 182,570
Trustees' fees and expenses (Note 4) 44,963
Administrative fees (Note 4) 148,050
Custodian fees and expenses 28,681
Transfer agent fees and expenses -
Class A 383,145
Transfer agent fees and expenses -
Class B 105,970
Transfer agent fees and expenses -
Class C 38,676
Transfer agent fees and expenses -
Class Y 3,583
Audit fees 37,729
Legal fees 4,079
Shareholder reporting expenses 76,024
Registration fees 55,148
Expense waiver recapture - Class Y
(Note 4) 5,495
Miscellaneous expenses 24,508
---------------------
Total expenses 3,909,505
Less reimbursement/waiver (Note 4) (14,496)
---------------------
Net expenses 3,895,009
---------------------
Net investment income (loss) 704,299
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, WRITTEN OPTIONS AND
FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 24,797,461
Written options - net --
Foreign currency transactions - net --
Change in unrealized appreciation
(depreciation) on:
Investments - net 14,208,318
Foreign currency translations - net --
---------------------
Net realized and unrealized gain on
investments, written options and
foreign currency transactions 39,005,779
---------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 39,710,078
=====================
See accompanying notes to financial statements.
45
Vaughan Nelson Westpeak
IXIS U.S. Diversified Small Cap Value Capital Growth
Portfolio IXIS Value Fund Fund Fund
- --------------------- --------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
$ 9,504,045 $ 2,114,238 $ 1,343,348 $ 552,723
427,258 132,021 237,224 29,913
148,849 8,954 35,039 3,846
(23,074) (4,129) -- --
- --------------------- --------------------- --------------------- ---------------------
10,057,078 2,251,084 1,615,611 586,482
- --------------------- --------------------- --------------------- ---------------------
5,557,166 932,836 1,118,892 433,385
972,878 254,242 180,258 119,496
1,606,428 198,514 363,120 91,488
470,141 28,297 158,630 8,375
69,675 32,009 25,273 22,547
349,523 72,347 70,513 35,338
56,092 25,656 22,992 18,213
719,922 169,083 172,970 148,318
303,895 34,430 96,641 28,877
87,713 4,766 38,543 2,672
996 -- 316 --
45,122 41,080 36,420 36,236
19,312 2,441 3,854 1,762
147,260 27,055 36,255 19,240
63,011 33,301 42,732 35,197
-- -- -- --
47,714 36,234 15,579 12,864
- --------------------- --------------------- --------------------- ---------------------
10,516,848 1,892,291 2,382,988 1,014,008
-- -- (237) (9,850)
- --------------------- --------------------- --------------------- ---------------------
10,516,848 1,892,291 2,382,751 1,004,158
- --------------------- --------------------- --------------------- ---------------------
(459,770) 358,793 (767,140) (417,676)
- --------------------- --------------------- --------------------- ---------------------
69,038,846 16,600,274 15,201,715 1,359,930
22,971 -- -- --
(4,271) -- -- --
9,002,528 5,401,523 5,842,036 4,795,603
293 -- -- --
- --------------------- --------------------- --------------------- ---------------------
78,060,367 22,001,797 21,043,751 6,155,533
- --------------------- --------------------- --------------------- ---------------------
$ 77,600,597 $ 22,360,590 $ 20,276,611 $ 5,737,857
===================== ===================== ===================== =====================
46
STATEMENTS OF CHANGES IN NET ASSETS
CGM Advisor Targeted Equity Fund Hansberger International Fund
-------------------------------------------- --------------------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
--------------------- --------------------- --------------------- ---------------------
--------------------- --------------------- --------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 5,415,878 $ 5,455,563 $ 772,749 $ 460,052
Net realized gain on investments,
written options and foreign
currency transactions 98,076,120 84,395,181 21,300,725 10,947,858
Net change in unrealized
appreciation (depreciation) on
investments and foreign
currency translations (41,577,124) 2,836,954 11,339,832 8,310,253
--------------------- --------------------- --------------------- ---------------------
Net increase (decrease) in net
assets resulting from operations 61,914,874 92,687,698 33,413,306 19,718,163
--------------------- --------------------- --------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A (4,805,342) (1,593,713) (1,649,325) --
Class B (344,672) (75,336) (308,165) --
Class C (50,730) (4,738) (228,856) --
Class Y (117,501) (49,839) -- --
Net realized capital gain
Class A (18,905,325) -- (12,651,380) --
Class B (1,296,659) -- (4,129,524) --
Class C (261,882) -- (2,916,961) --
Class Y (317,675) -- -- --
--------------------- --------------------- --------------------- ---------------------
Total distributions (26,099,786) (1,723,626) (21,884,211) --
--------------------- --------------------- --------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) (55,926,861) (87,386,245) 15,400,963 (13,245,555)
--------------------- --------------------- --------------------- ---------------------
Redemption fees
Class A 3,687 7,519 1,759 411
Class B 250 600 582 216
Class C 46 39 378 88
Class Y 64 110 -- --
--------------------- --------------------- --------------------- ---------------------
4,047 8,268 2,719 715
--------------------- --------------------- --------------------- ---------------------
Net increase (decrease) in net
assets (20,107,726) 3,586,095 26,932,777 6,473,323
--------------------- --------------------- --------------------- ---------------------
NET ASSETS
Beginning of the year 763,439,109 759,853,014 142,439,162 135,965,839
--------------------- --------------------- --------------------- ---------------------
End of the year $ 743,331,383 $ 763,439,109 $ 169,371,939 $ 142,439,162
===================== ===================== ===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME (LOSS) $ 4,251,080 $ 4,156,656 $ (828,914) $ (159,969)
===================== ===================== ===================== =====================
See accompanying notes to financial statements.
47
Harris Associates Focused Value Fund Harris Associates Large Cap Value Fund
- -------------------------------------------- --------------------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
$ (1,712,199) $ (1,906,104) $ 704,299 $ 595,285
32,289,793 57,991,221 24,797,461 25,778,595
(3,254,755) (40,207,477) 14,208,318 (29,282,480)
- --------------------- --------------------- --------------------- ---------------------
27,322,839 15,877,640 39,710,078 (2,908,600)
- --------------------- --------------------- --------------------- ---------------------
-- -- (435,177) (231,035)
-- -- (124,953) (81,761)
-- -- (46,052) (28,415)
-- -- (30,568) (16,672)
(9,867,493) (10,494,877) -- --
(13,053,352) (12,897,474) -- --
(14,611,917) (16,300,067) -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
(37,532,762) (39,692,418) (636,750) (357,883)
- --------------------- --------------------- --------------------- ---------------------
(63,505,817) (37,006,144) (50,651,493) (61,204,054)
- --------------------- --------------------- --------------------- ---------------------
801 6,748 -- --
1,006 7,032 -- --
1,149 9,087 -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
2,956 22,867 -- --
- --------------------- --------------------- --------------------- ---------------------
(73,712,784) (60,798,055) (11,578,165) (64,470,537)
- --------------------- --------------------- --------------------- ---------------------
302,299,103 363,097,158 282,331,608 346,802,145
- --------------------- --------------------- --------------------- ---------------------
$ 228,586,319 $ 302,299,103 $ 270,753,443 $ 282,331,608
===================== ===================== ===================== =====================
$ (77,212) $ (58,725) $ 446,071 $ 378,522
===================== ===================== ===================== =====================
IXIS U.S. Diversified Portfolio IXIS Value Fund
- -------------------------------------------- --------------------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
$ (459,770) $ (5,426,695) $ 358,793 $ 36,516
69,057,546 85,718,676 16,600,274 14,669,814
9,002,821 (36,729,033) 5,401,523 (7,165,564)
- --------------------- --------------------- --------------------- ---------------------
77,600,597 43,562,948 22,360,590 7,540,766
- --------------------- --------------------- --------------------- ---------------------
-- -- (278,098) --
-- -- (9,395) --
-- -- (1,244) --
-- -- -- --
-- -- (12,893,672) (12,510,896)
-- -- (2,496,747) (3,162,413)
-- -- (391,442) (411,818)
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
-- -- (16,070,598) (16,085,127)
- --------------------- --------------------- --------------------- ---------------------
(98,667,360) (114,045,267) 2,351,488 (3,970,555)
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
(21,066,763) (70,482,319) 8,641,480 (12,514,916)
- --------------------- --------------------- --------------------- ---------------------
629,535,636 700,017,955 123,727,353 136,242,269
- --------------------- --------------------- --------------------- ---------------------
$ 608,468,873 $ 629,535,636 $ 132,368,833 $ 123,727,353
===================== ===================== ===================== =====================
$ (404,299) $ (348,230) $ (63,059) $ (129,408)
===================== ===================== ===================== =====================
48
STATEMENTS OF CHANGES IN NET ASSETS (continued)
Vaughan Nelson Small Cap Value Fund Westpeak Capital Growth Fund
-------------------------------------------- --------------------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
--------------------- --------------------- --------------------- ---------------------
--------------------- --------------------- --------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ (767,140) $ (950,930) $ (417,676) $ (632,456)
Net realized gain on investments,
written options and foreign
currency transactions 15,201,715 12,955,895 1,359,930 984,436
Net change in unrealized
appreciation (depreciation) on
investments and foreign
currency translations 5,842,036 (2,141,269) 4,795,603 1,466,262
--------------------- --------------------- --------------------- ---------------------
Net increase (decrease) in net
assets resulting from operations 20,276,611 9,863,696 5,737,857 1,818,242
--------------------- --------------------- --------------------- ---------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class Y -- -- -- --
Net realized capital gain
Class A -- -- -- --
Class B -- -- -- --
Class C -- -- -- --
Class Y -- -- -- --
--------------------- --------------------- --------------------- ---------------------
Total distributions -- -- -- --
--------------------- --------------------- --------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) 4,860,769 (11,845,326) (9,528,533) (12,686,062)
--------------------- --------------------- --------------------- ---------------------
Redemption fees
Class A 3,304 2,646 -- --
Class B 1,780 2,033 -- --
Class C 731 649 -- --
Class Y -- -- -- --
--------------------- --------------------- --------------------- ---------------------
5,815 5,328 -- --
--------------------- --------------------- --------------------- ---------------------
Net increase (decrease) in net
assets 25,143,195 (1,976,302) (3,790,676) (10,867,820)
--------------------- --------------------- --------------------- ---------------------
NET ASSETS
Beginning of the year 111,361,553 113,337,855 60,479,933 71,347,753
--------------------- --------------------- --------------------- ---------------------
End of the year $ 136,504,748 $ 111,361,553 $ 56,689,257 $ 60,479,933
===================== ===================== ===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME (LOSS) $ (110,178) $ (92,028) $ (112,145) $ (95,208)
===================== ===================== ===================== =====================
See accompanying notes to financial statements.
49
This Page Intentionally Left Blank
50
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
12/31/2006 $ 10.22 $ 0.08 $ 0.78 $ 0.86 $ (0.07) $ (0.31) $ (0.38)
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) -- -- --
Class B
12/31/2006 9.48 0.00(e) 0.74 0.74 (0.07) (0.31) (0.38)
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) -- -- --
Class C
12/31/2006 9.48 0.00(e) 0.74 0.74 (0.07) (0.31) (0.38)
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) -- -- --
Class Y
12/31/2006 10.42 0.11 0.82 0.93 (0.11) (0.31) (0.42)
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) -- -- --
HANSBERGER INTERNATIONAL FUND
Class A
12/31/2006 $ 19.88 $ 0.16 $ 4.51 $ 4.67 $ (0.35) $ (2.70) $ (3.05)
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)
Class B
12/31/2006 18.27 0.01 4.11 4.12 (0.18) (2.70) (2.88)
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)
Redemption
fees (e)
----------
CGM ADVISOR TARGETED EQUITY FUND
Class A
12/31/2006 $ 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
12/31/2002 --
Class B
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
12/31/2002 --
Class C
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
12/31/2002 --
Class Y
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
12/31/2002 --
HANSBERGER INTERNATIONAL FUND
Class A
12/31/2006 $ 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
12/31/2002 --
Class B
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
12/31/2002 --
(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, if applicable, 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, if applicable,
total return would have been lower.
See accompanying notes to financial statements.
51
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) (c) (000's) (%) (f) (%) (d) (%) rate (%)
- ---------- ----------- ----------- --------- --------- -------------- ---------
$ 10.70 8.5 $ 679,897 1.16 N/A 0.76 171
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
9.84 7.8 43,032 1.91 N/A 0.02 171
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
9.84 7.7 8,688 1.90 N/A 0.04 171
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
10.93 9.0 11,714 0.87 N/A 1.05 171
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
$ 21.50 24.1 $ 112,814 1.49 N/A 0.75 49
19.88 16.1 89,663 1.81 N/A 0.62 45
17.12 13.6 73,707 1.92 1.91 0.14 81
15.07 39.0 59,762 2.32 2.30 (0.34) 92
10.84 (16.4) 50,053 2.19 N/A (0.45) 91
19.51 23.2 33,016 2.25 N/A 0.03 49
18.27 15.3 33,388 2.55 N/A (0.02) 45
15.85 12.7 45,213 2.67 2.66 (0.60) 81
14.06 38.0 60,296 3.07 3.05 (1.09) 92
10.19 (17.0) 53,306 2.94 N/A (1.20) 91
(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, if applicable, expenses would have been higher.
(e)Amount rounds to less than $0.01 per share, if applicable.
(f)Represents total expenses prior to advisory fee waiver and/or reimbursement
of a portion of the Fund's expenses, if applicable.
52
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
12/31/2006 $ 18.28 $ 0.00(f) $ 4.11 $ 4.11
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)
HARRIS ASSOCIATES FOCUSED VALUE FUND
Class A
12/31/2006 $ 12.08 $ (0.02) $ 1.50 $ 1.48
12/31/2005 13.06 0.00(f) 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)
Class B
12/31/2006 11.59 (0.10) 1.43 1.33
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)
Class C
12/31/2006 11.59 (0.10) 1.43 1.33
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)
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Class A
12/31/2006 $ 13.33 $ 0.06 $ 2.13 $ 2.19
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)
Class B
12/31/2006 12.48 (0.04) 1.98 1.94
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)
Less distributions:
-----------------------------------------
Distributions
Dividends from from net
net investment realized Total Redemption
income capital gains distributions fees (f)
-------------- ------------- ------------- ----------
HANSBERGER INTERNATIONAL FUND (continued)
Class C
12/31/2006 $ (0.21) $ (2.70) $ (2.91) $ 0.00
12/31/2005 -- -- -- 0.00
12/31/2004 -- -- -- 0.00
12/31/2003 -- -- -- --
12/31/2002 (0.05) -- (0.05) --
HARRIS ASSOCIATES FOCUSED VALUE FUND
Class A
12/31/2006 $ -- $ (2.00) $ (2.00) $ 0.00
12/31/2005 -- (1.74) (1.74) 0.00
12/31/2004 -- -- -- 0.00
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
Class B
12/31/2006 -- (2.00) (2.00) 0.00
12/31/2005 -- (1.74) (1.74) 0.00
12/31/2004 -- -- -- 0.00
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
Class C
12/31/2006 -- (2.00) (2.00) 0.00
12/31/2005 -- (1.74) (1.74) 0.00
12/31/2004 -- -- -- 0.00
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Class A
12/31/2006 $ (0.03) $ -- $ (0.03) $ --
12/31/2005 (0.01) -- (0.01) --
12/31/2004 -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
Class B
12/31/2006 (0.03) -- (0.03) --
12/31/2005 (0.01) -- (0.01) --
12/31/2004 -- -- -- --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
(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,
if applicable, 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, if applicable, expenses would have been higher.
See accompanying notes to financial statements.
53
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) (d) (000's) (%) (g) (%) (c) (%) rate (%)
- ---------- ----------- ----------- --------- --------- -------------- ---------
$ 19.48 23.1 $ 23,541 2.25 N/A 0.01 49
18.28 15.3 19,388 2.56 N/A (0.11) 45
15.86 12.8 17,046 2.67 2.66 (0.63) 81
14.06 38.0 12,557 3.07 3.05 (1.09) 92
10.19 (17.0) 11,013 2.94 N/A (1.20) 91
$ 11.56 12.7 $ 62,603 1.51 N/A (0.12) 36
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 95,957 1.84 1.70 (0.28) 30
9.24 (15.7) 68,660 1.79 1.70 (0.35) 12
10.92 11.9 78,950 2.26 N/A (0.87) 36
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 26.6 107,017 2.59 2.45 (1.03) 30
9.12 (16.3) 85,794 2.54 2.45 (1.10) 12
10.92 11.9 87,033 2.27 N/A (0.88) 36
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 26.6 124,427 2.59 2.45 (1.03) 30
9.12 (16.3) 86,269 2.54 2.45 (1.10) 12
$ 15.49 16.5 $ 195,714 1.30 1.30 0.44 23
13.33 (0.2) 188,763 1.46 1.30 0.40 39
13.37 9.1 222,434 1.49 1.30 0.30 27
12.25 30.0 215,259 1.62 1.45 0.07 30(e)
9.42 (20.0) 130,751 1.56 N/A 0.07 195
14.39 15.6 42,894 2.07 2.05 (0.33) 23
12.48 (1.0) 59,035 2.21 2.05 (0.35) 39
12.62 8.4 79,949 2.24 2.05 (0.46) 27
11.64 29.1 91,085 2.37 2.20 (0.69) 30(e)
9.02 (20.7) 71,436 2.31 N/A (0.68) 195
(d)Had certain expenses not been reduced during the period, if applicable,
total return would have been lower.
(e)Portfolio turnover excludes the impact of assets resulting from a merger
with another fund.
(f)Amount rounds to less than $0.01 per share, if applicable.
(g)Represents total expenses prior to advisory fee waiver and/or reimbursement
of a portion of the Fund's expenses, if applicable.
54
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
12/31/2006 $ 12.46 $ (0.04) $ 1.98 $ 1.94
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)
Class Y
12/31/2006 13.72 0.12 2.20 2.32
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)
IXIS U.S. DIVERSIFIED PORTFOLIO
Class A
12/31/2006 $ 20.17 $ 0.04 $ 2.73 $ 2.77
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)
Class B
12/31/2006 18.01 (0.11) 2.43 2.32
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)
Class C
12/31/2006 18.03 (0.11) 2.44 2.33
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)
Class Y
12/31/2006 21.41 0.14 2.90 3.04
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)
Less distributions:
---------------------------
Dividends
from
net investment Total
income distributions
-------------- -------------
HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued)
Class C
12/31/2006 $ (0.03) $ (0.03)
12/31/2005 (0.01) (0.01)
12/31/2004 -- --
12/31/2003 -- --
12/31/2002 -- --
Class Y
12/31/2006 (0.03) (0.03)
12/31/2005 (0.01) (0.01)
12/31/2004 -- --
12/31/2003 -- --
12/31/2002 -- --
IXIS U.S. DIVERSIFIED PORTFOLIO
Class A
12/31/2006 $ -- $ --
12/31/2005 -- --
12/31/2004 -- --
12/31/2003 -- --
12/31/2002 -- --
Class B
12/31/2006 -- --
12/31/2005 -- --
12/31/2004 -- --
12/31/2003 -- --
12/31/2002 -- --
Class C
12/31/2006 -- --
12/31/2005 -- --
12/31/2004 -- --
12/31/2003 -- --
12/31/2002 -- --
Class Y
12/31/2006 -- --
12/31/2005 -- --
12/31/2004 -- --
12/31/2003 -- --
12/31/2002 -- --
(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,
if applicable, 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, if applicable, expenses would have been higher.
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) (d) (000's) (%) (f) (%) (c) (%) rate (%)
- ---------- ----------- ----------- --------- --------- -------------- ---------
$ 14.37 15.6 $ 18,089 2.06 2.05 (0.32) 23
12.46 (1.0) 20,308 2.21 2.05 (0.35) 39
12.60 8.3 26,392 2.24 2.05 (0.42) 27
11.63 29.1 15,553 2.37 2.20 (0.69) 30(e)
9.01 (20.7) 6,440 2.31 N/A (0.68) 195
16.01 17.0 14,057 0.91(g) N/A 0.82 23
13.72 (0.0) 14,226 1.09 1.05 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
$ 22.94 13.7 $ 393,430 1.46 N/A 0.17 83
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
20.33 12.9 147,819 2.22 N/A (0.60) 83
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
20.36 12.9 46,064 2.22 N/A (0.59) 83
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
24.45 14.2 21,155 1.03 N/A 0.60 83
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
(d)Had certain expenses not been reduced during the period, if applicable,
total return would have been lower.
(e)Portfolio turnover excludes the impact resulting from 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, if applicable.
(g)Includes expense waiver recapture of 0.04%.
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
---------- ---------- -------------- ----------
IXIS VALUE FUND
Class A
12/31/2006 $ 8.32 $ 0.04 $ 1.56 $ 1.60
12/31/2005 8.92 0.02 0.54 0.56
12/31/2004 8.16 0.00(c) 0.93 0.93
12/31/2003 6.20 (0.01) 1.97 1.96
12/31/2002 7.70 (0.01) (1.49) (1.50)
Class B
12/31/2006 7.51 (0.03) 1.40 1.37
12/31/2005 8.21 (0.05) 0.51 0.46
12/31/2004 7.57 (0.06) 0.87 0.81
12/31/2003 5.80 (0.06) 1.83 1.77
12/31/2002 7.26 (0.06) (1.40) (1.46)
Class C
12/31/2006 7.50 (0.03) 1.41 1.38
12/31/2005 8.21 (0.05) 0.50 0.45
12/31/2004 7.57 (0.05) 0.86 0.81
12/31/2003 5.80 (0.06) 1.83 1.77
12/31/2002 7.26 (0.06) (1.40) (1.46)
VAUGHAN NELSON SMALL CAP VALUE FUND
Class A
12/31/2006 $ 17.69 $ (0.05) $ 3.26 $ 3.21
12/31/2005 16.07 (0.08) 1.70 1.62
12/31/2004 13.94 (0.13) 2.26 2.13
12/31/2003 10.05 (0.19) 4.08 3.89
12/31/2002 14.52 (0.21) (4.26) (4.47)
Class B
12/31/2006 16.36 (0.20) 3.03 2.83
12/31/2005 14.97 (0.19) 1.58 1.39
12/31/2004 13.08 (0.22) 2.11 1.89
12/31/2003 9.51 (0.26) 3.83 3.57
12/31/2002 13.84 (0.28) (4.05) (4.33)
Class C
12/31/2006 16.37 (0.19) 3.01 2.82
12/31/2005 14.98 (0.19) 1.58 1.39
12/31/2004 13.09 (0.22) 2.11 1.89
12/31/2003 9.51 (0.26) 3.84 3.58
12/31/2002 13.84 (0.28) (4.05) (4.33)
Class Y
12/31/2006(e) 19.02 0.02 1.87 1.89
Less distributions:
-------------------------------------------
Dividends Distributions
from from net
net investment realized Total Redemption
income capital gains distributions fees (c)
-------------- ------------- ------------- ----------
IXIS VALUE FUND
Class A
12/31/2006 $ (0.02) $ (1.13) $ (1.15) $ --
12/31/2005 -- (1.16) (1.16) --
12/31/2004 -- (0.17) (0.17) --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
Class B
12/31/2006 (0.00)(c) (1.13) (1.13)
12/31/2005 -- (1.16) (1.16) --
12/31/2004 -- (0.17) (0.17) --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
Class C
12/31/2006 (0.00)(c) (1.13) (1.13) --
12/31/2005 -- (1.16) (1.16) --
12/31/2004 -- (0.17) (0.17) --
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
VAUGHAN NELSON SMALL CAP VALUE FUND
Class A
12/31/2006 $ -- $ -- $ -- $ 0.00
12/31/2005 -- -- -- 0.00
12/31/2004 -- -- -- 0.00
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
Class B
12/31/2006 -- -- -- 0.00
12/31/2005 -- -- -- 0.00
12/31/2004 -- -- -- 0.00
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
Class C
12/31/2006 -- -- -- 0.00
12/31/2005 -- -- -- 0.00
12/31/2004 -- -- -- 0.00
12/31/2003 -- -- -- --
12/31/2002 -- -- -- --
Class Y
12/31/2006(e) -- -- -- --
(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,
if applicable, 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, if applicable.
(d)Effect of voluntary waiver of expenses by advisor was less than 0.005%.
(e)From commencement of Class operations on August 31, 2006 through
December 31, 2006.
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) (g) (000's) (%) (h) (i) (%) (f) (i) (%) (i) rate (%)
- ---------- ----------- ----------- ----------- ----------- -------------- ---------
$ 8.77 19.7 $ 110,588 1.38 N/A 0.43 61
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
7.75 18.6 18,795 2.14 N/A (0.34) 61
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
7.75 18.8 2,986 2.14 N/A (0.33) 61
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
$ 20.90 18.1 $ 85,285 1.59 N/A (0.28) 88
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
19.19 17.2 32,606 2.37 N/A (1.10) 88
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
19.19 17.2 18,186 2.35 N/A (1.04) 88
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
20.91 9.9 427 1.90 1.35 0.35 88
(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, if applicable, expenses would have been higher.
(g)Had certain expenses not been reduced during the period, if applicable,
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, if applicable.
(i)Computed on an annualized basis for periods less than one year.
58
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
12/31/2006 $ 11.81 $ (0.07) $ 1.35 $ 1.28 $ -- $ --
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) -- --
Class B
12/31/2006 10.19 (0.14) 1.15 1.01 -- --
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) -- --
Class C
12/31/2006 10.17 (0.14) 1.15 1.01 -- --
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) -- --
(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, if applicable, 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.
See accompanying notes to financial statements.
59
Ratios to average net assets:
-----------------------------
Net assets, Net
Net asset Total end of Gross Net investment Portfolio
value, end return period expenses expenses income turnover
of period (%) (a) (e) (000's) (%) (f) (%) (d) (loss) (%) rate (%)
---------- ----------- ----------- --------- --------- ---------- ---------
$ 13.09 10.8 $ 47,332 1.62 1.61 (0.59) 126
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
11.20 9.9 8,599 2.38 2.36 (1.35) 126
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
11.18 9.9 758 2.38 2.36 (1.35) 126
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
(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, if applicable, expenses would have been higher.
(e)Had certain expenses not been reduced during the period, if applicable,
total return would have been lower.
(f)Represents total expenses prior to advisory fee waiver and/or reimbursement
of a portion of the Fund's expenses, if applicable.
60
NOTES TO FINANCIAL STATEMENTS
December 31, 2006
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. 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 (individually, a "Fund" and collectively the "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,
Small Cap Value 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 Rule 12b-1 fees than Class A shares
and may be subject to a CDSC of 1.00% if those shares are redeemed within one
year. Class Y shares do not pay a front-end sales charge, a CDSC or Rule 12b-1
fees. They are generally intended for institutional investors with a minimum
initial investment of $1,000,000, though some categories of investors are
excepted from the minimum investment amount as outlined in the Prospectus.
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 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, including closed-end investment
companies, for which market quotations are readily available are valued at
market value, as reported by pricing services recommended by the investment
adviser and the subadvisors 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 sixty days or less) are generally
valued at market price on the basis of valuations furnished to the Funds by a
pricing service recommended by the investment adviser and the subadvisors and
approved 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.
Broker-dealer bid quotations may also be used to value debt and equity
securities where a pricing service does not price a security or where a pricing
service does not provide a reliable price for the security. In instances where
broker-dealer bid quotations are not available, certain securities held by the
Funds may be valued on the basis of a price provided by a principal market
maker. The prices provided by the principal market makers may differ from the
value that would be realized if the securities were sold. Short-term
obligations with a remaining maturity of sixty 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' subadvisors using consistently applied procedures
under the general supervision of the Board of Trustees . As of December 31,
2006, approximately 68% of the market value of the investments for the
Hansberger International Fund was fair valued pursuant to procedures approved
by the Board of Trustees. Investments in other open-end investment companies
are valued at their 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 securities, the Funds may,
among other things, use modeling tools or other processes that may take into
account factors such as securities market activity and/or significant events
that occur after the close of the foreign market and before the Funds calculate
their net asset values.
61
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
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.
Each Fund 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 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 those resulting from future adverse political
or economic developments and the possible imposition of currency exchange
blockages or other foreign governmental laws or restrictions. 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 generally 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. The U.S. dollar value of the currencies a Fund has
committed to buy or sell represents the aggregate exposure to each currency a
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 December 31, 2006, there were no open forward currency
contracts.
e. Options. Certain Funds may enter into option contracts. An option contract
is a contract in which the writer of the option grants the buyer of the option
the right to purchase from (call option) or sell to (put option) the writer a
designated instrument at a specified price within a specified period of time.
When a Fund writes an option, an amount equal to the premium received is
recorded as a liability and subsequently marked to market to reflect the
current value. Premiums received from writing options which expire are treated
as realized gains. Premiums received from writing options which are exercised
or closed are added to the proceeds from or offset against the amounts paid on
the underlying instrument to determine the realized gain or loss. When a Fund
writes an option, it bears the risk of an unfavorable change in the price of
the underlying instrument. The writer of an option may enter into a closing
transaction by purchasing an option identical to the option written. The Fund
bears the risk that an illiquid market may limit its ability to enter into a
closing transaction. At December 31, 2006, there were no open written option
contracts.
When a Fund purchases an option, it pays a premium and the option is
subsequently marked to market to reflect the current value. Premiums paid for
purchasing options which expire are treated as realized losses. Premiums paid
for purchasing options which are exercised or closed are added to the cost or
deducted from the proceeds on the underlying instrument to determine the
realized gain or loss. The risk associated with purchasing options is limited
to the premium paid. At December 31, 2006, there were no open purchased option
contracts.
Exchange-traded options are valued at the last sale price, or if no sale is
reported, the last bid price for purchased options and the last ask price for
written options.
62
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
For the year ended December 31, 2006, written option transactions for the U.S.
Diversified Portfolio were as follows:
Number of
Contracts Premiums
--------- --------
Outstanding at beginning of period -- --
Options written (186) $(22,971)
Options closed -- --
Options exercised -- --
Options expired 186 22,971
---- --------
Outstanding at end of period -- $ --
==== ========
f. 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.
g. 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.
The tax characterization of distributions is determined on an annual basis. The
tax character of distributions paid to shareholders during the years ended
December 31, 2006 and December 31, 2005 was as follows:
2006 Distributions Paid From: 2005 Distributions Paid From:
----------------------------------------- -----------------------------------------
Ordinary Long-Term Ordinary Long-Term
Fund Income Capital Gains Total Income Capital Gains Total
- ---- ------ ------------- ----- ------ ------------- -----
Targeted Equity Fund $ 5,318,245 $ 20,781,541 $ 26,099,786 $ 1,723,626 $ -- $ 1,723,626
International Fund 5,684,336 16,199,875 21,884,211 -- -- --
Focused Value Fund -- 37,532,762 37,532,762 -- 39,692,418 39,692,418
Large Cap Value Fund 636,750 -- 636,750 357,883 -- 357,883
Value Fund 3,406,132 12,664,466 16,070,598 2,535,529 13,549,598 16,085,127
As of December 31, 2006, the components of distributable earnings on a tax
basis were as follows:
U.S.
Targeted International Focused Large Cap Diversified
Equity Fund Fund Value Fund Value Fund Portfolio Value Fund
----------- ---- ---------- ---------- --------- ----------
Undistributed ordinary income $ 11,640,410 $ 1,550,549 $ -- $ 738,282 $ -- $ 1,210,027
Undistributed long-term capital gains 13,479,725 2,374,284 2,205,434 -- -- 1,854,989
------------- ------------- ------------- ------------- ------------- -------------
Total undistributed earnings 25,120,135 3,924,833 2,205,434 738,282 -- 3,065,016
Capital loss carryforward:
Expires December 31, 2009 -- -- -- (50,921,004) (8,873,074) --
Expires December 31, 2010 -- -- -- (24,633,843) (62,468,898) --
Expires December 31, 2011 -- -- -- (9,965,466) -- --
------------- ------------- ------------- ------------- ------------- -------------
Total capital loss carryforward -- -- -- (85,520,313) (71,341,972) --
Deferred net currency losses (post
October) -- -- -- -- (6,591) --
Unrealized appreciation (depreciation) 61,057,700 37,303,994 35,254,968 53,957,102 110,748,496 26,830,432
------------- ------------- ------------- ------------- ------------- -------------
Total accumulated earnings (losses) $ 86,177,835 $ 41,228,827 $ 37,460,402 $ (30,824,929) $ 39,399,933 $ 29,895,448
------------- ------------- ------------- ------------- ------------- -------------
Capital loss carryforward utilized in
the current year $ 55,280,538 $ -- $ -- $ 24,472,911 $ 68,135,269 $ --
============= ============= ============= ============= ============= =============
Small Cap Capital
Value Fund Growth Fund
---------- -----------
Undistributed ordinary income $ -- $ --
Undistributed long-term capital gains -- --
------------- -------------
Total undistributed earnings -- --
Capital loss carryforward:
Expires December 31, 2009 -- (20,489,767)
Expires December 31, 2010 (14,054,764) (26,883,047)
Expires December 31, 2011 -- (4,097,913)
------------- -------------
Total capital loss carryforward (14,054,764) (51,470,727)
Deferred net currency losses (post
October) -- --
Unrealized appreciation (depreciation) 18,279,881 5,764,627
------------- -------------
Total accumulated earnings (losses) $ 4,225,117 $ (45,706,100)
------------- -------------
Capital loss carryforward utilized in
the current year $ 15,219,336 $ 627,143
============= =============
63
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
h. 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 arrangements 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.
i. 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 December 31, 2006
were as follows:
Market Value Value of
of Securities Collateral
Fund on Loan Received
---- ------------- ------------
Targeted Equity Fund $105,389,588 $107,341,167
International Fund 35,697,604 37,301,240
Focused Value Fund 32,309,413 33,336,293
Large Cap Value Fund 1,525,254 1,558,900
U.S. Diversified Portfolio 71,332,377 73,222,927
Value Fund 16,764,688 17,278,289
Small Cap Value Fund 33,826,317 34,905,193
Capital Growth Fund 7,609,915 7,840,726
j. Indemnifications. Under the Trusts' 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.
k. New Accounting Pronouncements. Financial Accounting Standards Board (FASB)
Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an
Interpretation of FASB Statement 109 ("FIN 48") was issued and became effective
for fiscal years beginning after December 15, 2006. FIN 48 sets forth a
threshold for financial statement recognition, measurement and disclosure of a
tax position taken or expected to be taken on a tax return. Subsequent thereto,
the United States Securities and Exchange Commission ("SEC") indicated that it
would not object if a fund first adopts FIN 48 on the last business day of the
first required financial reporting period for fiscal years beginning after
December 15, 2006. Accordingly, Management is continuing to evaluate the impact
the adoption of FIN 48 may have on each Fund's net assets and results of
operations. In compliance with the recently issued SEC guidance the impacts, if
any, will be reflected in the Funds' semiannual financial statements as of
June 30, 2007.
In addition, in September, 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements ("SFAS 157"), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact, if any,
the adoption of SFAS 157 will have on the Funds' financial statements.
3. Purchases and Sales of Securities. For the year ended December 31, 2006,
purchases and sales of securities (excluding short-term investments) were as
follows:
Fund Purchases Sales
---- -------------- --------------
Targeted Equity Fund $1,285,893,374 $1,361,600,040
International Fund 75,299,526 80,875,851
Focused Value Fund 87,684,282 167,406,942
Large Cap Value Fund 59,807,343 113,459,076
U.S. Diversified Portfolio 504,369,821 597,171,122
Value Fund 73,770,770 87,759,008
Small Cap Value Fund 109,209,670 104,220,130
Capital Growth Fund 72,066,130 81,784,360
64
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. IXIS Asset Management Advisors, L.P. ("IXIS Advisors")
serves as investment advisor to each Fund except the Targeted Equity Fund.
Capital Growth Management Limited Partnership ("CGM") is the investment advisor
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 0.90% 0.90% 0.90% 0.90% 0.90%
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%
Prior to July 1, 2006, the management fee for Focused Value Fund was 1.00% of
the Fund's first $1 billion of the Fund's average daily net assets and 0.95% of
such assets in excess of $1 billion.
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")
BlackRock Investment Management LLC ("BlackRock")
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
Prior to October 2, 2006, Mercury Advisors served as subadvisor to a segment of
U.S. Diversified Portfolio.
Payments to IXIS Advisors are reduced in the amount of payments to the
subadvisors.
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. For the year ended
December 31, 2006 (for the period May 1, 2006 through December 31, 2006 for
Small Cap Value Fund and Capital Growth Fund), 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% 1.35%
Capital Growth Fund 1.50% 2.25% 2.25% --
65
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
Prior to May 1, 2006, Small Cap Value Fund and Capital Growth Fund had no
expense limits.
For the year ended December 31, 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 $5,291,650 $-- $5,291,650 0.70% 0.70%
International Fund 1,250,812 -- 1,250,812 0.80% 0.80%
Focused Value Fund 2,425,826 -- 2,425,826 0.95% 0.95%
Large Cap Value Fund 1,822,308 -- 1,822,308 0.69% 0.69%
U.S. Diversified Portfolio 5,557,166 -- 5,557,166 0.90% 0.90%
Value Fund 932,836 -- 932,836 0.75% 0.75%
Small Cap Value Fund 1,118,892 -- 1,118,892 0.90% 0.90%
Capital Growth Fund 433,385 -- 433,385 0.75% 0.75%
For the year ended December 31, 2006, class specific expenses have been
reimbursed as follows:
Fund Reimbursement
---- -------------
Large Cap Value Fund $14,496
Small Cap Value Fund 237
Capital Growth Fund 9,850
IXIS Advisors shall be permitted to recover management fees waived and/or
expenses it has borne under the expense limitation agreements on a Class by
Class basis in later periods to the extent the expenses of a Class fall below a
Class' expense limits, provided, however, that a Class is not obligated to pay
such deferred fees/expenses more than one year after the end of the fiscal year
in which the fee/expense was deferred. The amounts subject to possible
reimbursement under the expense limitation agreements at December 31, 2006 were
as follows:
Expenses Subject to Possible Reimbursement until December 31, 2007
Fund Class A Class B Class C Class Y Total
---- ------- ------- ------- ------- -----
Large Cap Value Fund $5,520 $7,469 $1,507 $ -- $14,496
Small Cap Value Fund -- -- -- 237 237
Capital Growth Fund 7,891 1,802 157 -- 9,850
Certain officers and directors of IXIS Advisors and its affiliates are also
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.
b. Administrative Fees. IXIS Advisors provides certain administrative services
for the Funds and has subcontracted with State Street Bank to serve as
sub-administrator. IXIS Advisors is a wholly-owned subsidiary of IXIS US Group.
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. New funds are subject to a prorated annual fee of $50,000 plus
$12,500 per class and an additional $50,000 if managed by multiple subadvisors
in their first calendar year of operations.
66
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
For the year ended December 31, 2006, amounts paid to IXIS Advisors for
administrative fees were as follows:
Administrative
Fund Fees
---- --------------
Targeted Equity Fund $429,903
International Fund 96,502
Focused Value Fund 145,192
Large Cap Value Fund 148,050
U.S. Diversified Portfolio 349,523
Value Fund 72,347
Small Cap Value Fund 70,513
Capital Growth Fund 35,338
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 of the Trusts.
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 an 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 an 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 an 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 year ended December 31, 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 $1,728,516 $123,852 $ 18,738 $ 371,557 $ 56,215
International Fund 252,677 84,057 54,146 252,169 162,439
Focused Value Fund 171,625 213,031 251,141 639,094 753,423
Large Cap Value Fund 461,466 121,778 45,643 365,332 136,927
U.S. Diversified Portfolio 972,878 401,607 117,535 1,204,821 352,606
Value Fund 254,242 49,629 7,074 148,885 21,223
Small Cap Value Fund 180,258 90,780 39,658 272,340 118,972
Capital Growth Fund 119,496 22,872 2,094 68,616 6,281
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 year ended December 31, 2006 were as follows:
Fund Commission
---- ----------
Targeted Equity Fund $408,420
International Fund 128,778
Focused Value Fund 342,303
Large Cap Value Fund 145,056
U.S. Diversified Portfolio 493,669
Value Fund 113,653
Small Cap Value Fund 115,922
Capital Growth Fund 69,540
67
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
For the year ended December 31, 2006, brokerage commissions for portfolio
transactions paid to affiliated broker/dealers by the U.S. Diversified
Portfolio were $24,951.
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 and 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 IXIS Advisor Funds Trusts and
Loomis Sayles Funds Trusts based on a formula that takes into account, among
other factors, the relative net assets of each fund. Trustees are reimbursed
for travel expenses in connection with attendance at meetings.
A deferred compensation plan (the "Plan") is available to the Trustees on a
voluntary basis. Each participating Trustee will receive an amount equal to the
value that such deferred compensation would have been had it been invested in a
designated Fund or certain other funds of the IXIS Advisor Funds Trusts and the
Loomis Sayles Funds Trusts on the normal payment date. Deferred amounts remain
in the Funds until distributed in accordance with the Plan.
f. Redemption Fees. Shareholders of Class A shares and Class Y 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 fund based on its borrowings 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 funds based on their average daily unused portion of
the line of credit. For the year ended December 31, 2006, the Funds had no
borrowings under this agreement.
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 year ended December 31, 2006, amounts rebated
under these agreements were as follows:
Fund Rebates
---- --------
Targeted Equity Fund $402,508
International Fund 17,195
Focused Value Fund 83,253
Large Cap Value Fund 40,733
U.S. Diversified Portfolio 148,810
Value Fund 38,006
Small Cap Value Fund 31,504
Capital Growth Fund 18,216
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.
68
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
8. Capital Shares. Each Fund may issue an unlimited number of shares of
beneficial interest without par value. Transactions in capital shares were as
follows:
Year Ended
December 31, 2006
-----------------------------------
Targeted Equity Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 3,021,026 $ 32,094,011
Issued in connection with the reinvestment of distributions 2,175,752 22,722,255
---------------- -----------------
5,196,778 54,816,266
Redeemed (9,606,296) (102,106,132)
---------------- -----------------
Net change (4,409,518) $ (47,289,866)
---------------- -----------------
Class B
Issued from the sale of shares 527,280 $ 5,168,973
Issued in connection with the reinvestment of distributions 158,904 1,525,452
---------------- -----------------
686,184 6,694,425
Redeemed (1,901,868) (18,667,272)
---------------- -----------------
Net change (1,215,684) $ (11,972,847)
---------------- -----------------
Class C
Issued from the sale of shares 491,071 $ 4,828,598
Issued in connection with the reinvestment of distributions 19,469 187,296
---------------- -----------------
510,540 5,015,894
Redeemed (168,586) (1,657,411)
---------------- -----------------
Net change 341,954 $ 3,358,483
---------------- -----------------
Class Y
Issued from the sale of shares 134,863 $ 1,446,830
Issued in connection with the reinvestment of distributions 40,781 435,176
---------------- -----------------
175,644 1,882,006
Redeemed (175,923) (1,904,637)
---------------- -----------------
Net change (279) $ (22,631)
---------------- -----------------
Increase (decrease) from capital share transactions (5,283,527) $ (55,926,861)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Targeted Equity Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 2,114,436 $ 20,342,978
Issued in connection with the reinvestment of distributions 157,595 1,531,634
---------------- -----------------
2,272,031 21,874,612
Redeemed (10,590,304) (100,805,465)
---------------- -----------------
Net change (8,318,273) $ (78,930,853)
---------------- -----------------
Class B
Issued from the sale of shares 479,091 $ 4,271,772
Issued in connection with the reinvestment of distributions 8,192 70,535
---------------- -----------------
487,283 4,342,307
Redeemed (1,703,082) (15,113,085)
---------------- -----------------
Net change (1,215,799) $ (10,770,778)
---------------- -----------------
Class C
Issued from the sale of shares 247,891 $ 2,279,688
Issued in connection with the reinvestment of distributions 427 3,675
---------------- -----------------
248,318 2,283,363
Redeemed (87,175) (772,409)
---------------- -----------------
Net change 161,143 $ 1,510,954
---------------- -----------------
Class Y
Issued from the sale of shares 154,883 $ 1,499,898
Issued in connection with the reinvestment of distributions 4,853 49,839
---------------- -----------------
159,736 1,549,737
Redeemed (77,671) (745,305)
---------------- -----------------
Net change 82,065 $ 804,432
---------------- -----------------
Increase (decrease) from capital share transactions (9,290,864) $ (87,386,245)
================ =================
Year Ended
December 31, 2006
-----------------------------------
International Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 882,514 $ 19,025,323
Issued in connection with the reinvestment of distributions 620,244 13,054,791
---------------- -----------------
1,502,758 32,080,114
Redeemed (765,037) (16,553,658)
---------------- -----------------
Net change 737,721 $ 15,526,456
---------------- -----------------
Class B
Issued from the sale of shares 281,932 $ 5,558,168
---------------- -----------------
Issued in connection with the reinvestment of distributions 217,726 4,157,074
---------------- -----------------
499,658 9,715,242
Redeemed (634,271) (12,632,454)
---------------- -----------------
Net change (134,613) $ (2,917,212)
---------------- -----------------
Class C
Issued from the sale of shares 191,194 $ 3,765,350
Issued in connection with the reinvestment of distributions 123,876 2,364,479
---------------- -----------------
315,070 6,129,829
Redeemed (167,643) (3,338,110)
---------------- -----------------
Net change 147,427 $ 2,791,719
---------------- -----------------
Increase (decrease) from capital share transactions 750,535 $ 15,400,963
================ =================
Year Ended
December 31, 2005
-----------------------------------
International Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,043,158 $ 18,504,622
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
1,043,158 18,504,622
Redeemed (837,941) (14,808,970)
---------------- -----------------
Net change 205,217 $ 3,695,652
---------------- -----------------
Class B
Issued from the sale of shares 203,605 $ 3,346,613
---------------- -----------------
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
203,605 3,346,613
Redeemed (1,228,248) (20,075,132)
---------------- -----------------
Net change (1,024,643) $ (16,728,519)
---------------- -----------------
Class C
Issued from the sale of shares 171,446 $ 2,829,915
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
171,446 2,829,915
Redeemed (185,571) (3,042,603)
---------------- -----------------
Net change (14,125) $ (212,688)
---------------- -----------------
Increase (decrease) from capital share transactions (833,551) $ (13,245.555)
================ =================
69
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
Year Ended
December 31, 2006
-----------------------------------
Focused Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 762,517 $ 9,168,276
Issued in connection with the reinvestment of distributions 594,724 6,857,113
---------------- -----------------
1,357,241 16,025,389
Redeemed (2,756,214) (33,719,620)
---------------- -----------------
Net change (1,398,973) $ (17,694,231)
---------------- -----------------
Class B
Issued from the sale of shares 460,413 $ 5,172,828
Issued in connection with the reinvestment of distributions 850,572 9,284,689
---------------- -----------------
1,310,985 14,457,517
Redeemed (2,469,943) (28,816,298)
---------------- -----------------
Net change (1,158,958) $ (14,358,781)
---------------- -----------------
Class C
Issued from the sale of shares 840,633 $ 9,434,145
Issued in connection with the reinvestment of distributions 760,727 8,305,493
---------------- -----------------
1,601,360 17,739,638
Redeemed (4,218,781) (49,192,443)
---------------- -----------------
Net change (2,617,421) $ (31,452,805)
---------------- -----------------
Increase (decrease) from capital share transactions (5,175,352) $ (63,505,817)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Focused Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,278,667 $ 16,573,289
Issued in connection with the reinvestment of distributions 580,779 7,068,077
---------------- -----------------
1,859,446 23,641,366
Redeemed (3,318,671) (43,905,787)
---------------- -----------------
Net change (1,459,225) $ (20,264,421)
---------------- -----------------
Class B
Issued from the sale of shares 576,120 $ 7,060,801
Issued in connection with the reinvestment of distributions 766,254 8,949,845
---------------- -----------------
1,342,374 16,010,646
Redeemed (1,639,139) (21,010,935)
---------------- -----------------
Net change (296,765) $ (5,000,289)
---------------- -----------------
Class C
Issued from the sale of shares 1,319,958 $ 16,274,937
Issued in connection with the reinvestment of distributions 758,307 8,857,031
---------------- -----------------
2,078,265 25,131,968
Redeemed (2,893,997) (36,873,402)
---------------- -----------------
Net change (815,732) $ (11,741,434)
---------------- -----------------
Increase (decrease) from capital share transactions (2,571,722) $ (37,006,144)
================ =================
Year Ended
December 31, 2006
-----------------------------------
Large Cap Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,331,189 $ 18,612,209
Issued in connection with the reinvestment of distributions 27,510 358,457
---------------- -----------------
1,358,699 18,970,666
Redeemed (2,887,544) (40,026,448)
---------------- -----------------
Net change (1,528,845) $ (21,055,782)
---------------- -----------------
Class B
Issued from the sale of shares 176,257 $ 2,291,417
Issued in connection with the reinvestment of distributions 9,192 111,770
---------------- -----------------
185,449 2,403,187
Redeemed (1,936,076) (25,010,219)
---------------- -----------------
Net change (1,750,627) $ (22,607,032)
---------------- -----------------
Class C
Issued from the sale of shares 113,625 $ 1,446,870
Issued in connection with the reinvestment of distributions 1,654 20,078
---------------- -----------------
115,279 1,466,948
Redeemed (486,431) (6,230,411)
---------------- -----------------
Net change (371,152) $ (4,763,463)
---------------- -----------------
Class Y
Issued from the sale of shares 76,363 $ 1,102,604
Issued in connection with the reinvestment of distributions 2,238 30,077
---------------- -----------------
78,601 1,132,681
Redeemed (237,315) (3,357,897)
---------------- -----------------
Net change (158,714) $ (2,225,216)
---------------- -----------------
Increase (decrease) from capital share transactions (3,809,338) $ (50,651,493)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Large Cap Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,068,733 $ 13,952,739
Issued in connection with the reinvestment of distributions 14,688 191,232
---------------- -----------------
1,083,421 14,143,971
Redeemed (3,550,446) (46,275,347)
---------------- -----------------
Net change (2,467,025) $ (32,131,376)
---------------- -----------------
Class B
Issued from the sale of shares 262,250 $ 3,214,063
Issued in connection with the reinvestment of distributions 6,033 73,844
---------------- -----------------
268,283 3,287,907
Redeemed (1,873,402) (22,992,338)
---------------- -----------------
Net change (1,605,119) $ (19,704,431)
---------------- -----------------
Class C
Issued from the sale of shares 233,814 $ 2,864,911
Issued in connection with the reinvestment of distributions 976 11,942
---------------- -----------------
234,790 2,876,853
Redeemed (699,505) (8,571,119)
---------------- -----------------
Net change (464,715) $ (5,694,266)
---------------- -----------------
Class Y
Issued from the sale of shares 68,963 $ 925,029
Issued in connection with the reinvestment of distributions 1,195 16,006
---------------- -----------------
70,158 941,035
Redeemed (345,786) (4,615,016)
---------------- -----------------
Net change (275,628) $ (3,673,981)
---------------- -----------------
Increase (decrease) from capital share transactions (4,812,487) $ (61,204,054)
================ =================
70
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
Year Ended
December 31, 2006
-----------------------------------
U.S. Diversified Portfolio Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Issued from the sale of shares 1,699,970 $ 36,351,386
Redeemed (3,689,517) (78,838,491)
---------------- -----------------
Net change (1,989,547) $ (42,487,105)
---------------- -----------------
Class B
Issued from the sale of shares 536,719 $ 10,239,866
Redeemed (2,967,752) (56,524,819)
---------------- -----------------
Net change (2,431,033) $ (46,284,953)
---------------- -----------------
Class C
Issued from the sale of shares 77,624 $ 1,484,914
Redeemed (490,888) (9,387,689)
---------------- -----------------
Net change (413,264) $ (7,902,775)
---------------- -----------------
Class Y
Issued from the sale of shares 123,141 $ 2,825,376
Redeemed (212,914) (4,817,903)
---------------- -----------------
Net change (89,773) $ (1,992,527)
---------------- -----------------
Increase (decrease) from capital share transactions (4,923,617) $ (98,667,360)
================ =================
Year Ended
December 31, 2005
-----------------------------------
U.S. Diversified Portfolio Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Issued from the sale of shares 2,385,720 $ 44,954,334
Redeemed (4,189,901) (79,262,654)
---------------- -----------------
Net change (1,804,181) $ (34,308,320)
---------------- -----------------
Class B
Issued from the sale of shares 669,095 $ 11,320,578
Redeemed (4,207,942) (71,182,972)
---------------- -----------------
Net change (3,538,847) $ (59,862,394)
---------------- -----------------
Class C
Issued from the sale of shares 102,734 $ 1,746,851
Redeemed (912,989) (15,415,642)
---------------- -----------------
Net change (810,255) $ (13,668,791)
---------------- -----------------
Class Y
Issued from the sale of shares 142,301 $ 2,842,762
Redeemed (451,903) (9,048,524)
---------------- -----------------
Net change (309,602) $ (6,205,762)
---------------- -----------------
Increase (decrease) from capital share transactions (6,462,885) $ (114,045,267)
================ =================
Year Ended
December 31, 2006
-----------------------------------
Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,203,187 $ 10,847,757
Issued in connection with the reinvestment of distributions 1,483,355 12,855,774
---------------- -----------------
2,686,542 23,703,531
Redeemed (1,895,422) (16,798,467)
---------------- -----------------
Net change 791,120 $ 6,905,064
---------------- -----------------
Class B
Issued from the sale of shares 265,829 $ 2,112,444
Issued in connection with the reinvestment of distributions 312,207 2,393,002
---------------- -----------------
578,036 4,505,446
Redeemed (1,144,083) (9,035,508)
---------------- -----------------
Net change (566,047) $ (4,530,062)
---------------- -----------------
Class C
Issued from the sale of shares 44,612 $ 357,458
Issued in connection with the reinvestment of distributions 40,018 306,916
---------------- -----------------
84,630 664,374
Redeemed (87,753) (687,888)
---------------- -----------------
Net change (3,123) $ (23,514)
---------------- -----------------
Increase (decrease) from capital share transactions 221,950 $ 2,351,488
================ =================
Year Ended
December 31, 2005
-----------------------------------
Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 752,413 $ 6,758,994
Issued in connection with the reinvestment of distributions 1,432,023 12,200,602
---------------- -----------------
2,184,436 18,959,596
Redeemed (2,182,286) (19,556,017)
---------------- -----------------
Net change 2,150 $ (596,421)
---------------- -----------------
Class B
Issued from the sale of shares 229,964 $ 1,881,852
Issued in connection with the reinvestment of distributions 393,062 3,030,283
---------------- -----------------
623,026 4,912,135
Redeemed (1,018,265) (8,370,264)
---------------- -----------------
Net change (395,239) $ (3,458,129)
---------------- -----------------
Class C
Issued from the sale of shares 51,464 $ 417,159
Issued in connection with the reinvestment of distributions 39,420 303,708
---------------- -----------------
90,884 720,867
Redeemed (77,457) (636,872)
---------------- -----------------
Net change 13,427 $ 83,995
---------------- -----------------
Increase (decrease) from capital share transactions (379,662) $ (3,970,555)
================ =================
71
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
Year Ended
December 31, 2006
-----------------------------------
Small Cap Value Fund Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Issued from the sale of shares 1,565,095 $ 30,243,879
Redeemed (817,467) (15,859,750)
---------------- -----------------
Net change 747,628 $ 14,384,129
---------------- -----------------
Class B
Issued from the sale of shares 154,897 $ 2,772,776
Redeemed (822,694) (14,729,819)
---------------- -----------------
Net change (667,797) $ (11,957,043)
---------------- -----------------
Class C
Issued from the sale of shares 364,171 $ 6,498,460
Redeemed (251,618) (4,488,816)
---------------- -----------------
Net change 112,553 $ 2,009,644
---------------- -----------------
Class Y*
Issued from the sale of shares 20,430 $ 424,039
Redeemed -- --
---------------- -----------------
Net change 20,430 $ 424,039
---------------- -----------------
Increase (decrease) from capital share transactions 212,814 $ 4,860,769
================ =================
Year Ended
December 31, 2005
-----------------------------------
Small Cap Value Fund Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Issued from the sale of shares 1,322,502 $ 21,908,202
Redeemed (797,816) (13,154,538)
---------------- -----------------
Net change 524,686 $ 8,753,664
---------------- -----------------
Class B
Issued from the sale of shares 172,453 $ 2,628,609
Redeemed (1,455,176) (22,158,268)
---------------- -----------------
Net change (1,282,723) $ (19,529,659)
---------------- -----------------
Class C
Issued from the sale of shares 177,290 $ 2,719,736
Redeemed (246,708) (3,789,067)
---------------- -----------------
Net change (69,418) $ (1,069,331)
---------------- -----------------
Class Y*
Issued from the sale of shares -- --
Redeemed -- --
---------------- -----------------
Net change -- --
---------------- -----------------
Increase (decrease) from capital share transactions (827,455) $ (11,845,326)
================ =================
Year Ended
December 31, 2006
-----------------------------------
Capital Growth Fund Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Issued from the sale of shares 209,910 $ 2,590,783
Redeemed (798,809) (9,769,562)
---------------- -----------------
Net change (588,899) $ (7,178,779)
---------------- -----------------
Class B
Issued from the sale of shares 81,915 $ 870,627
Redeemed (282,316) (2,968,891)
---------------- -----------------
Net change (200,401) $ (2,098,264)
---------------- -----------------
Class C
Issued from the sale of shares 12,274 $ 135,304
Redeemed (36,537) (386,794)
---------------- -----------------
Net change (24,263) $ (251,490)
---------------- -----------------
Increase (decrease) from capital share transactions (813,563) $ (9,528,533)
================ =================
Year Ended
December 31, 2005
-----------------------------------
Capital Growth Fund Shares Amount
- ------------------------------------------------------ ---------------- -----------------
Class A
Issued from the sale of shares 241,489 $ 2,743,935
Redeemed (1,057,103) (12,074,125)
---------------- -----------------
Net change (815,614) $ (9,330,190)
---------------- -----------------
Class B
Issued from the sale of shares 93,730 $ 919,070
Redeemed (425,145) (4,178,212)
---------------- -----------------
Net change (331,415) $ (3,259,142)
---------------- -----------------
Class C
Issued from the sale of shares 5,876 $ 57,428
Redeemed (15,868) (154,158)
---------------- -----------------
Net change (9,992) $ (96,730)
---------------- -----------------
Increase (decrease) from capital share transactions (1,157,021) $ (12,686,062)
================ =================
* From commencement of Class operations on August 31, 2006 through
December 31, 2006.
72
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of IXIS Advisor Funds Trust I, IXIS Advisor Funds Trust II, and
IXIS Advisor Funds Trust III and Shareholders of CGM Advisor Targeted Equity
Fund, Hansberger International Fund, IXIS U.S. Diversified Portfolio, IXIS
Value Fund, Vaughan Nelson Small Cap Value Fund, Westpeak Capital Growth Fund,
Harris Associates Large Cap Value Fund and Harris Associates Focused Value Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the CGM Advisor
Targeted Equity Fund, Hansberger International Fund, IXIS U.S. Diversified
Portfolio, IXIS Value Fund, Vaughan Nelson Small Cap Value Fund and Westpeak
Capital Growth Fund, each a series of IXIS Advisor Funds Trust I; the Harris
Associates Large Cap Value Fund, a series of IXIS Advisor Funds Trust II; and
the Harris Associates Focused Value Fund, a series of IXIS Advisor Funds Trust
III (collectively, the "Funds"), at December 31, 2006, and the results of each
of their operations, the changes in each of their net assets and the financial
highlights for each of the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at December 31, 2006 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 23, 2007
73
2006 U.S. TAX DISTRIBUTION INFORMATION TO SHAREHOLDERS (unaudited)
Corporate Dividends Received Deduction. For the fiscal year ended December 31,
2006, a percentage of dividends distributed by the Funds listed below qualify
for the dividends received deduction for corporate shareholders. These
percentages are as follows:
Qualifying
Fund Percentage
---- ----------
Targeted Equity Fund 61.52%
Large Cap Value Fund 100.00%
Value Fund 52.26%
Capital Gains Distributions. Pursuant to Internal Revenue Section 852(b), the
following Funds paid distributions, which have been designated as capital gains
distributions for the fiscal year ended December 31, 2006.
Fund Amount
---- -----------
Targeted Equity Fund $20,781,541
International Fund 16,199,875
Focused Value 37,532,762
Value Fund 12,664,466
Qualified Dividend Income. A percentage of dividends distributed by the Funds
during the fiscal year ended December 31, 2006 are considered qualified
dividend income, and are eligible for reduced tax rates. These lower rates
range from 5% to 15% depending on an individual's tax bracket. These
percentages are noted below:
Fund Percentage
---- ----------
Targeted Equity Fund 100.00%
International Fund 33.80%
Large Cap Value Fund 100.00%
Value Fund 51.18%
74
TRUSTEE AND OFFICER INFORMATION
The tables below provide certain information regarding the Trustees and
officers of IXIS Advisor Funds Trust I, IXIS Advisor Funds Trust II and IXIS
Advisor Funds Trust III (the "Trusts"). Unless otherwise indicated, the address
of all persons below is 399 Boylston Street, Boston, MA 02116. The Trusts'
Statements of Additional Information include additional information about the
Trustees of the Trusts and are available by calling IXIS Advisor Funds at
800-225-5478.
Position(s) Held with the Number of Portfolios in
Trusts, Length of Time Principal Occupation(s) Fund Complex Overseen***
Name and Date of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
INDEPENDENT TRUSTEES
Graham T. Allison, Jr. Trustee, Douglas Dillon Professor and 38
(3/23/40) since 1984 for IXIS Advisor Director of the Belfer Center Director, Taubman Centers,
Funds Trust I, (including its for Science and International Inc. (real estate investment
predecessors) since 1995 Affairs, John F. Kennedy trust)
for IXIS Advisor Funds School of Government,
Trust II and IXIS Advisor Harvard University
Funds Trust III
Contract Review and
Governance Committee
Member
Charles D. Baker Trustee, President and Chief Executive 38
(11/13/56) since 2005 Officer, Harvard Pilgrim None
Audit Committee Member Health Care (health plan)
Edward A. Benjamin Trustee, Retired 38
(5/30/38) since 2003 for IXIS Advisor Director, Precision Optics
Funds Trust I, IXIS Advisor Corporation (optics
Funds Trust II, and IXIS manufacturer)
Advisor Funds Trust III
Chairman of the Contract
Review and Governance
Committee Member
Daniel M. Cain Trustee, President and Chief Executive 38
(2/24/45) since 1996 for IXIS Advisor Officer, Cain Brothers & Director, Sheridan
Funds Trust I, IXIS Advisor Company, Incorporated Healthcare Inc. (physician
Funds Trust II and IXIS (investment banking) practice management);
Advisor Funds Trust III Trustee, Lexington Strategic
Chairman of the Audit Asset Corporation (realty
Committee investment trust)
Richard Darman Trustee, Partner, The Carlyle Group 38
(5/10/43) since 1996 for IXIS Advisor (investments); formerly, Director and Chairman of
Funds Trust I, IXIS Advisor Professor, John F. Kennedy Board of Directors, AES
Funds Trust II and IXIS School of Government, Corporation (international
Advisor Funds Trust III Harvard University power company)
Contract Review and
Governance Committee
Member
75
TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the Number of Portfolios in
Trusts, Length of Time Principal Occupation(s) Fund Complex Overseen***
Name and Date of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
INDEPENDENT TRUSTEES
continued
Sandra O. Moose Trustee, since 1982 for President, Strategic Advisory 38
(2/17/42) IXIS Advisor Funds Trust I Services (management Director, Verizon
(including its predecessors) consulting); formerly, Senior Communications;
since 1993 for IXIS Advisor Vice President and Director, Director, Rohm and Haas
Funds Trust II; and since The Boston Consulting Group, Company (specialty
1995 for IXIS Advisor Inc. (management consulting) chemicals);
Funds Trust III Director, AES Corporation
Chairperson of the Board (international power
of Trustees since November company)
2005
Ex officio member of the
Audit Committee and
Contract Review and
Governance Committee
Cynthia L. Walker Trustee, Executive Dean for 38
(7/25/56) since 2005 Administration (formerly, None
Audit Committee Member Dean for Finance and CFO),
Harvard Medical School
INTERESTED TRUSTEES
Robert J. Blanding/1/ Trustee, President, Chairman, Director, 38
(4/14/47) since 2003 and Chief Executive Officer, None
555 California Street Loomis, Sayles & Company,
San Francisco, CA 94104 L.P.; President and Chief
Executive Officer for Loomis
Sayles Funds I; Chief Executive
Officer for Loomis Sayles
Funds II
John T. Hailer/2/ President, Chief Executive President and Chief Executive 38
(11/23/60) Officer and Trustee Officer, IXIS Asset None
since 2000 Management Advisors, L.P.,
IXIS Asset Management
Distributors, L.P. and IXIS
Asset Management Global
Associates, L.P.; Executive
Vice President, Loomis Sayles
Funds I; President and Chief
Executive Officer, AEW Real
Estate Income Fund, IXIS
Advisor Cash Management
Trust, and IXIS Advisor Funds
Trust IV
* Each Trustee serves until retirement, resignation or removal from the Board
of Trustees. The current retirement age is 72. The position of Chairperson
of the Board is appointed for a two-year term.
76
TRUSTEE AND OFFICER INFORMATION
** Each person listed above, except as noted, holds the same position(s) with
the Trusts. Previous positions during the past five years with IXIS Asset
Management Distributors, L.P. (the "Distributor"), IXIS Asset Management
Advisors, L.P. ("IXIS Advisors") or Loomis, Sayles & Company, L.P. are
omitted if not materially different from a trustee's or officer's current
position with such entity.
***The Trustees of the Trusts serve as trustees of a fund complex that includes
all series of 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, AEW Real Estate Income Fund, Loomis Sayles Funds I and
Loomis Sayles Funds II (together the "IXIS Advisor Funds and Loomis Sayles
Funds Trusts").
/1/ Mr. Blanding is deemed an "interested person" of the Trusts because he
holds the following positions with affiliated persons of the Trusts:
President, Chairman, Director and Chief Executive Officer of Loomis Sayles.
/2/ Mr. Hailer is deemed an "interested person" of the Trusts because he holds
the following positions with affiliated persons of the Trusts: Director
and Executive Vice President of IXIS Asset Management Distribution
Corporation ("IXIS Distribution Corporation"); and President and Chief
Executive Officer of IXIS Asset Management Global Associates, L.P., IXIS
Asset Management Advisors and IXIS Asset Management Distributors, L.P.
77
TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the Trusts Term of Principal Occupation(s)
Name and Date of Birth Office and Length of Time Served* During Past 5 Years**
- ---------------------- --------------------------------- ---------------------
OFFICERS OF THE TRUSTS
Coleen Downs Dinneen Secretary, Clerk and Chief Legal Officer Senior Vice President, General
(12/16/60) since September 2004 Counsel, Secretary and Clerk
(formerly, Deputy General Counsel,
Assistant Secretary and Assistant
Clerk), IXIS Asset Management
Distribution Corporation, IXIS Asset
Management Distributors, L.P. and
IXIS Asset Management Advisors, L.P.
Russell L. Kane Chief Compliance Officer, Chief Compliance Officer for Mutual
(7/23/69) since May 2006; Assistant Secretary Funds, Vice President, Associate
since June 2004 General Counsel, Assistant Secretary
and Assistant Clerk, IXIS Asset
Management Distribution
Corporation, IXIS Asset Management
Distributors, L.P. and IXIS Asset
Management Advisors, L.P.;
formerly, Senior Counsel, Columbia
Management Group.
Michael C. Kardok Treasurer, Principal Financial and Senior Vice President, IXIS Asset
(7/17/59) Accounting Officer Management Advisors, L.P. and IXIS
since October 2004 Asset Management Distributors, L.P.;
formerly, Senior Director, PFPC Inc;
formerly, Vice President--Division
Manager, First Data Investor
Services, Inc.
Max J. Mahoney Anti-Money Laundering Officer Senior Vice President, Deputy
(5/1/62) and Assistant Secretary General Counsel, Assistant Secretary
since August 2005 and Assistant Clerk, IXIS Asset
Management Distribution
Corporation, IXIS Asset Management
Distributors, L.P. and IXIS Asset
Management Advisors, L.P.; Chief
Compliance Officer, IXIS Asset
Management Advisors L.P. formerly,
Senior Counsel, MetLife, Inc.;
formerly, Associate Counsel, LPL
Financial Services, Inc.
John E. Pelletier Chief Operating Officer Executive Vice President and Chief
(6/24/64) since September 2004 Operating Officer (formerly, Senior
Vice President, General Counsel,
Secretary and Clerk), IXIS Asset
Management Distribution
Corporation, IXIS Asset Management
Distributors, L.P. and IXIS Asset
Management Advisors, L.P.
* Each officer of the Trusts serves for an indefinite term in accordance with
their current By-laws until the date his or her successor is elected and
qualified, or until he or she sooner dies, retires, is removed or becomes
disqualified.
** Each person listed above, except as noted, holds the same position(s) with
the IXIS Advisor Funds and Loomis Sayles Funds Trusts. Previous positions
during the past five years with the Distributor, IXIS Advisors or Loomis
Sayles are omitted, if not materially different from a trustee's or
officer's current position with such entity.
78
[LOGO]
Annual Report
December 31, 2006
IXIS Equity Diversified Portfolio
Dreman Mid Cap Value Discipline
Hansberger International Value Discipline
Harris Associates Large Cap Value Discipline
Loomis Sayles Large Cap Growth Discipline
IXIS Income Diversified Portfolio
Active Dividend Equity Discipline
AEW Diversified REIT Discipline
Loomis Sayles Inflation Protected Securities Discipline
Loomis Sayles Multi-Sector Bond Discipline
IXIS Moderate Diversified Portfolio
Dreman Mid Cap Value Discipline
Hansberger International Value Discipline
Harris Associates Large Cap Value Discipline
Loomis Sayles Core Fixed Income Discipline
Loomis Sayles Large Cap Growth Discipline
TABLE OF CONTENTS
Management Discussion
and Performance..........Page 1
Portfolio of InvestmentsPage 13
Financial Statements....Page 29
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
- --------------------------------------------------------------------------------
Against a backdrop of relatively strong global growth, equity markets around
the world generated substantial returns in 2006. Stock performance in overseas
developed and emerging markets outpaced the U.S. market. While stocks across
the capitalization spectrum made significant gains, small- and mid-cap
companies continued to do better than large-cap companies, and value stocks
outperformed growth stocks. For the year ended December 31, 2006, the total
return on Class A shares of IXIS Equity Diversified Portfolio was 10.54% at net
asset value, with $0.08 in dividends and $0.62 in capital gains reinvested
during the period. The portfolio lagged the 15.79% return on its benchmark, the
Standard & Poor's 500 Index, but was substantially ahead of the 6.93% average
return of the funds in Morningstar's Large Growth category.
Each of the fund's four Disciplines is managed by a separate advisor, and each
emphasizes a different equity class, giving shareholders access to a broad
range of stocks selected for their appreciation potential. Undervalued stocks
of mid-cap companies are the focus of Dreman Mid Cap Value Discipline.
Hansberger International Value Discipline looks beyond U.S. borders for small-,
mid- and large-cap companies that appear to be attractively valued. Harris
Associates Large Cap Value Discipline seeks undervalued stocks of larger
companies, while the Loomis Sayles Large Cap Growth Discipline focuses on
large-cap growth stocks.
DREMAN SOUGHT UNDERVALUED STOCKS OF COMPANIES WITH SUSTAINABLE EARNINGS GROWTH
Dreman Value Management took over as the segment's manager at the beginning of
April 2006. Stock performance in the technology and consumer discretionary
sectors helped drive results. Top contributors included cigarette-maker
Carolina Group, a subsidiary of Loews. The maker of Newport and Kent cigarette
brands came out ahead on some court battles. Healthcare real estate investment
trust (REIT) Ventas, another top performer, is building assisted-living homes
for the elderly. Fisher Scientific, which provides laboratory equipment,
chemicals and supplies to the healthcare industry worldwide, rose in value when
it was acquired by Thermo-Electron. The segment's position in cash reserves
held it back as stock prices rose. While the energy sector looks attractive
over the long term, the relatively warm winter, coupled with moderating
economic growth, resulted in declines in energy prices over the past year. As a
result, this segment's substantial position in energy detracted from
performance. Oil States International, an oil and gas drilling and production
company, was the worst performer. Other stocks that disappointed included R&G
Financial, a commercial bank in Puerto Rico, and CardinalHealth, a developer of
medical products. Dreman sold all three positions.
HANSBERGER UNCOVERED ATTRACTIVE VALUE OPPORTUNITIES IN OVERSEAS MARKETS
A substantial position in Japan proved to be beneficial, with game-maker
Nintendo one of the top three stocks in the segment. Although a relatively
large allocation to European equities detracted from results, some individual
holdings performed well. A leading German pharmaceutical company, Schering AG,
was acquired by Merck, and was one of the best performers in the segment. Swiss
electrical equipment manufacturer ABB Ltd., another top stock, benefited from
an increase in orders. Investments in the Pacific ex-Japan were also positive.
The segment began adding exposure to emerging markets in the second quarter of
2006, and stock selections in the region contributed to results. This segment's
three largest positions were in the information technology, consumer
discretionary sector and healthcare areas, all of which contributed strongly to
performance. The three smallest positions were materials, industrials and
consumer staples. Investments in materials and industrial stocks were
disappointing, but consumer staples stocks outperformed. Individual stocks that
detracted most from performance included Johnson Electric Holdings in Hong
Kong, a world-leader in the manufacturing of micro-motors; Yanzhou Coal, the
largest coal mining company in China; and Joyo Bank Ltd. one of Japan's largest
regional banks. Johnson Electric Holdings and Joyo Bank remain in the
portfolio, but Yanzhou Coal was sold.
1
IXIS EQUITY DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
HARRIS ASSOCIATES FAVORED STOCKS OF HIGH-QUALITY BUSINESSES SELLING AT LOW
PRICES
This segment's top performers in 2006 included Hewlett-Packard, Morgan Stanley
and McDonald's. Hewlett-Packard's performance can be attributed to gains in
market share for its personal computer and printer businesses, as well as a
larger sales force and improved incentives that may help the company increase
margins. The business environment was favorable for Morgan Stanley, whose
performance was driven by its Institutional Securities and Wealth Management
Divisions. Board approval of the spin-off of the Discover Card unit was another
positive. McDonald's achieved a successful business turnaround, which led to
higher earnings and a higher valuation for its stock. Segment performance was
hurt by certain technology holdings, the relatively small position in
telecommunications stocks, and the lack of exposure to the energy sector early
in 2006. Among technology companies, Intel detracted from results when it lost
market share to a competitor. While the price of Intel stock was still down at
year-end 2006, the company's current initiatives are designed to improve
profitability, and fourth-quarter results were encouraging. Dell was also a
disappointment. The company reported lower earnings from the previous year,
although its fourth-quarter earnings were better than expected. Dell's overseas
sales continue to be strong, and the company has improved its customer service.
Harris Associates expects improved performance from both Intel and Dell. Cruise
ship company Carnival Corp.'s earnings were negatively impacted by high fuel
costs and reduced Caribbean cruise bookings when tourists were concerned about
forecasts for a bad hurricane season. Forecasts proved wrong, fuel prices
declined and Harris Associates looks for improved earnings for Carnival in 2007.
LOOMIS SAYLES SOUGHT CORPORATE LEADERS WITH GOOD GROWTH PROSPECTS
Loomis Sayles made some major shifts in sector allocation during the year.
Healthcare holdings were decreased significantly, reducing both healthcare
services and medical technology holdings. These had been strong contributors to
return in past years. The segment's commitment to consumer discretionary stocks
was also reduced. Most additions were technology companies, where Loomis
favored large-cap, liquid companies with excellent growth prospects. Individual
technology companies that provided the strongest returns included Akamai
Technologies, an internet software and services company, and Cognizant
Technology Solutions, a business software and services company. Financial
stocks were also top performers. CB Richard Ellis, a commercial real estate
company, Goldman Sachs and the Chicago Mercantile Exchange were the best
performers. Declines in the healthcare sector included St. Jude Medical, which
missed earnings estimates and was sold. UnitedHealth Group declined following a
stock options scandal, but remains in the segment. Other stocks that detracted
included internet auctioneer eBay; Hansen Natural, which distributes a variety
of beverages aimed at health-conscious consumers; Chico's FAS, a retailer; and
Whole Foods Markets, a chain of organic supermarkets. Earnings disappointments
impacted all of these stocks and they were sold. Halliburton's stock declined
along with natural gas prices, but this global leader in energy services
remains in the portfolio.
2
IXIS EQUITY DIVERSIFIED PORTFOLIO
Investment Results through December 31, 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/
[CHART]
January 31, 2005 (Inception) through December 31, 2006
Net Asset Maximum Sales S&P 500
Month End Value/1/ Charge/2/ Index/4/
--------- -------- --------- --------
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
7/31/2006 10,740 10,122 11,112
8/31/2006 10,940 10,311 11,377
9/30/2006 11,249 10,602 11,670
10/31/2006 11,599 10,932 12,050
11/30/2006 11,809 11,130 12,279
12/31/2006 11,971 11,282 12,452
Average Annual Total Returns -- December 31, 2006
SINCE
1 YEAR/6/ INCEPTION/6/
CLASS A (Inception 1/31/05)
Net Asset Value/1/ 10.54% 9.85%
With Maximum Sales Charge/2/ 4.19 6.51
CLASS C (Inception 1/31/05)
Net Asset Value/1/ 9.68 9.09
With CDSC/3/ 8.68 9.09
- ------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 1 YEAR INCEPTION/7/
S&P 500 Index/4/ 15.79% 12.12%
Morningstar Large Growth Fund Avg./5/ 6.93 8.85
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 12/31/06 12/31/05
- ------------------------------------------------------
Common Stocks 93.8 98.2
- ------------------------------------------------------
Short-Term Investments and Other 6.2 1.8
- ------------------------------------------------------
% of Net Assets as of
LARGEST HOLDINGS 12/31/06 12/31/05
- ------------------------------------------------------
Morgan Stanley 2.0 1.5
- ------------------------------------------------------
McDonald's Corp. 1.7 1.6
- ------------------------------------------------------
Intel Corp. 1.7 1.8
- ------------------------------------------------------
Time Warner, Inc. 1.5 1.5
- ------------------------------------------------------
Tyco International, Ltd. 1.4 1.4
- ------------------------------------------------------
Viacom, Inc., Class B 1.4 0.9
- ------------------------------------------------------
Dell, Inc. 1.4 1.0
- ------------------------------------------------------
Union Pacific Corp. 1.4 0.9
- ------------------------------------------------------
Hewlett-Packard Co. 1.3 2.5
- ------------------------------------------------------
JPMorgan Chase & Co. 1.3 1.6
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
- ------------------------------------------------------
Diversified Financial Services 10.9 10.8
- ------------------------------------------------------
Media 7.1 6.2
- ------------------------------------------------------
Computers 6.1 6.5
- ------------------------------------------------------
Retail 5.4 8.5
- ------------------------------------------------------
Banks 5.2 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
- --------------------------------------------------------------------------------
Stock prices generally rose in 2006, with the strongest gains in the first and
fourth quarters. Bond prices were mixed, declining in the early part of the
year as interest rates rose in response to the Federal Reserve Board's
tightening moves, and rising again when investors began to forecast an end to
the Fed's program.
Each of IXIS Income Diversified Portfolio's four Disciplines participates in a
separate class of income-oriented securities.
.. Active Dividend Equity Discipline is 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.
.. AEW Diversified REIT Discipline is composed of Real Estate Investment Trusts
(REITs), managed by AEW Management and Advisors, a specialist in this
income-producing equity field.
.. Loomis Sayles Inflation Protected Securities Discipline is a portfolio of
Treasury Inflation-Protected Securities (TIPS), managed by Loomis, Sayles &
Company.
.. Loomis Sayles Multi-Sector Bond Discipline is a diversified portfolio of
domestic and foreign bonds, also managed by Loomis, Sayles & Company.
For the year ended December 31, 2006, the combined return on the fund's four
segments was 14.22% based on the net asset value of Class A shares, including
$0.32 in dividends and $0.01 in capital gains reinvested during the period. For
the same period, the fund's primary benchmark, the Lehman Aggregate Bond Index,
returned 4.33% and its secondary benchmark returned 9.46%. 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 (500 U.S. common stocks). The average return on
Morningstar's Conservative Allocation category for the year was 8.18%.
AIA'S ACTIVE DIVIDEND EQUITY DISCIPLINE MATCHED ITS BENCHMARK
This Discipline's benchmark, the Dow Jones Select Dividend Index, rose with
stock prices generally and reflected reduced investor concerns that the Fed
would continue to raise interest rates. The benchmark is composed of equity
securities issued by companies that have provided a 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 Total Market Index--a broad-based
index that represents the total market for U.S. equity securities.
Since the portfolio is designed to replicate the benchmark, it holds all 100 of
the stocks in the benchmark, adding or deleting issues only as they are changed
by the Dow Jones Company. In most cases, the fund makes any such changes on the
same day they are changed in the index. The most recent rebalancing of both the
fund and the benchmark took place on December 15, when Equitable Resources, MDU
Resources, Marathon Oil Corp, Republic Bancorp, and Whirlpool were deleted.
These stocks were replaced with common shares of UnionBanCal Corp, Masco Corp,
Valley National Bancorp, New York Times, and Mattel.
AIA's Active Dividend Equity Discipline gives shareholders exposure to a
diversified portfolio of dividend-paying common stocks and possible capital
appreciation when prices rise. Common stock prices may reflect changes in
interest rates from time to time, but there is no direct correlation between
them.
AEW DIVERSIFIED REIT DISCIPLINE'S PERFORMANCE KEPT AHEAD OF ITS BENCHMARK
The past year was strongly positive for equity REITs. Returns were bolstered by
a continued, steady flow of investor capital into real estate. Top-performing
securities in this Discipline included regional mall REIT Simon Properties;
office REIT Boston Properties; and apartment
4
IXIS INCOME DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
company AvalonBay Communities. The only detractor from performance during the
period was regional mall REIT Mills Corp., which was sold early in the year. In
terms of sector allocations, the Discipline had a relatively small position in
healthcare REITs, which did well during the year, and a relatively large
concentration in industrial REITs, which underperformed the overall REIT
market. However, these negatives were partially offset by the Discipline's
underweight position in regional malls, which lagged the market.
Looking ahead, AEW believes that investor demand for commercial property should
remain strong for the foreseeable future, and that this demand should continue
to provide price support for REIT securities.
LOOMIS SAYLES TIPS DISCIPLINE SHORTENED DURATION IN 2006
Interest rates generally rose during the first half of 2006, as the Fed raised
short-term interest rates four times in increments of 0.25%, deciding to hold
rates steady at its August 8, 2006 meeting. The primary concern in the TIPS
market was then whether inflation was under control, especially as oil prices
rose sharply early in the year. This concern led to the inversion of both the
real yield curve (adjusted for inflation) and the nominal (unadjusted) yield
curve. (The yield curve is a graphical representation of differences in yield
on bonds of comparable quality, plotted from the shortest to the longest
maturity. Normally, short-term bonds offer lower yields than long-term bonds
because they involve less risk, but when short rates move higher than long
rates, the yield curve becomes inverted.) Oil prices peaked in July and began
to decline in August, along with real yields, although the real yield curve
remained inverted. As oil prices fell, TIPS underperformed regular Treasury
securities. This Discipline was able to beat its benchmark by having a shorter
duration, making it less sensitive to changes in interest rates, and by
under-weighting TIPS in favor of regular Treasuries.
Loomis believes the economy is strong enough to keep the Fed from having to
ease interest rates, while inflation seems likely to remain low enough to keep
the Fed from tightening further. They believe financial conditions remain
generally positive and the global picture looks strong. In their view, bond
prices anticipate a possible cut in interest rates some time in 2007. However,
if economic activity rebounds, the market may shift to anticipate another Fed
rate hike, which could lead to higher interest rates and lower bond prices
later in the year.
LOOMIS SAYLES MULTI-SECTOR BOND DISCIPLINE BENEFITED FROM OUT-OF-BENCHMARK
SECURITIES
Despite the Fed's rate hikes during the past two years, U.S. interest rates in
general remain low. Bond issuers have been eager to finance new debt, and a
record amount of new issues came to market in 2006. Especially as it became
clear that the Fed had paused in its cycle of rate tightening at midyear,
investors became more confident in their pursuit of high current income. Bonds
backed by U.S. government agencies did moderately better than Treasury
securities for the year, and back-to-back strong quarters for high-yield bonds
provided attractive returns.
For this Discipline, the principal drivers of positive performance were
higher-yielding bonds denominated in U.S. dollars and U.S. Treasury securities.
The Discipline's foreign bonds were also strong contributors. Holdings
denominated in foreign currencies led performance--notably bonds denominated in
Canadian dollars, the Mexican peso, the Brazilian real, and in Australian and
New Zealand dollars. Bonds denominated in the Japanese yen detracted from
results. Along with allocation, individual security selection was key. Despite
an up and down year for U.S. Treasury securities, the Discipline's long-term
Treasury holdings were among its best performers. Government agency securities
also contributed. Selections in convertible securities and the cable and
entertainment sectors were also positive, although the energy sector lagged.
Loomis' outlook for 2007 could be characterized as benign. With yields low by
historic standards, and spreads between higher- and lower-rated bonds tight,
Loomis believes the markets will generate modest but respectable returns.
5
IXIS INCOME DIVERSIFIED PORTFOLIO
Investment Results through December 31, 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 December 31, 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 $10,000 $10,000
11/30/2005 10,072 9,619 10,000 10,000
12/31/2005 10,115 9,660 10,095 10,054
1/31/2006 10,355 9,889 10,096 10,174
2/28/2006 10,454 9,984 10,129 10,204
3/31/2006 10,540 10,066 10,030 10,207
4/30/2006 10,484 10,013 10,012 10,260
5/31/2006 10,376 9,909 10,001 10,118
6/30/2006 10,508 10,035 10,022 10,136
7/31/2006 10,710 10,228 10,157 10,239
8/31/2006 10,934 10,442 10,313 10,436
9/30/2006 11,078 10,580 10,403 10,609
10/31/2006 11,357 10,846 10,472 10,806
11/30/2006 11,621 11,098 10,594 10,970
12/31/2006 11,553 11,033 10,532 11,008
Average Annual Total Returns -- December 31, 2006
SINCE
1 YEAR/8/ INCEPTION/8/
CLASS A (Inception 11/17/05)
Net Asset Value/1/ 14.22% 13.75%
With Maximum Sales Charge/2/ 9.12 9.18
CLASS C (Inception 11/17/05)
Net Asset Value/1/ 13.31 12.90
With CDSC/3/ 12.31 12.90
- ---------------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 1 YEAR INCEPTION/7/
Lehman Aggregate Bond Index/4/ 4.33% 4.91%
55% Lehman Aggregate Bond Index/45% S&P 500 Index/5/ 9.46 9.24
Morningstar Conservative Allocation Fund Avg./6/ 8.18 8.25
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 12/31/06 12/31/05
- ------------------------------------------------------
Common Stocks 45.2 44.5
- ------------------------------------------------------
Investment Companies 0.2 --
- ------------------------------------------------------
Preferred Stocks 0.1 0.2
- ------------------------------------------------------
Bonds and Notes 46.1 52.2
- ------------------------------------------------------
Short-Term Investments and Other 8.4 3.1
- ------------------------------------------------------
% of Net Assets as of
LARGEST HOLDINGS 12/31/06 12/31/05
- ------------------------------------------------------
Equities
- ------------------------------------------------------
Simon Property Group, Inc. 2.1 1.8
- ------------------------------------------------------
Boston Properties, Inc. 1.5 1.3
- ------------------------------------------------------
Equity Residential Trust 1.2 1.1
- ------------------------------------------------------
Public Storage, Inc. 1.1 0.8
- ------------------------------------------------------
AvalonBay Communities, Inc. 1.1 1.2
- ------------------------------------------------------
Fixed-Income
- ------------------------------------------------------
U.S. Treasury Bond,
5.375%, 2/15/2031 3.8 --
- ------------------------------------------------------
U.S. Treasury Note,
4.625%, 11/30/2008 2.3 --
- ------------------------------------------------------
U.S. Treasury Bond,
3.375%, 4/15/2032 2.3 3.0
- ------------------------------------------------------
U.S. Treasury Bond,
4.500%, 2/15/2036 1.4 --
- ------------------------------------------------------
U.S. Treasury Note,
4.250%, 8/15/2015 1.3 --
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
- ------------------------------------------------------
Treasuries 22.8 14.5
- ------------------------------------------------------
Banks 7.2 5.6
- ------------------------------------------------------
REITs--Apartments 4.7 4.6
- ------------------------------------------------------
REITs--Office 4.6 4.4
- ------------------------------------------------------
Electric 3.8 3.9
- ------------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 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
- --------------------------------------------------------------------------------
Relatively strong economic growth and benign inflation provided a positive
environment for both the stock and bond markets in 2006. Most equity markets
were relatively robust, with some of the biggest gains coming from overseas. As
has been the case for some time, value stocks outperformed growth stocks and
small- and mid-cap companies did better than large-cap companies. In the
fixed-income markets, the best returns came from corporate and securitized
bonds, while U.S. Treasuries lagged.
Class A shares of IXIS Moderate Diversified Portfolio provided a total return
of 8.38% at net asset value, with $0.20 in dividends and $0.81 in capital gains
reinvested during the year ended December 31, 2006. The fund underperformed the
15.79% return of its equity benchmark, the Standard & Poor's 500 Index, but
outperformed the 4.33% return of its fixed-income benchmark, the Lehman
Aggregate Bond Index. The average return on the funds in Morningstar's Moderate
Allocation category was 11.26% for the period.
Each of the fund's five Disciplines is composed of a different asset class and
managed by one of four advisors. This multi-advisor approach provides
shareholders with exposure to U.S. fixed-income and equity securities as well
as international securities. Dreman Mid Cap Value Discipline emphasizes stocks
of undervalued, mid-cap companies that the manager believes have favorable
prospects for appreciation. Hansberger International Value Discipline invests
substantially all of its assets in small-, mid- and large-cap overseas
companies in both developed and emerging markets. Harris Associates Large Cap
Value Discipline favors undervalued large- and mid-cap companies that are
trading at a substantial discount to their true business value. Loomis, Sayles
& Company manages two segments. 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
of large, growth-oriented companies are the focus of Loomis Sayles Large Cap
Growth Discipline.
DREMAN SOUGHT UNDERVALUED STOCKS OF COMPANIES WITH SUSTAINABLE EARNINGS GROWTH
Dreman Value Management took over as the segment's manager at the beginning of
April 2006. Stock performance in the technology and consumer discretionary
sectors helped drive results in 2006. Top contributors included cigarette-maker
Carolina Group, a subsidiary of Loews. The maker of Newport and Kent cigarette
brands came out ahead on some court battles. Healthcare real estate investment
trust (REIT) Ventas, another top-performer, is building assisted-living homes
for the elderly. Fisher Scientific, which provides laboratory equipment,
chemicals and supplies to the healthcare industry worldwide, rose in value when
it was acquired by Thermo-Electron. This segment's position in cash reserves
held it back as stock prices rose. While the energy sector looks attractive
over the long term, the relatively warm winter, coupled with moderating
economic growth, resulted in declines in energy prices over the past year. As a
result, this segment's substantial position in energy detracted from
performance. Oil States International, an oil and gas drilling and production
company, was the worst performer. Other stocks that disappointed included R&G
Financial, a commercial bank in Puerto Rico, and CardinalHealth, a developer of
medical products. Dreman sold all three positions.
HANSBERGER PURSUED ATTRACTIVELY VALUED STOCKS IN OVERSEAS MARKETS
A substantial position in Japan proved to be beneficial, and game-maker
Nintendo was one of the top three stocks in the segment. Although a relatively
large allocation to European equities detracted from results, some individual
holdings performed well. A leading German pharmaceutical company, Schering AG,
was acquired by Merck, and was one of the best performers in the segment. Swiss
electrical equipment manufacturer ABB Ltd., another top stock, benefited from
an increase in orders. Investments in the Pacific ex-Japan region were also
positive. The segment began adding exposure to emerging markets in the second
quarter of 2006, and stock selection in this region aided return. This
segment's three largest positions were in the
7
IXIS MODERATE DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
information technology, consumer discretionary and healthcare areas, all of
which contributed strongly to performance. The three smallest positions were
materials, industrials and consumer staples. Investments in materials and
industrial stocks were disappointing, but consumer staples stocks outperformed.
Individual stocks that detracted most from performance included Johnson
Electric Holdings in Hong Kong, a world-leader in the manufacturing of
micro-motors; Yanzhou Coal, the largest coal mining company in China; and Joyo
Bank Ltd., one of Japan's largest regional banks. Johnson Electric Holdings and
Joyo Bank remain in the portfolio, but Yanzhou Coal was sold.
HARRIS ASSOCIATES FAVORED STOCKS OF HIGH-QUALITY COMPANIES SELLING AT LOW PRICES
Top performers during the year included Hewlett-Packard, Morgan Stanley and
McDonald's. Hewlett-Packard's good performance can be attributed to gains in
market share for its personal computer and printer businesses, as well as a
larger sales force and improved incentives that may help the company increase
margins. The business environment was favorable for Morgan Stanley, whose
results were driven by its Institutional Securities and Wealth Management
Divisions. Board approval of the spin-off of the Discover Card unit was another
positive. McDonald's achieved a successful business turnaround, which led to
higher earnings and a higher valuation for its stock. Segment performance was
hurt by certain technology holdings, its relatively small position in
telecommunications stocks, and its lack of exposure to energy early in 2006.
Among technology companies, Intel detracted from results when it lost market
share to a competitor. While the price of Intel stock was still down at
year-end 2006, its current initiatives are designed to improve profitability
and its fourth-quarter financial results were encouraging. Dell was also a
disappointment. The company reported lower earnings from the previous year,
although its fourth-quarter earnings were better than expected. Harris
Associates expects both Intel and Dell to improve. Cruise ship company Carnival
Corp.'s earnings were negatively impacted by high fuel costs and reduced
Caribbean cruise sales early in the year, when tourists were concerned about
forecasts for a bad hurricane season. Forecasts proved wrong, fuel costs
subsided, and Harris Associates looks for improved earnings in 2007.
LOOMIS FIXED INCOME DISCIPLINE FOCUSED ON SECURITIZED ASSETS AND CORPORATE BONDS
Corporate bonds and commercial mortgage-backed securities (CMBS) were some of
the best-performing areas in the fixed-income markets during 2006, while U.S.
Treasury securities underperformed. This segment's emphasis on corporate bonds
and underweight position in Treasuries were positives, but its relatively small
position in CMBS limited its participation in this sector. The high
profitability of media companies, brokerage companies, and electric utilities
was reflected in the strong results of the segment's relatively large
allocation to these industries. Bonds issued by media giant Time Warner
produced some of the best returns. At the same time, telecommunications and gas
utility bonds lagged other industries. A position in Kinder Morgan, a gas
pipeline company, was the segment's worst performer during the period, when its
involvement in a leveraged buyout damaged the company's credit rating. The
segment began the period with a relatively short duration, which made it less
sensitive to interest-rate changes, and Loomis lengthened duration
opportunistically during the year as market conditions warranted. This duration
strategy benefited results.
LOOMIS SAYLES LARGE CAP DISCIPLINE SOUGHT CORPORATE LEADERS WITH GROWTH
PROSPECTS
This Loomis Sayles segment made some major shifts in sector allocation during
the year. Healthcare holdings were decreased significantly, reducing both
healthcare services and medical technology holdings. These industries had been
strong contributors to return in previous years. The segment's commitment to
consumer discretionary stocks was also reduced. Most additions were technology
companies, where Loomis favored large-cap, liquid companies with excellent
growth prospects. Individual technology companies that provided the strongest
returns included Akamai Technologies, an internet software and services
company, and Cognizant Technology Solutions, a business software and services
company. Financial stocks were also top performers. CB Richard Ellis, a
commercial real estate company; investment banker Goldman Sachs; and the
Chicago Mercantile Exchange were the best performers. Decliners in the
healthcare sector included St. Jude Medical, which missed earnings estimates
and was sold. UnitedHealth Group, which declined following a stock options
scandal, remains in the segment. Other stocks that detracted included internet
auctioneer eBay; Hansen Natural, which distributes a variety of beverages aimed
at health-conscious consumers; Chico's FAS, a retailer; and Whole Foods
Markets, a chain of organic supermarkets. Earnings disappointments impacted all
of these stocks and they were sold. Halliburton's stock declined along with
natural gas prices, but this global leader in energy services remains in the
portfolio.
8
IXIS MODERATE DIVERSIFIED PORTFOLIO
Investment Results through December 31, 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 14, 2004 (Inception) through December 31, 2006
Lehman
Net Asset Maximum Sales S&P 500 Aggregate
Month End Value/1/ Charge/2/ Index/4/ Bond Index/5/
- --------- -------- --------- -------- -------------
7/14/2004 $10,000 $ 9,425 $10,000 $10,000
7/31/2004 9,850 9,284 10,000 10,000
8/31/2004 9,870 9,302 10,040 10,191
9/30/2004 9,990 9,416 10,149 10,218
10/31/2004 10,150 9,566 10,304 10,304
11/30/2004 10,430 9,830 10,721 10,222
12/31/2004 10,721 10,105 11,086 10,316
1/31/2005 10,511 9,907 10,816 10,381
2/28/2005 10,531 9,925 11,043 10,319
3/31/2005 10,392 9,794 10,848 10,266
4/30/2005 10,241 9,652 10,642 10,405
5/31/2005 10,502 9,899 10,981 10,518
6/30/2005 10,585 9,977 10,996 10,575
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 11,056 10,420 11,945 10,490
7/31/2006 11,046 10,411 12,019 10,632
8/31/2006 11,241 10,595 12,305 10,795
9/30/2006 11,494 10,833 12,622 10,890
10/31/2006 11,753 11,077 13,033 10,962
11/30/2006 11,949 11,262 13,281 11,089
12/31/2006 12,029 11,338 13,467 11,024
Average Annual Total Returns -- December 31, 2006
SINCE
1 YEAR/8/ INCEPTION/8/
CLASS A (Inception 7/15/04)
Net Asset Value/1/ 8.38% 7.78%
With Maximum Sales Charge/2/ 2.12 5.22
CLASS C (Inception 7/15/04)
Net Asset Value/1/ 7.57 6.96
With CDSC/3/ 6.58 6.96
- -------------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 1 YEAR INCEPTION/7/
S&P 500 Index/4/ 15.79% 13.11%
Lehman Aggregate Bond Index/5/ 4.33 4.12
Morningstar Moderate Allocation Fund Avg./6/ 11.26 10.50
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 12/31/06 12/31/05
- ------------------------------------------------------
Common Stocks 68.1 66.8
- ------------------------------------------------------
Bonds and Notes 27.9 32.2
- ------------------------------------------------------
Short-Term Investments and Other 4.0 1.0
- ------------------------------------------------------
% of Net Assets as of
LARGEST HOLDINGS 12/31/06 12/31/05
- ------------------------------------------------------
Equities
- ------------------------------------------------------
Morgan Stanley 1.4 1.0
- ------------------------------------------------------
McDonald's Corp. 1.2 1.1
- ------------------------------------------------------
Intel Corp. 1.1 1.1
- ------------------------------------------------------
Dell, Inc. 1.0 0.6
- ------------------------------------------------------
Time Warner, Inc. 1.0 1.0
- ------------------------------------------------------
Fixed-Income
- ------------------------------------------------------
FNMA, 5.000%, 8/01/2035 1.9 1.4
- ------------------------------------------------------
FNMA, 4.000%, 2/01/2020 1.4 1.0
- ------------------------------------------------------
FNMA, 5.000%, 10/01/2036 1.3 0.9
- ------------------------------------------------------
FNMA, 3.250%, 1/15/2008 1.2 0.9
- ------------------------------------------------------
FNMA, 4.500%, 9/01/2035 1.1 0.8
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/06 12/31/05
- ------------------------------------------------------
Mortgage Related 14.4 13.4
- ------------------------------------------------------
Diversified Financial Services 12.7 12.5
- ------------------------------------------------------
Media 5.0 4.4
- ------------------------------------------------------
Computers 4.4 4.3
- ------------------------------------------------------
Banks 4.1 3.2
- ------------------------------------------------------
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/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, D.C. 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 July 1, 2006 through December 31, 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 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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,106.40 $7.65
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.95 $7.32
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,103.00 $11.71
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.06 $11.22
*Expenses are equal to the fund's annualized expense ratio (after
waivers/reimbursements): 1.44% and 2.21% for Class A and C, respectively,
multiplied by the average account value over the period multiplied by the
number of days in the most recent fiscal half-year, divided by 365 (to reflect
the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
IXIS INCOME DIVERSIFIED PORTFOLIO 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,099.40 $6.61
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.90 $6.36
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,097.10 $10.57
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,015.12 $10.16
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the fund's annualized expense ratio (after
waivers/reimbursements): 1.25% and 2.00% for Class A and C, respectively,
multiplied by the average account value over the period multiplied by the
number of days in the most recent fiscal half-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 7/1/2006 12/31/2006 7/1/2006 - 12/31/2006
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,088.10 $6.84
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.65 $6.61
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,083.10 $10.82
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.82 $10.46
*Expenses are equal to the fund's annualized expense ratio (after
waivers/reimbursements): 1.30% and 2.06% for Class A and C, respectively,
multiplied by the average account value over the period multiplied by the
number of days in the most recent fiscal half-year, divided by 365 (to reflect
the half-year period).
IXIS EQUITY DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- -----------------------------------------------------------------------------------
Common Stocks -- 93.8% of Net Assets
Aerospace & Defense -- 2.1%
650 Alliant Techsystems, Inc.(b) $ 50,823
5,650 CAE, Inc. 51,867
800 DRS Technologies, Inc. 42,144
2,600 Honeywell International, Inc.(c) 117,624
700 L-3 Communications Holdings, Inc. 57,246
5,600 Raytheon Co.(c) 295,680
--------------
615,384
--------------
Agriculture -- 0.1%
950 Archer-Daniels-Midland Co. 30,362
--------------
Apparel -- 0.8%
4,500 Coach, Inc.(b) 193,320
4,000 Onward Kashiyama Co., Ltd. 50,993
--------------
244,313
--------------
Athletic Footwear -- 0.7%
773 Adidas AG, (EUR) 38,500
1,700 NIKE, Inc., Class B 168,351
--------------
206,851
--------------
Auto Manufacturers -- 0.5%
128,000 Denway Motors, Ltd. (HKD) 51,811
11,000 Isuzu Motors, Ltd. (JPY) 51,398
2,157 Nissan Motor Co., Ltd., Sponsored ADR(c) 52,351
--------------
155,560
--------------
Auto Parts & Equipment -- 0.3%
1,300 Autoliv, Inc. 78,390
--------------
Banks -- 5.2%
1,624 ABN AMRO Holding NV, Sponsored ADR(c) 52,049
2,720 Banco Santander Central Hispano SA, ADR 50,755
13,800 Bangkok Bank PCL 46,290
788 Bank of Yokohama, Ltd., ADR(c) 61,070
1,290 BNP Paribas, ADR(c) 70,498
3,000 Chugoku Bank, Ltd. (The) (JPY) 39,259
1,300 Comerica, Inc. 76,284
1,337 Commerzbank AG (EUR) 50,558
1,110 Credit Agricole SA (EUR) 46,529
1,070 DBS Group Holdings, Ltd., Sponsored ADR(c) 63,183
800 First Horizon National Corp. 33,424
650 Hancock Holding Co. 34,346
2,621 HBOS PLC (GBP) 57,941
779 HSBC Holdings PLC, Sponsored ADR(c) 71,395
11,000 Joyo Bank, Ltd. (The) (JPY) 60,703
650 KeyCorp 24,720
596 Kookmin Bank 47,920
1,050 Marshall & Ilsley Corp. 50,516
4,650 Mellon Financial Corp. 195,997
148,000 PT Bank Mandiri (IDR) 47,958
1,291 Royal Bank of Scotland Group PLC (GBP) 50,244
4,702 Sumitomo Trust & Banking Co., Ltd. (The), Sponsored ADR 48,666
2,640 U.S. Bancorp(c) 95,542
8,420 UniCredito Italiano SpA (EUR) 73,606
724 Westpac Banking Corp., Sponsored ADR(c) 69,243
--------------
1,518,696
--------------
Beverages -- 1.7%
2,080 Coca-Cola Co. (The) 100,360
1,600 Constellation Brands, Inc.(b) 46,432
1,200 Diageo PLC, Sponsored ADR 95,172
520 Fomento Economico Mexicano, SA de CV, ADR 60,195
Shares Description Value (+)
- -----------------------------------------------------------------------------
Beverages --continued
2,800 PepsiCo, Inc. $ 175,140
450 Quilmes Industrial SA, ADR 29,682
--------------
506,981
--------------
Biotechnology -- 1.2%
2,175 Celgene Corp.(b)(c) 125,128
700 Charles River Laboratories International, Inc.(b) 30,275
1,950 Genentech, Inc.(b) 158,203
550 Invitrogen Corp.(b) 31,125
--------------
344,731
--------------
Building Materials -- 0.4%
1,560 Cemex SAB de CV, ADR(b) 52,853
2,500 JS Group Corp. (JPY) 52,573
--------------
105,426
--------------
Chemicals -- 1.7%
950 Agrium, Inc. 29,915
850 Ashland, Inc. 58,803
1,457 Ciba Specialty Chemicals AG, Sponsored ADR(c) 48,533
4,400 Dow Chemical Co. (The)(c) 175,736
800 Lonza Group AG (CHF) 68,956
1,200 Lyondell Chemical Co. 30,684
950 Sherwin-Williams Co. (The) 60,401
500 Sigma-Aldrich Corp. 38,860
--------------
511,888
--------------
Commercial Services -- 1.3%
1,875 Alliance Data Systems Corp.(b) 117,131
1,900 Apollo Group, Inc., Class A(b) 74,043
1,600 Convergys Corp.(b) 38,048
22,000 Cosco Pacific, Ltd. (HKD) 51,241
2,025 Monster Worldwide, Inc.(b) 94,446
--------------
374,909
--------------
Computers -- 6.1%
3,175 Apple Computer, Inc.(b) 269,367
2,325 Cognizant Technology Solutions Corp.(b) 179,397
16,600 Dell, Inc.(b) 416,494
800 Diebold, Inc. 37,280
950 DST Systems, Inc.(b) 59,498
9,500 Hewlett-Packard Co. 391,305
5,450 Network Appliance, Inc.(b) 214,076
40,900 Sun Microsystems, Inc.(b)(c) 221,678
--------------
1,789,095
--------------
Cosmetics & Personal Care -- 0.4%
2,025 Procter & Gamble Co. 130,147
--------------
Distribution & Wholesale -- 0.2%
3,170 Sumitomo Corp., Sponsored ADR(c) 46,758
--------------
Diversified Financial Services -- 10.9%
4,800 American Express Co. 291,216
550 Bear Stearns Cos. (The), Inc. 89,529
725 BlackRock, Inc., Class A(c) 110,127
8,256 Cattles PLC (GBP) 70,815
325 Chicago Mercantile Exchange Holdings, Inc. 165,669
1,350 CIT Group, Inc. 75,289
5,300 Citigroup, Inc. 295,210
928 Credit Suisse Group, Sponsored ADR 64,821
2,150 Eaton Vance Corp. 70,972
1,050 Federated Investors, Inc., Class B 35,469
1,350 Goldman Sachs Group, Inc. 269,122
See accompanying notes to financial statements.
13
IXIS EQUITY DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- ------------------------------------------------------------------------------------------
Diversified Financial Services --continued
1,070 IGM Financial, Inc. (CAD) $ 45,052
7,720 JPMorgan Chase & Co. 372,876
650 Legg Mason, Inc. 61,783
2,075 Lehman Brothers Holdings, Inc. 162,099
7,740 Man Group PLC (GBP) 79,003
7,175 Morgan Stanley 584,260
2,800 Nomura Holdings, Inc.(c) 53,032
1,250 Nuveen Investments, Class A 64,850
925 NYSE Group, Inc.(b)(c) 89,910
3,600 T. Rowe Price Group, Inc. 157,572
--------------
3,208,676
--------------
Electric -- 1.0%
2,400 AES Corp. (The)(b) 52,896
1,060 Cia Energetica de Minas Gerais, Sponsored ADR(c) 51,092
52,000 Datang International Power Generation Co., Ltd., Class H 54,103
1,600 Mirant Corp.(b) 50,512
550 PG&E Corp. 26,031
750 PPL Corp. 26,880
450 Progress Energy, Inc. 22,086
--------------
283,600
--------------
Electrical Components & Equipment -- 0.9%
1,875 AMETEK, Inc. 59,700
1,700 General Cable Corp.(b) 74,307
700 Hubbell, Inc., Class B 31,647
9,000 Johnson Electric Holdings, Ltd., Sponsored ADR(c) 60,750
420 Schneider Electric SA (EUR) 46,482
--------------
272,886
--------------
Electronics -- 0.3%
721 Celestica, Inc.(b) 5,631
650 Mettler Toledo International, Inc.(b) 51,253
1,200 PerkinElmer, Inc. 26,676
--------------
83,560
--------------
Engineering & Construction -- 0.1%
1,100 Shaw Group, Inc.(b) 36,850
--------------
Entertainment -- 0.1%
600 Penn National Gaming, Inc.(b) 24,972
--------------
Food -- 1.3%
530 Ajinomoto Co., Inc., ADR 69,430
1,471 Carrefour SA (EUR) 89,032
650 Hormel Foods Corp. 24,271
1,100 Loblaw Cos., Ltd. 46,023
680 Nestle SA, Sponsored ADR 60,282
980 Royal Numico NV (EUR) 52,626
1,200 Smithfield Foods, Inc.(b) 30,792
--------------
372,456
--------------
Gas -- 0.5%
14,000 Osaka Gas Co., Ltd. (JPY) 52,036
3,250 Southern Union Co. 90,837
--------------
142,873
--------------
Health Care -- Products -- 3.5%
1,550 Bausch & Lomb, Inc. 80,693
2,275 Baxter International, Inc. 105,537
800 Beckman Coulter, Inc. 47,840
1,600 Biomet, Inc. 66,032
1,200 Cooper Cos. (The), Inc. 53,400
3,925 Johnson & Johnson 259,129
Shares Description Value (+)
- -------------------------------------------------------------------------
Health Care -- Products -- continued
800 Kinetic Concepts, Inc.(b) $ 31,640
4,375 Medtronic, Inc. 234,106
1,620 Smith & Nephew PLC, Sponsored ADR(c) 84,775
800 Zimmer Holdings, Inc.(b) 62,704
--------------
1,025,856
--------------
Health Care -- Services -- 1.4%
1,200 Lifepoint Hospitals, Inc.(b) 40,440
1,000 Lincare Holdings, Inc.(b) 39,840
650 Quest Diagnostics, Inc. 34,450
1,200 Triad Hospitals, Inc.(b) 50,196
1,725 UnitedHealth Group, Inc. 92,684
1,775 WellPoint, Inc.(b) 139,675
--------------
397,285
--------------
Home Builders -- 0.7%
1,600 Lennar Corp., Class A(c) 83,936
3,400 Pulte Homes, Inc.(c) 112,608
--------------
196,544
--------------
Household Products & Wares -- 1.2%
950 Church & Dwight Co., Inc. 40,518
2,400 Fortune Brands, Inc.(c) 204,936
1,100 Scotts Miracle-Gro Co. (The), Class A 56,815
800 Whirlpool Corp. 66,416
--------------
368,685
--------------
Insurance -- 3.0%
1,600 Aflac, Inc. 73,600
400 Ambac Financial Group, Inc. 35,628
1,825 American International Group, Inc. 130,779
900 Arch Capital Group, Ltd.(b) 60,849
1,620 Axa, Sponsored ADR 65,335
1,975 Chubb Corp. 104,497
1,150 Cincinnati Financial Corp. 52,107
1,250 ING Groep NV, Sponsored ADR 55,212
1,400 Millea Holdings, Inc. (JPY) 49,586
1,800 Ohio Casualty Corp. 53,658
18,307 Old Mutual PLC (GBP) 62,307
600 PMI Group, Inc. (The) 28,302
4,300 Progressive Corp. 104,146
--------------
876,006
--------------
Internet -- 2.5%
2,800 Akamai Technologies, Inc.(b)(c) 148,736
2,030 Check Point Software Technologies, Ltd.(b)(c) 44,498
800 Google, Inc., Class A(b) 368,384
8,850 Symantec Corp.(b)(c) 184,522
--------------
746,140
--------------
Iron & Steel -- 0.2%
1,932 Evraz Group SA, GDR, 144A 49,633
300 Oregon Steel Mills, Inc.(b) 18,723
--------------
68,356
--------------
Leisure Time -- 2.0%
6,800 Carnival Corp.(c) 333,540
3,300 Harley-Davidson, Inc.(c) 232,551
450 Royal Caribbean Cruises, Ltd. 18,621
--------------
584,712
--------------
Lodging & Gaming -- 0.5%
1,750 Las Vegas Sands Corp.(b)(c) 156,590
--------------
See accompanying notes to financial statements.
14
IXIS EQUITY DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- --------------------------------------------------------------------------
Manufacturing -- 2.0%
400 Cooper Industries, Ltd., Class A $ 36,172
500 Eaton Corp. 37,570
800 ITT Industries, Inc. 45,456
550 Parker Hannifin Corp. 42,284
14,000 Tyco International, Ltd. 425,600
--------------
587,082
--------------
Media -- 7.1%
1,330 British Sky Broadcasting PLC, Sponsored ADR(c) 54,796
4,700 Comcast Corp., Class A(b)(c) 198,951
3,900 Eniro AB (SEK) 51,441
1,800 Liberty Media Corp. - Capital, Series A(b) 176,364
2,600 McGraw-Hill Cos., Inc. (The) 176,852
8,250 News Corp., Class A 177,210
1,287 Reuters Group PLC, Sponsored ADR(c) 67,220
19,900 Time Warner, Inc.(c) 433,422
10,200 Viacom, Inc., Class B(b) 418,506
1,960 Vivendi (EUR) 76,449
7,100 Walt Disney Co. (The) 243,317
--------------
2,074,528
--------------
Metal Fabricate & Hardware -- 0.7%
2,800 Precision Castparts Corp.(c) 219,184
--------------
Metals -- 0.7%
1,250 Allegheny Technologies, Inc.(c) 113,350
1,800 Cameco Corp. 72,810
400 Freeport-McMoRan Copper & Gold, Inc., Class B 22,292
--------------
208,452
--------------
Mining -- 0.4%
1,050 BHP Billiton Ltd., Sponsored ADR(c) 41,738
2,880 Cia Vale do Rio Doce, Sponsored ADR 75,600
--------------
117,338
--------------
Office & Business Equipment -- 0.4%
1,325 Canon, Inc., Sponsored ADR(c) 74,982
2,760 Xerox Corp.(b) 46,782
--------------
121,764
--------------
Oil & Gas -- 2.8%
1,250 Anadarko Petroleum Corp. 54,400
2,400 Chesapeake Energy Corp. 69,720
1,099 Eni SpA, Sponsored ADR 73,941
500 Hess Corp. 24,785
390 LUKOIL, Sponsored ADR 34,086
700 Murphy Oil Corp. 35,595
450 Noble Energy, Inc. 22,082
560 Petroleo Brasileiro SA, ADR 57,674
700 Pogo Producing Co. 33,908
600 Range Resources Corp. 16,476
1,170 Sasol, Ltd., Sponsored ADR(c) 43,173
1,200 Sunoco, Inc. 74,832
1,150 Tesoro Corp. 75,635
1,050 Total SA, Sponsored ADR 75,516
2,925 XTO Energy, Inc. 137,621
--------------
829,444
--------------
Oil & Gas Services -- 0.9%
4,525 Halliburton Co.(c) 140,501
1,200 Oil States International, Inc.(b) 38,676
2,989 Saipem SpA (EUR) 77,554
--------------
256,731
--------------
Shares Description Value (+)
- ------------------------------------------------------------------------------------------
Pharmaceuticals -- 3.4%
4,150 Abbott Laboratories $ 202,146
260 AstraZeneca PLC (GBP) 13,934
1,000 AstraZeneca PLC, Sponsored ADR 53,550
3,375 Gilead Sciences, Inc.(b) 219,139
1,300 GlaxoSmithKline PLC, ADR(c) 68,588
1,050 Medco Health Solutions, Inc.(b) 56,112
1,031 Novartis AG, ADR 59,221
9,600 Schering-Plough Corp. 226,944
3,000 Shionogi & Co., Ltd. (JPY) 58,917
800 Takeda Pharmaceutical Co., Ltd. (JPY) 54,829
--------------
1,013,380
--------------
Real Estate -- 0.9%
7,525 CB Richard Ellis Group, Inc., Class A(b)(c) 249,830
--------------
REITs -- Health Care -- 0.3%
1,850 Ventas, Inc. 78,292
--------------
REITs -- Hotels -- 0.3%
1,425 Starwood Hotels & Resorts Worldwide, Inc. 89,063
--------------
REITs -- Mortgage -- 0.5%
1,200 Annaly Mortgage Management, Inc. 16,692
2,150 KKR Financial Corp. 57,599
1,050 Newcastle Investment Corp. 32,886
2,000 NovaStar Financial, Inc. 53,300
--------------
160,477
--------------
Restaurants -- 1.8%
11,600 McDonald's Corp. 514,228
--------------
Retail -- 5.4%
3,400 American Eagle Outfitters, Inc.(c) 106,114
2,025 Best Buy Co., Inc. 99,610
6,850 CVS Corp.(c) 211,733
1,349 Folli - Follie SA (EUR) 53,133
7,500 Home Depot, Inc. 301,200
6,190 Kingfisher PLC, Sponsored ADR(c) 57,877
1,825 Kohl's Corp.(b) 124,885
3,200 Marui Co., Ltd. (JPY) 37,256
2,925 Nordstrom, Inc.(c) 144,319
21,300 Signet Group PLC (GBP) 49,634
3,200 TJX Cos., Inc. 91,264
6,890 Wal-Mart Stores, Inc. 318,180
--------------
1,595,205
--------------
Savings & Loans -- 1.3%
2,615 Sovereign Bancorp, Inc. 66,395
7,100 Washington Mutual, Inc. 322,979
--------------
389,374
--------------
Semiconductors -- 3.5%
25,350 Intel Corp. 513,338
4,425 NVIDIA Corp.(b) 163,769
29 Samsung Electronics Co., Ltd. (KRW) 19,024
4,010 STMicroelectronics NV 73,784
4,330 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR(c) 47,327
7,600 Texas Instruments, Inc. 218,880
--------------
1,036,122
--------------
Software -- 2.6%
2,600 Adobe Systems, Inc.(b)(c) 106,912
1,250 Avid Technology, Inc.(b) 46,575
6,075 BEA Systems, Inc.(b) 76,424
9,100 Microsoft Corp. 271,726
See accompanying notes to financial statements.
15
IXIS EQUITY DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- -------------------------------------------------------------------------------------------------
Software -- continued
13,975 Oracle Corp.(b)(c) $ 239,531
1,751 Patni Computer Systems, Ltd. ADR(c) 35,685
--------------
776,853
--------------
Telecommunications -- 3.2%
500 Anixter International, Inc.(b) 27,150
13,275 Cisco Systems, Inc.(b) 362,806
2,939 France Telecom SA, Sponsored ADR 81,410
10 KDDI Corp. (JPY) 67,886
2,100 Nokia Oyj (EUR) 42,645
2,825 QUALCOMM, Inc. 106,757
5,300 Sprint Nextel Corp.(c) 100,117
3,148 Vodafone Group PLC, Sponsored ADR(c) 87,451
5,200 Windstream Corp. 73,944
--------------
950,166
--------------
Textiles -- 0.1%
250 Mohawk Industries, Inc.(b) 18,715
--------------
Tobacco -- 0.5%
1,550 Loews Corp. - Carolina Group 100,316
550 UST, Inc. 32,010
--------------
132,326
--------------
Toys, Games & Hobbies -- 0.3%
2,401 Nintendo Co., Ltd., ADR(c) 77,672
--------------
Transportation -- 1.7%
2,300 Expeditors International of Washington, Inc.(c) 93,150
4,450 Union Pacific Corp. 409,489
--------------
502,639
--------------
Water -- 0.2%
1,030 Suez SA, ADR(c) 53,518
--------------
Total Common Stocks (Identified Cost $24,658,993) 27,557,921
--------------
Shares/
Principal
Amount
- -------------------------------------------------------------------------------------------------
Short-Term Investments -- 20.8%
5,962,609 State Street Securities Lending Quality Trust(d) 5,962,609
$ 155,047 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$155,120 on 1/02/2007, collateralized by $125,000 U.S.
Treasury Bond, 7.125% due 2/15/2023 valued at $158,545,
including accrued interest 155,047
--------------
Total Short-Term Investments (Identified Cost $6,117,656) 6,117,656
--------------
Total Investments -- 114.6%
(Identified Cost $30,776,649)(a) 33,675,577
Other assets less liabilities--(14.6)% (4,279,335)
--------------
Net Assets -- 100% $ 29,396,242
==============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $30,928,794 for federal income tax
purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which
there is an excess of value over tax cost $ 3,122,571
Aggregate gross unrealized depreciation for all securities in which
there is an excess of tax cost over value (375,788)
--------------
Net unrealized appreciation $ 2,746,783
==============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
(d) Represents investment of securities lending collateral.
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 period end, the value of these amounted to $49,633
or 0.2% of net assets.
ADR/GDR An American Depositary Receipt or Global Depositary Receipt 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.
REITs Real Estate Investment Trusts
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro
GBP British Pound
HKD Hong Kong Dollar
IDR Indonesian Rupiah
JPY Japanese Yen
KRW South Korean Won
SEK Swedish Krona
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Diversified Financial Services 10.9%
Media 7.1
Computers 6.1
Retail 5.4
Banks 5.2
Semiconductors 3.5
Health Care -- Products 3.5
Pharmaceuticals 3.4
Telecommunications 3.2
Insurance 3.0
Oil & Gas 2.8
Software 2.6
Internet 2.5
Aerospace & Defense 2.1
Manufacturing 2.0
Leisure Time 2.0
Others, Less than 2% each 28.5
See accompanying notes to financial statements.
16
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- --------------------------------------------------------------------
Common Stocks -- 45.2% of Net Assets
Agriculture -- 0.3%
4,775 Universal Corp. $ 234,023
---------------
Auto Manufacturers -- 0.2%
4,079 General Motors Corp. 125,307
---------------
Auto Parts & Equipment -- 0.1%
3,991 Superior Industries International, Inc. 76,907
---------------
Banks -- 6.2%
4,400 Associated Banc Corp. 153,472
5,429 Bank of America Corp. 289,854
4,068 Bank of Hawaii Corp. 219,469
2,878 Bank of New York Co., Inc. 113,307
4,924 BB&T Corp. 216,311
5,586 Citizens Banking Corp. 148,029
3,371 Colonial BancGroup, Inc. 86,770
5,193 Comerica, Inc. 304,725
3,420 Compass Bancshares, Inc. 204,003
6,705 F N B Corp. 122,500
5,096 Fifth Third Bancorp 208,579
5,679 First Horizon National Corp. 237,269
6,248 FirstMerit Corp. 150,827
4,336 Fulton Financial Corp. 72,411
4,880 Huntington Bancshares, Inc. 115,900
4,815 KeyCorp 183,114
5,493 National City Corp. 200,824
3,887 PNC Financial Services Group, Inc. 287,793
4,397 Popular, Inc. 78,926
4,363 Provident Bankshares Corp. 155,323
4,862 Regions Financial Corp. 181,839
5,295 Sky Financial Group, Inc. 151,119
3,725 Suntrust Banks, Inc. 314,576
3,072 Synovus Financial Corp. 94,710
4,157 TCF Financial Corp. 113,985
4,774 U.S. Bancorp 172,771
4,038 UnionBanCal Corp. 247,328
4,311 Valley National Bancorp 114,285
5,116 Wachovia Corp. 291,356
3,807 Wells Fargo & Co. 135,377
---------------
5,366,752
---------------
Beverages -- 0.2%
3,267 Coca-Cola Co. (The) 157,633
---------------
Building Materials -- 0.1%
3,833 Masco Corp. 114,492
---------------
Chemicals -- 1.3%
4,849 Dow Chemical Co. (The) 193,669
3,608 Eastman Chemical Co. 213,990
2,727 Lubrizol Corp. 136,705
4,262 Lyondell Chemical Co. 108,979
3,813 PPG Industries, Inc. 244,833
4,130 RPM International, Inc. 86,276
3,345 Sensient Technologies Corp. 82,287
---------------
1,066,739
---------------
Commercial Services -- 0.3%
4,808 Deluxe Corp. 121,162
3,504 R. R. Donnelley & Sons Co. 124,532
---------------
245,694
---------------
Consumer Products -- 0.4%
4,089 Briggs & Stratton Corp. 110,199
Shares Description Value (+)
- ----------------------------------------------------------------------
Consumer Products --continued
3,809 Kimberly-Clark Corp. $ 258,821
---------------
369,020
---------------
Distribution & Wholesale -- 0.2%
3,659 Genuine Parts Co. 173,546
---------------
Diversified Financial Services -- 0.6%
4,820 Citigroup, Inc. 268,474
3,676 JPMorgan Chase & Co. 177,551
2,888 Waddell & Reed Financial, Inc. 79,015
---------------
525,040
---------------
Electric -- 3.2%
4,638 Black Hills Corp. 171,328
4,227 Centerpoint Energy, Inc. 70,084
4,270 DPL, Inc. 118,621
5,437 DTE Energy Co. 263,205
6,196 Duquesne Light Holdings, Inc. 122,991
6,088 Energy East Corp. 150,982
3,010 Entergy Corp. 277,883
3,315 Exelon Corp. 205,165
3,809 FirstEnergy Corp. 229,683
3,562 FPL Group, Inc. 193,844
3,201 Northeast Utilities 90,140
5,412 Pinnacle West Capital Corp. 274,334
3,582 PNM Resources, Inc. 111,400
3,900 PPL Corp. 139,776
5,241 SCANA Corp. 212,890
2,740 Unisource Energy Corp. 100,092
---------------
2,732,418
---------------
Electrical Components & Equipment -- 0.3%
6,281 Emerson Electric Co. 276,929
---------------
Environmental Control -- 0.1%
3,027 Waste Management, Inc. 111,303
---------------
Food -- 0.3%
3,123 General Mills, Inc. 179,885
2,822 Sara Lee Corp. 48,058
---------------
227,943
---------------
Forest Products & Paper -- 0.1%
3,704 Meadwestvaco Corp. 111,342
---------------
Gas -- 0.8%
4,848 AGL Resources, Inc. 188,636
4,517 Nicor, Inc. 211,395
4,839 NiSource, Inc. 116,620
3,558 Oneok, Inc. 153,421
---------------
670,072
---------------
Home Construction -- 0.0%
375 KB Home 19,230
---------------
Home Furnishings -- 0.1%
4,847 La-Z-Boy, Inc. 57,534
---------------
Household Products & Wares -- 0.2%
2,830 Avery Dennison Corp. 192,242
---------------
Insurance -- 1.0%
5,128 Arthur J Gallagher & Co. 151,532
3,732 Cincinnati Financial Corp. 169,097
4,026 Commerce Group, Inc. 119,774
2,990 Lincoln National Corp. 198,536
4,483 Unitrin, Inc. 224,643
---------------
863,582
---------------
See accompanying notes to financial statements.
17
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- ---------------------------------------------------------------------------
Office & Business Equipment -- 0.2%
3,531 Pitney Bowes, Inc. $ 163,097
---------------
Oil & Gas -- 0.3%
3,597 Chevron Corp. 264,487
---------------
Packaging & Containers -- 0.1%
3,048 Sonoco Products Co. 116,007
---------------
Pharmaceuticals -- 0.9%
3,166 Abbott Laboratories 154,216
5,649 Bristol-Myers Squibb Co. 148,682
3,834 Eli Lilly & Co. 199,751
4,214 Merck & Co., Inc. 183,730
4,549 Pfizer, Inc. 117,819
---------------
804,198
---------------
Pipelines -- 0.5%
4,269 Kinder Morgan, Inc. 451,447
---------------
Publishing -- 0.1%
3,455 New York Times Co., Class A 84,164
---------------
Real Estate Investment Trusts 25.4%
REITs -- Apartments -- 4.7%
4,400 Apartment Investment & Management Co., Class A 246,488
14,000 Archstone-Smith Trust 814,940
7,400 AvalonBay Communities, Inc. 962,370
6,600 Camden Property Trust 487,410
21,000 Equity Residential 1,065,750
2,400 Home Properties, Inc. 142,248
9,100 United Dominion Realty Trust, Inc. 289,289
---------------
4,008,495
---------------
REITs -- Diversified -- 1.2%
5,600 BioMed Realty Trust, Inc. 160,160
7,000 Vornado Realty Trust 850,500
---------------
1,010,660
---------------
REITs -- Healthcare -- 1.1%
3,300 Health Care Property Investors, Inc. 121,506
6,300 Healthcare Realty Trust, Inc. 249,102
12,200 Nationwide Health Properties, Inc. 368,684
10,700 Omega Healthcare Investors, Inc. 189,604
---------------
928,896
---------------
REITs -- Hotels -- 2.1%
6,900 Ashford Hospitality Trust 85,905
13,300 Hilton Hotels Corp. 464,170
2,400 Hospitality Properties Trust 114,072
33,100 Host Hotels & Resorts, Inc. 812,605
4,700 Starwood Hotels & Resorts Worldwide, Inc. 293,750
---------------
1,770,502
---------------
REITs -- Industrial -- 3.1%
6,800 AMB Property Corp. 398,548
12,300 DCT Industrial Trust, Inc. 145,140
2,700 Duke Realty Corp. 110,430
5,400 First Potomac Realty Trust 157,194
14,300 Liberty Property Trust 702,702
15,500 ProLogis 941,935
3,400 PS Business Parks, Inc. 240,414
---------------
2,696,363
---------------
REITs -- Office -- 4.6%
11,300 Boston Properties, Inc. 1,264,243
13,700 Brandywine Realty Trust, Inc. 455,525
14,000 Brookfield Properties Corp. 550,620
Shares Description Value (+)
- -------------------------------------------------------------------------------
REITs -- Office --continued
5,300 Corporate Office Properties Trust $ 267,491
3,000 Digital Realty Trust, Inc. 102,690
6,800 Equity Office Properties Trust 327,556
9,800 Highwoods Properties, Inc. 399,448
18,600 HRPT Properties Trust 229,710
4,700 Kilroy Realty Corp. 366,600
---------------
3,963,883
---------------
REITs -- Regional Malls -- 3.7%
11,600 General Growth Properties, Inc. 605,868
5,500 Macerich Co. (The) 476,135
17,700 Simon Property Group, Inc. 1,792,833
6,700 Taubman Centers, Inc. 340,762
---------------
3,215,598
---------------
REITs -- Shopping Centers -- 3.0%
4,000 Cedar Shopping Centers, Inc. 63,640
14,100 Developers Diversified Realty Corp. 887,595
6,600 Federal Realty Investment Trust 561,000
9,000 Kimco Realty Corp. 404,550
4,700 Kite Realty Group Trust 87,514
7,500 Regency Centers Corp. 586,275
---------------
2,590,574
---------------
REITs -- Storage -- 1.4%
12,000 Extra Space Storage, Inc. 219,120
10,100 Public Storage, Inc. 984,750
1,600 U-Store-It Trust 32,880
---------------
1,236,750
---------------
REITs -- Triple Net Lease -- 0.5%
4,800 iStar Financial, Inc. 229,536
4,600 Realty Income Corp. 127,420
9,500 Spirit Finance Corp. 118,466
---------------
475,422
---------------
Total Real Estate Investment Trusts 21,897,143
---------------
Savings & Loans -- 0.9%
3,845 Astoria Financial Corp. 115,965
7,379 New York Community Bancorp, Inc. 118,802
2,674 People's Bank 119,314
4,144 Washington Federal, Inc. 97,508
6,130 Washington Mutual, Inc. 278,854
---------------
730,443
---------------
Telecommunications -- 0.2%
4,814 AT&T, Inc. 172,100
---------------
Tobacco -- 0.5%
5,232 Altria Group, Inc. 449,010
---------------
Toys, Games & Hobbies -- 0.1%
3,465 Mattel, Inc. 78,517
---------------
Total Common Stocks (Identified Cost $35,977,890) 38,928,361
---------------
Principal
Amount (b)
- -------------------------------------------------------------------------------
Bonds and Notes -- 46.1%
Aerospace & Defense -- 0.6%
$ 320,000 Bombardier, Inc., 144A,
7.450%, 5/01/2034 292,800
200,000 Embraer Overseas, Ltd., Series 144A,
6.375%, 1/24/2017 200,000
---------------
492,800
---------------
See accompanying notes to financial statements.
18
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Principal
Amount (b) Description Value (+)
- ---------------------------------------------------------------------------------
Airlines -- 0.2%
$ 2,505 Continental Airlines, Inc., Series 1999-1, Class C,
6.954%, 8/02/2009 $ 2,480
15,974 Continental Airlines, Inc., Series 2000-2, Class B,
8.307%, 4/02/2018 16,534
165,000 Qantas Airways, Ltd., 144A,
6.050%, 4/15/2016 146,855
---------------
165,869
---------------
Automotive -- 0.5%
115,000 Cummins, Inc.,
7.125%, 3/01/2028 119,541
30,000 Ford Motor Co.,
6.375%, 2/01/2029 21,525
175,000 Ford Motor Co.,
7.450%, 7/16/2031 137,375
40,000 Goodyear Tire & Rubber Co.,
7.000%, 3/15/2028 34,000
105,000 Goodyear Tire & Rubber Co.,
7.857%, 8/15/2011 105,525
10,000 Goodyear Tire & Rubber Co.,
9.000%, 7/01/2015 10,475
---------------
428,441
---------------
Banks -- 1.0%
110,000,000 Barclays Financial LLC, 144A,
4.060%, 9/16/2010 (KRW) 115,725
300,000,000 Barclays Financial LLC, 144A,
4.470%, 12/04/2011 (KRW) 318,839
123,800,000 Barclays Financial LLC, 144A,
4.670%, 3/23/2009 (KRW)(c) 133,087
437,254 HSBC Bank USA, 144A,
Zero Coupon, 11/28/2011(c) 296,021
35,000 Wells Fargo & Co., Convertible,
5.121%, 5/01/2033(c) 35,113
---------------
898,785
---------------
Brokerage -- 0.0%
20,000 Goldman Sachs Group, Inc.,
4.750%, 7/15/2013 19,306
10,000 JPMorgan Chase & Co.,
5.125%, 9/15/2014 9,833
10,000 Merrill Lynch & Co., Inc., (MTN),
4.500%, 11/04/2010 9,745
---------------
38,884
---------------
Building Materials -- 0.2%
200,000 USG Corp., 144A,
6.300%, 11/15/2016 198,248
---------------
Chemicals -- 0.3%
45,000 Borden, Inc.,
7.875%, 2/15/2023 36,000
10,000 Borden, Inc.,
8.375%, 4/15/2016 8,700
25,000 Borden, Inc.,
9.200%, 3/15/2021 22,125
200,000 Hercules, Inc., Subordinated Note,
6.500%, 6/30/2029 171,000
55,000 Methanex Corp.,
6.000%, 8/15/2015 52,170
---------------
289,995
---------------
Principal
Amount (b) Description Value (+)
- -------------------------------------------------------------------------------------------
Construction Machinery -- 0.3%
$ 150,000 Case Corp.,
7.250%, 1/15/2016 $ 151,875
105,000 United Rentals North America, Inc., Senior Subordinated Note,
7.000%, 2/15/2014 103,031
---------------
254,906
---------------
Consumer Products -- 0.0%
20,000 Hasbro, Inc., Senior Debenture,
6.600%, 7/15/2028 19,796
---------------
Electric -- 0.5%
20,000 Dominion Resources, Inc.,
5.000%, 3/15/2013 19,471
60,000 Dominion Resources, Inc., Senior Note, Series B,
5.950%, 6/15/2035 58,988
55,000 Dynegy Holdings, Inc.,
7.125%, 5/15/2018 53,625
100,000 Dynegy Holdings, Inc.,
7.625%, 10/15/2026 97,000
70,000 Exelon Generation Co., LLC,
5.350%, 1/15/2014 68,565
20,000 NGC Corp. Capital Trust I, Series B,
8.316%, 6/01/2027 18,900
90,000 Toledo Edison Co.,
6.150%, 5/15/2037 88,593
---------------
405,142
---------------
Entertainment -- 0.7%
5,000 Time Warner, Inc.,
6.500%, 11/15/2036 4,977
425,000 Time Warner, Inc.,
6.625%, 5/15/2029 430,419
35,000 Time Warner, Inc.,
6.950%, 1/15/2028 36,729
100,000 Viacom, Inc., Class B,
6.875%, 4/30/2036 98,868
---------------
570,993
---------------
Finance Other -- 2.1%
65,000 Berkshire Hathaway Finance Corp.,
4.125%, 1/15/2010 63,172
595,000 Berkshire Hathaway Finance Corp.,
4.850%, 1/15/2015 576,510
110,000,000 SLM Corp., Series 35, (MTN),
1.530%, 9/15/2011 (JPY) 922,563
240,000 Western Union Co., 144A,
6.200%, 11/17/2036 225,448
---------------
1,787,693
---------------
Food -- 0.0%
30,000 Sara Lee Corp.,
6.125%, 11/01/2032 27,145
---------------
Government Guaranteed -- 1.3%
100,000,000 Development Bank of Japan,
1.750%, 6/21/2010 (JPY) 861,176
7,000,000 Kreditanstalt fuer Wiederaufbau,
1.750%, 3/23/2010 (JPY) 60,222
8,000,000 Kreditanstalt fuer Wiederaufbau,
1.850%, 9/20/2010 (JPY) 69,125
19,000,000 Oesterreichische Kontrollbank AG,
1.800%, 3/22/2010 (JPY) 163,710
---------------
1,154,233
---------------
See accompanying notes to financial statements.
19
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Principal
Amount (b) Description Value (+)
- -------------------------------------------------------------------------------
Government Sponsored -- 1.8%
$ 275,000 Federal Home Loan Mortgage Corp.,
4.375%, 11/16/2007 $ 272,982
600,000 Federal Home Loan Mortgage Corp.,
4.625%, 2/21/2008 596,298
20,000,000 Federal National Mortgage Association,
1.750%, 3/26/2008 (JPY) 170,253
200,000 Federal National Mortgage Association,
2.290%, 2/19/2009 (SGD) 127,374
370,000 Federal National Mortgage Association,
3.250%, 8/15/2008 359,617
---------------
1,526,524
---------------
Healthcare -- 0.6%
15,000 HCA, Inc.,
6.500%, 2/15/2016 12,638
25,000 HCA, Inc.,
7.050%, 12/01/2027 18,816
5,000 HCA, Inc.,
7.500%, 12/15/2023 4,069
190,000 HCA, Inc.,
7.500%, 11/06/2033 154,850
135,000 HCA, Inc., (MTN),
7.580%, 9/15/2025 109,846
160,000 HCA, Inc.,
7.690%, 6/15/2025 132,432
30,000 HCA, Inc., (MTN),
7.750%, 7/15/2036 24,059
20,000 HCA, Inc.,
8.360%, 4/15/2024 17,596
10,000 WellPoint, Inc.,
5.250%, 1/15/2016 9,803
---------------
484,109
---------------
Home Construction -- 1.1%
45,000 Centex Corp.,
5.250%, 6/15/2015 42,502
50,000 DR Horton, Inc., Senior Note,
5.250%, 2/15/2015 46,671
25,000 DR Horton, Inc.,
5.625%, 9/15/2014 24,147
30,000 DR Horton, Inc., Guaranteed Note,
5.625%, 1/15/2016 28,541
170,000 K. Hovnanian Enterprises, Inc., Senior Note,
6.250%, 1/15/2016 160,650
10,000 K. Hovnanian Enterprises, Inc., Guaranteed Note,
6.375%, 12/15/2014 9,600
25,000 K. Hovnanian Enterprises, Inc., Senior Note,
6.500%, 1/15/2014 24,250
20,000 K. Hovnanian Enterprises, Inc.,
7.500%, 5/15/2016 20,100
30,000 KB Home, Senior Note,
5.875%, 1/15/2015 27,508
105,000 KB Home,
7.250%, 6/15/2018 102,545
55,000 Lennar Corp., Series B, Class A, Guaranteed Note,
5.600%, 5/31/2015 52,590
10,000 Pulte Homes, Inc.,
5.200%, 2/15/2015 9,527
80,000 Pulte Homes, Inc.,
6.000%, 2/15/2035 73,178
320,000 Pulte Homes, Inc.,
6.375%, 5/15/2033 298,772
Principal
Amount (b) Description Value (+)
- ----------------------------------------------------------------------------
Home Construction -- continued
$ 25,000 Toll Brothers Financial Corp.,
5.150%, 5/15/2015 $ 22,907
---------------
943,488
---------------
Independent Energy -- 0.5%
210,000 Chesapeake Energy Corp.,
6.500%, 8/15/2017 205,275
100,000 Chesapeake Energy Corp.,
6.875%, 11/15/2020 98,250
115,000 XTO Energy, Inc.,
6.100%, 4/01/2036 112,231
---------------
415,756
---------------
Insurance -- 0.1%
55,000 Fund American Cos., Inc.,
5.875%, 5/15/2013 54,671
---------------
Media Cable -- 0.8%
455,000 Comcast Corp.,
5.650%, 6/15/2035 413,020
65,000 Comcast Corp.,
6.450%, 3/15/2037 65,035
80,000 Comcast Corp.,
6.500%, 11/15/2035 80,565
100,000 CSC Holdings, Inc., Senior Note,
7.625%, 7/15/2018 97,375
75,000 Shaw Communications, Inc.,
6.150%, 5/09/2016 (CAD) 64,389
---------------
720,384
---------------
Media Non-Cable -- 0.2%
70,000 British Sky Broadcasting Finance PLC, 144A,
6.500%, 10/15/2035 69,227
80,000 Intelsat Corp.,
6.875%, 1/15/2028 73,200
---------------
142,427
---------------
Mining -- 0.2%
30,000 Glencore Funding LLC, Guaranteed Note, 144A,
6.000%, 4/15/2014 29,245
125,000 Vale Overseas, Ltd.,
6.875%, 11/21/2036 128,206
---------------
157,451
---------------
Municipal -- 0.1%
50,000 Michigan Tobacco Settlement Finance Authority,
Taxable Turbo Series A,
7.309%, 6/01/2034 52,199
---------------
Non Captive Consumer -- 0.4%
20,000 Capital One Bank,
5.125%, 2/15/2014 19,671
65,000 Ford Motor Credit Co.,
5.700%, 1/15/2010 62,309
80,000 Ford Motor Credit Co.,
8.000%, 12/15/2016 79,052
60,000 General Electric Capital Corp., (MTN),
4.750%, 9/15/2014 57,978
200,000 General Electric Capital Corp.,
6.500%, 9/28/2015 (NZD) 135,500
45,000 GMAC LLC, (MTN),
6.750%, 12/01/2014 46,221
---------------
400,731
---------------
See accompanying notes to financial statements.
20
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Principal
Amount (b) Description Value (+)
- ---------------------------------------------------------------------------------------
Oil & Gas Services -- 0.1%
$ 100,000 Weatherford International, Ltd.,
6.500%, 8/01/2036 $ 100,387
---------------
Packaging & Containers -- 0.0%
30,000 Owens-Illinois, Inc.,
7.800%, 5/15/2018 29,888
---------------
Paper -- 0.6%
90,000 Abitibi-Consolidated, Inc.,
7.400%, 4/01/2018 71,100
20,000 Abitibi-Consolidated, Inc.,
7.500%, 4/01/2028 15,350
115,000 Bowater, Inc.,
6.500%, 6/15/2013 104,937
5,000 Georgia-Pacific Corp.,
7.250%, 6/01/2028 4,850
25,000 Georgia-Pacific Corp.,
7.375%, 12/01/2025 24,375
105,000 Georgia-Pacific Corp.,
7.750%, 11/15/2029 104,737
60,000 Georgia-Pacific Corp.,
8.000%, 1/15/2024 60,900
95,000 Georgia-Pacific Corp.,
8.875%, 5/15/2031 100,463
---------------
486,712
---------------
Pharmaceuticals -- 0.5%
170,000 Elan Finance Corp., Senior Note,
7.750%, 11/15/2011 165,962
85,000 Elan Finance PLC, 144A,
8.875%, 12/01/2013 85,000
5,000 EPIX Pharmaceuticals, Inc., Senior Note, Convertible,
3.000%, 6/15/2024 3,988
10,000 Invitrogen Corp.,
1.500%, 2/15/2024 8,538
95,000 Nektar Therapeutics,
3.250%, 9/28/2012 94,881
50,000 Teva Pharmaceutical Finance LLC,
6.150%, 2/01/2036 48,581
10,000 Valeant Pharmaceuticals International, Subordinated Note,
4.000%, 11/15/2013 9,525
---------------
416,475
---------------
Pipelines -- 0.6%
75,000 Duke Energy Field Services LLC, 144A,
6.450%, 11/03/2036 77,060
25,000 El Paso Energy Corp., (MTN),
7.750%, 1/15/2032 27,375
20,000 Kinder Morgan Energy Partners, LP, Senior Note,
5.000%, 12/15/2013 19,008
100,000 Kinder Morgan Energy Partners, LP, Senior Note,
5.800%, 3/15/2035 90,874
65,000 Kinder Morgan Finance Co., Guaranteed Note,
5.700%, 1/05/2016 59,639
55,000 Kinder Morgan Finance Co., Guaranteed Note,
6.400%, 1/05/2036 49,037
25,000 Kinder Morgan, Inc., Senior Note,
5.150%, 3/01/2015 22,433
35,000 ONEOK Partners, LP,
6.150%, 10/01/2016 35,513
45,000 ONEOK Partners, LP,
6.650%, 10/01/2036 46,027
Principal
Amount (b) Description Value (+)
- -------------------------------------------------------------------------------
Pipelines -- continued
$ 50,000 Tennessee Gas Pipeline Co., Senior Note,
7.000%, 10/15/2028 $ 52,794
60,000 Transcontinental Gas Pipe Line Corp.,
6.400%, 4/15/2016 60,600
---------------
540,360
---------------
Real Estate Investment Trusts -- 0.4%
50,000 Archstone-Smith Trust,
5.750%, 3/15/2016 50,644
20,000 EOP Operating, LP, Guaranteed Note,
4.650%, 10/01/2010 19,860
100,000 EOP Operating, LP, Guaranteed Note,
4.750%, 3/15/2014 99,063
30,000 ERP Operating, LP,
5.375%, 8/01/2016 29,686
10,000 FelCor Lodging, LP, Senior Note,
8.500%, 6/01/2011 10,650
95,000 Host Marriott, LP, Guaranteed Note, Series O,
6.375%, 3/15/2015 93,694
20,000 Simon Property Group, LP,
4.875%, 8/15/2010 19,723
---------------
323,320
---------------
Retailers -- 0.6%
55,000 CVS Corp., Senior Note,
6.125%, 8/15/2016 56,749
205,000 Dillard's, Inc., Class A,
7.000%, 12/01/2028 195,775
300,000 Toys R US, Inc.,
7.375%, 10/15/2018 243,000
---------------
495,524
---------------
Sovereigns -- 1.4%
240,000 Kingdom of Norway,
5.500%, 5/15/2009 (NOK) 39,454
110,000 Kingdom of Norway,
6.000%, 5/16/2011 (NOK) 18,751
290,000 Province of Manitoba,
5.750%, 6/02/2008 (CAD) 253,978
335,000 Queensland Treasury Corp.,
6.000%, 7/14/2009 (AUD) 262,998
400,000 Republic of Brazil,
12.500%, 1/05/2016 (BRL) 212,497
20,000(++) Mexican Fixed Rate Bonds, Series M-10,
8.000%, 12/17/2015 (MXN) 191,762
20,000(++) Mexican Fixed Rate Bonds, Series M-10,
9.000%, 12/20/2012 (MXN) 199,741
---------------
1,179,181
---------------
Supermarkets -- 0.6%
55,000 Albertson's, Inc., Series C, (MTN),
6.625%, 6/01/2028 49,932
120,000 Albertson's, Inc., Senior Note,
7.450%, 8/01/2029 117,240
355,000 Albertson's, Inc.,
7.750%, 6/15/2026 354,092
15,000 Albertson's, Inc., Senior Note,
8.000%, 5/01/2031 15,215
10,000 Albertson's, Inc., Senior Note,
8.700%, 5/01/2030 10,445
---------------
546,924
---------------
See accompanying notes to financial statements.
21
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Principal
Amount (b) Description Value (+)
- ----------------------------------------------------------------------------
Technology -- 1.6%
$ 10,000 Affiliated Computer Services, Inc.,
5.200%, 6/01/2015 $ 9,200
70,000 Arrow Electronics, Inc.,
6.875%, 6/01/2018 72,314
40,000 Avnet, Inc.,
2.000%, 3/15/2034 40,250
55,000 Avnet, Inc.,
6.000%, 9/01/2015 54,230
50,000 Corning, Inc.,
5.900%, 3/15/2014 50,779
75,000 Corning, Inc.,
6.200%, 3/15/2016 76,358
115,000 Corning, Inc.,
6.850%, 3/01/2029 119,678
65,000 Corning, Inc.,
7.250%, 8/15/2036 69,658
90,000 JDS Uniphase Corp., Convertible,
Zero Coupon, 11/15/2010 81,562
20,000 Kulicke & Soffa Industries, Inc., Convertible,
0.500%, 11/30/2008 17,675
15,000 Kulicke & Soffa Industries, Inc., Convertible,
1.000%, 6/30/2010 13,763
335,000 Lucent Technologies, Inc.,
6.450%, 3/15/2029 309,037
75,000 Nortel Networks Corp., Convertible,
4.250%, 9/01/2008 72,563
25,000 Nortel Networks Corp.,
6.875%, 9/01/2023 21,000
140,000 Nortel Networks, Ltd., 144A,
10.125%, 7/15/2013 151,200
40,000 Northern Telecom Capital Corp.,
7.875%, 6/15/2026 35,800
170,000 Xerox Corp.,
6.400%, 3/15/2016 173,612
---------------
1,368,679
---------------
Treasuries -- 22.8%
401,678 U.S. Treasury Bond,
2.000%, 1/15/2026(d) 377,765
797,703 U.S. Treasury Bond,
2.375%, 1/15/2025(d) 794,182
1,608,975 U.S. Treasury Bond,
3.375%, 4/15/2032(d) 1,943,593
1,250,000 U.S. Treasury Bond,
4.500%, 2/15/2036 1,188,673
3,020,000 U.S. Treasury Bond,
5.375%, 2/15/2031 3,234,939
905,591 U.S. Treasury Note,
0.875%, 4/15/2010(d) 858,543
628,922 U.S. Treasury Note,
1.625%, 1/15/2015(d) 591,972
1,153,147 U.S. Treasury Note,
1.875%, with various maturities to 2015(d)(e) 1,109,612
1,753,776 U.S. Treasury Note,
2.000%, with various maturities to 2016(d)(e) 1,701,202
269,470 U.S. Treasury Note,
2.375%, 4/15/2011(d) 268,396
259,840 U.S. Treasury Note,
2.500%, 7/15/2016(d) 261,809
572,502 U.S. Treasury Note,
3.000%, 7/15/2012(d) 589,163
Principal
Amount (b) Description Value (+)
- ---------------------------------------------------------------------------
Treasuries --continued
$ 153,453 U.S. Treasury Note,
3.375%, 1/15/2012(d) $ 160,209
324,709 U.S. Treasury Note,
3.500%, 1/15/2011(d) 338,027
124,933 U.S. Treasury Note,
3.625%, 1/15/2008(d) 126,265
338,425 U.S. Treasury Note,
3.875%, 1/15/2009(d) 347,732
359,893 U.S. Treasury Note,
4.250%, 1/15/2010(d) 378,787
1,135,000 U.S. Treasury Note,
4.250%, 8/15/2015 1,098,290
2,910,000 U.S. Treasury Note,
4.625%, with various maturities to 2008(e) 2,899,357
1,000,000 U.S. Treasury Note,
5.000%, 7/31/2008 1,001,641
760,000 U.S. Treasury STRIPS,
Zero Coupon, 8/15/2019 412,012
---------------
19,682,169
---------------
Wireless -- 1.1%
1,000,000 America Movil S.A. de C.V., Series L, 144A,
8.460%, 12/18/2036 (MXN) 93,023
225,000 Hanarotelecom, Inc., 144A,
7.000%, 2/01/2012 225,562
420,000 Nextel Communications, Inc., Series F,
5.950%, 3/15/2014 409,003
50,000 Sprint Capital Corp.,
6.875%, 11/15/2028 50,050
175,000 True Move Co., Ltd., 144A,
10.750%, 12/16/2013 171,063
---------------
948,701
---------------
Wirelines -- 2.3%
30,000 AT&T, Inc.,
6.150%, 9/15/2034 29,507
25,000 AT&T, Inc.,
6.500%, 3/15/2029 24,953
425,000 BellSouth Corp.,
6.000%, 11/15/2034 408,048
100,000 Level 3 Communications, Inc.,
2.875%, 7/15/2010 104,875
5,000 Level 3 Communications, Inc.,
6.000%, 9/15/2009 4,675
250,000 Level 3 Communications, Inc.,
6.000%, 3/15/2010 230,625
50,000 Level 3 Communications, Inc., Senior Note,
11.500%, 3/01/2010 53,000
160,000 Qwest Capital Funding, Inc., Guaranteed Note,
6.500%, 11/15/2018 149,600
250,000 Qwest Capital Funding, Inc., Guaranteed Note,
6.875%, 7/15/2028 228,438
15,000 Qwest Capital Funding, Inc., Guaranteed Note,
7.625%, 8/03/2021 14,775
295,000 Qwest Capital Funding, Inc.,
7.750%, 2/15/2031 289,471
130,000 Qwest Corp.,
6.875%, 9/15/2033 124,150
40,000 Qwest Corp.,
7.500%, 10/01/2014 42,400
See accompanying notes to financial statements.
22
IXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Principal
Amount (b) Description Value (+)
- ------------------------------------------------------------------------------------------------------
Wirelines -- continued
$ 100,000 Telefonica Emisiones SAU, Guaranteed Note,
7.045%, 6/20/2036 $ 106,217
85,000 Verizon Global Funding Corp., Senior Note,
5.850%, 9/15/2035 81,408
30,000 Verizon Maryland, Inc., Series B, Senior Note,
5.125%, 6/15/2033 24,611
30,000 Verizon New York, Inc., Series B,
7.375%, 4/01/2032 30,975
---------------
1,947,728
---------------
Total Bonds and Notes (Identified Cost $39,378,719) 39,696,718
---------------
Shares
- ------------------------------------------------------------------------------------------------------
Investment Companies -- 0.2%
2,434 iShares Dow Jones Select Dividend Index Fund
(Identified Cost $172,540) 172,181
---------------
Preferred Stocks -- 0.1%
Consumer Products -- 0.0%
625 Newell Financial Trust I 29,766
---------------
Electric -- 0.1%
1,025 AES Trust III, Convertible 50,481
---------------
Pipelines -- 0.0%
1,150 El Paso Energy Capital Trust I 44,620
---------------
Total Preferred Stocks (Identified Cost $117,899) 124,867
---------------
Principal
Amount(b)
- ------------------------------------------------------------------------------------------------------
Short-Term Investments -- 8.1%
$ 6,977,638 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$6,980,933 on 1/02/2007, collateralized by $5,625,000 U.S.
Treasury Bond, 7.125% due 2/15/2023 valued at $7,134,542,
including accrued interest
(Identified Cost $6,977,638) 6,977,638
---------------
Total Investments -- 99.7%
(Identified Cost $82,624,686)(a) 85,899,765
Other assets less liabilities--0.3% 244,248
---------------
Net Assets -- 100% $ 86,144,013
===============
(+) See Note 2a of Notes to Financial Statements.
(++) Amount shown represents units.
(a) Federal Tax Information:
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $82,646,173 for federal income tax
purposes was as follows:
Aggregate gross unrealized appreciation for
all securities in which there is an excess of
value over tax cost $ 3,522,000
Aggregate gross unrealized depreciation for
all securities in which there is an excess of
tax cost over value (268,408)
---------------
Net unrealized appreciation $ 3,253,592
===============
(b) Principal amount is in USD unless otherwise noted.
(c) 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).
(d) Treasury Inflation Protected Security (TIPS).
(e) 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.
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 period end, the value of these amounted to $2,828,403 or 3.3%
of net assets.
MTN Medium Term Note
REITs Real Estate Investment Trusts
STRIPS Separate Trading of Registered Interest and Principal of Securities
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
JPY Japanese Yen
KRW South Korean Won
MXN Mexican Peso
NOK Norwegian Krone
NZD New Zealand Dollar
SGD Singapore Dollar
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Treasuries 22.8%
Banks 7.2
REITs --Apartments 4.7
REITs --Office 4.6
Electric 3.8
REITs --Regional Malls 3.7
REITs --Industrial 3.1
REITs --Shopping Centers 3.0
Wirelines 2.3
Finance Other 2.1
REITs --Hotels 2.1
Other, less than 2% each 32.2
See accompanying notes to financial statements.
23
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2006
Shares Description Value (+)
- ------------------------------------------------------------------------------------
Common Stocks -- 68.1% of Net Assets
Aerospace & Defense -- 1.5%
1,650 Alliant Techsystems, Inc.(b) $ 129,013
13,000 CAE, Inc. 119,340
2,000 DRS Technologies, Inc. 105,360
7,700 Honeywell International, Inc. 348,348
1,650 L-3 Communications Holdings, Inc. 134,937
13,000 Raytheon Co.(c) 686,400
---------------
1,523,398
---------------
Agriculture -- 0.1%
2,350 Archer-Daniels-Midland Co. 75,106
---------------
Apparel -- 0.6%
11,425 Coach, Inc.(b) 490,818
9,000 Onward Kashiyama Co., Ltd. (JPY) 114,735
---------------
605,553
---------------
Athletic Footwear -- 0.5%
1,865 Adidas AG (EUR) 92,887
3,900 NIKE, Inc., Class B 386,217
---------------
479,104
---------------
Auto Manufacturers -- 0.4%
336,000 Denway Motors, Ltd. (HKD) 136,004
29,000 Isuzu Motors, Ltd. (JPY) 135,504
5,855 Nissan Motor Co., Ltd., Sponsored ADR(c) 142,101
---------------
413,609
---------------
Auto Parts & Equipment -- 0.2%
3,350 Autoliv, Inc. 202,005
---------------
Banks -- 3.8%
4,129 ABN AMRO Holding NV, Sponsored ADR(c) 132,334
6,750 Banco Santander Central Hispano SA, ADR 125,955
34,200 Bangkok Bank PCL 114,719
1,971 Bank of Yokohama, Ltd., ADR 152,752
3,250 BNP Paribas, ADR(c) 177,612
9,000 Chugoku Bank, Ltd. (The) (JPY) 117,777
3,200 Comerica, Inc. 187,776
3,399 Commerzbank AG (EUR) 128,531
2,774 Credit Agricole SA (EUR) 116,281
2,845 DBS Group Holdings, Ltd., Sponsored ADR(c) 167,997
1,850 First Horizon National Corp. 77,293
1,500 Hancock Holding Co. 79,260
6,479 HBOS PLC (GBP) 143,229
1,867 HSBC Holdings PLC, Sponsored ADR(c) 171,111
26,000 Joyo Bank, Ltd. (The) (JPY) 143,479
1,650 KeyCorp 62,750
1,479 Kookmin Bank 118,915
2,650 Marshall & Ilsley Corp. 127,492
10,300 Mellon Financial Corp. 434,145
377,000 PT Bank Mandiri (IDR) 122,163
3,092 Royal Bank of Scotland Group PLC (GBP) 120,336
12,085 Sumitomo Trust & Banking Co., Ltd. (The), Sponsored ADR 125,080
6,400 U.S. Bancorp(c) 231,616
21,700 UniCredito Italiano SpA (EUR) 189,696
1,721 Westpac Banking Corp., Sponsored ADR(c) 164,596
---------------
3,732,895
---------------
Beverages -- 1.3%
5,000 Coca-Cola Co. (The) 241,250
3,600 Constellation Brands, Inc.(b) 104,472
2,900 Diageo PLC, Sponsored ADR 229,999
1,240 Fomento Economico Mexicano, SA de CV, ADR 143,542
Shares Description Value (+)
- ------------------------------------------------------------------------------
Beverages -- continued
7,125 PepsiCo, Inc. $ 445,669
1,000 Quilmes Industrial SA, ADR 65,960
---------------
1,230,892
---------------
Biotechnology -- 0.9%
5,525 Celgene Corp.(b)(c) 317,853
1,800 Charles River Laboratories International, Inc.(b) 77,850
4,950 Genentech, Inc.(b) 401,594
1,000 Invitrogen Corp.(b) 56,590
---------------
853,887
---------------
Building Materials -- 0.3%
3,900 Cemex SAB de CV, ADR(b) 132,132
6,100 JS Group Corp. (JPY) 128,278
---------------
260,410
---------------
Chemicals -- 1.3%
1,600 Agrium, Inc. 50,384
2,150 Ashland, Inc. 148,737
3,704 Ciba Specialty Chemicals AG, Sponsored ADR(c) 123,380
10,400 Dow Chemical Co. (The) 415,376
2,020 Lonza Group AG (CHF) 174,114
4,000 Lyondell Chemical Co. 102,280
2,350 Sherwin-Williams Co. (The) 149,413
1,400 Sigma-Aldrich Corp. 108,808
---------------
1,272,492
---------------
Commercial Services -- 1.0%
4,800 Alliance Data Systems Corp.(b) 299,856
4,700 Apollo Group, Inc., Class A(b) 183,159
4,000 Convergys Corp.(b) 95,120
58,000 Cosco Pacific, Ltd. (HKD) 135,090
5,175 Monster Worldwide, Inc.(b) 241,362
---------------
954,587
---------------
Computers -- 4.4%
8,075 Apple Computer, Inc.(b) 685,083
5,925 Cognizant Technology Solutions Corp.(b) 457,173
39,900 Dell, Inc.(b) 1,001,091
2,000 Diebold, Inc. 93,200
2,200 DST Systems, Inc.(b) 137,786
21,800 Hewlett-Packard Co. 897,942
13,875 Network Appliance, Inc.(b) 545,010
89,800 Sun Microsystems, Inc.(b) 486,716
---------------
4,304,001
---------------
Cosmetics & Personal Care -- 0.3%
5,150 Procter & Gamble Co. 330,991
---------------
Distribution & Wholesale -- 0.1%
8,400 Sumitomo Corp., Sponsored ADR(c) 123,900
---------------
Diversified Financial Services -- 7.8%
10,600 American Express Co. 643,102
800 Bear Stearns Cos. (The), Inc. 130,224
1,875 BlackRock, Inc., Class A(c) 284,812
22,419 Cattles PLC (GBP) 192,296
850 Chicago Mercantile Exchange Holdings, Inc. 433,287
3,550 CIT Group, Inc. 197,984
12,400 Citigroup, Inc. 690,680
2,279 Credit Suisse Group, Sponsored ADR 159,188
6,400 Eaton Vance Corp. 211,264
2,300 Federated Investors, Inc., Class B 77,694
3,450 Goldman Sachs Group, Inc. 687,757
See accompanying notes to financial statements.
24
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- -------------------------------------------------------------------------------------
Diversified Financial Services -- continued
2,737 IGM Financial, Inc. (CAD) $ 115,240
17,600 JPMorgan Chase & Co. 850,080
1,650 Legg Mason, Inc. 156,833
5,275 Lehman Brothers Holdings, Inc. 412,083
19,487 Man Group PLC (GBP) 198,907
16,925 Morgan Stanley 1,378,203
6,940 Nomura Holdings, Inc.(c) 131,444
3,100 Nuveen Investments, Class A 160,828
2,325 NYSE Group, Inc.(b)(c) 225,990
9,200 T. Rowe Price Group, Inc. 402,684
---------------
7,740,580
---------------
Electric -- 0.7%
5,000 AES Corp. (The)(b) 110,200
2,810 Cia Energetica de Minas Gerais, Sponsored ADR(c) 135,442
130,000 Datang International Power Generation Co., Ltd., Class H 135,257
4,000 Mirant Corp.(b) 126,280
1,350 PG&E Corp. 63,896
1,650 PPL Corp. 59,136
1,500 Progress Energy, Inc. 73,620
---------------
703,831
---------------
Electrical Components & Equipment -- 0.6%
4,725 AMETEK, Inc. 150,444
4,100 General Cable Corp.(b) 179,211
1,800 Hubbell, Inc., Class B 81,378
16,505 Johnson Electric Holdings, Ltd., Sponsored ADR(c) 111,409
950 Schneider Electric SA (EUR) 105,138
---------------
627,580
---------------
Electronics -- 0.2%
1,775 Celestica, Inc.(b) 13,863
1,650 Mettler Toledo International, Inc.(b) 130,102
3,900 PerkinElmer, Inc. 86,697
---------------
230,662
---------------
Engineering & Construction -- 0.1%
2,900 Shaw Group, Inc.(b) 97,150
---------------
Entertainment -- 0.1%
1,600 Penn National Gaming, Inc.(b) 66,592
---------------
Food -- 1.0%
1,340 Ajinomoto Co., Inc., ADR 175,540
3,721 Carrefour SA (EUR) 225,212
1,600 Hormel Foods Corp. 59,744
2,800 Loblaw Cos., Ltd. 117,148
1,650 Nestle SA, Sponsored ADR 146,273
2,620 Royal Numico NV (EUR) 140,695
3,300 Smithfield Foods, Inc.(b) 84,678
---------------
949,290
---------------
Gas -- 0.3%
31,000 Osaka Gas Co., Ltd. (JPY) 115,223
7,100 Southern Union Co. 198,445
---------------
313,668
---------------
Health Care -- Products -- 2.6%
3,750 Bausch & Lomb, Inc. 195,225
5,800 Baxter International, Inc. 269,062
2,000 Beckman Coulter, Inc. 119,600
3,950 Biomet, Inc. 163,017
2,850 Cooper Cos. (The), Inc. 126,825
9,975 Johnson & Johnson 658,549
Shares Description Value (+)
- -----------------------------------------------------------------------
Health Care -- Products -- continued
2,000 Kinetic Concepts, Inc.(b) $ 79,100
10,225 Medtronic, Inc. 547,140
4,100 Smith & Nephew PLC, Sponsored ADR(c) 214,553
2,000 Zimmer Holdings, Inc.(b) 156,760
---------------
2,529,831
---------------
Health Care -- Services -- 1.0%
2,900 Lifepoint Hospitals, Inc.(b) 97,730
2,400 Lincare Holdings, Inc.(b) 95,616
1,650 Quest Diagnostics, Inc. 87,450
3,050 Triad Hospitals, Inc.(b) 127,581
4,400 UnitedHealth Group, Inc. 236,412
4,500 WellPoint, Inc.(b) 354,105
---------------
998,894
---------------
Home Builders -- 0.4%
3,500 Lennar Corp., Class A 183,610
7,300 Pulte Homes, Inc.(c) 241,776
---------------
425,386
---------------
Household Products & Wares -- 0.9%
2,350 Church & Dwight Co., Inc. 100,228
5,400 Fortune Brands, Inc.(c) 461,106
2,650 Scotts Miracle-Gro Co. (The), Class A 136,872
2,100 Whirlpool Corp. 174,342
---------------
872,548
---------------
Insurance -- 2.2%
4,600 Aflac, Inc. 211,600
1,000 Ambac Financial Group, Inc. 89,070
4,650 American International Group, Inc. 333,219
2,350 Arch Capital Group, Ltd.(b) 158,883
3,900 Axa, Sponsored ADR 157,287
5,050 Chubb Corp. 267,195
2,800 Cincinnati Financial Corp. 126,868
2,995 ING Groep NV, Sponsored ADR 132,289
3,100 Millea Holdings, Inc. (JPY) 109,797
4,750 Ohio Casualty Corp. 141,598
43,679 Old Mutual PLC (GBP) 148,660
1,900 PMI Group, Inc. (The) 89,623
9,500 Progressive Corp. 230,090
---------------
2,196,179
---------------
Internet -- 1.9%
7,125 Akamai Technologies, Inc.(b)(c) 378,480
5,480 Check Point Software Technologies, Ltd.(b) 120,122
2,025 Google, Inc., Class A(b) 932,472
22,125 Symantec Corp.(b)(c) 461,306
---------------
1,892,380
---------------
Iron & Steel -- 0.2%
5,144 Evraz Group SA, GDR, 144A 132,149
700 Oregon Steel Mills, Inc.(b) 43,687
---------------
175,836
---------------
Leisure Time -- 1.4%
15,500 Carnival Corp.(c) 760,275
7,900 Harley-Davidson, Inc.(c) 556,713
850 Royal Caribbean Cruises, Ltd. 35,173
---------------
1,352,161
---------------
Lodging & Gaming -- 0.4%
4,450 Las Vegas Sands Corp.(b)(c) 398,186
---------------
See accompanying notes to financial statements.
25
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- ---------------------------------------------------------------------------------
Manufacturing -- 1.4%
1,000 Cooper Industries, Ltd., Class A $ 90,430
1,300 Eaton Corp. 97,682
2,000 ITT Industries, Inc. 113,640
1,300 Parker Hannifin Corp. 99,944
30,700 Tyco International, Ltd. 933,280
---------------
1,334,976
---------------
Media -- 5.0%
3,560 British Sky Broadcasting PLC, Sponsored ADR(c) 146,672
11,950 Comcast Corp., Class A(b)(c) 505,843
9,800 Eniro AB (SEK) 129,264
3,565 Liberty Media Corp. -- Capital, Series A(b) 349,299
6,600 McGraw-Hill Cos., Inc. (The) 448,932
20,950 News Corp., Class A 450,006
3,302 Reuters Group PLC, Sponsored ADR(c) 172,463
45,600 Time Warner, Inc. 993,168
23,300 Viacom, Inc., Class B(b) 955,999
4,930 Vivendi (EUR) 192,292
16,800 Walt Disney Co. (The) 575,736
---------------
4,919,674
---------------
Metal Fabricate & Hardware -- 0.6%
7,125 Precision Castparts Corp. 557,745
---------------
Metals -- 0.6%
3,200 Allegheny Technologies, Inc.(c) 290,176
4,500 Cameco Corp. 182,025
1,100 Freeport-McMoRan Copper & Gold, Inc., Class B 61,303
---------------
533,504
---------------
Mining -- 0.3%
2,700 BHP Billiton Ltd., Sponsored ADR(c) 107,325
6,820 Cia Vale do Rio Doce, Sponsored ADR 179,025
---------------
286,350
---------------
Office & Business Equipment -- 0.4%
3,325 Canon, Inc., Sponsored ADR(c) 188,162
13,600 Xerox Corp.(b) 230,520
---------------
418,682
---------------
Oil & Gas -- 2.1%
2,850 Anadarko Petroleum Corp. 124,032
5,800 Chesapeake Energy Corp. 168,490
2,957 Eni SpA, Sponsored ADR 198,947
1,500 Hess Corp. 74,355
1,000 LUKOIL, Sponsored ADR 87,400
1,700 Murphy Oil Corp. 86,445
1,500 Noble Energy, Inc. 73,605
1,340 Petroleo Brasileiro SA, ADR 138,006
1,700 Pogo Producing Co. 82,348
1,700 Range Resources Corp. 46,682
2,800 Sasol, Ltd., Sponsored ADR(c) 103,320
2,900 Sunoco, Inc. 180,844
2,800 Tesoro Corp. 184,156
2,638 Total SA, Sponsored ADR 189,725
7,475 XTO Energy, Inc. 351,699
---------------
2,090,054
---------------
Oil & Gas Services -- 0.7%
11,475 Halliburton Co. 356,299
3,200 Oil States International, Inc.(b) 103,136
7,165 Saipem SpA (EUR) 185,905
---------------
645,340
---------------
Shares Description Value (+)
- -------------------------------------------------------------------------------------------
Pharmaceuticals -- 2.4%
10,350 Abbott Laboratories $ 504,148
2,540 AstraZeneca PLC, Sponsored ADR(c) 136,017
8,600 Gilead Sciences, Inc.(b) 558,398
3,155 GlaxoSmithKline PLC, ADR(c) 166,458
2,700 Medco Health Solutions, Inc.(b) 144,288
2,656 Novartis AG, ADR 152,561
19,000 Schering-Plough Corp. 449,160
8,000 Shionogi & Co., Ltd. (JPY) 157,113
1,800 Takeda Pharmaceutical Co., Ltd. (JPY) 123,365
---------------
2,391,508
---------------
Real Estate -- 0.6%
19,150 CB Richard Ellis Group, Inc., Class A(b) 635,780
---------------
REITs -- Healthcare -- 0.2%
4,500 Ventas, Inc. 190,440
---------------
REITs -- Hotels -- 0.2%
3,600 Starwood Hotels & Resorts Worldwide, Inc. 225,000
---------------
REITs -- Mortgage -- 0.4%
3,500 Annaly Mortgage Management, Inc. 48,685
5,300 KKR Financial Corp. 141,987
2,100 Newcastle Investment Corp. 65,772
5,000 NovaStar Financial, Inc. 133,250
---------------
389,694
---------------
Restaurants -- 1.2%
26,600 McDonald's Corp. 1,179,178
---------------
Retail -- 3.9%
8,650 American Eagle Outfitters, Inc.(c) 269,966
5,150 Best Buy Co., Inc. 253,328
17,400 CVS Corp.(c) 537,834
3,436 Folli - Follie SA (EUR) 135,334
15,800 Home Depot, Inc. 634,528
14,610 Kingfisher PLC, Sponsored ADR(c) 136,604
4,625 Kohl's Corp.(b) 316,489
3,700 Limited Brands, Inc. 107,078
7,400 Marui Co., Ltd. (JPY) 86,155
7,450 Nordstrom, Inc.(c) 367,583
53,200 Signet Group PLC (GBP) 123,968
8,000 TJX Cos., Inc. 228,160
15,100 Wal-Mart Stores, Inc. 697,318
---------------
3,894,345
---------------
Savings & Loans -- 0.9%
6,520 Sovereign Bancorp, Inc. 165,543
16,900 Washington Mutual, Inc. 768,781
---------------
934,324
---------------
Semiconductors -- 2.4%
51,850 Intel Corp. 1,049,962
11,275 NVIDIA Corp.(b) 417,288
211 Samsung Electronics Co., Ltd. (KRW) 138,418
9,060 STMicroelectronics NV 166,704
11,848 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR(c) 129,499
17,200 Texas Instruments, Inc. 495,360
---------------
2,397,231
---------------
Software -- 2.0%
6,625 Adobe Systems, Inc.(b) 272,420
3,450 Avid Technology, Inc.(b) 128,547
15,450 BEA Systems, Inc.(b) 194,361
23,150 Microsoft Corp. 691,259
See accompanying notes to financial statements.
26
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Shares Description Value (+)
- --------------------------------------------------------------------------------------------
Software -- continued
35,525 Oracle Corp.(b) $ 608,899
5,043 Patni Computer Systems, Ltd., ADR 102,776
---------------
1,998,262
---------------
Telecommunications -- 2.4%
1,000 Anixter International, Inc.(b) 54,300
33,725 Cisco Systems, Inc.(b) 921,704
7,368 France Telecom SA, Sponsored ADR 204,094
26 KDDI Corp. (JPY) 176,504
5,500 Nokia Oyj (EUR) 111,689
7,150 QUALCOMM, Inc. 270,199
11,700 Sprint Nextel Corp.(c) 221,013
8,163 Vodafone Group PLC, Sponsored ADR 226,768
12,800 Windstream Corp. 182,016
---------------
2,368,287
---------------
Textiles -- 0.1%
700 Mohawk Industries, Inc.(b) 52,402
---------------
Tobacco -- 0.3%
3,900 Loews Corp. - Carolina Group 252,408
1,350 UST, Inc. 78,570
---------------
330,978
---------------
Toys, Games & Hobbies -- 0.2%
6,024 Nintendo Co., Ltd., ADR(c) 194,876
---------------
Transportation -- 1.2%
5,825 Expeditors International of Washington, Inc.(c) 235,912
10,500 Union Pacific Corp. 966,210
---------------
1,202,122
---------------
Water -- 0.1%
2,669 Suez SA, ADR(c) 138,681
---------------
Total Common Stocks (Identified Cost $59,959,310) 67,243,017
---------------
Principal
Amount
- --------------------------------------------------------------------------------------------
Bonds and Notes -- 27.9%
Asset Backed Securities -- 0.4%
$ 100,000 Citibank Credit Card Issuance Trust, Series 2003-A3, Class A3,
3.100%, 3/10/2010 97,515
277,000 Citibank Credit Card Issuance Trust, Series 2003-A6, Class A6,
2.900%, 5/17/2010 268,534
---------------
366,049
---------------
Auto Manufacturers -- 0.3%
285,000 DaimlerChrysler NA Holding Corp.,
4.050%, 6/04/2008 278,912
---------------
Banks -- 0.3%
300,000 JPMorgan Chase & Co.,
5.150%, 10/01/2015 294,394
---------------
Brokerage -- 0.3%
320,000 Goldman Sachs Group, Inc. (The),
4.750%, 7/15/2013 308,893
---------------
Diversified Financial Services -- 4.9%
275,000 American General Finance Corp.,
5.375%, 10/01/2012 274,238
295,000 Capital One Bank,
6.500%, 6/13/2013 310,968
275,000 CIT Group, Inc.,
5.800%, 7/28/2011 279,664
Principal
Amount Description Value (+)
- -------------------------------------------------------------------------
Diversified Financial Services -- continued
$ 550,000 Countrywide Home Loans, Inc., (MTN),
5.500%, 2/01/2007 $ 550,025
600,000 General Electric Capital Corp., (MTN),
6.000%, 6/15/2012 621,103
650,000 HSBC Finance Corp.,
4.750%, 7/15/2013 630,280
630,000 John Deere Capital Corp., Global Note,
4.500%, 8/22/2007 626,488
650,000 Morgan Stanley,
4.750%, 4/01/2014(c) 621,483
300,000 Residential Capital LLC,
6.500%, 4/17/2013 304,030
625,000 USA Education, Inc.,
5.625%, 4/10/2007 625,403
---------------
4,843,682
---------------
Electric -- 1.5%
220,000 Carolina Power & Light,
6.500%, 7/15/2012 230,531
540,000 Dominion Resources, Inc.,
5.700%, 9/17/2012 546,120
625,000 Duke Energy Corp., Senior Note,
4.200%, 10/01/2008 612,423
120,000 Progress Energy, Inc.,
7.100%, 3/01/2011 127,794
---------------
1,516,868
---------------
Entertainment -- 0.4%
180,000 Time Warner, Inc.,
6.500%, 11/15/2036 179,158
130,000 Time Warner, Inc.,
7.625%, 4/15/2031 145,231
---------------
324,389
---------------
Government Sponsored -- 2.2%
950,000 Federal Home Loan Mortgage Corp.,
4.625%, 2/21/2008 944,138
1,230,000 Federal National Mortgage Association,
3.250%, 1/15/2008 1,206,004
---------------
2,150,142
---------------
Mortgage Related -- 14.4%
373,372 FHLMC,
4.000%, 5/01/2020 351,098
1,136,674 FHLMC,
4.500%, 6/01/2035 1,065,160
251,956 FHLMC,
5.500%, with various maturities to 2019(d) 252,014
27,353 FHLMC,
6.000%, 6/01/2035 27,601
949,158 FHLMC,
6.500%, with various maturities to 2035(d) 968,219
1,931,527 FNMA,
4.000%, with various maturities to 2020(d) 1,818,998
1,165,135 FNMA,
4.500%, 9/01/2035 1,092,169
4,328,145 FNMA,
5.000%, with various maturities to 2036(d) 4,179,448
3,242,877 FNMA,
5.500%, with various maturities to 2035(d) 3,235,291
1,049,883 FNMA,
6.500%, with various maturities to 2036(d) 1,072,522
See accompanying notes to financial statements.
27
IXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2006
Principal
Amount Description Value (+)
- --------------------------------------------------------------------------------------------------
Mortgage Related -- continued
$ 117,555 GNMA,
6.500%, 10/20/2034 $ 120,161
---------------
14,182,681
---------------
Pipelines -- 0.6%
585,000 ONEOK Partners, LP,
6.150%, 10/01/2016(c) 593,576
---------------
REITs -- Regional Malls -- 0.4%
450,000 Simon Property Group LP,
4.600%, 6/15/2010 438,895
---------------
Treasuries -- 1.2%
615,000 U.S. Treasury Bond,
4.500%, 2/15/2036(c) 584,827
615,000 U.S. Treasury Note,
4.500%, 2/15/2016(c) 605,198
---------------
1,190,025
---------------
Wireless -- 0.4%
415,000 Sprint Capital Corp.,
6.875%, 11/15/2028 415,418
---------------
Wirelines -- 0.6%
300,000 Embarq Corp.,
7.995%, 6/01/2036 312,188
320,000 SBC Communications,
5.100%, 9/15/2014 310,703
---------------
622,891
---------------
Total Bonds and Notes (Identified Cost $27,863,604) 27,526,815
---------------
Shares/
Principal
Amount
- --------------------------------------------------------------------------------------------------
Short-Term Investments -- 16.4%
11,714,666 State Street Securities Lending Quality Trust(e) 11,714,666
$ 4,435,248 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/29/2006 at 4.250% to be repurchased at
$4,437,343 on 1/2/2007, collateralized by $3,580,000 U.S.
Treasury Note, 7.125% due 2/15/2023 valued at $4,540,740,
including accrued interest 4,435,248
---------------
Total Short-Term Investments (Identified Cost $16,149,914) 16,149,914
---------------
Total Investments -- 112.4%
(Identified Cost $103,972,828)(a) 110,919,746
Other assets less liabilities--(12.4)% (12,201,242)
---------------
Total Net Assets -- 100% $ 98,718,504
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2006, the net unrealized appreciation on
investments based on cost of $104,354,495 for federal income tax
purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which
there is an excess of value over tax cost $ 8,098,230
Aggregate gross unrealized depreciation for all securities in which
there is an excess of tax cost over value (1,532,979)
---------------
Net unrealized appreciation $ 6,565,251
===============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at December 31, 2006.
(d) The Fund's investment in mortgage related securities of the Federal Home Loan Mortgage
Corporation, Federal National Mortgage Association and Government National Mortgage
Association are interests in separate pools of mortgages. All separate investments in
securities of each issuer which have the same coupon rate have been aggregated for the
purpose of presentation in the Portfolio of Investments.
(e) Represents investment of securities lending collateral.
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 period end, the value of these amounted to $132,149 or 0.1% of
net assets.
ADR/GDR An American Depositary Receipt or Global Depositary Receipt 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.
MTN Medium Term Note
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
REITs Real Estate Investment Trusts
CAD Canadian Dollar
CHF Swiss Franc
EUR Euro
GBP British Pound
HKD Hong Kong Dollar
IDR Indonesian Rupiah
JPY Japanese Yen
KRW South Korean Won
SEK Swedish Krona
Holdings at December 31, 2006 as a Percentage of Net Assets (unaudited)
Mortgage Related 14.4%
Diversified Financial Services 12.7
Media 5.0
Computers 4.4
Banks 4.1
Retail 3.9
Health Care--Products 2.6
Semiconductors 2.4
Pharmaceuticals 2.4
Telecommunications 2.4
Electric 2.2
Insurance 2.2
Government Sponsored 2.2
Oil & Gas 2.1
Software 2.0
Others, less than 2% each 31.0
See accompanying notes to financial statements.
28
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2006
IXIS IXIS IXIS
Equity Income Moderate
Diversified Diversified Diversified
Portfolio Portfolio Portfolio
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
ASSETS
Investments at cost $ 30,776,649 $ 82,624,686 $ 103,972,828
Net unrealized appreciation 2,898,928 3,275,079 6,946,918
--------------------- --------------------- ---------------------
Investments at value (a) 33,675,577 85,899,765 110,919,746
Cash -- 86,995 64,377
Foreign currency at value (identified
cost $0, $14,798, $0) -- 14,840 --
Receivable for Fund shares sold 1,160,020 1,371,305 68,642
Receivable for securities sold 725,142 978,285 736,909
Receivable from investment advisor
(Note 4) 15,621 -- --
Dividends and interest receivable 32,282 713,391 326,599
Tax reclaims receivable 1,714 -- 3,269
Securities lending income receivable 574 -- 1,365
--------------------- --------------------- ---------------------
TOTAL ASSETS 35,610,930 89,064,581 112,120,907
--------------------- --------------------- ---------------------
LIABILITIES
Collateral on securities loaned, at
value (Note 2) 5,962,609 -- 11,714,666
Payable for securities purchased 59,319 2,693,823 1,275,411
Payable for Fund shares redeemed 32 141,973 279,113
Payable to custodian bank 129,536 -- --
Management fees payable (Note 4) -- 49,764 68,189
Deferred Trustees' fees (Note 4) 17,311 6,945 26,297
Administrative fees payable (Note 4) 1,845 3,890 7,174
Other accounts payable and accrued
expenses 44,036 24,173 31,553
--------------------- --------------------- ---------------------
TOTAL LIABILITIES 6,214,688 2,920,568 13,402,403
--------------------- --------------------- ---------------------
NET ASSETS $ 29,396,242 $ 86,144,013 $ 98,718,504
===================== ===================== =====================
NET ASSETS CONSIST OF:
Paid-in capital $ 26,489,188 $ 82,860,143 $ 91,583,420
Undistributed (overdistributed) net
investment income (loss) (67,811) (6,945) (84,877)
Accumulated net realized gain on
investments and foreign currency
transactions 75,881 15,160 272,878
Net unrealized appreciation on
investments and foreign currency
translations 2,898,984 3,275,655 6,947,083
--------------------- --------------------- ---------------------
NET ASSETS $ 29,396,242 $ 86,144,013 $ 98,718,504
===================== ===================== =====================
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:
Class A shares:
Net assets $ 8,866,801 $ 37,117,033 $ 26,978,050
===================== ===================== =====================
Shares of beneficial interest 787,437 3,328,608 2,492,749
===================== ===================== =====================
Net asset value and redemption price
per share $ 11.26 $ 11.15 $ 10.82
===================== ===================== =====================
Offering price per share
(100/[100-maximum sales charge] of
net asset value)(Note 1) $ 11.95 $ 11.68 $ 11.48
===================== ===================== =====================
Class C shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge)(Note 1)
Net assets $ 20,529,441 $ 49,026,980 $ 71,740,454
===================== ===================== =====================
Shares of beneficial interest 1,836,532 4,406,951 6,651,612
===================== ===================== =====================
Net asset value and offering price
per share $ 11.18 $ 11.12 $ 10.79
===================== ===================== =====================
(a) Including securities on loan with
market values of: $ 5,787,798 $ -- $ 11,408,507
===================== ===================== =====================
See accompanying notes to financial statements.
29
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2006
IXIS
Equity
Diversified
Portfolio
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 519,350
Interest 26,149
Securities lending income (Note 2) 5,706
Less net foreign taxes withheld (11,585)
---------------------
539,620
---------------------
Expenses
Management fees (Note 4) 252,138
Service fees - Class A (Note 4) 27,880
Service and distribution fees - Class C (Note 4) 203,654
Trustees' fees and expenses (Note 4) 17,866
Administrative fees (Note 4) 27,440
Custodian fees and expenses 38,100
Transfer agent fees and expenses - Class A 6,435
Transfer agent fees and expenses - Class C 11,292
Audit fees 38,962
Legal fees 148
Shareholder reporting expenses 12,286
Registration fees 41,264
Miscellaneous expenses 6,584
---------------------
Total expenses 684,049
Less reimbursement/waiver (Note 4) (42,446)
---------------------
Net expenses 641,603
---------------------
Net investment income (loss) (101,983)
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 1,804,569
Foreign currency transactions - net (4,629)
Change in unrealized appreciation (depreciation) on:
Investments - net 954,132
Foreign currency translations - net 56
---------------------
Net realized and unrealized gain on investments and foreign currency transactions 2,754,128
---------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,652,145
=====================
IXIS
Income
Diversified
Portfolio
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 436,046
Interest 804,630
Securities lending income (Note 2) --
Less net foreign taxes withheld (2,960)
---------------------
1,237,716
---------------------
Expenses
Management fees (Note 4) 170,485
Service fees - Class A (Note 4) 39,570
Service and distribution fees - Class C (Note 4) 151,692
Trustees' fees and expenses (Note 4) 11,292
Administrative fees (Note 4) 12,037
Custodian fees and expenses 41,922
Transfer agent fees and expenses - Class A 8,369
Transfer agent fees and expenses - Class C 7,762
Audit fees 37,886
Legal fees 1,068
Shareholder reporting expenses 2,113
Registration fees 23,117
Miscellaneous expenses 10,340
---------------------
Total expenses 517,653
Less reimbursement/waiver (Note 4) (16,164)
---------------------
Net expenses 501,489
---------------------
Net investment income (loss) 736,227
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 277,704
Foreign currency transactions - net (180)
Change in unrealized appreciation (depreciation) on:
Investments - net 3,241,535
Foreign currency translations - net 576
---------------------
Net realized and unrealized gain on investments and foreign currency transactions 3,519,635
---------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,255,862
=====================
IXIS
Moderate
Diversified
Portfolio
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 1,309,883
Interest 1,760,397
Securities lending income (Note 2) 22,136
Less net foreign taxes withheld (31,783)
---------------------
3,060,633
---------------------
Expenses
Management fees (Note 4) 855,364
Service fees - Class A (Note 4) 83,502
Service and distribution fees - Class C (Note 4) 806,475
Trustees' fees and expenses (Note 4) 18,875
Administrative fees (Note 4) 79,320
Custodian fees and expenses 49,656
Transfer agent fees and expenses - Class A 19,626
Transfer agent fees and expenses - Class C 45,070
Audit fees 40,847
Legal fees 3,808
Shareholder reporting expenses 49,790
Registration fees 33,451
Miscellaneous expenses 14,532
---------------------
Total expenses 2,100,316
Less reimbursement/waiver (Note 4) (4,942)
---------------------
Net expenses 2,095,374
---------------------
Net investment income (loss) 965,259
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments - net 7,602,581
Foreign currency transactions - net (8,533)
Change in unrealized appreciation (depreciation) on:
Investments - net (637,604)
Foreign currency translations - net 165
---------------------
Net realized and unrealized gain on investments and foreign currency transactions 6,956,609
---------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,921,868
=====================
See accompanying notes to financial statements.
30
STATEMENTS OF CHANGES IN NET ASSETS
IXIS Equity
Diversified Portfolio
--------------------------------------------
For the Period
January 31, 2005 (a)
Year Ended through
December 31, December 31,
2006 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ (101,983) $ (140,277)
Net realized gain on investments and
foreign currency transactions 1,799,940 9,421
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations 954,188 1,944,796
--------------------- ---------------------
Net increase in net assets resulting from
operations 2,652,145 1,813,940
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A (62,678) --
Class C (10,669) --
Net realized capital gain
Class A (462,460) --
Class C (1,087,918) --
--------------------- ---------------------
Total distributions (1,623,725) --
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) (688,669) 27,242,551
--------------------- ---------------------
Net increase (decrease) in net assets 339,751 29,056,491
--------------------- ---------------------
NET ASSETS
Beginning of the year 29,056,491 --
--------------------- ---------------------
End of the year $ 29,396,242 $ 29,056,491
===================== =====================
UNDISTRIBUTED
(OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ (67,811) $ (7,867)
===================== =====================
IXIS Income
Diversified Portfolio
--------------------------------------------
For the Period
November 17, 2005 (a)
Year Ended through
December 31, December 31,
2006 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 736,227 $ 22,153
Net realized gain on investments and
foreign currency transactions 277,524 2,634
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations 3,242,111 33,544
--------------------- ---------------------
Net increase in net assets resulting from
operations 4,255,862 58,331
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A (509,270) (22,662)
Class C (402,946) (103)
Net realized capital gain
Class A (42,371) --
Class C (54,527) --
--------------------- ---------------------
Total distributions (1,009,114) (22,765)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) 77,785,017 5,076,682
--------------------- ---------------------
Net increase (decrease) in net assets 81,031,765 5,112,248
--------------------- ---------------------
NET ASSETS
Beginning of the year 5,112,248 --
--------------------- ---------------------
End of the year $ 86,144,013 $ 5,112,248
===================== =====================
UNDISTRIBUTED
(OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ (6,945) $ --
===================== =====================
IXIS Moderate
Diversified Portfolio
--------------------------------------------
Year Ended Year Ended
December 31, December 31,
2006 2005
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 965,259 $ 171,767
Net realized gain on investments and
foreign currency transactions 7,594,048 890,157
Net change in unrealized appreciation
(depreciation) on investments and
foreign currency translations (637,439) 4,320,133
--------------------- ---------------------
Net increase in net assets resulting from
operations 7,921,868 5,382,057
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A (578,602) (360,094)
Class C (854,233) (74,730)
Net realized capital gain
Class A (1,935,693) (221,549)
Class C (5,108,891) (402,202)
--------------------- ---------------------
Total distributions (8,477,419) (1,058,575)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) (36,902,749) 59,020,971
--------------------- ---------------------
Net increase (decrease) in net assets (37,458,300) 63,344,453
--------------------- ---------------------
NET ASSETS
Beginning of the year 136,176,804 72,832,351
--------------------- ---------------------
End of the year $ 98,718,504 $ 136,176,804
===================== =====================
UNDISTRIBUTED
(OVERDISTRIBUTED) NET
INVESTMENT INCOME (LOSS) $ (84,877) $ 68,273
===================== =====================
(a)Commencement of operations.
See accompanying notes to financial statements.
31
This Page Intentionally Left Blank
32
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
Income (loss) from investment operations:
---------------------------------------
Net asset
value, Net Net realized
beginning investment and unrealized Total from
of income gain (loss) on investment
period (loss) (b) investments operations
---------- ---------- -------------- ----------
IXIS EQUITY DIVERSIFIED PORTFOLIO
Class A
12/31/2006 $ 10.83 $ 0.02 $ 1.11 $ 1.13
12/31/2005(g) 10.00 (0.04) 0.87 0.83
Class C
12/31/2006 10.77 (0.06) 1.10 1.04
12/31/2005(g) 10.00 (0.11) 0.88 0.77
IXIS INCOME DIVERSIFIED PORTFOLIO
Class A
12/31/2006 $ 10.07 $ 0.29 $ 1.12 $ 1.41
12/31/2005(i) 10.00 0.04 0.08 0.12
Class C
12/31/2006 10.07 0.22 1.09 1.31
12/31/2005(i) 10.00 0.04 0.07 0.11
IXIS MODERATE DIVERSIFIED PORTFOLIO
Class A
12/31/2006 $ 10.94 $ 0.15 $ 0.74 $ 0.89
12/31/2005 10.70 0.07 0.30 0.37
12/31/2004(e) 10.00 0.03 (h) 0.69 0.72
Class C
12/31/2006 10.90 0.07 0.75 0.82
12/31/2005 10.67 (0.01) 0.30 0.29
12/31/2004(e) 10.00 0.01 (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
12/31/2006 $ (0.08) $ (0.62) $ (0.70)
12/31/2005(g) -- -- --
Class C
12/31/2006 (0.01) (0.62) (0.63)
12/31/2005(g) -- -- --
IXIS INCOME DIVERSIFIED PORTFOLIO
Class A
12/31/2006 $ (0.32) $ (0.01) $ (0.33)
12/31/2005(i) (0.05) -- (0.05)
Class C
12/31/2006 (0.25) (0.01) (0.26)
12/31/2005(i) (0.04) -- (0.04)
IXIS MODERATE DIVERSIFIED PORTFOLIO
Class A
12/31/2006 $ (0.20) $ (0.81) $ (1.01)
12/31/2005 (0.08) (0.05) (0.13)
12/31/2004(e) (0.02) -- (0.02)
Class C
12/31/2006 (0.12) (0.81) (0.93)
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, if applicable, 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, if applicable, expenses would have been higher.
(d)Had certain expenses not been reduced during the period, if applicable,
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.
See accompanying notes to financial statements.
33
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)(d) (000's) (%) (f) (%) (c)(f) (%) (f) rate (%)
- ---------- ---------- ----------- --------- ---------- -------------- ---------
$ 11.26 10.5 $ 8,867 1.67 1.55 0.16 117
10.83 8.3 11,652 3.15 1.65 (0.41) 72
11.18 9.7 20,529 2.44 2.30 (0.59) 117
10.77 7.7 17,405 3.61 2.40 (1.17) 72
$ 11.15 14.2 $ 37,117 1.30 1.25 2.72 52
10.07 1.2 5,074 9.57 1.25 3.61 2
11.12 13.3 49,027 2.05 2.00 2.02 52
10.07 1.1 39 10.31 2.00 3.25 2
$ 10.82 8.4 $ 26,978 1.31 1.31(k) 1.38 89
10.94 3.5 47,908 1.59(j) 1.58 0.62 88
10.70 7.2 25,660 3.51 1.65 0.71(h) 33
10.79 7.6 71,740 2.06 2.06(k) 0.63 89
10.90 2.7 88,269 2.33(j) 2.32 (0.13) 88
10.67 6.8 47,173 4.26 2.40 0.12(h) 33
(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%.
(k)Effect of voluntary waiver of expenses by advisor was less than 0.005%
34
NOTES TO FINANCIAL STATEMENTS
December 31, 2006
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 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 "Portfolio" and collectively, the "Portfolios"). Information
presented in these financial statements pertains to certain Diversified
Portfolios of the Trusts; the financial statements for the remaining 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
Rule 12b-1 fees than Class A shares and may be subject to a contingent deferred
sales charge ("CDSC") of 1.00% if those shares are redeemed within one year.
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, including closed-end investment
companies, for which market quotations are readily available are valued at
market value, as reported by pricing services recommended by the investment
advisor and the subadvisors 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 sixty days or less) are generally
valued at market price on the basis of valuations furnished to the Portfolios
by a pricing service recommended by the investment advisor and the subadvisors
and approved 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.
Broker-dealer bid quotations may also be used to value debt and equity
securities where a pricing service does not price a security or where a pricing
service does not provide a reliable price for the security. In instances where
broker-dealer bid quotations are not available, certain securities held by the
Portfolios may be valued on the basis of a price provided by a principal market
maker. The prices provided by the principal market makers may differ from the
value that would be realized if the securities were sold. Short-term
obligations with a remaining maturity of sixty 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' subadvisors using consistently applied procedures
under the general supervision of the Board of Trustees. As of December 31,
2006, approximately 6% and 5% of the market value of investments for IXIS
Equity Diversified Portfolio and IXIS Moderate Diversified Portfolio,
respectively, were fair valued pursuant to procedures approved by the Board of
Trustees. Investments in other open-end investment companies are valued at
their 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 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 Portfolios calculate their net asset values.
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 andlosses 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.
35
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
c. Foreign Currency Translation. The books and records of the Portfolios are
maintained in U.S. dollars. The value of securities, currencies and other
assets and liabilities denominated in currencies other than U.S. dollars are
translated into U.S. dollars based upon foreign exchange rates prevailing at
the end of the period. Purchases and sales of investment securities, income and
expenses are translated on the respective dates of such transactions.
Since the values of investment securities are presented at the foreign exchange
rates prevailing at the end of the period, it is not practical to isolate that
portion of the results of operations arising from changes in exchange rates
from fluctuations arising from changes in market prices of the investment
securities. Such changes are included with the net realized and unrealized gain
or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign
currency, currency gains or losses realized between the trade and settlement
dates on securities transactions 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.
Each Portfolio 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 generally 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 Portfolios'
Statements of Assets and Liabilities. The U.S. dollar value of the currencies a
Portfolio has committed to buy or sell represents the aggregate exposure to
each currency a 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 December 31, 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.
The tax characterization of distributions is determined on an annual basis. The
tax character of distributions paid to shareholders during the year ended
December 31, 2006 and December 31, 2005 was as follows:
2006 Distributions Paid From: 2005 Distributions Paid From:
- - ----------------------------- -----------------------------
Ordinary Long-Term Ordinary Long-Term
Fund Income Capital Gains Total Income Capital Gains Total
- ---- ------ ------------- ----- ------ ------------- -----
Equity Diversified Portfolio $ 764,498 $ 859,227 $ 1,623,725 $ -- $ -- $ --
Income Diversified Portfolio 919,018 90,096 1,009,114 22,765 -- 22,765
Moderate Diversified
Portfolio 3,620,095 4,857,324 8,477,419 966,317 92,258 1,058,575
36
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
As of December 31, 2006, the components of distributable earnings on a tax
basis were as follows:
Equity Diversified Income Diversified Moderate Diversified
Portfolio Portfolio Portfolio
- - --------- --------- ---------
Undistributed ordinary income $ -- $ -- $ 216,792
Undistributed long-term capital gains 177,527 36,647 379,173
---------- ---------- ----------
Total undistributed earnings 177,527 36,647 595,965
Unrealized appreciation (depreciation) 2,746,838 3,254,169 6,565,417
---------- ---------- ----------
Total accumulated earnings $2,924,365 $3,290,816 $7,161,382
========== ========== ==========
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 arrangements 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.
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 December 31, 2006 were as follows:
Market Value of Value of Collateral
Fund Securities on Loan Received
---- ------------------ -------------------
Equity Diversified Portfolio $ 5,787,798 $ 5,962,609
Moderate Diversified Portfolio 11,408,507 11,714,666
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 Trusts' 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.
k. New Accounting Pronouncements. Financial Accounting Standards Board (FASB)
Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an
Interpretation of FASB Statement 109 ("FIN 48") was issued and became effective
for fiscal years beginning after December 15, 2006. FIN 48 sets forth a
threshold for financial statement recognition, measurement and disclosure of a
tax position taken or expected to be taken on a tax return. Subsequent thereto,
the United States Securities and Exchange Commission ("SEC") indicated that it
would not object if a fund first adopts FIN 48 on the last business day of the
first required financial reporting period for fiscal years beginning after
December 15, 2006. Accordingly, Management is continuing to evaluate the impact
the adoption of FIN 48 may have on each Portfolio's net assets and results of
operations. In compliance with the recently issued SEC guidance the impacts, if
any, will be reflected in the Portfolios' semiannual financial statements as of
June 30, 2007.
In addition, in September, 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements ("SFAS 157"), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact, if any,
the adoption of SFAS 157 will have on the Portfolios' financial statements.
37
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
3. Purchases and Sales of Securities. For the year ended December 31, 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 $ -- $ -- $35,728,677 $ 39,440,662
Income Diversified Portfolio 21,982,059 2,550,710 63,986,569 12,853,596
Moderate Diversified Portfolio 14,892,361 22,669,877 85,980,228 122,960,445
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. IXIS Asset Management Advisors, L.P. ("IXIS Advisors")
serves as investment advisor 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%
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
Prior to April 3, 2006, Reich & Tang Asset Management, LLC served as subadvisor
to the mid cap value segments of Equity Diversified Portfolio and Moderate
Diversified Portfolio.
Payments to IXIS Advisors are reduced in the amount of payments to the
subadvisors. IXIS Advisors voluntarily agreed to waive a portion of the
management fee it retains for the Moderate Diversified Portfolio after payment
to subadvisors.
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. For the period
May 1, 2006 through December 31, 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%
38
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
For the year ended December 31, 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 $ 252,138 $ 24,719 $ 227,419 0.80% 0.72%
Income Diversified Portfolio 170,485 33 170,452 0.55% 0.55%
Moderate Diversified Portfolio 855,364 4,942 850,422 0.75% 0.75%
For the year ended December 31, 2006, in addition to the waiver of management
fees, expenses have been reimbursed as follows:
Fund Amount
---- -------
Equity Diversified Portfolio $17,727
Income Diversified Portfolio 16,131
IXIS Advisors is permitted to recover management fees waived and/or expenses it
has borne under the expense limitation agreements on a Class by Class basis in
later periods to the extent the expenses of a Class fall below a Class' expense
limits, provided, however, that a Class is not obligated to pay such deferred
fees/expenses more than one year after the end of the fiscal year in which the
fee/expense was deferred. The amounts subject to possible reimbursement under
the expense limitation agreements at December 31, 2006 were as follows:
Expenses Subject to Possible
Reimbursement Until
December 31, 2007
- -----------------
Fund Class A Class C Total
---- ------- ------- -----
Equity Diversified Portfolio $13,358 $29,088 $42,446
Income Diversified Portfolio 8,288 7,876 16,164
Certain officers and directors of IXIS Advisors and its affiliates are also
Trustees of the Portfolios. IXIS Advisors, Harris Associates, Loomis Sayles and
AEW 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.
b. Administrative Fees. IXIS Advisors provides certain administrative services
for the Portfolios and has subcontracted with State Street Bank to serve as
sub-administrator. IXIS Advisors is a wholly-owned subsidiary of IXIS US Group.
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. New funds are subject to a prorated annual fee of $50,000 plus
$12,500 per class and an additional $50,000 if managed by multiple sub-advisers
in their first calendar year of operations.
For the year ended December 31, 2006, amounts paid to IXIS Advisors for
administrative fees were as follows:
Administrative
Fund Fees
---- --------------
Equity Diversified Portfolio $27,440
Income Diversified Portfolio 12,037
Moderate Diversified Portfolio 79,320
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").
39
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
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.
For the year ended December 31, 2006, the Portfolios paid the following service
and distribution fees:
Service Fee Distribution Fee
- --------------------------- ----------------
Fund Class A Class C Class C
---- ------- ------- -------
Equity Diversified Portfolio $ 27,880 $ 50,913 $ 152,741
Income Diversified Portfolio 39,570 37,923 113,769
Moderate Diversified Portfolio 83,502 201,619 604,856
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 year ended December 31, 2006 were as follows:
Fund Commission
---- ----------
Equity Diversified Portfolio $ 46,734
Income Diversified Portfolio 347,026
Moderate Diversified Portfolio 113,033
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 funds in the IXIS Advisor Funds Trusts and
Loomis Sayles Funds Trusts based on a formula that takes into account, among
other factors, the relative net assets of each fund. Trustees are reimbursed
for travel expenses in connection with attendance at meetings.
A deferred compensation plan (the "Plan") is available to the Trustees on a
voluntary basis. Each participating Trustee will receive an amount equal to the
value that such deferred compensation would have been had it been invested in a
designated 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 fund based on its borrowings 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 funds based on their average daily unused
portion of the line of credit. For the year ended December 31, 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 year ended December 31, 2006, amounts rebated under these
agreements were as follows:
Fund Rebates
---- -------
Equity Diversified Portfolio $ 9,752
Income Diversified Portfolio 56
Moderate Diversified Portfolio 33,164
40
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
7. Shareholders. At December 31, 2006, IXIS Asset Management Group and its
affiliates owned shares equating to 6.47% of Income Diversified Portfolio's net
assets.
8. Capital Shares. Each Portfolio may issue an unlimited number of shares of
beneficial interest without par value. Transactions in capital shares were as
follows:
For the Period
January 31, 2005*
Year Ended through
December 31, 2006 December 31, 2005
---------------------------- ----------------------------
Equity Diversified Portfolio Shares Amount Shares Amount
- -------------------------------------------------------------- --------- ----------------- --------- -----------------
Class A
Issued from the sale of shares 220,109 $ 2,456,779 1,433,489 $ 14,431,086
Issued in connection with the reinvestment of distributions 8,758 97,919 -- --
--------- ----------------- --------- -----------------
228,867 2,554,698 1,433,489 14,431,086
Redeemed (517,195) (5,715,400) (357,724) (3,555,004)
--------- ----------------- --------- -----------------
Net change (288,328) $ (3,160,702) 1,075,765 $ 10,876,082
--------- ----------------- --------- -----------------
Class C
Issued from the sale of shares 607,518 $ 6,752,635 1,675,129 $ 16,957,327
Issued in connection with the reinvestment of distributions 17,967 199,438 -- --
--------- ----------------- --------- -----------------
625,485 6,952,073 1,675,129 16,957,327
Redeemed (405,700) (4,480,040) (58,382) (590,858)
--------- ----------------- --------- -----------------
Net change 219,785 $ 2,472,033 1,616,747 $ 16,366,469
--------- ----------------- --------- -----------------
Increase (decrease) from capital share transactions (68,543) $ (688,669) 2,692,512 $ 27,242,551
--------- ----------------- --------- -----------------
For the Period
November 17, 2005*
Year Ended through
December 31, 2006 December 31, 2005
---------------------------- ----------------------------
Income Diversified Portfolio Shares Amount Shares Amount
- -------------------------------------------------------------- --------- ----------------- --------- -----------------
Class A
Issued from the sale of shares 2,937,015 $ 31,558,801 503,771 $ 5,038,040
Issued in connection with the reinvestment of distributions 16,837 182,050 8 77
--------- ----------------- --------- -----------------
2,953,852 31,740,851 503,779 5,038,117
Redeemed (129,023) (1,389,673) -- --
--------- ----------------- --------- -----------------
Net change 2,824,829 $ 30,351,178 503,779 $ 5,038,117
--------- ----------------- --------- -----------------
Class C
Issued from the sale of shares 4,465,827 $ 48,112,171 3,838 $ 38,462
Issued in connection with the reinvestment of distributions 7,732 83,528 10 103
--------- ----------------- --------- -----------------
4,473,559 48,195,699 3,848 38,565
Redeemed (70,456) (761,860) -- --
--------- ----------------- --------- -----------------
Net change 4,403,103 $ 47,433,839 3,848 $ 38,565
--------- ----------------- --------- -----------------
Increase (decrease) from capital share transactions 7,227,932 $ 77,785,017 507,627 $ 5,076,682
--------- ----------------- --------- -----------------
* Commencement of operations
41
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2006
Year Ended Year Ended
December 31, 2006 December 31, 2005
----------------------------- -----------------------------
Moderate Diversified Portfolio Shares Amount Shares Amount
- -------------------------------------------------------------- ---------- ----------------- ---------- -----------------
Class A
Issued from the sale of shares 437,927 $ 4,810,568 3,027,859 $ 31,745,974
Issued in connection with the reinvestment of distributions 74,265 799,936 9,030 96,760
---------- ----------------- ---------- -----------------
512,192 5,610,504 3,036,889 31,842,734
Redeemed (2,398,348) (26,497,879) (1,056,600) (11,146,771)
---------- ----------------- ---------- -----------------
Net change (1,886,156) $ (20,887,375) 1,980,289 $ 20,695,963
---------- ----------------- ---------- -----------------
Class C
Issued from the sale of shares 1,242,388 $ 13,607,078 4,541,434 $ 47,600,241
Issued in connection with the reinvestment of distributions 51,743 555,646 2,815 30,460
---------- ----------------- ---------- -----------------
1,294,131 14,162,724 4,544,249 47,630,701
Redeemed (2,736,976) (30,178,098) (871,085) (9,305,693)
---------- ----------------- ---------- -----------------
Net change (1,442,845) $ (16,015,374) 3,673,164 $ 38,325,008
---------- ----------------- ---------- -----------------
Increase (decrease) from capital share transactions (3,329,001) $ (36,902,749) 5,653,453 $ 59,020,971
---------- ----------------- ---------- -----------------
42
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of IXIS Advisor Funds Trust I and IXIS Advisor Funds Trust III
and Shareholders of IXIS Income Diversified Portfolio, IXIS Equity Diversified
Portfolio and IXIS Moderate Diversified Portfolio:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the IXIS Income
Diversified Portfolio, a series of IXIS Advisor Funds Trust I and the IXIS
Equity Diversified Portfolio and IXIS Moderate Diversified Portfolio, each a
series of IXIS Advisor Funds Trust III (collectively, the "Funds"), at
December 31, 2006, and the results of each of their operations, the changes in
each of their net assets and the financial highlights for each of the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Funds' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 2006 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 23, 2007
43
2006 U.S. TAX DISTRIBUTION INFORMATION TO SHAREHOLDERS (UNAUDITED)
Corporate Dividends Received Deduction. For the fiscal year ended December 31,
2006, a percentage of dividends distributed by the Portfolio listed below
qualify for the dividends received deduction for corporate shareholders. These
percentages are as follows:
Qualifying
Portfolio Percentage
--------- ----------
Equity Diversified Portfolio 42.12%
Income Diversified Portfolio 16.95%
Moderate Diversified Portfolio 26.60%
Capital Gains Distributions. Pursuant to Internal Revenue Section 852(b), the
following Portfolio paid distributions, which have been designated as capital
gains distributions for the fiscal year ended December 31, 2006.
Portfolio Amount
--------- ----------
Equity Diversified Portfolio $ 859,227
Income Diversified Portfolio 90,096
Moderate Diversified Portfolio 4,857,324
Qualified Dividend Income. A percentage of dividends distributed by the
Portfolios during the fiscal year ended December 31, 2006 are considered
qualified dividend income, and are eligible for reduced tax rates. These lower
rates range from 5% to 15% depending on an individual's tax bracket. These
percentages are noted below:
Portfolio Percentage
--------- ----------
Equity Diversified Portfolio 50.20%
Income Diversified Portfolio 17.97%
Moderate Diversified Portfolio 27.43%
44
TRUSTEE AND OFFICER INFORMATION
The table below provides certain information regarding the Trustees and
Officers of IXIS Advisor Funds Trust I and IXIS Advisor Funds Trust III (the
"Trusts"). Unless otherwise indicated, the address of all persons below is 399
Boylston Street, Boston, MA 02116. The statement of additional information
includes additional information about the Trustees of the Trust and is
available on the IXIS Advisor Funds website at www.ixisadvisorfunds.com or by
calling IXIS Advisor Funds at 800-225-5478.
Position(s) Held with the Number of Portfolios in
Trusts, Length of Time Principal Occupation(s) Fund Complex Overseen***
Name and Date of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
INDEPENDENT TRUSTEES
Graham T. Allison, Jr. Trustee since 1984 for IXIS Douglas Dillon Professor and 38
(3/23/40) Advisor Funds Trust I; 1995 Director of the Belfer Center Director, Taubman Centers,
for IXIS Advisor Funds of Science for International Inc. (real estate investment
Trust III Affairs, John F. Kennedy trust)
Contract Review and School of Government,
Governance Committee Harvard University
Member
Charles D. Baker Trustee since 2005 for IXIS President and Chief Executive 38
(11/13/56) Advisor Funds Trust I and Officer, Harvard Pilgrim None
IXIS Advisor Funds Health Care (health plan)
Trust III
Audit Committee Member
Edward A. Benjamin Trustee since 2003 for IXIS Retired 38
(5/30/38) Advisor Funds Trust I and Director, Precision Optics
IXIS Advisor Funds Corporation (optics
Trust III manufacturer)
Contract Review and
Governance Committee
Member
Daniel M. Cain Trustee since 1996 for IXIS President and Chief Executive 38
(2/24/45) Advisor Funds Trust I and Officer, Cain Brothers & Director, Sheridan
IXIS Advisor Funds Company, Incorporated Healthcare Inc. (physician
Trust III (investment banking) practice management)
Chairman of the Audit Trustee, Lexington Strategic
Committee Asset Corporation (realty
investment trust)
Richard Darman Trustee since 1996 for IXIS Partner, The Carlyle Group 38
(5/10/43) Advisor Funds Trust I and (investments); formerly, Director and Chairman of
IXIS Advisor Funds Professor, John F. Kennedy Board of Directors, AES
Trust III School of Government, Corporation (international
Contract Review and Harvard University power company)
Governance Committee
Member
45
TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the Number of Portfolios in
Trusts, Length of Time Principal Occupation(s) Fund Complex Overseen***
Name and Date of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
INDEPENDENT TRUSTEES
continued
Sandra O. Moose Chairperson of the Board of President, Strategic Advisory 38
(2/17/42) Trustees since November Services (management Director, Verizon
2005 consulting); formerly, Senior Communications;
Trustee since 1984 for IXIS Vice President and Director, Director, Rohm and Haas
Advisor Funds Trust I; 1995 The Boston Consulting Group, Company (specialty
for IXIS Advisor Funds Inc. (management consulting) chemicals);
Trust III Director, AES Corporation
Ex officio member of the
Audit Committee and
Contract Review and
Governance Committee
Cynthia L. Walker Trustee since 2005 for IXIS Executive Dean for 38
(7/25/56) Advisor Funds Trust I and Administration (formerly, None
IXIS Advisor Funds Dean for Finance and CFO),
Trust III Harvard Medical School
Audit Committee Member
INTERESTED TRUSTEES
Robert J. Blanding/1/ Trustee since 2003 for IXIS President, Chairman, Director, 38
(4/14/47) Advisor Funds Trust I and and Chief Executive Officer, None
555 California Street IXIS Advisor Funds Loomis, Sayles & Company,
San Francisco, CA 94104 Trust III L.P.; President and Chief
Executive Officer -- Loomis
Sayles Funds I; Chief Executive
Officer for Loomis Sayles
Trust II
John T. Hailer/2/ President, Chief Executive President and Chief Executive 38
(11/23/60) Officer and Trustee since Officer, IXIS Asset None
2000 for IXIS Advisor Management Advisors, L.P.
Funds Trust I and IXIS and IXIS Asset Management
Advisor Funds Trust III Distributors, L.P.; Executive
Vice President, Loomis Sayles
Funds I; President and Chief
Executive Officer, AEW Real
Estate Income Fund, IXIS
Advisor Cash Management
Trust, IXIS Advisor Funds
Trust II and IXIS Advisor
Funds Trust IV
46
TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the Number of Portfolios in
Trusts, Length of Time Principal Occupation(s) Fund Complex Overseen***
Name and Date of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
OFFICERS
Coleen Downs Dinneen Secretary, Senior Vice President, General Not Applicable
(12/16/60) Clerk and Chief Legal Counsel, Secretary and Clerk
Officer, since 2004 (formerly, Deputy General
Counsel, Assistant Secretary and
Assistant Clerk), IXIS Asset
Management Distribution
Corporation, IXIS Asset
Management Distributors, L.P.
and IXIS Asset Management
Advisors, L.P.
Michael C. Kardok Treasurer, Principal Senior Vice President, IXIS Not Applicable
(7/17/59) Financial and Accounting Asset Management Advisors,
Officer, since 2004 L.P. and IXIS Asset
Management Distributors,
L.P.; formerly, Senior Director,
PFPC Inc; formerly, Vice
President -- Division
Manager, First Data Investor
Services, Inc.
Max J. Mahoney Anti-Money Laundering Senior Vice President, Deputy Not Applicable
(5/01/62) Officer and Assistant General Counsel, Assistant
Secretary, since 2005 Secretary and Assistant Clerk,
IXIS Asset Management
Distribution Corporation, IXIS
Asset Management
Distributors, L.P. and IXIS
Asset Management Advisors,
L.P.; Chief Compliance Officer,
IXIS Asset Management
Advisors, L.P.; formerly, Senior
Counsel, MetLife, Inc.;
formerly, Associate Counsel,
LPL Financial Services, Inc.
John E. Pelletier Chief Operating Officer, Executive Vice President and Not Applicable
(6/24/64) since 2004 Chief Operating Officer
(formerly, Senior Vice
President, General Counsel,
Secretary and Clerk), IXIS
Asset Management
Distribution Corporation, IXIS
Asset Management
Distributors, L.P. and IXIS
Asset Management Advisors,
L.P.
47
TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the Number of Portfolios in
Trusts, Length of Time Principal Occupation(s) Fund Complex Overseen***
Name and Date of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
OFFICERS
(continued)
Russel L. Kane Chief Compliance Officer, Chief Compliance Officer for Not Applicable
(7/23/69) since 2006; Mutual Funds: Vice President,
Assistant Secretary Associate General Counsel,
since 2004 Assistant Secretary and
Assistant Clerk, IXIS Asset
Management Distribution
Corporation, IXIS Asset
Management Distributors, L.P.
and IXIS Asset Management
Advisors, L.P.; formerly,
Senior Counsel Columbia
Management Group.
* The year provided is the earliest year during which a Trustee was elected or
appointed to the Trust. Each Trustee serves until retirement, resignation or
removal from the Board of Trustees. The current retirement age is 72. The
position of Chairperson of the Board is appointed for a two-year term.
** Each person listed above, except as noted, holds the same position(s) with
the Trusts. Previous positions during the past five years with IXIS Asset
Management Distributors, L.P. (the "Distributor"), IXIS Asset Management
Advisors, L.P. ("IXIS Advisors") or Loomis, Sayles & Company, L.P. are
omitted if not materially different from a Trustee's or officer's current
position with such entity.
***The Trustees of the Trust serve as Trustees of a fund complex that includes
all series of 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, AEW Real Estate Income Fund, Loomis Sayles Funds I and
Loomis Sayles Funds II.
/1/ Mr. Blanding is deemed an "interested person" of the Trust because he
holds the following positions with affiliated persons of the Trust:
President, Chairman, Director and Chief Executive Officer of Loomis,
Sayles & Company, L.P.
/2/ Mr. Hailer is deemed an "interested person" of the Trust because he holds
the following positions with affiliated persons of the Trust: Director and
Executive Vice President of IXIS Asset Management Distribution
Corporation, President and Chief Executive Officer of IXIS Advisors, IXIS
Asset Management Global Associates, L.P. and the Distribution.
48
Item 2. Code of Ethics.
The Registrant has adopted a code of ethics that applies to the Registrant's
principal executive officer, principal financial officer and persons performing
similar functions.
Item 3. Audit Committee Financial Expert.
The Board of Trustees of the Registrant has established an audit committee.
Ms. Cynthia L. Walker, Mr. Daniel M. Cain and Mr. Charles D. Baker are members
of the audit committee and have been designated as "audit committee financial
experts" by the Board of Trustees. Each of these individuals is also an
Independent Trustee of the Registrant.
Item 4. Principal Accountant Fees and Services.
Fees paid to Principal Accountant by the Fund.
The table below sets forth fees billed by the principal accountant,
PricewaterhouseCoopers LLP, for the past two fiscal years for professional
services rendered in connection with a) the audit of the Registrant's annual
financial statements and services provided in connection with regulatory
filings; b) audit-related services (including services that are reasonably
related to the performance of the audit of the Registrant's financial
statements and but not reported under "Audit Fees"); c) tax compliance, tax
advice and tax planning and d) all other fees billed for professional services
rendered by the principal accountant to the Registrant, other than the services
provided reported as a part of (a) through (c) of this Item.
Audit-related All other
Audit fees fees/1/ Tax fees/2/ fees/3/
--------------- -------------- ------------- -----------
2005 2006 2005 2006 2005 2006 2005 2006
------- ------- ------ ------- ------ ------ ---- ------
IXIS Advisor Funds
Trust III $70,900 $89,728 $2,186 $12,300 $4,321 $7,504 -- $8,266
- --------
1. The audit-related fees for 2005 consist of the performance of agreed upon
procedures relating to the Trust's deferred compensation plan. The
audit-related fees for 2006 consist of the performance of agreed upon
procedures related to a change in the Trust's custodian.
2. The tax fees consist of a review of the Trust's year-end shareholder
reporting and tax compliance.
3. Other fees consist of a review of income and expense allocation methods in
conjunction with the annual review of the Trust's management contract.
Aggregate fees billed to the Registrant for non-audit services during 2005 and
2006 were $6,507 and $28,070, respectively.
Fees paid to Principal Accountant By Adviser and Control Affiliates.
The following table sets forth the non-audit services provided by the Trust's
principal accountant to IXIS Asset Management Advisors, L.P. and entities
controlling, controlled by or under common control with IXIS Asset Management
Advisors, L.P. that provide ongoing services to the Trust ("Control
Affiliates") for the last two fiscal years.
Audit-related fees Tax fees All other fees
------------------ ---------------- ---------------
2005 2006 2005 2006 2005 2006
-------- ---- ------- -------- ------- -------
Control Affiliates $102,000 -- $44,030 $107,010 $35,000 $15,800
Aggregate fees billed to Control Affiliates for non-audit services during 2005
and 2006 were $181,030 and $122,810, respectively.
None of the series described above were approved pursuant to (c)(7)(i)(C) of
Regulation S-X.
Audit Committee Pre Approval Policies.
Annually, the Registrant's Audit Committee reviews the audit, audit-related,
tax and other non-audit services together with the projected fees, for services
proposed to be rendered to the Trust and/or other entities for which
pre-approval is required during the upcoming year. Any subsequent revisions to
already pre-approved services or fees (including fee increases) and requests
for pre-approval of new services would be presented for consideration quarterly
as needed.
If, in the opinion of management, a proposed engagement by the Registrant's
independent accountants needs to commence before the next regularly scheduled
Audit Committee meeting, any member of the Audit Committee who is an
independent Board member is authorized to pre-approve the engagement, but only
for engagements to provide audit, audit related and tax services. This approval
is subject to review of the full Audit Committee at its next quarterly meeting.
All other engagements require the approval of all the members of the Audit
Committee.
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) Code of Ethics required by Item 2 hereof, filed herewith as exhibit
(a)(1).
(a) (2) Certifications of Principal Executive Officer and Principal Financial
Officer pursuant to Rule 30a-2(a) under the Investment Company Act of
1940 [17 CFR 270.30a-2(a)], filed herewith as exhibits (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: February 26, 2007
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: February 26, 2007
By: /s/ Michael C. Kardok
---------------------------------
Name: Michael C. Kardok
Title: Treasurer
Date: February 26, 2007