EXHIBIT 12
[LOGO] ROPES & GRAY LLP
ONE INTERNATIONAL PLACE BOSTON, MA 02110-2624 617-951-7000 F 617-951-7050
BOSTON NEW YORK PALO ALTO SAN FRANCISCO WASHINGTON, DC www.ropesgray.com
October 26, 2007
Natixis Value Fund
Natixis Funds Trust I
399 Boylston Street, Boston, MA 02116
Loomis Sayles Value Fund
Loomis Sayles Funds II
399 Boylston Street, Boston, MA 02116
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated October 26, 2007, between Natixis Funds
Trust I, a Massachusetts business trust (the "Target Trust"), on behalf of
Natixis Value Fund ("Target Fund"), and Loomis Sayles Funds II, a Massachusetts
business trust (the "Acquiring Trust"), on behalf of Loomis Sayles Value Fund
("Acquiring Fund"). The Agreement describes a proposed transaction (the
"Transaction") to occur as of the date of this letter (the "Closing Date"),
pursuant to which Acquiring Fund will acquire substantially all of the assets
of Target Fund in exchange for shares of beneficial interest in Acquiring Fund
(the "Acquiring Fund Shares") and the assumption by Acquiring Fund of all of
the liabilities of Target Fund following which the Acquiring Fund Shares
received by Target Fund will be distributed by Target Fund to its shareholders
in liquidation and termination of Target Fund. This opinion as to certain U.S.
federal income tax consequences of the Transaction is furnished to you pursuant
to Sections 8(f) and 9(f) of the Agreement. Capitalized terms not defined
herein are used herein as defined in the Agreement.
Target Fund is a series of the Target Trust, which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net
asset value at each shareholder's option. Target Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Acquiring Trust, which is registered under
the 1940 Act as an open-end management investment company. Shares of Acquiring
Fund are redeemable at net asset value at each shareholder's option. Acquiring
Fund has elected to be a regulated investment company for federal income tax
purposes under Section 851 of the Code.
Natixis Value Fund October 26, 2007
Loomis Sayles Value Fund
For purposes of this opinion, we have considered the Agreement, the Combined
Prospectus/Proxy Statement dated August 15, 2007, and such other items as we
have deemed necessary to render this opinion. In addition, you have provided us
with letters dated as of the date hereof, representing as to certain facts,
occurrences and information upon which you have indicated that we may rely in
rendering this opinion (whether or not contained or reflected in the documents
and items referred to above).
The facts you have represented as to in paragraph 5 of the letter from
Acquiring Fund and paragraph 6 of the letter from Target Fund, each dated as of
the date hereof, support the conclusion that, following the Transaction,
Acquiring Fund will continue the historic business of Target Fund as an
open-ended fund seeking long-term investment return from a combination of
market appreciation and dividend income from equity securities.
Various factors demonstrate the similarity between Target Fund and Acquiring
Fund. The two funds have similar investment styles: as of March 31, 2007 (the
"comparison date"), a randomly selected date that reflects the Funds'
portfolios composed, each fund invested at least 92.5% in U.S. stock, 2.8% in
cash, and 1.6% in foreign stock./1/
A comparison of the Funds' portfolios indicates that, consistent with the
Funds' shared goals and strategies, the funds hold securities with similar
characteristics. As if the comparison date, the weighted average market
capitalization was $36.16 billion for the Target Fund and $48.9 billion for the
Acquiring Fund, placing both Funds in the large-cap sphere./2/ Consistent with
their focus on large-sized companies, both Funds invested more than 75% of
their net assets in large-cap and giant-cap stocks./3/ More specifically, when
comparing the percentages of net assets each fund invested in stocks of varying
market capitalizations, there was a total overlap of 93.2%. Both Funds invested
similarly in each market-cap segment, with an overlap of 50.3% in giant-cap
stocks, 24.89% in large-cap stocks, and 18% in medium-cap stocks. In addition,
Acquiring Fund invested an insignificant amount of its assets in small-cap
stocks (1.8%) and micro-cap stocks (.4%), while Target Fund did not.
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/1/ Unless otherwise noted, all data was obtained from Morningstar.
/2/ Morningstar does not use a fixed numerical range in determining whether a
fund is large, mid or small-cap based on average market capitalization.
Instead, Morningstar ranks all U.S. stocks by their market capitalization,
classifying the companies that make up the top 70% of the domestic U.S.
market as large capitalization ("large cap") stocks, the next 20% as
mid-cap, and the smallest 10% as small-cap. Morningstar resets the
boundaries periodically by examining the relative sizes of their database
of stocks. For example, as of April 2002, stocks with market caps of more
than $8.85 billion were considered large cap; companies with market caps
between $1.56 billion and $8.85 billion were considered mid cap; anything
less than $1.56 billion was classified as small cap.
/3/ Rather than using a fixed number for "large-cap" or "small-cap" stocks,
Morningstar uses a flexible system that is not adversely affected by
overall movements in the market. World equity markets are first divided
into seven style zones: (1) United States, (2) Latin America, (3) Canada,
(4) Europe, (5) Japan, (6) Asia excluding Japan, and (7) Australia/New
Zealand. The stocks in each style zone are further subdivided into size
groups. "Giant-cap" stocks are defined as those that account for the top
40% of the capitalization of each style zone, "large-cap" stocks represent
the next 30%, "mid-cap" stocks represent the next 20%, "small-cap" stocks
represent the next 7%, and "micro-cap" stocks represent the smallest 3%.
Natixis Value Fund October 26, 2007
Loomis Sayles Value Fund
Although both Funds invest predominantly in large-cap equity securities, the
Funds have somewhat different investment styles. Target Fund primarily selects
investments using a "value" approach, while Acquiring Fund selects investments
using a combined approach of "growth" and "value:" Morningstar puts Target Fund
in the "Large Blend" domestic equity fund category and Acquiring Fund in the
"Large Value" domestic equity fund category./4/ With respect to Morningstar's
Style Box, both Funds' investment style is characterized as "Large Blend."/5/
The fund's portfolios are similar in terms of industry sector diversification.
As of the comparison date, the Funds' equity investments were compared using
three broad sectors, which were also subdivided into twelve industries. Looking
solely at the three broad sectors, the Funds shared a total overlap of 73.12%:
Target Fund and Acquiring Fund both invested almost half (48.38% and 48.39%,
respectively) of their equity investments in the services sector, around a
third (33.61% and 29.72%, respectively) in manufacturing, and the balance, in
each case, of around one fifth (18% and 21.89%, respectively) in the
information sector. Upon further dividing these three large industry sectors
into twelve sub-categories (services: healthcare services, consumer services,
business services, financial services; information: software, hardware, media,
telecommunications; manufacturing: consumer goods, industrial goods, energy,
utilities), the Funds shared a total overlap of 86.87%. Both Funds were also
relatively diversified across these twelve industries, with each fund
allocating no more than 29.3% of its equity investments to any one industry.
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/4/ The "value" approach favors stocks that appear to be currently underpriced
in the market according to certain forms of fundamental analysis; for
example, this may include shares that are trading at high dividend yields
or low price-to-earnings or price-to-book ratios. The "growth" approach
favors stocks of companies exhibiting signs of above-average earnings
and/or sales growth, even if the share price appears expensive in terms of
metrics such as price-to-earnings or price-to-book ratios. The "blend"
approach is a mix of these two approaches. In classifying fund portfolios
as "Value," "Growth," or "Blend," Morningstar begins by assigning each
stock held in the portfolio a "Value" score (based on price/prospective
earnings, price/book, price/sales, price/cash flow, and dividend yield)
and a "Growth" score (based on long-term projected earnings growth,
historical earnings growth, sales growth, cash flow growth, and book value
growth). Stocks are evaluated against other stocks in the same geographic
area and capitalization band. The style attributes of individual stocks
are then used to determine the style classification of stock mutual funds,
based on the asset-weighted average of the style scores.
/5/ According to Morningstar, the Morningstar Style Box is based on the equity
holdings of a portfolio based on its most recently available portfolio at
the time of analysis, which can differ from a fund's historic holdings.
The Morningstar Category, on the other hand, is assigned based on the
underlying securities in each portfolio over the past three years.
Natixis Value Fund October 26, 2007
Loomis Sayles Value Fund
In addition, Target and Acquiring Fund invest similarly across geographic
regions. Both Funds invest more than 92.5% of their assets in U.S. stock.
(92.5% for Target Fund and 95.6% for Acquiring Fund) as of the comparison date.
Each fund then invests a negligible amount of assets (2.6% for Target, 1.6% for
Acquiring) in non-U.S. stock.
The specific characteristics described above (the relative figures and
percentages in terms of performance and asset allocation) do not constitute
fixed aspects of Target Fund and Acquiring Fund's investment strategies.
Rather, they reflect the fact that the Funds' similar investment strategies
have led them to react similarly (by choosing similar portfolios) to the market
conditions in place up to and as of the comparison date.
Consistent with the similarity of the funds, on the date of the Transaction, at
least 33 1/3% of Target's portfolio assets as they existed prior to any
realignment occurring in connection with the Transaction will not be required
to be sold by virtue of the investment objectives, strategies, policies, risks
or restrictions of Acquiring Fund, and the Target Fund will not have realigned
its portfolio prior to the Transaction in order for this to be true. Acquiring
Fund has not plan or intention to change any of its investment objectives,
strategies, policies, risks, or restrictions after the Transaction. After the
Transaction, Acquiring Fund will invest all assets acquired from the Target
Fund in a manner consistent with the funds' shared investment strategies, as
described above and reflected by the aforementioned portfolio data.
Based on the foregoing representations and assumption and our review of the
documents and items referred to above, we are of the opinion that generally,
subject to the final paragraphs hereof, for U.S. federal income tax purposes:
(i) The Transaction will constitute a reorganization within the meaning of
Section 368(a) of the Code, and Acquiring Fund and Target Fund each will
be a "party to a reorganization" within the meaning of Section 368(b) of
the Code;
(ii) Under section 1032 of the Code, no gain or loss will be recognized by
Acquiring Fund upon the receipt of the assets of Target Fund in exchange
for Acquiring Fund Shares and the assumption by Acquiring Fund of the
liabilities of Target Fund;
(iii) Under section 362(b) of the Code, the basis in the hands of Acquiring
Fund of the assets of Target Fund transferred to Acquiring Fund in the
Transaction will be the same as the basis of such assets in the hands of
Target Fund immediately prior to the transfer;
(iv) Under section 1223(2) of the Code, the holding periods of the assets of
Target Fund in the hands of Acquiring Fund will include the periods
during which such assets were held by Target Fund;
Natixis Value Fund October 26, 2007
Loomis Sayles Value Fund
(v) Under section 361 of the Code, no gain or loss will be recognized by
Target Fund upon the transfer of Target Fund's assets to Acquiring Fund
in exchange for Acquiring Fund Shares and the assumption by Acquiring
Fund of the liabilities of Target Fund, or upon the distribution of
Acquiring Fund Shares by Target Fund to its shareholders in liquidation;
(vi) Under section 354 of the Code, no gain or loss will be recognized by
Target Fund shareholders upon the exchange of their Target Fund shares
for Acquiring Fund Shares;
(vii) Under section 358 of the Code, the aggregate basis of Acquiring Fund
Shares a Target Fund shareholder receives in connection with the
Transaction will be the same as the aggregate basis of his or her Target
Fund shares exchanged therefor;
(viii) Under section 1223(1) of the Code, a Target Fund shareholder's holding
period for his or her Acquiring Fund Shares will be determined by
including the period for which he or she held the Target Fund shares
exchanged therefor, provided that he or she held such Target Fund shares
as capital assets; and
(ix) Acquiring Fund will succeed to and take into account the items of Target
Fund described in Section 381(c) of the Code, subject to the conditions
and limitations specified in Sections 381, 382, 383 and 384 of the Code
and the Regulations thereunder.
We express no view with respect to the effect of the reorganization on any
transferred asset as to which any unrealized gain or loss is required to be
recognized at the end of a taxable year (or on the termination or transfer
thereof) under federal income tax principles.
In connection with this opinion, we call your attention to Revenue Ruling
87-76, 1987-2 C.B. 84, published by the Internal Revenue Service ("IRS"). In
that ruling, the IRS held that the so-called "continuity of business
enterprise" requirement necessary to tax-free reorganization treatment was not
met in the case of an acquisition of an investment company which invested in
corporate stocks and bonds by an investment company which invested in municipal
bonds. Specifically, the IRS based its ruling on its conclusion that the
business of investing in corporate stocks and bonds is not the same line of
business as investing in municipal bonds. We believe that the IRS's conclusion
in this ruling has always been questionable. In addition, a series of private
letter rulings issued in July 2005 suggest that the IRS's position on this
issue is evolving: the IRS relied upon historic business representations to
conclude that the reorganization satisfied the continuity of business
enterprise requirement. However, even if the IRS's 1987 revenue ruling were a
correct statement of law, the facts of this Transaction are distinguishable
from those in the ruling.
Natixis Value Fund October 26, 2007
Loomis Sayles Value Fund
We believe that Acquiring Fund and Target Fund are both engaged in the same
line of business: each is an open-end management investment company that seeks
long-term investment return by investing in equity securities issued by
large-cap, domestic companies based in significant measure or wholly,
respectively, on the "value" approach. After the Transaction, Acquiring Fund
will continue that line of business for the benefit of the stockholders of both
Target and Acquiring Funds. While Acquiring Fund will dispose of securities
formerly held by Target Fund, these dispositions will be fully consistent with
the shared historic investment policies of both Funds and all proceeds
generated by such dispositions will be reinvested in a manner fully consistent
with such policies. In these circumstances, we are of the opinion that
Acquiring Fund will have continued the historic business of Target Fund for the
benefit of, among others, the historic stockholders of Target Fund, and that
the continuity of business enterprise doctrine should, as a result, be
fulfilled. However, because Revenue Ruling 87-76 is the only ruling on which
taxpayers can rely (i.e., the only ruling other that is not a private letter
ruling) dealing specifically with the application of the "continuity of
business enterprise" requirement to a reorganization involving investment
companies, our opinion cannot be free from doubt. No ruling has been or will be
obtained from the IRS as to the subject matter of this opinion and there can be
no assurance that the IRS or a court of law will concur with the opinion set
forth above.
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Natixis Value Fund October 26, 2007
Loomis Sayles Value Fund
Our opinion is based on the Internal Revenue Code of 1986, as amended, Treasury
Regulations, Internal Revenue Service rulings, judicial decisions, and other
applicable authority, all as in effect on the date of this opinion. The legal
authorities on which this opinion is based may be changed at any time. Any such
changes may be retroactively applied and could modify the opinions expressed
above.
Very truly yours,
/s/ Ropes & Gray LLP
Ropes & Gray LLP