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
NATIXIS FUNDS TRUST III
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
399 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
COLEEN DOWNS DINNEEN, ESQ.
NATIXIS DISTRIBUTORS, L.P.
399 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(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, 2007
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
EQUITY FUNDS
ANNUAL REPORT
December 31, 2007
CGM Advisor Targeted Equity Fund
Hansberger International Fund
Harris Associates Focused Value Fund
Harris Associates Large Cap Value Fund
Natixis U.S. Diversified Portfolio
BlackRock Investment Management
Harris Associates
Loomis, Sayles & Company
Vaughan Nelson Small Cap Value Fund
Westpeak 130/30 Growth Fund
[Formerly Westpeak Capital Growth Fund]
[GRAPHIC]
TABLE OF CONTENTS
Management Discussion and Performance ....................................page 1
Portfolio of Investments ................................................page 22
Financial Statements.................................................... page 39
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
- --------------------------------------------------------------------------------
An emphasis on globally oriented companies and good stock selection helped CGM
Advisor Targeted Equity Fund achieve strong returns for the year ended
December 31, 2007. Total return for Class A shares based on net asset value was
34.42% for the year, including $0.13 in dividends and $1.15 in capital gains
reinvested during the period. The fund significantly outperformed the 5.49%
return on its benchmark, the S&P 500 Index, and the 6.16% average return of the
funds in Morningstar's Large Blend category.
FUND EMPHASIZED GLOBAL BUSINESSES
Throughout 2007, the fund remained fully invested in anticipation of continued
strong global economic growth. While the U.S. economy was hurt by weakness in
the housing market and rising mortgage foreclosures, the fund emphasized U.S.
companies with a global reach as well as businesses domiciled overseas in such
rapidly growing economies as Brazil.
The fund began 2007 with modest weightings in agriculture and energy, which
were increased greatly during the year to benefit from rising grain and oil
prices. New positions were established in Brazilian mining company Vale
(formerly Companhia Vale do Rio Doce) and Banco Itau, one of Brazil's largest
commercial banks.
We also focused on domestic companies with major foreign exposure, including
Research in Motion, a leader in wireless communications products, and Johnson &
Johnson, a multi-national provider of healthcare products and related services.
In the course of the year we sold large positions in investment banks,
including Lehman Brothers and Merrill Lynch, as well as European discount
airline Ryanair Holdings, and automobile manufacturer Toyota Motors, using the
proceeds to invest in companies we believed were better positioned for growth.
APPRECIATION IN INDIVIDUAL STOCKS DRIVEN BY STRONG ECONOMIES AND SECTORS
The three biggest contributors to the fund's positive returns underscore our
commitment to global growth. Petroleo Brasileiro (more commonly known as
Petrobras), Vale (mentioned above), and Deere & Company all benefited from
strong economic growth outside of the United States.
Petrobras is one of Brazil's leading oil and gas producers and one of the few
major oil companies expected to increase oil and gas production over the next
five years. The company recently announced a significant deep offshore
discovery - a new oil frontier that could rival the world's most important oil
fields.
Brazilian mining giant, Vale, is a world leader in iron ore production.
Worldwide demand for iron ore drove prices higher in 2007 and we look for
further price increases in 2008. In addition, last year Vale purchased Canada's
leading nickel miner, Inco Limited. Nickel prices are expected to continue to
rise as producers strain to meet growing demand from developing countries.
Deere & Company, the world's leading manufacturer of agricultural machinery, is
benefiting from a boom in the farm economy, driven by near-record soybean and
corn prices. We expect these prices to remain elevated as demand increases and
supply falls short. Currently, over 30% of the U.S. corn crop is converted to
ethanol. This, coupled with increased demand for grain in emerging markets, is
creating a favorable earnings outlook for Deere.
CASINOS AND AUTOMOBILE ISSUES PROVED DISAPPOINTING
During the year, the fund had a sizeable loss in Las Vegas Sands, a leading
casino company that experienced disappointing results from its new mega-casino
in Macau, China. The share price of automobile giant Toyota also tumbled, as
increased competition eroded the company's prospects. Both positions were sold.
COMPANIES WITH GLOBAL EXPOSURE REMAIN BEST OPPORTUNITIES
In our judgment, the best opportunities going forward remain in companies with
exposure to economies outside the United States. We plan to focus on both
foreign and U.S. companies doing business internationally - firms that we
believe may benefit from global economic trends. We will continue to target
stocks of relatively few companies in industries we believe will experience the
strongest growth.
1
CGM ADVISOR TARGETED EQUITY FUND
Investment Results through December 31, 2007
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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, 1997 through December 31, 2007
Net Asset Maximum Sales S&P 500
Value/1/ Charge/2/ Index/4/
------------ --------------- ------------
12/31/1997 $10,000 $ 9,425 $10,000
1/31/1998 10,163 9,579 10,111
2/28/1998 11,056 10,421 10,840
3/31/1998 11,767 11,091 11,395
4/30/1998 12,219 11,517 11,510
5/31/1998 12,027 11,336 11,312
6/30/1998 12,671 11,942 11,771
7/31/1998 12,738 12,005 11,646
8/31/1998 10,307 9,715 9,962
9/30/1998 10,381 9,784 10,600
10/31/1998 11,426 10,769 11,463
11/30/1998 12,377 11,665 12,157
12/31/1998 13,340 12,573 12,858
1/31/1999 14,244 13,425 13,396
2/28/1999 13,223 12,462 12,979
3/31/1999 13,540 12,761 13,498
4/30/1999 13,493 12,717 14,021
5/31/1999 13,058 12,307 13,690
6/30/1999 14,021 13,214 14,450
7/31/1999 13,691 12,904 13,999
8/31/1999 13,668 12,882 13,929
9/30/1999 12,857 12,118 13,548
10/31/1999 13,351 12,583 14,405
11/30/1999 13,856 13,059 14,698
12/31/1999 15,365 14,481 15,563
1/31/2000 14,163 13,349 14,781
2/29/2000 15,421 14,534 14,502
3/31/2000 15,589 14,692 15,920
4/30/2000 15,003 14,140 15,441
5/31/2000 14,403 13,574 15,124
6/30/2000 14,459 13,627 15,497
7/31/2000 13,998 13,193 15,255
8/31/2000 14,661 13,818 16,203
9/30/2000 14,130 13,318 15,347
10/31/2000 14,160 13,346 15,282
11/30/2000 14,027 13,220 14,078
12/31/2000 14,666 13,823 14,146
1/31/2001 13,366 12,597 14,648
2/28/2001 12,942 12,198 13,313
3/31/2001 12,613 11,888 12,469
4/30/2001 13,162 12,405 13,438
5/31/2001 12,896 12,154 13,528
6/30/2001 12,984 12,237 13,199
7/31/2001 12,606 11,881 13,069
8/31/2001 11,567 10,902 12,251
9/30/2001 10,450 9,849 11,262
10/31/2001 10,512 9,908 11,476
11/30/2001 11,630 10,961 12,357
12/31/2001 12,290 11,584 12,465
1/31/2002 12,668 11,939 12,283
2/28/2002 12,085 11,390 12,046
3/31/2002 12,289 11,583 12,499
4/30/2002 12,321 11,613 11,741
5/31/2002 12,196 11,494 11,655
6/30/2002 11,802 11,123 10,825
7/31/2002 10,495 9,892 9,981
8/31/2002 10,495 9,892 10,046
9/30/2002 9,850 9,283 8,955
10/31/2002 9,613 9,061 9,743
11/30/2002 9,377 8,838 10,316
12/31/2002 8,748 8,245 9,710
1/31/2003 8,748 8,245 9,456
2/28/2003 8,685 8,185 9,314
3/31/2003 8,889 8,378 9,404
4/30/2003 9,455 8,911 10,179
5/31/2003 10,273 9,682 10,715
6/30/2003 10,445 9,845 10,852
7/31/2003 10,241 9,652 11,043
8/31/2003 10,508 9,904 11,259
9/30/2003 10,634 10,023 11,139
10/31/2003 11,956 11,268 11,769
11/30/2003 12,428 11,714 11,873
12/31/2003 12,492 11,773 12,495
1/31/2004 12,208 11,506 12,725
2/29/2004 12,948 12,203 12,902
3/31/2004 13,546 12,767 12,707
4/30/2004 12,476 11,759 12,508
5/31/2004 12,775 12,041 12,679
6/30/2004 12,885 12,144 12,926
7/31/2004 12,272 11,566 12,498
8/31/2004 12,413 11,699 12,549
9/30/2004 13,184 12,426 12,684
10/31/2004 13,341 12,574 12,878
11/30/2004 13,938 13,137 13,399
12/31/2004 14,237 13,418 13,855
1/31/2005 14,111 13,300 13,518
2/28/2005 15,055 14,190 13,802
3/31/2005 14,394 13,567 13,558
4/30/2005 14,001 13,196 13,300
5/31/2005 14,395 13,567 13,724
6/30/2005 14,713 13,867 13,743
7/31/2005 15,469 14,580 14,254
8/31/2005 15,627 14,729 14,124
9/30/2005 16,210 15,278 14,239
10/31/2005 15,832 14,922 14,001
11/30/2005 16,084 15,159 14,531
12/31/2005 16,116 15,190 14,536
1/31/2006 16,809 15,843 14,921
2/28/2006 16,226 15,293 14,961
3/31/2006 16,683 15,724 15,147
4/30/2006 17,456 16,452 15,351
5/31/2006 16,857 15,888 14,909
6/30/2006 16,827 15,859 14,929
7/31/2006 16,923 15,950 15,021
8/31/2006 16,796 15,830 15,379
9/30/2006 16,446 15,501 15,775
10/31/2006 17,002 16,025 16,289
11/30/2006 17,050 16,070 16,599
12/31/2006 17,490 16,484 16,832
1/31/2007 17,719 16,700 17,086
2/28/2007 17,065 16,084 16,752
3/31/2007 17,540 16,531 16,939
4/30/2007 18,292 17,240 17,690
5/31/2007 19,126 18,026 18,307
6/30/2007 19,564 18,439 18,003
7/31/2007 19,783 18,646 17,445
8/31/2007 19,969 18,821 17,706
9/30/2007 22,150 20,876 18,368
10/31/2007 23,468 22,118 18,661
11/30/2007 22,876 21,561 17,880
12/31/2007 23,510 22,158 17,756
Average Annual Total Returns -- December 31, 2007
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
CLASS A (Inception 11/27/68)
Net Asset Value/1/ 34.42% 21.86% 8.93% --
With Maximum Sales Charge/2/ 26.72 20.42 8.28 --
CLASS B (Inception 2/28/97)
Net Asset Value/1/ 33.41 20.93 8.12 --
With CDSC/3/ 28.41 20.75 8.12 --
CLASS C (Inception 9/1/98)
Net Asset Value/1/ 33.47 20.97 -- 7.79%
With CDSC/3/ 32.47 20.97 -- 7.79
CLASS Y (Inception 6/30/99)
Net Asset Value/1/ 34.75 22.25 -- 6.66
SINCE SINCE
CLASS C CLASS Y
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ INCEPTION/6/
S&P 500 Index/4/ 5.49% 12.83% 5.91% 6.39% 2.45%
Morningstar Large Blend Fund Avg./5/ 6.16 12.63 5.92 6.88 3.26
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.funds.natixis.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 12/31/07 12/31/06
- ---------------------------------------------------
Common Stocks 95.8 99.0
- ---------------------------------------------------
Short-Term Investments and
Other 4.2 1.0
- ---------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/07 12/31/06
- ---------------------------------------------------
Petroleo Brasileiro SA, ADR 9.1 --
- ---------------------------------------------------
Schlumberger, Ltd. 6.6 4.9
- ---------------------------------------------------
Deere & Co. 6.6 5.1
- ---------------------------------------------------
Monsanto Co. 5.9 --
- ---------------------------------------------------
Banco Itau Holding Financeira
SA, ADR 5.6 --
- ---------------------------------------------------
Apple, Inc. 5.4 --
- ---------------------------------------------------
Research in Motion, Ltd. 5.3 --
- ---------------------------------------------------
MasterCard, Inc., Class A 5.2 5.0
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Companhia Vale do Rio Doce,
ADR 5.0 --
- ---------------------------------------------------
McDonald's Corp. 5.0 5.0
- ---------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/07
- ---------------------------------------------------
Energy Equipment & Services 11.1
- ---------------------------------------------------
Chemicals 10.7
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Commercial Banks 9.6
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Oil, Gas & Consumable Fuels 9.1
- ---------------------------------------------------
Insurance 8.9
- ---------------------------------------------------
Portfolio holdings and asset allocations will vary
EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio Net Expense Ratio
- ---------------------------------------------------
A 1.16% 1.16%
- ---------------------------------------------------
B 1.91 1.91
- ---------------------------------------------------
C 1.90 1.90
- ---------------------------------------------------
Y 0.87 0.87
- ---------------------------------------------------
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 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
- --------------------------------------------------------------------------------
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
Lauretta Reeves
- --------------------------------------------------------------------------------
Symbols:
Class A NEFDX
Class B NEDBX
Class C NEDCX
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Hansberger International Fund's total return for the year ended December 31,
2007 was 16.38%, based on the net asset value of Class A shares, including
$0.40 in dividends and $2.40 in capital gains reinvested during the period. By
comparison, the fund's benchmarks, the MSCI EAFE Index and the MSCI ACWI ex USA
Index, returned 11.63% and 17.12%, respectively, expressed in U.S. dollars. The
average performance of the fund's Morningstar peer group, the Foreign Large
Blend category, was 12.71%. Neither the fund nor its benchmarks include U.S.
stocks, and the Morningstar category has only limited exposure to domestic
equities.
International markets - notably emerging market countries - led the way in
2007, significantly outperforming the U.S. market, as measured by the S&P 500
Index, which returned just 5.49% for the year. Brazil, India, China and Russia
were among the strongest markets, and U.S. investors who owned internationally
diversified portfolios benefited from the weakening U.S. dollar.
Two teams of Hansberger's international equity specialists manage the fund. One
team focuses on value and the other seeks growth potential. Growth investors
fared better than value investors in 2007, although stock selection had a
positive influence on both the fund's segments.
FINANCIALS, JAPAN LAGGED, BUT STOCK SELECTION WAS POSITIVE
The subprime crisis and the credit crunch in the United States disturbed
financial markets all over the world in 2007, and the value portfolio's
financial holdings suffered. Disappointments included Sumitomo Trust and
Banking, one of Japan's largest financial institutions, although the stock
remains in the portfolio in anticipation of improving prospects. Also hard hit
was Japan's Daiei Inc., a general merchandise and supermarket retailer.
Consumer confidence in Japan remains low and we sold the stock.
Materials, energy and telecom benefited the value portfolio. Companhia Vale do
Rio Doce in Brazil (recently renamed Vale), the world's largest iron ore mining
company, benefited from strong demand, particularly from China and other
developing economies. Even though Japanese equities performed poorly this year,
the value team's selections included Nintendo, the game console manufacturer
whose "Wii" console was stronger than expected, causing the company to revise
its earnings outlook upward several times. Both stocks remain in the portfolio.
GROWTH TEAM LOOKS FOR COMPANIES NOT TIED TO ECONOMIC CYCLES
For the first time in several years, growth-oriented investors outperformed
value investors in 2007, as slowing economic growth made investors more willing
to pay a higher premium for solid growth prospects. The types of stocks
Hansberger's Growth team favors are companies able to generate opportunities
through their own businesses rather than depending on economic cycles. For
example, recent investments include Autonomy, a British software company that
developed a unique search platform to help customers analyze unstructured data.
Another example is Denmark's Vestas Wind Systems, which has been a strong
performer for the fund for several years. Vestas' order backlogs continue to
increase its visibility for both earnings and revenue growth worldwide as the
demand for green energy grows.
From a sector standpoint, the portfolio's best performers were those regarded
as more defensive, including consumer staples, energy, telecommunication
services and utilities. Earnings of companies in these sectors are expected to
hold up relatively well even during less favorable economic periods. The worst
sectors were information technology, industrials, financials and consumer
discretionary companies, which were hurt by reduced capital spending and the
global credit crisis.
EMERGING MARKETS EXPECTED TO CONTINUE TO LEAD IN 2008
As 2008 unfolds, we believe high-quality stocks, which have been under a cloud
for some time, will return to favor. Although the U.S. economy could enter a
recession, we expect continued strength in emerging markets, particularly China
and India. This may create a healthy growth scenario, with a soft landing for
global economies. Much will turn on what happens in the United States, both
politically and from an economic standpoint.
3
HANSBERGER INTERNATIONAL FUND
Investment Results through December 31, 2007
- --------------------------------------------------------------------------------
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, 1997 through December 31, 2007
MSCI MSCI
Class A Class A EAFE ACWI ex USA
@ N.A. @ M.S.C. Index Index
Cumulative Cumulative Cumulative Cumulative
Month End Value/1/ Value/2/ Value/4/ Value/5/
- ---------- ---------- ---------- ---------- -----------
12/31/1997 $10,000 $ 9,425 $10,000 $10,000
1/31/1998 9,968 9,395 10,460 10,299
2/28/1998 10,647 10,035 11,133 10,986
3/31/1998 11,080 10,443 11,479 11,366
4/30/1998 11,144 10,504 11,572 11,447
5/31/1998 10,918 10,290 11,519 11,240
6/30/1998 10,692 10,077 11,608 11,198
7/31/1998 10,660 10,047 11,729 11,304
8/31/1998 8,972 8,456 10,278 9,710
9/30/1998 8,887 8,376 9,966 9,505
10/31/1998 9,534 8,986 11,007 10,500
11/30/1998 10,045 9,468 11,574 11,065
12/31/1998 10,401 9,803 12,033 11,446
1/31/1999 10,763 10,144 12,001 11,434
2/28/1999 10,627 10,016 11,717 11,178
3/31/1999 11,061 10,425 12,209 11,717
4/30/1999 11,656 10,986 12,707 12,303
5/31/1999 11,364 10,711 12,055 11,725
6/30/1999 12,030 11,339 12,528 12,264
7/31/1999 11,894 11,211 12,903 12,552
8/31/1999 11,810 11,131 12,953 12,595
9/30/1999 11,538 10,875 13,086 12,681
10/31/1999 11,946 11,259 13,579 13,153
11/30/1999 12,838 12,100 14,054 13,679
12/31/1999 14,313 13,490 15,318 14,983
1/31/2000 13,781 12,988 14,348 14,170
2/29/2000 14,643 13,801 14,737 14,553
3/31/2000 14,686 13,841 15,311 15,101
4/30/2000 13,621 12,838 14,508 14,258
5/31/2000 13,003 12,255 14,156 13,893
6/30/2000 13,384 12,614 14,713 14,485
7/31/2000 13,024 12,275 14,099 13,913
8/31/2000 13,413 12,642 14,224 14,085
9/30/2000 12,909 12,166 13,535 13,304
10/31/2000 12,419 11,705 13,218 12,881
11/30/2000 11,854 11,173 12,725 12,303
12/31/2000 12,564 11,842 13,180 12,723
1/31/2001 12,808 12,072 13,174 12,914
2/28/2001 11,990 11,300 12,187 11,891
3/31/2001 11,206 10,561 11,380 11,051
4/30/2001 11,928 11,243 12,178 11,802
5/31/2001 12,068 11,374 11,758 11,477
6/30/2001 11,968 11,280 11,282 11,036
7/31/2001 11,749 11,073 11,077 10,791
8/31/2001 11,495 10,834 10,799 10,523
9/30/2001 10,295 9,703 9,708 9,406
10/31/2001 10,497 9,893 9,956 9,670
11/30/2001 11,093 10,455 10,324 10,112
12/31/2001 11,437 10,779 10,385 10,243
1/31/2002 11,165 10,523 9,834 9,804
2/28/2002 11,191 10,548 9,904 9,874
3/31/2002 11,860 11,178 10,492 10,452
4/30/2002 11,780 11,103 10,520 10,479
5/31/2002 11,851 11,169 10,663 10,593
6/30/2002 11,130 10,490 10,242 10,135
7/31/2002 10,063 9,484 9,232 9,148
8/31/2002 10,080 9,500 9,213 9,148
9/30/2002 8,836 8,328 8,226 8,179
10/31/2002 9,321 8,785 8,669 8,617
11/30/2002 9,991 9,417 9,063 9,032
12/31/2002 9,559 9,009 8,759 8,740
1/31/2003 9,223 8,693 8,394 8,433
2/28/2003 8,968 8,452 8,202 8,262
3/31/2003 8,853 8,344 8,047 8,102
4/30/2003 9,779 9,217 8,845 8,883
5/31/2003 10,475 9,873 9,389 9,449
6/30/2003 10,713 10,097 9,622 9,710
7/31/2003 10,934 10,305 9,856 9,969
8/31/2003 11,277 10,629 10,096 10,266
9/30/2003 11,427 10,770 10,409 10,553
10/31/2003 12,238 11,535 11,059 11,238
11/30/2003 12,450 11,734 11,306 11,483
12/31/2003 13,288 12,524 12,190 12,359
1/31/2004 13,588 12,807 12,363 12,558
2/29/2004 13,755 12,964 12,651 12,877
3/31/2004 13,623 12,840 12,727 12,956
4/30/2004 13,235 12,474 12,450 12,554
5/31/2004 13,279 12,515 12,488 12,582
6/30/2004 13,499 12,723 12,783 12,866
7/31/2004 12,890 12,149 12,369 12,491
8/31/2004 13,005 12,257 12,427 12,591
9/30/2004 13,341 12,574 12,753 12,996
10/31/2004 13,729 12,939 13,189 13,448
11/30/2004 14,531 13,695 14,094 14,382
12/31/2004 15,094 14,226 14,713 14,999
1/31/2005 14,768 13,919 14,444 14,741
2/28/2005 15,579 14,683 15,071 15,468
3/31/2005 15,148 14,277 14,698 15,048
4/30/2005 14,795 13,944 14,369 14,677
5/31/2005 14,848 13,994 14,391 14,769
6/30/2005 15,007 14,144 14,588 15,047
7/31/2005 15,580 14,684 15,036 15,602
8/31/2005 16,065 15,141 15,421 16,002
9/30/2005 16,497 15,548 16,111 16,827
10/31/2005 16,038 15,116 15,641 16,214
11/30/2005 16,522 15,572 16,028 16,760
12/31/2005 17,527 16,519 16,775 17,566
1/31/2006 18,805 17,723 17,806 18,791
2/28/2006 18,478 17,415 17,769 18,736
3/31/2006 19,060 17,964 18,364 19,281
4/30/2006 19,852 18,711 19,254 20,275
5/31/2006 19,040 17,946 18,530 19,340
6/30/2006 18,919 17,831 18,537 19,321
7/31/2006 19,134 18,034 18,722 19,518
8/31/2006 19,647 18,517 19,242 20,072
9/30/2006 19,791 18,653 19,276 20,085
10/31/2006 20,519 19,339 20,027 20,903
11/30/2006 21,186 19,968 20,631 21,661
12/31/2006 21,743 20,493 21,280 22,337
1/31/2007 22,017 20,751 21,426 22,420
2/28/2007 21,977 20,714 21,602 22,557
3/31/2007 22,575 21,277 22,163 23,192
4/30/2007 23,415 22,068 23,167 24,268
5/31/2007 24,225 22,832 23,604 24,933
6/30/2007 24,528 23,117 23,641 25,146
7/31/2007 24,280 22,884 23,295 25,074
8/31/2007 23,896 22,522 22,937 24,689
9/30/2007 25,395 23,934 24,168 26,324
10/31/2007 26,893 25,347 25,120 27,793
11/30/2007 25,788 24,305 24,301 26,544
12/31/2007 25,308 23,853 23,755 26,161
Average Annual Total Returns -- December 31, 2007/7/
1 YEAR 5 YEARS 10 YEARS
CLASS A (Inception 12/29/95)
Net Asset Value/1/ 16.38% 21.51% 9.73%
With Maximum Sales Charge/2/ 9.70 20.08 9.09
CLASS B (Inception 12/29/95)
Net Asset Value/1/ 15.63 20.62 8.94
With CDSC/3/ 10.63 20.43 8.94
CLASS C (Inception 12/29/95)
Net Asset Value/1/ 15.54 20.61 8.92
With CDSC/3/ 14.54 20.61 8.92
- --------------------------------------------------------------------
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS
MSCI EAFE Index/4/ 11.63% 22.08% 9.04%
MSCI ACWI ex-U.S.A. Index/5/ 17.12 24.52 10.09
Morningstar Foreign Large Blend Fund Avg./6/ 12.71 20.31 7.94
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.funds.natixis.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 12/31/07 12/31/06
- -------------------------------------------------
Common Stocks 97.3 99.1
- -------------------------------------------------
Preferred Stock 1.3 --
- -------------------------------------------------
Short-Term Investments and
Other 1.4 0.9
- -------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/07 12/31/06
- -------------------------------------------------
Petroleo Brasileiro SA, ADR 2.2 1.1
- -------------------------------------------------
Nintendo Co., Ltd. 1.9 0.8
- -------------------------------------------------
Adidas AG 1.9 1.0
- -------------------------------------------------
Banco Santander Central
Hispano SA 1.7 1.1
- -------------------------------------------------
UniCredito Italiano SpA 1.6 1.9
- -------------------------------------------------
Saipem SpA 1.6 1.6
- -------------------------------------------------
Axa 1.5 0.7
- -------------------------------------------------
Tesco PLC 1.4 0.6
- -------------------------------------------------
Nestle SA 1.3 1.2
- -------------------------------------------------
Infosys Technologies, Ltd.,
Sponsored ADR 1.3 0.7
- -------------------------------------------------
% of Net Assets as of
FIVE LARGEST COUNTRIES 12/31/07 12/31/06
- -------------------------------------------------
Japan 14.0 18.3
- -------------------------------------------------
United Kingdom 13.0 17.0
- -------------------------------------------------
France 9.9 8.7
- -------------------------------------------------
Switzerland 8.9 10.4
- -------------------------------------------------
Germany 6.6 3.2
- -------------------------------------------------
Portfolio holdings and asset allocations will vary.
EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio Net Expense Ratio
- ---------------------------------------------------
A 1.50% 1.50%
- ---------------------------------------------------
B 2.25 2.25
- ---------------------------------------------------
C 2.25 2.25
- ---------------------------------------------------
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 USA (MSCI
ACWI ex USA 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 reductions/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
- --------------------------------------------------------------------------------
Faced with turmoil in the credit markets and falling housing prices, stock
prices began to decline in July, as investors sought short-term safety. For
Harris Associates Focused Value Fund, holdings in weak sectors and a lack of
representation in stronger market segments brought disappointing results for
2007, despite solid returns in the first half of the year.
For the 12 months ended December 31, 2007, Class A shares of the fund provided
a total return of -6.81% based on net asset value with $1.76 in capital gains
reinvested during the period. These results were well behind the fund's
benchmark, the S&P 500 Index, which returned 5.49% for the period and below the
6.16% average return on the funds in Morningstar's Large Blend category.
TECH STOCKS AND CONSUMER ISSUES LED GAINERS
In 2006 we purchased Intel, a leading maker of microprocessors, when
competitive challenges had driven its shares lower. Intel rebounded in 2007, as
a major competitor encountered difficulties launching new products, reaffirming
Intel's dominant industry position. Discovery Holding Co., owners of the
Discovery and History cable channels, among others, was another positive
contributor. A complex corporate structure had kept investors away from this
issue, but after management transformed Discovery from a holding company to a
traditional corporation, investors came to recognize the value inherent in its
strong channel lineup. McDonald's extended its successful turnaround, building
on improved service and enhanced menu choices. Yum! Brands, operators of Pizza
Hut, Taco Bell and other fast-food chains, benefited from its early entry into
China and the strong reception there of its KFC brand.
Buyouts of Huntsman Chemical and Bausch & Lomb also aided the fund's returns,
as did the merger of brewers Molson and Coors. The combined company, Molson
Coors Brewing Company, has generated sizeable cost savings and other synergies
that helped boost its stock price. We took profits in all three stocks. The
fund was underweight relative to the benchmark in the embattled financial
sector, which was a positive, and the financial stocks we selected performed
relatively well.
SOME SECTOR EXPOSURES AND INDIVIDUAL ISSUES HURT RESULTS
Unlike the benchmark, the fund held no utilities, telecommunications or energy
companies during the year, which caused the fund's performance to lag, as all
three sectors delivered impressive returns.
Timberland, retailers of outdoor gear, declined in the wake of earnings
shortfalls, tighter margins and declining U.S. revenues. Timberland enjoys good
return on capital and strong cash flow and, in our view, management's focus on
cost control and store closings should benefit the stock over the longer term.
Chipmaker Micron Technology, a recent addition, fell toward year-end due to an
oversupply of microchips and weak pricing. Although our commitment to the stock
may have been premature, we believe Micron is undervalued and will benefit from
any rebound for the chip markets.
With hindsight, we were late to sell D.R. Horton, taking losses in this major
homebuilder because a housing recovery may be some time off. We were also in
the process of eliminating Sovereign Bancorp from the portfolio at year-end.
Like so many financial services stocks, Sovereign was tainted by the credit
crisis. We used the proceeds from sales to buy other stocks that had fallen in
price to what we believed to be attractive levels.
POSITIONED FOR BUYING OPPORTUNITIES
We believe shares of financial companies may have been beaten down more than
the facts warrant. As falling prices make values more compelling, we have been
adding to the fund's holdings in financial giants like Merrill Lynch and Morgan
Stanley. Close examination of other possible investments, including some
mid-cap issues, also suggests that opportunities continue to emerge for our
value-based, bottom-up selection process. Although the coming months may see
further economic slowing, we attempt to look past the market's ups and downs in
an effort to assess companies' potential in light of their current valuations.
5
HARRIS ASSOCIATES FOCUSED VALUE FUND
Investment Results through December 31, 2007
- --------------------------------------------------------------------------------
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, 2007
Class A Class A S&P 500
@ N.A. @ M.S.C. Index
Cumulative Cumulative Cumulative
Month End Value/1/ Value/2/ Value/4/
- ---------- ---------- ---------- ----------
3/15/2001 $10,000 $9,425
3/31/2001 10,090 9,510 $10,000
4/30/2001 10,420 9,821 10,777
5/31/2001 10,690 10,075 10,849
6/30/2001 10,990 10,358 10,585
7/31/2001 11,310 10,660 10,481
8/31/2001 10,870 10,245 9,825
9/30/2001 10,240 9,651 9,032
10/31/2001 10,000 9,425 9,204
11/30/2001 10,680 10,066 9,910
12/31/2001 10,960 10,330 9,997
1/31/2002 10,890 10,264 9,851
2/28/2002 10,600 9,990 9,661
3/31/2002 10,910 10,282 10,024
4/30/2002 10,859 10,235 9,416
5/31/2002 10,929 10,300 9,347
6/30/2002 10,079 9,499 8,681
7/31/2002 9,619 9,066 8,005
8/31/2002 9,959 9,386 8,057
9/30/2002 8,568 8,076 7,181
10/31/2002 8,968 8,453 7,813
11/30/2002 9,468 8,924 8,273
12/31/2002 9,238 8,707 7,787
1/31/2003 9,008 8,490 7,583
2/28/2003 8,888 8,377 7,469
3/31/2003 8,988 8,471 7,542
4/30/2003 9,507 8,960 8,163
5/31/2003 10,117 9,535 8,593
6/30/2003 10,336 9,742 8,703
7/31/2003 10,256 9,667 8,856
8/31/2003 10,676 10,062 9,029
9/30/2003 10,556 9,949 8,933
10/31/2003 11,196 10,552 9,439
11/30/2003 11,687 11,015 9,522
12/31/2003 11,787 11,109 10,021
1/31/2004 12,097 11,401 10,205
2/29/2004 12,177 11,477 10,347
3/31/2004 11,937 11,251 10,191
4/30/2004 11,777 11,100 10,031
5/31/2004 12,037 11,345 10,168
6/30/2004 11,907 11,223 10,366
7/31/2004 11,677 11,006 10,023
8/31/2004 11,627 10,959 10,064
9/30/2004 11,938 11,251 10,173
10/31/2004 12,148 11,449 10,328
11/30/2004 12,648 11,921 10,746
12/31/2004 13,058 12,307 11,111
1/31/2005 12,608 11,883 10,841
2/28/2005 12,987 12,240 11,069
3/31/2005 12,817 12,080 10,873
4/30/2005 12,597 11,872 10,667
5/31/2005 13,046 12,296 11,006
6/30/2005 13,415 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
1/31/2007 15,815 14,906 13,703
2/28/2007 15,465 14,576 13,435
3/31/2007 15,263 14,385 13,585
4/30/2007 15,976 15,057 14,187
5/31/2007 16,742 15,780 14,682
6/30/2007 16,684 15,725 14,438
7/31/2007 15,895 14,981 13,990
8/31/2007 15,391 14,506 14,200
9/30/2007 15,839 14,928 14,731
10/31/2007 15,866 14,953 14,965
11/30/2007 14,792 13,941 14,340
12/31/2007 14,496 13,662 14,240
Average Annual Total Returns -- December 31, 2007/7/
SINCE
1 YEAR 5 YEARS INCEPTION
CLASS A (Inception 3/15/01)
Net Asset Value/1/ -6.81% 9.44% 5.63%
With Maximum Sales Charge/2/ -12.20 8.16 4.71
CLASS B (Inception 3/15/01)
Net Asset Value/1/ -7.39 8.63 4.85
With CDSC/3/ -11.23 8.37 4.85
CLASS C (Inception 3/15/01)
Net Asset Value/1/ -7.39 8.63 4.85
With CDSC/3/ -8.16 8.63 4.85
- -----------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS INCEPTION/6/
S&P 500 Index/4/ 5.49% 12.83% 5.38%
Morningstar Large Blend Fund Avg./5/ 6.16 12.63 5.43
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.funds.natixis.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 12/31/07 12/31/06
- -----------------------------------------------------
Common Stocks 100.0 100.2
- -----------------------------------------------------
Short-Term Investments
and Other 0.0 -0.2
- -----------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/07 12/31/06
- -----------------------------------------------------
Intel Corp. 9.0 5.0
- -----------------------------------------------------
National Semiconductor Corp. 6.1 4.7
- -----------------------------------------------------
Liberty Media Holding Corp.--
Interactive, Class A 5.5 --
- -----------------------------------------------------
Virgin Media, Inc. 5.2 --
- -----------------------------------------------------
PerkinElmer, Inc. 5.2 --
- -----------------------------------------------------
Discovery Holding Co. 5.1 3.5
- -----------------------------------------------------
Yum! Brands, Inc. 5.0 4.5
- -----------------------------------------------------
Robert Half International, Inc. 4.9 --
- -----------------------------------------------------
Hospira, Inc. 4.9 --
- -----------------------------------------------------
Avon Products, Inc. 4.7 --
- -----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/07
- -----------------------------------------------------
Semiconductors &
Semiconductor Equipment 21.7
- -----------------------------------------------------
Media 18.6
- -----------------------------------------------------
Life Sciences Tools & Services 9.2
- -----------------------------------------------------
Hotels, Restaurants & Leisure 6.8
- -----------------------------------------------------
Internet & Catalog Retail 5.5
- -----------------------------------------------------
Portfolio holdings and asset allocations will vary.
NOTES TO CHARTS
/1/Does not include a sales charge.
/2/Includes the maximum sales charge of 5.75%.
/3/Performance for Class B shares assumes a maximum 5.00% contingent deferred
sales charge ("CDSC") applied when you sell shares, which declines annually
between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%.
Class C share performance assumes a 1.00% CDSC applied when you sell shares
within one year of purchase.
/4/S&P 500 Index is an unmanaged index of U.S. common stocks.
/5/Morningstar Large 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 reductions/reimbursements,
without which performance would have been lower.
6
EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio Net Expense Ratio
- ---------------------------------------------------
A 1.46% 1.46%
- ---------------------------------------------------
B 2.21 2.21
- ---------------------------------------------------
C 2.22 2.22
- ---------------------------------------------------
HARRIS ASSOCIATES LARGE CAP VALUE FUND
PORTFOLIO PROFILE
Objective:
Seeks opportunities for long-term capital growth and income
- --------------------------------------------------------------------------------
Strategy:
Invests primarily in common stock of large- and mid-cap companies in any
industry
- --------------------------------------------------------------------------------
Inception Date:
May 6, 1931
- --------------------------------------------------------------------------------
Managers:
Edward S. Loeb
Michael J. Mangan
Diane Mustain
- --------------------------------------------------------------------------------
Symbols:
Class A NEFOX
Class B NEGBX
Class C NECOX
Class Y NEOYX
- --------------------------------------------------------------------------------
What You Should Know:
Value stocks may fall out of favor with investors and underperform the overall
market during any given period.
Management Discussion
- --------------------------------------------------------------------------------
Momentum and economic optimism carried stocks higher during the first half of
2007, but early summer brought a sudden shift, as the subprime mortgage crisis
and slumping home values caused investors to retreat. Harris Associates Large
Cap Value Fund recorded disappointing returns for the year, despite
comparatively favorable first half results.
For the 12 months ended December 31, 2007, Class A shares of the fund provided
a total return of -2.94% based on net asset value with $0.09 in dividends
reinvested during the period. These results trailed the fund's benchmark for
the year and its Morningstar peer group. The Russell 1000 Value Index returned
- -0.17%, while the average return on the funds in Morningstar's Large Blend
category was 6.16%.
SECTOR ALLOCATIONS PROVIDED MIXED RESULTS
Our underweight position in financial stocks compared to the benchmark was a
positive during the year. However, that advantage was offset by the fund's
limited exposure to the strong energy and commodity-related sectors. We have
downplayed these sectors for some time because we think that current price
up-trends for oil and other commodities are unsustainable. In addition, the
second half of the year rewarded strategies that rely on active trading on
short-term stock-price movements. Those tactics are at odds with our
value-focused, long-term approach to stock selection.
DIVERSE GROUP OF ISSUES LED THE WAY
Intel and Hewlett-Packard, two names that have been in the fund for some time,
rose in value in 2007. Both companies are dominant global businesses with
strong balance sheets and commanding industry positions. Intel has recaptured
market share from a leading competitor whose latest product offerings suffered
technical setbacks. Union Pacific (UP) continued its vigorous turnaround, as
high oil prices boosted demand from utilities for less costly coal, swelling
the railroad's coal-hauling business. A tight focus on costs by UP's new
management team also aided results. McDonald's extended its successful
turnaround, recording steady growth in same-store sales thanks to improved
service and well-received menu changes. Not all financial services stocks
suffered. Our large position in Bank of New York Mellon added modestly to
results. We believe this recently merged company will produce
better-than-expected operating synergies and cost savings.
FINANCE, BUILDING AND TELECOM WERE AREAS OF CONCERN
Portfolio adjustments in July led us to sell a portion of the fund's Washington
Mutual holdings. Although modest gains resulted from this sale, the sharp drop
in our remaining shares made Washington Mutual the period's most negative
stock. Credit-card issuer Capital One was another detractor, but we added to
this position as its valuation grew more attractive. Investors appear to be
overestimating the threat of charge offs if credit woes lead consumers to
retrench. Shares of Home Depot (HD) fell on the weak housing outlook, despite
having a new CEO and completing the timely sale of its supply business. We
believe the impact of the housing slowdown on the company will be less severe
than expected, and HD has a major share repurchase program in progress. We took
losses in Sprint Nextel, which faces heavy competition from larger companies
and was overlooked in the initial rollout of Apple's iPhone. TimeWarner's
shares also continued to languish, but we believe management action in 2008
should unlock shareholder value.
VOLATILE MARKETS COULD MEAN BUYING OPPORTUNITIES
Using our customary value-centered approach, we are repositioning the
portfolio, using the opportunities the market presents to build positions in
beaten-down financial and consumer-sensitive companies. We think overall
economic conditions are better than many headlines imply. And although the
economy is clearly slowing, we believe a sharp downturn is unlikely. U.S.
exports remain strong and interest rates may fall further, but if a recession
does occur, investors should bear in mind that stocks can rise during
recessions just as they can fall during prosperous periods.
7
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Investment Results through December 31, 2007
- --------------------------------------------------------------------------------
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, 1997 through December 31, 2007
Class A Class A Russell 1000
@ N.A. @ M.S.C Value Index
Cumulative Cumulative Cumulative
Month End Value/1/ Value/2/ Value/4/
- ---------- ---------- -------------- ----------------
12/31/1997 $10,000 $ 9,425 $10,000
1/31/1998 10,059 9,481 9,859
2/28/1998 10,867 10,242 10,522
3/31/1998 11,480 10,820 11,166
4/30/1998 11,538 10,875 11,240
5/31/1998 11,381 10,727 11,074
6/30/1998 11,857 11,175 11,216
7/31/1998 11,674 11,003 11,018
8/31/1998 9,909 9,339 9,378
9/30/1998 10,403 9,805 9,916
10/31/1998 11,154 10,512 10,685
11/30/1998 11,660 10,990 11,182
12/31/1998 12,392 11,680 11,563
1/31/1999 12,752 12,019 11,655
2/28/1999 12,446 11,730 11,491
3/31/1999 12,618 11,892 11,729
4/30/1999 13,366 12,597 12,824
5/31/1999 13,306 12,541 12,683
6/30/1999 13,721 12,932 13,051
7/31/1999 13,316 12,550 12,669
8/31/1999 13,136 12,381 12,199
9/30/1999 12,604 11,879 11,773
10/31/1999 13,110 12,356 12,450
11/30/1999 13,148 12,392 12,353
12/31/1999 13,566 12,786 12,413
1/31/2000 12,858 12,118 12,008
2/29/2000 12,424 11,710 11,115
3/31/2000 13,433 12,661 12,472
4/30/2000 13,211 12,452 12,327
5/31/2000 12,805 12,068 12,457
6/30/2000 12,972 12,226 11,887
7/31/2000 12,893 12,152 12,036
8/31/2000 13,758 12,967 12,706
9/30/2000 13,130 12,375 12,822
10/31/2000 13,166 12,409 13,137
11/30/2000 12,382 11,670 12,649
12/31/2000 12,574 11,851 13,283
1/31/2001 12,582 11,859 13,334
2/28/2001 11,835 11,154 12,964
3/31/2001 11,170 10,528 12,505
4/30/2001 12,081 11,387 13,119
5/31/2001 12,099 11,404 13,413
6/30/2001 11,680 11,008 13,116
7/31/2001 11,279 10,630 13,088
8/31/2001 10,586 9,978 12,564
9/30/2001 9,702 9,145 11,680
10/31/2001 10,049 9,471 11,579
11/30/2001 10,760 10,142 12,252
12/31/2001 10,742 10,124 12,541
1/31/2002 10,687 10,073 12,444
2/28/2002 10,404 9,806 12,464
3/31/2002 10,687 10,072 13,054
4/30/2002 10,386 9,788 12,606
5/31/2002 10,340 9,745 12,669
6/30/2002 9,720 9,161 11,942
7/31/2002 9,099 8,576 10,832
8/31/2002 9,327 8,791 10,914
9/30/2002 8,069 7,605 9,700
10/31/2002 8,370 7,888 10,419
11/30/2002 8,935 8,421 11,075
12/31/2002 8,588 8,094 10,594
1/31/2003 8,378 7,897 10,338
2/28/2003 8,114 7,647 10,062
3/31/2003 8,214 7,742 10,079
4/30/2003 8,989 8,472 10,966
5/31/2003 9,664 9,108 11,674
6/30/2003 9,874 9,306 11,820
7/31/2003 9,783 9,220 11,996
8/31/2003 10,111 9,530 12,183
9/30/2003 9,893 9,324 12,064
10/31/2003 10,358 9,762 12,802
11/30/2003 10,723 10,106 12,976
12/31/2003 11,170 10,528 13,775
1/31/2004 11,252 10,605 14,018
2/29/2004 11,517 10,855 14,318
3/31/2004 11,344 10,692 14,193
4/30/2004 11,344 10,692 13,846
5/31/2004 11,353 10,700 13,987
6/30/2004 11,518 10,856 14,318
7/31/2004 11,099 10,460 14,116
8/31/2004 11,153 10,512 14,317
9/30/2004 11,153 10,512 14,539
10/31/2004 11,391 10,736 14,780
11/30/2004 11,700 11,028 15,528
12/31/2004 12,193 11,492 16,048
1/31/2005 11,955 11,268 15,763
2/28/2005 11,910 11,225 16,285
3/31/2005 11,764 11,088 16,062
4/30/2005 11,527 10,864 15,774
5/31/2005 11,809 11,130 16,154
6/30/2005 11,722 11,048 16,331
7/31/2005 12,096 11,400 16,803
8/31/2005 11,905 11,220 16,730
9/30/2005 11,868 11,185 16,965
10/31/2005 11,712 11,039 16,534
11/30/2005 12,196 11,495 17,077
12/31/2005 12,169 11,469 17,179
1/31/2006 12,187 11,487 17,847
2/28/2006 12,324 11,615 17,956
3/31/2006 12,506 11,787 18,199
4/30/2006 12,579 11,856 18,661
5/31/2006 12,323 11,615 18,190
6/30/2006 12,282 11,575 18,306
7/31/2006 12,181 11,480 18,751
8/31/2006 12,528 11,808 19,065
9/30/2006 13,151 12,394 19,445
10/31/2006 13,608 12,826 20,082
11/30/2006 13,810 13,016 20,540
12/31/2006 14,176 13,361 21,001
1/31/2007 14,478 13,645 21,270
2/28/2007 14,048 13,240 20,938
3/31/2007 13,993 13,188 21,262
4/30/2007 14,716 13,870 22,048
5/31/2007 15,256 14,379 22,843
6/30/2007 15,041 14,176 22,309
7/31/2007 14,408 13,580 21,277
8/31/2007 14,444 13,613 21,516
9/30/2007 14,646 13,804 22,255
10/31/2007 14,967 14,106 22,257
11/30/2007 14,123 13,311 21,169
12/31/2007 13,760 12,969 20,965
Average Annual Total Returns -- December 31, 2007/7/
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
CLASS A (Inception 5/6/31)
Net Asset Value/1/ -2.94% 9.88% 3.24% --
With Maximum Sales Charge/2/ -8.55 8.60 2.63 --
CLASS B (Inception 9/13/93)
Net Asset Value/1/ -3.68 9.06 2.47 --
With CDSC/3/ -8.48 8.77 2.47 --
CLASS C (Inception 5/1/95)
Net Asset Value/1/ -3.69 9.05 2.46 --
With CDSC/3/ -4.65 9.05 2.46 --
CLASS Y (Inception 11/18/98)
Net Asset Value/1/ -2.59 10.29 -- 2.43%
- -------------------------------------------------------------------------
SINCE
CLASS Y
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/
Russell 1000 Value Index/4/ -0.17% 14.63% 7.68% 7.16%
Morningstar Large Blend Fund Avg./5/ 6.16 12.63 5.92 4.92
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.funds.natixis.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 12/31/07 12/31/06
- ---------------------------------------------------
Common Stocks 96.4 97.8
- ---------------------------------------------------
Short-Term Investments and
Other 3.6 2.2
- ---------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/07 12/31/06
- ---------------------------------------------------
Intel Corp. 6.9 4.0
- ---------------------------------------------------
Union Pacific Corp. 5.4 4.2
- ---------------------------------------------------
Hewlett-Packard Co. 5.0 4.0
- ---------------------------------------------------
Bank of New York Mellon Corp. 4.8 --
- ---------------------------------------------------
Dell, Inc. 4.4 4.3
- ---------------------------------------------------
Carnival Corp. 4.2 3.4
- ---------------------------------------------------
Time Warner, Inc. 3.6 4.4
- ---------------------------------------------------
Capital One Financial Corp. 3.5 --
- ---------------------------------------------------
JPMorgan Chase & Co. 3.5 3.8
- ---------------------------------------------------
Viacom, Inc., Class B 3.3 4.3
- ---------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/07
- ---------------------------------------------------
Media 12.2
- ---------------------------------------------------
Computers & Peripherals 10.9
- ---------------------------------------------------
Capital Markets 10.2
- ---------------------------------------------------
Semiconductors &
Semiconductor Equipment 9.4
- ---------------------------------------------------
Consumer Finance 7.9
- ---------------------------------------------------
Portfolio holdings and asset allocations will vary.
EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio/8/ Net Expense Ratio/9/
- -------------------------------------------------------
A 1.30% 1.30%
- -------------------------------------------------------
B 2.07 2.05
- -------------------------------------------------------
C 2.06 2.05
- -------------------------------------------------------
Y 0.91 0.91
- -------------------------------------------------------
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 reductions/reimbursements,
without which performance would have been lower.
/8/Before reductions and reimbursements.
/9/After reductions and reimbursements. Expense reductions are contractual and
are set to expire on 4/30/08.
8
NATIXIS 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
- --------------------------------------------------------------------------------
Deteriorating credit conditions and concerns about weakness in the U.S. economy
heavily influenced the equity markets during the year, causing investors to
become more defensive, especially during the second half of 2007. For the year,
large-cap stocks outperformed both small- and mid-cap stocks and growth
outperformed value.
Each of this fund's four segments is managed using a different discipline,
providing investors with exposure to a wide spectrum of large-, medium- and
small-cap stocks using both growth and value investment styles. The BlackRock
segment seeks long-term growth of capital in companies of any size, with an
emphasis on those with capitalizations greater than $2 billion. The segment
managed by Harris Associates invests primarily in common stocks of large- and
mid-cap companies that the manager believes are trading at a substantial
discount to their "true business value." Loomis Sayles manages two portfolio
segments. One invests in mid-cap growth stocks, and the other focuses on
small-cap value stocks.
For the 12 months ended December 31, 2007, Natixis U.S. Diversified Portfolio
returned 13.69% based on the net asset value of Class A shares, including $0.31
in capital gains reinvested during the period. This return was significantly
ahead of the 5.49% return of the S&P 500 Index and the 7.98% return of the S&P
MidCap 400 Index. The portfolio's return also outpaced the 5.78% return of the
Dow Jones Wilshire 4500 Index and came in ahead of the 13.35% average return of
the funds in Morningstar's Large Growth category.
BLACKROCK EMPHASIZED COMPANIES TIED TO GLOBAL GROWTH
While the U.S. experienced uneven economic growth in 2007, other countries
enjoyed more consistent expansions. This created attractive investment
opportunities in industries geared to global economic growth, such as
materials, industrials and information technology. This segment had relatively
large positions in these areas and relatively small positions in consumer
staples, energy, consumer discretionary and finance.
With the exception of the underweight in energy and consumer staples,
BlackRock's sector positioning was a positive. The segment's three
best-performing stocks were: Intuitive Surgical Inc., a designer of robotic
surgical systems; Monsanto, the world's largest seed producer; and National
Oilwell Varco Inc., an energy equipment and services company. An underweight
position in volatile oil giant Exxon Mobil Corporation, poor performance from
Comcast Corp. and Japanese information technology company Akamai Technologies
Inc. were the primary detractors from return. Exxon Mobil and Comcast were
eliminated from the segment. The position in Akamai Technologies was reduced as
part of a broader strategy of emphasizing companies that may benefit from the
ongoing growth of internet commerce.
HARRIS ASSOCIATES' BOTTOM-UP PROCESS GOVERNED SECTOR ALLOCATION
Harris Associates focused on stronger, higher-quality businesses. Lack of
exposure to the energy sector detracted meaningfully from return. Although
performance was also held back by too great an emphasis on consumer
discretionary businesses, specific consumer-related holdings were positive
contributors. These included restaurant chain McDonald's; athletic apparel
manufacturer NIKE; specialty retailer Best Buy; and media companies Liberty
Media and Viacom. Investments in the telecommunications sector generally held
back results, and by year-end all the segment's holdings in the sector had been
eliminated. The segment's underweight position in financial stocks relative to
the benchmark was positive because the sector did poorly, but the performance
of some of the financial stocks and the segment's technology holdings were
positive.
The segment's three best performers were Intel, Union Pacific and McDonald's.
Intel consistently reported better-than-expected earnings and delivered a year
of solid performance. Going forward, Intel may benefit from a growing demand
for processor power and the trend toward mobile computing. Union Pacific
generated impressive earnings, as did McDonald's, which continued to
successfully execute its strategy for operational improvements. Washington
Mutual,
9
NATIXIS U.S. DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
Capital One and Home Depot had the most negative impact on return. The
deterioration in the housing market, coupled with significant loan write-offs,
eroded Washington Mutual's earnings power. Capital One declined on expectations
of increased write-offs due to pessimism about the economy and the weak housing
market. Home Depot declined on lower earnings, as the company continued to face
a tough economic environment. All three stocks remain in the segment as Harris
Associates believes they are undervalued at current levels.
LOOMIS SAYLES' MID-CAP GROWTH FAVORED COMPANIES LINKED TO OVERSEAS CONSUMERS
Strong stock selection in consumer discretionary, materials and processing and
energy drove performance. In general, many of the segment's larger holdings
were the best performers, including Precision Castparts,
IntercontinentalExchange and Stericycle. In terms of sectors, consumer
discretionary had the most positive impact. Examples include GameStop, a
nationwide retailer of computer and video games, and apparel company Guess?.
Stocks of both companies rose on better-than-expected earnings. Loomis took
profits in Guess?. Many of our best performers are either foreign domiciled or
have strong markets overseas. Stocks in the materials and processing sector
were also good performers. Precision Castparts benefited from an upturn in the
commercial aerospace cycle, and Mosaic, a fertilizer company, was aided by
strength in agriculture. In energy, service stocks with exposure to oil and
international operations were leaders, as were alternative energy companies
First Solar and SunPower.
Even though the financial sector was weak, Loomis Sayles' stock selection was
positive, including IntercontinentalExchange, which operates internet-based
specialized securities markets, and BlackRock, a major U.S. investment
management firm. Auctioneer Sotheby's proved disappointing and was sold.
Returns on some telecommunications companies were disappointing, although
utility companies, particularly wireless providers, were strong. In addition to
Mosaic, the segment's most successful individual selections included Intuitive
Surgical, a designer of robotic surgical systems, and Vimpel-Communications,
one of Russia's largest wireless carriers. Disappointing stocks in this segment
included F5 Networks, an internet traffic management and security software
company; General Cable, a manufacturer of wire and cable products that we held
only briefly; and PDL BioPharma, a biotechnology company. All three were sold.
LOOMIS SAYLES' SMALL-CAP VALUE SOUGHT COMPANIES WITH STRONG MARKET NICHES
A focus on higher-quality stocks led to outperformance in several sectors and
resulted in acquisition offers for several companies in this segment.
Technology investments were among the best contributors, with leadership coming
from GeoEye, a satellite operator; Amphenol Corporation, a manufacturer of
electronic and fiber connectors and cables; and Avnet, Inc., a distributor of
computer products. Certain industrial stocks benefited from a strong demand in
the aerospace industry and from infrastructure development. Three of the most
positive companies were: Actuant Corporation, an industrial products
manufacturer; BE Aerospace, the world's largest manufacturer of cabin interior
components; and Ametek, Inc., a global manufacturer of electronic instruments.
The segment's healthcare position was enhanced by Perrigo Co., a supplier of
private label over-the-counter drugs, Beckman Coulter, Inc., a manufacturer of
laboratory and analytical equipment, and Hospira, Inc., a marketer of medical
delivery systems.
Problems in the subprime mortgage market, rising energy prices and a severe
housing slowdown contributed to relatively poor performance in the consumer
discretionary, autos and transportation and financial services areas.
Individual stocks that disappointed included Avis Budget Group, a car and truck
rental company; Colonial BancGroup, Inc. a regional bank with major operations
in Florida; and Developers Diversified Realty, which acquires, develops and
manages shopping centers. All three remain in the segment because Loomis Sayles
believes they are undervalued.
10
NATIXIS U.S. DIVERSIFIED PORTFOLIO
Investment Results through December 31, 2007
- --------------------------------------------------------------------------------
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, 1997 through December 31, 2007
Class A Class A S&P 500 S&P 400 Wilshire
@ N.A. @ M.S.C. Index Index 4500 Index
Cumulative Cumulative Cumulative Cumulative Monthly
Month End Value/1/ Value/2/ Value/5/ Value/4/ Performance/6/
- ---------- ---------- ---------- ---------- ---------- --------------
12/31/1997 $10,000 $ 9,425 $10,000 $10,000 $10,000
1/31/1998 10,044 9,466 10,111 9,810 9,857
2/28/1998 10,781 10,161 10,840 10,622 10,611
3/31/1998 11,232 10,586 11,395 11,101 11,160
4/30/1998 11,359 10,706 11,510 11,304 11,301
5/31/1998 11,045 10,410 11,312 10,796 10,773
6/30/1998 11,398 10,742 11,771 10,863 10,941
7/31/1998 11,057 10,421 11,646 10,442 10,321
8/31/1998 9,224 8,693 9,962 8,499 8,321
9/30/1998 9,894 9,325 10,600 9,292 8,922
10/31/1998 10,502 9,898 11,463 10,122 9,429
11/30/1998 11,026 10,392 12,157 10,627 10,015
12/31/1998 11,925 11,240 12,858 11,911 10,863
1/31/1999 12,486 11,768 13,396 11,448 11,037
2/28/1999 12,116 11,420 12,979 10,848 10,437
3/31/1999 12,843 12,105 13,498 11,151 10,844
4/30/1999 13,356 12,588 14,021 12,031 11,709
5/31/1999 12,986 12,239 13,690 12,083 11,607
6/30/1999 13,803 13,009 14,450 12,730 12,095
7/31/1999 13,344 12,577 13,999 12,459 11,729
8/31/1999 13,291 12,527 13,929 12,032 11,437
9/30/1999 13,339 12,572 13,548 11,661 11,349
10/31/1999 13,818 13,023 14,405 12,255 11,929
11/30/1999 14,994 14,131 14,698 12,898 12,935
12/31/1999 17,466 16,462 15,563 13,665 14,718
1/31/2000 17,251 16,259 14,781 13,280 14,542
2/29/2000 19,368 18,254 14,502 14,209 16,803
3/31/2000 19,168 18,066 15,920 15,399 16,182
4/30/2000 17,692 16,675 15,441 14,861 14,235
5/31/2000 16,238 15,304 15,124 14,676 13,184
6/30/2000 16,552 15,600 15,497 14,891 14,768
7/31/2000 16,125 15,197 15,255 15,126 14,348
8/31/2000 17,389 16,389 16,203 16,815 15,950
9/30/2000 16,877 15,907 15,347 16,700 15,301
10/31/2000 16,077 15,153 15,282 16,134 14,050
11/30/2000 14,134 13,321 14,078 14,916 11,659
12/31/2000 14,500 13,666 14,146 16,057 12,397
1/31/2001 14,913 14,056 14,648 16,415 13,071
2/28/2001 13,417 12,646 13,313 15,478 11,483
3/31/2001 12,509 11,790 12,469 14,327 10,430
4/30/2001 13,607 12,825 13,438 15,908 11,534
5/31/2001 13,739 12,949 13,528 16,278 11,807
6/30/2001 13,662 12,877 13,199 16,212 11,903
7/31/2001 13,423 12,651 13,069 15,971 11,349
8/31/2001 12,853 12,114 12,251 15,449 10,798
9/30/2001 11,489 10,828 11,262 13,527 9,409
10/31/2001 11,778 11,101 11,476 14,125 9,902
11/30/2001 12,746 12,013 12,357 15,176 10,672
12/31/2001 13,142 12,386 12,465 15,960 11,244
1/31/2002 13,026 12,277 12,283 15,877 11,024
2/28/2002 12,779 12,044 12,046 15,897 10,712
3/31/2002 13,407 12,637 12,499 17,033 11,439
4/30/2002 13,052 12,302 11,741 16,953 11,327
5/31/2002 12,879 12,138 11,655 16,668 11,076
6/30/2002 11,837 11,156 10,825 15,448 10,318
7/31/2002 10,795 10,174 9,981 13,950 9,314
8/31/2002 10,878 10,253 10,046 14,021 9,368
9/30/2002 9,787 9,224 8,955 12,892 8,736
10/31/2002 10,241 9,652 9,743 13,450 9,024
11/30/2002 10,844 10,221 10,316 14,229 9,647
12/31/2002 10,274 9,683 9,710 13,644 9,241
1/31/2003 10,010 9,434 9,456 13,245 9,042
2/28/2003 9,903 9,333 9,314 12,930 8,811
3/31/2003 9,977 9,403 9,404 13,039 8,941
4/30/2003 10,754 10,136 10,179 13,985 9,686
5/31/2003 11,548 10,884 10,715 15,144 10,606
6/30/2003 11,705 11,032 10,852 15,337 10,859
7/31/2003 12,002 11,312 11,043 15,882 11,366
8/31/2003 12,589 11,865 11,259 16,602 11,842
9/30/2003 12,276 11,570 11,139 16,348 11,695
10/31/2003 13,168 12,411 11,769 17,584 12,581
11/30/2003 13,499 12,723 11,873 18,197 13,011
12/31/2003 13,730 12,940 12,495 18,504 13,282
1/31/2004 14,052 13,244 12,725 18,905 13,757
2/29/2004 14,176 13,361 12,902 19,359 13,998
3/31/2004 14,209 13,392 12,707 19,441 14,057
4/30/2004 13,919 13,118 12,508 18,803 13,492
5/31/2004 14,133 13,320 12,679 19,193 13,697
6/30/2004 14,496 13,663 12,926 19,630 14,054
7/31/2004 13,670 12,884 12,498 18,714 13,271
8/31/2004 13,505 12,728 12,549 18,665 13,277
9/30/2004 13,934 13,133 12,684 19,217 13,818
10/31/2004 14,190 13,374 12,878 19,525 14,129
11/30/2004 14,893 14,036 13,399 20,688 15,090
12/31/2004 15,496 14,605 13,855 21,554 15,748
1/31/2005 15,067 14,200 13,518 21,004 15,231
2/28/2005 15,373 14,489 13,802 21,708 15,507
3/31/2005 15,091 14,224 13,558 21,468 15,233
4/30/2005 14,611 13,771 13,300 20,634 14,718
5/31/2005 15,224 14,348 13,724 21,876 15,590
6/30/2005 15,438 14,551 13,743 22,383 16,092
7/31/2005 16,165 15,236 14,254 23,559 16,978
8/31/2005 16,067 15,143 14,124 23,296 16,777
9/30/2005 16,264 15,329 14,239 23,476 16,881
10/31/2005 15,918 15,003 14,001 22,971 16,518
11/30/2005 16,637 15,681 14,531 24,094 17,291
12/31/2005 16,671 15,712 14,536 24,260 17,366
1/31/2006 17,481 16,476 14,921 25,689 18,458
2/28/2006 17,423 16,421 14,961 25,474 18,290
3/31/2006 17,935 16,904 15,147 26,110 18,974
4/30/2006 18,075 17,036 15,351 26,478 19,063
5/31/2006 17,372 16,373 14,909 25,283 18,293
6/30/2006 17,456 16,452 14,929 25,289 18,322
7/31/2006 17,084 16,102 15,021 24,568 17,809
8/31/2006 17,323 16,327 15,379 24,849 18,203
9/30/2006 17,702 16,685 15,775 25,016 18,410
10/31/2006 18,372 17,315 16,289 26,056 19,327
11/30/2006 18,842 17,758 16,599 26,894 20,054
12/31/2006 18,949 17,860 16,832 26,763 20,156
1/31/2007 19,576 18,451 17,086 27,736 20,827
2/28/2007 19,502 18,381 16,752 27,939 20,721
3/31/2007 19,650 18,520 16,939 28,315 20,945
4/30/2007 20,369 19,198 17,690 29,176 21,429
5/31/2007 21,270 20,047 18,307 30,638 22,314
6/30/2007 21,081 19,868 18,003 29,969 22,051
7/31/2007 20,577 19,394 17,445 28,679 21,124
8/31/2007 20,651 19,463 17,706 28,943 21,317
9/30/2007 21,493 20,257 18,368 29,709 22,003
10/31/2007 22,452 21,161 18,661 30,490 22,736
11/30/2007 21,493 20,257 17,880 28,954 21,413
12/31/2007 21,541 20,302 17,756 28,899 21,320
Average Annual Total Returns -- December 31, 2007
1 YEAR 5 YEARS 10 YEARS
CLASS A (Inception 7/7/94)
Net Asset Value/1/ 13.69% 15.97% 7.98%
With Maximum Sales Charge/2/ 7.15 14.60 7.34
CLASS B (Inception 7/7/94)
Net Asset Value/1/ 12.83 15.11 7.17
With CDSC/3/ 7.83 14.88 7.17
CLASS C (Inception 7/7/94)
Net Asset Value/1/ 12.82 15.09 7.17
With CDSC/3/ 11.82 15.09 7.17
CLASS Y (Inception 11/15/94)
Net Asset Value/1/ 14.02 16.52 8.46
- -------------------------------------------------------------
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS
S&P MidCap 400 Index/4/ 7.98% 16.20% 11.19%
S&P 500 Index/5/ 5.49 12.83 5.91
Dow Jones Wilshire 4500 Index/6/ 5.78 18.20 7.86
Morningstar Large Growth Fund Avg./7/ 13.35 12.75 5.28
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.funds.natixis.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 12/31/07 12/31/06
- -----------------------------------------------------
Common Stocks 98.0 99.0
- -----------------------------------------------------
Short-Term Investments and
Other 2.0 1.0
- -----------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/07 12/31/06
- -----------------------------------------------------
Intel Corp. 2.1 1.2
- -----------------------------------------------------
Hewlett-Packard Co. 1.6 1.2
- -----------------------------------------------------
Union Pacific Corp. 1.4 1.2
- -----------------------------------------------------
Bank of New York Mellon Corp. 1.3 --
- -----------------------------------------------------
Dell, Inc. 1.2 1.3
- -----------------------------------------------------
McDonald's Corp. 1.1 1.6
- -----------------------------------------------------
Broadridge Financial Solutions,
Inc. 1.1 --
- -----------------------------------------------------
Carnival Corp. 1.1 1.0
- -----------------------------------------------------
GeoEye, Inc. 1.0 --
- -----------------------------------------------------
Capital One Financial Corp. 0.9 --
- -----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/07
- -----------------------------------------------------
Computers & Peripherals 5.0
- -----------------------------------------------------
Health Care Equipment &
Supplies 4.7
- -----------------------------------------------------
Media 4.6
- -----------------------------------------------------
Capital Markets 4.2
- -----------------------------------------------------
Chemicals 4.2
- -----------------------------------------------------
Portfolio holdings and asset allocations will vary
EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio Net Expense Ratio
- ---------------------------------------------------
A 1.46% 1.46%
- ---------------------------------------------------
B 2.22 2.22
- ---------------------------------------------------
C 2.22 2.22
- ---------------------------------------------------
Y 1.03 1.03
- ---------------------------------------------------
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 Large Growth Fund Average is the average performance without
sales charges of funds with similar investment objectives, as calculated by
Morningstar, Inc.
11
This Page Intentionally Left Blank
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
- --------------------------------------------------------------------------------
Despite a challenging market background, Vaughan Nelson Small Cap Value Fund
outperformed its benchmark by a wide margin in 2007. Successful stock selection
and a focus on areas of economic strength were key factors. This helped the
fund side-step much of the turmoil that beset markets late in the year.
For the 12 months ended December 31, 2007, the fund's total return was 5.84%
based on the net asset value of Class A shares. For the same period, the
Russell 2000 Value Index, the fund's benchmark, returned -9.78%, while the
average performance of funds in Morningstar's Small Blend category was -1.10%.
A SHIFT FROM FINANCE TO ENERGY AND TECHNOLOGY DROVE RESULTS
Disarray in the credit markets and the severe contraction in housing topped the
concerns that produced high volatility during much of 2007. Large-cap companies
outperformed smaller issues and, for the first time in several years,
growth-style market indexes outperformed value. The fund's sizeable underweight
position in interest-rate sensitive sectors was a significant contributor to
its strong outperformance versus its benchmark. When risks among financial
companies seemed to outweigh their reward potential, the fund eliminated real
estate investment trusts and firms dependent on securities backed by mortgages
and other assets. Proceeds from these sales largely went into energy and areas
where values appeared more attractive. Specifically, the fund emphasized
companies positioned to capitalize on the worldwide need to repair and rebuild
infrastructure, a long-term necessity that may provide investment opportunities
for years to come.
INDUSTRIAL, ENERGY AND TECH COMPANIES WERE AMONG LEADERS
Cleveland-Cliffs, a major producer of iron ore to the steel industry, rose as
infrastructure needs boosted demand for steel. The fund took profits in this
stock early in the year, then reinvested at lower prices before shares moved
higher again. Aerospace supplier Alliant Techsystems also rose, thanks to solid
demand for its munitions products from the military and law enforcement, and
for its space systems. Team, Inc. saw growing demand for its specialized oil
field and industrial services. Arena Resources, an oil and gas exploration and
production company, increased output at its existing properties and acquired
additional acreage at attractive prices. Strong results also boosted shares of
CommScope, which serves communications networks and cable TV companies with
specialized cables and connectors.
CONSUMER AND FINANCIAL ISSUES LED DECLINES
Disappointments for the fund were few, with most occurring in the consumer and
financial areas. The fund eliminated California-based Central Garden and Pet,
an underperforming wholesaler of lawn, garden and pet supplies whose earnings
declined amid shrinking margins and competitive pressures. The fund also sold
Sterling Financial, a Washington state bank, when it had to increase its loan
loss reserves. Shares of Triarc declined through the year; in addition to
franchising Arby's restaurants, Triarc owns non-strategic assets, including an
investment advisory firm. The fund added to this position as management moved
to shed the investment subsidiary and concentrate on its core restaurant
business. The fund also capitalized on the price decline in First Cash
Financial Services shares, adding to its position in this specialty
financial-services company that operates pawn shops and "buy here/pay here"
used car outlets. First Cash is expanding into Mexico and has designed a
pricing structure and credit controls appropriate to these higher-risk
businesses, yet the price of shares plummeted at the end of 2007 despite
positive earnings momentum.
VOLATILITY AMONG SMALLER COMPANIES MAY PROVIDE OPPORTUNITIES
Small-cap stocks ceded dominance to large caps in 2007, as investors favored
financially strong companies with a global reach. Even though smaller companies
face greater hurdles from tighter credit or a slowing economy, market
volatility may bring opportunities that offset these disadvantages. Through our
disciplined, value-based, bottom-up selection process, the fund expects to
uncover attractively valued stocks and seeks to deliver solid returns over time
by investing in small companies.
13
VAUGHAN NELSON SMALL CAP VALUE FUND
Investment Results through December 31, 2007
- --------------------------------------------------------------------------------
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, 1997 through December 31, 2007
Class A Class A Russell 2000
@ N.A. @ M.S.C. Value
Cumulative Cumulative Cumulative
Month End Value/1/ Value/2/ Value/4/
- ---------- ---------- ----------- ------------
12/31/1997 $10,000 $ 9,425 $10,000
1/31/1998 9,720 9,161 9,819
2/28/1998 10,514 9,910 10,413
3/31/1998 11,126 10,486 10,835
4/30/1998 11,023 10,389 10,889
5/31/1998 10,346 9,751 10,503
6/30/1998 10,508 9,904 10,444
7/31/1998 9,689 9,131 9,626
8/31/1998 7,580 7,144 8,118
9/30/1998 8,108 7,642 8,577
10/31/1998 8,466 7,979 8,831
11/30/1998 9,261 8,729 9,070
12/31/1998 10,206 9,619 9,355
1/31/1999 10,421 9,822 9,143
2/28/1999 9,548 8,999 8,518
3/31/1999 10,206 9,619 8,448
4/30/1999 10,975 10,344 9,219
5/31/1999 10,884 10,258 9,503
6/30/1999 11,790 11,112 9,847
7/31/1999 11,646 10,976 9,613
8/31/1999 11,542 10,879 9,262
9/30/1999 11,863 11,181 9,076
10/31/1999 12,762 12,029 8,895
11/30/1999 14,230 13,412 8,941
12/31/1999 16,880 15,909 9,216
1/31/2000 16,858 15,889 8,975
2/29/2000 21,017 19,808 9,523
3/31/2000 20,216 19,054 9,568
4/30/2000 17,845 16,819 9,625
5/31/2000 16,396 15,453 9,478
6/30/2000 17,729 16,709 9,755
7/31/2000 16,482 15,535 10,080
8/31/2000 18,531 17,465 10,530
9/30/2000 17,940 16,908 10,471
10/31/2000 16,429 15,485 10,433
11/30/2000 13,566 12,786 10,221
12/31/2000 14,816 13,965 11,319
1/31/2001 15,462 14,573 11,632
2/28/2001 13,471 12,696 11,616
3/31/2001 12,187 11,486 11,429
4/30/2001 13,408 12,637 11,958
5/31/2001 13,686 12,899 12,266
6/30/2001 14,153 13,339 12,759
7/31/2001 13,183 12,425 12,473
8/31/2001 12,375 11,663 12,430
9/30/2001 10,410 9,811 11,058
10/31/2001 11,119 10,479 11,347
11/30/2001 12,097 11,402 12,162
12/31/2001 13,031 12,282 12,907
1/31/2002 12,726 11,994 13,078
2/28/2002 11,712 11,038 13,158
3/31/2002 12,753 12,020 14,143
4/30/2002 12,457 11,741 14,641
5/31/2002 11,855 11,174 14,157
6/30/2002 11,066 10,430 13,843
7/31/2002 9,396 8,856 11,786
8/31/2002 9,387 8,847 11,734
9/30/2002 8,525 8,035 10,896
10/31/2002 8,965 8,449 11,060
11/30/2002 9,656 9,101 11,942
12/31/2002 9,019 8,500 11,432
1/31/2003 8,516 8,027 11,110
2/28/2003 8,220 7,747 10,737
3/31/2003 8,238 7,764 10,851
4/30/2003 9,028 8,509 11,882
5/31/2003 9,953 9,380 13,095
6/30/2003 10,330 9,736 13,317
7/31/2003 11,003 10,371 13,981
8/31/2003 11,569 10,904 14,512
9/30/2003 11,228 10,582 14,346
10/31/2003 12,035 11,343 15,516
11/30/2003 12,385 11,673 16,111
12/31/2003 12,510 11,791 16,694
1/31/2004 12,994 12,247 17,271
2/29/2004 12,923 12,180 17,605
3/31/2004 12,950 12,205 17,849
4/30/2004 12,393 11,681 16,926
5/31/2004 12,438 11,723 17,130
6/30/2004 13,083 12,331 18,000
7/31/2004 12,518 11,798 17,173
8/31/2004 12,393 11,680 17,341
9/30/2004 12,833 12,095 18,027
10/31/2004 13,013 12,264 18,307
11/30/2004 14,000 13,195 19,932
12/31/2004 14,422 13,592 20,407
1/31/2005 13,990 13,186 19,618
2/28/2005 14,448 13,617 20,008
3/31/2005 14,241 13,422 19,596
4/30/2005 13,559 12,779 18,585
5/31/2005 14,276 13,456 19,718
6/30/2005 14,850 13,996 20,590
7/31/2005 15,640 14,741 21,762
8/31/2005 15,523 14,630 21,262
9/30/2005 15,675 14,774 21,227
10/31/2005 15,208 14,334 20,694
11/30/2005 15,864 14,951 21,533
12/31/2005 15,873 14,960 21,368
1/31/2006 17,111 16,127 23,135
2/28/2006 17,020 16,042 23,134
3/31/2006 17,873 16,845 24,254
4/30/2006 17,945 16,913 24,319
5/31/2006 17,308 16,312 23,312
6/30/2006 17,299 16,304 23,598
7/31/2006 16,905 15,933 23,271
8/31/2006 17,067 16,085 23,967
9/30/2006 17,219 16,229 24,200
10/31/2006 18,107 17,066 25,432
11/30/2006 18,529 17,464 26,157
12/31/2006 18,744 17,666 26,385
1/31/2007 18,978 17,887 26,781
2/28/2007 18,995 17,903 26,452
3/31/2007 19,246 18,140 26,771
4/30/2007 19,310 18,199 27,049
5/31/2007 20,513 19,333 28,040
6/30/2007 20,422 19,248 27,387
7/31/2007 19,542 18,419 25,056
8/31/2007 19,919 18,774 25,558
9/30/2007 20,288 19,121 25,673
10/31/2007 20,826 19,628 25,953
11/30/2007 19,874 18,731 24,008
12/31/2007 19,838 18,697 23,806
Average Annual Total Returns -- December 31, 2007/6/
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
CLASS A (Inception 12/31/96)
Net Asset Value/1/ 5.84% 17.08% 7.09% --
With Maximum Sales Charge/2/ -0.23 15.71 6.46 --
CLASS B (Inception 12/31/96)
Net Asset Value/1/ 5.06 16.20 6.29 --
With CDSC/3/ 0.06 15.98 6.29 --
CLASS C (Inception 12/31/96)
Net Asset Value/1/ 5.05 16.21 6.29 --
With CDSC/3/ 4.05 16.21 6.29 --
CLASS Y (Inception 8/31/06)
Net Asset Value/1/ 6.12 -- -- 12.25%
- -------------------------------------------------------------------------
COMPARATIVE PERFORMANCE SINCE
CLASS Y
1 YEAR 5 YEARS 10 YEARS INCEPTION/7/
Russell 2000 Value Index/4/ -9.78% 15.80% 9.06% -0.50%
Morningstar Small Blend Fund Avg./5/ -1.10 15.72 8.30 6.22
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.funds.natixis.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 12/31/07 12/31/06
- -----------------------------------------------------
Common Stocks 95.4 93.8
- -----------------------------------------------------
Investment Companies -- 2.7
- -----------------------------------------------------
Short-Term Investments and
Other 4.6 3.5
- -----------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/07 12/31/06
- -----------------------------------------------------
Raymond James Financial, Inc. 2.3 1.6
- -----------------------------------------------------
General Cable Corp. 2.3 1.3
- -----------------------------------------------------
Affiliated Managers Group, inc. 2.3 2.1
- -----------------------------------------------------
HCC Insurance Holdings, Inc. 2.0 1.6
- -----------------------------------------------------
Alliant Techsystems, Inc. 1.9 2.5
- -----------------------------------------------------
Sybase, Inc. 1.9 --
- -----------------------------------------------------
Waddell & Reed Financial, Inc. 1.8 --
- -----------------------------------------------------
CommScope, Inc. 1.8 0.8
- -----------------------------------------------------
Vectren Corp. 1.8 0.8
- -----------------------------------------------------
Ralcorp Holdings, Inc. 1.8 --
- -----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/07
- -----------------------------------------------------
Oil, Gas & Consumable Fuels 8.9
- -----------------------------------------------------
Capital Markets 7.3
- -----------------------------------------------------
Machinery 6.8
- -----------------------------------------------------
Insurance 5.9
- -----------------------------------------------------
Chemicals 5.5
- -----------------------------------------------------
Portfolio holdings and asset allocations will vary.
EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio/8/ Net Expense Ratio/9/
- -------------------------------------------------------
A 1.61% 1.47%
- -------------------------------------------------------
B 2.39 2.22
- -------------------------------------------------------
C 2.37 2.22
- -------------------------------------------------------
Y 1.92 1.22
- -------------------------------------------------------
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 reductions/reimbursements,
without which performance would have been lower.
/7/The since-inception comparative performance figures shown are calculated
from 9/1/06.
/8/Before reductions and reimbursements.
/9/After reductions and reimbursements. Expense reductions are contractual and
are set to expire 4/30/08.
14
WESTPEAK 130/30 GROWTH FUND
PORTFOLIO PROFILE
Objective:
Seeks long-term growth of capital
- --------------------------------------------------------------------------------
Strategy:
Seeks long-term growth of capital by establishing long and short positions in
equity securities issued by large- and mid capitalization U.S. companies.
- --------------------------------------------------------------------------------
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. Short sales expose the fund to the
risk that it may be required to buy a security it previously sold short at a
time when the security has appreciated in value. Short sales may also give rise
to leverage risk.
Management Discussion
- --------------------------------------------------------------------------------
Growth stocks did well in the first part of 2007, but attractively valued
stocks with good quality earnings - the stocks we have traditionally favored -
began to fall behind pure growth situations. As the year progressed, so too did
concerns about a possible recession, which made investors in general more
willing to pay a premium for growth.
For the year ended December 31, 2007, Westpeak 130/30 Growth Fund (formerly
Westpeak Capital Growth Fund) returned -4.35%, while the fund's benchmark, the
Russell 1000 Growth Index, returned 11.81% and the funds in Morningstar's Large
Growth category had an average return of 13.35%. To illustrate the widening gap
between growth and value during the period, the Russell 1000 Value Index
returned -0.17% for the period.
WESTPEAK TAKES QUANTITATIVE APPROACH TO SECURITY ANALYSIS
Westpeak is noted for our quantitative approach to determining the relative
attractiveness of a stock by examining its measurable characteristics, using
financial statement and market sentiment factors. Stocks with high scores are
potential candidates for long positions that we believe may appreciate over
time. Stocks with low scores are potential short-sale candidates. Since markets
continually evolve, we constantly monitor our signals and search for new
investment ideas.
Our quantitative approach has worked well for the fund in the past because we
seek "growth at a reasonable price." However, beginning in the second quarter
of 2007, many attractively priced growth stocks either underperformed or were
negative. As economic concerns spread through the markets in July and August,
we experienced the most difficult period we have witnessed in many years.
Although this coincided with the change in the Fund's strategy at the beginning
of August (described in the fund's prospectus), the change was not the primary
contributor to the fund's disappointing results.
BOTH SHORT AND LONG POSITIONS ADDED VALUE
One example of a stock that dropped in value and benefited the fund was Micron
Technologies, a semiconductor company. We took a short position in Micron
during the first week that the fund shifted to its new strategy, and the stock
has declined consistently since then. In fact, we added to the short position
in October as it continued to slide.
Among the fund's long positions, technology has been one of the best-performing
sectors this year, and one of our best-performing stocks, Hewlett-Packard, is
the fund's largest individual holding. Another solid performer for the fund is
AGCO, a manufacturer of agricultural equipment and related replacement parts.
The stock benefited as prices of agricultural commodities rose worldwide.
CONSUMER DISCRETIONARY STOCKS WERE POOR PERFORMERS
Disappointments included consumer discretionary stocks. We sold specialty
retailer Office Depot in August. We would have sold it even if we had not been
converting to a 130/30 strategy, but the conversion made us move a little more
aggressively. Office Depot shares dropped considerably further after we sold
it, but the fund's overall performance was still hurt in the first half.
Another poor performer was a long position in McGraw-Hill, which we sold.
McGraw-Hill stock dropped sharply when its Standard & Poor's subsidiary was
criticized for giving too high a rating to certain debt structures.
McGraw-Hill's analyst rating dropped, and the president of its Standard &
Poor's subsidiary stepped down.
NEAR-TERM OUTLOOK CONTINUES TO FAVOR GROWTH STOCKS
Both the energy and basic industry sectors have reached high valuations, but we
believe basic industries may still have some upward potential. Stocks with the
strongest growth potential may also continue to do well as the economy slows,
but we believe attractively valued growth stocks will return to favor
eventually. Valuations in the interest-sensitive sector seem temptingly low,
but we believe it may be too early to move back into financials. In pursuit of
more consistent growth, we think some healthcare services companies, like drug
distribution companies and healthcare insurers, look attractive.
15
WESTPEAK 130/30 GROWTH FUND
Investment Results through December 31, 2007
- --------------------------------------------------------------------------------
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, 1997 through December 31, 2007
Russell 1000
Class A Class A Growth
@ N.A.V. @ M.S.C. Index
Cumulative Cumulative Cumulative
Month End Value/1/ Value/2/ Value/4/
- ---------- ---------- ---------- ------------
12/31/1997 $10,000 $ 9,425 $10,000
1/31/1998 10,080 9,500 10,299
2/28/1998 10,771 10,152 11,074
3/31/1998 11,253 10,606 11,515
4/30/1998 11,453 10,795 11,675
5/31/1998 11,177 10,535 11,343
6/30/1998 11,758 11,082 12,038
7/31/1998 11,648 10,978 11,958
8/31/1998 9,798 9,235 10,164
9/30/1998 10,386 9,789 10,944
10/31/1998 11,145 10,505 11,824
11/30/1998 11,814 11,135 12,723
12/31/1998 12,906 12,164 13,871
1/31/1999 13,555 12,775 14,685
2/28/1999 12,793 12,057 14,014
3/31/1999 13,075 12,323 14,752
4/30/1999 13,331 12,564 14,771
5/31/1999 13,087 12,334 14,317
6/30/1999 13,780 12,988 15,320
7/31/1999 13,475 12,700 14,833
8/31/1999 13,593 12,811 15,076
9/30/1999 13,395 12,624 14,759
10/31/1999 14,328 13,504 15,873
11/30/1999 14,754 13,905 16,730
12/31/1999 16,099 15,174 18,470
1/31/2000 15,191 14,318 17,604
2/29/2000 15,825 14,915 18,464
3/31/2000 17,092 16,110 19,786
4/30/2000 16,585 15,631 18,845
5/31/2000 15,810 14,901 17,896
6/30/2000 16,852 15,883 19,252
7/31/2000 16,416 15,472 18,449
8/31/2000 17,699 16,682 20,120
9/30/2000 16,064 15,140 18,217
10/31/2000 15,507 14,615 17,355
11/30/2000 13,415 12,643 14,796
12/31/2000 12,955 12,210 14,328
1/31/2001 13,575 12,795 15,318
2/28/2001 11,732 11,057 12,718
3/31/2001 10,637 10,025 11,334
4/30/2001 12,075 11,381 12,767
5/31/2001 11,938 11,251 12,579
6/30/2001 11,751 11,076 12,288
7/31/2001 11,131 10,491 11,981
8/31/2001 10,235 9,646 11,001
9/30/2001 9,184 8,656 9,903
10/31/2001 9,606 9,054 10,422
11/30/2001 10,442 9,841 11,423
12/31/2001 10,304 9,712 11,402
1/31/2002 10,261 9,671 11,200
2/28/2002 9,889 9,321 10,736
3/31/2002 10,227 9,639 11,107
4/30/2002 9,657 9,102 10,201
5/31/2002 9,449 8,906 9,954
6/30/2002 8,672 8,173 9,033
7/31/2002 7,998 7,538 8,536
8/31/2002 8,007 7,546 8,562
9/30/2002 7,160 6,749 7,674
10/31/2002 7,679 7,237 8,378
11/30/2002 7,929 7,473 8,833
12/31/2002 7,410 6,984 8,223
1/31/2003 7,221 6,806 8,023
2/28/2003 7,255 6,838 7,986
3/31/2003 7,402 6,976 8,135
4/30/2003 7,834 7,383 8,736
5/31/2003 8,265 7,790 9,172
6/30/2003 8,343 7,863 9,299
7/31/2003 8,455 7,969 9,530
8/31/2003 8,559 8,067 9,767
9/30/2003 8,594 8,100 9,663
10/31/2003 9,008 8,490 10,205
11/30/2003 9,112 8,588 10,312
12/31/2003 9,388 8,848 10,669
1/31/2004 9,526 8,978 10,887
2/29/2004 9,526 8,978 10,956
3/31/2004 9,353 8,815 10,753
4/30/2004 9,146 8,620 10,628
5/31/2004 9,309 8,774 10,826
6/30/2004 9,430 8,888 10,961
7/31/2004 8,998 8,481 10,341
8/31/2004 8,989 8,472 10,290
9/30/2004 9,042 8,522 10,388
10/31/2004 9,249 8,717 10,550
11/30/2004 9,594 9,043 10,913
12/31/2004 9,871 9,303 11,341
1/31/2005 9,586 9,034 10,963
2/28/2005 9,663 9,108 11,079
3/31/2005 9,404 8,863 10,877
4/30/2005 9,197 8,668 10,670
5/31/2005 9,699 9,141 11,187
6/30/2005 9,820 9,255 11,145
7/31/2005 10,321 9,727 11,690
8/31/2005 10,131 9,548 11,540
9/30/2005 10,165 9,581 11,593
10/31/2005 9,898 9,329 11,480
11/30/2005 10,347 9,752 11,975
12/31/2005 10,200 9,614 11,938
1/31/2006 10,537 9,931 12,147
2/28/2006 10,520 9,915 12,128
3/31/2006 10,744 10,126 12,307
4/30/2006 10,753 10,134 12,290
5/31/2006 10,295 9,703 11,874
6/30/2006 10,346 9,751 11,827
7/31/2006 10,122 9,540 11,602
8/31/2006 10,320 9,727 11,964
9/30/2006 10,614 10,004 12,292
10/31/2006 10,969 10,338 12,725
11/30/2006 11,297 10,647 12,977
12/31/2006 11,306 10,655 13,021
1/31/2007 11,590 10,924 13,356
2/28/2007 11,331 10,679 13,105
3/31/2007 11,443 10,785 13,176
4/30/2007 11,754 11,078 13,796
5/31/2007 12,108 11,412 14,292
6/30/2007 11,659 10,988 14,079
7/31/2007 11,227 10,582 13,861
8/31/2007 11,331 10,679 14,082
9/30/2007 11,702 11,030 14,671
10/31/2007 11,849 11,167 15,171
11/30/2007 11,166 10,524 14,612
12/31/2007 10,812 10,191 14,559
Average Annual Total Returns -- December 31, 2007/6/
1 YEAR 5 YEARS 10 YEARS
CLASS A (Inception 8/3/92)
Net Asset Value/1/ -4.35% 7.85% 0.79%
With Maximum Sales Charge/2/ -9.86 6.59 0.19
CLASS B (Inception 9/13/93)
Net Asset Value/1/ -5.00 7.07 0.03
With CDSC/3/ -9.75 6.77 0.03
CLASS C (Inception 12/30/94)
Net Asset Value/1/ -5.01 7.03 0.01
With CDSC/3/ -5.96 7.03 0.01
- -------------------------------------------------------------
COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS
Russell 1000 Growth Index/4/ 11.81% 12.11% 3.83%
Morningstar Large Growth Fund Avg./5/ 13.35 12.75 5.28
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.funds.natixis.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 12/31/07 12/31/06
- -------------------------------------------------------
Common Stocks 127.1 99.4
- -------------------------------------------------------
Common Stocks Sold Short -27.5 --
- -------------------------------------------------------
Short-Term Investments and Other 0.4 0.6
- -------------------------------------------------------
% of Net Assets as of
TEN LARGEST HOLDINGS 12/31/07 12/31/06
- -------------------------------------------------------
Long Positions
- -------------------------------------------------------
Hewlett-Packard Co. 4.7 4.1
- -------------------------------------------------------
Cisco Systems, Inc. 4.1 5.4
- -------------------------------------------------------
UnitedHealth Group, Inc. 4.0 --
- -------------------------------------------------------
Honeywell International, Inc. 3.5 --
- -------------------------------------------------------
Boeing Co. (The) 3.5 3.9
- -------------------------------------------------------
Short Positions
- -------------------------------------------------------
W&T Offshore, Inc. -2.0 --
- -------------------------------------------------------
Quest Diagnostics, Inc. -1.9 --
- -------------------------------------------------------
Scientific Games Corp. -1.9 --
- -------------------------------------------------------
Arch Coal, Inc. -1.9 --
- -------------------------------------------------------
Eagle Materials, Inc. -1.6 --
- -------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/07
- -------------------------------------------------------
Health Care Providers & Services* 17.0
- -------------------------------------------------------
Aerospace & Defense 10.4
- -------------------------------------------------------
Computers & Peripherals 9.9
- -------------------------------------------------------
Energy Equipment & Services* 7.5
- -------------------------------------------------------
Chemicals 7.2
- -------------------------------------------------------
* Net of securities sold short.
Portfolio holdings and asset allocations will vary.
EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio/7/ Net Expense Ratio/8/
- -------------------------------------------------------
A 2.11% 1.95%
- -------------------------------------------------------
B 2.86 2.70
- -------------------------------------------------------
C 2.86 2.70
- -------------------------------------------------------
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 reductions/reimbursements,
without which performance would have been lower.
/7/Before reductions and reimbursements.
/8/After reductions and reimbursements. Expense reductions are contractual and
are set to expire 4/30/08.
16
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 Natixis Fund, contact your financial
professional or call Natixis 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 Natixis Funds at 800-225-5478; on the
funds' website at www.funds.natixis.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, 2007 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
17
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, 2007 through December 31, 2007. 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 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,201.70 $6.49
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.31 $5.96
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,196.90 $10.63
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,015.53 $9.75
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,197.30 $10.69
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,015.48 $9.80
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,203.40 $5.00
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.67 $4.58
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio:1.17%,1.92%, 1.93%
and 0.90% for Class A, B, C and Y, respectively, multiplied by the average
account value over the period multiplied by the number of days in the most
recent fiscal half-year, divided by 365 (to reflect the half-year period).
18
UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
HANSBERGER INTERNATIONAL FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,031.90 $7.53
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.80 $7.48
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,028.70 $11.35
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.01 $11.27
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,028.30 $11.35
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.01 $11.27
*Expenses are equal to the Fund's annualized expense ratio: 1.47%, 2.22%, and
2.22% 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 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $869.00 $7.30
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.39 $7.88
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $866.80 $10.82
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.61 $11.67
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $866.10 $10.82
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.61 $11.67
*Expenses are equal to the Fund's annualized expense ratio: 1.55%, 2.30% and
2.30% 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).
19
UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
HARRIS ASSOCIATES LARGE CAP VALUE FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $914.80 $6.32
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.60 $6.67
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $911.00 $9.92
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.82 $10.46
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $910.90 $9.92
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.82 $10.46
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $916.00 $4.64
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.37 $4.89
*Expenses are equal to the fund's annualized expense ratio: 1.31%, 2.06%, 2.06%
and 0.96% 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*
NATIXIS U.S. DIVERSIFIED PORTFOLIO 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,021.90 $7.64
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.64 $7.63
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,018.10 $11.45
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.86 $11.42
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,018.10 $11.45
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,013.86 $11.42
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,023.00 $6.27
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.00 $6.26
*Expenses are equal to the Fund's annualized expense ratio (after advisory
reduction/reimbursement): 1.50%, 2.25%, 2.25% and 1.23% 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*
VAUGHAN NELSON SMALL CAP VALUE FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $971.40 $7.21
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,017.90 $7.37
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $967.80 $10.91
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.12 $11.17
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $967.80 $10.91
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,014.12 $11.17
- ------------------------------------------------------------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $972.80 $5.82
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,019.31 $5.96
*Expenses are equal to the Fund's annualized expense ratio: 1.45%, 2.20%, 2.20%
and 1.17% for Class A, B, C and Y, respectively, multiplied by the average
account value over the period multiplied by the number of days in the most
recent fiscal half-year, divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD*
WESTPEAK 130/30 GROWTH FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $927.40 $8.99
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,015.88 $9.40
- ------------------------------------------------------------------------------------------------------------------
CLASS B
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $924.40 $12.61
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.10 $13.19
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $924.30 $12.61
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,012.10 $13.19
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio: 1.85%, 2.60% and
2.60% 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
CGM ADVISOR TARGETED EQUITY FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- -------------------------------------------------------------------------------
Common Stocks -- 95.8% of Net Assets
Chemicals -- 10.7%
475,000 Monsanto Co. $ 53,052,750
486,200 Praxair, Inc. 43,130,802
---------------
96,183,552
---------------
Commercial Banks -- 9.6%
1,933,000 Banco Itau Holding Financeira SA, ADR 49,987,380
1,205,000 Wells Fargo & Co.(b) 36,378,950
---------------
86,366,330
---------------
Communications Equipment -- 5.3%
415,000 Research In Motion, Ltd.(c) 47,061,000
---------------
Computers & Peripherals -- 5.4%
245,000 Apple, Inc.(c) 48,529,600
---------------
Diversified Financial Services -- 3.1%
670,000 Bank of America Corp. 27,644,200
---------------
Energy Equipment & Services -- 11.1%
1,070,000 Halliburton Co. 40,563,700
600,000 Schlumberger, Ltd. 59,022,000
---------------
99,585,700
---------------
Hotel, Restaurant & Leisure-- 5.0%
760,000 McDonald's Corp. 44,771,600
---------------
Insurance -- 8.9%
635,000 MetLife, Inc. 39,128,700
435,000 Prudential Financial, Inc. 40,472,400
---------------
79,601,100
---------------
IT Services -- 5.2%
215,000 MasterCard, Inc., Class A(b) 46,268,000
---------------
Machinery -- 6.5%
630,000 Deere & Co. 58,665,600
---------------
Metals & Mining -- 5.0%
1,375,000 Companhia Vale do Rio Doce, ADR 44,921,250
---------------
Oil, Gas & Consumable Fuels -- 9.1%
705,000 Petroleo Brasileiro SA, ADR 81,244,200
---------------
Pharmaceuticals -- 4.8%
650,000 Johnson & Johnson 43,355,000
---------------
Software -- 1.3%
500,000 Oracle Corp.(c) 11,290,000
---------------
Wireless Telecommunication Services -- 4.8%
705,000 America Movil SAB de CV, Series L, ADR 43,279,950
---------------
Total Common Stocks (Identified Cost $648,206,857) 858,767,082
---------------
Principal
Amount/
Shares Description Value (+)
- -----------------------------------------------------------------------------------------------------
Short-Term Investments -- 6.5%
$ 37,580,000 American Express Credit Corp.,
3.800%, due 1/02/2008 $ 37,580,000
20,829,727 State Street Navigator Securities Lending Prime Portfolio(d) 20,829,727
---------------
Total Short-Term Investments (Identified Cost $58,409,727) 58,409,727
---------------
Total Investments -- 102.3%
(Identified Cost $706,616,584)(a) 917,176,809
Other assets less liabilities -- (2.3)% (20,739,963)
---------------
Net Assets -- 100% $ 896,436,846
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized appreciation on
investments based on a cost of $712,758,328 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 $ 216,522,690
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (12,104,209)
---------------
Net unrealized appreciation $ 204,418,481
===============
(b) All or a portion of this security was on loan to brokers at December 31, 2007.
(c) Non-income producing security.
(d) Represents investment of security 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, 2007 as a Percentage of Net Assets (unaudited)
Energy Equipment & Services 11.1%
Chemicals 10.7
Commercial Banks 9.6
Oil, Gas & Consumable Fuels 9.1
Insurance 8.9
Machinery 6.5
Computers & Peripherals 5.4
Communications Equipment 5.3
IT Services 5.2
Hotels, Restaurants & Leisure 5.0
Metals & Mining 5.0
Pharmaceuticals 4.8
Wireless Telecommunication Services 4.8
Diversified Financial Services 3.1
Software 1.3
See accompanying notes to financial statements.
22
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- ----------------------------------------------------------------------------------
Common Stocks -- 97.3% of Net Assets
Australia -- 3.3%
40,616 BHP Billiton, Ltd. $ 1,419,859
15,453 Rio Tinto, Ltd.(b) 1,797,702
54,687 Westpac Banking Corp. 1,329,824
35,324 Woodside Petroleum, Ltd. 1,548,316
---------------
6,095,701
---------------
Austria -- 0.6%
14,831 Erste Bank Der Oesterreichischen Sparkassen AG 1,047,187
---------------
Brazil -- 4.8%
41,837 Banco Itau Holding Financeira SA, ADR(b) 1,081,905
14,034 Companhia de Bebidas das Americas, Preferred ADR 996,835
50,927 Companhia Energetica de Minas Gerais, ADR(b) 940,112
54,372 Companhia Vale do Rio Doce, ADR 1,776,333
34,323 Petroleo Brasileiro SA, ADR 3,955,383
---------------
8,750,568
---------------
Canada -- 3.3%
17,586 Bank of Nova Scotia 895,916
36,783 Cameco Corp. 1,464,331
16,834 IGM Financial, Inc. 853,341
41,379 Manulife Financial Corp. 1,686,194
11,076 Suncor Energy, Inc. 1,204,294
---------------
6,104,076
---------------
China -- 2.1%
12,100 China Medical Technologies, Inc., Sponsored ADR(b) 537,119
376,000 Cosco Pacific, Ltd. 980,865
2,016,410 Denway Motors, Ltd. 1,267,296
20,202 Focus Media Holding Ltd.(b)(c) 1,147,676
---------------
3,932,956
---------------
Denmark -- 1.2%
20,542 Vestas Wind Systems A/S(c) 2,218,140
---------------
France -- 9.9%
70,702 Axa 2,818,812
10,823 BNP Paribas(b) 1,174,294
26,220 Carrefour SA(b) 2,040,776
13,051 Electricite de France 1,554,534
17,665 Iliad SA(b) 1,899,760
8,344 LVMH Moet Hennessy Louis Vuitton SA 1,008,365
4,857 PPR 780,175
10,156 Schneider Electric SA(b) 1,375,565
34,464 Societe Television Franciase 1(b) 918,874
16,496 Suez SA(b) 1,122,815
19,925 Total SA 1,649,797
11,711 Total SA, ADR 967,329
21,311 Vivendi SA(b) 978,452
---------------
18,289,548
---------------
Germany -- 6.6%
46,132 Adidas AG(b) 3,430,015
28,821 Commerzbank AG 1,096,542
4,652 E.ON AG 988,982
6,500 Merck KGaA 840,628
27,792 SAP AG(b) 1,430,545
21,401 SAP AG, ADR(b) 1,092,521
12,536 Siemens AG (Registered) 1,993,251
4,388 Wacker Chemie AG 1,265,732
---------------
12,138,216
---------------
Shares Description Value (+)
- -----------------------------------------------------------------------------------
Greece -- 1.3%
23,388 Folli-Follie SA $ 868,424
22,051 National Bank of Greece SA 1,512,148
---------------
2,380,572
---------------
Hong Kong -- 1.6%
136,300 Esprit Holdings, Ltd. 2,022,625
444,000 Foxconn International Holdings, Ltd.(c) 988,507
---------------
3,011,132
---------------
India -- 2.2%
12,194 HDFC Bank, Ltd., ADR(b) 1,590,707
52,125 Infosys Technologies, Ltd., ADR(b) 2,364,390
---------------
3,955,097
---------------
Ireland -- 0.8%
45,180 Anglo Irish Bank Corp. PLC 724,351
20,902 Ryanair Holdings PLC, Sponsored ADR(b)(c) 824,375
---------------
1,548,726
---------------
Israel -- 0.7%
27,666 Teva Pharmaceutical Industries, Ltd., Sponsored ADR(b) 1,285,916
---------------
Italy -- 4.1%
45,290 ENI SpA 1,652,918
72,959 Saipem SpA(b) 2,913,527
358,670 UniCredito Italiano SpA 2,950,203
---------------
7,516,648
---------------
Japan -- 14.0%
140,000 Bank of Yokohama (The), Ltd. 975,436
17,600 Canon, Inc.(b) 805,491
25,800 Denso Corp. 1,049,911
198,000 Isuzu Motors, Ltd.(b) 888,912
30,900 Millea Holdings, Inc. 1,037,389
34,000 NGK Insulators, Ltd. 911,584
18,300 Nidec Corp. 1,322,214
5,900 Nintendo Co., Ltd. 3,464,194
26,000 Nitto Denko Corp. 1,366,479
50,100 Nomura Holdings, Inc.(b) 839,418
6,740 ORIX Corp. 1,133,581
40,900 Promise Co., Ltd.(b) 1,007,036
16,600 Shin-Etsu Chemical Co., Ltd. 1,032,373
56,000 Shionogi & Co., Ltd. 992,829
8,100 SMC Corp. 963,605
94,200 Sumitomo Corp.(b) 1,317,987
191,000 Sumitomo Trust & Banking Co., Ltd. 1,258,832
46,200 THK Co., Ltd. 933,773
137,000 Toshiba Corp.(b) 1,011,055
22,100 Toyota Motor Corp. 1,177,017
12,500 Yamada Denki Co., Ltd.(b) 1,410,064
71,000 Yaskawa Electric Corp. 957,790
---------------
25,856,970
---------------
Kazakhstan -- 0.1%
12,820 Eurasian Natural Resources Corp., 144A(c) 163,325
---------------
Luxembourg -- 0.9%
14,260 Millicom International Cellular S.A.(b)(c) 1,681,824
---------------
Mexico -- 1.7%
26,690 America Movil SAB de C.V., Series L, ADR 1,638,499
21,273 Cemex SAB de CV, Sponsored ADR(b)(c) 549,907
26,901 Wal-Mart de Mexico SA de CV, Sponsored ADR, Series V 928,085
---------------
3,116,491
---------------
See accompanying notes to financial statements.
23
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Description Value (+)
- ----------------------------------------------------------------------------------------
Netherlands -- 1.1%
18,689 ING Groep NV $ 728,223
30,610 Koninklijke (Royal) Philips Electronics NV 1,308,578
---------------
2,036,801
---------------
Norway -- 1.5%
21,300 Norske Skogindustrier ASA(b) 175,612
32,399 Renewable Energy Corp. A/S(b)(c) 1,625,086
42,100 Subsea 7, Inc.(c) 935,523
---------------
2,736,221
---------------
Republic of Korea -- 3.0%
26,265 Hyundai Motor Co., Ltd.(c) 1,990,628
12,012 Kookmin Bank, Sponsored ADR(b) 880,720
2,788 Samsung Electronics Co., Ltd. 1,640,731
3,519 Samsung Electronics Co., Ltd., GDR, 144A 1,030,187
---------------
5,542,266
---------------
Russia -- 3.1%
20,602 Evraz Group SA, GDR, 144A 1,596,655
18,335 LUKOIL, ADR 1,585,978
5,463 Mining and Metallurgical Co. Norilsk Nickel, ADR 1,479,107
19,342 OAO Gazprom, Sponsored ADR 1,096,691
---------------
5,758,431
---------------
Singapore -- 1.8%
80,000 DBS Group Holdings, Ltd. 1,135,437
131,000 Keppel Corp., Ltd.(b) 1,167,298
215,000 Keppel Land, Ltd. 1,075,737
---------------
3,378,472
---------------
South Africa -- 0.6%
53,719 MTN Group, Ltd. 1,006,139
---------------
Spain -- 3.6%
68,452 Banco Bilbao Vizcaya Argentaria SA 1,666,404
147,057 Banco Santander Central Hispano SA 3,176,129
55,303 Telefonica SA 1,792,717
---------------
6,635,250
---------------
Switzerland -- 8.9%
61,314 ABB, Ltd. 1,767,791
14,672 Credit Suisse Group 883,189
12,942 Holcim, Ltd. (Registered) 1,379,624
12,444 Lonza Group AG 1,504,990
5,186 Nestle SA 2,381,360
3,711 Nobel Biocare Holding AG(c) 988,313
40,587 Novartis AG 2,219,595
9,038 Roche Holding AG 1,562,360
4,675 Syngenta AG 1,186,329
8,334 Synthes, Inc.(c) 1,036,198
32,201 UBS AG 1,484,714
---------------
16,394,463
---------------
Taiwan -- 1.0%
505,619 Taiwan Semiconductor Manufacturing Co., Ltd. 958,647
96,369 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR 959,835
---------------
1,918,482
---------------
Thailand -- 0.5%
278,100 Bangkok Bank PLC 982,184
---------------
United Kingdom -- 13.0%
465,017 ARM Holdings PLC(b) 1,146,844
21,725 AstraZeneca PLC 935,104
85,772 Autonomy Corp. PLC(c) 1,507,652
Shares Description Value (+)
- ---------------------------------------------------------------------------------------------
United Kingdom -- continued
40,229 BHP Billiton PLC $ 1,226,715
167,091 British Sky Broadcasting PLC 2,055,348
36,672 GlaxoSmithKline PLC 931,341
68,940 HBOS PLC 1,002,457
71,000 HSBC Holdings PLC 1,193,805
100,011 ICAP PLC 1,441,217
131,158 Man Group PLC 1,488,870
200,727 Michael Page International PLC 1,142,776
257,109 Old Mutual PLC 856,620
123,680 Prudential PLC 1,741,511
17,539 Reckitt Benckiser Group PLC 1,019,190
148,779 Smith & Nephew PLC 1,706,938
278,807 Tesco PLC 2,652,157
497,873 Vodafone Group PLC 1,868,970
---------------
23,917,515
---------------
Total Common Stocks (Identified Cost $135,881,740) 179,399,317
---------------
Preferred Stocks -- 1.3%
Brazil -- 1.0%
65,715 Companhia Vale do Rio Doce, Sponsored ADR(b) 1,838,706
---------------
Germany -- 0.3%
5,871 Fresenius SE-PFD 487,708
---------------
Total Preferred Stocks (Identified Cost $1,200,752) 2,326,414
---------------
Shares/
Principal
Amount
- ---------------------------------------------------------------------------------------------
Short-Term Investments -- 18.7%
31,403,828 State Street Navigator Securities Lending Prime Portfolio(d) 31,403,828
$ 3,143,412 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/31/2007 at 3.25% to be repurchased at
$3,143,979 on 1/02/2008, collateralized by $3,120,000 Federal
Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at
$3,209,700 including accrued interest (Note 2h of Notes to
Financial Statements) 3,143,412
---------------
Total Short-Term Investments (Identified Cost $34,547,240) 34,547,240
---------------
Total Investments -- 117.3%
(Identified Cost $171,629,732)(a) 216,272,971
Other assets less liabilities -- (17.3)% (31,864,176)
---------------
Net Assets -- 100% $ 184,408,795
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized appreciation on
investments based on a cost of $173,965,089 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 $ 45,498,471
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (3,190,589)
---------------
Net unrealized appreciation $ 42,307,882
===============
(b) All or a portion of this security was on loan to brokers at December 31, 2007.
(c) Non-income producing security.
(d) Represents investment of security lending collateral.
See accompanying notes to financial statements.
24
HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
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 the period end, the value of these amounted to $2,790,167 or
1.5% of net assets.
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.
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited)
Commercial Banks 13.9%
Oil, Gas & Consumable Fuels 8.2
Metals & Mining 6.1
Pharmaceuticals 4.8
Insurance 4.4
Software 4.1
Capital Markets 3.8
Electrical Equipment 3.8
Wireless Telecommunication Services 3.4
Semiconductors & Semiconductor 3.1
Food & Staples Retailing 3.0
Automobiles 2.9
Textiles, Apparel & Luxury Good 2.9
Media 2.8
Chemicals 2.6
Health Care Equipment & Supplies 2.6
Industrial Conglomerates 2.4
Energy Equipment & Services 2.1
Diversified Telecommunication Services 2.0
Other, less than 2% each 19.7
See accompanying notes to financial statements.
25
HARRIS ASSOCIATES FOCUSED VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- ----------------------------------------------------------------------------------
Common Stocks -- 100.0% of Net Assets
Capital Markets -- 5.0%
51,500 Merrill Lynch & Co., Inc. $ 2,764,520
76,500 Morgan Stanley 4,062,915
---------------
6,827,435
---------------
Chemicals -- 3.0%
87,100 International Flavors & Fragrances, Inc.(b) 4,192,123
---------------
Commercial Services & Supplies -- 4.9%
248,200 Robert Half International, Inc. 6,711,328
---------------
Computers & Peripherals -- 2.4%
61,300 Dell, Inc.(c) 1,502,463
66,000 Teradata Corp.(c) 1,809,060
---------------
3,311,523
---------------
Consumer Finance -- 3.0%
270,400 Discover Financial Services 4,077,632
---------------
Health Care Equipment & Supplies -- 4.9%
156,500 Hospira, Inc.(c) 6,673,160
---------------
Health Care Providers & Services -- 3.3%
891,000 Tenet Healthcare Corp.(b)(c) 4,526,280
---------------
Hotels, Restaurants & Leisure -- 6.8%
44,000 McDonald's Corp. 2,592,040
177,900 Yum! Brands, Inc. 6,808,233
---------------
9,400,273
---------------
Internet & Catalog Retail -- 5.5%
394,900 Liberty Media Holding Corp. - Interactive, Class A(c) 7,534,692
---------------
Life Sciences Tools & Services -- 9.2%
284,000 MDS, Inc.(b) 5,523,800
272,300 PerkinElmer, Inc. 7,085,246
---------------
12,609,046
---------------
Media -- 18.6%
115,700 Cablevision Systems Corp., Class A(c) 2,834,650
280,720 Discovery Holding Co.(c) 7,057,301
38,000 Liberty Media Corp. - Capital, Series A(c) 4,426,620
246,000 Time Warner, Inc. 4,061,460
415,300 Virgin Media, Inc.(b) 7,118,242
---------------
25,498,273
---------------
Personal Products -- 4.7%
163,700 Avon Products, Inc. 6,471,061
---------------
Semiconductors & Semiconductor Equipment -- 21.7%
464,900 Intel Corp. 12,394,234
106,200 International Rectifier Corp.(c) 3,607,614
739,600 Micron Technology, Inc.(b)(c) 5,362,100
368,900 National Semiconductor Corp. 8,351,896
---------------
29,715,844
---------------
Specialty Retail -- 2.7%
82,100 Tiffany & Co. 3,779,063
---------------
Textiles, Apparel & Luxury Goods -- 3.7%
277,600 Timberland Co.(b)(c) 5,019,008
---------------
Shares Description Value (+)
- ---------------------------------------------------------------------------------------------
Thrifts & Mortgage Finance -- 0.6%
71,215 Sovereign Bancorp, Inc. $ 811,851
---------------
Total Common Stocks (Identified Cost $137,248,070) 137,158,592
---------------
Shares/
Principal
Amount
- ---------------------------------------------------------------------------------------------
Short-Term Investments -- 17.6%
18,890,517 State Street Navigator Securities Lending Prime Portfolio(d) 18,890,517
$ 5,322,641 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/31/2007 at 3.250% to be repurchased at
$5,323,602 on 1/2/2008, collateralized by $5,280,000 Federal
Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at
$5,431,800, including accrued interest (Note 2h of Notes to
Financial Statements) 5,322,641
---------------
Total Short-Term Investments (Identified Cost $24,213,158) 24,213,158
---------------
Total Investments -- 117.6%
(Identified Cost $161,461,228)(a) 161,371,750
Other assets less liabilities -- (17.6)% (24,172,737)
---------------
Net Assets -- 100% $ 137,199,013
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized depreciation on
investments based on a cost of $161,472,109 for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost $ 15,117,291
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (15,217,650)
---------------
Net unrealized depreciation $ (100,359)
===============
(b) All or a portion of this security was on loan to brokers at
December 31, 2007.
(c) Non-income producing security.
(d) Represents investment of securities lending collateral.
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited)
Semiconductors & Semiconductor Equipment 21.7%
Media 18.6
Life Sciences Tools & Services 9.2
Hotels, Restaurants & Leisure 6.8
Internet & Catalog Retail 5.5
Capital Markets 5.0
Commercial Services & Supplies 4.9
Health Care Equipment & Supplies 4.9
Personal Products 4.7
Textiles, Apparel & Luxury Goods 3.7
Health Care Providers & Services 3.3
Chemicals 3.0
Consumer Finance 3.0
Specialty Retail 2.7
Computers & Peripherals 2.4
Thrifts & Mortgage Finance 0.6
See accompanying notes to financial statements.
26
HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- -----------------------------------------------------------------------------
Common Stocks -- 96.4% of Net Assets
Air Freight & Logistics -- 3.0%
74,700 FedEx Corp. $ 6,660,999
---------------
Automobiles -- 1.7%
83,000 Harley-Davidson, Inc.(b) 3,876,930
---------------
Beverages -- 1.9%
27,400 Coca-Cola Co. (The) 1,681,538
28,700 Diageo PLC, Sponsored ADR 2,463,321
---------------
4,144,859
---------------
Capital Markets -- 10.2%
222,300 Bank of New York Mellon Corp. 10,839,348
106,500 Merrill Lynch & Co., Inc. 5,716,920
118,000 Morgan Stanley 6,266,980
---------------
22,823,248
---------------
Chemicals -- 1.8%
102,000 Dow Chemical Co. (The) 4,020,840
---------------
Communications Equipment -- 3.3%
453,700 Motorola, Inc. 7,277,348
---------------
Computers & Peripherals -- 10.9%
406,000 Dell, Inc.(c) 9,951,060
221,000 Hewlett-Packard Co. 11,156,080
184,975 Sun Microsystems, Inc.(c) 3,353,597
---------------
24,460,737
---------------
Consumer Finance -- 7.9%
111,100 American Express Co. 5,779,422
168,000 Capital One Financial Corp. 7,939,680
261,550 Discover Financial Services(b) 3,944,174
---------------
17,663,276
---------------
Diversified Financial Services -- 3.5%
179,100 JPMorgan Chase & Co. 7,817,715
---------------
Electronic Equipment & Instruments -- 0.5%
30,800 Tyco Electronics, Ltd. 1,143,604
---------------
Health Care Equipment & Supplies -- 3.2%
30,300 Covidien, Ltd. 1,341,987
117,000 Medtronic, Inc. 5,881,590
---------------
7,223,577
---------------
Hotels, Restaurants & Leisure -- 7.4%
213,700 Carnival Corp. 9,507,513
119,000 McDonald's Corp. 7,010,290
---------------
16,517,803
---------------
Household Durables -- 2.1%
53,300 Fortune Brands, Inc. 3,856,788
87,200 Pulte Homes, Inc.(b) 919,088
---------------
4,775,876
---------------
Insurance -- 1.3%
45,900 Aflac, Inc. 2,874,717
---------------
Media -- 12.2%
129,800 Comcast Corp., Special Class A(c) 2,351,976
40,310 Liberty Media Corp. - Capital, Series A(b)(c) 4,695,712
47,500 Omnicom Group, Inc. 2,257,675
482,000 Time Warner, Inc. 7,957,820
167,300 Viacom, Inc., Class B(c) 7,347,816
87,100 Walt Disney Co. (The) 2,811,588
---------------
27,422,587
---------------
Shares Description Value (+)
- -----------------------------------------------------------------------------------------------------
Office Electronics -- 1.0%
137,400 Xerox Corp. $ 2,224,506
---------------
Pharmaceuticals -- 1.1%
49,000 GlaxoSmithKline PLC, Sponsored ADR 2,469,110
---------------
Road & Rail -- 5.4%
97,000 Union Pacific Corp. 12,185,140
---------------
Semiconductors & Semiconductor Equipment -- 9.4%
581,400 Intel Corp. 15,500,124
164,800 Texas Instruments, Inc. 5,504,320
---------------
21,004,444
---------------
Specialty Retail -- 5.6%
85,900 Best Buy Co., Inc.(b) 4,522,635
244,500 Home Depot, Inc. 6,586,830
71,800 Limited Brands, Inc.(b) 1,359,174
---------------
12,468,639
---------------
Textiles, Apparel & Luxury Goods -- 2.3%
79,300 NIKE, Inc., Class B 5,094,232
---------------
Thrifts & Mortgage Finance -- 0.7%
112,400 Washington Mutual, Inc.(b) 1,529,764
---------------
Total Common Stocks (Identified Cost $190,631,088) 215,679,951
---------------
Shares/
Principal
Amount
- -----------------------------------------------------------------------------------------------------
Short-Term Investments -- 12.5%
16,389,229 State Street Navigator Securities Lending Prime Portfolio(d) 16,389,229
$ 11,629,319 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/31/2007 at 3.250% to be repurchased at
$11,631,419 on 1/2/2008, collateralized by $11,535,000
Federal Home Loan Mortgage Corp., 5.875% due 9/21/2022
valued at $11,866,631, including accrued interest (Note 2h of
Notes to Financial Statements) 11,629,319
---------------
Total Short-Term Investments (Identified Cost $28,018,548) 28,018,548
---------------
Total Investments -- 108.9%
(Identified Cost $218,649,636)(a) 243,698,499
Other assets less liabilities -- (8.9)% (19,857,573)
---------------
Net Assets -- 100% $ 223,840,926
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized appreciation on
investments based on a cost of $218,745,298 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 $ 37,949,348
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (12,996,147)
---------------
Net unrealized appreciation $ 24,953,201
===============
(b) All or a portion of this security was on loan to brokers at December 31, 2007.
(c) Non-income producing security.
(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.
See accompanying notes to financial statements.
27
HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited)
Media 12.2%
Computers & Peripherals 10.9
Capital Markets 10.2
Semiconductors & Semiconductor Equipment 9.4
Consumer Finance 7.9
Hotels, Restaurants & Leisure 7.4
Specialty Retail 5.6
Road and Rail 5.4
Diversified Financial Services 3.5
Communications Equipment 3.3
Health Care Equipment & Supplies 3.2
Air Freight & Logistics 3.0
Textiles, Apparel & Luxury Goods 2.3
Household Durables 2.1
Other, less than 2% each 10.0
See accompanying notes to financial statements.
28
NATIXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- -----------------------------------------------------------------------------
Common Stocks -- 98.0% of Net Assets
Aerospace & Defense -- 2.1%
89,452 BE Aerospace, Inc.(b) $ 4,732,011
17,800 Boeing Co. (The) 1,556,788
16,500 Lockheed Martin Corp. 1,736,790
15,320 Precision Castparts Corp. 2,124,884
15,000 Spirit Aerosystems Holdings, Inc., Class A(b)(c) 517,500
19,500 United Technologies Corp. 1,492,530
---------------
12,160,503
---------------
Air Freight & Logistics -- 0.8%
51,400 FedEx Corp.(c) 4,583,338
---------------
Airlines -- 0.5%
86,123 UAL Corp.(b)(c) 3,071,146
---------------
Auto Components -- 0.2%
24,288 WABCO Holdings, Inc. 1,216,586
---------------
Automobiles -- 0.6%
55,900 Harley-Davidson, Inc. 2,611,089
36,615 Winnebago Industries(c) 769,647
---------------
3,380,736
---------------
Beverages -- 1.2%
45,600 Coca-Cola Co. (The) 2,798,472
19,600 Diageo PLC, Sponsored ADR 1,682,268
35,700 PepsiCo, Inc. 2,709,630
---------------
7,190,370
---------------
Biotechnology -- 0.9%
38,269 BioMarin Pharmaceuticals, Inc.(b)(c) 1,354,722
34,900 Celgene Corp.(b)(c) 1,612,729
45,600 Gilead Sciences, Inc.(b) 2,098,056
---------------
5,065,507
---------------
Building Products -- 1.1%
87,257 Armstrong World Industries, Inc.(b)(c) 3,499,878
58,538 Trane, Inc. 2,734,310
---------------
6,234,188
---------------
Capital Markets -- 4.2%
4,300 Affiliated Managers Group, Inc.(b)(c) 505,078
152,200 Bank of New York Mellon Corp. 7,421,272
12,634 BlackRock, Inc.(c) 2,739,051
50,400 Charles Schwab Corp. (The) 1,287,720
8,500 Franklin Resources, Inc. 972,655
58,849 Janus Capital Group, Inc.(c) 1,933,190
73,000 Merrill Lynch & Co., Inc. 3,918,640
79,800 Morgan Stanley 4,238,178
21,200 State Street Corp. 1,721,440
---------------
24,737,224
---------------
Chemicals -- 4.2%
8,400 Air Products & Chemicals, Inc. 828,492
34,232 CF Industries Holdings, Inc. 3,767,574
36,421 Cytec Industries, Inc. 2,242,805
69,800 Dow Chemical Co. (The) 2,751,516
55,027 Ecolab, Inc. 2,817,933
24,200 Monsanto Co. 2,702,898
56,660 Mosaic Co. (The)(b) 5,345,304
4,400 Potash Corp. of Saskatchewan, Inc. 633,424
16,300 Praxair, Inc. 1,445,973
41,555 Scotts Miracle-Gro Co. (The), Class A(c) 1,554,988
40,658 Zep, Inc.(b)(c) 563,927
---------------
24,654,834
---------------
Shares Description Value (+)
- ----------------------------------------------------------------------------------------------
Commercial Banks -- 1.2%
67,909 BOK Financial Corp. $ 3,510,895
156,853 Colonial BancGroup, Inc.(c) 2,123,790
67,636 East West Bancorp, Inc.(c) 1,638,820
---------------
7,273,505
---------------
Commercial Services & Supplies -- 3.6%
15,702 ABM Industries, Inc. 320,164
129,747 Comfort Systems USA, Inc.(c) 1,658,167
91,164 Corrections Corp. of America(b) 2,690,249
21,155 Dun & Bradstreet Corp.(c) 1,874,968
99,158 Exponent, Inc.(b)(c) 2,681,232
169,366 GeoEye, Inc.(b)(c) 5,699,166
128,494 Hill International, Inc.(b) 1,820,760
71,565 Stericycle, Inc.(b)(c) 4,250,961
---------------
20,995,667
---------------
Communications Equipment -- 1.8%
140,400 Cisco Systems, Inc.(b) 3,800,628
309,100 Motorola, Inc. 4,957,964
18,537 Research In Motion, Ltd.(b) 2,102,096
---------------
10,860,688
---------------
Computers & Peripherals -- 5.0%
19,800 Apple, Inc.(b) 3,921,984
277,900 Dell, Inc.(b) 6,811,329
83,800 EMC Corp.(b) 1,552,814
189,700 Hewlett-Packard Co. 9,576,056
119,069 NCR Corp.(b)(c) 2,988,632
125,700 Sun Microsystems, Inc.(b)(c) 2,278,941
77,044 Teradata Corp.(b) 2,111,776
---------------
29,241,532
---------------
Construction & Engineering -- 1.7%
23,086 Fluor Corp.(c) 3,364,092
22,393 Foster Wheeler, Ltd.(b) 3,471,363
7,800 Jacobs Engineering Group, Inc.(b)(c) 745,758
66,726 KBR, Inc.(b) 2,588,968
---------------
10,170,181
---------------
Construction Materials -- 0.4%
30,917 Texas Industries, Inc.(c) 2,167,282
---------------
Consumer Finance -- 2.0%
75,800 American Express Co. 3,943,116
115,100 Capital One Financial Corp. 5,439,626
178,550 Discover Financial Services(c) 2,692,534
---------------
12,075,276
---------------
Containers & Packaging -- 0.5%
52,756 Crown Holdings, Inc.(b) 1,353,192
88,751 Temple-Inland, Inc.(c) 1,850,458
---------------
3,203,650
---------------
Diversified Consumer Services -- 1.1%
265,166 INVESTools, Inc.(b)(c) 4,704,045
25,111 New Oriental Education & Technology Group, Inc., Sponsored ADR(b) 2,023,695
---------------
6,727,740
---------------
Diversified Financial Services -- 3.0%
2,900 CME Group, Inc.(c) 1,989,400
28,154 IntercontinentalExchange, Inc.(b) 5,419,645
122,600 JPMorgan Chase & Co. 5,351,490
54,536 Nasdaq Stock Market, Inc.(b)(c) 2,698,986
16,557 Nymex Holdings, Inc. 2,212,181
---------------
17,671,702
---------------
See accompanying notes to financial statements.
29
NATIXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Description Value (+)
- ----------------------------------------------------------------------------------
Diversified Telecommunication Services -- 0.5%
53,779 Embarq Corp. $ 2,663,674
---------------
Electric Utilities -- 0.4%
38,589 Allete, Inc.(c) 1,527,353
29,644 Portland General Electric Co. 823,510
---------------
2,350,863
---------------
Electrical Equipment -- 3.3%
58,990 Acuity Brands, Inc.(c) 2,654,550
62,807 AMETEK, Inc. 2,941,880
27,700 Emerson Electric Co. 1,569,482
7,014 First Solar, Inc.(b)(c) 1,873,720
44,084 General Cable Corp.(b)(c) 3,230,476
37,928 Roper Industries, Inc.(c) 2,372,017
16,407 SunPower Corp., Class A(b)(c) 2,139,309
31,142 Suntech Power Holdings Co., Ltd., Sponsored ADR(b)(c) 2,563,609
---------------
19,345,043
---------------
Electronic Equipment & Instruments -- 2.1%
84,824 Amphenol Corp., Class A(c) 3,933,289
54,523 Avnet, Inc.(b) 1,906,669
127,347 Ingram Micro, Inc.(b) 2,297,340
32,305 Mettler-Toledo International, Inc.(b) 3,676,309
20,725 Tyco Electronics, Ltd. 769,519
---------------
12,583,126
---------------
Energy Equipment & Services -- 3.1%
13,400 Baker Hughes, Inc. 1,086,740
41,080 Cameron International Corp.(b) 1,977,180
20,400 Grant Prideco, Inc.(b)(c) 1,132,404
85,587 Helix Energy Solutions Group, Inc.(b)(c) 3,551,860
61,524 National-Oilwell Varco, Inc.(b) 4,519,553
25,453 Oceaneering International, Inc.(b) 1,714,260
17,800 Schlumberger, Ltd. 1,750,986
10,124 Transocean, Inc.(b) 1,449,251
18,300 Weatherford International, Ltd.(b) 1,255,380
---------------
18,437,614
---------------
Food & Staples Retailing -- 1.4%
71,200 CVS Caremark Corp. 2,830,200
183,015 Spartan Stores, Inc.(c) 4,181,893
77,029 Winn-Dixie Stores, Inc.(b)(c) 1,299,479
---------------
8,311,572
---------------
Food Products -- 0.3%
17,520 Bunge, Ltd. 2,039,503
---------------
Gas Utilities -- 1.1%
33,028 Oneok, Inc. 1,478,663
31,797 Questar Corp. 1,720,218
127,520 UGI Corp. 3,474,920
---------------
6,673,801
---------------
Health Care Equipment & Supplies -- 4.7%
8,300 Alcon, Inc. 1,187,232
51,361 Beckman Coulter, Inc. 3,739,081
20,425 Covidien, Ltd. 904,623
27,473 Gen-Probe, Inc.(b) 1,728,876
26,159 Hologic, Inc.(b)(c) 1,795,554
119,565 Hospira, Inc.(b)(c) 5,098,252
42,672 IDEXX Laboratories, Inc.(b) 2,501,859
15,578 Intuitive Surgical, Inc.(b) 5,055,061
79,000 Medtronic, Inc. 3,971,330
37,648 Mindray Medical International, Ltd.(c) 1,617,734
---------------
27,599,602
---------------
Shares Description Value (+)
- ----------------------------------------------------------------------------------
Health Care Providers & Services -- 0.6%
30,700 Aetna, Inc. $ 1,772,311
68,554 CorVel Corp.(b)(c) 1,578,113
---------------
3,350,424
---------------
Hotels, Restaurants & Leisure -- 3.2%
145,700 Carnival Corp.(c) 6,482,193
39,120 Ctrip.com International, Ltd., ADR 2,248,227
105,995 Mccormick & Schmick's Seafood Restaurants, Inc.(b)(c) 1,264,520
112,900 McDonald's Corp. 6,650,939
99,013 Wyndham Worldwide Corp.(c) 2,332,746
---------------
18,978,625
---------------
Household Durables -- 0.8%
36,300 Fortune Brands, Inc.(c) 2,626,668
17,680 Garmin, Ltd.(c) 1,714,960
51,900 Pulte Homes, Inc.(c) 547,026
---------------
4,888,654
---------------
Household Products -- 1.0%
35,203 Church & Dwight Co., Inc.(c) 1,903,426
56,300 Procter & Gamble Co. 4,133,546
---------------
6,036,972
---------------
Independent Power Producers & Energy Traders -- 0.8%
25,697 Constellation Energy Group 2,634,713
48,978 NRG Energy, Inc.(b)(c) 2,122,707
---------------
4,757,420
---------------
Industrial Conglomerates -- 1.2%
73,100 General Electric Co. 2,709,817
37,485 McDermott International, Inc.(b) 2,212,740
15,653 Teleflex, Inc. 986,295
16,200 Textron, Inc. 1,155,060
---------------
7,063,912
---------------
Insurance -- 2.2%
31,300 Aflac, Inc. 1,960,319
158,373 AmCOMP, Inc.(b) 1,480,787
58,611 Assurant, Inc.(c) 3,921,076
91,136 Employers Holdings, Inc. 1,522,883
54,035 HCC Insurance Holdings, Inc. 1,549,724
60,233 National Financial Partners Corp.(c) 2,747,227
---------------
13,182,016
---------------
Internet & Catalog Retail -- 0.9%
20,100 Amazon.com, Inc.(b)(c) 1,862,064
30,983 Priceline.com, Inc.(b)(c) 3,558,707
---------------
5,420,771
---------------
Internet Software & Services -- 1.4%
33,800 Akamai Technologies, Inc.(b)(c) 1,169,480
33,900 eBay, Inc.(b) 1,125,141
6,500 Google, Inc., Class A(b) 4,494,620
121,802 United Online, Inc.(c) 1,439,700
---------------
8,228,941
---------------
IT Services -- 2.4%
296,448 Broadridge Financial Solutions, Inc. 6,649,329
16,700 Cognizant Technology Solutions Corp., Class A(b) 566,798
64,043 Fidelity National Information Services, Inc. 2,663,548
18,300 Infosys Technologies, Ltd., Sponsored ADR(c) 830,088
5,300 MasterCard, Inc., Class A(c) 1,140,560
71,873 Wright Express Corp.(b) 2,550,773
---------------
14,401,096
---------------
See accompanying notes to financial statements.
30
NATIXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Description Value (+)
- --------------------------------------------------------------------------------
Life Sciences Tools & Services -- 1.5%
10,600 Covance, Inc.(b) $ 918,172
39,391 Illumina, Inc.(b)(c) 2,334,311
103,921 PerkinElmer, Inc. 2,704,024
35,300 Thermo Fisher Scientific, Inc.(b)(c) 2,036,104
11,400 Waters Corp.(b) 901,398
---------------
8,894,009
---------------
Machinery -- 2.0%
120,340 Actuant Corp., Class A(c) 4,092,764
48,192 AGCO Corp.(b) 3,276,092
9,200 Deere & Co. 856,704
8,800 Flowserve Corp. 846,560
74,782 Wabtec Corp. 2,575,492
---------------
11,647,612
---------------
Media -- 4.6%
18,420 Central European Media Enterprises Ltd., Class A(b) 2,136,352
88,700 Comcast Corp., Special Class A(b) 1,607,244
35,345 Focus Media Holding Ltd., ADR(b)(c) 2,007,949
130,920 Interactive Data Corp. 4,321,669
27,205 Liberty Media Corp. - Capital, Series A(b)(c) 3,169,111
32,500 Omnicom Group, Inc. 1,544,725
326,400 Time Warner, Inc. 5,388,864
114,200 Viacom, Inc., Class B(b) 5,015,664
59,600 Walt Disney Co. (The) 1,923,888
---------------
27,115,466
---------------
Metals & Mining -- 0.4%
26,500 Barrick Gold Corp. 1,114,325
10,600 Freeport-McMoRan Copper & Gold, Inc. 1,085,864
---------------
2,200,189
---------------
Multi Utilities -- 0.5%
50,879 CMS Energy Corp.(c) 884,277
81,361 MDU Resources Group, Inc.(c) 2,246,377
---------------
3,130,654
---------------
Office Electronics -- 0.3%
94,100 Xerox Corp. 1,523,479
---------------
Oil, Gas & Consumable Fuels -- 1.5%
43,408 Arena Resources, Inc.(b)(c) 1,810,548
19,600 CONSOL Energy, Inc. 1,401,792
92,036 Denbury Resources, Inc.(b) 2,738,071
57,109 Range Resources Corp.(c) 2,933,118
---------------
8,883,529
---------------
Paper & Forest Products -- 0.2%
162,024 Domtar Corp.(b)(c) 1,245,964
---------------
Personal Products -- 0.7%
166,248 Alberto-Culver Co. 4,079,726
---------------
Pharmaceuticals -- 2.4%
35,100 Abbott Laboratories 1,970,865
29,561 Allergan, Inc. 1,898,999
33,000 GlaxoSmithKline PLC, Sponsored ADR(c) 1,662,870
36,200 Merck & Co., Inc. 2,103,582
149,718 Perrigo Co.(c) 5,241,627
30,100 Teva Pharmaceutical Industries, Ltd., Sponsored ADR 1,399,048
---------------
14,276,991
---------------
REITs -- 0.9%
59,901 Developers Diversified Realty Corp. 2,293,609
63,244 Potlatch Corp.(c) 2,810,564
---------------
5,104,173
---------------
Shares Description Value (+)
- -------------------------------------------------------------------------------
Real Estate Management & Development -- 0.1%
59,168 Forestar Real Estate Group, Inc.(b) $ 697,880
---------------
Road & Rail -- 1.7%
142,130 Avis Budget Group, Inc.(b)(c) 1,847,690
66,400 Union Pacific Corp. 8,341,168
---------------
10,188,858
---------------
Semiconductors & Semiconductor Equipment -- 4.0%
463,100 Intel Corp. 12,346,246
38,851 MEMC Electronic Materials, Inc.(b) 3,437,925
31,700 NVIDIA Corp.(b) 1,078,434
302,070 ON Semiconductor Corp.(b)(c) 2,682,381
112,300 Texas Instruments, Inc. 3,750,820
---------------
23,295,806
---------------
Software -- 3.0%
37,000 Adobe Systems, Inc.(b) 1,581,010
61,686 McAfee, Inc.(b) 2,313,225
43,787 MICROS Systems, Inc.(b) 3,072,096
104,700 Microsoft Corp. 3,727,320
89,591 Nuance Communications, Inc.(b)(c) 1,673,560
65,800 Oracle Corp.(b) 1,485,764
35,461 Salesforce.com, Inc.(b)(c) 2,223,050
15,688 VMware, Inc., Class A(b)(c) 1,333,323
---------------
17,409,348
---------------
Specialty Retail -- 3.0%
58,100 Best Buy Co., Inc.(c) 3,058,965
160,553 Borders Group, Inc.(c) 1,709,890
54,046 GameStop Corp., Class A(b)(c) 3,356,797
166,000 Home Depot, Inc. 4,472,040
64,500 Limited Brands, Inc.(c) 1,220,985
43,412 PetSmart, Inc.(c) 1,021,484
214,120 Sally Beauty Holdings, Inc.(b)(c) 1,937,786
37,381 Tween Brands, Inc.(b) 989,849
---------------
17,767,796
---------------
Textiles, Apparel & Luxury Goods -- 1.7%
77,910 Fossil, Inc.(b) 3,270,662
118,058 Hanesbrands, Inc.(b)(c) 3,207,636
54,300 NIKE, Inc., Class B 3,488,232
---------------
9,966,530
---------------
Thrifts & Mortgage Finance -- 0.3%
59,168 Guaranty Financial Group, Inc.(b) 473,339
75,700 Washington Mutual, Inc.(c) 1,030,277
---------------
1,503,616
---------------
Tobacco -- 0.3%
25,400 Altria Group, Inc. 1,919,731
---------------
Wireless Telecommunication Services -- 1.4%
12,700 China Mobile, Ltd., Sponsored ADR(c) 1,103,249
18,736 Millicom International Cellular S.A.(b)(c) 2,209,724
70,569 Turkcell Iletisim Hizmetleri AS, Sponsored ADR 1,945,587
78,771 Vimpel-Communications, Sponsored ADR 3,276,874
---------------
8,535,434
---------------
Total Common Stocks (Identified Cost $473,658,959) 578,382,075
---------------
See accompanying notes to financial statements.
31
NATIXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares/
Principal
Amount Description Value (+)
- -------------------------------------------------------------------------------------------------
Short-Term Investments -- 26.2%
135,549,039 State Street Navigator Securities Lending Prime Portfolio(d) $ 135,549,039
$ 18,854,482 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/31/2007 at 3.250% to be repurchased at
$18,857,886 on 1/2/2008, collateralized by $18,705,000
Federal Home Loan Mortgage Corp., 5.875% due 9/21/2022
valued at $19,242,769 including accrued interest (Note 2h of
Notes to Financial Statements) 18,854,482
---------------
Total Short-Term Investments (Identified Cost $154,403,521) 154,403,521
---------------
Total Investments -- 124.2%
(Identified Cost $628,062,480)(a) 732,785,596
Other assets less liabilities -- (24.2)% (142,641,565)
---------------
Net Assets -- 100% $ 590,144,031
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized appreciation on
investments based on a cost of $629,140,403 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 $ 122,759,946
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (19,114,753)
---------------
Net unrealized appreciation $ 103,645,193
===============
(b) Non-income producing security.
(c) All or a portion of this security was on loan to brokers at
December 31, 2007.
(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, 2007 as a Percentage of Net Assets (unaudited)
Computers & Peripherals 5.0%
Health Care Equipment & Supplies 4.7
Media 4.6
Capital Markets 4.2
Chemicals 4.2
Semiconductors & Semiconductor Equipment 4.0
Commercial Services & Supplies 3.6
Electrical Equipment 3.3
Hotels, Restaurants & Leisure 3.2
Energy Equipment & Services 3.1
Specialty Retail 3.0
Diversified Financial Services 3.0
Software 3.0
IT Services 2.4
Pharmaceuticals 2.4
Insurance 2.2
Electronic Equipment & Instruments 2.1
Aerospace & Defense 2.1
Consumer Finance 2.0
Machinery 2.0
Other, less than 2% each 33.9
See accompanying notes to financial statements.
32
VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- ---------------------------------------------------------------------
Common Stocks -- 95.4% of Net Assets
Aerospace & Defense -- 4.4%
25,370 Alliant Techsystems, Inc.(b)(c) $ 2,886,091
31,600 DRS Technologies, Inc.(b) 1,714,932
46,137 Moog, Inc., Class A(c) 2,113,536
---------------
6,714,559
---------------
Air Freight & Logistics -- 1.1%
52,125 Forward Air Corp.(b) 1,624,736
---------------
Building Products -- 1.7%
63,325 Lennox International, Inc. 2,622,922
---------------
Capital Markets -- 7.3%
29,500 Affiliated Managers Group, Inc.(b)(c) 3,465,070
50,025 KBW, Inc.(b)(c) 1,280,140
107,819 Raymond James Financial, Inc.(b) 3,521,369
77,450 Waddell & Reed Financial, Inc., Class A 2,795,170
---------------
11,061,749
---------------
Chemicals -- 5.5%
43,400 Airgas, Inc.(b) 2,261,574
18,025 Cytec Industries, Inc. 1,109,979
27,725 FMC Corp.(b) 1,512,399
46,250 Scotts Miracle-Gro Co. (The), Class A(b) 1,730,675
80,700 Valspar Corp.(b) 1,818,978
---------------
8,433,605
---------------
Commercial Banks -- 4.8%
39,775 Cullen/Frost Bankers, Inc.(b) 2,015,001
74,300 Prosperity Bancshares, Inc.(b) 2,183,677
37,500 Provident Bankshares Corp.(b) 802,125
41,050 United Bankshares, Inc.(b) 1,150,221
47,100 Whitney Holding Corp.(b) 1,231,665
---------------
7,382,689
---------------
Commercial Services & Supplies -- 2.5%
75,693 Healthcare Services Group, Inc.(b) 1,603,178
22,065 Team, Inc.(c) 807,138
44,327 Waste Connections, Inc.(b)(c) 1,369,704
---------------
3,780,020
---------------
Communications Equipment -- 1.8%
55,825 CommScope, Inc.(b)(c) 2,747,148
---------------
Construction & Engineering -- 2.2%
34,025 Granite Construction, Inc.(b) 1,231,025
38,000 URS Corp.(c) 2,064,540
---------------
3,295,565
---------------
Consumer Finance -- 2.0%
108,700 First Cash Financial Services, Inc.(c) 1,595,716
57,935 McGrath Rentcorp 1,491,826
---------------
3,087,542
---------------
Distributors -- 1.0%
38,995 WESCO International, Inc.(b)(c) 1,545,762
---------------
Diversified Consumer Services -- 0.9%
47,175 Regis Corp.(b) 1,319,013
---------------
Electric Utilities -- 1.1%
63,705 Westar Energy, Inc.(b) 1,652,508
---------------
Electrical Equipment -- 3.6%
47,300 General Cable Corp.(b)(c) 3,466,144
45,475 Regal-Beloit Corp.(b) 2,044,101
---------------
5,510,245
---------------
Shares Description Value (+)
- ---------------------------------------------------------------------
Energy Equipment & Services -- 3.6%
22,125 Atwood Oceanics, Inc.(b)(c) $ 2,217,810
49,875 Oil States International, Inc.(b)(c) 1,701,735
45,150 Superior Energy Services, Inc.(c) 1,554,063
---------------
5,473,608
---------------
Food Products -- 2.9%
46,400 Corn Products International, Inc.(b) 1,705,200
44,750 Ralcorp Holdings, Inc.(c) 2,720,352
---------------
4,425,552
---------------
Gas Utilities -- 1.8%
94,425 Vectren Corp.(b) 2,739,269
---------------
Health Care Equipment & Supplies -- 0.9%
63,581 Medical Action Industries, Inc.(c) 1,325,664
---------------
Health Care Providers & Services -- 5.2%
96,350 Healthspring, Inc.(c) 1,835,468
82,925 LHC Group, Inc.(c) 2,071,466
36,100 Owens & Minor, Inc.(b) 1,531,723
35,600 Pediatrix Medical Group, Inc.(b)(c) 2,426,140
---------------
7,864,797
---------------
Hotels, Restaurants & Leisure -- 1.9%
103,050 AFC Enterprises, Inc.(c) 1,166,526
193,900 Triarc Cos., Inc., Class B 1,698,564
---------------
2,865,090
---------------
Household Durables -- 1.1%
62,825 Tempur-Pedic International, Inc.(b) 1,631,565
---------------
Industrial Conglomerates -- 1.5%
35,075 Teleflex, Inc. 2,210,076
---------------
Insurance -- 5.9%
105,262 HCC Insurance Holdings, Inc. 3,018,914
45,700 Hilb, Rogal & Hobbs Co.(b) 1,854,049
73,875 IPC Holdings, Ltd.(b) 2,132,771
65,995 United Fire & Casualty Co. 1,919,795
---------------
8,925,529
---------------
Internet Software & Services -- 0.7%
71,900 Vignette Corp.(c) 1,050,459
---------------
Leisure Equipment & Products -- 0.6%
54,650 Brunswick Corp.(b) 931,783
---------------
Machinery -- 6.8%
71,550 Actuant Corp., Class A(b) 2,433,416
55,200 Kennametal, Inc. 2,089,872
34,825 Lincoln Electric Holdings, Inc.(b) 2,478,843
40,365 Nordson Corp.(b) 2,339,555
19,350 Rofin-Sinar Technologies, Inc.(c) 930,929
---------------
10,272,615
---------------
Metals & Mining -- 1.1%
17,475 Cleveland-Cliffs, Inc.(b) 1,761,480
---------------
Oil, Gas & Consumable Fuels -- 8.9%
49,075 Arena Resources, Inc.(c) 2,046,918
125,275 Concho Resources, Inc.(b)(c) 2,581,918
100,125 Continental Resources, Inc.(b)(c) 2,616,266
115,100 Gulfport Energy Corp.(c) 2,101,726
107,200 Petrohawk Energy Corp.(b)(c) 1,855,632
160,525 PetroQuest Energy, Inc.(c) 2,295,508
---------------
13,497,968
---------------
See accompanying notes to financial statements.
33
VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Description Value (+)
- ---------------------------------------------------------------------------------------------
Semiconductors & Semiconductor Equipment -- 4.2%
47,600 ATMI, Inc.(b)(c) $ 1,535,100
125,700 Brooks Automation, Inc.(b)(c) 1,660,497
88,350 Microsemi Corp.(b)(c) 1,956,069
97,625 Ultra Clean Holdings, Inc.(b)(c) 1,191,025
---------------
6,342,691
---------------
Software -- 3.9%
25,070 MICROS Systems, Inc.(b)(c) 1,758,911
108,050 Sybase, Inc.(b)(c) 2,819,024
101,175 Tyler Technologies, Inc.(c) 1,304,146
---------------
5,882,081
---------------
Specialty Retail -- 3.5%
99,465 Aaron Rents, Inc. 1,913,707
48,775 Men's Wearhouse, Inc. (The)(b) 1,315,950
64,470 Monro Muffler, Inc. 1,256,520
53,224 Stage Stores, Inc.(b) 787,715
---------------
5,273,892
---------------
Textiles, Apparel & Luxury Goods -- 1.0%
34,154 Columbia Sportswear Co.(b) 1,505,850
---------------
Total Common Stocks (Identified Cost $132,589,942) 144,758,032
---------------
Shares/
Principal
Amount
- ---------------------------------------------------------------------------------------------
Short-Term Investments -- 30.5%
39,044,059 State Street Navigator Securities Lending Prime Portfolio(d) 39,044,059
$ 7,365,019 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/31/2007 at 3.250% to be repurchased at
$7,366,349 on 1/2/2008, collateralized by $7,305,000 Federal
Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at
$7,515,019 including accrued interest (Note 2h of Notes to
Financial Statements) 7,365,019
---------------
Total Short-Term Investments (Identified Cost $46,409,078) 46,409,078
---------------
Total Investments -- 125.9%
(Identified Cost $178,999,020)(a) 191,167,110
Other assets less liabilities -- (25.9)% (39,365,960)
---------------
Net Assets -- 100% $ 151,801,150
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized appreciation on
investments based on a cost of $179,096,407 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 $ 20,744,698
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (8,673,995)
---------------
Net unrealized appreciation $ 12,070,703
===============
(b) All or a portion of this security was on loan to brokers at December 31, 2007.
(c) Non-income producing security.
(d) Represents investment of securities lending collateral.
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited)
Oil, Gas & Consumable Fuels 8.9%
Capital Markets 7.3
Machinery 6.8
Insurance 5.9
Chemicals 5.5
Health Care Providers & Services 5.2
Commercial Banks 4.8
Aerospace & Defense 4.4
Semiconductors & Semiconductor Equipment 4.2
Software 3.9
Electrical Equipment 3.6
Energy Equipment & Services 3.6
Specialty Retail 3.5
Food Products 2.9
Commercial Services & Supplies 2.5
Construction & Engineering 2.2
Consumer Finance 2.0
Other, less than 2% each 18.2
See accompanying notes to financial statements.
34
WESTPEAK 130/30 GROWTH FUND* -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- -----------------------------------------------------------------------
Common Stocks -- 127.1% of Net Assets
Aerospace & Defense -- 10.4%
18,595 Boeing Co. (The)(c) $ 1,626,319
26,900 Honeywell International, Inc.(c) 1,656,233
10,500 Precision Castparts Corp.(c) 1,456,350
1,800 United Technologies Corp. 137,772
---------------
4,876,674
---------------
Auto Components -- 1.0%
9,200 Autoliv, Inc. 484,932
---------------
Biotechnology -- 0.9%
5,800 Genzyme Corp.(b) 431,752
---------------
Capital Markets -- 3.5%
6,784 Goldman Sachs Group, Inc.(c) 1,458,899
5,700 Janus Capital Group, Inc. 187,245
---------------
1,646,144
---------------
Chemicals -- 7.2%
36,700 Cabot Corp.(c) 1,223,578
25,000 Celanese Corp.(c) 1,058,000
10,400 Lubrizol Corp. 563,264
4,700 Monsanto Co. 524,943
---------------
3,369,785
---------------
Commercial Services & Supplies -- 1.5%
8,000 Dun & Bradstreet Corp.(c) 709,040
---------------
Communications Equipment -- 6.3%
71,180 Cisco Systems, Inc.(b)(c) 1,926,843
30,300 Juniper Networks, Inc.(b)(c) 1,005,960
---------------
2,932,803
---------------
Computers & Peripherals -- 9.9%
5,200 Apple, Inc.(b) 1,030,016
73,500 EMC Corp.(b) 1,361,955
43,400 Hewlett-Packard Co.(c) 2,190,832
3,200 Network Appliance, Inc.(b) 79,872
---------------
4,662,675
---------------
Containers & Packaging -- 1.7%
29,100 Pactiv Corp.(b)(c) 774,933
---------------
Diversified Consumer Services -- 2.1%
11,800 ITT Educational Services, Inc.(b)(c) 1,006,186
---------------
Electrical Equipment -- 2.1%
19,800 Thomas & Betts Corp.(b)(c) 970,992
---------------
Electronic Equipment & Instruments -- 3.0%
12,500 Mettler-Toledo International, Inc.(b)(c) 1,422,500
---------------
Energy Equipment & Services -- 8.0%
36,700 Dresser-Rand Group, Inc.(b)(c) 1,433,135
32,600 Global Industries, Ltd.(b) 698,292
21,900 National-Oilwell Varco, Inc.(b)(c) 1,608,774
---------------
3,740,201
---------------
Food & Staples Retailing -- 1.4%
23,800 Kroger Co. 635,698
---------------
Health Care Providers & Services -- 20.5%
26,600 Aetna, Inc.(c) 1,535,618
32,300 AmerisourceBergen Corp.(c) 1,449,301
24,700 Cardinal Health, Inc.(c) 1,426,425
22,600 CIGNA Corp.(c) 1,214,298
6,200 Health Net, Inc.(b) 299,460
6,800 McKesson Corp. 445,468
Shares Description Value (+)
- -----------------------------------------------------------------------------
Health Care Providers & Services -- continued
32,400 UnitedHealth Group, Inc.(c) $ 1,885,680
15,500 WellPoint, Inc.(b)(c) 1,359,815
---------------
9,616,065
---------------
Hotels, Restaurants & Leisure -- 2.5%
21,700 Starwood Hotels & Resorts Worldwide, Inc. 955,451
9,000 Wendy's International, Inc.(c) 232,560
---------------
1,188,011
---------------
Internet & Catalog Retail -- 5.2%
13,700 Amazon.com, Inc.(b)(c) 1,269,168
4,600 Expedia, Inc.(b)(c) 145,452
38,300 IAC/InterActiveCorp.(b)(c) 1,031,036
---------------
2,445,656
---------------
Internet Software & Services -- 2.5%
5,900 eBay, Inc.(b) 195,821
1,400 Google, Inc., Class A(b) 968,072
---------------
1,163,893
---------------
IT Services -- 3.7%
11,600 Accenture, Ltd., Class A 417,948
20,900 Fiserv, Inc.(b)(c) 1,159,741
4,200 Hewitt Associates, Inc., Class A(b) 160,818
---------------
1,738,507
---------------
Life Sciences Tools & Services -- 3.0%
14,900 Invitrogen Corp.(b)(c) 1,391,809
---------------
Machinery -- 7.9%
20,600 AGCO Corp.(b)(c) 1,400,388
11,700 Caterpillar, Inc. 848,952
1,000 Cummins, Inc. 127,370
28,200 Ingersoll-Rand Co., Ltd., Class A(c) 1,310,454
---------------
3,687,164
---------------
Media -- 3.0%
61,100 DIRECTV Group, Inc. (The)(b)(c) 1,412,632
---------------
Metals & Mining -- 1.1%
2,900 AK Steel Holding Corp.(b) 134,096
1,300 Freeport-McMoRan Copper & Gold, Inc. 133,172
1,700 Newmont Mining Corp. 83,011
3,300 Reliance Steel & Aluminum Co. 178,860
---------------
529,139
---------------
Multiline Retail -- 2.7%
19,400 Big Lots, Inc.(b)(c) 310,206
36,100 Dollar Tree Stores, Inc.(b)(c) 935,712
---------------
1,245,918
---------------
Oil, Gas & Consumable Fuels -- 0.5%
5,200 Continental Resources, Inc.(b) 135,876
2,400 Massey Energy Co. 85,800
---------------
221,676
---------------
Pharmaceuticals -- 2.9%
37,500 Forest Laboratories, Inc.(b)(c) 1,366,875
---------------
Semiconductors & Semiconductor Equipment -- 5.3%
44,800 Analog Devices, Inc.(c) 1,420,160
47,600 Applied Materials, Inc. 845,376
17,300 Integrated Device Technology, Inc.(b) 195,663
---------------
2,461,199
---------------
See accompanying notes to financial statements.
35
WESTPEAK 130/30 GROWTH FUND* -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Description Value (+)
- -------------------------------------------------------------------------------------------
Software -- 5.3%
44,500 Compuware Corp.(b) $ 395,160
11,100 Microsoft Corp. 395,160
80,900 Novell, Inc.(b) 555,783
43,300 Synopsys, Inc.(b)(c) 1,122,769
---------------
2,468,872
---------------
Tobacco -- 1.2%
7,400 Altria Group, Inc. 559,292
---------------
Wireless Telecommunication Services -- 0.8%
5,700 Telephone & Data Systems, Inc. 356,820
---------------
Total Common Stocks (Identified Cost $58,398,356) 59,517,843
---------------
Principal
Amount
- -------------------------------------------------------------------------------------------
Short-Term Investments -- 0.9%
$ 417,199 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/31/2007 at 3.250% to be repurchased at
$417,274 on 1/2/2008, collateralized by $415,000 Federal
Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at
$426,931, including accrued interest (Note 2h of Notes to
Financial Statements) 417,199
---------------
Total Short-Term Investments (Identified Cost $417,199) 417,199
---------------
Total Investments -- 128.0%
(Identified Cost $58,815,555)(a) 59,935,042
Other assets less liabilities -- (28.0)% (13,092,923)
---------------
Net Assets -- 100% $ 46,842,119
===============
Shares
- -------------------------------------------------------------------------------------------
Common Stocks Sold Short -- 27.5% of Net Assets
Biotechnology -- 1.5%
10,250 Abraxis Bioscience, Inc.(b) 704,893
---------------
Commercial Services & Supplies -- 1.1%
13,900 Pitney Bowes, Inc. 528,756
---------------
Construction Materials -- 1.6%
21,000 Eagle Materials, Inc. 745,080
---------------
Electrical Equipment -- 0.3%
1,700 General Cable Corp.(b) 124,576
---------------
Energy Equipment & Services -- 0.5%
4,300 Nabors Industries, Ltd.(b) 117,777
7,000 Tetra Technologies, Inc.(b) 108,990
---------------
226,767
---------------
Health Care Providers & Services -- 3.5%
32,000 Omnicare, Inc. 729,920
17,200 Quest Diagnostics, Inc. 909,880
---------------
1,639,800
---------------
Health Care Technology -- 0.9%
7,500 Cerner Corp.(b) 423,000
---------------
Hotels, Restaurants & Leisure -- 1.9%
27,100 Scientific Games Corp.(b) 901,075
---------------
Household Durables -- 0.5%
22,100 Pulte Homes, Inc. 232,934
---------------
Machinery -- 3.0%
18,000 Graco, Inc. 670,680
26,600 Trinity Industries, Inc. 738,416
---------------
1,409,096
---------------
Shares Description Value (+)
- --------------------------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 4.9%
20,000 Arch Coal, Inc. $ 898,600
13,000 CNX Gas Corp.(b) 415,350
31,871 W&T Offshore, Inc. 954,855
---------------
2,268,805
---------------
Personal Products -- 0.9%
16,200 Bare Escentuals, Inc.(b) 392,850
---------------
Pharmaceuticals -- 0.9%
41,000 APP Pharmaceuticals, Inc.(b) 421,070
---------------
REITs -- 1.5%
40,800 CapitalSource, Inc. 717,672
---------------
Semiconductors & Semiconductor Equipment -- 1.9%
6,800 International Rectifier Corp.(b) 230,996
92,400 Micron Technology, Inc.(b) 669,900
---------------
900,896
---------------
Specialty Retail -- 1.3%
16,700 Tractor Supply Co.(b) 600,198
---------------
Trading Companies & Distributors -- 1.3%
15,500 Fastenal Co. 626,510
---------------
Total Common Stocks Sold Short (Proceeds $14,030,602) 12,863,978
---------------
* Formerly Westpeak Capital Growth Fund.
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized appreciation on
investments based on a cost of $58,837,858 (excludes proceeds
received from short sales of $14,030,602) for federal income tax
purposes was as follows:
Aggregate gross unrealized appreciation (in which there is an excess
of value over tax cost):
Investment securities $ 4,529,357
Securities sold short 2,036,967
Aggregate gross unrealized depreciation (in which there is an excess
of tax cost over value):
Investment securities (3,432,173)
Securities sold short (870,343)
---------------
Net unrealized appreciation $ 2,263,808
===============
(b) Non-income producing security.
(c) Securities held as collateral for short sales.
REITs Real Estate Investment Trusts
See accompanying notes to financial statements.
36
WESTPEAK 130/30 GROWTH FUND* -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited)
* Health Care Providers & Services 17.0%
Aerospace & Defense 10.4
Computers & Peripherals 9.9
* Energy Equipment & Services 7.5
Chemicals 7.2
Communications Equipment 6.3
Software 5.3
Internet & Catalog Retail 5.2
* Machinery 4.9
IT Services 3.7
Capital Markets 3.5
* Semiconductors & Semiconductor Equipment 3.4
Electronic Equipment & Instruments 3.0
Media 3.0
Life Sciences Tools & Services 3.0
Multiline Retail 2.7
Internet Software & Services 2.5
Diversified Consumer Services 2.1
* Pharmaceuticals 2.0
* Oil, Gas & Consumable Fuels (4.4)
* Other, less than 2% each 1.4
* Net of securities sold short.
See accompanying notes to financial statements.
37
This Page Intentionally Left Blank
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2007
CGM Advisor Hansberger Harris Associates
Targeted Equity Fund International Fund Focused Value Fund
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
ASSETS
Investments at cost $ 706,616,584 $ 171,629,732 $ 161,461,228
Net unrealized appreciation
(depreciation) 210,560,225 44,643,239 (89,478)
--------------------- --------------------- ---------------------
Investments at value(a) 917,176,809 216,272,971 161,371,750
Cash 4,507 6,652 --
Foreign currency at value (identified
cost $0, $126,030, $0, $0, $0, $0,
$0) -- 126,887 --
Receivable for Fund shares sold 5,179,967 174,272 60,060
Receivable for securities sold 12,612,949 222,290 252,718
Dividends and interest receivable 1,122,244 149,937 69,837
Tax reclaims receivable 3,534 100,323 --
Securities lending income receivable 32,108 23,616 10,720
Other assets -- -- --
--------------------- --------------------- ---------------------
TOTAL ASSETS 936,132,118 217,076,948 161,765,085
--------------------- --------------------- ---------------------
LIABILITIES
Collateral on securities loaned, at
value (Note 2) 20,829,727 31,403,828 18,890,517
Securities sold short (proceeds $0,
$0, $0, $0, $0, $0, $14,030,602) -- -- --
Payable for securities purchased 16,560,319 681,316 3,993,224
Payable for Fund shares redeemed 617,987 144,723 1,353,248
Management fees payable (Note 4) 515,137 125,532 109,537
Deferred Trustees' fees (Note 4) 857,488 135,214 101,843
Administrative fees payable (Note 4) 73,547 15,863 13,190
Prime Broker expense payable -- -- --
Dividends payable for short sales -- -- --
Other accounts payable and accrued
expenses 241,067 161,677 104,513
--------------------- --------------------- ---------------------
TOTAL LIABILITIES 39,695,272 32,668,153 24,566,072
--------------------- --------------------- ---------------------
NET ASSETS $ 896,436,846 $ 184,408,795 $ 137,199,013
===================== ===================== =====================
NET ASSETS CONSIST OF:
Paid-in capital $ 660,607,048 $ 138,413,647 $ 135,415,565
Overdistributed net investment income (798,914) (1,964,958) (101,844)
Accumulated net realized gain (loss)
on investments, foreign currency
transactions and short sales 26,068,487 3,313,542 1,974,770
Net unrealized appreciation
(depreciation) on investments,
foreign currency translations and
short sales 210,560,225 44,646,564 (89,478)
--------------------- --------------------- ---------------------
NET ASSETS $ 896,436,846 $ 184,408,795 $ 137,199,013
===================== ===================== =====================
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:
Class A shares:
Net assets $ 826,866,706 $ 128,224,237 $ 40,869,170
===================== ===================== =====================
Shares of beneficial interest 63,534,373 5,784,641 4,509,688
===================== ===================== =====================
Net asset value and redemption price
per share $ 13.01 $ 22.17 $ 9.06
===================== ===================== =====================
Offering price per share
(100/[100-maximum sales charge] of
net asset value) (Note 1) $ 13.80 $ 23.52 $ 9.61
===================== ===================== =====================
Class B shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (Note 1)
Net assets $ 32,296,513 $ 29,770,148 $ 47,194,309
===================== ===================== =====================
Shares of beneficial interest 2,734,625 1,497,594 5,627,350
===================== ===================== =====================
Net asset value and offering price
per share $ 11.81 $ 19.88 $ 8.39
===================== ===================== =====================
Class C shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (Note 1)
Net assets $ 19,753,489 $ 26,414,410 $ 49,135,534
===================== ===================== =====================
Shares of beneficial interest 1,675,190 1,333,307 5,857,843
===================== ===================== =====================
Net asset value and offering price
per share $ 11.79 $ 19.81 $ 8.39
===================== ===================== =====================
Class Y shares:
Net assets $ 17,520,138 $ -- $ --
===================== ===================== =====================
Shares of beneficial interest 1,315,535 -- --
===================== ===================== =====================
Net asset value, offering and
redemption price per share $ 13.32 $ -- $ --
===================== ===================== =====================
(a) Including securities on loan with
market values of: $ 20,856,845 $ 30,183,464 $ 18,322,482
===================== ===================== =====================
* Formerly Westpeak Capital Growth Fund.
See accompanying notes to financial statements.
39
Harris Associates Vaughan Nelson Westpeak
Large Cap Value Natixis U.S. Diversified Small Cap Value 130/30 Growth
Fund Portfolio Fund Fund*
- --------------------- ------------------------ --------------------- ---------------------
--------------------- --------------------- ---------------------
$ 218,649,636 $ 628,062,480 $ 178,999,020 $ 58,815,555
25,048,863 104,723,116 12,168,090 1,119,487
- --------------------- --------------------- --------------------- ---------------------
243,698,499 732,785,596 191,167,110 59,935,042
-- 27,021 -- 13,506
-- -- -- --
190,959 134,705 603,077 43,934
-- 4,549,195 599,926 --
233,867 438,887 119,151 36,759
-- 20,951 -- --
9,019 71,441 17,743 --
304,637 -- -- --
- --------------------- --------------------- --------------------- ---------------------
244,436,981 738,027,796 192,507,007 60,029,241
- --------------------- --------------------- --------------------- ---------------------
16,389,229 135,549,039 39,044,059 --
-- -- -- 12,863,978
3,229,080 7,714,199 1,127,322 --
283,310 3,288,631 178,486 65,339
149,503 457,894 97,578 7,463
357,178 487,139 140,039 141,206
20,185 50,837 13,033 4,231
-- -- -- 13,301
-- -- -- 19,968
167,570 336,026 105,340 71,636
- --------------------- --------------------- --------------------- ---------------------
20,596,055 147,883,765 40,705,857 13,187,122
- --------------------- --------------------- --------------------- ---------------------
$ 223,840,926 $ 590,144,031 $ 151,801,150 $ 46,842,119
===================== ===================== ===================== =====================
$ 262,063,397 $ 477,716,070 $ 139,684,366 $ 94,194,846
(340,402) (487,139) (140,040) (141,206)
(62,930,932) 8,190,600 88,734 (49,497,632)
25,048,863 104,724,500 12,168,090 2,286,111
- --------------------- --------------------- --------------------- ---------------------
$ 223,840,926 $ 590,144,031 $ 151,801,150 $ 46,842,119
===================== ===================== ===================== =====================
$ 172,467,646 $ 407,227,589 $ 103,719,298 $ 40,370,001
===================== ===================== ===================== =====================
11,523,980 15,806,068 4,691,044 3,224,027
===================== ===================== ===================== =====================
$ 14.97 $ 25.76 $ 22.11 $ 12.52
===================== ===================== ===================== =====================
$ 15.88 $ 27.33 $ 23.46 $ 13.28
===================== ===================== ===================== =====================
$ 23,916,150 $ 119,028,411 $ 25,075,528 $ 5,899,204
===================== ===================== ===================== =====================
1,728,112 5,259,544 1,244,536 554,520
===================== ===================== ===================== =====================
$ 13.84 $ 22.63 $ 20.15 $ 10.64
===================== ===================== ===================== =====================
$ 15,616,298 $ 47,238,801 $ 21,765,113 $ 572,914
===================== ===================== ===================== =====================
1,130,124 2,085,387 1,079,688 53,934
===================== ===================== ===================== =====================
$ 13.82 $ 22.65 $ 20.16 $ 10.62
===================== ===================== ===================== =====================
$ 11,840,832 $ 16,649,230 $ 1,241,211 $ --
===================== ===================== ===================== =====================
765,279 603,768 55,923 --
===================== ===================== ===================== =====================
$ 15.47 $ 27.58 $ 22.20 $ --
===================== ===================== ===================== =====================
$ 15,469,371 $ 131,450,548 $ 37,866,232 $ --
===================== ===================== ===================== =====================
40
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2007
Harris Associates
CGM Advisor Hansberger Focused Value
Targeted Equity Fund International Fund Fund
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
INVESTMENT INCOME
Dividends $ 11,839,637 $ 4,153,683 $ 1,689,118
Interest 633,555 108,171 133,977
Securities lending income (Note 2) 316,857 142,499 58,333
Less net foreign taxes withheld (181,133) (350,902) --
--------------------- --------------------- ---------------------
12,608,916 4,053,451 1,881,428
--------------------- --------------------- ---------------------
Expenses
Management fees (Note 4) 5,402,846 1,441,589 1,732,909
Service fees - Class A (Note 4) 1,796,683 305,801 135,107
Service and distribution fees -
Class B (Note 4) 353,570 323,413 661,646
Service and distribution fees -
Class C (Note 4) 103,588 255,374 723,380
Trustees' fees and expenses (Note 4) 175,724 33,778 28,133
Administrative fees (Note 4) 408,927 100,153 95,792
Custodian fees and expenses 51,034 123,181 22,891
Transfer agent fees and expenses -
Class A (Note 4) 785,369 222,023 102,079
Transfer agent fees and expenses -
Class B (Note 4) 39,071 57,956 123,861
Transfer agent fees and expenses -
Class C (Note 4) 11,489 46,328 135,009
Transfer agent fees and expenses -
Class Y (Note 4) 11,111 -- --
Audit fees 36,359 42,126 33,959
Legal fees 19,902 4,951 3,699
Shareholder reporting expenses 98,958 40,245 59,858
Registration fees 49,222 34,120 25,641
Expense waiver recapture - Class A
(Note 4) -- -- --
Expense waiver recapture - Class B
(Note 4) -- -- --
Expense waiver recapture - Class C
(Note 4) -- -- --
Expense waiver recapture - Class Y
(Note 4) -- -- --
Dividend expense on securities sold
short -- -- --
Miscellaneous expenses 71,977 21,123 23,289
--------------------- --------------------- ---------------------
Total expenses 9,415,830 3,052,161 3,907,253
Less fee reduction and/or expense
reimbursement (Note 4) (5,490) (1,190) (978)
--------------------- --------------------- ---------------------
Net expenses 9,410,340 3,050,971 3,906,275
--------------------- --------------------- ---------------------
Net investment income (loss) 3,198,576 1,002,480 (2,024,847)
--------------------- --------------------- ---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FOREIGN CURRENCY
TRANSACTIONS AND SHORT SALES
Net realized gain (loss) on:
Investments 80,201,690 20,268,048 26,572,372*
Foreign currency transactions -- (102,405) --
Short sales -- -- --
Payments by affiliates (Note 4) -- -- --
Net change in unrealized appreciation
(depreciation) on:
Investments 149,502,525 5,253,276 (35,355,327)
Foreign currency translations -- 317 --
Short sales -- -- --
--------------------- --------------------- ---------------------
Total net realized and unrealized gain
(loss) on investments, foreign
currency transactions and short sales 229,704,215 25,419,236 (8,782,955)
--------------------- --------------------- ---------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 232,902,791 $ 26,421,716 $ (10,807,802)
===================== ===================== =====================
Harris Associates
Large Cap Value
Fund
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 3,834,035
Interest 324,718
Securities lending income (Note 2) 28,350
Less net foreign taxes withheld --
---------------------
4,187,103
---------------------
Expenses
Management fees (Note 4) 1,774,740
Service fees - Class A (Note 4) 481,059
Service and distribution fees -
Class B (Note 4) 339,629
Service and distribution fees -
Class C (Note 4) 174,627
Trustees' fees and expenses (Note 4) 75,651
Administrative fees (Note 4) 136,965
Custodian fees and expenses 27,864
Transfer agent fees and expenses -
Class A (Note 4) 344,239
Transfer agent fees and expenses -
Class B (Note 4) 59,623
Transfer agent fees and expenses -
Class C (Note 4) 31,187
Transfer agent fees and expenses -
Class Y (Note 4) 8,536
Audit fees 33,626
Legal fees 4,765
Shareholder reporting expenses 67,661
Registration fees 46,271
Expense waiver recapture - Class A
(Note 4) 5,520
Expense waiver recapture - Class B
(Note 4) 7,469
Expense waiver recapture - Class C
(Note 4) 1,507
Expense waiver recapture - Class Y
(Note 4) --
Dividend expense on securities sold
short --
Miscellaneous expenses 26,296
---------------------
Total expenses 3,647,235
Less fee reduction and/or expense
reimbursement (Note 4) (7,002)
---------------------
Net expenses 3,640,233
---------------------
Net investment income (loss) 546,870
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FOREIGN CURRENCY
TRANSACTIONS AND SHORT SALES
Net realized gain (loss) on:
Investments 22,651,455 *
Foreign currency transactions --
Short sales --
Payments by affiliates (Note 4) --
Net change in unrealized appreciation
(depreciation) on:
Investments (28,970,313)
Foreign currency translations --
Short sales --
---------------------
Total net realized and unrealized gain
(loss) on investments, foreign
currency transactions and short sales (6,318,858)
---------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (5,771,988)
=====================
* Amount includes a litigation payment of $427,091 for Harris Associates
Focused Value Fund and $304,637 for Harris Associates Large Cap Value Fund.
See Note 2.
** Formerly Westpeak Capital Growth Fund.
See accompanying notes to financial statements.
41
Natixis Vaughan Nelson Westpeak
U.S. Diversified Small Cap Value 130/30 Growth
Portfolio Fund Fund**
--------------------- --------------------- ---------------------
--------------------- --------------------- ---------------------
$ 6,344,257 $ 1,710,933 $ 354,223
837,019 245,108 86,955
353,735 81,928 3,036
(20,547) -- --
--------------------- --------------------- ---------------------
7,514,464 2,037,969 444,214
--------------------- --------------------- ---------------------
5,539,020 1,324,569 402,851
1,023,056 240,992 151,561
1,380,162 295,218 79,158
473,124 206,751 7,300
104,237 34,147 32,812
327,564 81,626 28,554
47,464 25,240 18,040
768,643 198,205 117,487
255,618 59,175 18,766
88,830 42,367 1,731
18,109 119 --
40,926 31,726 41,906
14,925 4,068 4,846
141,782 52,321 23,085
63,364 67,764 34,465
-- -- --
-- -- --
-- -- --
-- 237 --
-- -- 58,557
59,595 17,686 12,228
--------------------- --------------------- ---------------------
10,346,419 2,682,211 1,033,347
(3,833) (116,984) (76,874)
--------------------- --------------------- ---------------------
10,342,586 2,565,227 956,473
--------------------- --------------------- ---------------------
(2,828,122) (527,258) (512,259)
--------------------- --------------------- ---------------------
87,628,640 14,196,089 3,611,532
(7,111) -- --
-- -- (1,566,401)
34,706 -- --
(7,025,776) (6,164,382) (4,717,164)
1,091 -- --
-- -- 1,166,624
--------------------- --------------------- ---------------------
80,631,550 8,031,707 (1,505,409)
--------------------- --------------------- ---------------------
$ 77,803,428 $ 7,504,449 $ (2,017,668)
===================== ===================== =====================
42
STATEMENTS OF CHANGES IN NET ASSETS
CGM Advisor Targeted Equity Fund
--------------------------------------------
Year Ended Year Ended
December 31, December 31,
2007 2006
--------------------- ---------------------
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 3,198,576 $ 5,415,878
Net realized gain on investments, foreign
currency transactions and short sales 80,201,690 98,076,120
Net change in unrealized appreciation
(depreciation) on investments, foreign
currency translations and short sales 149,502,525 (41,577,124)
--------------------- ---------------------
Net increase (decrease) in net assets
resulting from operations 232,902,791 61,914,874
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A (7,741,811) (4,805,342)
Class B (251,226) (344,672)
Class C (80,296) (50,730)
Class Y (178,444) (117,501)
Net realized capital gain
Class A (68,451,630) (18,905,325)
Class B (3,157,063) (1,296,659)
Class C (1,397,920) (261,882)
Class Y (1,283,819) (317,675)
--------------------- ---------------------
Total distributions (82,542,209) (26,099,786)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) 2,733,857 (55,926,861)
--------------------- ---------------------
Redemption fees
Class A 10,214 3,687
Class B 448 250
Class C 171 46
Class Y 191 64
--------------------- ---------------------
11,024 4,047
--------------------- ---------------------
Net increase (decrease) in net assets 153,105,463 (20,107,726)
--------------------- ---------------------
NET ASSETS
Beginning of the year 743,331,383 763,439,109
--------------------- ---------------------
End of the year $ 896,436,846 $ 743,331,383
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME (LOSS) $ (798,914) $ 4,251,080
===================== =====================
Hansberger International Fund
--------------------------------------------
Year Ended Year Ended
December 31, December 31,
2007 2006
--------------------- ---------------------
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ 1,002,480 $ 772,749
Net realized gain on investments, foreign
currency transactions and short sales 20,165,643 21,300,725
Net change in unrealized appreciation
(depreciation) on investments, foreign
currency translations and short sales 5,253,593 11,339,832
--------------------- ---------------------
Net increase (decrease) in net assets
resulting from operations 26,421,716 33,413,306
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A (2,121,366) (1,649,325)
Class B (325,097) (308,165)
Class C (304,997) (228,856)
Class Y -- --
Net realized capital gain
Class A (12,588,474) (12,651,380)
Class B (3,324,922) (4,129,524)
Class C (2,884,783) (2,916,961)
Class Y -- --
--------------------- ---------------------
Total distributions (21,549,639) (21,884,211)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) 10,155,626 15,400,963
--------------------- ---------------------
Redemption fees
Class A 6,284 1,759
Class B 1,563 582
Class C 1,306 378
Class Y -- --
--------------------- ---------------------
9,153 2,719
--------------------- ---------------------
Net increase (decrease) in net assets 15,036,856 26,932,777
--------------------- ---------------------
NET ASSETS
Beginning of the year 169,371,939 142,439,162
--------------------- ---------------------
End of the year $ 184,408,795 $ 169,371,939
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME (LOSS) $ (1,964,958) $ (828,914)
===================== =====================
Harris Associates Focused Value Fund
--------------------------------------------
Year Ended Year Ended
December 31, December 31,
2007 2006
--------------------- ---------------------
--------------------- ---------------------
--------------------- ---------------------
FROM OPERATIONS:
Net investment income (loss) $ (2,024,847) $ (1,712,199)
Net realized gain on investments, foreign
currency transactions and short sales 26,572,372 32,289,793
Net change in unrealized appreciation
(depreciation) on investments, foreign
currency translations and short sales (35,355,327) (3,254,755)
--------------------- ---------------------
Net increase (decrease) in net assets
resulting from operations (10,807,802) 27,322,839
--------------------- ---------------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income
Class A -- --
Class B -- --
Class C -- --
Class Y -- --
Net realized capital gain
Class A (6,965,375) (9,867,493)
Class B (8,645,512) (13,053,352)
Class C (9,181,053) (14,611,917)
Class Y -- --
--------------------- ---------------------
Total distributions (24,791,940) (37,532,762)
--------------------- ---------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (NOTE 8) (55,787,929) (63,505,817)
--------------------- ---------------------
Redemption fees
Class A 103 801
Class B 126 1,006
Class C 136 1,149
Class Y -- --
--------------------- ---------------------
365 2,956
--------------------- ---------------------
Net increase (decrease) in net assets (91,387,306) (73,712,784)
--------------------- ---------------------
NET ASSETS
Beginning of the year 228,586,319 302,299,103
--------------------- ---------------------
End of the year $ 137,199,013 $ 228,586,319
===================== =====================
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT INCOME (LOSS) $ (101,844) $ (77,212)
===================== =====================
* Formerly Westpeak Capital Growth Fund.
See accompanying notes to financial statements.
43
Harris Associates Large Cap Value Fund Natixis U.S. Diversified Portfolio
- -------------------------------------------- --------------------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
$ 546,870 $ 704,299 $ (2,828,122) $ (459,770)
22,651,455 24,797,461 87,656,235 69,057,546
(28,970,313) 14,208,318 (7,024,685) 9,002,821
- --------------------- --------------------- --------------------- ---------------------
(5,771,988) 39,710,078 77,803,428 77,600,597
- --------------------- --------------------- --------------------- ---------------------
(1,054,288) (435,177) -- --
(108,220) (124,953) -- --
(53,175) (46,052)
(117,660) (30,568) -- --
-- -- (4,889,025) --
-- -- (1,624,487) --
-- -- (642,678) --
-- -- (217,377) --
- --------------------- --------------------- --------------------- ---------------------
(1,333,343) (636,750) (7,373,567) --
- --------------------- --------------------- --------------------- ---------------------
(39,807,186) (50,651,493) (88,754,703) (98,667,360)
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
(46,912,517) (11,578,165) (18,324,842) (21,066,763)
- --------------------- --------------------- --------------------- ---------------------
270,753,443 282,331,608 608,468,873 629,535,636
- --------------------- --------------------- --------------------- ---------------------
$ 223,840,926 $ 270,753,443 $ 590,144,031 $ 608,468,873
===================== ===================== ===================== =====================
$ (340,402) $ 446,071 $ (487,139) $ (404,299)
===================== ===================== ===================== =====================
Vaughan Nelson Small Cap Value Fund Westpeak 130/30 Growth Fund*
- -------------------------------------------- --------------------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
- --------------------- --------------------- --------------------- ---------------------
- --------------------- --------------------- --------------------- ---------------------
$ (527,258) $ (767,140) $ (512,259) $ (417,676)
14,196,089 15,201,715 2,045,131 1,359,930
(6,164,382) 5,842,036 (3,550,540) 4,795,603
- --------------------- --------------------- --------------------- ---------------------
7,504,449 20,276,611 (2,017,668) 5,737,857
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
-- -- -- --
- --------------------- --------------------- --------------------- ---------------------
7,783,917 4,860,769 (7,829,470) (9,528,533)
- --------------------- --------------------- --------------------- ---------------------
5,305 3,304 -- --
1,559 1,780 -- --
1,134 731 -- --
38 -- -- --
- --------------------- --------------------- --------------------- ---------------------
8,036 5,815 -- --
- --------------------- --------------------- --------------------- ---------------------
15,296,402 25,143,195 (9,847,138) (3,790,676)
- --------------------- --------------------- --------------------- ---------------------
136,504,748 111,361,553 56,689,257 60,479,933
- --------------------- --------------------- --------------------- ---------------------
$ 151,801,150 $ 136,504,748 $ 46,842,119 $ 56,689,257
===================== ===================== ===================== =====================
$ (140,040) $ (110,178) $ (141,206) $ (112,145)
===================== ===================== ===================== =====================
44
STATEMENT OF CASH FLOWS FOR WESTPEAK 130/30 GROWTH FUND*
For the Year Ended December 31, 2007
Increase (Decrease) in Cash
Cash Flows From Operating Activities
Change in net assets resulting from
operations $ (2,017,668)
Adjustments to reconcile change in net
assets resulting from operations to
net cash used in operating activities:
Purchase of investment securities (88,155,317)
Proceeds from sale of investment
securities 83,863,968
Net sales of short-term investment
securities 201,404
Purchases to cover securities sold
short (12,869,364)
Proceeds from securities sold short 25,333,565
Decrease in income receivable 16,662
Increase in payable for accrued
expenses 46,803
Decrease in management fee payable (93,717)
Net realized gain on investments and
short sales (2,027,764)
Net unrealized depreciation on
investments and short sales 3,550,540
---------------------
NET CASH USED IN OPERATING ACTIVITIES 7,849,112
=====================
Cash Flows From Financing Activities:
Proceeds from sale of shares 3,881,425
Payment for shares redeemed (11,717,031)
---------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES (7,835,606)
=====================
NET INCREASE IN CASH 13,506
=====================
Cash:
Cash at beginning of period 0
---------------------
Cash at end of period $ 13,506
=====================
Supplemental disclosure of cash flow
information:
Non cash financing activities, which
typically consist of reinvestment of
dividends, were zero.
Interest and taxes paid were zero.
* Formerly Westpeak Capital Growth Fund
See accompanying notes to financial statements.
45
This Page Intentionally Left Blank
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 net from net
of income and unrealized investment investment realized Total
the period (loss) (b) gain (loss) operations income capital gains distributions
---------- ---------- -------------- ---------- ---------- ------------- -------------
CGM ADVISOR TARGETED EQUITY FUND
Class A
12/31/2007 $ 10.70 $ 0.05 $ 3.54 $ 3.59 $ (0.13) $ (1.15) $ (1.28)
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 -- -- --
Class B
12/31/2007 9.84 (0.04) 3.24 3.20 (0.08) (1.15) (1.23)
12/31/2006 9.48 0.00(f) 0.74 0.74 (0.07) (0.31) (0.38)
12/31/2005 8.45 0.00(f) 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 -- -- --
Class C
12/31/2007 9.84 (0.03) 3.22 3.19 (0.09) (1.15) (1.24)
12/31/2006 9.48 0.00(f) 0.74 0.74 (0.07) (0.31) (0.38)
12/31/2005 8.45 0.00(f) 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 -- -- --
Class Y
12/31/2007 10.93 0.09 3.61 3.70 (0.16) (1.15) (1.31)
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 -- -- --
HANSBERGER INTERNATIONAL FUND
Class A
12/31/2007 $ 21.50 $ 0.18 $ 3.29 $ 3.47 $ (0.40) $ (2.40) $ (2.80)
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 -- -- --
Class B
12/31/2007 19.51 0.01 2.98 2.99 (0.22) (2.40) (2.62)
12/31/2006 18.27 0.01 4.11 4.12 (0.18) (2.70) (2.88)
12/31/2005 15.85 0.00(f) 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 -- -- --
Redemption
fees (f)
----------
CGM ADVISOR TARGETED EQUITY FUND
Class A
12/31/2007 $ 0.00
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
Class B
12/31/2007 0.00
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
Class C
12/31/2007 0.00
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
Class Y
12/31/2007 0.00
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
HANSBERGER INTERNATIONAL FUND
Class A
12/31/2007 $ 0.00
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
Class B
12/31/2007 0.00
12/31/2006 0.00
12/31/2005 0.00
12/31/2004 0.00
12/31/2003 --
(a)A sales charge for Class A 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, total return would
have been lower.
See accompanying notes to financial statements.
47
Ratios to Average Net Assets:
---------------------------------
Net asset Net assets,
value, Total end of Net Gross Net investment Portfolio
end of return the period expenses expenses income (loss) turnover
the period (%) (a) (c) (000's) (%) (d) (%) (e) (%) rate (%)
- ---------- ----------- ----------- --------- --------- -------------- ---------
$ 13.01 34.4 $ 826,867 1.17 1.17 0.45 179
10.70 8.5 679,897 1.16 1.16 0.76 171
10.22 13.2 694,121 1.28 1.28 0.78 196
9.05 14.0 689,967 1.42 1.42 0.16 265
7.94 42.8 724,214 1.57 1.57 (0.40) 261
11.81 33.4 32,297 1.92 1.92 (0.34) 179
9.84 7.8 43,032 1.91 1.91 0.02 171
9.48 12.4 53,005 2.03 2.03 0.03 196
8.45 13.1 57,527 2.17 2.17 (0.58) 265
7.47 41.5 56,880 2.32 2.32 (1.14) 261
11.79 33.5 19,753 1.93 1.93 (0.24) 179
9.84 7.7 8,688 1.90 1.90 0.04 171
9.48 12.4 5,133 2.04 2.04 0.03 196
8.45 13.1 3,214 2.17 2.17 (0.58) 265
7.47 41.8 2,647 2.32 2.32 (1.14) 261
13.32 34.8 17,520 0.90 0.90 0.74 179
10.93 9.0 11,714 0.87 0.87 1.05 171
10.42 13.4 11,181 1.07 1.07 0.99 196
9.23 14.4 9,145 1.08 1.08 0.51 265
8.07 43.3 7,773 1.03 1.03 0.16 261
$ 22.17 16.4 $ 128,224 1.45 1.45 0.79 47
21.50 24.1 112,814 1.49 1.49 0.75 49
19.88 16.1 89,663 1.81 1.81 0.62 45
17.12 13.6 73,707 1.91 1.92 0.14 81
15.07 39.0 59,762 2.30 2.32 (0.34) 92
19.88 15.6 29,770 2.20 2.20 0.06 47
19.51 23.2 33,016 2.25 2.25 0.03 49
18.27 15.3 33,388 2.55 2.55 (0.02) 45
15.85 12.7 45,213 2.66 2.67 (0.60) 81
14.06 38.0 60,296 3.05 3.07 (1.09) 92
(d)The investment adviser has agreed to reimburse a portion of the Fund's
expenses and/or reduce its management fee during the period. Without this
reimbursement/fee reduction, if applicable, expenses would have been higher.
(e)Represents the total expenses prior to advisory fee reduction and/or
reimbursement of a portion of the Fund's expenses, if applicable.
(f)Amount rounds to less than $0.01 per share, if applicable.
48
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
the period (loss) (b) gain (loss) operations
---------- ---------- -------------- ----------
HANSBERGER INTERNATIONAL FUND (continued)
Class C
12/31/2007 $ 19.48 $ 0.01 $ 2.97 $ 2.98
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
HARRIS ASSOCIATES FOCUSED VALUE FUND
Class A
12/31/2007 $ 11.56 $ (0.06) $ (0.68)(h) $ (0.74)
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
Class B
12/31/2007 10.92 (0.14) (0.63)(h) (0.77)
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
Class C
12/31/2007 10.92 (0.14) (0.63)(h) (0.77)
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
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Class A
12/31/2007 $ 15.49 $ 0.05 $ (0.48)(h) $ (0.43)
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
Class B
12/31/2007 14.39 (0.06) (0.45)(h) (0.51)
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
Less Distributions:
--------------------------------------
Dividends Distributions
from net from net
investment realized Total Redemption
income capital gains distributions fees (f)
---------- ------------- ------------- ----------
HANSBERGER INTERNATIONAL FUND (continued)
Class C
12/31/2007 $ (0.25) $ (2.40) $ (2.65) $ 0.00
12/31/2006 (0.21) (2.70) (2.91) 0.00
12/31/2005 -- -- -- 0.00
12/31/2004 -- -- -- 0.00
12/31/2003 -- -- -- --
HARRIS ASSOCIATES FOCUSED VALUE FUND
Class A
12/31/2007 $ -- $ (1.76) $ (1.76) $ 0.00
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 -- -- -- --
Class B
12/31/2007 -- (1.76) (1.76) 0.00
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 -- -- -- --
Class C
12/31/2007 -- (1.76) (1.76) 0.00
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 -- -- -- --
HARRIS ASSOCIATES LARGE CAP VALUE FUND
Class A
12/31/2007 $ (0.09) $ -- $ (0.09) $ --
12/31/2006 (0.03) -- (0.03) --
12/31/2005 (0.01) -- (0.01) --
12/31/2004 -- -- -- --
12/31/2003 -- -- -- --
Class B
12/31/2007 (0.04) -- (0.04) --
12/31/2006 (0.03) -- (0.03) --
12/31/2005 (0.01) -- (0.01) --
12/31/2004 -- -- -- --
12/31/2003 -- -- -- --
(a)A sales charge for Class A 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 has agreed to reimburse a portion of the Fund's
expenses and/or reduce its management fee during the period. Without this
reimbursement/fee reduction, 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.
See accompanying notes to financial statements.
49
Ratios to Average Net Assets:
------------------------------------------
Net assets,
Net asset Total end of Net Gross Net investment Portfolio
value, end return the period expenses expenses income (loss) turnover
of the period (%) (a) (d) (000's) (%) (c) (%) (g) (%) rate (%)
- ------------- ----------- ----------- --------- --------- -------------- ---------
$ 19.81 15.5 $ 26,414 2.20 2.20 0.04 47
19.48 23.1 23,541 2.25 2.25 0.01 49
18.28 15.3 19,388 2.56 2.56 (0.11) 45
15.86 12.8 17,046 2.66 2.67 (0.63) 81
14.06 38.0 12,557 3.05 3.07 (1.09) 92
$ 9.06 (6.8) $ 40,869 1.49 1.49 (0.51) 51
11.56 12.7 62,603 1.51 1.51 (0.12) 36
12.08 5.7 82,298 1.68 1.68 (0.04) 39
13.06 10.8 108,042 1.70 1.70 (0.15) 26
11.79 27.6 95,957 1.70 1.84 (0.28) 30
8.39 (7.4) 47,194 2.24 2.24 (1.26) 51
10.92 11.9 78,950 2.26 2.26 (0.87) 36
11.59 5.0 97,256 2.43 2.43 (0.80) 39
12.69 9.9 110,275 2.45 2.45 (0.90) 26
11.55 26.6 107,017 2.45 2.59 (1.03) 30
8.39 (7.4) 49,136 2.24 2.24 (1.26) 51
10.92 11.9 87,033 2.27 2.27 (0.88) 36
11.59 5.0 122,745 2.43 2.43 (0.79) 39
12.69 9.9 144,780 2.45 2.45 (0.90) 26
11.55 26.6 124,427 2.45 2.59 (1.03) 30
$ 14.97 (2.9) $ 172,468 1.28(i)(j) 1.28(i) 0.35 30
15.49 16.5 195,714 1.30 1.30 0.44 23
13.33 (0.2) 188,763 1.30 1.46 0.40 39
13.37 9.1 222,434 1.30 1.49 0.30 27
12.25 30.0 215,259 1.45 1.62 0.07 30(e)
13.84 (3.7) 23,916 2.04(i)(j) 2.04 (i) (0.44) 30
14.39 15.6 42,894 2.05 2.07 (0.33) 23
12.48 (1.0) 59,035 2.05 2.21 (0.35) 39
12.62 8.4 79,949 2.05 2.24 (0.46) 27
11.64 29.1 91,085 2.20 2.37 (0.69) 30(e)
(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 the total expenses prior to advisory fee reduction and/or
reimbursement of a portion of the Fund's expenses, if applicable.
(h)Includes a litigation payment of $0.02 per share. See Note 2.
(i)Includes expense recapture of 0.00%, and 0.02% for Class A and B,
respectively.
(j)Effect of voluntary waiver of expenses by adviser was less than 0.005%.
50
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (Loss) from Investment Operations:
--------------------------------------- -----------
Net asset
value, Net Dividends
beginning investment Net realized Total from from net
of income and unrealized investment investment
the period (loss) (b) gain (loss) operations income
---------- ---------- -------------- ---------- ----------
HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued)
Class C
12/31/2007 $ 14.37 $ (0.06) $ (0.45)(j) $ (0.51) $ (0.04)
12/31/2006 12.46 (0.04) 1.98 1.94 (0.03)
12/31/2005 12.60 (0.04) (0.09) (0.13) (0.01)
12/31/2004 11.63 (0.05) 1.02 0.97 --
12/31/2003 9.01 (0.07) 2.69 2.62 --
Class Y
12/31/2007 16.01 0.12 (0.51)(j) (0.39) (0.15)
12/31/2006 13.72 0.12 2.20 2.32 (0.03)
12/31/2005 13.74 0.09 (0.10) (0.01) (0.01)
12/31/2004 12.54 0.07 1.13 1.20 --
12/31/2003 9.59 0.06 2.89 2.95 --
NATIXIS U.S. DIVERSIFIED PORTFOLIO
Class A
12/31/2007 $ 22.94 $ (0.06) $ 3.19 $ 3.13 $ --
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 --
Class B
12/31/2007 20.33 (0.22) 2.83 2.61 --
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 --
Class C
12/31/2007 20.36 (0.22) 2.82 2.60 --
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 --
Class Y
12/31/2007 24.45 0.03 3.41 3.44 --
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 --
Less Distributions:
-------------------------------
Distributions
from net
realized Total
capital gains distributions (f)
------------- -----------------
HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued)
Class C
12/31/2007 $ -- $ (0.04)
12/31/2006 -- (0.03)
12/31/2005 -- (0.01)
12/31/2004 -- --
12/31/2003 -- --
Class Y
12/31/2007 -- (0.15)
12/31/2006 -- (0.03)
12/31/2005 -- (0.01)
12/31/2004 -- --
12/31/2003 -- --
NATIXIS U.S. DIVERSIFIED PORTFOLIO
Class A
12/31/2007 $ (0.31) $ (0.31)
12/31/2006 -- --
12/31/2005 -- --
12/31/2004 -- --
12/31/2003 -- --
Class B
12/31/2007 (0.31) (0.31)
12/31/2006 -- --
12/31/2005 -- --
12/31/2004 -- --
12/31/2003 -- --
Class C
12/31/2007 (0.31) (0.31)
12/31/2006 -- --
12/31/2005 -- --
12/31/2004 -- --
12/31/2003 -- --
Class Y
12/31/2007 (0.31) (0.31)
12/31/2006 -- --
12/31/2005 -- --
12/31/2004 -- --
12/31/2003 -- --
(a)A sales charge for Class A 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 has agreed to reimburse a portion of the Fund's
expenses and/or reduce its management fee during the period. Without this
reimbursement/fee reduction, 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.
See accompanying notes to financial statements.
51
G
Ratios to Average Net Assets:
------------------------------------------
Net assets,
Net asset Total end of Net Gross Net investment Portfolio
value, end return the period expenses expenses income (loss) turnover
of the period (%) (a) (d) (000's) (%) (c) (%) (f) (%) rate (%)
- ------------- ----------- ----------- --------- --------- -------------- ---------
$ 13.82 (3.7) $ 15,616 2.04(i)(h) 2.04(h) (0.41) 30
14.37 15.6 18,089 2.05 2.06 (0.32) 23
12.46 (1.0) 20,308 2.05 2.21 (0.35) 39
12.60 8.3 26,392 2.05 2.24 (0.42) 27
11.63 29.1 15,553 2.20 2.37 (0.69) 30(e)
15.47 (2.6) 11,840 0.91(i) 0.91 0.72 30
16.01 17.0 14,057 0.91(g) 0.91(g) 0.82 23
13.72 (0.0) 14,226 1.05 1.09 0.65 39
13.74 9.6 18,027 0.99 0.99 0.58 27
12.54 30.8 26,545 1.01 1.01 0.51 30(e)
$ 25.76 13.7 $ 407,228 1.47 1.47 (0.24) 82
22.94 13.7 393,430 1.46 1.46 0.17 83
20.17 7.6 386,084 1.73 1.73 (0.57) 97
18.75 12.9 392,726 1.87 1.87 (0.71) 104
16.61 33.6 354,755 1.99 1.99 (0.94) 102
22.63 12.8 119,028 2.21 2.21 (1.00) 82
20.33 12.9 147,819 2.22 2.22 (0.60) 83
18.01 6.8 174,745 2.48 2.48 (1.32) 97
16.87 12.0 223,349 2.62 2.62 (1.50) 104
15.06 32.7 272,533 2.74 2.74 (1.69) 102
22.65 12.8 47,239 2.22 2.22 (0.99) 82
20.36 12.9 46,064 2.22 2.22 (0.59) 83
18.03 6.8 48,262 2.48 2.48 (1.32) 97
16.89 12.0 58,883 2.62 2.62 (1.48) 104
15.08 32.6 60,783 2.74 2.74 (1.69) 102
27.58 14.0 16,649 1.12 1.12 0.10 82
24.45 14.2 21,155 1.03 1.03 0.60 83
21.41 8.0 20,445 1.32 1.32 (0.16) 97
19.82 13.5 25,060 1.33 1.33 (0.27) 104
17.46 34.5 47,485 1.34 1.34 (0.30) 102
(e)Portfolio turnover excludes the impact of assets resulting from a merger
with another fund.
(f)Represents total expenses prior to advisory fee reduction and/or
reimbursement of a portion of the Fund's expenses, if applicable.
(g)Includes expense recapture of 0.04%.
(h)Includes expense recapture of 0.01%.
(i)Effect of voluntary waiver of expenses by adviser was less than 0.005%.
(j)Includes a litigation payment of $0.02 per share. See Note 2.
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 Redemption
the period (loss) (b) gain (loss) operations fees (c)
---------- ---------- -------------- ---------- ----------
VAUGHAN NELSON SMALL CAP VALUE FUND
Class A
12/31/2007 $ 20.90 $ (0.02) $ 1.23 $ 1.21 $ 0.00
12/31/2006 17.69 (0.05) 3.26 3.21 0.00
12/31/2005 16.07 (0.08) 1.70 1.62 0.00
12/31/2004 13.94 (0.13) 2.26 2.13 0.00
12/31/2003 10.05 (0.19) 4.08 3.89 --
Class B
12/31/2007 19.19 (0.17) 1.13 0.96 0.00
12/31/2006 16.36 (0.20) 3.03 2.83 0.00
12/31/2005 14.97 (0.19) 1.58 1.39 0.00
12/31/2004 13.08 (0.22) 2.11 1.89 0.00
12/31/2003 9.51 (0.26) 3.83 3.57 --
Class C
12/31/2007 19.19 (0.17) 1.14 0.97 0.00
12/31/2006 16.37 (0.19) 3.01 2.82 0.00
12/31/2005 14.98 (0.19) 1.58 1.39 0.00
12/31/2004 13.09 (0.22) 2.11 1.89 0.00
12/31/2003 9.51 (0.26) 3.84 3.58 --
Class Y
12/31/2007 20.91 0.04 1.25 1.29 0.00
12/31/2006(d) 19.02 0.02 1.87 1.89 --
(a)A sales charge for Class A 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)From commencement of Class operations on August 31, 2006 through
December 31, 2006.
See accompanying notes to financial statements.
53
Ratios to Average Net Assets:
-----------------------------------------
Net assets,
Net asset Total end of Net Gross Net investment Portfolio
value, end return the period expenses expenses income (loss) turnover
of the period (%) (a) (f) (000's) (%) (e) (h) (%) (g) (h) (%) (h) rate (%)
- ------------- ----------- ----------- ----------- ----------- -------------- ---------
$ 22.11 5.8 $ 103,719 1.49 1.57 (0.11) 78
20.90 18.1 85,285 1.59 1.59 (0.28) 88
17.69 10.1 58,963 1.92 1.92 (0.47) 80
16.07 15.3 45,138 2.01 2.01 (0.89) 172
13.94 38.7 45,442 2.33 2.33 (1.69) 156
20.15 5.1 25,076 2.24 2.31 (0.84) 78
19.19 17.2 32,606 2.37 2.37 (1.10) 88
16.36 9.3 38,732 2.66 2.66 (1.24) 80
14.97 14.5 54,652 2.76 2.76 (1.65) 172
13.08 37.5 55,662 3.08 3.08 (2.44) 156
20.16 5.1 21,765 2.24 2.32 (0.85) 78
19.19 17.2 18,186 2.35 2.35 (1.04) 88
16.37 9.3 13,667 2.67 2.67 (1.23) 80
14.98 14.4 13,549 2.76 2.76 (1.63) 172
13.09 37.6 12,042 3.08 3.08 (2.44) 156
22.20 6.1 1,241 1.19(i) 1.19(i) 0.17 78
20.91 9.9 427 1.35 1.90 0.35 88
(e)The investment adviser has agreed to reimburse a portion of the Fund's
expenses and/or reduce its management fee during the period. Without this
reimbursement/fee reduction, if applicable, expenses would have been higher.
(f)Had certain expenses not been reduced during the period, total return would
have been lower.
(g)Represents total expenses prior to advisory fee reduction and/or
reimbursement of a portion of the Fund's expenses, if applicable.
(h)Computed on an annualized basis for periods less than one year, if
applicable.
(i)Includes expense recapture of 0.04%.
54
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period.
Income (Loss) from Investment Operations:
----------------------------------------
Net asset
value, Net Net assets,
beginning investment Net realized Total from Net asset Total end of
of income and unrealized investment value, end return the period
the period (loss) (b) gain (loss) operations of the period (%) (a) (d) (000's)
---------- ---------- -------------- ---------- ------------- ----------- -----------
WESTPEAK 130/30 GROWTH FUND*
Class A
12/31/2007 $ 13.09 $ (0.11) $ (0.46) $ (0.57) $ 12.52 (4.4) $ 40,370
12/31/2006 11.81 (0.07) 1.35 1.28 13.09 10.8 47,332
12/31/2005 11.43 (0.10) 0.48 0.38 11.81 3.3 49,680
12/31/2004 10.87 (0.02)(g) 0.58 0.56 11.43 5.2 57,420
12/31/2003 8.58 (0.08) 2.37 2.29 10.87 26.7 63,380
Class B
12/31/2007 11.20 (0.18) (0.38) (0.56) 10.64 (5.0) 5,899
12/31/2006 10.19 (0.14) 1.15 1.01 11.20 9.9 8,599
12/31/2005 9.94 (0.16) 0.41 0.25 10.19 2.5 9,864
12/31/2004 9.52 (0.09)(g) 0.51 0.42 9.94 4.4 12,916
12/31/2003 7.56 (0.13) 2.09 1.96 9.52 25.9 16,485
Class C
12/31/2007 11.18 (0.18) (0.38) (0.56) 10.62 (5.0) 573
12/31/2006 10.17 (0.14) 1.15 1.01 11.18 9.9 758
12/31/2005 9.92 (0.16) 0.41 0.25 10.17 2.5 936
12/31/2004 9.50 (0.09)(g) 0.51 0.42 9.92 4.4 1,013
12/31/2003 7.56 (0.13) 2.07 1.94 9.50 25.7 1,174
* Formerly Westpeak Capital Growth Fund.
(a)A sales charge for Class A 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 has agreed to reimburse a portion of the Fund's
expenses and/or reduce its management fee during the period. Without this
reimbursement/fee reduction, if applicable, expenses would have been higher.
See accompanying notes to financial statements.
55
Ratios to Average Net Assets:
- ---------------------------------------------------------------------------------------
Net expenses Gross expenses Net expenses Gross expenses
(including (including (excluding (excluding
dividend dividend dividend dividend
expense for expense for expense for expense for Net investment Portfolio
securities sold securities sold securities sold securities sold income (loss) turnover
short) (%) (c) (f) short) (%) (e) (f) short) (%) (c) (f) short) (%) (e) (f) (%) (f) rate (%)
- ------------------ ------------------ ------------------ ------------------ -------------- ---------
1.56 1.69 1.45 1.58 (0.84) 143
1.61 1.62 -- -- (0.59) 126
1.88 1.88 -- -- (0.84) 132
1.89 1.89 -- -- (0.18)(g) 121
1.93 1.93 -- -- (0.85) 107
2.31 2.43 2.21 2.33 (1.59) 143
2.36 2.38 -- -- (1.35) 126
2.63 2.63 -- -- (1.59) 132
2.64 2.64 -- -- (0.97)(g) 121
2.68 2.68 -- -- (1.60) 107
2.31 2.43 2.20 2.33 (1.59) 143
2.36 2.38 -- -- (1.35) 126
2.63 2.63 -- -- (1.59) 132
2.64 2.64 -- -- (0.94)(g) 121
2.68 2.68 -- -- (1.60) 107
(d)Had certain expenses not been reduced during the period, total return would
have been lower.
(e)Represents total expenses prior to advisory fee reduction and/or
reimbursement of a portion of the Fund's expenses, if applicable.
(f)Computed on an annualized basis for periods less than one year, if
applicable.
(g)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.
56
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
1. Organization. Natixis Funds Trust I, Natixis Funds Trust II, and Natixis
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:
Natixis Funds Trust I:
CGM Advisor Targeted Equity Fund (the "Targeted Equity Fund")
Hansberger International Fund (the "International Fund")
Natixis U.S. Diversified Portfolio (the "U.S. Diversified Portfolio")
Vaughan Nelson Small Cap Value Fund (the "Small Cap Value Fund")
Westpeak 130/30 Growth Fund (formerly Westpeak Capital Growth Fund) (the
"130/30 Growth Fund")
Natixis Funds Trust II:
Harris Associates Large Cap Value Fund (the "Large Cap Value Fund")
Natixis Funds Trust III:
Harris Associates Focused Value Fund (the "Focused Value Fund")
Each Fund offers Class A 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. On June 1, 2007, the Board of Trustees of the Natixis Funds
approved the termination of offering of Class B shares. Effective July 30,
2007, no new accounts may be opened in Class B shares. Effective October 12,
2007, no additional investments may be made in Class B shares. Existing Class B
shareholders may continue to reinvest dividends into Class B shares and
exchange their Class B shares for Class B shares of other Natixis Funds subject
to existing exchange privileges as described in the Prospectus.
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
$100,000, though some categories of investors are exempted from the minimum
investment amount as outlined in the Funds' prospectus. Prior to March 16,
2007, the minimum initial investment for Class Y shares was $1,000,000.
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 and exchange-traded funds, for which market quotations are readily
available are valued at market value, as reported by pricing services
recommended by the investment adviser and the subadvisers 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 Global Select Market, NASDAQ Global Market and NASDAQ Capital Markets
are valued at the NASDAQ Official Closing Price ("NOCP"), or if lacking a NOCP,
at the most recent bid quotation on the applicable NASDAQ Market. Debt
securities (other than short-term obligations purchased with an original or
remaining maturity of sixty days or less) are generally valued on the basis of
evaluated bids furnished to the Funds by a pricing service recommended by the
investment adviser and the subadvisers 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. Short-term obligations purchased with an
original or 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' adviser or subadvisers using consistently applied procedures
under the general supervision of the Board of Trustees. As of December 31,
2007, approximately 77% 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.
57
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
Certain 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.
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,
non-class specific expenses 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 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 than those
of comparable U.S. companies and the U.S. government.
d. Forward Foreign Currency Contracts. The International Fund and the U.S.
Diversified 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 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' Statements 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, 2007, there were no open forward currency
contracts.
e. Short Sales. The 130/30 Growth Fund may enter into short sales transactions,
in which, the Fund sells a security it does not own at the current market price
and delivers to the buyer a security that the Fund has borrowed in anticipation
of a decline in the market value of the security. To complete, or close out,
the short sale transaction, the Fund buys the same security in the market and
returns it to the lender. Securities sold short represent a liability of the
Fund to acquire securities at prevailing market prices in order to return the
borrowed security to the lender. Liabilities for securities sold short are
reported at market value in accordance with the Fund's security valuation
policies.
The Fund will realize a gain on a short position when the market price of the
security goes down, after the date of the short sale, and it replaces the
borrowed security at the lower market price. Conversely, if the market price of
the security goes up after the date of the short sale, the Fund will realize a
loss on the date on which it replaces the borrowed security at the higher
market price. Because losses arise from an increase in the market price of the
security sold short, the amount of loss realized by the Fund is theoretically
unlimited. The Fund is also required to repay the lender of the security any
dividends that accrue on the security during the period of the loan and will
also bear other costs, such as charges for the prime brokerage account, in
connection with short positions. These costs are reported as expenses in the
Statement of Operations.
Until the Fund replaces the borrowed security, the Fund is required to
maintain, in a segregated account at the Fund's custodian bank, cash or
securities at least equal to 300% of the value of the Fund's liabilities for
securities sold short. The securities held as collateral are assets of the Fund
and are part of the Portfolio of Investments.
58
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
The risks associated with short sale transactions include (but are not limited
to) the Fund not always being able to borrow a security it wants to sell short
and the Fund having to replace the borrowed security, at a time when the market
value of the security has gone up, in order to cover a short position.
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.
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. Management has implemented FIN 48 and has performed an analysis of
the Funds' tax positions taken or that will be taken on federal and state tax
returns that remain subject to examinations (tax years ended December 31, 2004
- - 2007) in connection with the adoption of FIN 48 and has concluded that no
provision for income tax is required. Accordingly, there is no impact on the
Funds' net assets at December 31, 2007 or results of operations for the year
then ended. Additionally, Fund Management is not aware of any events that are
reasonably possible to occur in the next twelve months that would result in the
amounts of any unrecognized tax benefits significantly increasing or decreasing
for the Funds.
A Fund may be subject to foreign taxes on income and gains on investments that
are accrued based upon the Funds' 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 annually in accordance with
federal tax regulations, which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily due
to differing treatments for book and tax purposes of items such as net
operating losses, foreign currency transactions and gains realized from passive
foreign investment companies ("PFICs"). Permanent book and tax basis
differences relating to shareholder distributions, net investment income,
distributions from Real Estate Investment Trusts ("REITs") 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, post October losses, 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 year ended
December 31, 2007 and December 31, 2006 was as follows:
2007 Distributions Paid From:
- -------------------------------------
Ordinary Long-Term
Fund Income Capital Gains Total
---- ------ ------------- -----
Targeted Equity Fund $52,469,601 $30,072,608 $82,542,209
International Fund 6,107,517 15,442,122 21,549,639
Focused Value Fund 2,372,807 22,419,133 24,791,940
Large Cap Value Fund 1,333,343 -- 1,333,343
U.S. Diversified Portfolio -- 7,373,567 7,373,567
2006 Distributions Paid From:
- ------------------------------------
Ordinary Long-Term
Fund Income Capital Gains Total
---- ------ ------------- -----
Targeted Equity Fund $5,318,245 $20,781,541 $26,099,786
International Fund 5,684,336 16,199,875 21,884,211
Focused Value Fund -- 37,532,762 37,532,762
Large Cap Value Fund 636,750 -- 636,750
Differences between these amounts and those reported in the Statements of
Changes in Net Assets are primarily attributable to different book and tax
treatment for short-term capital gains.
59
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
As of December 31, 2007, the components of distributable earnings on a tax
basis were as follows:
Targeted International Focused Large Cap U.S. Diversified
Equity Fund Fund Value Fund Value Fund Portfolio
- - ----------- - ---------- ---------- ----------------
Undistributed ordinary income $ 30,268,357 $ 1,226,625 $ 31,797 $ 16,774 $ --
Undistributed long-term capital gains 2,000,447 2,595,341 1,953,854 -- 9,268,523
------------ ----------- ---------- ------------ ------------
Total undistributed earnings 32,268,804 3,821,966 1,985,651 16,774 9,268,523
Capital loss carryforward:
Expires December 31, 2009 -- -- -- (28,235,961)* --
Expires December 31, 2010 -- -- -- (24,633,843)* --
Expires December 31, 2011 -- -- -- (9,965,466) --
------------ ----------- ---------- ------------ ------------
Total capital loss carryforward -- -- -- (62,835,270) --
Deferred net capital losses (post October) -- -- -- -- --
Unrealized appreciation (depreciation) 204,418,481 42,311,207 (100,359) 24,953,201 103,646,577
------------ ----------- ---------- ------------ ------------
Total accumulated earnings (losses) $236,687,285 $46,133,173 $1,885,292 $(37,865,295) $112,915,100
------------ ----------- ---------- ------------ ------------
Capital loss carryforward utilized in the current year $ -- $ -- $ -- $ 22,685,043 $ 71,215,618
============ =========== ========== ============ ============
Small Cap 130/30
Value Fund Growth Fund
- - ---------- -----------
Undistributed ordinary income $ -- $ --
Undistributed long-term capital gains 186,121 --
----------- ------------
Total undistributed earnings 186,121 --
Capital loss carryforward:
Expires December 31, 2009 -- (16,749,265)
Expires December 31, 2010 -- (26,883,047)
Expires December 31, 2011 -- (4,097,913)
----------- ------------
Total capital loss carryforward -- (47,730,225)
Deferred net capital losses (post October) -- (1,745,104)
Unrealized appreciation (depreciation) 12,070,704 2,263,808
----------- ------------
Total accumulated earnings (losses) $12,256,825 $(47,211,521)
----------- ------------
Capital loss carryforward utilized in the current year $14,087,903 $ 3,740,514
=========== ============
*Some of the losses expiring in 2009 and 2010 were obtained in the Fund's
merger with the Nvest Balanced Fund. These losses are subject to limitations.
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 value of securities on loan to borrowers and the value of collateral
held by the Funds with respect to such loans at December 31, 2007 were as
follows:
Value of Value of
Fund Securities on Loan Collateral
---- ------------------ ----------
Targeted Equity Fund $ 20,856,845 $ 20,829,727
International Fund 30,183,464 31,403,828
Focused Value Fund 18,322,482 18,890,517
Large Cap Value Fund 15,469,371 16,389,229
U.S. Diversified Portfolio 131,450,548 135,549,039
Small Cap Value Fund 37,866,232 39,044,059
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. Other. Harris Associates Focused Value Fund and Harris Associates Large Cap
Value Fund received a litigation payment as a result of its participation in a
class action lawsuit brought against an issuer of one of the Funds' holdings.
These payments have been included in the realized gains in the Statement of
Operations.
60
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
l. New Accounting Pronouncement. In September, 2006, Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), was issued
and is effective for fiscal years beginning after November 15, 2007. FAS 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 FAS 157 will have on the Funds'
financial statements.
3. Purchases and Sales of Securities. For the year ended December 31, 2007,
purchases and sales of securities (excluding short-term investments) were as
follows:
Fund Purchases Sales
---- --------- -----
Targeted Equity Fund $1,375,062,280 $1,481,786,695
International Fund 84,142,895 95,754,047
Focused Value Fund 95,213,665 177,998,912
Large Cap Value Fund 74,014,911 116,496,619
U.S. Diversified Portfolio 496,197,810 600,437,859
Small Cap Value Fund 114,833,998 109,830,572
130/30 Growth Fund 88,155,317 83,863,968
For 130/30 Growth Fund, short sales and purchases to cover were $25,333,565 and
$12,869,364.
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. Natixis Asset Management Advisors, L.P. ("Natixis
Advisors") serves as investment adviser to each Fund except the Targeted Equity
Fund. Capital Growth Management Limited Partnership ("CGM") is the investment
adviser to the Targeted Equity Fund. Under the terms of the management
agreements, each Fund pays a management fee at the following annual rates,
calculated daily and payable monthly, based on each Fund's average daily net
assets:
Percentage of Average Daily Net Assets
- - ------------------------------------------------------------
First Next Next Next Over
Fund $200 million $300 million $500 million $1 billion $2 billion
- ---- ------------ ------------ ------------ ---------- ----------
Targeted Equity Fund 0.75% 0.70% 0.65% 0.65% 0.60%
International Fund 0.80% 0.75% 0.75% 0.75% 0.75%
Focused Value Fund 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%
Small Cap Value Fund 0.90% 0.90% 0.90% 0.90% 0.90%
130/30 Growth Fund 0.75% 0.70% 0.65% 0.65% 0.65%
Natixis 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")
Small Cap Value Fund Vaughan Nelson Investment Management, L.P. ("Vaughan Nelson")
130/30 Growth Fund Westpeak Global Advisors, L.P. ("Westpeak")
Payments to Natixis Advisors are reduced in the amount of payments to the
subadvisors. Natixis Advisors voluntarily agreed to waive a portion of the
management fee it retains for Large Cap Value Fund after payments to
subadvisors.
61
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
Natixis Advisors has given binding undertakings to the Funds to reduce 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, 2008 and will be reevaluated on an annual basis. For the period from
August 1, 2007 to December 31, 2007, 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 1.45% 2.20% 2.20% 1.20%
130/30 Growth Fund 1.65% 2.40% 2.40% --
Expense limits for the 130/30 Growth Fund are exclusive of dividend expenses on
securities sold short.
Prior to August 1, 2007, 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 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 1.45% 2.20% 2.20% 1.20%
130/30 Growth Fund 1.50% 2.25% 2.25% --
Prior to July 1, 2007, 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 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%
130/30 Growth Fund 1.50% 2.25% 2.25% --
For the year ended December 31, 2007, the management fees and reductions of
management fees for each Fund were as follows:
Percentage of
Voluntary Average
Gross Reduction of Net Daily Net Assets
Management Management Management ----------------
Fund Fee Fee Fee Gross Net
---- ---------- ------------ ---------- ----- ---
Targeted Equity Fund $5,402,846 $ -- $5,402,846 0.70% 0.70%
International Fund 1,441,589 -- 1,441,589 0.80% 0.80%
Focused Value Fund 1,732,909 -- 1,732,909 0.90% 0.90%
Large Cap Value Fund 1,774,740 5,501 1,769,239 0.69% 0.69%
U.S. Diversified Portfolio 5,539,020 -- 5,539,020 0.90% 0.90%
Small Cap Value Fund 1,324,569 -- 1,324,569 0.90% 0.90%
130/30 Growth Fund 402,851 -- 402,851 0.75% 0.75%
For the year ended December 31, 2007, class specific expenses have been
reimbursed as follows:
Fund Reimbursement
---- -------------
Small Cap Value Fund $116,017
130/30 Growth Fund 76,560
62
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
Natixis Advisors shall be permitted to recover expenses it has borne under the
expense limitation agreement (whether through a reduction of its management fee
or otherwise) 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, 2007 were as follows:
Expenses Subject to Possible Reimbursement until
December 31, 2008
- ------------------------------------------------
Class A Class B Class C Class Y Total
Fund ------- ------- ------- ------- -----
Small Cap Value Fund $78,801 $20,907 $16,309 $-- $116,017
130/30 Growth Fund 65,588 10,024 948 -- 76,560
Certain officers and directors of Natixis Advisors and its affiliates are also
officers or Trustees of the Funds. Natixis Advisors, CGM, Hansberger, Harris,
Loomis Sayles, Vaughan Nelson and Westpeak are subsidiaries of Natixis Global
Asset Management, L.P. ("Natixis US"), which is part of Natixis Global Asset
Management, an international asset management group based in Paris, France.
Loomis Sayles reimbursed the U.S. Diversified Portfolio $34,706 for losses
incurred in connection with a trading error.
b. Administrative Expense. Natixis Advisors provides certain administrative
services for the Funds and subcontracts with State Street Bank to serve as
sub-administrator. Natixis Advisors is a wholly-owned subsidiary of Natixis US.
Pursuant to an agreement among Natixis Funds Trust I, Natixis Funds Trust II,
Natixis Funds Trust III, Natixis Funds Trust IV, Natixis Cash Management Trust
("Natixis Funds Trusts"), Loomis Sayles Funds I, Loomis Sayles Funds II
("Loomis Sayles Funds Trusts") and Natixis Advisors (the "Administrative
Service Agreement"), each Fund pays Natixis 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 Natixis Funds Trusts and Loomis Sayles
Funds Trusts, 0.0625% of the next $5 billion, 0.0500% of the next $20 billion
and 0.045% of such assets in excess of $30 billion, subject to an annual
aggregate minimum fee for the Natixis 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 subadvisers in their first calendar
year of operations.
Effective September 17, 2007, pursuant to an amendment to the Administrative
Service Agreement, the Hansberger International Series was added to the
Agreement and pays Natixis Advisors monthly its pro rata fees equal to its
prorated portion of the above mentioned fees.
New Funds are subject to an annual fee of $50,000 plus $12,500 per class on an
additional $50,000 if managed by multiple subadvisers in their first calendar
year of operations.
Prior to July 1, 2007, each Fund paid Natixis 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 Natixis 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
Natixis Funds Trusts and Loomis Sayles Funds Trusts of $5 million, which is
reevaluated on an annual basis.
Effective October 1, 2007, State Street Bank reduced the fees it receives from
Natixis Advisors for serving as sub-administrator to the Funds. Also, effective
October 1, 2007, Natixis Advisors has given a binding contractual undertaking
to the Funds to waive the administrative fees paid by the Fund in an amount
equal to the reduction in sub-administrative fees discussed above. The waiver
is in effect through June 30, 2008.
For the year ended December 31, 2007, amounts paid to Natixis Advisors for
administrative fees were as follows:
Gross Waiver of Net
Administrative Administrative Administrative
Fund Fees Fees Fees
---- ---- ---- ----
Targeted Equity Fund $408,927 $5,490 $403,437
International Fund 100,153 1,190 98,963
Focused Value Fund 95,792 978 94,814
Large Cap Value Fund 136,965 1,501 135,464
U.S. Diversified Portfolio 327,564 3,833 323,731
Small Cap Value Fund 81,626 967 80,659
130/30 Growth Fund 28,554 314 28,240
c. Service and Distribution Fees. Natixis Distributors, L.P. ("Natixis
Distributors"), a wholly-owned subsidiary of Natixis US. has entered into a
distribution agreement with the Trusts. Pursuant to this agreement, Natixis
Distributors serves as principal underwriter of the funds of the Trusts.
63
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
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 Natixis 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 Natixis 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 Natixis 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 Natixis 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 Natixis 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 Natixis Distributors in
connection with the marketing or sale of Class B and Class C shares.
For the year ended December 31, 2007, 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 $1,796,683 $ 88,392 $ 25,897 $ 265,178 $ 77,691
International Fund 305,801 80,853 63,843 242,560 191,531
Focused Value Fund 135,107 165,411 180,845 496,235 542,535
Large Cap Value Fund 481,059 84,907 43,657 254,722 130,970
U.S. Diversified Portfolio 1,023,056 345,040 118,281 1,035,122 354,843
Small Cap Value Fund 240,992 73,804 51,688 221,414 155,063
130/30 Growth Fund 151,561 19,789 1,825 59,369 5,475
d. Sub-Transfer Agent Fees and Expenses. Natixis Distributors has entered into
agreements with financial intermediaries to provide certain recordkeeping,
processing, shareholder communications and other services to customers of the
intermediaries and have agreed to compensate the intermediaries for providing
those services. Certain services would be provided by the Funds if the shares
of those customers were registered directly with the Funds' transfer agent.
Accordingly, the Funds agreed to pay a portion of the intermediary fees
attributable to shares of the Fund held by the intermediary (which generally
are a percentage of the value of shares held) not exceeding what the Funds
would have paid its transfer agent had each customer's shares been registered
directly with the transfer agent instead of held through the intermediary.
Natixis Distributors pay the remainder of the fees. Listed below are the fees
incurred by the Funds which are included in the transfer agent fees and
expenses in the Statements of Operations.
Sub-Transfer Agent Fees
- -------------------------------
Fund Class A Class B Class C Class Y
---- ------- ------- ------- -------
Targeted Equity Fund $56,091 $ 2,910 $ 765 $ 9,803
International Fund 30,761 8,337 6,440 --
Focused Value Fund 41,366 50,820 56,154 --
Large Cap Value Fund 40,824 7,463 3,749 7,512
U.S. Diversified Portfolio 91,025 26,708 10,660 17,003
Small Cap Value Fund 37,972 10,265 8,216 36
130/30 Growth Fund 4,692 605 71 --
e. Commissions. The Funds have been informed that commissions (including CDSCs)
on Fund shares paid to Natixis Distributors by investors in shares of the Funds
during the year ended December 31, 2007 were as follows:
Fund Commission
---- ----------
Targeted Equity Fund $292,725
International Fund 124,617
Focused Value Fund 209,988
Large Cap Value Fund 98,711
U.S. Diversified Portfolio 332,917
Small Cap Value Fund 77,382
130/30 Growth Fund 53,526
64
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
For the year ended December 31, 2007, brokerage commissions for portfolio
transactions paid to affiliated broker/dealers by the U.S. Diversified
Portfolio were $32,930.
f. Trustees Fees and Expenses. The Funds do not pay any compensation directly
to their officers or Trustees who are directors, officers or employees of
Natixis Advisors, Natixis Distributors and Natixis US, 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 Natixis Funds Trusts, Loomis
Sayles Funds Trusts and the Hansberger International Series (effective
September 12, 2007) 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.
Effective January 1, 2008, each Independent Trustee (other than the
Chairperson) receives, in the aggregate, a retainer fee at the annual rate of
$65,000. Each Independent Trustee also receives a meeting attendance fee of
$7,500 for each meeting of the Board of Trustees that he or she attends in
person and $3,750 for each meeting that he or she attends telephonically. In
addition, each Contract Review and Governance Committee member receives $5,000
for each committee meeting that he or she attends in person and $2,500 for each
committee meeting that he or she attends telephonically. Each Audit Committee
member receives $6,250 for each committee meeting that he or she attends in
person and $3,125 for each committee meeting that he or she attends
telephonically. The retainer fees paid to the Chairperson and the Committee
Chairmen remain unchanged.
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 Natixis Funds Trusts, the Loomis
Sayles Funds Trusts and the Hansberger International Series on the normal
payment date. Deferred amounts remain in the Funds until distributed in
accordance with the Plan.
g. 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, such shares within 60 days of their acquisition (including
acquisition by exchange). The redemption fee is intended to discourage frequent
purchases and redemptions of Fund shares and 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 Natixis
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 borrowing at a rate per annum equal to the
Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.09% per
annum, payable at the end of each calendar quarter, is accrued and apportioned
among the participating funds based on their average daily unused portion of
the line of credit. For the year ended December 31, 2007, 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, 2007, amounts rebated
under these agreements were as follows:
Fund Rebates
---- -------
Targeted Equity Fund $280,848
International Fund 10,783
Focused Value Fund --
Large Cap Value Fund --
U.S. Diversified Portfolio 65,535
Small Cap Value Fund 9,737
130/30 Growth Fund 23,897
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.
65
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
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, 2007
-----------------------------------
CGM Advisor Targeted Equity Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 3,737,261 $ 45,862,629
Issued in connection with the reinvestment of distributions 5,862,904 72,878,709
---------------- -----------------
9,600,165 118,741,338
Redeemed (9,585,214) (111,765,850)
---------------- -----------------
Net change 14,951 $ 6,975,488
---------------- -----------------
Class B
Issued from the sale of shares 262,400 $ 2,812,834
Issued in connection with the reinvestment of distributions 283,544 3,180,585
---------------- -----------------
545,944 5,993,419
Redeemed (2,184,278) (22,947,868)
---------------- -----------------
Net change (1,638,334) $ (16,954,449)
---------------- -----------------
Class C
Issued from the sale of shares 923,790 $ 10,699,501
Issued in connection with the reinvestment of distributions 88,327 1,012,586
---------------- -----------------
1,012,117 11,712,087
Redeemed (220,223) (2,325,399)
---------------- -----------------
Net change 791,894 $ 9,386,688
---------------- -----------------
Class Y
Issued from the sale of shares 262,592 $ 3,465,372
Issued in connection with the reinvestment of distributions 113,125 1,444,931
---------------- -----------------
375,717 4,910,303
Redeemed (132,427) (1,584,173)
---------------- -----------------
Net change 243,290 $ 3,326,130
---------------- -----------------
Increase (decrease) from capital share transactions (588,199) $ 2,733,857
================ =================
Year Ended
December 31, 2007
-----------------------------------
Hansberger International Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 870,349 $ 20,307,759
Issued in connection with the reinvestment of distributions 615,505 13,642,851
---------------- -----------------
1,485,854 33,950,610
Redeemed (949,003) (22,012,908)
---------------- -----------------
Net change 536,851 $ 11,937,702
---------------- -----------------
Class B
Issued from the sale of shares 194,192 $ 4,062,447
Issued in connection with the reinvestment of distributions 172,664 3,443,715
---------------- -----------------
366,856 7,506,162
Redeemed (561,815) (11,811,328)
---------------- -----------------
Net change (194,959) $ (4,305,166)
---------------- -----------------
Class C
Issued from the sale of shares 233,746 $ 4,957,792
Issued in connection with the reinvestment of distributions 121,350 2,409,103
---------------- -----------------
355,096 7,366,895
Redeemed (229,985) (4,843,805)
---------------- -----------------
Net change 125,111 $ 2,523,090
---------------- -----------------
Increase (decrease) from capital share transactions 467,003 $ 10,155,626
================ =================
Year Ended
December 31, 2006
-----------------------------------
CGM Advisor 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, 2006
-----------------------------------
Hansberger 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
================ =================
66
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
Year Ended
December 31, 2007
-----------------------------------
Harris Associates Focused Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 631,847 $ 6,966,043
Issued in connection with the reinvestment of distributions 532,542 5,008,910
---------------- -----------------
1,164,389 11,974,953
Redeemed (2,070,078) (23,875,285)
---------------- -----------------
Net change (905,689) $ (11,900,332)
---------------- -----------------
Class B
Issued from the sale of shares 310,935 $ 2,940,601
Issued in connection with the reinvestment of distributions 729,290 6,359,477
---------------- -----------------
1,040,225 9,300,078
Redeemed (2,645,145) (28,682,591)
---------------- -----------------
Net change (1,604,920) $ (19,382,513)
---------------- -----------------
Class C
Issued from the sale of shares 625,545 $ 6,004,671
Issued in connection with the reinvestment of distributions 612,914 5,347,383
---------------- -----------------
1,238,459 11,352,054
Redeemed (3,352,102) (35,857,138)
---------------- -----------------
Net change (2,113,643) $ (24,505,084)
---------------- -----------------
Increase (decrease) from capital share transactions (4,624,252) $ (55,787,929)
================ =================
Year Ended
December 31, 2007
-----------------------------------
Harris Associates Large Cap Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,098,477 $ 17,352,523
Issued in connection with the reinvestment of distributions 55,168 870,874
---------------- -----------------
1,153,645 18,223,397
Redeemed (2,264,640) (35,926,938)
---------------- -----------------
Net change (1,110,995) $ (17,703,541)
---------------- -----------------
Class B
Issued from the sale of shares 133,358 $ 1,953,515
Issued in connection with the reinvestment of distributions 6,268 95,395
---------------- -----------------
139,626 2,048,910
Redeemed (1,392,098) (20,396,796)
---------------- -----------------
Net change (1,252,472) $ (18,347,886)
---------------- -----------------
Class C
Issued from the sale of shares 131,012 $ 1,888,111
Issued in connection with the reinvestment of distributions 1,501 22,821
---------------- -----------------
132,513 1,910,932
Redeemed (261,095) (3,822,123)
---------------- -----------------
Net change (128,582) $ (1,911,191)
---------------- -----------------
Class Y
Issued from the sale of shares 52,630 $ 864,679
Issued in connection with the reinvestment of distributions 7,191 115,598
---------------- -----------------
59,821 980,277
Redeemed (172,407) (2,824,845)
---------------- -----------------
Net change (112,586) $ (1,844,568)
---------------- -----------------
Increase (decrease) from capital share transactions (2,604,635) $ (39,807,186)
================ =================
Year Ended
December 31, 2006
-----------------------------------
Harris Associates 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, 2006
-----------------------------------
Harris Associates 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)
================ =================
67
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
Year Ended
December 31, 2007
-----------------------------------
U.S. Diversified Portfolio Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,493,221 $ 37,264,200
Issued in connection with the reinvestment of distributions 181,096 4,715,740
---------------- -----------------
1,674,317 41,979,940
Redeemed (3,017,079) (75,527,212)
---------------- -----------------
Net change (1,342,762) $ (33,547,272)
---------------- -----------------
Class B
Issued from the sale of shares 339,734 $ 7,394,658
Issued in connection with the reinvestment of distributions 68,470 1,566,593
---------------- -----------------
408,204 8,961,251
Redeemed (2,418,196) (53,258,701)
---------------- -----------------
Net change (2,009,992) $ (44,297,450)
---------------- -----------------
Class C
Issued from the sale of shares 134,395 $ 2,984,422
Issued in connection with the reinvestment of distributions 23,359 534,930
---------------- -----------------
157,754 3,519,352
Redeemed (335,383) (7,349,240)
---------------- -----------------
Net change (177,629) $ (3,829,888)
---------------- -----------------
Class Y
Issued from the sale of shares 123,956 $ 3,273,376
Issued in connection with the reinvestment of distributions 7,783 216,982
---------------- -----------------
131,739 3,490,358
Redeemed (393,194) (10,570,451)
---------------- -----------------
Net change (261,455) $ (7,080,093)
---------------- -----------------
Increase (decrease) from capital share transactions (3,791,838) $ (88,754,703)
================ =================
Year Ended
December 31, 2007
-----------------------------------
Vaughan Nelson Small Cap Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,451,447 $ 31,978,338
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
1,451,447 31,978,338
Redeemed (841,796) (18,480,247)
---------------- -----------------
Net change 609,651 $ 13,498,091
---------------- -----------------
Class B
Issued from the sale of shares 99,421 $ 1,989,981
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
99,421 1,989,981
Redeemed (554,258) (11,098,446)
---------------- -----------------
Net change (454,837) $ (9,108,465)
---------------- -----------------
Class C
Issued from the sale of shares 332,854 $ 6,647,049
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
332,854 6,647,049
Redeemed (200,639) (4,038,911)
---------------- -----------------
Net change 132,215 $ 2,608,138
---------------- -----------------
Class Y*
Issued from the sale of shares 35,602 $ 788,793
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
35,602 788,793
Redeemed (109) (2,640)
---------------- -----------------
Net change 35,493 $ 786,153
---------------- -----------------
Increase (decrease) from capital share transactions 322,522 $ 7,783,917
================ =================
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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, 2006
-----------------------------------
Vaughan Nelson Small Cap Value Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 1,565,095 $ 30,243,879
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
20,430 424,039
Redeemed -- --
---------------- -----------------
Net change 20,430 $ 424,039
---------------- -----------------
Increase (decrease) from capital share transactions 212,814 $ 4,860,769
================ =================
* From commencement of class operations August 31, 2006 through December 31,
2006.
68
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
Year Ended
December 31, 2007
-----------------------------------
Westpeak 130/30 Growth Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 233,589 $ 3,116,297
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
233,589 3,116,297
Redeemed (626,717) (8,362,258)
---------------- -----------------
Net change (393,128) $ (5,245,961)
---------------- -----------------
Class B
Issued from the sale of shares 57,724 $ 661,921
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
57,724 661,921
Redeemed (270,922) (3,088,283)
---------------- -----------------
Net change (213,198) $ (2,426,362)
---------------- -----------------
Class C
Issued from the sale of shares 12,508 $ 144,889
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
12,508 144,889
Redeemed (26,379) (302,036)
---------------- -----------------
Net change (13,871) $ (157,147)
---------------- -----------------
Increase (decrease) from capital share transactions (620,197) $ (7,829,470)
================ =================
Year Ended
December 31, 2006
-----------------------------------
Westpeak 130/30 Growth Fund Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 209,910 $ 2,590,783
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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
Issued in connection with the reinvestment of distributions -- --
---------------- -----------------
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)
================ =================
69
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of Natixis Funds Trust I, Natixis Funds Trust II, and Natixis
Funds Trust III and Shareholders of CGM Advisor Targeted Equity Fund,
Hansberger International Fund, Natixis U.S. Diversified Portfolio, Vaughan
Nelson Small Cap Value Fund, Westpeak 130/30 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 statement of cash flows for the
Westpeak 130/30 Growth Fund and the financial highlights present fairly, in all
material respects, the financial position of the CGM Advisor Targeted Equity
Fund, Hansberger International Fund, Natixis U.S. Diversified Portfolio,
Vaughan Nelson Small Cap Value Fund and Westpeak 130/30 Growth Fund, (formerly,
Westpeak Capital Growth Fund) each a series of Natixis Funds Trust I; the
Harris Associates Large Cap Value Fund, a series of Natixis Funds Trust II; and
the Harris Associates Focused Value Fund, a series of Natixis Funds Trust III
(collectively, the "Funds"), at December 31, 2007, and the results of each of
their operations, the changes in each of their net assets and the cash flows of
Westpeak 130/30 Growth Fund 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, 2007 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 25, 2008
70
2007 U.S. TAX DISTRIBUTION INFORMATION TO SHAREHOLDERS (unaudited)
Corporate Dividends Received Deduction. For the fiscal year ended December 31,
2007, 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 21.68%
Focused Value Fund 46.22%
Large Cap Value Fund 100.00%
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, 2007.
Fund Amount
---- -----------
Targeted Equity Fund $30,072,608
International Fund 15,442,122
Focused Value Fund 22,419,133
U.S. Diversified Portfolio Fund 7,373,567
Qualified Dividend Income. A percentage of dividends distributed by the Funds
during the fiscal year ended December 31, 2007 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 19.76%
International Fund 45.76%
Large Cap Value Fund 100.00%
Focused Value Fund 45.68%
Foreign Tax Credit. For the year ended December 31, 2007, the International
Fund intends to pass through a foreign tax credit of $185,811 and has derived
gross income from sources within foreign countries amounting to $4,142,462.
71
TRUSTEE AND OFFICER INFORMATION
The tables below provide certain information regarding the Trustees and
officers of Natixis Funds Trust I, Natixis Funds Trust II and Natixis 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 Natixis 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 Year of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
INDEPENDENT TRUSTEES/1/
Graham T. Allison, Jr. Trustee, since 1984 for Douglas Dillon Professor and 42;
(1940) Natixis Funds Trust I Director of the Belfer Center Director, Taubman Centers,
(including predecessors); for Science and International Inc. (real estate investment
since 1995 for Natixis Affairs, John F. Kennedy trust)
Funds Trust II and Natixis School of Government,
Funds Trust III Harvard University
Contract Review and
Governance Committee
Member
Charles D. Baker Trustee, since 2005 for President and Chief Executive 42;
(1956) Natixis Funds Trust I, Officer, Harvard Pilgrim None
Natixis Funds Trust II and Health Care (health plan)
Natixis Funds Trust III
Contract Review and
Governance Committee
Member
Edward A. Benjamin Trustee, since 2003 for Retired 42;
(1938) Natixis Funds Trust I, None
Natixis Funds Trust II and
Natixis Funds Trust III
Chairman of the Contract
Review and Governance
Committee
Daniel M. Cain Trustee, since 1996 for President and Chief Executive 42;
(1945) Natixis Funds Trust I, Officer, Cain Brothers & Director, Sheridan
Natixis Funds Trust II and Company, Incorporated Healthcare Inc. (physician
Natixis Funds Trust III (investment banking) practice management)
Chairman of the Audit
Committee
Jonathan P. Mason Trustee, since 2007 for Chief Financial Officer, Cabot 42;
(1958) Natixis Funds Trust I, Corp. (specialty chemicals); None
Natixis Funds Trust II and formerly, Vice President and
Natixis Funds Trust III Treasurer, International Paper
Audit Committee Member Company; formerly, Chief
Financial Officer, Carter Holt
Harvey (forest products)
72
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 Year 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 President, Strategic Advisory 42;
(1942) of Trustees since Services (management Director, Verizon
November 2005 consulting); formerly, Senior Communications; Director,
Trustee, since 1982 Natixis Vice President and Director, Rohm and Haas Company
Funds Trust I (including The Boston Consulting Group, (specialty chemicals);
predecessors); since 1993 Inc. (management consulting) Director, AES Corporation
for Natixis Funds Trust II; (international power
since 1995 for Natixis company)
Funds Trust III
Ex officio member of the
Audit Committee and
Contract Review and
Governance Committee
Cynthia L. Walker Trustee, since 2005 for Deputy Dean for Finance & 42;
(1956) Natixis Funds Trust I, Administration, Yale None
Natixis Funds Trust II and University School of Medicine;
Natixis Funds Trust III formerly, Executive Dean for
Audit Committee Member Administration, Harvard
Medical School and formerly,
Dean for Finance & CFO,
Harvard Medical School
INTERESTED TRUSTEES
Robert J. Blanding/2/ Trustee, since 2003 for President, Chairman, Director 42;
(1947) Natixis Funds Trust I, and Chief Executive Officer, None
555 California Street Natixis Funds Trust II and Loomis, Sayles & Company,
San Francisco, CA 94104 Natixis Funds Trust III L.P.
John T. Hailer/3/ Trustee, since 2000 for President and Chief Executive 42;
(1960) Natixis Funds Trust I, Officer, Natixis Asset None
Natixis Funds Trust II and Management Advisors, L.P.,
Natixis Funds Trust III Natixis Distributors, L.P. and
President and Chief Natixis Global Associates,
Executive Officer of Inc.; President and Chief
Natixis Funds Trust I, Executive Officer, Natixis
Natixis Funds Trust II and Global Asset Management,
Natixis Funds Trust III L.P.-U.S. and Asia
* 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. Ms. Moose was re-appointed to
serve an additional two-year term as the Chairperson of the Board of
Trustees on September 14, 2007.
** Each person listed above, except as noted, holds the same position(s) with
the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger
International Series. Previous positions during the past five years with
Natixis Distributors, L.P., Natixis Asset Management Advisors, L.P. or
Loomis, Sayles & Company, L.P. are omitted if not materially different from
a Trustee's or officer's current position with such entity.
73
TRUSTEE AND OFFICER INFORMATION
***The Trustees of the Trusts serve as Trustees of a fund complex that includes
all series of Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds
Trust III, Natixis Funds Trust IV, Natixis Cash Management Trust, Loomis
Sayles Funds I, Loomis Sayles Funds II, Hansberger International Series and
Gateway Trust (the "Funds' Trusts").
/1/ Mr. Richard Darman served as a Trustee until his death on January 25, 2008.
/2/ 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 & Company, L.P.
/3/ Mr. Hailer is deemed an "interested person" of the Trusts because he holds
the following positions with affiliated persons of the Trusts: President
and Chief Executive Officer of Natixis Distribution Corporation, Natixis
Global Asset Management, L.P., Natixis Global Associates, Inc., Natixis
Asset Management Advisors, L.P. and Natixis Distributors, L.P.
74
TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the
Trusts, Length of Time
Name and Year of Birth Served and Term of Office* Principal Occupation(s) During Past 5 Years**
- ---------------------- -------------------------- ---------------------------------------------
OFFICERS OF THE TRUSTS
Coleen Downs Dinneen Secretary, Clerk and Chief Senior Vice President, General Counsel, Secretary and Clerk
(1960) Legal Officer, since (formerly, Deputy General Counsel, Assistant Secretary and
September 2004 Assistant Clerk), Natixis Distribution Corporation, Natixis
Distributors, L.P. and Natixis Asset Management Advisors, L.P.
Russell L. Kane Chief Compliance Officer, Chief Compliance Officer for Mutual Funds, Senior Vice
(1969) since May 2006, Assistant President, Deputy General Counsel, Assistant Secretary and
Secretary, since June 2004 Assistant Clerk, Natixis Distributors, L.P. and Natixis Asset
and Anti-Money Management Advisors, L.P.; Vice President, Associate General
Laundering Officer since Counsel, Assistant Secretary and Assistant Clerk, Natixis
April 2007 Distribution Corporation; formerly, Senior Counsel, Columbia
Management Group.
Michael C. Kardok Treasurer, Principal Senior Vice President, Natixis Asset Management Advisors,
(1959) Financial and Accounting L.P. and Natixis Distributors, L.P.; formerly, Senior Director,
Officer, since October PFPC Inc.
2004
Robert Krantz Executive Vice President, Executive Vice President, Natixis Distributors, L.P. and
(1964) since September 2007 Natixis Asset Management Advisors, L.P.
* Each officer of the Trusts serve for an indefinite term in accordance with
the Trusts' 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 Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger
International Series. Previous positions during the past five years with the
Distributor, Natixis Advisors or Loomis Sayles are omitted, if not
materially different from a Trustee's or officer's current position with
such entity.
75
LOGO
ANNUAL REPORT
December 31, 2007
Natixis Income Diversified Portfolio
Active Dividend Equity Discipline
AEW Diversified REIT Discipline
Loomis Sayles Inflation Protected Securities Discipline
Loomis Sayles Multi-Sector Bond Discipline
Natixis Moderate Diversified Portfolio
Active International Discipline
Dreman Mid Cap Value Discipline
Harris Associates Large Cap Value Discipline
Loomis Sayles Core Fixed Income Discipline
Loomis Sayles Large Cap Growth Discipline
[GRAPHIC]
TABLE OF CONTENTS
Management Discussion and
Performance.............................................................. page 1
Portfolio of Investments..................................................page 9
Financial Statements.................................................... page 22
NATIXIS INCOME DIVERSIFIED PORTFOLIO
PORTFOLIO PROFILE
Objective:
Seeks current income with a secondary objective of capital appreciation
- --------------------------------------------------------------------------------
Strategy:
Focuses on 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
- --------------------------------------------------------------------------------
During the fiscal year, fixed-income investments and interest-sensitive stocks
were affected by the volatility in the financial markets that resulted from
problems in the subprime mortgage crises and concerns about a slowdown in
global economic growth. These problems had an influence on all of the segments
in the fund.
The fund's four segments are: Active Dividend Equity Discipline, an indexed
portfolio of dividend-paying common stocks based on the Dow Jones Select
Dividend Index, tracked by Active Investment Advisors (AIA), a division of
Natixis Asset Management Advisors; AEW Diversified REIT Discipline, 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, a portfolio of Treasury Inflation-Protected
Securities (TIPS), managed by Loomis Sayles and Loomis Sayles Multi-Sector Bond
Discipline, a diversified portfolio of domestic and foreign bonds also managed
by Loomis Sayles.
For the 12-months ended December 31, 2007, the combined return on the fund's
four segments was -2.80% based on the net asset value of Class A shares,
including $0.45 in dividends and $0.14 in capital gains reinvested during the
period. For the same period, the fund's primary benchmark, the Lehman Aggregate
Bond Index, returned 6.97% and the return on its secondary benchmark was
- -0.84%. The fund's secondary benchmark is an unmanaged blended index composed
of the following weights: 40% Lehman Aggregate Bond Index; 25% Morgan Stanley
Capital International U.S. REIT Index; 20% Dow Jones Select Dividend Index; and
15% Lehman U.S. TIPS Index. The fund's Morningstar peer group, the Conservative
Allocation category, had an average return of 4.53% for the period.
ACTIVE DIVIDEND EQUITY SEGMENT CHANGED WITH ITS BENCHMARK
This segment fully replicates its benchmark, the Dow Jones Select Divided
Index, holding substantially all of the securities within the index in the same
proportions. The benchmark is composed of equity securities that have paid a
relatively high dividend yield consistently over time. It includes 100 of the
highest dividend yielding securities (other than REITs) in the Dow Jones Total
Market Index--a broad-based index that represents the total market for U.S.
equity securities. Because the segment mirrors its benchmark, it was heavily
weighted in financial stocks and utilities which had a difficult year. While
the benchmark was moderately positive in the first half of the year, it did
poorly in the second half of 2007, finishing the period with a decline of
5.16%. Because the segment substantially replicates the Dow Jones Select
Dividend Index, it holds all of the stocks that are in the index and sells all
of the stocks that are eliminated from the index. The segment generally makes
changes on the same day they are implemented by the index, except in cases
where the changes are related to corporate actions. In such instances, there
may be a delay between the time the index reflects these changes and the time
the portfolio is able to implement them, depending upon the settlement of the
new stock or cash distributed. There were a number of index changes throughout
2007. Altria spun off Kraft Foods, which was not added to the index, so it was
sold from the segment. Kinder Morgan went private and was removed from the
segment. Duquesne Light Holdings was acquired and was removed from the segment.
Wilmington Trust and Trustmark replaced Kinder Morgan and Duquesne,
respectively. Compass Bancshares was removed from the index because of an
acquisition by Banco Bilbao Vizcaya, and PFF Bancorp took its place in the
index. Lyondell Chemical, which was acquired by Basell, was removed and
replaced by D.R. Horton. When Dow Jones reconstituted the index in December, it
removed 10 stocks and added 10 new ones.
AEW'S SEGMENT WEATHERED A TOUGH INVESTMENT ENVIRONMENT
Several factors, including the general outlook for slowing economic growth and
the impact of the subprime mortgage crisis and resulting turmoil in the credit
markets had a negative effect
1
NATIXIS INCOME DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
on REITs during the year. Within the segment, detractors from performance
included Developers Diversified Realty, a shopping center REIT, and Liberty
Property Trust, an industrial REIT. Based on their solid value, these companies
remain overweighted in the segment. An underweight in the healthcare sector, an
area that substantially outperformed the REIT market, also detracted from the
segment's return. On a more positive note, Hilton Hotels Corp. and apartment
company Archstone-Smith Trust aided results, as both companies announced that
they were being acquired at significant premiums to their respective share
prices. The health of the U.S. economy, the pace of job growth and conditions
in the credit markets are expected to affect U.S. REITs over the next several
months. In this environment, the segment will continue to emphasize limiting
downside risk by identifying securities with good relative value and the
potential for price appreciation.
DURATION AND MATURITY OF LOOMIS SAYLES INFLATION PROTECTED SECURITIES
DISCIPLINE AFFECTED RETURNS
Mixed economic data and difficulties in the subprime mortgage market led to a
volatile investment environment for TIPS. During a period when yields on TIPS
fluctuated in a broad range, the segment's relatively long average duration, or
price sensitivity to interest-rate changes, was positive. On the other hand,
the segment's bar-belled maturity structure, or emphasis on bonds with short
and long maturities, detracted from results. While the Loomis economic team
expects a pullback in economic growth, it believes that the actions of central
banks around the globe will be successful in alleviating the stress on the
financial system caused by the subprime mortgage debacle. The team believes
that the economy has pockets of strength in nonresidential construction,
capital spending and net exports because of relatively strong overseas
economies and the weaker U.S. dollar. In this environment, bond yields may test
their lows as economic data continue to be weak. However, Loomis expects yields
to rise and the economy to gain some momentum later in 2008.
LOOMIS SAYLES MULTI-SECTOR BOND DISCIPLINE BENEFITED FROM OVERSEAS SECURITIES
Allocations to high-quality fixed-income securities denominated in the Canadian
dollar were positive for the segment, as the Canadian dollar appreciated
dramatically against the U.S. dollar on the heels of solid economic growth,
higher commodity prices and broad U.S. dollar depreciation. Investments
denominated in the Brazilian real were also helpful, carrying high yields and
gaining strength from a strong local economy. Investment-grade bonds in the
financial and utility sectors were notable performers. The segment benefited
from being underweight compared to the benchmark in the financial sector, which
was impacted by the subprime mortgage fallout. Among utility bonds, longer
duration and prudent security selection helped performance. The segment's
relatively long duration (its price sensitivity to interest-rate changes)
boosted performance, as a "flight to quality" pushed down rates across the U.S.
yield curve, resulting in solid absolute performance for U.S. Treasury bonds.
However, compared to its benchmark, the segment was underweight in Treasuries,
which detracted from its return. Moreover, U.S. corporate bonds sensitive to a
slowing economy were laggards. Homebuilders in particular dampened returns for
investment-grade bonds. Selected paper, transportation, and retail industry
issues also did poorly. Performance was held back primarily by the segment's
exposure to speculative grade U.S. corporate bonds. High-yield bonds in the
industrial sector were notably weak because of the softening U.S. economy and
investors' aversion to risk. Securities issued by consumer companies, such as
retailers and auto manufacturers, also suffered. Financial sector, high-yield
bonds did poorly because of their exposure to the subprime mortgage market.
Equity market volatility, declining yields and individual credit weakness hurt
the segment's convertible bonds.
2
NATIXIS INCOME DIVERSIFIED PORTFOLIO
Investment Results through December 31, 2007
- --------------------------------------------------------------------------------
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/5/
[CHART]
November 17, 2005 (Inception) through December 31, 2007
Lehman
Net Asset Maximum Sales Blended Aggregate
Month End Value/1/ Charge/2/ Index Bond Index
- --------- -------- --------- -------- -------------
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 10,047 10,095
1/31/2006 10,355 9,889 10,277 10,096
2/28/2006 10,454 9,984 10,364 10,129
3/31/2006 10,540 10,066 10,416 10,030
4/30/2006 10,484 10,013 10,362 10,012
5/31/2006 10,376 9,909 10,264 10,001
6/30/2006 10,508 10,035 10,428 10,022
7/31/2006 10,710 10,228 10,668 10,157
8/31/2006 10,934 10,442 10,889 10,313
9/30/2006 11,078 10,580 11,012 10,403
10/31/2006 11,357 10,846 11,285 10,472
11/30/2006 11,621 11,098 11,534 10,594
12/31/2006 11,553 11,033 11,466 10,532
1/31/2007 11,833 11,300 11,739 10,528
2/28/2007 11,878 11,343 11,774 10,691
3/31/2007 11,790 11,259 11,739 10,691
4/30/2007 11,904 11,369 11,846 10,749
5/31/2007 11,909 11,373 11,834 10,667
6/30/2007 11,467 10,951 11,463 10,636
7/31/2007 11,088 10,589 11,179 10,724
8/31/2007 11,394 10,881 11,484 10,856
9/30/2007 11,644 11,120 11,684 10,938
10/31/2007 11,772 11,243 11,781 11,036
11/30/2007 11,451 10,936 11,584 11,235
12/31/2007 11,230 10,725 11,370 11,266
Average Annual Total Returns -- December 31, 2007
SINCE
1 YEAR INCEPTION
Class A (Inception 11/17/05)
Net Asset Value/1/ -2.80% 5.62%
With Maximum Sales Charge/2/ -7.21 3.36
Class C (Inception 11/17/05)
Net Asset Value/1/ -3.52 4.84
With CDSC/3/ -4.44 4.84
- -----------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 1 YEAR INCEPTION/4/
Lehman Aggregate Bond Index 6.97% 5.89%
Blended Index -0.84 6.35
Morningstar Conservative Allocation Fund Avg. 4.53 6.41
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.funds.natixis.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 12/31/07 12/31/06
- ------------------------------------------------------
Common Stocks 40.3 45.2
- ------------------------------------------------------
Investment Companies -- 0.2
- ------------------------------------------------------
Preferred Stocks 0.4 0.1
- ------------------------------------------------------
Bonds and Notes 58.6 46.1
- ------------------------------------------------------
Short-Term Investments and Other 0.7 8.4
- ------------------------------------------------------
% of Net Assets as of
LARGEST HOLDINGS 12/31/07 12/31/06
- ------------------------------------------------------
Equities
- ------------------------------------------------------
Simon Property Group, Inc. 1.9 2.1
- ------------------------------------------------------
Boston Properties, Inc. 1.3 1.5
- ------------------------------------------------------
Equity Residential 1.1 1.2
- ------------------------------------------------------
Vornado Realty Trust 1.0 1.0
- ------------------------------------------------------
Public Storage, Inc. 1.0 1.1
- ------------------------------------------------------
Fixed-Income
- ------------------------------------------------------
U.S. Treasury Bond,
3.375%, 4/15/2032 3.3 2.3
- ------------------------------------------------------
Canadian Government,
5.250%, 6/01/2012 1.9 --
- ------------------------------------------------------
U.S. Treasury Bond,
2.375%, 1/15/2025 1.4 0.9
- ------------------------------------------------------
U.S. Treasury Note,
.875%, 4/15/2010 1.2 1.0
- ------------------------------------------------------
U.S. Treasury Note,
2.000%, 1/15/2014 1.1 0.8
- ------------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/07
- ------------------------------------------------------
Treasuries 16.8
- ------------------------------------------------------
Commercial Banks 6.4
- ------------------------------------------------------
REITs -- Office 3.5
- ------------------------------------------------------
Sovereigns 3.4
- ------------------------------------------------------
REITs -- Regional Malls 3.3
- ------------------------------------------------------
Portfolio holdings and asset allocations will vary.
FUND EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio/6/ Net Expense Ratio/7/
- -------------------------------------------------------
A 1.32% 1.27%
- -------------------------------------------------------
C 2.07 2.02
- -------------------------------------------------------
NOTES TO CHARTS
See page 7 for a description of the indexes.
/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/The since-inception comparative performance figures shown for Class A and C
shares were calculated from 12/1/05.
/5/Fund performance has been increased by expense reductions and
reimbursements, without which performance would have been lower.
/6/Before reductions if any, and reimbursements.
/7/After reductions and reimbursements. Expense reductions are contractual and
are set to expire on 4/30/08.
3
NATIXIS MODERATE DIVERSIFIED PORTFOLIO
PORTFOLIO PROFILE
Objective:
Seeks long-term capital appreciation, with income as a secondary objective
- --------------------------------------------------------------------------------
Strategy:
Combines 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
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
- --------------------------------------------------------------------------------
While stock prices were volatile, they finished 2007 on the upside. Large-cap
stocks outperformed small- and mid-caps, and growth stocks outpaced value. In
the fixed-income markets, concerns about a credit crunch led to a shift in
investor sentiment regarding risk, triggering a flight to quality. As a result,
Treasury securities outperformed other fixed-income assets.
Natixis Moderate Diversified Portfolio combines five different investment
strategies, each focusing on a different asset class and managed by one of four
firms. This multi-advisor approach provides shareholders with exposure to
fixed-income, U.S. equity and international securities. Active International
Discipline invests in stocks believed to be a representative sampling of the
Standard & Poor's ADR Index, tracked by Active Investment Advisors (AIA), a
division of Natixis Asset Management Advisors. Dreman Mid Cap Value Discipline
favors mid-size companies that it believes are undervalued, but which appear to
have good prospects for capital appreciation. Harris Associates Large Cap Value
Discipline focuses on large- and mid-cap companies that it believes are trading
at substantial discounts to their "true business value." Loomis Sayles 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. Loomis Sayles Large Cap
Growth Discipline emphasizes common stocks, convertible and other equity
securities of larger companies.
For the year ended December 31, 2007, Class A shares of Natixis Moderate
Diversified Portfolio returned 8.53% at net asset value, with $0.20 in
dividends and $1.09 in capital gains reinvested during the period. The
portfolio outperformed the 5.49% return of its equity benchmark, the S&P 500
Index, and the 6.97% return of its fixed-income benchmark, the Lehman Aggregate
Bond Index. The fund also outperformed the 5.99% average return on the funds in
Morningstar's Moderate Allocation category.
ACTIVE INTERNATIONAL DISCIPLINE INVESTED IN A WIDE RANGE OF STOCKS
Active Investment Advisors (AIA) assumed responsibility for this segment at the
beginning of August, 2007. (The international portion of this portfolio was
previously subadvised by Hansberger Global Investors.) The segment uses a
sampling approach based on the S&P ADR Index, a U.S.-dollar-denominated version
of the broad-based S&P Global 1200, which represents 70% of the world's total
market capitalization. The S&P ADR Index includes stocks of foreign companies
that offer ADRs (American Depositary Receipts) -- certificates that provide
U.S. investors with a convenient way to invest in non-U.S. securities. The
Active International Discipline emphasizes the largest stocks in all
representative sectors of the S&P ADR Index in roughly the same sector weights.
As a result, the segment remains relatively compact, in terms of numbers of
stocks, while representing the majority of market capitalization of the
benchmark index. During the period, the stocks of the largest companies in the
index outperformed smaller company stocks, so the segment outperformed its
benchmark.
DREMAN EMPHASIZED FINANCIALLY SOUND, OUT-OF-FAVOR COMPANIES
Major contributors to this segment were the stocks Dreman Value Management
selected in energy, financials, industrials and information technology. Only a
relatively small position in the utilities sector held back results. The
top-performing stocks included Hess Corporation, an integrated oil company
which was sold on the strength of its gains early in 2008; Lyondell Chemical, a
chemical company that was acquired for a premium; and General Cable, a
manufacturer of wire used to transmit electricity, which benefited from strong
product demand.
CIT Group, a financial services company, was one of the segment's poorest
performers, but it remains in the segment because Dreman believes the stock is
undervalued. Idearc, a provider of telephone directories, also proved
disappointing when its earnings slowed. However, the stock has an attractively
high dividend yield and Dreman feels it has the potential for price
4
NATIXIS MODERATE DIVERSIFIED PORTFOLIO
Management Discussion
- --------------------------------------------------------------------------------
appreciation over the longer term, so it remains in the segment. Gannett also
proved disappointing as business prospects for its newspapers slumped and the
stock was sold shortly after the end of the year.
Faced with so much economic uncertainty in 2008, the segment had relatively
large positions in the healthcare, consumer staples and energy sectors, and a
relatively small position in the financial services and consumer discretionary
areas.
HARRIS ASSOCIATES' BOTTOM-UP SELECTION PROCESS DROVE RESULTS
This segment focused on higher-quality businesses that sold at little or no
premium to their lower-quality counterparts. Lack of exposure to the energy
sector detracted meaningfully from the segment's return. Performance was also
hurt by its emphasis on the consumer discretionary sector, although some
individual consumer discretionary holdings were positive. These included
restaurant chain McDonald's; athletic apparel manufacturer NIKE; retailer Best
Buy; media companies Liberty Media and Viacom; and cable television company
Comcast. Investments in telecommunications companies were generally negative,
and all the segment's holdings in this sector had been eliminated by the end of
2007.
Individual stock performance and a slight underweight in the poorly performing
financials sector were positive for the segment, as were its technology
holdings. The segment's top stocks included Intel, Union Pacific and
McDonald's. Intel consistently reported better-than-expected earnings. Going
forward, Intel may benefit from the growing demand for processor power and the
trend toward mobile computing. Union Pacific generated impressive earnings, as
did McDonald's which continued to successfully execute its strategy for
operational improvements. Washington Mutual, Capital One and Home Depot were
the segment's most disappointing stocks. The deterioration in the housing
market, coupled with significant loan write-offs, eroded Washington Mutual's
earnings power. Capital One declined on expectations of increased write-offs
due to pessimism about the economy and the effects of the weak housing market.
Home Depot declined on lower earnings, as the company continued to face a tough
economic environment.
LOOMIS SAYLES' CORE FIXED-INCOME DISCIPLINE FACED TROUBLED CREDIT MARKETS
Problems in the subprime mortgage market in 2007 led to concerns about the
potential for a credit crunch. Investors abandoned higher risk/reward
investments and sought the relative safety of the Treasury market. As a result,
U.S. Treasuries produced very strong performance, and the segment's underweight
in the sector held the segment back. Investments in industries that had the
most exposure to the subprime lending problem were also negative for return.
These included finance companies, brokers and bonds securitized by home equity
loans. The segment sold positions in Countrywide Financial because of the
magnitude of its involvement in the subprime sector, but maintained positions
in financial services company CIT Group and brokerage company Bear Stearns, as
their longer-term prospects appeared positive.
This segment reduced its holdings in investment-grade corporate bonds and
increased its position in securities backed by home and commercial mortgages in
anticipation of a slowing economy. However, even its high-grade mortgage
securities were impacted by the subprime crisis. The segment benefited from
several shifts in duration during the year, as Loomis lengthened or shortened
maturities to reflect changing market conditions. (Duration measures a bond's
price sensitivity to interest-rate changes; a long duration works best when
interest rates are falling, and a shorter duration may help when rates rise.)
Performance was also enhanced by the segment's small position in banks, which
lagged, and relatively large positions in more stable industries outside the
financial sector, like communications and capital goods.
Loomis expects the credit markets to continue to be volatile in 2008, but they
believe the Federal Reserve Board will help facilitate a return to relative
stability by easing interest rates.
LOOMIS SAYLES' LARGE CAP DISCIPLINE SOUGHT COMPANIES WITH MARKET LEADERSHIP
Stock selection in the materials and processing sector contributed to
performance as certain stocks benefited from increased global demand for food,
ethanol, aerospace products and chemicals. These included Monsanto, the world's
largest seed company; Precision Castparts, an aerospace parts supplier; and
Mosaic, a fertilizer company. Technology investments were also positive. Apple
enjoyed strong sales, First Solar benefited from increased interest in
alternative energy, and MEMC Electronic Materials, a manufacturer of silicon
wafers, reported profits that exceeded expectations. Good selection of
financial services stocks also added to return. MasterCard was aided by
international growth; IntercontinentalExchange rose on expectations that it
would establish a London-based securities clearing house; and CME Group, the
largest U.S. futures market, went up on the strength of its stock buy-back
program. The segment's utilities investments proved disappointing. The worst
performer was NII Holdings, a wireless telephone services provider with
operations in Latin America. The company's stock declined on concerns about the
potential for a slowdown in subscriber growth in Mexico and Brazil. Retailer
Kohl's fell on poor sales numbers, and Network Appliance lost value because of
a disappointing growth forecast. All three poor performers were sold.
5
NATIXIS MODERATE DIVERSIFIED PORTFOLIO
Investment Results through December 31, 2007
- --------------------------------------------------------------------------------
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/5/
[CHART]
July 15, 2004 (Inception) through December 31, 2007
Net Asset Maximum Sales Lehman Aggregate S&P 500
Month End Value/1/ Charge/2/ Bond Index Index
- ---------- --------- ------------- -------- ----------
7/15/2004 $10,000 $ 9,425 $10,000 $10,000
7/31/2004 9,850 9,284 10,000 10,000
8/31/2004 9,870 9,302 10,191 10,040
9/30/2004 9,990 9,416 10,218 10,149
10/31/2004 10,150 9,566 10,304 10,304
11/30/2004 10,430 9,830 10,222 10,721
12/31/2004 10,721 10,105 10,316 11,086
1/31/2005 10,511 9,907 10,381 10,816
2/28/2005 10,531 9,925 10,319 11,043
3/31/2005 10,392 9,794 10,266 10,848
4/30/2005 10,241 9,652 10,405 10,642
5/31/2005 10,502 9,899 10,518 10,981
6/30/2005 10,585 9,977 10,575 10,996
7/31/2005 10,797 10,176 10,479 11,405
8/31/2005 10,757 10,139 10,613 11,301
9/30/2005 10,820 10,197 10,504 11,393
10/31/2005 10,689 10,074 10,421 11,203
11/30/2005 11,022 10,388 10,467 11,626
12/31/2005 11,099 10,461 10,567 11,630
1/31/2006 11,332 10,681 10,567 11,938
2/28/2006 11,322 10,671 10,602 11,971
3/31/2006 11,424 10,767 10,498 12,120
4/30/2006 11,445 10,787 10,479 12,283
5/31/2006 11,068 10,432 10,468 11,929
6/30/2006 11,056 10,420 10,490 11,945
7/31/2006 11,046 10,411 10,632 12,019
8/31/2006 11,241 10,595 10,795 12,305
9/30/2006 11,494 10,833 10,890 12,622
10/31/2006 11,753 11,077 10,962 13,033
11/30/2006 11,949 11,262 11,089 13,281
12/31/2006 12,029 11,338 11,024 13,467
1/31/2007 12,252 11,547 11,020 13,671
2/28/2007 12,151 11,453 11,190 13,404
3/31/2007 12,222 11,519 11,190 13,554
4/30/2007 12,579 11,855 11,251 14,154
5/31/2007 12,891 12,149 11,165 14,648
6/30/2007 12,794 12,058 11,132 14,405
7/31/2007 12,569 11,846 11,225 13,958
8/31/2007 12,637 11,910 11,363 14,167
9/30/2007 13,036 12,286 11,449 14,697
10/31/2007 13,419 12,648 11,552 14,931
11/30/2007 13,058 12,307 11,759 14,307
12/31/2007 13,054 12,304 11,792 14,207
Average Annual Total Returns -- December 31, 2007
SINCE
1 YEAR INCEPTION
Class A (Inception 7/15/04)
Net Asset Value/1/ 8.53% 8.00%
With Maximum Sales Charge/2/ 2.29 6.17
Class C (Inception 7/15/04)
Net Asset Value/1/ 7.84 7.22
With CDSC/3/ 6.87 7.22
- -------------------------------------------------------------
SINCE
COMPARATIVE PERFORMANCE 1 YEAR INCEPTION/4/
S&P 500 Index 5.49% 10.83%
Lehman Aggregate Bond Index 6.97 4.94
Morningstar Moderate Allocation Fund Avg. 5.99 9.16
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.funds.natixis.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 12/31/07 12/31/06
- ----------------------------------------------------
Common Stocks 63.0 68.1
- ----------------------------------------------------
Bonds and Notes 30.4 27.9
- ----------------------------------------------------
Short-Term Investments
and Other 6.6 4.0
- ----------------------------------------------------
% of Net Assets as of
LARGEST HOLDINGS 12/31/07 12/31/06
- ----------------------------------------------------
Equities
- ----------------------------------------------------
Intel Corp. 2.1 1.1
- ----------------------------------------------------
Hewlett-Packard Co. 1.4 0.9
- ----------------------------------------------------
McDonald's Corp. 1.4 1.2
- ----------------------------------------------------
Apple, Inc. 1.3 0.7
- ----------------------------------------------------
Google, Inc., Class A 1.2 0.9
- ----------------------------------------------------
Fixed-Income
- ----------------------------------------------------
FNMA, 5.000%, 8/01/2035 1.4 1.9
- ----------------------------------------------------
FHLMC, 4.500%, 6/01/2035 1.3 1.1
- ----------------------------------------------------
FNMA, 5.000%, 7/01/2035 1.2 1.0
- ----------------------------------------------------
FNMA, 4.000%, 2/01/2020 1.1 1.4
- ----------------------------------------------------
FNMA, 5.500%, 12/01/2035 1.0 0.8
- ----------------------------------------------------
% of Net Assets as of
FIVE LARGEST INDUSTRIES 12/31/07
- ----------------------------------------------------
Mortgage Related 18.5
- ----------------------------------------------------
Diversified Financial Services 4.8
- ----------------------------------------------------
Capital Markets 4.6
- ----------------------------------------------------
Computers & Peripherals 4.4
- ----------------------------------------------------
Semiconductors & Semiconductor
Equipment 3.6
- ----------------------------------------------------
Portfolio holdings and asset allocations will vary.
FUND EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio/6/ Net Expense Ratio/7/
- -------------------------------------------------------
A 1.26% 1.26%
- -------------------------------------------------------
C 2.01 2.01
- -------------------------------------------------------
NOTES TO CHARTS
See page 7 for a description of the indexes.
/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/The since-inception comparative performance figures shown for Class A and C
shares were calculated from 8/1/04.
/5/Fund performance has been increased by expense reductions and
reimbursements, if any, without which performance would have been lower.
/6/Before reductions and reimbursements.
/7/After reductions and reimbursements. Expense reductions are contractual and
are set to expire on 4/30/08.
6
ADDITIONAL INFORMATION
The views expressed in this report reflect those of the portfolio managers as
of the dates indicated. The managers' views are subject to change at any time
without notice based on changes in market or other conditions. References to
specific securities or industries should not be regarded as investment advice.
Because the 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 Natixis Fund, contact your financial
professional or call Natixis 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.
INDEX/AVERAGE DESCRIPTIONS:
Blended Index is an unmanaged blended index comprised of the following weights:
40% Lehman Aggregate Bond Index, 25% Morgan Stanley Capital International U.S.
REIT Index, 20% Dow Jones Select Dividend Index, and 15% Lehman U.S. TIPS
Index. The four indices comprising the Blended Index measure, respectively, the
performance of investment grade fixed income securities, equity REIT
securities, dividend-yielding equity securities, and Treasury
inflation-protected securities. The weightings of the indices that comprise the
Blended Index are rebalanced on a monthly basis to maintain the allocations as
described above.
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.
Morningstar Conservative Allocation Fund Average is the average performance
without sales charges of funds with similar current investment objectives, as
calculated by Morningstar, Inc.
Morningstar Moderate Allocation Fund Average is the average performance without
sales charges of funds with similar current investment objectives, as
calculated by Morningstar, Inc.
S&P 500 Index is an unmanaged index of U.S. common stocks.
PROXY VOTING INFORMATION
A description of the funds' proxy voting policies and procedures is available
without charge, upon request, by calling Natixis Funds at 1-800-225-5478; on
the funds' website at www.funds.natixis.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, 2007 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
7
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, 2007 through December 31, 2007. 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*
NATIXIS INCOME DIVERSIFIED PORTFOLIO 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $979.40 $5.14
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,020.01 $5.24
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $975.60 $8.86
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,016.23 $9.05
- ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio (after advisory
reduction/reimbursement): 1.03% and 1.78% 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*
NATIXIS MODERATE DIVERSIFIED PORTFOLIO 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007
- ------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,020.40 $6.57
- ------------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000.00 $1,018.70 $6.56
- ------------------------------------------------------------------------------------------------------------------
CLASS C
- ------------------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,017.50 $10.37
- ------------------------------------------------------------------------------------------------------------------
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% and 2.04% 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).
8
NATIXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- --------------------------------------------------------------------------
Common Stocks -- 40.3% of Net Assets
Auto Components -- 0.1%
6,394 Superior Industries International, Inc.(b) $ 116,179
---------------
Automobiles -- 0.1%
6,753 General Motors Corp.(b) 168,082
---------------
Building Products -- 0.1%
7,592 Masco Corp.(b) 164,063
---------------
Chemicals -- 1.0%
7,346 Dow Chemical Co. (The) 289,579
5,175 Eastman Chemical Co. 316,141
5,446 PPG Industries, Inc.(b) 382,473
6,914 RPM International, Inc.(b) 140,354
4,754 Sensient Technologies Corp.(b) 134,443
---------------
1,262,990
---------------
Commercial Banks -- 6.4%
8,438 Associated Banc Corp.(b) 228,585
6,479 Bank of Hawaii Corp.(b) 331,336
10,425 BB&T Corp.(b) 319,735
15,382 Citizens Republic Bancorp, Inc.(b) 223,193
10,025 Colonial BancGroup, Inc.(b) 135,738
11,288 Comerica, Inc.(b) 491,367
12,018 F N B Corp.(b) 176,665
11,516 Fifth Third Bancorp(b) 289,397
7,122 First Bancorp 51,919
16,762 First Horizon National Corp.(b) 304,230
10,763 FirstMerit Corp.(b) 215,368
9,822 Fulton Financial Corp.(b) 110,203
13,589 Huntington Bancshares, Inc.(b) 200,574
11,823 KeyCorp(b) 277,249
18,376 National City Corp.(b) 302,469
8,135 Pacific Capital Bancorp(b) 163,758
7,135 PNC Financial Services Group, Inc.(b) 468,413
11,594 Popular, Inc.(b) 122,896
10,449 Provident Bankshares Corp.(b) 223,504
11,497 Regions Financial Corp. 271,904
7,950 South Financial Group, Inc.(b) 124,258
8,334 Suntrust Banks, Inc.(b) 520,792
6,194 Synovus Financial Corp.(b) 149,152
9,805 TCF Financial Corp.(b) 175,804
6,948 Trustmark Corp.(b) 176,201
9,212 U.S. Bancorp 292,389
9,226 Umpqua Holdings Corp.(b) 141,527
7,718 UnionBanCal Corp.(b) 377,487
8,234 Valley National Bancorp(b) 156,940
11,743 Wachovia Corp.(b) 446,586
7,445 Wells Fargo & Co. 224,765
7,162 Wilmington Trust Corp.(b) 252,102
---------------
7,946,506
---------------
Commercial Services & Supplies -- 0.9%
5,909 Avery Dennison Corp. 314,004
5,924 Deluxe Corp.(b) 194,840
6,783 Pitney Bowes, Inc.(b) 258,025
5,125 R. R. Donnelley & Sons Co. 193,418
5,043 Waste Management, Inc. 164,755
---------------
1,125,042
---------------
Containers & Packaging -- 0.2%
5,387 Sonoco Products Co. 176,047
---------------
Shares Description Value (+)
- ---------------------------------------------------------------------------
Distributors -- 0.2%
5,595 Genuine Parts Co. $ 259,049
---------------
Diversified Financial Services -- 0.9%
11,230 Bank of America Corp. 463,350
12,945 Citigroup, Inc. 381,101
6,303 JPMorgan Chase & Co. 275,126
---------------
1,119,577
---------------
Diversified Telecommunication Services -- 0.2%
6,360 AT&T, Inc. 264,322
---------------
Electric Utilities -- 1.3%
6,376 DPL, Inc.(b) 189,048
4,651 Entergy Corp.(b) 555,888
4,925 FirstEnergy Corp.(b) 356,274
8,807 Pinnacle West Capital Corp.(b) 373,505
5,089 Unisource Energy Corp.(b) 160,558
---------------
1,635,273
---------------
Food Products -- 0.3%
4,802 General Mills, Inc. 273,714
5,034 Sara Lee Corp. 80,846
---------------
354,560
---------------
Gas Utilities -- 0.7%
8,259 AGL Resources, Inc. 310,869
7,732 Nicor, Inc.(b) 327,450
5,852 Oneok, Inc. 261,994
---------------
900,313
---------------
Hotel, Restaurants & Leisure -- 0.5%
14,000 Starwood Hotels & Resorts Worldwide, Inc.(b) 616,420
---------------
Household Durables -- 0.3%
8,137 D.R. Horton, Inc.(b) 107,164
375 KB Home(b) 8,100
11,920 La-Z-Boy, Inc.(b) 94,526
9,694 Leggett & Platt, Inc.(b) 169,063
---------------
378,853
---------------
Household Products -- 0.3%
5,664 Kimberly-Clark Corp. 392,742
---------------
Insurance -- 1.5%
8,419 Arthur J Gallagher & Co.(b) 203,656
6,574 Cincinnati Financial Corp. 259,936
6,026 Commerce Group, Inc. 216,815
5,148 Lincoln National Corp. 299,717
7,945 Old Republic International Corp.(b) 122,432
7,423 Unitrin, Inc.(b) 356,230
8,860 Zenith National Insurance Corp. 396,308
---------------
1,855,094
---------------
Leisure Equipment & Products -- 0.1%
6,860 Mattel, Inc.(b) 130,614
---------------
Machinery -- 0.1%
6,767 Briggs & Stratton Corp. 153,340
---------------
Media -- 0.5%
7,963 Gannett Co., Inc.(b) 310,557
9,651 Lee Enterprises, Inc.(b) 141,387
9,945 New York Times Co., Class A(b) 174,336
---------------
626,280
---------------
See accompanying notes to financial statements.
9
NATIXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Description Value (+)
- ------------------------------------------------------------------------------
Multi Utilities -- 1.3%
5,951 Black Hills Corp.(b) $ 262,439
6,795 Centerpoint Energy, Inc.(b) 116,398
8,423 DTE Energy Co. 370,275
8,290 Energy East Corp.(b) 225,571
9,023 NiSource, Inc. 170,444
7,431 PNM Resources, Inc. 159,395
7,517 SCANA Corp.(b) 316,842
---------------
1,621,364
---------------
Oil, Gas & Consumable Fuels -- 0.4%
4,626 Chevron Corp. 431,745
---------------
Paper & Forest Products -- 0.1%
5,371 Meadwestvaco Corp. 168,112
---------------
Pharmaceuticals -- 0.8%
7,230 Bristol-Myers Squibb Co. 191,740
5,780 Eli Lilly & Co. 308,594
4,627 Merck & Co., Inc. 268,875
9,036 Pfizer, Inc. 205,388
---------------
974,597
---------------
REITs -- Apartments -- 3.0%
13,400 Apartment Investment & Management Co., Class A(b) 465,382
10,000 AvalonBay Communities, Inc. 941,400
14,500 Camden Property Trust(b) 698,175
38,000 Equity Residential(b) 1,385,860
2,700 Home Properties, Inc.(b) 121,095
9,900 UDR, Inc.(b) 196,515
---------------
3,808,427
---------------
REITs -- Diversified -- 1.3%
12,300 BioMed Realty Trust, Inc. 284,991
14,500 Vornado Realty Trust 1,275,275
---------------
1,560,266
---------------
REITs -- Healthcare -- 1.1%
4,500 HCP, Inc.(b) 156,510
6,700 Healthcare Realty Trust, Inc.(b) 170,113
23,000 Nationwide Health Properties, Inc.(b) 721,510
22,500 Omega Healthcare Investors, Inc.(b) 361,125
---------------
1,409,258
---------------
REITs -- Hotels -- 1.0%
27,800 Ashford Hospitality Trust(b) 199,882
4,400 Hospitality Properties Trust 141,768
55,500 Host Hotels & Resorts, Inc. 945,720
---------------
1,287,370
---------------
REITs -- Industrial -- 2.8%
12,500 AMB Property Corp.(b) 719,500
57,000 DCT Industrial Trust, Inc.(b) 530,670
13,500 First Potomac Realty Trust(b) 233,415
26,500 Liberty Property Trust 763,465
15,000 ProLogis 950,700
4,700 PS Business Parks, Inc.(b) 246,985
---------------
3,444,735
---------------
Shares Description Value (+)
- ---------------------------------------------------------------------------------
REITs -- Office -- 3.0%
17,000 Boston Properties, Inc. $ 1,560,770
22,000 Brandywine Realty Trust(b) 394,460
12,500 Corporate Office Properties Trust(b) 393,750
5,100 Digital Realty Trust, Inc.(b) 195,687
10,300 Dupont Fabros Technology, Inc.(b) 201,880
6,800 Highwoods Properties, Inc.(b) 199,784
39,000 HRPT Properties Trust(b) 301,470
8,000 Kilroy Realty Corp.(b) 439,680
---------------
3,687,481
---------------
REITs -- Regional Malls -- 3.3%
12,000 General Growth Properties, Inc.(b) 494,160
12,000 Macerich Co. (The) 852,720
26,700 Simon Property Group, Inc.(b) 2,319,162
10,300 Taubman Centers, Inc.(b) 506,657
---------------
4,172,699
---------------
REITs -- Shopping Centers -- 2.5%
11,000 Cedar Shopping Centers, Inc.(b) 112,530
23,100 Developers Diversified Realty Corp. 884,499
9,100 Federal Realty Investment Trust(b) 747,565
11,100 Kimco Realty Corp.(b) 404,040
5,900 Kite Realty Group Trust(b) 90,093
13,500 Regency Centers Corp. 870,615
---------------
3,109,342
---------------
REITs -- Storage -- 1.2%
22,000 Extra Space Storage, Inc.(b) 314,380
16,200 Public Storage, Inc. 1,189,242
---------------
1,503,622
---------------
REITs -- Triple Net Lease -- 0.4%
12,300 iStar Financial, Inc.(b) 320,415
5,100 Realty Income Corp.(b) 137,802
---------------
458,217
---------------
Real Estate Operating Companies -- 0.5%
33,000 Brookfield Properties Corp. 635,250
---------------
Thrifts & Mortgage Finance -- 1.0%
8,178 Astoria Financial Corp.(b) 190,302
7,500 Federal Home Loan Mortgage Corp.(b) 255,525
8,801 First Niagara Financial Group, Inc.(b) 105,964
10,622 New York Community Bancorp, Inc.(b) 186,735
5,823 People's United Financial, Inc.(b) 103,649
12,168 PFF Bancorp, Inc.(b) 146,503
7,434 Washington Federal, Inc.(b) 156,932
7,437 Washington Mutual, Inc.(b) 101,217
---------------
1,246,827
---------------
Tobacco -- 0.7%
7,185 Altria Group, Inc. 543,042
6,652 Universal Corp.(b) 340,716
---------------
883,758
---------------
Trading Companies & Distributors -- 0.2%
7,761 Watsco, Inc.(b) 285,294
---------------
Total Common Stocks (Identified Cost $61,545,798) 50,333,710
---------------
See accompanying notes to financial statements.
10
NATIXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Principal
Amount (++) Description Value (+)
- ----------------------------------------------------------------------------------
Bonds and Notes -- 58.6%
Aerospace & Defense -- 1.0%
$ 115,000 Bombardier, Inc.,
7.350%, 12/22/2026 (CAD) $ 110,112
1,020,000 Bombardier, Inc., 144A,
7.450%, 5/01/2034 1,004,700
200,000 Embraer Overseas Ltd.,
6.375%, 1/24/2017 189,760
---------------
1,304,572
---------------
Airlines -- 0.8%
2,101 Continental Airlines, Inc., Series 1999-1, Class C,
6.954%, 8/02/2009 2,064
1,055,000 United Air Lines, Inc., Series 2007-1, Class A,
6.636%, 7/02/2022 996,975
---------------
999,039
---------------
Automotive -- 1.6%
115,000 Cummings Engine, Inc.,
7.125%, 3/01/2028 118,925
30,000 Ford Motor Co.,
6.375%, 2/01/2029 19,950
15,000 Ford Motor Co.,
6.500%, 8/01/2018(b) 11,044
1,805,000 Ford Motor Co.,
6.625%, 10/01/2028 1,200,325
725,000 Ford Motor Co.,
7.450%, 7/16/2031(b) 538,313
25,000 General Motors Corp.,
8.250%, 7/15/2023 19,875
10,000 General Motors Corp.,
8.375%, 7/15/2033(b) 8,050
40,000 Goodyear Tire & Rubber Co.,
7.000%, 3/15/2028 34,800
---------------
1,951,282
---------------
Banks -- 2.5%
275,000 Bank of America Corp.,
5.750%, 12/01/2017 275,631
110,000,000 Barclays Financial LLC, 144A,
4.060%, 9/16/2010 (KRW) 118,655
300,000,000 Barclays Financial LLC, 144A,
4.470%, 12/04/2011 (KRW) 326,393
123,800,000 Barclays Financial LLC, 144A,
4.910%, 3/23/2009 (KRW)(c) 136,371
437,254 HSBC Bank USA, 144A,
Zero Coupon, 11/28/2011(c) 305,422
700,000 HSBC Bank PLC, 144A,
Zero Coupon, 4/18/2012 (MYR) 186,631
4,405,000 HSBC Bank USA, 144A,
Zero Coupon, 5/17/2012 (MYR) 1,169,516
585,000 Wells Fargo & Co.,
5.625%, 12/11/2017 585,358
---------------
3,103,977
---------------
Brokerage -- 0.6%
65,000 Goldman Sachs Group, Inc. (The),
5.625%, 1/15/2017 63,478
3,339,258,780 JPMorgan Chase & Co., 144A,
Zero Coupon, 4/12/2012 (IDR) 243,605
65,000 JPMorgan Chase & Co.,
5.150%, 10/01/2015 62,692
Principal
Amount (++) Description Value (+)
- -----------------------------------------------------------------------
Brokerage -- continued
$ 90,000 JPMorgan Chase & Co.,
6.125%, 6/27/2017 $ 91,748
160,000 Lehman Brothers Holdings, Inc.,
5.750%, 1/03/2017 153,703
115,000 Merrill Lynch & Co., Inc.,
6.400%, 8/28/2017 116,835
---------------
732,061
---------------
Building Materials -- 0.6%
170,000 Masco Corp.,
5.850%, 3/15/2017 164,933
85,000 Owens Corning, Inc.,
6.500%, 12/01/2016 77,838
525,000 USG Corp.,
6.300%, 11/15/2016 474,281
---------------
717,052
---------------
Chemicals -- 0.2%
45,000 Borden, Inc.,
7.875%, 2/15/2023 33,750
10,000 Borden, Inc.,
8.375%, 4/15/2016 8,100
25,000 Borden, Inc.,
9.200%, 3/15/2021 20,000
200,000 Hercules, Inc., Subordinated Note,
6.500%, 6/30/2029 164,000
55,000 Methanex Corp., Senior Note,
6.000%, 8/15/2015 53,673
---------------
279,523
---------------
Commercial MBS -- 0.3%
425,000 Wachovia Bank NA,
6.600%, 1/15/2038 427,133
---------------
Construction Machinery -- 0.3%
380,000 Joy Global, Inc.,
6.625%, 11/15/2036 401,010
---------------
Consumer Cyclical Service-- 0.3%
435,000 Western Union Co.,
6.200%, 11/17/2036(b) 417,503
---------------
Consumer Products -- 0.0%
20,000 Hasbro, Inc., Senior Debenture,
6.600%, 7/15/2028 20,315
---------------
Distribution & Wholesale -- 0.3%
345,000 Owens & Minor, Inc.,
6.350%, 4/15/2016 352,074
---------------
Diversified Financial Services -- 0.5%
90,000 Bear Stearns Cos., Inc.,
5.550%, 1/22/2017(b) 80,659
35,000 Citigroup, Inc.,
5.000%, 9/15/2014 33,350
145,000 Citigroup, Inc.,
5.500%, 2/15/2017 140,918
325,000 Countrywide Financial Corp.,
6.250%, 5/15/2016(b) 187,060
245,000 KAR Holdings, Inc., 144A,
10.000%, 5/01/2015 218,662
---------------
660,649
---------------
See accompanying notes to financial statements.
11
NATIXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Principal
Amount (++) Description Value (+)
- -------------------------------------------------------------------------------
Electric -- 0.2%
$ 55,000 Dynegy Holdings, Inc.,
7.125%, 5/15/2018(b) $ 48,675
100,000 Dynegy Holdings, Inc.,
7.625%, 10/15/2026 85,000
20,000 NGC Corp. Capital Trust I, Series B,
8.316%, 6/01/2027 17,600
135,000 TXU Corp., Series Q,
6.500%, 11/15/2024 98,470
---------------
249,745
---------------
Entertainment -- 1.2%
800,000 Time Warner, Inc.,
6.500%, 11/15/2036 778,405
425,000 Time Warner, Inc.,
6.625%, 5/15/2029 418,423
35,000 Time Warner, Inc.,
6.950%, 1/15/2028 35,715
315,000 Viacom, Inc., Senior Note,
6.875%, 4/30/2036 315,859
---------------
1,548,402
---------------
Food -- 0.1%
75,000 Kraft Foods, Inc.,
6.500%, 11/01/2031 73,567
30,000 Sara Lee Corp.,
6.125%, 11/01/2032(b) 28,408
---------------
101,975
---------------
Government Guaranteed -- 1.3%
100,000,000 Development Bank of Japan,
1.750%, 6/21/2010 (JPY) 915,347
22,000,000 Kreditanstalt fuer Wiederaufbau,
1.850%, 9/20/2010 (JPY 202,103
2,625,000 Kreditanstalt fuer Wiederaufbau, Series E, (MTN),
8.500%, 7/16/2010 (ZAR) 365,260
19,000,000 Oesterreichische Kontrollbank AG,
1.800%, 3/22/2010 (JPY) 173,701
---------------
1,656,411
---------------
Government Sponsored -- 0.3%
20,000,000 Federal National Mortgage Association,
1.750%, 3/26/2008 (JPY) 179,361
200,000 Federal National Mortgage Association,
2.290%, 2/19/2009 (SGD) 138,293
---------------
317,654
---------------
Healthcare -- 1.9%
655,000 Amgen, Inc., 144A,
6.375%, 6/01/2037 664,136
80,000 Baxter International, Inc.,
6.250%, 12/01/2037 82,084
10,000 Boston Scientific Corp.,
6.400%, 6/15/2016 9,400
55,000 Boston Scientific Corp.,
7.000%, 11/15/2035 48,400
265,000 HCA, Inc.,
6.375%, 1/15/2015 223,925
610,000 HCA, Inc.,
6.500%, 2/15/2016(b) 515,450
25,000 HCA, Inc.,
7.050%, 12/01/2027 19,093
Principal
Amount (++) Description Value (+)
- --------------------------------------------------------------------------
Healthcare -- continued
$ 5,000 HCA, Inc.,
7.500%, 12/15/2023 $ 4,094
460,000 HCA, Inc.,
7.500%, 11/06/2033 359,950
135,000 HCA, Inc.,
7.580%, 9/15/2025 109,898
310,000 HCA, Inc.,
7.690%, 6/15/2025 256,649
30,000 HCA, Inc.,
7.750%, 7/15/2036 24,104
20,000 HCA, Inc.,
8.360%, 4/15/2024 17,585
---------------
2,334,768
---------------
Home Construction -- 1.1%
175,000 Centex Corp.,
5.250%, 6/15/2015(b) 148,192
50,000 DR Horton, Inc., Senior Note,
5.250%, 2/15/2015 39,716
25,000 DR Horton, Inc.,
5.625%, 9/15/2014 20,998
30,000 DR Horton, Inc., Guaranteed Note,
5.625%, 1/15/2016 24,883
290,000 K. Hovnanian Enterprises, Inc., Senior Note,
6.250%, 1/15/2016(b) 197,200
10,000 K. Hovnanian Enterprises, Inc.,
Guaranteed Note,
6.375%, 12/15/2014(b) 7,000
100,000 K. Hovnanian Enterprises, Inc.,
Guaranteed Note,
6.500%, 1/15/2014 70,000
20,000 K. Hovnanian Enterprises, Inc.,
7.500%, 5/15/2016(b) 14,000
175,000 KB Home, Senior Note,
5.875%, 1/15/2015 150,937
125,000 KB Home, Guaranteed Note,
6.250%, 6/15/2015(b) 108,750
105,000 KB Home, Guaranteed Note,
7.250%, 6/15/2018 95,025
140,000 Lennar Corp., Series B, Guaranteed Note,
5.600%, 5/31/2015 106,683
10,000 Pulte Homes, Inc.,
5.200%, 2/15/2015 8,272
80,000 Pulte Homes, Inc.,
6.000%, 2/15/2035(b) 60,322
470,000 Pulte Homes, Inc.,
6.375%, 5/15/2033 356,060
25,000 Toll Brothers Financial Corp.,
5.150%, 5/15/2015 22,687
---------------
1,430,725
---------------
Insurance -- 0.4%
55,000 Fund American Cos., Inc.,
5.875%, 5/15/2013 55,119
465,000 White Mountains RE Group, 144A,
6.375%, 3/20/2017 450,526
---------------
505,645
---------------
Lodging -- 0.0%
35,000 Royal Caribbean Cruises Ltd.,
7.500%, 10/15/2027 31,911
---------------
See accompanying notes to financial statements.
12
NATIXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Principal
Amount (++) Description Value (+)
- ------------------------------------------------------------------------------------------
Media Cable -- 2.2%
$ 1,370,000 Comcast Corp.,
5.650%, 6/15/2035 $ 1,254,020
65,000 Comcast Corp.,
6.450%, 3/15/2037 66,182
80,000 Comcast Corp.,
6.500%, 11/15/2035 81,635
995,000 COX Communications, Inc., 144A,
6.450%, 12/01/2036 987,192
100,000 CSC Holdings, Inc., Senior Note,
7.625%, 7/15/2018 91,875
244,000 Time Warner Cable, Inc.,
6.550%, 5/01/2037 249,050
---------------
2,729,954
---------------
Media Non-Cable -- 1.2%
385,000 British Sky Broadcasting Finance PLC, 144A,
6.500%, 10/15/2035 372,383
80,000 Intelsat Corp.,
6.875%, 1/15/2028 66,400
83,454 Liberty Media LLC, Convertible,
3.500%, 1/15/2031 74,065
225,000 News America, Inc.,
6.150%, 3/01/2037 217,348
520,000 News America, Inc.,
6.200%, 12/15/2034 512,611
125,000 News America, Inc.,
6.400%, 12/15/2035 126,456
270,000 Tribune Co.,
5.250%, 8/15/2015(b) 158,047
---------------
1,527,310
---------------
Mining -- 0.7%
400,000 Barrick Gold Finance Co.,
5.800%, 11/15/2034 366,562
310,000 Newmont Mining Corp.,
5.875%, 4/01/2035 272,538
185,000 Vale Overseas, Ltd.,
6.875%, 11/21/2036 187,148
---------------
826,248
---------------
Municipal -- 0.0%
50,000 Michigan Tobacco Settlement Finance Authority, Taxable Turbo
Series A,
7.309%, 6/01/2034 47,043
---------------
Non Captive Consumer -- 1.8%
555,000 American General Finance Corp.,
6.900%, 12/15/2017 555,555
20,000 Capital One Bank,
5.125%, 2/15/2014 18,626
65,000 Ford Motor Credit Co.,
5.700%, 1/15/2010 58,564
230,000 Ford Motor Credit Co.,
8.000%, 12/15/2016 195,365
35,000 Residential Capital LLC,
8.000%, 6/01/2012 21,525
15,000 Residential Capital LLC,
8.375%, 6/30/2015 9,075
110,000,000 SLM Corp., (EMTN),
1.530%, 9/15/2011 (JPY) 906,521
Principal
Amount (++) Description Value (+)
- ------------------------------------------------------------------------------
Non Captive Consumer -- continued
$ 70,000 SLM Corp., Series A, (MTN),
5.000%, 10/01/2013 $ 61,356
90,000 SLM Corp., Series A, (MTN),
5.000%, 4/15/2015(b) 76,754
25,000 SLM Corp., Series A, (MTN),
5.000%, 6/15/2018 19,992
85,000 SLM Corp., (MTN),
5.050%, 11/14/2014 73,469
10,000 SLM Corp., Series A, (MTN),
5.375%, 5/15/2014 8,891
87,000 SLM Corp., (MTN),
5.625%, 8/01/2033 67,245
165,000 SLM Corp., Series A, (MTN),
6.500%, 6/15/2010 (NZD) 114,480
---------------
2,187,418
---------------
Non Captive Diversified -- 2.2%
515,000 CIT Group, Inc.,
7.625%, 11/30/2012 522,007
900,000 General Electric Capital Corp., Series G, (MTN),
2.960%, 5/18/2012 (SGD) 612,302
800,000 General Electric Capital Corp., Series G, (MTN),
3.485%, 3/08/2012 (SGD 556,386
405,000 GMAC LLC,
6.000%, 12/15/2011 339,665
190,000 GMAC LLC,
6.625%, 5/15/2012 157,950
225,000 GMAC LLC, (MTN),
6.750%, 12/01/2014 181,474
70,000 GMAC LLC,
8.000%, 11/01/2031(b) 58,721
85,000 iStar Financial, Inc.,
5.150%, 3/01/2012 73,459
35,000 iStar Financial, Inc.,
5.375%, 4/15/2010 32,402
105,000 iStar Financial, Inc.,
5.650%, 9/15/2011 93,830
15,000 iStar Financial, Inc.,
5.743%, 10/01/2012(b)(c) 13,275
25,000 iStar Financial, Inc.,
5.800%, 3/15/2011 22,396
10,000 iStar Financial, Inc., Series B,
5.125%, 4/01/2011 8,914
120,000 iStar Financial, Inc., Series B,
5.950%, 10/15/2013 104,567
---------------
2,777,348
---------------
Oil & Gas -- 0.6%
200,000 Anadarko Petroleum Corp.,
6.450%, 9/15/2036 203,667
410,000 Pioneer Natural Resources Co.,
7.200%, 1/15/2028 369,536
50,000 Talisman Energy, Inc.,
5.850%, 2/01/2037 46,750
120,000 Talisman Energy, Inc.,
6.250%, 2/01/2038 116,947
---------------
736,900
---------------
Oil Field Services -- 0.3%
390,000 Weatherford International, Ltd.,
6.500%, 8/01/2036 389,471
---------------
See accompanying notes to financial statements.
13
NATIXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Principal
Amount (++) Description Value (+)
- ---------------------------------------------------------------------------------------
Packaging & Containers -- 0.0%
$ 30,000 Owens-Illinois, Inc., Senior Note,
7.800%, 5/15/2018 $ 30,525
---------------
Paper -- 0.7%
115,000 Bowater, Inc.,
6.500%, 6/15/2013(b) 84,525
5,000 Georgia-Pacific Corp.,
7.250%, 6/01/2028 4,400
25,000 Georgia-Pacific Corp.,
7.375%, 12/01/2025 22,000
385,000 Georgia-Pacific Corp.,
7.750%, 11/15/2029 352,275
400,000 Georgia-Pacific Corp.,
8.000%, 1/15/2024 372,000
95,000 Georgia-Pacific Corp.,
8.875%, 5/15/2031(b) 91,675
---------------
926,875
---------------
Pharmaceuticals -- 0.6%
255,000 Elan Finance PLC, Senior Note,
7.750%, 11/15/2011 239,700
5,000 EPIX Pharmaceuticals, Inc., Senior Note, Convertible,
3.000%, 6/15/2024 3,362
10,000 Invitrogen Corp.,
1.500%, 2/15/2024 10,550
100,000 Nektar Therapeutics,
3.250%, 9/28/2012 82,500
480,000 Valeant Pharmaceuticals International, Subordinated Note,
4.000%, 11/15/2013 403,200
---------------
739,312
---------------
Pipelines -- 2.0%
75,000 DCP Midstream LP, 144A,
6.450%, 11/03/2036 72,965
620,000 El Paso Corp.,
6.950%, 6/01/2028(b) 586,939
130,000 El Paso Natural Gas Co.,
5.950%, 4/15/2017 128,312
10,000 K N Capital Trust III,
7.630%, 4/15/2028(b) 9,020
20,000 Kinder Morgan Energy Partners, LP, Senior Note,
5.000%, 12/15/2013 19,404
100,000 Kinder Morgan Energy Partners, LP,
5.800%, 3/15/2035 90,523
800,000 Kinder Morgan Energy Partners, LP, (MTN),
6.950%, 1/15/2038 839,597
65,000 Kinder Morgan Finance Co. ULC, Guaranteed Note,
5.700%, 1/05/2016 58,838
420,000 Kinder Morgan Finance Co. ULC, Guaranteed Note,
6.400%, 1/05/2036 346,857
25,000 Kinder Morgan, Inc., Senior Note,
5.150%, 3/01/2015 21,998
45,000 ONEOK Partners LP,
6.650%, 10/01/2036 45,503
125,000 Southern Natural Gas Co., 144A,
5.900%, 4/01/2017 122,946
50,000 Tennessee Gas Pipeline Co.,
7.000%, 10/15/2028(b) 50,474
60,000 Transcontinental Gas Pipe Line Corp.,
6.400%, 4/15/2016 61,575
---------------
2,454,951
---------------
Principal
Amount (++) Description Value (+)
- --------------------------------------------------------------------
Retailers -- 1.7%
$ 400,000 Dillard's, Inc.,
6.625%, 1/15/2018(b) $ 316,610
205,000 Dillard's, Inc., Class A,
7.000%, 12/01/2028 149,650
186,000 Home Depot, Inc.,
5.875%, 12/16/2036 156,966
715,000 J.C. Penney Corp., Inc., Senior Note,
6.375%, 10/15/2036 638,934
100,000 Macys Retail Holdings, Inc.,
6.790%, 7/15/2027 93,260
225,000 Macys Retail Holdings, Inc.,
6.900%, 4/01/2029 206,065
725,000 Toys R Us, Inc.,
7.375%, 10/15/2018 523,812
5,000 Toys R Us, Inc.,
7.875%, 4/15/2013 3,863
---------------
2,089,160
---------------
Sovereigns -- 3.4%
2,215,000 Canadian Government,
5.250%, 6/01/2012 (CAD) 2,368,621
130,000 Canadian Government,
5.750%, 6/01/2033 (CAD) 165,702
115,000(++) Mexican Fixed Rate Bonds, Series M-10,
8.000%, 12/17/2015 (MXN) 1,043,232
20,000(++) Mexican Fixed Rate Bonds, Series M-10,
9.000%, 12/20/2012 (MXN) 190,631
400,000 Republic of Brazil,
12.500%, 1/05/2016 (BRL) 244,944
105,000,000 Republic of Colombia,
9.850%, 6/28/2027 (COP) 51,864
1,145,000 Republic of South Africa,
13.000%, 8/31/2010 (ZAR) 181,425
---------------
4,246,419
---------------
Supermarkets -- 0.8%
355,000 Albertson's, Inc.,
7.750%, 6/15/2026 351,137
340,000 Albertson's, Inc., Senior Note,
7.450%, 8/01/2029 327,230
320,000 Albertson's, Inc., Series C, (MTN),
6.625%, 6/01/2028 281,524
---------------
959,891
---------------
Supranational -- 1.3%
1,000,000 European Investment Bank, 144A,
4.600%, 1/30/2037 1,012,797
38,500,000 Inter-American Development Bank,
13.000%, 6/20/2008 (ISK) 610,046
---------------
1,622,843
---------------
Technology -- 1.6%
10,000 Affiliated Computer Services, Inc.,
5.200%, 6/01/2015 8,613
70,000 Arrow Electronics, Inc.,
6.875%, 6/01/2018 74,518
340,000 Avnet, Inc.,
6.000%, 9/01/2015 339,404
115,000 Corning, Inc.,
6.850%, 3/01/2029 121,491
See accompanying notes to financial statements.
14
NATIXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Principal
Amount (++) Description Value (+)
- ------------------------------------------------------------------------------
Technology -- continued
$ 110,000 Freescale Semiconductor, Inc.,
10.125%, 12/15/2016(b) $ 90,750
20,000 Kulicke & Soffa Industries, Inc., Convertible,
0.500%, 11/30/2008 18,875
15,000 Kulicke & Soffa Industries, Inc., Convertible,
1.000%, 6/30/2010 12,975
920,000 Lucent Technologies, Inc.,
6.450%, 3/15/2029 760,150
390,000 Lucent Technologies, Inc.,
6.500%, 1/15/2028(b) 322,238
25,000 Nortel Networks Corp.,
6.875%, 9/01/2023 19,750
140,000 Nortel Networks, Ltd., 144A,
10.125%, 7/15/2013 144,200
40,000 Northern Telecom Capital Corp.,
7.875%, 6/15/2026 32,800
---------------
1,945,764
---------------
Transportation Services -- 0.3%
445,000 CSX Corp.,
6.000%, 10/01/2036(b) 403,878
---------------
Transportation -- 0.2%
190,000 Stena AB, Senior Note,
7.000%, 12/01/2016 182,637
---------------
Treasuries -- 16.8%
721,046 U.S. Treasury Bond,
2.000%, 1/15/2026(b)(d) 718,117
2,174,992 U.S. Treasury Bond,
2.375%, with various maturities to 2027(b)(d)(e) 2,287,368
3,172,069 U.S. Treasury Bond,
3.375%, 4/15/2032(d) 4,062,726
1,466,735 U.S. Treasury Note,
0.875%, 4/15/2010(b)(d) 1,461,808
1,263,731 U.S. Treasury Note,
1.625%, 1/15/2015(b)(d) 1,268,765
2,373,357 U.S. Treasury Note,
1.875%, with various maturities to 2015(b)(d)(e) 2,431,990
3,123,517 U.S. Treasury Note,
2.000%, with various maturities to 2016(b)(d)(e) 3,222,387
1,416,781 U.S. Treasury Note,
2.375%, with various maturities to 2017(b)(d)(e) 1,484,386
589,670 U.S. Treasury Note,
2.500%, 7/15/2016(b)(d) 628,827
1,254,925 U.S. Treasury Note,
3.000%, 7/15/2012(b)(d) 1,359,143
388,279 U.S. Treasury Note,
3.375%, 1/15/2012(b)(d) 423,558
684,221 U.S. Treasury Note,
3.500%, 1/15/2011(b)(d) 735,859
235,936 U.S. Treasury Note,
4.250%, 1/15/2010(d) 251,751
160,000 U.S. Treasury Note,
4.625%, 2/15/2017(b) 167,275
760,000 U.S. Treasury STRIPS,
0.010%, 8/15/2019(b) 452,586
---------------
20,956,546
---------------
Principal
Amount (++) Description Value (+)
- ---------------------------------------------------------------------------------
Wireless -- 1.3%
$ 5,000,000 America Movil SAB de CV,
8.460%, 12/18/2036 (MXN) $ 431,054
420,000 Nextel Communications, Inc., Series F,
5.950%, 3/15/2014 394,787
790,000 Sprint Capital Corp.,
6.875%, 11/15/2028 749,207
109,000 Sprint Nextel Corp.,
6.000%, 12/01/2016 104,399
---------------
1,679,447
---------------
Wirelines -- 3.4%
25,000 AT&T Corp.,
6.500%, 3/15/2029 24,540
30,000 AT&T, Inc.,
6.150%, 9/15/2034 29,950
425,000 BellSouth Corp.,
6.000%, 11/15/2034(b) 413,261
475,000 Citizens Communications Co.,
7.125%, 3/15/2019 451,250
340,000 Embarq Corp.,
7.995%, 6/01/2036 358,304
100,000 Level 3 Communications, Inc.,
2.875%, 7/15/2010 87,250
20,000 Level 3 Communications, Inc.,
6.000%, 9/15/2009(b) 18,600
820,000 Level 3 Communications, Inc.,
6.000%, 3/15/2010(b) 729,800
135,000 Level 3 Financing, Inc.,
8.750%, 2/15/2017 115,763
70,000 Level 3 Financing, Inc.,
9.250%, 11/01/2014 63,350
215,000 Qwest Capital Funding, Inc., Guaranteed Note,
6.500%, 11/15/2018 181,675
315,000 Qwest Capital Funding, Inc.,
7.750%, 2/15/2031 283,500
265,000 Qwest Capital Funding, Inc., Guaranteed Note,
6.875%, 7/15/2028(b) 223,925
15,000 Qwest Capital Funding, Inc., Guaranteed Note,
7.625%, 8/03/2021 13,500
130,000 Qwest Corp.,
6.875%, 9/15/2033 119,925
235,000 Qwest Corp., Senior Note,
6.500%, 6/01/2017 225,013
59,000 Telecom Italia Capital,
6.000%, 9/30/2034 57,372
122,000 Telecom Italia Capital,
6.375%, 11/15/2033 122,188
550,000 Telus Corp.,
4.950%, 3/15/2017 (CAD) 517,383
85,000 Verizon Global Funding Corp., Senior Note,
5.850%, 9/15/2035 83,145
30,000 Verizon Maryland, Inc., Series B, Senior Note,
5.125%, 6/15/2033 25,856
30,000 Verizon New York, Inc., Series A,
7.375%, 4/01/2032 32,935
---------------
4,178,485
---------------
Total Bonds and Notes (Identified Cost $73,043,715) 73,181,851
---------------
See accompanying notes to financial statements.
15
NATIXIS INCOME DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Value (+)
- ------------------------------------------------------------------------------------------------------
Preferred Stocks -- 0.4%
Containers & Packaging -- 0.1%
1,550 Owens-Illinois, Inc., Convertible, 4.75% $ 77,469
---------------
Household Products -- 0.0%
625 Newell Financial Trust I, Convertible, 5.250% 28,516
---------------
Oil, Gas & Consumable Fuels -- 0.0%
1,150 El Paso Energy Capital Trust I, Convertible, 4.750% 41,400
---------------
Thrifts & Mortgage Finance -- 0.3%
8,000 Federal Home Loan Mortgage Corp., 8.250% 209,200
7,000 Federal National Mortgage Association, 8.375% 180,250
---------------
389,450
---------------
Total Preferred Stocks (Identified Cost $505,712) 536,835
---------------
Short-Term Investments -- 25.8%
32,003,633 State Street Navigator Securities Lending Prime Portfolio(f) 32,003,633
$ 147,422 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/31/2007 at 3.250% to be repurchased at
$147,449 on 1/2/2008, collateralized by $150,000 Federal
National Mortgage Association 5.125% due 4/1/2010 valued at
$152,063 including accrued interest (Note 2g of Notes to Financial
Statements) 147,422
---------------
Total Short-Term Investments (Identified Cost $32,151,055) 32,151,055
---------------
Total Investments -- 125.1%
(Identified Cost $167,246,280)(a) 156,203,451
Other assets less liabilities -- (25.1)% (31,291,510)
---------------
Total Net Assets -- 100% $ 124,911,941
===============
(++) Principal amount is in U.S. dollars unless otherwise noted.
(+) See Note 2a of Notes to Financial Statements.
(++) Amount shown represents units. One unit represents a principal amount of 100.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized depreciation on investments based on a cost
of $167,530,831 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all investments in
which there is an excess of value over tax cost $ 2,854,947
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (14,182,327)
---------------
Net unrealized depreciation $ (11,327,380)
===============
(b) All or a portion of this security was on loan to brokers at December 31, 2007.
(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 Bond and Notes which have the same
coupon rate have been aggregated for the purpose of presentation in the Portfolio of
Investments.
(f) 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 the period end, the value of these amounted to
$7,537,100 or 6.0% of net assets.
EMTN Euro Medium Term Note
MBS Mortgage Backed Security
MTN Medium Term Note
REITS Real Estate Investment Trusts
STRIPS Separate Trading of Registered Interest and Principal of Securities
BRL Brazilian Real
CAD Canadian Dollar
COP Colombian Peso
IDR Indonesian Rupiah
ISK Iceland Krona
JPY Japanese Yen
KRW South Korean Won
MXN Mexican Peso
MYR Malaysian Ringgit
NZD New Zealand Dollar
SGD Singapore Dollar
ZAR South African Rand
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited)
Treasuries 16.8%
Commercial Banks 6.4
REITs -- Office 3.5
Sovereigns 3.4
REITs -- Regional Malls 3.3
Wirelines 3.2
REITs -- Apartments 3.0
REITs -- Industrial 2.8
Banks 2.5
REITs -- Shopping Centers 2.5
Non Captive Diversified 2.2
Media Cable 2.2
Healthcare 2.2
Non Captive Consumer 2.1
Pipelines 2.0
Other, less than 2% each 41.2
See accompanying notes to financial statements.
16
NATIXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS
Investments as of December 31, 2007
Shares Description Value (+)
- ---------------------------------------------------------------------------------
Common Stocks -- 63.0% of Net Assets
Aerospace & Defense -- 1.7%
1,050 Alliant Techsystems, Inc.(b)(c) $ 119,449
2,250 DRS Technologies, Inc.(b) 122,107
4,242 Goodrich Corp.(b) 299,528
1,300 L-3 Communications Holdings, Inc.(b) 137,722
4,371 Precision Castparts Corp.(b) 606,258
---------------
1,285,064
---------------
Air Freight & Logistics -- 0.6%
5,000 FedEx Corp.(b) 445,850
---------------
Automobiles -- 0.8%
1,241 DaimlerChrysler AG 118,677
5,200 Harley-Davidson, Inc.(b) 242,892
2,151 Honda Motor Co., Ltd., Sponsored ADR 71,284
1,648 Nissan Motor Co., Ltd., Sponsored ADR 35,795
1,643 Toyota Motor Corp., Sponsored ADR 174,437
---------------
643,085
---------------
Beverages -- 1.2%
10,735 Coca-Cola Co. (The) 658,807
2,817 Diageo PLC, Sponsored ADR 241,783
---------------
900,590
---------------
Biotechnology -- 0.5%
8,803 Gilead Sciences, Inc.(b)(c) 405,026
---------------
Capital Markets -- 4.6%
15,500 Bank of New York Mellon Corp. 755,780
1,602 BlackRock, Inc.(b) 347,313
10,178 Charles Schwab Corp. (The) 260,048
2,019 Credit Suisse Group, Sponsored ADR 121,342
1,981 Goldman Sachs Group, Inc. 426,014
5,079 Lehman Brothers Holdings, Inc.(b) 332,370
7,700 Merrill Lynch & Co., Inc.(b) 413,336
7,400 Morgan Stanley(b) 393,014
5,227 T. Rowe Price Group, Inc.(b) 318,220
3,127 UBS AG 143,842
---------------
3,511,279
---------------
Chemicals -- 2.0%
6,400 Dow Chemical Co. (The)(b) 252,288
6,596 Monsanto Co. 736,707
3,574 Mosaic Co. (The)(c) 337,171
473 Potash Corp. of Saskatchewan, Inc. 68,093
1,450 PPG Industries, Inc. 101,834
---------------
1,496,093
---------------
Commercial Banks -- 2.1%
5,993 Banco Bilbao Vizcaya Argentaria SA, Sponsored ADR(b) 145,330
10,990 Banco Santander Central Hispano SA, ADR 236,725
2,923 Barclays PLC, Sponsored ADR 118,002
1,950 Comerica, Inc.(b) 84,883
3,340 HSBC Holdings PLC, Sponsored ADR(b) 279,591
4,850 Huntington Bancshares, Inc.(b) 71,586
2,900 KeyCorp(b) 68,005
2,448 Marshall & Ilsley Corp.(b) 64,823
18,990 Mitsubishi UFJ Financial Group, Inc., ADR(b) 177,177
11,044 Mizuho Financial Group, Inc., ADR(b) 105,470
17,720 Royal Bank of Scotland Group PLC(b)(c) 158,594
908 Westpac Banking Corp., Sponsored ADR(b) 110,640
---------------
1,620,826
---------------
Shares Description Value (+)
- ---------------------------------------------------------------------------
Commercial Services & Supplies -- 0.2%
3,050 R. R. Donnelley & Sons Co.(b) $ 115,107
---------------
Communications Equipment -- 1.8%
5,506 Alcatel-Lucent, Sponsored ADR(b) 40,304
16,692 Cisco Systems, Inc.(c) 451,852
33,100 Motorola, Inc. 530,924
4,859 Nokia Corp., Sponsored ADR 186,537
700 Research In Motion, Ltd.(b)(c) 79,380
2,557 Telefonaktiebolaget LM Ericsson, Sponsored ADR 59,706
---------------
1,348,703
---------------
Computers & Peripherals -- 4.4%
5,019 Apple, Inc.(c) 994,163
25,500 Dell, Inc.(b)(c) 625,005
14,237 EMC Corp.(b)(c) 263,812
21,525 Hewlett-Packard Co. 1,086,582
4,450 Seagate Technology(b) 113,475
11,800 Sun Microsystems, Inc.(b)(c) 213,934
---------------
3,296,971
---------------
Construction & Engineering -- 0.6%
3,030 Foster Wheeler, Ltd.(b)(c) 469,711
---------------
Construction Materials -- 0.1%
1,466 Cemex SAB de CV, Sponsored ADR(b)(c) 37,896
---------------
Consumer Finance -- 1.6%
7,100 American Express Co.(b) 369,342
12,300 Capital One Financial Corp.(b) 581,298
19,000 Discover Financial Services(b) 286,520
---------------
1,237,160
---------------
Diversified Financial Services -- 2.7%
2,950 CIT Group, Inc.(b) 70,889
734 CME Group, Inc.(b) 503,524
3,525 ING Groep NV, Sponsored ADR 137,158
2,274 IntercontinentalExchange, Inc.(b)(c) 437,745
11,500 JPMorgan Chase & Co. 501,975
3,109 Nymex Holdings, Inc.(b) 415,393
---------------
2,066,684
---------------
Diversified Telecommunication Services -- 0.8%
1,570 BT Group PLC, Sponsored ADR(b) 84,654
4,939 Deutsche Telekom AG, Sponsored ADR 107,028
2,936 France Telecom SA, Sponsored ADR 104,610
2,044 Telefonica SA, Sponsored ADR 199,474
7,700 Windstream Corp.(b) 100,254
---------------
596,020
---------------
Electric Utilities -- 0.3%
1,850 Edison International(b) 98,735
2,250 PPL Corp. 117,202
---------------
215,937
---------------
Electrical Equipment -- 1.6%
2,787 ABB, Ltd., Sponsored ADR 80,266
2,500 Cooper Industries, Ltd., Class A(b) 132,200
1,901 First Solar, Inc.(b)(c) 507,833
1,550 General Cable Corp.(b)(c) 113,584
2,150 Hubbell, Inc., Class B(b) 110,940
1,915 SunPower Corp., Class A(b)(c) 249,697
---------------
1,194,520
---------------
See accompanying notes to financial statements.
17
NATIXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Description Value (+)
- ------------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.4%
1,450 Anixter International, Inc.(b)(c) $ 90,291
2,850 Arrow Electronics, Inc.(b)(c) 111,948
2,200 Tyco Electronics, Ltd. 81,686
---------------
283,925
---------------
Energy Equipment & Services -- 1.3%
6,470 National-Oilwell Varco, Inc.(c) 475,286
1,950 Superior Energy Services, Inc.(b)(c) 67,119
2,837 Transocean, Inc.(c) 406,117
---------------
948,522
---------------
Food & Staples Retailing -- 0.8%
3,139 Costco Wholesale Corp. 218,976
7,221 CVS Caremark Corp.(b) 287,035
2,750 SUPERVALU, Inc.(b) 103,180
---------------
609,191
---------------
Food Products -- 0.6%
2,350 Hormel Foods Corp.(b) 95,128
2,250 J.M. Smucker Co. (The) 115,740
3,900 Smithfield Foods, Inc.(b)(c) 112,788
2,236 Unilever NV 81,525
1,844 Unilever PLC, Sponsored ADR(b) 69,002
---------------
474,183
---------------
Health Care Equipment & Supplies -- 2.1%
1,550 Beckman Coulter, Inc.(b) 112,840
1,950 Cooper Cos., Inc. (The)(b) 74,100
2,200 Covidien, Ltd. 97,438
1,950 Hillenbrand Industries, Inc.(b) 108,674
3,738 Hologic, Inc.(b)(c) 256,576
701 Intuitive Surgical, Inc.(b)(c) 227,474
2,250 Kinetic Concepts, Inc.(b)(c) 120,510
7,500 Medtronic, Inc. 377,025
2,775 Stryker Corp.(b) 207,348
---------------
1,581,985
---------------
Hotels, Restaurants & Leisure -- 2.2%
13,300 Carnival Corp.(b) 591,717
17,649 McDonald's Corp. 1,039,703
---------------
1,631,420
---------------
Household Durables -- 1.2%
4,250 Fortune Brands, Inc.(b) 307,530
2,275 Garmin, Ltd.(b) 220,675
4,650 Leggett & Platt, Inc.(b) 81,096
3,132 Matsushita Electric Industrial Co., Ltd., Sponsored ADR 64,018
5,600 Pulte Homes, Inc.(b) 59,024
1,365 Sony Corp., Sponsored ADR 74,120
900 Whirlpool Corp.(b) 73,467
---------------
879,930
---------------
Independent Power Producers & Energy Traders -- 0.0%
764 TransAlta Corp.(b) 25,579
---------------
Industrial Conglomerates -- 0.9%
1,386 Koninklijke (Royal) Philips Electronics NV 59,251
1,032 Siemens AG, Sponsored ADR 162,396
6,347 Textron, Inc. 452,541
---------------
674,188
---------------
Insurance -- 1.2%
3,100 Aflac, Inc. 194,153
6,920 Allianz SE, ADR 147,050
1,600 Arch Capital Group, Ltd.(c) 112,560
Shares Description Value (+)
- --------------------------------------------------------------------------
Insurance -- continued
3,564 Axa, Sponsored ADR $ 141,526
2,700 Cincinnati Financial Corp. 106,758
4,650 HCC Insurance Holdings, Inc.(b) 133,362
2,650 Protective Life Corp. 108,703
---------------
944,112
---------------
Internet & Catalog Retail -- 1.1%
6,700 Amazon.com, Inc.(b)(c) 620,688
1,710 Priceline.com, Inc.(b)(c) 196,411
---------------
817,099
---------------
Internet Software & Services -- 1.2%
1,330 Google, Inc., Class A(b)(c) 919,668
---------------
IT Services -- 0.8%
2,849 MasterCard, Inc., Class A(b) 613,105
---------------
Leisure Equipment & Products -- 0.2%
6,750 Mattel, Inc.(b) 128,520
---------------
Life Sciences Tools & Services -- 0.5%
6,549 Thermo Fisher Scientific, Inc.(c) 377,746
---------------
Machinery -- 1.6%
3,659 AGCO Corp.(b)(c) 248,739
5,813 Deere & Co. 541,307
1,350 Eaton Corp. 130,882
2,104 Flowserve Corp. 202,405
1,474 Parker Hannifin Corp.(b) 111,007
---------------
1,234,340
---------------
Media -- 2.6%
9,500 Comcast Corp., Special Class A(b)(c) 172,140
2,150 Gannett Co., Inc.(b) 83,850
3,800 Idearc, Inc.(b) 66,728
2,365 Liberty Media Corp. - Capital, Series A(b)(c) 275,499
3,500 Omnicom Group, Inc.(b) 166,355
658 Reed Elsevier PLC, Sponsored ADR(c) 35,466
29,800 Time Warner, Inc.(b) 491,998
10,500 Viacom, Inc., Class B(b)(c) 461,160
5,600 Walt Disney Co. (The)(b) 180,768
---------------
1,933,964
---------------
Metals & Mining -- 1.1%
3,368 Anglo American PLC, ADR(b) 102,286
2,411 BHP Billiton Ltd., Sponsored ADR(b) 168,867
1,413 BHP Billiton PLC, ADR(b) 86,617
2,008 Companhia Vale do Rio Doce, ADR(b) 65,601
2,593 Companhia Vale do Rio Doce, Sponsored ADR 72,552
407 POSCO, ADR(b) 61,217
321 Rio Tinto PLC, Sponsored ADR(b) 134,788
12,500 Yamana Gold, Inc. 161,750
---------------
853,678
---------------
Multi Utilities -- 0.4%
2,050 Ameren Corp. 111,130
2,200 Integrys Energy Group, Inc.(b) 113,718
293 National Grid PLC, Sponsored ADR 24,451
555 Veolia Environnement 50,494
---------------
299,793
---------------
Office Electronics -- 0.3%
1,476 Canon, Inc., Sponsored ADR 67,645
8,600 Xerox Corp.(b) 139,234
---------------
206,879
---------------
See accompanying notes to financial statements.
18
NATIXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Shares Description Value (+)
- ----------------------------------------------------------------------------------------
Oil, Gas & Consumable Fuels -- 3.0%
4,252 BP PLC, Sponsored ADR(b) $ 311,119
1,450 Cameco Corp. 57,724
2,700 Chesapeake Energy Corp.(b) 105,840
2,850 Cimarex Energy Co.(b) 121,210
1,669 EnCana Corp. 113,425
1,857 Eni SpA, Sponsored ADR 134,503
1,050 Hess Corp. 105,903
2,050 Newfield Exploration Co.(b)(c) 108,035
950 Noble Energy, Inc.(b) 75,544
1,448 Petroleo Brasileiro SA, ADR(b) 139,327
2,663 Royal Dutch Shell PLC, Class A, ADR 224,225
1,901 Royal Dutch Shell PLC, Class B, ADR 157,783
1,500 Sunoco, Inc. 108,660
2,857 Total SA, Sponsored ADR(b) 235,988
5,680 XTO Energy, Inc.(b) 291,725
---------------
2,291,011
---------------
Pharmaceuticals -- 2.0%
1,588 AstraZeneca PLC, Sponsored ADR(b) 67,998
6,750 Biovail Corp. 90,855
6,148 GlaxoSmithKline PLC, Sponsored ADR(b) 309,798
11,130 Merck & Co., Inc. 646,764
5,400 Mylan Laboratories, Inc.(b) 75,924
2,724 Novartis AG, ADR 147,941
550 Novo Nordisk A/S, Sponsored ADR 35,673
2,574 Sanofi-Aventis, ADR 117,194
---------------
1,492,147
---------------
REITs -- Health Care -- 0.2%
2,650 Ventas, Inc. 119,912
---------------
REITs -- Hotels -- 0.1%
2,600 Hospitality Properties Trust 83,772
---------------
Road & Rail -- 1.1%
602 Canadian National Railway Co. 28,252
6,100 Union Pacific Corp. 766,282
---------------
794,534
---------------
Semiconductors & Semiconductor Equipment -- 3.6%
57,967 Intel Corp. 1,545,400
4,905 MEMC Electronic Materials, Inc.(c) 434,044
9,816 NVIDIA Corp.(b)(c) 333,940
6,822 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR 67,947
10,200 Texas Instruments, Inc. 340,680
---------------
2,722,011
---------------
Software -- 1.9%
10,895 Activision, Inc.(c) 323,581
4,950 Check Point Software Technologies, Ltd.(c) 108,702
23,182 Microsoft Corp. 825,279
1,176 SAP AG, Sponsored ADR(b) 60,035
1,692 VMware, Inc., Class A(b)(c) 143,803
---------------
1,461,400
---------------
Specialty Retail -- 1.5%
5,900 Best Buy Co., Inc.(b) 310,635
15,400 Home Depot, Inc.(b) 414,876
5,900 Limited Brands, Inc.(b) 111,687
2,450 Men's Wearhouse, Inc. (The)(b) 66,101
1,650 Sherwin-Williams Co. (The)(b) 95,766
4,200 TJX Cos., Inc. 120,666
---------------
1,119,731
---------------
Shares Description Value (+)
- ----------------------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods -- 0.4%
5,100 NIKE, Inc., Class B $ 327,624
---------------
Thrifts & Mortgage Finance -- 0.1%
7,100 Washington Mutual, Inc.(b) 96,631
---------------
Tobacco -- 0.3%
1,037 British American Tobacco PLC, Sponsored ADR 81,467
1,350 Loews Corp. - Carolina Group(b) 115,155
---------------
196,622
---------------
Trading Companies & Distributors -- 0.1%
90 Mitsui & Co., Ltd., Sponsored ADR 38,362
---------------
Wireless Telecommunication Services -- 0.6%
1,829 America Movil SAB de CV, Series L, ADR 112,282
1,477 China Mobile, Ltd., Sponsored ADR(b) 128,307
6,531 Vodafone Group PLC, Sponsored ADR 243,737
---------------
484,326
---------------
Total Common Stocks (Identified Cost $42,766,554) 47,552,432
---------------
Principal
Amount
- ----------------------------------------------------------------------------------------------
Bonds and Notes -- 30.4%
Asset Backed Securities -- 1.1%
$ 305,000 Americredit Automobile Receivables Trust, Series 2007-DF,
Class A3A,
5.490%, 7/06/2012 306,839
100,000 Citibank Credit Card Issuance Trust, Series 2003-A3, Class A3,
3.100%, 3/10/2010 99,706
277,000 Citibank Credit Card Issuance Trust, Series 2003-A6, Class A6,
2.900%, 5/17/2010 275,122
195,000 Countrywide Asset-Backed Certificates, Series 2006-S4, Class A3,
5.804%, 7/25/2034(d) 163,700
---------------
845,367
---------------
Banks -- 0.4%
140,000 Bank of America NA, 5.300%, 3/15/2017 136,132
150,000 JPMorgan Chase & Co., 5.150%, 10/01/2015 144,674
---------------
280,806
---------------
Commercial MBS -- 3.0%
305,000 Greenwich Capital Commercial Funding Corp., Series 2007-GG9,
Class A4,
5.444%, 3/10/2039 306,801
300,000 GS Mortgage Securities Corp. II, Series 2006-GG8, Class A4,
5.560%, 11/10/2039 304,678
300,000 JP Morgan Chase Commercial Mortgage Securities Corp., Series
2006-LDP7, Class A4,
5.875%, 4/15/2045(d) 312,139
190,000 LB-UBS Commercial Mortgage Trust, Series 2005-C3, Class A5,
4.739%, 7/15/2030 182,191
530,000 LB-UBS Commercial Mortgage Trust, Series 2007-C2, Class A2,
5.303%, 2/15/2040 531,493
300,000 LB-UBS Commercial Mortgage Trust, Series 2006-C4, Class A4,
5.883%, 6/15/2038(d) 313,072
355,000 Merrill Lynch/Countrywide Commercial Mortgage Trust, Series
2007-6, Class A4,
5.485%, 3/12/2051(d) 357,270
---------------
2,307,644
---------------
Construction Machinery -- 0.2%
185,000 Caterpillar Financial Services Corp.,
4.850%, 12/07/2012 185,320
---------------
See accompanying notes to financial statements.
19
NATIXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Principal
Amount Description Value (+)
- ---------------------------------------------------------------------------------------
Diversified Financial Services -- 2.1%
$ 155,000 American Express Co.,
6.150%, 8/28/2017(b) $ 159,072
30,000 Bear Stearns Cos., Inc. (The),
5.300%, 10/30/2015 27,485
140,000 Bear Stearns Cos., Inc. (The),
5.550%, 1/22/2017(b) 125,470
200,000 Capital One Auto Finance Trust, Series 2007-C, Class A3A,
5.130%, 4/16/2012 199,872
10,000 CIT Group, Inc.,
5.650%, 2/13/2017(b) 8,778
275,000 CIT Group, Inc.,
5.800%, 7/28/2011(b) 264,778
10,000 CIT Group, Inc.,
5.850%, 9/15/2016(b) 8,829
140,000 Citigroup, Inc.,
5.300%, 10/17/2012 141,821
65,000 Citigroup, Inc.,
6.125%, 11/21/2017 66,768
185,000 Goldman Sachs Group, Inc.,
5.450%, 11/01/2012 188,600
105,000 Lehman Brothers Holdings, Inc.,
6.200%, 9/26/2014 106,939
35,000 Lehman Brothers Holdings, Inc.,
6.500%, 7/19/2017 35,415
250,000 Morgan Stanley,
4.750%, 4/01/2014(b) 234,214
---------------
1,568,041
---------------
Electric -- 0.8%
330,000 Duke Energy Corp., Senior Note,
4.200%, 10/01/2008 327,926
120,000 Progress Energy, Inc.,
7.100%, 3/01/2011 127,703
130,000 Virginia Electric And Power Co.,
5.100%, 11/30/2012 130,559
---------------
586,188
---------------
Entertainment -- 0.4%
180,000 Time Warner, Inc.,
6.500%, 11/15/2036 175,141
130,000 Time Warner, Inc.,
7.625%, 4/15/2031 143,861
---------------
319,002
---------------
Food & Beverage -- 0.5%
185,000 General Mills, Inc.,
5.650%, 9/10/2012 188,019
120,000 Kellogg Co.,
5.125%, 12/03/2012 121,005
50,000 Kraft Foods, Inc.,
6.500%, 8/11/2017 51,727
---------------
360,751
---------------
Insurance -- 0.2%
130,000 Willis North America, Inc.,
6.200%, 3/28/2017 129,714
---------------
Mortgage Related -- 18.5%
327,428 FHLMC,
4.000%, 5/01/2020 313,816
1,048,478 FHLMC,
4.500%, 6/01/2035 991,653
Principal
Amount Description Value (+)
- ----------------------------------------------------------------------------------
Mortgage Related -- continued
$ 818,487 FHLMC,
5.500%, with various maturities from 2019 to 2037(e) $ 820,037
557,411 FHLMC,
6.000%, with various maturities from 2035 to 2037(e) 565,784
757,473 FHLMC,
6.500%, with various maturities from 2033 to 2035(e) 781,388
1,270,865 FNMA,
4.000%, with various maturities from 2019 to 2020(e) 1,217,602
647,113 FNMA,
4.500%, 9/01/2035 612,796
2,693,139 FNMA,
5.000%, with various maturities from 2035 to 2036(e) 2,629,009
3,530,736 FNMA,
5.500%, with various maturities from 2017 to 2035(e) 3,568,107
1,195,458 FNMA,
6.000%, with various maturities to 2037(e) 1,214,148
266,241 FNMA,
6.050%, 2/01/2037(d) 272,027
850,132 FNMA,
6.500%, with various maturities from 2032 to 2036(e) 877,548
91,939 GNMA,
6.500%, 10/20/2034 95,149
---------------
13,959,064
---------------
Non Captive Diversified -- 0.5%
350,000 General Electric Capital Corp., (MTN),
6.000%, 6/15/2012 366,918
---------------
Oil & Gas -- 0.1%
15,000 Talisman Energy, Inc.,
5.850%, 2/01/2037(b) 14,025
50,000 Talisman Energy, Inc.,
6.250%, 2/01/2038 48,728
---------------
62,753
---------------
Pharmaceuticals -- 0.4%
270,000 Cardinal Health, Inc.,
5.850%, 12/15/2017(b) 270,393
---------------
Pipelines -- 0.4%
290,000 ONEOK Partners LP,
6.150%, 10/01/2016(b) 294,587
---------------
REITs Apartments -- 0.4%
305,000 ERP Operating LP,
5.125%, 3/15/2016 283,771
---------------
Retail -- 0.5%
140,000 CVS Caremark Corp.,
5.750%, 6/01/2017 140,901
150,000 Home Depot, Inc.,
5.875%, 12/16/2036 126,585
130,000 J.C. Penney Corp., Inc., Senior Note,
6.375%, 10/15/2036 116,170
---------------
383,656
---------------
Technology -- 0.2%
50,000 Equifax, Inc.,
7.000%, 7/01/2037 47,442
140,000 Pitney Bowes, Inc.,
5.250%, 1/15/2037 138,001
---------------
185,443
---------------
See accompanying notes to financial statements.
20
NATIXIS MODERATE DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued)
Investments as of December 31, 2007
Principal
Amount Description Value (+)
- ------------------------------------------------------------------------------------------------------
Treasuries -- 0.2%
$ 225,000 United States STRIPS,
9.000%, 11/15/2018(b) $ 139,434
---------------
Wireless -- 0.3%
130,000 Sprint Capital Corp.,
6.875%, 11/15/2028 123,287
135,000 Vodafone Group PLC,
6.150%, 2/27/2037(b) 133,329
---------------
256,616
---------------
Wirelines -- 0.2%
60,000 Embarq Corp.,
7.995%, 6/01/2036 63,230
125,000 Telefonica Emisones SAU,
6.421%, 6/20/2016(b) 131,545
---------------
194,775
---------------
Total Bonds and Notes (Identified Cost $22,964,408) 22,980,243
---------------
Shares/
Principal
Amount
- ------------------------------------------------------------------------------------------------------
Short-Term Investments -- 33.6%
18,775,765 State Street Navigator Securities Lending Prime Portfolio(f) 18,775,765
$ 6,571,568 Tri-Party Repurchase Agreement with Fixed Income Clearing
Corporation, dated 12/31/2007 at 3.250% to be repurchased at
$6,572,754 on 1/2/2008, collateralized by $6,525,000 Federal
Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at
$6,712,594 including accrued interest (Note 2g of Notes to
Financial Statements) 6,571,568
---------------
Total Short-Term Investments (Identified Cost $25,347,333) 25,347,333
---------------
Total Investments -- 127.0%
(Identified Cost $91,078,295)(a) 95,880,008
Other assets less liabilities--(27.0)% (20,374,252)
---------------
Net Assets -- 100% $ 75,505,756
===============
(+) See Note 2a of Notes to Financial Statements.
(a) Federal Tax Information:
At December 31, 2007, the net unrealized appreciation on investments based on a cost
of $91,203,322 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 $ 7,127,192
Aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value (2,450,506)
---------------
Net unrealized appreciation $ 4,676,686
===============
(b) All or a portion of this security was on loan to brokers at December 31, 2007.
(c) Non-income producing security.
(d) 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). The coupon rate shown represents the rate at period end.
(e) 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 schedule of investments.
(f) 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.
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
MBS Mortgage Backed Security
MTN Medium Term Note
REITs Real Estate Investment Trusts
STRIPS Separate Trading of Registered Interest and Principal of Securities
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited)
Mortgage Related 18.5%
Diversified Financial Services 4.8
Capital Markets 4.6
Computers & Peripherals 4.4
Semiconductors & Semiconductor Equipment 3.6
Commercial MBS 3.0
Oil, Gas & Consumable Fuels 3.0
Media 2.6
Pharmaceuticals 2.4
Hotels, Restaurants & Leisure 2.2
Commercial Banks 2.1
Health Care Equipment & Supplies 2.1
Chemicals 2.0
Other, less than 2% each 38.1
See accompanying notes to financial statements.
21
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2007
Natixis Income Natixis Moderate
Diversified Portfolio Diversified Portfolio
--------------------- ---------------------
--------------------- ---------------------
ASSETS
Investments at cost $ 167,246,280 $ 91,078,295
Net unrealized appreciation
(depreciation) (11,042,829) 4,801,713
--------------------- ---------------------
Investments at value (a) 156,203,451 95,880,008
Cash -- 4,454
Foreign currency at value (identified
cost $70,732, $0) 70,654 --
Receivable for Fund shares sold 34,400 48,995
Receivable for securities sold 2,711,743 62,562
Dividends and interest receivable 1,333,678 200,482
Tax reclaims receivable -- 7,816
Securities lending income receivable 17,637 9,828
--------------------- ---------------------
TOTAL ASSETS 160,371,563 96,214,145
--------------------- ---------------------
LIABILITIES
Collateral on securities loaned, at
value (Note 2) 32,003,633 18,775,765
Payable for securities purchased 2,555,608 1,714,783
Payable for Fund shares redeemed 731,403 68,110
Payable to custodian bank 2,209 --
Management fees payable (Note 4) 75,574 45,265
Deferred Trustees' fees (Note 4) 19,449 39,749
Administrative fees payable (Note 4) 11,355 6,527
Other accounts payable and accrued
expenses 60,391 58,190
--------------------- ---------------------
TOTAL LIABILITIES 35,459,622 20,708,389
--------------------- ---------------------
NET ASSETS $ 124,911,941 $ 75,505,756
===================== =====================
NET ASSETS CONSIST OF:
Paid-in capital $ 135,245,607 $ 69,753,471
Overdistributed net investment income
(loss) (19,448) (39,750)
Accumulated net realized gain on
investments and foreign currency
transactions 727,628 990,193
Net unrealized appreciation
(depreciation) on investments and
foreign currency translations (11,041,846) 4,801,842
--------------------- ---------------------
NET ASSETS $ 124,911,941 $ 75,505,756
===================== =====================
COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:
Class A shares:
Net assets $ 54,732,626 $ 18,413,038
===================== =====================
Shares of beneficial interest 5,333,206 1,761,082
===================== =====================
Net asset value and redemption price
per share $ 10.26 $ 10.46
===================== =====================
Offering price per share
(100/[100-maximum sales charge] of
net asset value) (Note 1) $ 10.74 $ 11.10
===================== =====================
Class C shares: (redemption price per
share is equal to net asset value
less any applicable contingent
deferred sales charge) (Note 1)
Net assets $ 70,179,315 $ 57,092,718
===================== =====================
Shares of beneficial interest 6,854,523 5,480,729
===================== =====================
Net asset value and offering price
per share $ 10.24 $ 10.42
===================== =====================
(a) Including securities on loan with
market values of: $ 31,403,389 $ 18,295,345
===================== =====================
See accompanying notes to financial statements.
22
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2007
Natixis Income
Diversified Portfolio
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 1,903,665
Interest 4,695,570
Securities lending income (Note 2) 81,046
Less net foreign taxes withheld (992)
---------------------
6,679,289
---------------------
Expenses
Management fees (Note 4) 759,235
Service fees - Class A (Note 4) 148,770
Service and distribution fees - Class C (Note 4) 785,349
Trustees' fees and expenses (Note 4) 13,835
Administrative fees (Note 4) 81,054
Custodian fees and expenses 41,948
Transfer agent fees and expenses - Class A (Note 4) 46,889
Transfer agent fees and expenses - Class C (Note 4) 63,163
Audit fees 37,226
Legal fees 8,276
Shareholder reporting expenses 51,245
Registration fees 31,031
Expense waiver recapture - Class A (Note 4) 8,288
Expense waiver recapture - Class C (Note 4) 7,876
Miscellaneous expenses 11,768
---------------------
Total expenses 2,095,953
Less fee reduction and/or expense reimbursement (Note 4) (11,350)
---------------------
Net expenses 2,084,603
---------------------
Net investment income 4,594,686
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on:
Investments 3,015,099
Foreign currency transactions 6,983
Net change in unrealized appreciation (depreciation) on:
Investments (14,317,908)
Foreign currency translations 407
---------------------
Total net realized and unrealized gain (loss) on investments and foreign currency transactions (11,295,419)
---------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (6,700,733)
=====================
Natixis Moderate
Diversified Portfolio
---------------------
---------------------
INVESTMENT INCOME
Dividends $ 901,000
Interest 1,431,506
Securities lending income (Note 2) 46,965
Less net foreign taxes withheld (25,796)
---------------------
2,353,675
---------------------
Expenses
Management fees (Note 4) 639,979
Service fees - Class A (Note 4) 58,817
Service and distribution fees - Class C (Note 4) 639,925
Trustees' fees and expenses (Note 4) 14,931
Administrative fees (Note 4) 45,203
Custodian fees and expenses 83,647
Transfer agent fees and expenses - Class A (Note 4) 19,576
Transfer agent fees and expenses - Class C (Note 4) 52,922
Audit fees 36,726
Legal fees 1,792
Shareholder reporting expenses 29,251
Registration fees 28,671
Expense waiver recapture - Class A (Note 4) --
Expense waiver recapture - Class C (Note 4) --
Miscellaneous expenses 20,051
---------------------
Total expenses 1,671,491
Less fee reduction and/or expense reimbursement (Note 4) (495)
---------------------
Net expenses 1,670,996
---------------------
Net investment income 682,679
---------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on:
Investments 8,392,684
Foreign currency transactions (2,747)
Net change in unrealized appreciation (depreciation) on:
Investments (2,145,205)
Foreign currency translations (36)
---------------------
Total net realized and unrealized gain (loss) on investments and foreign currency transactions 6,244,696
---------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 6,927,375
=====================
See accompanying notes to financial statements.
23
STATEMENTS OF CHANGES IN NET ASSETS
Natixis Income Diversified Portfolio Natixis Moderate Diversified Portfolio
-------------------------------------------- --------------------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
--------------------- --------------------- --------------------- ---------------------
--------------------- --------------------- --------------------- ---------------------
FROM OPERATIONS:
Net investment
income $ 4,594,686 $ 736,227 $ 682,679 $ 965,259
Net realized gain
on investments
and foreign
currency
transactions 3,022,082 277,524 8,389,937 7,594,048
Net change in
unrealized
appreciation
(depreciation)
on investments
and foreign
currency
translations (14,317,501) 3,242,111 (2,145,241) (637,439)
--------------------- --------------------- --------------------- ---------------------
Net increase
(decrease) in
net assets
resulting from
operations (6,700,733) 4,255,862 6,927,375 7,921,868
--------------------- --------------------- --------------------- ---------------------
FROM DISTRIBUTIONS
TO SHAREHOLDERS:
Net investment
income
Class A (2,462,923) (509,270) (378,625) (578,602)
Class C (2,698,232) (402,946) (600,202) (854,233)
Net realized
capital gain
Class A (761,717) (42,371) (1,794,967) (1,935,693)
Class C (993,931) (54,527) (5,536,380) (5,108,891)
--------------------- --------------------- --------------------- ---------------------
Total distributions (6,916,803) (1,009,114) (8,310,174) (8,477,419)
--------------------- --------------------- --------------------- ---------------------
NET INCREASE
(DECREASE) IN NET
ASSETS FROM
CAPITAL SHARE
TRANSACTIONS (NOTE
7) 52,385,464 77,785,017 (21,829,949) (36,902,749)
--------------------- --------------------- --------------------- ---------------------
Net increase
(decrease) in
net assets 38,767,928 81,031,765 (23,212,748) (37,458,300)
--------------------- --------------------- --------------------- ---------------------
NET ASSETS
Beginning of the
year 86,144,013 5,112,248 98,718,504 136,176,804
--------------------- --------------------- --------------------- ---------------------
End of the year $ 124,911,941 $ 86,144,013 $ 75,505,756 $ 98,718,504
===================== ===================== ===================== =====================
OVERDISTRIBUTED NET
INVESTMENT INCOME
(LOSS) $ (19,448) $ (6,945) $ (39,750) $ (84,877)
===================== ===================== ===================== =====================
See accompanying notes to financial statements.
24
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
Income (Loss) from Investment Operations:
---------------------------------------
Net asset Net
value, investment Net realized Total from
beginning income and unrealized investment
of the period (loss) (b) gain (loss) operations
------------- ---------- -------------- ----------
NATIXIS INCOME DIVERSIFIED PORTFOLIO
Class A
12/31/2007 $ 11.15 $ 0.41 $ (0.71) $ (0.30)
12/31/2006 10.07 0.29 1.12 1.41
12/31/2005(g) 10.00 0.04 0.08 0.12
Class C
12/31/2007 11.12 0.33 (0.70) (0.37)
12/31/2006 10.07 0.22 1.09 1.31
12/31/2005(g) 10.00 0.04 0.07 0.11
NATIXIS MODERATE DIVERSIFIED PORTFOLIO
Class A
12/31/2007 $ 10.82 $ 0.15 $ 0.78 $ 0.93
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
12/31/2007 10.79 0.07 0.76 0.83
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:
-----------------------------------------
Distributions
Dividends from from net
net investment realized Total
income capital gains distributions
-------------- ------------- -------------
NATIXIS INCOME DIVERSIFIED PORTFOLIO
Class A
12/31/2007 $ (0.45) $ (0.14) $ (0.59)
12/31/2006 (0.32) (0.01) (0.33)
12/31/2005(g) (0.05) -- (0.05)
Class C
12/31/2007 (0.37) (0.14) (0.51)
12/31/2006 (0.25) (0.01) (0.26)
12/31/2005(g) (0.04) -- (0.04)
NATIXIS MODERATE DIVERSIFIED PORTFOLIO
Class A
12/31/2007 $ (0.20) $ (1.09) $ (1.29)
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
12/31/2007 (0.11) (1.09) (1.20)
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 has agreed to reimburse a portion of the Portfolio's
expenses and/or reduce its management fee during the period. Without this
reimbursement/fee reduction, 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, if
applicable.
See accompanying notes to financial statements.
25
Ratios to Average Net Assets:
--------------------------------------
Net asset Net assets,
value, Total end of the Net Gross Net investment Portfolio
end of return period expenses expenses income (loss) turnover
the period (%) (a)(d) (000's) (%) (c)(f)) (%) (f) (%) (f) rate (%)
- ---------- ---------- ----------- ----------- --------- -------------- ---------
$ 10.26 (2.8) $ 54,733 1.08(j) 1.09(j) 3.76 50
11.15 14.2 37,117 1.25 1.30 2.72 52
10.07 1.2 5,074 1.25 9.57 3.61 2
10.24 (3.5) 70,179 1.83(j) 1.84(j) 3.00 50
11.12 13.3 49,027 2.00 2.05 2.02 52
10.07 1.1 39 2.00 10.31 3.25 2
$ 10.46 8.5 $ 18,413 1.37 1.37 1.31 91
10.82 8.4 26,978 1.31(k) 1.31 1.38 89
10.94 3.5 47,908 1.58(i) 1.59(i) 0.62 88
10.70 7.2 25,660 1.65 3.51 0.71(h) 33
10.42 7.8 57,093 2.11 2.11 0.58 91
10.79 7.6 71,740 2.06(k) 2.06 0.63 89
10.90 2.7 88,269 2.32(i) 2.33(i) (0.13) 88
10.67 6.8 47,173 2.40 4.26 0.12(h) 33
(g)For the period November 17, 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 loss to average net assets would have been 0.51% and (0.14)%
for Class A and Class C shares, respectively.
(i)Includes expense recapture of 0.22%.
(j)Includes expense recapture of 0.01% and 0.01% for Class A and Class C,
respectively.
(k)Effect of voluntary waiver of expenses by adviser was less than 0.005%.
26
NOTES TO FINANCIAL STATEMENTS
December 31, 2007
1. Organization. Natixis Funds Trust I and Natixis Funds Trust III (the
"Trusts" and each a "Trust") are each organized as a Massachusetts business
trust. Each Trust is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as an open-end investment management company. Each
Declaration of Trust permits the Board of Trustees to authorize the issuance of
an unlimited number of shares of the Trust in multiple series. Information
presented in these financial statements pertains to certain Diversified
Portfolios of the Trusts; the financial statements for the other funds of the
Trusts are presented in separate reports. The following Portfolios
(individually, a "Portfolio" and collectively, the "Portfolios") are included
in this report:
Natixis Funds Trust I:
Natixis Income Diversified Portfolio (the "Income Diversified Portfolio")
Natixis Funds Trust III:
Natixis Moderate Diversified Portfolio (the "Moderate Diversified Portfolio")
Each Portfolio offers Class A and Class C shares. Class A shares of the
Moderate Diversified Portfolio are sold with a maximum front-end sales charge
of 5.75% and Class A shares of Income Diversified Portfolio are sold with a
maximum front-end sales charge of 4.50%. Class C shares do not pay a front-end
sales charge, pay higher ongoing 12b-1 fees than Class A shares and may be
subject to a contingent deferred sales charge ("CDSC") of 1.00% if those shares
are redeemed within one year.
Most expenses of the Trusts can be directly attributed to a fund. Expenses
which cannot be directly attributed to a fund are generally apportioned based
on the relative net assets of each of the funds in the Trusts. Expenses of a
fund are borne pro rata by the holders of each class of shares, except that
each class bears expenses unique to that class (including the Rule 12b-1
service and distribution fees). In addition, each class votes as a class only
with respect to its own Rule 12b-1 Plan. Shares of each class would receive
their pro rata share of the net assets of a fund if the fund were liquidated.
The Trustees approve separate dividends from net investment income on each
class of shares.
2. Significant Accounting Policies. The following is a summary of significant
accounting policies consistently followed by each Portfolio in the preparation
of its financial statements. The Portfolios' financial statements are prepared
in accordance with accounting principles generally accepted in the United
States of America which require the use of management estimates that affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
a. Security Valuation. Equity securities, including closed-end investment
companies and exchange-traded funds, for which market quotations are readily
available are valued at market value, as reported by pricing services
recommended by the investment adviser 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 Global
Select Market, NASDAQ Global Market and NASDAQ Capital Market are valued at the
NASDAQ Official Closing Price ("NOCP"), or if lacking a NOCP, at the most
recent bid quotation on the applicable NASDAQ Market. Debt securities (other
than short-term obligations purchased with an original or remaining maturity of
sixty days or less) are generally valued on the basis of evaluated bids
furnished to the Portfolios by a pricing service recommended by the investment
adviser and subadvisers 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. Short-term obligations purchased with an
original or 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' investment adviser and subadvisers using consistently
applied procedures under the general supervision of the Board of Trustees.
Investments in other open-end investment companies are valued at their net
asset value each day.
Certain Portfolios may hold securities traded in foreign markets. Foreign
securities are valued at the market price in the foreign market. However, if
events occurring after the close of the foreign market (but before the close of
regular trading on the New York Stock Exchange) are believed to materially
affect the value of those securities, such securities are fair valued pursuant
to procedures approved by the Board of Trustees. When fair valuing equity
securities, the Portfolios may, among other things, use modeling tools or other
processes that may take into account factors such as securities market activity
and/or significant events that occur after the close of the 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,
non-class specific expenses and realized and unrealized gains and losses are
allocated on a pro rata basis to each class based on the relative net assets of
each class to the total net assets of the Portfolio.
c. Foreign Currency Translation. The books and records of the Portfolios are
maintained in U.S. dollars. The value of securities, currencies and other
assets and liabilities denominated in currencies other than U.S. dollars are
translated into U.S. dollars based upon foreign exchange rates prevailing at
the end of the period. Purchases and sales of investment securities, income and
expenses are translated on the respective dates of such transactions.
27
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
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 than 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, 2007, 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.
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. Management has implemented FIN 48 and has performed an analysis of
the Portfolios' tax positions taken or that will be taken on federal and state
tax returns that remain subject to examinations (tax years ended December 31,
2004 - 2007) in connection with the adoption of FIN 48 and has concluded that
no provision for income tax is required. Accordingly, there is no impact on the
Portfolios' net assets at December 31, 2007 or results of operations for the
year then ended. Additionally, Fund Management is not aware of any events that
are reasonably possible to occur in the next twelve months that would result in
the amounts of any unrecognized tax benefits significantly increasing or
decreasing for the Portfolios.
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 countries in which the Portfolio invests. Foreign
governments may also impose taxes or other payments on investments with respect
to foreign securities. Such taxes are accrued as applicable.
f. Dividends and Distributions to Shareholders. Dividends and distributions are
recorded on ex-dividend date. The timing and characterization of certain income
and capital gain distributions are determined in accordance with federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. These differences are primarily due to differing
treatments for book and tax purposes of items such as paydowns on
mortgage-backed securities, Treasury Inflation Protected Securities (TIPs)
adjustments, gains realized from passive foreign investment companies
("PFICs"), distribution redesignations, capital gain and return of capital
distributions from Real Estate Investment Trusts (REITs), foreign currency
gains and losses and premium amortization accruals. 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, TIPs adjustments, wash sales, gains realized
from PFICs, 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 years ended
December 31, 2007 and December 31, 2006 was as follows:
2007 Distributions Paid From:
- -----------------------------------
Ordinary Long-Term
Fund Income Capital Gains Total
---- ------ ------------- -----
Income Diversified Portfolio $5,539,820 $1,376,983 $6,916,803
Moderate Diversified Portfolio 3,621,011 4,689,163 8,310,174
28
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
2006 Distributions Paid From:
- -----------------------------------
Ordinary Long-Term
Fund Income Capital Gains Total
---- ------ ------------- -----
Income Diversified Portfolio $ 919,018 $ 90,096 $1,009,114
Moderate Diversified Portfolio 3,620,095 4,857,324 8,477,419
Differences between these amounts and those reported in the Statements of
Changes in Net Assets are primarily attributable to different book and tax
treatment for short-term capital gains.
As of December 31, 2007, the components of distributable earnings on a tax
basis were as follows:
Income Moderate
Diversified Diversified
Portfolio Portfolio
- --------- ---------
Undistributed ordinary income $ 18,388 $ 353,268
Undistributed long-term capital gains 993,791 761,950
------------ ----------
Total undistributed earnings 1,012,179 1,115,218
Unrealized appreciation (depreciation) (11,326,396) 4,676,816
------------ ----------
Total accumulated earnings $(10,314,217) $5,792,034
============ ==========
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, 2007 were as follows:
Market Value of
Fund Securities on Loan Value of Collateral
---- ------------------ -------------------
Income Diversified Portfolio $31,403,389 $32,003,633
Moderate Diversified Portfolio 18,295,345 18,775,765
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 Pronouncement. In September, 2006, Statement of Financial
Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), was issued
and is effective for fiscal years beginning after November 15, 2007. FAS 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 FAS 157 will have on the Funds'
financial statements.
29
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
3. Purchases and Sales of Securities. For the year ended December 31, 2007,
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
- ---- --------- ----- --------- -----
Income Diversified Portfolio $13,840,252 $15,779,575 $107,551,311 $49,421,052
Moderate Diversified Portfolio 14,790,824 16,840,268 62,982,626 91,415,528
4. Management Fees and Other Transactions with Affiliates.
a. Management Fees. Natixis Asset Management Advisors, L.P. ("Natixis
Advisors") serves as investment adviser to each Portfolio. Under the terms of
the management agreements, each Portfolio pays a management fee at the
following annual rates, calculated daily and payable monthly, based on each
Portfolio's average daily net assets:
Percentage of Average
Daily Net Assets
- --------------------
First Over
Fund $1 billion $1 billion
---- ---------- ----------
Income Diversified Portfolio 0.55% 0.50%
Moderate Diversified Portfolio 0.70% 0.65%
Prior to August 3, 2007, the management fee as a percentage of average daily
net assets for Moderate Diversified Portfolio was 0.75% for the first one
billion and 0.70% thereafter.
Natixis Advisors has entered into subadvisory agreements for each Portfolio as
listed below.
Income Diversified Portfolio AEW Management and Advisors, L.P. ("AEW")
Loomis, Sayles & Company, L.P. ("Loomis Sayles")
Moderate Diversified Portfolio Dreman Value Management, LLC ("Dreman")
Harris Associates, L.P. ("Harris Associates")
Loomis Sayles
Prior to August 6, 2007, a segment of Moderate Diversified Portfolio was
subadvised by Hansberger Global Investors. This segment is now advised by
Active Investment Advisors, a division of Natixis Advisors, without a
subadviser.
Payments to Natixis Advisors are reduced in the amount of payments to the
subadvisors. Natixis Advisors voluntarily agreed to waive a portion of the
management fee it retains for the Income Diversified Portfolio after payment to
subadvisers.
Natixis Advisors has given binding undertakings to the Portfolios to reduce 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, 2008 and will be reevaluated on an annual basis. For the year
ended December 31, 2007, 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
---- ------- -------
Income Diversified Portfolio 1.25% 2.00%
Moderate Diversified Portfolio 1.45% 2.20%
30
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
For the year ended December 31, 2007, the management fees and reductions of
management fees for each Portfolio were as follows:
Percentage of
Voluntary Average Daily Net
Gross Reductions of Net Assets
- Management Management Management ----------------
Fund Fee Fee Fee Gross Net
---- ---------- ------------- ---------- ----- ---
Income Diversified Portfolio $759,235 $10,486 $748,749 0.55% 0.54%
Moderate Diversified Portfolio 639,979 -- 639,979 0.73% 0.73%
For the year ended December 31, 2007, no expenses have been reimbursed for the
Portfolios.
Natixis Advisors is permitted to recover expenses it has borne under the
expense limitation agreement (whether through a reduction of its management fee
or otherwise) on a 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. There are no
amounts subject to possible reimbursement under the expense limitation
agreements at December 31, 2007.
Certain officers and directors of Natixis Advisors and its affiliates are also
Trustees of the Portfolios. Natixis Advisors, Harris Associates, Loomis Sayles
and AEW are subsidiaries of Natixis Global Asset Management, L.P. ("Natixis
US"), which is part of Natixis Global Asset Management, an international asset
management group based in Paris, France.
b. Administrative Expense. Natixis Advisors provides certain administrative
services for the Portfolios and subcontracts with State Street Bank to serve as
sub-administrator. Natixis Advisors is a wholly-owned subsidiary of Natixis US.
Pursuant to an agreement among Natixis Funds Trust I , Natixis Funds Trust II ,
Natixis Funds Trust III , Natixis Funds Trust IV , Natixis Cash Management
Trust ("Natixis Funds Trusts"), Loomis Sayles Funds I, Loomis Sayles Funds II
("Loomis Sayles Funds Trusts") and Natixis Advisors (the "Administrative
Service Agreement"), each Fund pays Natixis 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 Natixis Funds Trusts and Loomis Sayles
Funds Trusts, 0.0625% of the next $5 billion, 0.0500% of the next $20 billion,
and 0.0450% of such assets in excess of $30 billion, subject to an annual
aggregate minimum fee for the Natixis Funds Trusts and Loomis Sayles Funds
Trusts of $5 million, which is reevaluated on an annual basis.
Effective September 17, 2007, pursuant to an amendment to the Administrative
Service Agreement, the Hansberger International Series was added to the
agreement and pays Natixis Advisors monthly its pro rata fees equal to it
prorated portion of the above mentioned fees.
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.
Prior to July 1, 2007, each Fund paid Natixis 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 Natixis 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
Natixis Funds Trusts and Loomis Sayles Funds Trusts of $5 million.
Effective October 1, 2007, State Street Bank reduced the fees it receives from
Natixis Advisors for serving as a sub-administrator to the Funds. Also,
effective October 1, 2007, Natixis Advisors has given a binding contractual
undertaking to the Funds to waive the administrative fees paid by the Fund in
an amount equal to the reduction in sub-administrative fees discussed above.
The waiver is in effect through June 30, 2008.
For the year ended December 31, 2007, amounts paid to Natixis Advisors for
administrative fees were as follows:
Gross Waiver of Net
Administrative Administrative Administrative
Fund Fees Fees Fee
---- -------------- -------------- --------------
Income Diversified Portfolio $81,054 $864 $80,190
Moderate Diversified Portfolio 45,203 495 44,708
c. Service and Distribution Fees. Natixis Distributors, L.P. ("Natixis
Distributors") a wholly-owned subsidiary of Natixis U.S. has entered into a
distribution agreement with the Trust. Pursuant to this agreement, Natixis
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").
31
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
Under the Class A Plan, each Portfolio pays Natixis 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 Natixis 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 Natixis 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 Natixis 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 Natixis 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 Natixis Distributors in connection with the
marketing or sale of Class C shares.
For the year ended December 31, 2007, the Portfolios paid the following service
and distribution fees:
Service Fee Distribution Fee
- ----------------- ----------------
Fund Class A Class C Class C
---- ------- ------- -------
Income Diversified Portfolio $148,770 $196,337 $589,012
Moderate Diversified Portfolio 58,817 159,981 479,944
d. Sub-Transfer Agent Fees. Natixis Distributors has entered into agreements
with financial intermediaries to provide certain recordkeeping, processing,
shareholder communications and other services to customers of the
intermediaries and has agreed to compensate the intermediaries for providing
those services. Certain services would be provided by the Portfolios if the
shares of those customers were registered directly with the Portfolios'
transfer agent. Accordingly, the Portfolios agreed to pay a portion of the
intermediary fees attributable to shares of the Portfolio held by the
intermediary (which generally are a percentage of the values of shares held)
not exceeding what each Portfolio would have paid its transfer agent had each
customer's shares been registered directly with the transfer agent instead of
held through the intermediary. Natixis Distributors pays the remainder of the
fees. Listed below are the fees incurred by the Portfolios which are included
in the transfer agent fees and expenses in the Statement of Operations.
Sub-Transfer Agent Fees
- -----------------------
Fund Class A Class C
---- ------- -------
Income Diversified Portfolio $34,408 $44,970
Moderate Diversified Portfolio 13,784 37,049
e. Commissions. The Portfolios have been informed that commissions (including
CDSCs) on Portfolio shares paid to Natixis Distributors by investors in shares
of the Portfolios during the year ended December 31, 2007 were as follows:
Fund Commission
---- ----------
Income Diversified Portfolio $100,455
Moderate Diversified Portfolio 17,748
f. Trustees Fees and Expenses. The Portfolios do not pay any compensation
directly to their officers or Trustees who are directors, officers or employees
of Natixis Advisors, Natixis Distributors, Natixis US 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 Natixis Funds Trusts, Loomis
Sayles Funds Trusts and the Hansberger International Series (effective
September 12, 2007) 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.
Effective January 1, 2008, each Independent Trustee (other than the
Chairperson) receives, in the aggregate, a retainer fee at the annual rate of
$65,000. Each Independent Trustee also receives a meeting attendance fee of
$7,500 for each meeting of the Board of Trustees that he or she attends in
person and $3,750 for each meeting that he or she attends telephonically. In
addition, each Contract Review and Governance Committee member receives $5,000
for each committee meeting that he or she attends in person and $2,500 for each
committee meeting that he or she attends telephonically. Each Audit Committee
member receives $6,250 for each committee meeting that he or she attends in
person and $3,125 for each committee meeting that he or she attends
telephonically. The retainer fees paid to the Chairperson and the Committee
Chairmen remain unchanged.
32
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 2007
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 Natixis Funds Trusts, Loomis
Sayles Funds Trusts and the Hansberger International Series 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 Natixis
Funds Trusts and Loomis Sayles Funds Trusts, participates in a $75,000,000
committed line of credit provided by State Street Bank. Interest is charged to
each participating Portfolio based on its borrowing at a rate per annum equal
to the Federal Funds rate plus 0.50%. In addition, a commitment fee of
0.09% per annum, payable at the end of each calendar quarter, is accrued and
apportioned among the participating Portfolios based on their average daily
unused portion of the line of credit. For the year ended December 31, 2007, 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, 2007, amounts rebated under these
agreements were as follows:
Fund Rebates
---- -------
Income Diversified Portfolio $ 697
Moderate Diversified Portfolio 7,507
7. Capital Shares. Each Portfolio may issue an unlimited number of shares of
beneficial interest without par value. Transactions in capital shares were as
follows:
Year Ended
December 31, 2007
-----------------------------------
Income Diversified Portfolio Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 4,603,328 $ 52,094,305
Issued in connection with the reinvestment of distributions 190,943 2,041,330
---------------- -----------------
4,794,271 54,135,635
Redeemed (2,789,673) (30,406,349)
---------------- -----------------
Net change 2,004,598 $ 23,729,286
---------------- -----------------
Class C
Issued from the sale of shares 4,546,429 $ 51,123,677
Issued in connection with the reinvestment of distributions 105,904 1,126,884
---------------- -----------------
4,652,333 52,250,561
Redeemed (2,204,761) (23,594,383)
---------------- -----------------
Net change 2,447,572 $ 28,656,178
---------------- -----------------
Increase (decrease) from capital share transactions 4,452,170 $ 52,385,464
================ =================
Moderate Diversified Portfolio
- --------------------------------------------------------------
Class A
Issued from the sale of shares 336,042 $ 3,713,224
Issued in connection with the reinvestment of distributions 69,098 732,380
---------------- -----------------
405,140 4,445,604
Redeemed (1,136,807) (12,842,929)
---------------- -----------------
Net change (731,667) $ (8,397,325)
---------------- -----------------
Class C
Issued from the sale of shares 764,944 $ 8,256,172
Issued in connection with the reinvestment of distributions 66,612 700,175
---------------- -----------------
831,556 8,956,347
Redeemed (2,002,439) (22,388,971)
---------------- -----------------
Net change (1,170,883) $ (13,432,624)
---------------- -----------------
Increase (decrease) from capital share transactions (1,902,550) $ (21,829,949)
================ =================
Year Ended
December 31, 2006
-----------------------------------
Income Diversified Portfolio Shares Amount
- -------------------------------------------------------------- ---------------- -----------------
Class A
Issued from the sale of shares 2,937,015 $ 31,558,801
Issued in connection with the reinvestment of distributions 16,837 182,050
---------------- -----------------
2,953,852 31,740,851
Redeemed (129,023) (1,389,673)
---------------- -----------------
Net change 2,824,829 $ 30,351,178
---------------- -----------------
Class C
Issued from the sale of shares 4,465,827 $ 48,112,171
Issued in connection with the reinvestment of distributions 7,732 83,528
---------------- -----------------
4,473,559 48,195,699
Redeemed (70,456) (761,860)
---------------- -----------------
Net change 4,403,103 $ 47,433,839
---------------- -----------------
Increase (decrease) from capital share transactions 7,227,932 $ 77,785,017
================ =================
Moderate Diversified Portfolio
- --------------------------------------------------------------
Class A
Issued from the sale of shares 437,927 $ 4,810,568
Issued in connection with the reinvestment of distributions 74,265 799,936
---------------- -----------------
512,192 5,610,504
Redeemed (2,398,348) (26,497,879)
---------------- -----------------
Net change (1,886,156) $ (20,887,375)
---------------- -----------------
Class C
Issued from the sale of shares 1,242,388 $ 13,607,078
Issued in connection with the reinvestment of distributions 51,743 555,646
---------------- -----------------
1,294,131 14,162,724
Redeemed (2,736,976) (30,178,098)
---------------- -----------------
Net change (1,442,845) $ (16,015,374)
---------------- -----------------
Increase (decrease) from capital share transactions (3,329,001) $ (36,902,749)
================ =================
33
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees of Natixis Advisor Funds Trust I and Natixis Advisor Funds
Trust III and Shareholders of Natixis Income Diversified Portfolio and Natixis
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 Natixis Income
Diversified Portfolio, a series of Natixis Advisor Funds Trust I and the
Natixis Moderate Diversified Portfolio, a series of Natixis Advisor Funds Trust
III (collectively, the "Funds"), at December 31, 2007, 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, 2007 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 25, 2008
34
2007 U.S. TAX DISTRIBUTION INFORMATION TO SHAREHOLDERS (unaudited)
Corporate Dividends Received Deduction. For the fiscal year ended December 31,
2007, 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
--------- ----------
Income Diversified Portfolio 14.24%
Moderate Diversified Portfolio 7.96%
Capital Gains Distributions. Pursuant to Internal Revenue Section 852(b), the
following Portfolios paid distributions, which have been designated as capital
gains distributions for the fiscal year ended December 31, 2007.
Portfolio Amount
--------- ----------
Income Diversified Portfolio $1,376,983
Moderate Diversified Portfolio 4,689,163
Qualified Dividend Income. A percentage of dividends distributed by the
Portfolios during the fiscal year ended December 31, 2007 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. If the
Funds pay a distribution during calendar year 2007, complete information will
be reported in conjunction with Form 1099-DIV. These percentages are noted
below:
Portfolio Percentage
--------- ----------
Income Diversified Portfolio 11.95%
Moderate Diversified Portfolio 14.94%
35
TRUSTEE AND OFFICER INFORMATION
The table below provides certain information regarding the Trustees and
Officers of Natixis Funds Trust I and Natixis 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
Natixis Funds website at www.funds.natixis.com or by calling Natixis 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 Year of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
INDEPENDENT TRUSTEES/1/
Graham T. Allison, Jr. Trustee, since 1984 for Douglas Dillon Professor and 42
(1940) Natixis Funds Trust I Director of the Belfer Center for Director, Taubman Centers,
(including predecessors) Science and International Inc. (real estate investment
and since 1995 for Natixis Affairs, John F. Kennedy School trust)
Funds Trust III of Government, Harvard
Contract Review and University
Governance Committee
Member
Charles D. Baker Trustee, since 2005 for President and Chief Executive 42
(1956) Natixis Funds Trust I and Officer, Harvard Pilgrim Health None
Natixis Funds Trust III Care (health plan)
Contract Review and
Governance Committee
Member
Edward A. Benjamin Trustee, since 2003 for Retired 42
(1938) Natixis Funds Trust I and None
Natixis Funds Trust III
Chairman of the Contract
Review and Governance
Committee
Daniel M. Cain Trustee, since 1996 for President and Chief Executive 42
(1945) Natixis Funds Trust I and Officer, Cain Brothers & Director, Sheridan
Natixis Funds Trust III Company, Incorporated Healthcare Inc. (physician
Chairman of the Audit (investment banking) practice management)
Committee
Jonathan P. Mason Trustee, since 2007 for Chief Financial Officer, Cabot 42;
(1958) Natixis Funds Trust I and Corp. (specialty chemicals); None
Natixis Funds Trust III formerly, Vice President and
Audit Committee Member Treasurer, International Paper
Company; formerly, Chief
Financial Officer, Carter Holt
Harvey (forest products)
Sandra O. Moose Chairperson of the Board, President, Strategic Advisory 42;
(1942) since November 2005 Services (management Director, Verizon
Trustee, since 1982 for consulting); formerly, Senior Communications; Director,
Natixis Funds Trust I Vice President and Director, The Rohm and Haas Company
(including predecessors) Boston Consulting Group, Inc. (specialty chemicals);
and since 1995 for Natixis (management consulting) Director, AES Corporation
Funds Trust III (international power
Ex officio member of the company)
Audit Committee and
Contract Review and
Governance Committee
36
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 Year of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held
- ---------------------- -------------------------- --------------------- ----------------------------
INDEPENDENT TRUSTEES/1/
continued
Cynthia L. Walker Trustee, since 2005 for Deputy Dean for Finance & 42;
(1956) Natixis Funds Trust I and Administration, Yale University None
Natixis Funds Trust III School of Medicine; formerly,
Audit Committee Member Executive Dean for
Administration, Harvard
Medical School and formerly,
Dean for Finance & CFO,
Harvard Medical School
INTERESTED TRUSTEES
Robert J. Blanding/2/ Trustee, since 2003 for President, Chairman, Director 42;
(1947) Natixis Funds Trust I and and Chief Executive Officer, None
555 California Street Natixis Funds Trust III Loomis, Sayles & Company,
San Francisco, CA 94104 L.P.
John T. Hailer/3/ Trustee, since 2000 for President and Chief Executive 42;
(1960) Natixis Funds Trust I and Officer, Natixis Asset None
Natixis Funds Trust III Management Advisors, L.P.,
President and Chief Natixis Distributors, L.P. and
Executive Officer of Natixis Global Associates, Inc.;
Natixis Funds Trust I and President and Chief Executive
Natixis Funds Trust III Officer-U.S. and Asia-Natixis
Global Asset Management, L.P.
* 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. Ms. Moose was re-appointed to
serve an additional two-year term as the Chairperson of the Board of
Trustees on September 14, 2007.
** Each person listed above, except as noted, holds the same position(s) with
the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger
International Series. Previous positions during the past five years with
Natixis Distributors, L.P., Natixis Asset Management Advisors, L.P. 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 Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds
Trust III, Natixis Funds Trust IV, Natixis Cash Management Trust, Loomis
Sayles Funds I, Loomis Sayles Funds II, Hansberger International Series and
Gateway Trust. The number of portfolios overseen does not include AEW Real
Estate Income Fund which liquidated on April 13, 2007, or Natixis Equity
Diversified Portfolio, which liquidated on August 3, 2007.
/1/ Mr. Richard Darman served as a Trustee until his death on January 25, 2008.
/2/ 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 & Company, L.P.
/3/ Mr. Hailer is deemed an "interested person" of the Trusts because he holds
the following positions with affiliated persons of the Trusts: President
and Chief Executive Officer of Natixis Distribution Corporation, Natixis
Global Asset Management, L.P., Natixis Global Associates, Inc., Natixis
Asset Management Advisors, L.P. and Natixis Distributors, L.P.
37
TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the
Trusts, Length of Time Principal Occupation(s)
Name and Year of Birth Served and Term of Office* During Past 5 Years**
- ---------------------- -------------------------- ---------------------
OFFICERS OF THE TRUSTS
Coleen Downs Dinneen Secretary, Clerk and Chief Legal Senior Vice President, General Counsel, Secretary
(1960) Officer, since September 2004 and Clerk (formerly, Deputy General Counsel,
Assistant Secretary and Assistant Clerk), Natixis
Distribution Corporation, Natixis Distributors, L.P.
and Natixis Asset Management Advisors, L.P.
Russell L. Kane Chief Compliance Officer, since Chief Compliance Officer for Mutual Funds, Senior
(1969) May 2006, Assistant Secretary, Vice President, Deputy General Counsel, Assistant
since June 2004 and Anti-Money Secretary and Assistant Clerk, Natixis Distributors,
Laundering Officer L.P. and Natixis Asset Management Advisors, L.P.;
since April 2007 Vice President, Associate General Counsel,
Assistant Secretary and Assistant Clerk, Natixis
Distribution Corporation; formerly, Senior
Counsel, Columbia Management Group.
Michael C. Kardok Treasurer, Principal Financial and Senior Vice President, Natixis Asset Management
(1959) Accounting Officer, since Advisors, L.P. and Natixis Distributors, L.P.;
October 2004 formerly, Senior Director, PFPC Inc.
Robert Krantz Executive Vice President, since Executive Vice President, Natixis Distributors, L.P.
(1964) September 2007 and Natixis Asset Management Advisors, L.P.
* Each officer of the Trusts serve for an indefinite term in accordance with
the Trusts' 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 Natixis Funds Trusts, Loomis Sayles Funds Trusts, Hansberger
International Series. Previous positions during the past five years with the
Distributor, Natixis Advisors or Loomis Sayles are omitted, if not
materially different from a Trustee's or officer's current position with
such entity.
38
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. Jonathan P. Mason 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 billed by the Principal Accountant for services rendered to the Registrant.
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 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 as reported as a part of (a) through (c) of this Item.
AUDIT-RELATED
AUDIT FEES FEES/1/ TAX FEES/2/ ALL OTHER FEES/3/
--------------- ------------ --------------- -----------------
2006 2007 2006 2007 2006 2007 2006 2007
------- ------- ------- ---- ------- ------- ------ ----
Natixis Funds
Trust III.... $89,728 $68,700 $12,300 $595 $23,014 $23,182 $8,266 $--
1. The audit-related fees for 2006 consist of the performance of agreed upon
procedures related to a change in the Trust's custodian. The audit-related
fees for 2007 consist of the performance of agreed upon procedures related
to the Registrant's deferred compensation plan.
2. The tax fees consist of a review of year-end shareholder reporting (2006 and
2007), a review of the Registrant's tax returns (2006 and 2007), and a
review of tax compliance (2006).
3. Other fees for 2006 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 2006 and
2007 were $43,580 and $23,777, respectively.
Fees billed by the Principal Accountant for services rendered to the Adviser
and Control Affiliates.
The following table sets forth the non-audit services provided by the Trust's
principal accountant to Natixis Asset Management Advisors, L.P. and entities
controlling, controlled by or under common control with Natixis 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
------------------ --------- --------------
2006 2007 2006 2007 2006 2007
---- ------- ---- ---- ------- ----
Control Affiliates................. $-- $12,000 $-- $-- $15,800 $--
Aggregate fees billed to Control Affiliates for non-audit services during 2006
and 2007 were $15,800 and $12,000, respectively.
None of the audit-related, tax and other services provided by the Registrant's
principal accountant were approved by the Audit Committee 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.
Natixis Funds Trust III
By: /s/ John T. Hailer
------------------------------
Name: John T. Hailer
Title: President and Chief Executive
Officer
Date: February 21, 2008
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 21, 2008
By: /s/ Michael C. Kardok
------------------------------
Name: Michael C. Kardok
Title: Treasurer
Date: February 21, 2008