-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HTh9E6nPO6f/jRGJFfLp5a++1B/OjXQZYNouRhS2ZcfO0wuAbzRE4HceNd0uqy+H KSANNtdMrGCZF8K1ibSjrA== 0001193125-05-178927.txt : 20050901 0001193125-05-178927.hdr.sgml : 20050901 20050901125641 ACCESSION NUMBER: 0001193125-05-178927 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050901 DATE AS OF CHANGE: 20050901 EFFECTIVENESS DATE: 20050901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IXIS Advisor Funds Trust II CENTRAL INDEX KEY: 0000052136 IRS NUMBER: 041990692 STATE OF INCORPORATION: MA FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-00242 FILM NUMBER: 051063992 BUSINESS ADDRESS: STREET 1: 399 BOYLSTON ST CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 8003997788 MAIL ADDRESS: STREET 1: 399 BOYLSTON STREET CITY: BOSTON STATE: MA ZIP: 02116 FORMER COMPANY: FORMER CONFORMED NAME: CDC NVEST FUNDS TRUST II DATE OF NAME CHANGE: 20010503 FORMER COMPANY: FORMER CONFORMED NAME: NVEST FUNDS TRUST II DATE OF NAME CHANGE: 20000202 FORMER COMPANY: FORMER CONFORMED NAME: NEW ENGLAND FUNDS TRUST II DATE OF NAME CHANGE: 19940615 N-CSRS 1 dncsrs.txt IXIS ADVISOR FUNDS TRUST II 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: 811-242 IXIS Advisor Funds Trust II - -------------------------------------------------------------------------------- (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. IXIS Asset Management 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: June 30, 2005 Item 1. Reports to Stockholders. [LOGO] IXIS ADVISOR FUNDS Equity Funds Semiannual Report June 30, 2005 CGM Advisor Targeted Equity Fund Hansberger International Fund Harris Associates Focused Value Fund Harris Associates Large Cap Value Fund IXIS U.S. Diversified Portfolio (formerly CDC Nvest Star Advisers Fund) Harris Associates Loomis, Sayles & Company Mercury Advisors IXIS Value Fund (formerly CDC Nvest Star Value Fund) Harris Associates Loomis, Sayles & Company Vaughan Nelson Investment Management Westpeak Global Advisors Vaughan Nelson Small Cap Value Fund Westpeak Capital Growth Fund TABLE OF CONTENTS Management Discussion and Performance.......Page 1 Schedule of Investments....................Page 27 Financial Statements.......................Page 47 CGM ADVISOR TARGETED EQUITY FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital through investments in equity securities of companies whose earnings are expected to grow at a faster rate than the overall U.S. economy - -------------------------------------------------------------------------------- Strategy: Generally invests in a focused portfolio of common stocks of large-cap companies - -------------------------------------------------------------------------------- Inception Date: November 27, 1968 - -------------------------------------------------------------------------------- Manager: G. Kenneth Heebner - -------------------------------------------------------------------------------- Symbols: Class A NEFGX Class B NEBGX Class C NEGCX Class Y NEGYX
- -------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- CGM Advisor Targeted Equity Fund's concentrated investment approach served shareholders well during the first half of 2005, as several key holdings delivered strong gains. For the six months ended June 30, 2005, the fund returned 3.34%, based on the net asset value of class A shares and $0.01 in dividends reinvested during the period. The fund's performance was ahead of both its benchmark, the S&P 500 Index, which returned -0.81% for the period, and Morningstar's Large Blend category, which averaged -0.60%. ASSETS SHIFTED TO CAPITALIZE ON INVESTMENT OPPORTUNITIES We began 2005 fully invested in anticipation of continued moderate economic growth, rising corporate profits and modest interest rates. Because we expected continued increases in oil and gas prices, these industries were the most heavily weighted. The fund also held a variety of economically sensitive companies and defense firms. However, during the first half of the year we eliminated the defense holdings and reduced the economically sensitive securities, using the proceeds to add to the fund's positions in oil services and healthcare, including pharmaceutical and biotech companies. ENERGY STOCKS AMONG TOP PERFORMERS Reflecting our optimism for the sector, energy stocks accounted for approximately one-third of fund assets. The biggest gainer during the period was ConocoPhillips, a leading integrated oil company, which recently made a major investment in LUKOIL, Russia's largest oil company. Oil and gas producers -- including British Petroleum, France's Total, and Halliburton (a major U.S. provider of oil services) -- all contributed positively to fund performance. Going forward, we believe that oil and gas prices will continue to increase, creating significant investment opportunities within the industry. Other top performers in the fund's portfolio included Genentech, which manufactures and markets biotechnology products in the U.S., Europe and Asia. In addition to receiving recognition for its leadership in drugs used in treating cancer, Genentech targets rare and/or badly underserved diseases, sidestepping its competition. Google, a global internet search engine, has made impressive earnings gains since its initial public offering in the fall of 2004. FINANCIAL SERVICES AND INTERNET STOCKS UNDERPERFORMED Laggards for the period included American International Group (AIG), a major global financial services company. AIG declined in the face of regulatory accusations and the departure of its CEO, Maurice Greenburg. eBay, a popular online auction service, also proved disappointing. eBay's results were less than expected and we sold the stock at a significant loss. However, we have high expectations for Legg Mason, which we added to the fund's financial services investments late in the period. Legg Mason recently announced the acquisition of CitiGroup's asset management business. We believe this merger should greatly increase Legg Mason's earning power and enhance its competitive position. MANAGER EXPECTS CONTINUED ECONOMIC GROWTH AND GRADUALLY RISING INTEREST RATES We expect further economic expansion and additional short-term rate increases, as the Federal Reserve Board continues to raise interest rates from the abnormally low levels established in 2003 and 2004. While the market is not inexpensive by historical standards, we continue to find opportunities in individual stocks. As always, we will target a relatively small number of established companies in industries we believe will have earnings growth rates well above the overall economy. 1 CGM ADVISOR TARGETED EQUITY FUND Investment Results through June 30, 2005 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide you with a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] June 30, 1995 through June 30, 2005 Maximum Net Asset Value/1/ Sales Charge/2/ S&P 500 Index/4/ ---------------- ---------------- ---------------- 6/30/1995 $10,000 $ 9,425 $10,000 7/31/1995 10,451 9,850 10,332 8/31/1995 10,504 9,900 10,358 9/30/1995 10,695 10,080 10,795 10/31/1995 10,475 9,873 10,756 11/30/1995 10,975 10,344 11,228 12/31/1995 10,827 10,204 11,445 1/31/1996 11,207 10,562 11,834 2/29/1996 11,566 10,901 11,944 3/31/1996 11,566 10,901 12,059 4/30/1996 11,351 10,699 12,237 5/31/1996 11,526 10,863 12,552 6/30/1996 11,403 10,747 12,600 7/31/1996 10,736 10,118 12,043 8/31/1996 10,839 10,216 12,297 9/30/1996 11,582 10,916 12,990 10/31/1996 12,263 11,558 13,348 11/30/1996 13,219 12,459 14,357 12/31/1996 13,089 12,336 14,072 1/31/1997 14,271 13,450 14,951 2/28/1997 14,034 13,227 15,069 3/31/1997 13,438 12,665 14,450 4/30/1997 14,204 13,387 15,312 5/31/1997 14,901 14,044 16,244 6/30/1997 15,566 14,671 16,972 7/31/1997 17,074 16,092 18,323 8/31/1997 16,196 15,265 17,296 9/30/1997 17,026 16,047 18,243 10/31/1997 16,358 15,418 17,634 11/30/1997 16,172 15,242 18,450 12/31/1997 16,172 15,242 18,767 1/31/1998 16,435 15,490 18,975 2/28/1998 17,880 16,852 20,343 3/31/1998 19,030 17,935 21,385 4/30/1998 19,760 18,624 21,600 5/31/1998 19,450 18,332 21,229 6/30/1998 20,491 19,313 22,091 7/31/1998 20,599 19,415 21,856 8/31/1998 16,669 15,711 18,696 9/30/1998 16,787 15,822 19,894 10/31/1998 18,478 17,415 21,512 11/30/1998 20,015 18,864 22,816 12/31/1998 21,572 20,332 24,131 1/31/1999 23,035 21,710 25,140 2/28/1999 21,383 20,154 24,358 3/31/1999 21,897 20,637 25,333 4/30/1999 21,820 20,565 26,314 5/31/1999 21,117 19,903 25,693 6/30/1999 22,674 21,370 27,119 7/31/1999 22,141 20,868 26,272 8/31/1999 22,103 20,832 26,142 9/30/1999 20,792 19,597 25,425 10/31/1999 21,591 20,349 27,034 11/30/1999 22,407 21,119 27,584 12/31/1999 24,847 23,418 29,208 1/31/2000 22,904 21,587 27,741 2/29/2000 24,938 23,504 27,216 3/31/2000 25,210 23,760 29,878 4/30/2000 24,262 22,867 28,979 5/31/2000 23,291 21,952 28,385 6/30/2000 23,382 22,038 29,084 7/31/2000 22,636 21,335 28,630 8/31/2000 23,709 22,346 30,408 9/30/2000 22,851 21,537 28,803 10/31/2000 22,899 21,582 28,681 11/30/2000 22,684 21,379 26,420 12/31/2000 23,718 22,354 26,549 1/31/2001 21,614 20,372 27,491 2/28/2001 20,929 19,726 24,984 3/31/2001 20,398 19,225 23,401 4/30/2001 21,285 20,061 25,220 5/31/2001 20,855 19,656 25,389 6/30/2001 20,997 19,789 24,771 7/31/2001 20,386 19,214 24,527 8/31/2001 18,706 17,630 22,992 9/30/2001 16,899 15,927 21,135 10/31/2001 17,000 16,023 21,538 11/30/2001 18,808 17,726 23,190 12/31/2001 19,876 18,733 23,393 1/31/2002 20,486 19,308 23,052 2/28/2002 19,544 18,420 22,607 3/31/2002 19,874 18,731 23,458 4/30/2002 19,926 18,780 22,036 5/31/2002 19,722 18,588 21,873 6/30/2002 19,085 17,988 20,315 7/31/2002 16,973 15,997 18,732 8/31/2002 16,973 15,997 18,854 9/30/2002 15,929 15,013 16,805 10/31/2002 15,546 14,653 18,285 11/30/2002 15,164 14,292 19,361 12/31/2002 14,147 13,333 18,223 1/31/2003 14,147 13,333 17,746 2/28/2003 14,045 13,237 17,480 3/31/2003 14,375 13,548 17,649 4/30/2003 15,290 14,411 19,103 5/31/2003 16,613 15,658 20,110 6/30/2003 16,892 15,921 20,366 7/31/2003 16,561 15,609 20,725 8/31/2003 16,993 16,016 21,130 9/30/2003 17,197 16,208 20,905 10/31/2003 19,335 18,223 22,088 11/30/2003 20,098 18,943 22,282 12/31/2003 20,201 19,039 23,451 1/31/2004 19,742 18,607 23,881 2/29/2004 20,939 19,735 24,213 3/31/2004 21,906 20,647 23,848 4/30/2004 20,176 19,016 23,473 5/31/2004 20,660 19,472 23,795 6/30/2004 20,837 19,639 24,258 7/31/2004 19,846 18,705 23,455 8/31/2004 20,074 18,920 23,550 9/30/2004 21,320 20,095 23,805 10/31/2004 21,574 20,334 24,169 11/30/2004 22,541 21,245 25,147 12/31/2004 23,023 21,699 26,003 1/31/2005 22,820 21,508 25,369 2/28/2005 24,347 22,947 25,903 3/31/2005 23,278 21,940 25,444 4/30/2005 22,643 21,341 24,961 5/31/2005 23,279 21,941 25,756 6/30/2005 23,797 22,428 25,792 Average Annual Total Returns -- June 30, 2005
SINCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION Class A (Inception 11/27/68) Net Asset Value/1/ 3.34% 14.19% 0.36% 9.06% -- With Maximum Sales Charge/2/ -2.58 7.62 -0.82 8.41 -- Class B (Inception 2/28/97) Net Asset Value/1/ 3.10 13.44 -0.40 -- 5.74% With CDSC/3/ -1.90 8.44 -0.76 -- 5.74 Class C (Inception 9/1/98) Net Asset Value/1/ 2.99 13.31 -0.42 -- 3.73 With CDSC/3/ 1.99 12.31 -0.42 -- 3.73 Class Y (Inception 6/30/99) Net Asset Value/1/ 3.60 14.66 0.81 -- 1.24 - -----------------------------------------------------------------------
------------------------- SINCE SINCE SINCE CLASS B CLASS C CLASS Y COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ INCEPTION/6/ INCEPTION/6/ S&P 500 Index/4/ -0.81% 6.32% -2.37% 9.94% 6.66% 3.92% -0.83% Morningstar Large Blend Fund Avg./5/ -0.60 6.35 -1.79 8.61 5.84 4.19 -0.22 - ------------------------------------------------------------------------------------------------------------
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those noted. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to certain institutional investors only. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/05 12/31/04 - ------------------------------------------------ Common Stocks 99.2 99.4 - ------------------------------------------------ Short Term Investments and Other 0.8 0.6 - ------------------------------------------------ % of Net Assets as of TEN LARGEST HOLDINGS 6/30/05 12/31/04 - ------------------------------------------------ ConocoPhillips 7.7 5.7 - ------------------------------------------------ Total SA, Sponsored ADR 6.1 5.6 - ------------------------------------------------ Halliburton Co. 5.5 -- - ------------------------------------------------ HCA, Inc. 5.4 -- - ------------------------------------------------ BP PLC, Sponsored ADR 5.3 4.7 - ------------------------------------------------ Occidental Petroleum Corp. 5.2 -- - ------------------------------------------------ J.C. Penney Co., Inc. 5.2 -- - ------------------------------------------------ Altria Group, Inc. 5.2 -- - ------------------------------------------------ Schlumberger, Ltd. 5.1 -- - ------------------------------------------------ Yum! Brands, Inc. 5.1 2.4 - ------------------------------------------------ % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/05 12/31/04 - ------------------------------------------------ Oil & Gas 24.8 23.7 - ------------------------------------------------ Oil & Gas Services 10.6 -- - ------------------------------------------------ Telecommunications 9.7 13.5 - ------------------------------------------------ Insurance 7.2 4.4 - ------------------------------------------------ Health Care -- Services 5.4 4.7 - ------------------------------------------------
Portfolio holdings and asset allocations will vary. Notes to Charts /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P 500 Index is an unmanaged index of U.S. common stocks. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception performance comparisons for each Class of fund shares are calculated as follows: Class B from 2/28/97; Class C from 9/30/98; and Class Y from 6/30/99. 2 HANSBERGER INTERNATIONAL FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital - -------------------------------------------------------------------------------- Strategy: Invests in common stocks of small-, mid- and large-cap companies located outside the U.S. Assets are diversified across developed and emerging markets - -------------------------------------------------------------------------------- Inception Date: December 29, 1995 - -------------------------------------------------------------------------------- Managers: Growth: Barry A. Lockhart Patrick H. Tan Thomas R.H. Tibbles Value: Ronald Holt Robert Mazuelos Lauretta Reeves - -------------------------------------------------------------------------------- Symbols: Class A NEFDX Class B NEDBX Class C NEDCX
- -------------------------------------------------------------------------------- You Should Know: Foreign securities involve risks not associated with domestic securities, such as currency fluctuations, differing political, economic conditions and accounting standards. Growth stocks can be more sensitive to market movements because their prices are based in part on future expectations. Value stocks may fall out of favor and underperform the overall market during any given period. Management Discussion - -------------------------------------------------------------------------------- Hansberger International Fund is managed by two teams of international equity specialists -- one that focuses on value stocks and the other that looks for growth potential. For the six months ended June 30, 2005, the fund's total return was -0.58%, based on the net asset value of class A shares. The fund's benchmarks, the MSCI EAFE Index and the MSCI ACWI ex-U.S. Index (neither of which include the United States) returned -0.85% and 0.32%, respectively, for the six-month period, while the average performance of Morningstar's Foreign Large Blend category was -1.20%. VALUE TEAM EMPHASIZED EUROPE AND EMERGING MARKETS The value team's three strongest stocks were Brazilian companies, followed by two high-tech firms, one each in Taiwan and South Korea. Petrobras, a Brazilian oil company, was the top performer, as worldwide demand kept upward pressure on oil prices. A Brazilian electric utility, Cemig, was the second best performer, followed by one of the largest banks in Brazil, Banco Bradesco. Although concern about political stability hurt Brazilian stocks in the closing weeks of the semiannual period, these holdings were still a net positive. Two other major contributors were Taiwan Semiconductor and Samsung Electronics -- both information technology companies. The team believes this sector may be poised for recovery. They also like Finland's Nokia, one of Europe's leading telecommunication equipment companies, and Celestica, one of two Canadian companies recently added to the portfolio. Celestica is moving its electronics production operations into countries like China, where costs are lower. Energy was the top-performing sector during the period, and the value segment benefited from its position in France's Total, a world leader in oil and gas production. However, energy was a relatively small portion of the fund's holdings. The value segment's worst performer was Telefonica Moviles, Spain's leading cellular telephone company, which is also active in cellular services in Latin America. Pricing wars have discouraged investors, but the team believes in the potential for Telefonica's growth in Mexico and Brazil. Another disappointing performer, Japan's Sumitomo Trust & Banking Company, was hurt when it was unable to take over the trust operations of another bank, and by sluggish economic growth in Japan. Although the team took some profits in Japanese stocks, the segment's exposure to Japan has increased. INDIVIDUAL STOCK SELECTION HELPED GROWTH SEGMENT Emerging markets were positive for both segments of the fund in 2005. In the growth segment, Europe was neutral and Japan was weak. Areas of concentration included information technology and healthcare; energy and materials were smaller positions relative to the benchmark. However, individual stock selection had a strongly positive influence on performance. Energy is not considered a traditional growth investment, but this team is particularly interested in the growth potential of companies developing alternative energy sources. Denmark's Vestas Wind Systems, a pioneer and world leader in wind turbines, was this segment's top performing stock during the period. Canada's Suncor Energy was another leader. In addition to exploring for and producing crude oil and natural gas, after decades of work Suncor has developed a relatively inexpensive process that will enable it to pump oil out of huge deposits of tar sand the company owns in Alberta -- reserves said to equal those of Saudi Arabia. Energy-hungry China has expressed interest in buying the company. British Sky Broadcasting was one of this segment's worst performers in the first half of 2005. The company supplies digital television programming in the U.K. The growth team believes in the long-term fundamental outlook for Sky, although investors appear to be concerned that the franchise may be too powerful and potentially vulnerable to action by the British government that could hurt profits. INTERNATIONAL MARKETS APPEAR UNDERVALUED RELATIVE TO THE UNITED STATES Hansberger believes that stocks in emerging markets are selling at a discount to developed markets. High oil prices and interest rates may slow economic growth, especially in Japan and Europe. 3 HANSBERGER INTERNATIONAL FUND Investment Results through June 30, 2005 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide you with a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] December 29, 1995 (inception) through June 30, 2005 Maximum MSCI MSCI ACWI Net Asset Sales EAFE ex USA Value/1/ Charge/2/ Index/4/ Index/5/ ---------- ---------- ---------- ----------- 12/29/1995 $10,000 $ 9,425 12/31/1995 10,000 9,425 $10,000 $10,000 1/31/1996 10,088 9,508 10,043 10,137 2/29/1996 10,264 9,673 10,080 10,137 3/31/1996 10,527 9,922 10,297 10,327 4/30/1996 10,872 10,246 10,598 10,640 5/31/1996 11,136 10,495 10,406 10,480 6/30/1996 11,176 10,533 10,467 10,533 7/31/1996 10,664 10,051 10,164 10,183 8/31/1996 10,952 10,322 10,189 10,243 9/30/1996 11,136 10,496 10,462 10,497 10/31/1996 11,048 10,413 10,357 10,392 11/30/1996 11,495 10,834 10,772 10,793 12/31/1996 11,665 10,995 10,636 10,668 1/31/1997 12,136 11,438 10,266 10,472 2/28/1997 12,387 11,675 10,437 10,664 3/31/1997 12,265 11,560 10,477 10,641 4/30/1997 12,387 11,675 10,535 10,731 5/31/1997 13,027 12,278 11,223 11,394 6/30/1997 13,626 12,843 11,845 12,023 7/31/1997 14,144 13,331 12,039 12,266 8/31/1997 13,351 12,583 11,142 11,301 9/30/1997 14,081 13,271 11,769 11,912 10/31/1997 13,060 12,309 10,867 10,898 11/30/1997 12,907 12,165 10,759 10,762 12/31/1997 13,145 12,389 10,855 10,886 1/31/1998 13,103 12,349 11,354 11,211 2/28/1998 13,995 13,190 12,085 11,959 3/31/1998 14,565 13,727 12,460 12,373 4/30/1998 14,649 13,807 12,561 12,461 5/31/1998 14,352 13,527 12,503 12,235 6/30/1998 14,055 13,247 12,601 12,189 7/31/1998 14,013 13,207 12,731 12,305 8/31/1998 11,793 11,115 11,157 10,570 9/30/1998 11,682 11,010 10,818 10,346 10/31/1998 12,533 11,812 11,948 11,430 11/30/1998 13,204 12,445 12,563 12,044 12/31/1998 13,672 12,886 13,062 12,459 1/31/1999 14,148 13,334 13,027 12,446 2/28/1999 13,969 13,166 12,719 12,167 3/31/1999 14,539 13,703 13,253 12,755 4/30/1999 15,321 14,440 13,793 13,393 5/31/1999 14,938 14,079 13,086 12,764 6/30/1999 15,814 14,905 13,599 13,350 7/31/1999 15,635 14,736 14,006 13,663 8/31/1999 15,524 14,631 14,061 13,711 9/30/1999 15,167 14,295 14,205 13,804 10/31/1999 15,702 14,800 14,740 14,318 11/30/1999 16,875 15,905 15,256 14,890 12/31/1999 18,814 17,733 16,628 16,310 1/31/2000 18,115 17,073 15,574 15,425 2/29/2000 19,248 18,142 15,996 15,842 3/31/2000 19,304 18,194 16,620 16,438 4/30/2000 17,905 16,875 15,748 15,520 5/31/2000 17,092 16,109 15,367 15,123 6/30/2000 17,593 16,581 15,971 15,767 7/31/2000 17,119 16,135 15,305 15,145 8/31/2000 17,631 16,617 15,441 15,332 9/30/2000 16,968 15,993 14,692 14,482 10/31/2000 16,325 15,387 14,348 14,021 11/30/2000 15,582 14,686 13,813 13,392 12/31/2000 16,516 15,566 14,307 13,850 1/31/2001 16,836 15,868 14,300 14,057 2/28/2001 15,760 14,854 13,229 12,945 3/31/2001 14,730 13,883 12,353 12,030 4/30/2001 15,680 14,778 13,220 12,848 5/31/2001 15,863 14,951 12,764 12,493 6/30/2001 15,732 14,827 12,246 12,014 7/31/2001 15,444 14,556 12,025 11,746 8/31/2001 15,110 14,241 11,722 11,455 9/30/2001 13,533 12,754 10,538 10,239 10/31/2001 13,798 13,004 10,807 10,526 11/30/2001 14,582 13,743 11,206 11,008 12/31/2001 15,034 14,169 11,273 11,150 1/31/2002 14,676 13,832 10,675 10,672 2/28/2002 14,711 13,865 10,750 10,749 3/31/2002 15,589 14,693 11,390 11,378 4/30/2002 15,485 14,594 11,419 11,407 5/31/2002 15,578 14,682 11,574 11,531 6/30/2002 14,631 13,789 11,118 11,033 7/31/2002 13,227 12,467 10,021 9,958 8/31/2002 13,250 12,488 10,001 9,958 9/30/2002 11,615 10,947 8,929 8,903 10/31/2002 12,253 11,548 9,410 9,381 11/30/2002 13,134 12,378 9,838 9,832 12/31/2002 12,565 11,842 9,508 9,514 1/31/2003 12,124 11,427 9,112 9,180 2/28/2003 11,788 11,110 8,904 8,994 3/31/2003 11,637 10,968 8,735 8,820 4/30/2003 12,854 12,115 9,601 9,669 5/31/2003 13,770 12,978 10,192 10,285 6/30/2003 14,082 13,272 10,444 10,570 7/31/2003 14,372 13,546 10,699 10,852 8/31/2003 14,824 13,971 10,959 11,175 9/30/2003 15,021 14,157 11,299 11,488 10/31/2003 16,087 15,162 12,004 12,233 11/30/2003 16,365 15,424 12,273 12,500 12/31/2003 17,467 16,463 13,232 13,454 1/31/2004 17,862 16,835 13,420 13,670 2/29/2004 18,081 17,042 13,732 14,017 3/31/2004 17,908 16,878 13,815 14,104 4/30/2004 17,397 16,397 13,514 13,665 5/31/2004 17,455 16,451 13,555 13,696 6/30/2004 17,745 16,724 13,875 14,006 7/31/2004 16,944 15,970 13,427 13,598 8/31/2004 17,095 16,112 13,489 13,706 9/30/2004 17,536 16,528 13,844 14,147 10/31/2004 18,046 17,009 14,317 14,639 11/30/2004 19,100 18,002 15,299 15,655 12/31/2004 19,841 18,701 15,971 16,327 1/31/2005 19,413 18,297 15,679 16,046 2/28/2005 20,479 19,301 16,360 16,838 3/31/2005 19,911 18,766 15,955 16,381 4/30/2005 19,447 18,329 15,598 15,977 5/31/2005 19,517 18,395 15,622 16,077 6/30/2005 19,731 18,600 15,835 16,380 Average Annual Total Returns -- June 30, 2005
SINCE 6 MONTHS 1 YEAR/8/ 5 YEARS/8/ INCEPTION/8/ CLASS A (Inception 12/29/95) Net Asset Value/1/ -0.58% 11.17% 2.31% 7.41% With Maximum Sales Charge/2/ -6.28 4.80 1.10 6.75 CLASS B (Inception 12/29/95) Net Asset Value/1/ -0.95 10.33 1.55 6.63 With CDSC/3/ -5.90 5.33 1.22 6.63 CLASS C (Inception 12/29/95) Net Asset Value/1/ -1.01 10.33 1.54 6.63 With CDSC/3/ -2.00 9.33 1.54 6.63 - --------------------------------------------------------------------------------------- SINCE COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION/7/ MSCI ACWI ex-U.S. Index/5/ 0.32% 16.95% 0.76% 5.33% MSCI EAFE Index/4/ -0.85 14.13 -0.17 4.96 Morningstar Foreign Large Blend Fund Avg./6/ -1.20 12.57 -2.51 5.09
All results represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/05 12/31/04 - -------------------------------------------------------- Common Stocks 97.6 97.4 - -------------------------------------------------------- Short Term Investments and Other 2.4 2.6 - -------------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/05 12/31/04 - -------------------------------------------------------- HBOS PLC 1.8 1.6 - -------------------------------------------------------- Royal Bank of Scotland PLC 1.8 1.8 - -------------------------------------------------------- Novartis AG 1.6 1.6 - -------------------------------------------------------- Canon, Inc. 1.4 1.7 - -------------------------------------------------------- DBS Group Holdings, Ltd. 1.4 0.8 - -------------------------------------------------------- Nestle SA 1.4 0.9 - -------------------------------------------------------- Schneider Electric SA 1.3 0.7 - -------------------------------------------------------- Hutchison Whampoa, Ltd. 1.3 1.3 - -------------------------------------------------------- Vestas Wind Systems AS 1.2 1.0 - -------------------------------------------------------- Banco Bilbao Vizcaya Argentaria SA 1.1 0.8 - -------------------------------------------------------- % of Net Assets as of FIVE LARGEST COUNTRIES 6/30/05 12/31/04 - -------------------------------------------------------- United Kingdom 18.7 19.0 - -------------------------------------------------------- Japan 16.7 18.7 - -------------------------------------------------------- France 13.1 13.9 - -------------------------------------------------------- Switzerland 8.9 5.6 - -------------------------------------------------------- Germany 6.4 7.2 - --------------------------------------------------------
Portfolio holdings and asset allocations will vary. Notes to Charts /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Morgan Stanley Capital International Europe Australasia and Far East Index (MSCI EAFE) is an unmanaged index designed to measure developed market equity performance, excluding the United States and Canada. /5/Morgan Stanley Capital International All Countries World Index ex-U.S. (MSCI ACWI ex-U.S. Index) is an unmanaged index designed to measure equity market performance in developed and emerging markets, excluding the United States. /6/Morningstar Foreign Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /7/The since-inception performance comparisons are calculated from 12/31/95. /8/Fund performance has been increased by expense waivers, without which performance would have been lower. 4 HARRIS ASSOCIATES FOCUSED VALUE FUND PORTFOLIO PROFILE Objective: Seeks long-term capital appreciation - -------------------------------------------------------------------------------- Strategy: Focuses on 25 to 30 stocks of mid- to large-cap U.S. companies - -------------------------------------------------------------------------------- Inception Date: March 15, 2001 - -------------------------------------------------------------------------------- Managers: Floyd J. Bellman Robert M. Levy - -------------------------------------------------------------------------------- Symbols: Class A NRSAX Class B NRSBX Class C NRSCX
- -------------------------------------------------------------------------------- You Should Know: The fund invests in a small number of securities, which may result in greater volatility than more diversified funds. Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion - -------------------------------------------------------------------------------- Equity returns were muted during the first half of 2005, but Harris Associates Focused Value Fund's total return for the six months ended June 30 was 2.76%, based on the net asset value of the fund's class A shares. The fund outperformed its benchmark, the Standard & Poor's 500 Index, which returned - -0.81% for the period, and exceeded the 0.39% average return on Morningstar's Large Value category. CAREFUL STOCK-PICKING BROUGHT SOLID RESULTS Although the fund's energy position was significantly less than the benchmark, strong performance by Burlington Resources, a North American producer of oil and natural gas, had a positive impact on the fund's performance. In addition, the fund's technology holdings kept pace with the benchmark's tech segment, despite having far less exposure. H&R Block had a positive impact on fund performance by confounding the market's negative expectations. Although tax preparation volumes were flat, Block enhanced its competitive position, opened more stores, and exceeded estimates for its mortgage division. The result was increased revenue and a higher stock price. Among the fund's healthcare holdings, Omnicare, which provides pharmaceutical services to nursing homes, saw earnings stabilize as inconsistencies among state reimbursement plans were better managed. In 2006, this function will be further simplified as reimbursement rates will be set by the federal government. Omnicare has also slashed costs, and its proposed acquisition of one of its competitors, Neighborcare, drew favorable market response. Hospira, which makes a variety of hospital supply products and specialty injectable pharmaceuticals, has continued to move forward after it was spun off from Abbott Laboratories. TIME WARNER, WASHINGTON MUTUAL, AND HARLEY DAVIDSON HURT RESULTS Media giant Time Warner was down sharply, as cable and media stocks came under competitive fire from traditional phone companies encroaching on their franchises, and problems persisted at America Online (AOL). We think the market has overreacted to AOL's troubles and largely ignored Time Warner's other strengths. Because Washington Mutual was a relatively large holding, the modest drop in its stock price had a negative impact on the portfolio. We believe changes in management and other short-term news obscured the company's solid operating results. The market also may have misread Harley-Davidson's announcement of production cutbacks, which were aimed at controlling dealer inventory and maintaining pricing. Some investors saw the news as signaling a sales slowdown. Our dealer contacts reported continued strong demand for Harley products, and we increased the fund's holdings when the stock fell. ADDITIONS INCLUDED HIGH-TECH BUSINESSES AND MCDONALD'S We added two technology companies whose share prices have fallen and whose managements are using capital to enhance shareholder value. National Semiconductor is shifting its focus from digital to analog chips for use in high-volume consumer products. This is a more stable, higher margin business niche than large computer applications. National is buying back stock and, unlike many tech companies, pays a dividend. CDW Corp. is a direct distributor of multi-brand computers and other technology products to small businesses. CDW has a solid record of growth, good market share and business prospects, and an attractive return on capital, but we believe its shares have been overlooked. Management is committed to a long-term program of increasing shareholder value. We regarded the recent decline in McDonald's shares as an opportunity to invest in this global company at an attractive price. We believe the new management team is dedicated to better capital allocation, and to building returns by improving margins and enhancing return on capital. MANAGERS FOCUS ON VALUE AND STOCK SELECTION We believe the fund's current holdings are selling at low prices relative to the overall market -- a comfortable stance at a time when overall equity returns seem likely to stay subdued. Against that backdrop, we believe our style of opportunistic stock selection offers potential for good absolute and relative returns. 5 HARRIS ASSOCIATES FOCUSED VALUE FUND Investment Results through June 30, 2005 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide you with a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] March 15, 2001 (inception) through June 30, 2005 Net Maximum Asset Sales S&P 500 Value/1/ Charge/2/ Index/4/ ---------- ---------- ---------- 3/15/2001 $10,000 $ 9,425 3/31/2001 10,090 9,510 $10,000 4/30/2001 10,420 9,821 10,777 5/31/2001 10,690 10,075 10,849 6/30/2001 10,990 10,358 10,585 7/31/2001 11,310 10,660 10,481 8/31/2001 10,870 10,245 9,825 9/30/2001 10,240 9,651 9,032 10/31/2001 10,000 9,425 9,204 11/30/2001 10,680 10,066 9,910 12/31/2001 10,960 10,330 9,997 1/31/2002 10,890 10,264 9,851 2/28/2002 10,600 9,990 9,661 3/31/2002 10,910 10,282 10,024 4/30/2002 10,859 10,235 9,416 5/31/2002 10,929 10,300 9,347 6/30/2002 10,079 9,499 8,681 7/31/2002 9,619 9,066 8,005 8/31/2002 9,959 9,386 8,057 9/30/2002 8,568 8,076 7,181 10/31/2002 8,968 8,453 7,813 11/30/2002 9,468 8,924 8,273 12/31/2002 9,238 8,707 7,787 1/31/2003 9,008 8,490 7,583 2/28/2003 8,888 8,377 7,469 3/31/2003 8,988 8,471 7,542 4/30/2003 9,507 8,960 8,163 5/31/2003 10,117 9,535 8,593 6/30/2003 10,336 9,742 8,703 7/31/2003 10,256 9,667 8,856 8/31/2003 10,676 10,062 9,029 9/30/2003 10,556 9,949 8,933 10/31/2003 11,196 10,552 9,439 11/30/2003 11,687 11,015 9,522 12/31/2003 11,787 11,109 10,021 1/31/2004 12,097 11,401 10,205 2/29/2004 12,177 11,477 10,347 3/31/2004 11,937 11,251 10,191 4/30/2004 11,777 11,100 10,031 5/31/2004 12,037 11,345 10,168 6/30/2004 11,907 11,223 10,366 7/31/2004 11,677 11,006 10,023 8/31/2004 11,627 10,959 10,064 9/30/2004 11,938 11,251 10,173 10/31/2004 12,148 11,449 10,328 11/30/2004 12,648 11,921 10,746 12/31/2004 13,058 12,307 11,111 1/31/2005 12,608 11,883 10,841 2/28/2005 12,987 12,240 11,069 3/31/2005 12,817 12,080 10,873 4/30/2005 12,597 11,872 10,667 5/31/2005 13,046 12,296 11,006 6/30/2005 13,420 12,648 11,022 Average Annual Total Returns -- June 30, 2005
SINCE 6 MONTHS 1 YEAR INCEPTION/7/ CLASS A (Inception 3/15/01) Net Asset Value/1/ 2.76% 12.68% 7.09% With Maximum Sales Charge/2/ -3.17 6.17 5.63 CLASS B (Inception 3/15/01) Net Asset Value/1/ 2.44 11.88 6.30 With CDSC/3/ -2.56 6.88 5.92 CLASS C (Inception 3/15/01) Net Asset Value/1/ 2.44 11.88 6.30 With CDSC/3/ 1.44 10.88 6.30 - ----------------------------------------------------------------- SINCE COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR INCEPTION/6/ S&P 500 Index/4/ -0.81% 6.32% 2.32% Morningstar Large Value Fund Avg./5/ 0.39 9.55 4.31
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/05 12/31/04 - ------------------------------------------------ Common Stocks 92.2 90.6 - ------------------------------------------------ Short Term Investments and Other 7.8 9.4 - ------------------------------------------------ % of Net Assets as of TEN LARGEST HOLDINGS 6/30/05 12/31/04 - ------------------------------------------------ Washington Mutual, Inc. 9.6 15.3 - ------------------------------------------------ Yum! Brands, Inc. 5.5 6.7 - ------------------------------------------------ Omnicare, Inc. 5.5 4.3 - ------------------------------------------------ RR Donnelley & Sons Co. 5.3 4.9 - ------------------------------------------------ H&R Block, Inc. 5.0 6.6 - ------------------------------------------------ Time Warner, Inc. 4.7 5.0 - ------------------------------------------------ Hospira, Inc. 4.6 3.6 - ------------------------------------------------ TJX Cos., Inc. 4.5 4.2 - ------------------------------------------------ Raytheon Co. 4.5 4.0 - ------------------------------------------------ Burlington Resources, Inc. 4.0 4.3 - ------------------------------------------------ % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/05 12/31/04 - ------------------------------------------------ Pharmaceuticals 13.7 11.3 - ------------------------------------------------ Commercial Services 13.3 14.5 - ------------------------------------------------ Savings & Loans 12.2 15.3 - ------------------------------------------------ Media 12.0 11.5 - ------------------------------------------------ Retail 10.6 13.5 - ------------------------------------------------
Portfolio holdings and asset allocations will vary. Notes to Charts /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P 500 Index is an unmanaged index of U.S. common stocks. /5/Morningstar Large Value Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception performance comparisons are calculated from 3/31/01. /7/Fund performance has been increased by expense waivers, without which performance would have been lower. 6 HARRIS ASSOCIATES LARGE CAP VALUE FUND PORTFOLIO PROFILE Objective: Seeks opportunities for long-term capital growth and income - -------------------------------------------------------------------------------- Strategy: Invests primarily in common stock of large- and mid-cap companies in any industry - -------------------------------------------------------------------------------- Inception Date: May 6, 1931 - -------------------------------------------------------------------------------- Managers: Edward S. Loeb Michael J. Mangan Diane Mustain - -------------------------------------------------------------------------------- Symbols: Class A NEFOX Class B NEGBX Class C NECOX Class Y NEOYX
- -------------------------------------------------------------------------------- You Should Know: Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion - -------------------------------------------------------------------------------- Despite growing corporate earnings, the stock market's engines idled during the first half of 2005. High oil prices, the nation's trade deficit, and steady upticks in interest rates prompted investors to question the durability of the U.S. economic expansion. For the six months ended June 30, 2005, class A shares of Harris Associates Large Cap Value Fund had a total return of -3.86% based on net asset value and $0.01 in dividends reinvested during the period. The fund's results trailed both its benchmark, the Russell 1000 Value Index, which returned 1.76% for the period, and the -0.60% average return on the funds in Morningstar's Large Blend category. LOW EXPOSURE TO ENERGY, UTILITIES AND BASIC MATERIALS HURT RESULTS The fund had relatively little exposure to energy, the period's best-performing segment, and we have been selling our smaller holdings as prices rise. At this point, the rise in the price of oil seems driven by speculative traders. Like any commodity, its price is sensitive to shifts in supply and demand; some data suggest that prices have outrun long-term demand. Our underweight stance in utilities and basic materials, two other sectors that performed well, also held back returns. Earnings at Washington Mutual, the nation's largest savings and loan company, continue to progress. However, shares fell moderately over this period as investors focused on short-term issues, such as changes in management. The acquisition of Providian's credit card business fits well with the company's retail business, in our opinion. MEDIA STOCKS ALSO SUFFERED Media companies were among the fund's weakest holdings over the period, accounting for a large portion of our underperformance; Time Warner, Viacom, Liberty Media, Disney, and Comcast all declined. In each case, investors focused on short-term weaknesses, while ignoring greater strengths. Viacom's Infinity Broadcasting suffered during a challenging time for radio generally. But other parts of the businesses -- MTV, Nickelodeon, Comedy Central -- are growing rapidly. At Disney, the focus has been on ABC's problems rather than on the success of ESPN. And Time Warner's cable and other divisions are doing well, while investors only seem to see the difficulties at America Online (AOL). In our view, all these companies are moving forward. Management's efforts to help investors see the real values inherent in their companies also bolster our enthusiasm. For example, Time Warner and Comcast are adding Adelphia's former subscribers, Viacom is splitting apart to highlight the sum of its parts, and Liberty Media is spinning off the highly profitable Discovery Channel. FORTUNE BRANDS, HEWLETT-PACKARD AND BAXTER WERE POSITIVE Conglomerate Fortune Brands' spirits business was bolstered by the announcement of its purchase, with Pernod, of several high-quality liquor brands. Fortune, which also makes a broad range of home and hardware products, has benefited from the strong housing market. We bought Hewlett-Packard (HP) when shares slumped during a sudden management change that followed a series of failed initiatives. The firm reported better results than expected during the second quarter of 2005, and the stock has performed well since the appointment of a new CEO. HP's many assets include a dominant position in printers. The turnaround at Baxter International continues to go well, as this medical products and services company reported solid quarterly results, with improved margins and the formation of a new management team under its new CEO. CONDITIONS APPEAR TO FAVOR EQUITIES We believe business is moving ahead. The economy is expanding at a reasonable pace, corporate profits are increasing faster than many expected, and interest rates are still relatively low -- not an unattractive scenario for equity investors. Moreover, there are few alternatives at the moment. Bond prices are vulnerable to higher interest rates and real estate prices are nearing extremes. The market may continue to mark time, but if the economy continues to move forward, as we think it will, stock prices should follow. 7 HARRIS ASSOCIATES LARGE CAP VALUE FUND Investment Results through June 30, 2005 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide you with a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] June 30, 1995 through June 30, 2005 Net Asset Maximum Sales Russell 1000 Value/1/ Charge/2/ Value Index/4/ ---------- --------------- ------------------- 6/30/1995 $10,000 $ 9,425 $10,000 7/31/1995 10,350 9,755 10,348 8/31/1995 10,446 9,846 10,494 9/30/1995 10,905 10,278 10,874 10/31/1995 10,797 10,176 10,766 11/30/1995 11,158 10,516 11,311 12/31/1995 11,403 10,747 11,595 1/31/1996 11,760 11,084 11,957 2/29/1996 11,823 11,144 12,047 3/31/1996 11,883 11,199 12,252 4/30/1996 11,922 11,236 12,299 5/31/1996 12,104 11,408 12,453 6/30/1996 11,845 11,164 12,463 7/31/1996 11,256 10,609 11,992 8/31/1996 11,527 10,864 12,335 9/30/1996 12,117 11,420 12,825 10/31/1996 12,490 11,772 13,321 11/30/1996 13,600 12,818 14,287 12/31/1996 13,365 12,596 14,105 1/31/1997 14,029 13,223 14,789 2/28/1997 14,203 13,386 15,006 3/31/1997 13,585 12,804 14,466 4/30/1997 14,300 13,478 15,074 5/31/1997 15,217 14,342 15,916 6/30/1997 15,962 15,044 16,599 7/31/1997 16,968 15,992 17,848 8/31/1997 16,484 15,536 17,212 9/30/1997 17,501 16,495 18,252 10/31/1997 16,735 15,772 17,742 11/30/1997 17,456 16,452 18,527 12/31/1997 17,833 16,808 19,068 1/31/1998 17,938 16,907 18,798 2/28/1998 19,379 18,264 20,063 3/31/1998 20,472 19,295 21,290 4/30/1998 20,576 19,393 21,433 5/31/1998 20,296 19,129 21,115 6/30/1998 21,145 19,929 21,386 7/31/1998 20,819 19,622 21,008 8/31/1998 17,671 16,655 17,882 9/30/1998 18,551 17,484 18,908 10/31/1998 19,891 18,747 20,373 11/30/1998 20,794 19,598 21,322 12/31/1998 22,099 20,829 22,048 1/31/1999 22,740 21,433 22,224 2/28/1999 22,195 20,918 21,910 3/31/1999 22,501 21,207 22,363 4/30/1999 23,835 22,465 24,452 5/31/1999 23,728 22,363 24,183 6/30/1999 24,468 23,061 24,886 7/31/1999 23,746 22,381 24,157 8/31/1999 23,426 22,079 23,260 9/30/1999 22,477 21,185 22,448 10/31/1999 23,378 22,034 23,740 11/30/1999 23,446 22,098 23,554 12/31/1999 24,192 22,801 23,668 1/31/2000 22,929 21,611 22,896 2/29/2000 22,156 20,882 21,195 3/31/2000 23,955 22,578 23,781 4/30/2000 23,560 22,205 23,504 5/31/2000 22,834 21,521 23,752 6/30/2000 23,134 21,803 22,666 7/31/2000 22,992 21,670 22,950 8/31/2000 24,535 23,124 24,227 9/30/2000 23,414 22,068 24,449 10/31/2000 23,480 22,129 25,049 11/30/2000 22,080 20,811 24,120 12/31/2000 22,422 21,133 25,328 1/31/2001 22,438 21,148 25,425 2/28/2001 21,105 19,892 24,718 3/31/2001 19,919 18,774 23,845 4/30/2001 21,545 20,306 25,014 5/31/2001 21,577 20,336 25,576 6/30/2001 20,828 19,631 25,009 7/31/2001 20,114 18,957 24,956 8/31/2001 18,879 17,793 23,956 9/30/2001 17,302 16,307 22,270 10/31/2001 17,920 16,890 22,078 11/30/2001 19,189 18,085 23,362 12/31/2001 19,156 18,055 23,912 1/31/2002 19,058 17,963 23,728 2/28/2002 18,553 17,487 23,766 3/31/2002 19,058 17,962 24,890 4/30/2002 18,521 17,456 24,037 5/31/2002 18,439 17,379 24,157 6/30/2002 17,333 16,336 22,770 7/31/2002 16,227 15,294 20,654 8/31/2002 16,633 15,676 20,809 9/30/2002 14,389 13,562 18,496 10/31/2002 14,926 14,067 19,866 11/30/2002 15,933 15,017 21,117 12/31/2002 15,315 14,434 20,200 1/31/2003 14,941 14,082 19,711 2/28/2003 14,469 13,637 19,186 3/31/2003 14,648 13,806 19,218 4/30/2003 16,030 15,108 20,909 5/31/2003 17,234 16,243 22,259 6/30/2003 17,608 16,595 22,537 7/31/2003 17,446 16,443 22,873 8/31/2003 18,032 16,995 23,229 9/30/2003 17,642 16,628 23,003 10/31/2003 18,472 17,409 24,410 11/30/2003 19,122 18,022 24,741 12/31/2003 19,919 18,774 26,266 1/31/2004 20,067 18,913 26,728 2/29/2004 20,538 19,357 27,301 3/31/2004 20,230 19,067 27,062 4/30/2004 20,230 19,067 26,401 5/31/2004 20,246 19,082 26,670 6/30/2004 20,540 19,359 27,300 7/31/2004 19,792 18,654 26,916 8/31/2004 19,889 18,745 27,298 9/30/2004 19,889 18,745 27,722 10/31/2004 20,313 19,145 28,182 11/30/2004 20,865 19,665 29,607 12/31/2004 21,744 20,493 30,599 1/31/2005 21,320 20,094 30,056 2/28/2005 21,239 20,017 31,052 3/31/2005 20,980 19,773 30,626 4/30/2005 20,556 19,374 30,077 5/31/2005 21,059 19,848 30,801 6/30/2005 20,898 19,697 31,138 Average Annual Total Returns -- June 30, 2005
SINCE 6 MONTHS 1 YEAR/7/ 5 YEARS/7/ 10 YEARS/7/ INCEPTION/7/ CLASS A (Inception 5/6/31) Net Asset Value/1/ -3.86% 1.78% -2.01% 7.65% -- With Maximum Sales Charge/2/ -9.41 -4.07 -3.16 7.01 -- CLASS B (Inception 9/13/93) Net Asset Value/1/ -4.24 1.04 -2.73 6.86 -- With CDSC/3/ -9.03 -3.96 -3.11 6.86 -- CLASS C (Inception 5/1/95) Net Asset Value/1/ -4.17 1.13 -2.72 6.86 -- With CDSC/3/ -5.13 0.13 -2.72 6.86 -- CLASS Y (Inception 11/18/98) Net Asset Value/1/ -3.75 2.12 -1.52 -- 0.77% - -------------------------------------------------------------------------------------------- SINCE CLASS Y COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ Russell 1000 Value Index/4/ 1.76% 14.06% 6.56% 12.03% 5.92% Morningstar Large Blend Fund Avg./5/ -0.60 6.35 -1.79 8.61 2.29
All returns represents past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to certain institutional investors only. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/05 12/31/04 - ---------------------------------------------------- Common Stocks 98.5 97.3 - ---------------------------------------------------- Short Term Investments and Other 1.5 2.7 - ---------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/05 12/31/04 - ---------------------------------------------------- Washington Mutual, Inc. 4.1 4.0 - ---------------------------------------------------- Liberty Media Corp., Class A 4.1 4.0 - ---------------------------------------------------- McDonald's Corp. 4.0 3.6 - ---------------------------------------------------- JPMorgan Chase & Co. 3.5 3.0 - ---------------------------------------------------- Time Warner, Inc. 3.3 3.6 - ---------------------------------------------------- Home Depot, Inc. 3.3 3.5 - ---------------------------------------------------- Citigroup, Inc. 3.0 2.4 - ---------------------------------------------------- Hewlett-Packard Co. 3.0 -- - ---------------------------------------------------- Baxter International, Inc. 2.9 2.1 - ---------------------------------------------------- Viacom, Inc., Class B 2.9 2.5 - ---------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/05 12/31/04 - ---------------------------------------------------- Media 16.6 17.8 - ---------------------------------------------------- Retail 15.4 15.5 - ---------------------------------------------------- Diversified Financial Services 11.1 8.2 - ---------------------------------------------------- Beverages 5.3 6.7 - ---------------------------------------------------- Health Care -- Products 4.9 5.9 - ----------------------------------------------------
Portfolio holdings and asset allocations will vary. Notes to Charts /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 1000 Value Index is an unmanaged index of the largest 1,000 U.S. companies within the Russell 3000 with lower price-to-book ratios and lower forecasted growth values. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception performance comparison for Class Y shares is calculated from 11/30/98. /7/Fund performance has been increased by expense waivers, without which performance would have been lower. 8 IXIS U.S. DIVERSIFIED PORTFOLIO PORTFOLIO PROFILE Objective: Seeks long-term growth of capital - -------------------------------------------------------------------------------- Strategy: Features growth and value investments through a diversified portfolio of complementary equity investment disciplines provided by specialized money managers - -------------------------------------------------------------------------------- Inception Date: July 7, 1994 - -------------------------------------------------------------------------------- Subadvisors: Harris Associates, L.P. Loomis, Sayles & Company, L.P. Mercury Advisors - -------------------------------------------------------------------------------- Symbols: Class A NEFSX Class B NESBX Class C NECCX
- -------------------------------------------------------------------------------- What You Should Know: Growth stocks can be more sensitive to market movements because their values are based on future expectations. Value stocks may fall out of favor with investors and underperform the overall market. Small cap stocks carry special risks, including narrower markets, limited financial and management resources, less liquidity and greater volatility. Management Discussion - -------------------------------------------------------------------------------- Faced with rising oil prices and the Federal Reserve Board's efforts to raise interest rates, U.S. stocks made only modest gains during the first half of 2005. For the six months ended June 30, 2005, IXIS U.S. Diversified Portfolio returned -0.37%, based on the net asset value of class A shares, slightly ahead of the -0.81% return on the Standard & Poor's 500 Index. However, the fund's results lagged the 3.85% return on the Standard & Poor's Midcap 400 Index and the 2.19% return on the Wilshire 4500 Index. It also fell short of the 0.05% average return of the funds in Morningstar's Mid-Cap Growth category. The fund's four segments provide exposure to growth and value stocks across the capitalization spectrum. Harris Associates' large-cap value segment favored undervalued mid- to large-cap companies. Loomis Sayles manages two segments. Loomis' mid-cap growth segment focused on companies with a combination of earnings growth, attractive relative value and strong price trends, while their small-cap value segment emphasized companies whose appreciation potential had not been recognized by the market, in the managers' opinion. Mercury Advisors' segment sought large-cap growth stocks offering the potential for above-average earnings growth and return on equity. HARRIS ASSOCIATES' LARGE-CAP VALUE SEGMENT FOCUSED ON INDIVIDUAL STOCKS This segment had a relatively small position in energy, which hurt results during the period, while its media-related stocks, for which Harris Associates sees attractive business prospects, received only lukewarm attention from investors. One of the segment's energy holdings, Burlington Resources, benefited from lower exploration expenses and the rise in the price of oil and natural gas. Consumer products company Fortune Brands advanced on plans to spin-off its office products business and on the potential purchase of several high-quality liquor brands. A new CEO and better-than-expected earnings pushed Hewlett-Packard to a top-performing position. However, weak revenue growth depressed the price of Xerox Corporation stock, although Harris Associates believes the company's strong balance sheet, cash flow, and record of product innovation augur well for the future. Time Warner gave back some of its 2004 gains, depressing the stock, but Harris continues to like the company's stable of assets and strong cash flow. While McDonald's stock slumped toward the end of the period, Harris believes its fundamentals remain attractive. LOOMIS SAYLES' MID-CAP GROWTH SEGMENT BALANCED CYCLICAL AND NON-CYCLICAL AREAS Positives for this segment included producer durables, consumer discretionary, and energy. Among producer durables, stocks of homebuilders rose on strong earnings gains, including Toll Brothers, which builds high-end homes. Specialty retail stocks were leaders, including Chico's FAS, a women's apparel company. Google, the global Internet search company, has been confounding critics with its exceptional earnings growth since its initial offering last year. The segment's large energy position was a positive. However, relatively few of the segment's technology holdings were big contributors during the period, and several financial services selections were weak. Individual stocks that proved disappointing included Harman International, a manufacturer of audio systems for automobiles, which weakened as competition in "infotainment" systems heated up. After a great run in 2004, shares of XM Satellite Radio fell on profit taking. Profit taking and concerns about the sustainability of its extraordinary sales numbers also drove down Starbucks' stock price. Loomis has been gradually moving the segment into less cyclical areas, like healthcare and consumer staples. LOOMIS SAYLES' SMALL-CAP SEGMENT FOCUSED ON QUALITY COMPANIES WITH STRONG CASH FLOWS Utilities, healthcare, and consumer staples were the strongest sectors during the period. The best performers among individual stocks included Triad Hospitals, which advanced on superior operating results; Trammell Crow Company, a real estate management and development company benefiting from the attractive commercial leasing and development environment; and UGI Corporation, a natural gas utility with operations in Europe, aided by the good performance of a 9 IXIS U.S. DIVERSIFIED PORTFOLIO Management Discussion - -------------------------------------------------------------------------------- recent acquisition in France. Weakest contributors during the period included Commercial Capital Bancorp. Loomis sold its holdings in this California-based savings and loan, once a strong performer, when the stock fell as net interest margins declined. Avocent Corporation, which makes switching systems and remote access devices, fell after a disappointing earnings forecast; Loomis trimmed the position but decided to hold the stock after meeting with management. Bluelinx Holdings, a building products distributor, also declined in value but it remains in the segment because of its dividend yield and attractive valuation. MERCURY'S LARGE-CAP GROWTH SEGMENT PURSUED OPPORTUNITIES IN A VARIETY OF SECTORS While certain individual energy stocks contributed to results, the Mercury segment's relatively small position in energy and utilities -- two of the best performing areas of the market -- held back performance. Selections in the financial and consumer staples areas also proved disappointing. Individual holdings that did poorly included Doral Financial, a diversified Puerto Rican financial company whose presence in the segment was brief but harmful; Wynn Resorts, a hotel and casino company in a highly competitive marketplace; and 3M Company, a diversified company with a broad product reach, which was obliged to narrow its full-year earnings estimates. Stock selection in the healthcare, information technology, consumer discretionary, and materials sectors had a positive impact on the segment. The best performers in this segment included Alcon, which makes medical instruments and supplies to treat eye diseases; Gilead Sciences, a biotechnology company; Transocean Inc., an offshore drilling company; and Corning, an information technology firm. 10 IXIS U.S. DIVERSIFIED PORTFOLIO Investment Results through June 30, 2005 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide you with a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] June 30, 1995 through June 30, 2005 Maximum S&P Midcap Net Asset Sales 400 S&P 500 Wilshire 4500 Value/1/ Charge/2/ Index/4/ Index/5/ Index/6/ ---------- ------------ ---------- --------- ------------- 6/30/1995 $10,000 $ 9,425 $10,000 $10,000 $10,000 7/31/1995 10,727 10,110 10,522 10,332 10,588 8/31/1995 10,950 10,320 10,716 10,358 10,835 9/30/1995 11,291 10,641 10,976 10,795 11,128 10/31/1995 11,023 10,389 10,694 10,756 10,830 11/30/1995 11,504 10,842 11,161 11,228 11,290 12/31/1995 11,666 10,995 11,133 11,445 11,433 1/31/1996 11,798 11,119 11,294 11,834 11,550 2/29/1996 12,257 11,552 11,678 11,944 11,926 3/31/1996 12,465 11,748 11,818 12,059 12,108 4/30/1996 13,132 12,377 12,179 12,237 12,671 5/31/1996 13,542 12,763 12,344 12,552 13,078 6/30/1996 13,138 12,383 12,159 12,600 12,667 7/31/1996 12,130 11,433 11,336 12,043 11,716 8/31/1996 12,721 11,990 11,990 12,297 12,349 9/30/1996 13,428 12,656 12,513 12,990 12,938 10/31/1996 13,316 12,550 12,549 13,348 12,746 11/30/1996 13,973 13,170 13,256 14,357 13,284 12/31/1996 13,877 13,079 13,271 14,072 13,404 1/31/1997 14,496 13,662 13,769 14,951 13,837 2/28/1997 14,015 13,209 13,656 15,069 13,545 3/31/1997 13,427 12,655 13,073 14,450 12,838 4/30/1997 13,687 12,900 13,412 15,312 12,870 5/31/1997 14,717 13,871 14,585 16,244 14,150 6/30/1997 15,321 14,440 14,995 16,972 14,821 7/31/1997 16,549 15,598 16,480 18,323 15,841 8/31/1997 16,076 15,152 16,460 17,296 15,985 9/30/1997 16,854 15,885 17,406 18,243 17,093 10/31/1997 16,310 15,372 16,648 17,634 16,441 11/30/1997 16,435 15,490 16,895 18,450 16,446 12/31/1997 16,677 15,718 17,551 18,767 16,849 1/31/1998 16,750 15,787 17,217 18,975 16,608 2/28/1998 17,980 16,946 18,643 20,343 17,879 3/31/1998 18,731 17,654 19,484 21,385 18,803 4/30/1998 18,943 17,854 19,839 21,600 19,042 5/31/1998 18,420 17,361 18,947 21,229 18,153 6/30/1998 19,008 17,915 19,066 22,091 18,436 7/31/1998 18,439 17,379 18,327 21,856 17,392 8/31/1998 15,382 14,498 14,915 18,696 14,022 9/30/1998 16,500 15,552 16,308 19,894 15,034 10/31/1998 17,514 16,506 17,765 21,512 15,888 11/30/1998 18,387 17,330 18,652 22,816 16,876 12/31/1998 19,888 18,744 20,905 24,131 18,304 1/31/1999 20,823 19,625 20,091 25,140 18,599 2/28/1999 20,206 19,044 19,039 24,358 17,587 3/31/1999 21,419 20,187 19,571 25,333 18,273 4/30/1999 22,273 20,993 21,115 26,314 19,729 5/31/1999 21,656 20,411 21,206 25,693 19,558 6/30/1999 23,018 21,695 22,342 27,119 20,379 7/31/1999 22,254 20,975 21,867 26,272 19,762 8/31/1999 22,165 20,891 21,118 26,142 19,269 9/30/1999 22,245 20,966 20,466 25,425 19,121 10/31/1999 23,044 21,719 21,509 27,034 20,098 11/30/1999 25,005 23,567 22,637 27,584 21,794 12/31/1999 29,128 27,453 23,983 29,208 24,798 1/31/2000 28,770 27,115 23,307 27,741 24,500 2/29/2000 32,300 30,442 24,939 27,216 28,310 3/31/2000 31,967 30,129 27,026 29,878 27,262 4/30/2000 29,505 27,809 26,082 28,979 23,983 5/31/2000 27,080 25,523 25,757 28,385 22,213 6/30/2000 27,603 26,016 26,135 29,084 24,881 7/31/2000 26,891 25,344 26,548 28,630 24,174 8/31/2000 28,999 27,331 29,512 30,408 26,872 9/30/2000 28,146 26,528 29,310 28,803 25,778 10/31/2000 26,812 25,270 28,316 28,681 23,672 11/30/2000 23,571 22,215 26,179 26,420 19,643 12/31/2000 24,181 22,791 28,181 26,549 20,886 1/31/2001 24,870 23,440 28,809 27,491 22,023 2/28/2001 22,376 21,089 27,165 24,984 19,347 3/31/2001 20,861 19,661 25,145 23,401 17,573 4/30/2001 22,692 21,388 27,919 25,220 19,432 5/31/2001 22,913 21,595 28,569 25,389 19,893 6/30/2001 22,784 21,474 28,454 24,771 20,054 7/31/2001 22,386 21,098 28,030 24,527 19,121 8/31/2001 21,434 20,202 27,113 22,992 18,192 9/30/2001 19,160 18,058 23,741 21,135 15,852 10/31/2001 19,643 18,513 24,791 21,538 16,683 11/30/2001 21,256 20,033 26,635 23,190 17,979 12/31/2001 21,917 20,656 28,011 23,393 18,943 1/31/2002 21,724 20,475 27,866 23,052 18,574 2/28/2002 21,311 20,086 27,900 22,607 18,048 3/31/2002 22,359 21,074 29,894 23,458 19,272 4/30/2002 21,767 20,515 29,754 22,036 19,083 5/31/2002 21,477 20,242 29,253 21,873 18,661 6/30/2002 19,740 18,605 27,112 20,315 17,383 7/31/2002 18,003 16,968 24,483 18,732 15,691 8/31/2002 18,141 17,098 24,609 18,854 15,782 9/30/2002 16,322 15,383 22,626 16,805 14,719 10/31/2002 17,079 16,097 23,606 18,285 15,203 11/30/2002 18,085 17,045 24,972 19,361 16,254 12/31/2002 17,134 16,149 23,946 18,223 15,569 1/31/2003 16,693 15,734 23,246 17,746 15,233 2/28/2003 16,515 15,565 22,693 17,480 14,845 3/31/2003 16,639 15,682 22,884 17,649 15,064 4/30/2003 17,935 16,904 24,545 19,103 16,319 5/31/2003 19,258 18,151 26,579 20,110 17,869 6/30/2003 19,520 18,398 26,918 20,366 18,295 7/31/2003 20,016 18,865 27,873 20,725 19,149 8/31/2003 20,995 19,788 29,138 21,130 19,951 9/30/2003 20,472 19,295 28,692 20,905 19,704 10/31/2003 21,961 20,698 30,861 22,088 21,196 11/30/2003 22,512 21,217 31,936 22,282 21,920 12/31/2003 22,897 21,580 32,475 23,451 22,376 1/31/2004 23,435 22,087 33,179 23,881 23,177 2/29/2004 23,641 22,282 33,976 24,213 23,583 3/31/2004 23,695 22,333 34,120 23,848 23,682 4/30/2004 23,212 21,877 33,000 23,473 22,730 5/31/2004 23,569 22,214 33,685 23,795 23,076 6/30/2004 24,175 22,785 34,451 24,258 23,678 7/31/2004 22,797 21,486 32,844 23,455 22,359 8/31/2004 22,521 21,226 32,758 23,550 22,368 9/30/2004 23,238 21,901 33,728 23,805 23,281 10/31/2004 23,665 22,304 34,267 24,169 23,804 11/30/2004 24,837 23,408 36,308 25,147 25,423 12/31/2004 25,842 24,356 37,828 26,003 26,532 1/31/2005 25,127 23,682 36,863 25,369 25,661 2/28/2005 25,637 24,163 38,099 25,903 26,126 3/31/2005 25,168 23,720 37,678 25,444 25,663 4/30/2005 24,367 22,966 36,213 24,961 24,796 5/31/2005 25,388 23,928 38,394 25,756 26,266 6/30/2005 25,754 24,275 39,284 25,792 27,112 Average Annual Total Returns -- June 30, 2005
6 MONTHS 1 YEAR 5 YEARS 10 YEARS CLASS A (Inception 7/7/94) Net Asset Value/1/ -0.37% 6.50% -1.38% 9.92% With Maximum Sales Charge/2/ -6.08 0.38 -2.54 9.27 CLASS B (Inception 7/7/94) Net Asset Value/1/ -0.71 5.68 -2.12 9.10 With CDSC/3/ -5.68 0.68 -2.46 9.10 CLASS C (Inception 7/7/94) Net Asset Value/1/ -0.77 5.68 -2.13 9.10 With CDSC/3/ -1.76 4.68 -2.13 9.10 CLASS Y (Inception 11/15/94) Net Asset Value/1/ -0.15 7.03 -0.82 10.41 - ------------------------------------------------------------------------ COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS S&P Midcap 400 Index/4/ 3.85% 14.03% 8.49% 14.66% S&P 500 Index/5/ -0.81 6.32 -2.37 9.94 Wilshire 4500 Index/6/ 2.19 14.50 1.73 10.49 Morningstar Mid-Cap Growth Fund Avg./7/ 0.05 7.75 -4.72 8.56
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to certain institutional investors only. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/05 12/31/04 - ---------------------------------------------------- Common Stocks 99.3 98.3 - ---------------------------------------------------- Short Term Investments and Other 0.7 1.7 - ---------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/05 12/31/04 - ---------------------------------------------------- General Electric Co. 1.3 1.3 - ---------------------------------------------------- Johnson & Johnson 1.3 0.6 - ---------------------------------------------------- Liberty Media Corp., Class A 1.1 1.1 - ---------------------------------------------------- Washington Mutual, Inc. 1.1 1.1 - ---------------------------------------------------- NRG Energy, Inc. 1.1 0.9 - ---------------------------------------------------- McDonald's Corp. 1.1 1.0 - ---------------------------------------------------- Citigroup, Inc. 1.0 0.7 - ---------------------------------------------------- Assurant, Inc. 1.0 0.8 - ---------------------------------------------------- Certegy, Inc. 0.9 0.6 - ---------------------------------------------------- JPMorgan Chase & Co. 0.9 0.8 - ---------------------------------------------------- % of Net Assets as of FIVE LARGEST HOLDINGS 6/30/05 12/31/04 - ---------------------------------------------------- Retail 7.6 7.8 - ---------------------------------------------------- Media 5.5 6.4 - ---------------------------------------------------- Health Care -- Products 5.2 5.4 - ---------------------------------------------------- Diversified Financial Services 4.6 4.1 - ---------------------------------------------------- Software 3.8 5.2 - ----------------------------------------------------
Portfolio holdings and asset allocations will vary. Notes to Charts /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P Midcap 400 Index is an unmanaged index of U.S. mid-sized companies. /5/S&P 500 Index is an unmanaged index of U.S. common stocks. /6/Wilshire 4500 Index is an unmanaged index of 4,500 mid- and small-sized companies. /7/Morningstar Mid-Cap Growth Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. 11 IXIS VALUE FUND PORTFOLIO PROFILE Objective: Seeks a reasonable, long-term investment return from a combination of market appreciation and dividend income from equity securities - -------------------------------------------------------------------------------- Strategy: Features value investments through a diversified portfolio of complementary equity investment disciplines provided by specialized money managers - -------------------------------------------------------------------------------- Inception Date: June 5, 1970 - -------------------------------------------------------------------------------- Subadvisors: Harris Associates, L.P. Loomis, Sayles & Company, L.P. Vaughan Nelson Investment Management, L.P. Westpeak Global Advisors, L.P. - -------------------------------------------------------------------------------- Symbols: Class A NEFVX Class B NEVBX Class C NECVX
- -------------------------------------------------------------------------------- What You Should Know: Value stocks may fall out of favor with investors and underperform the overall market. Small cap stocks carry special risks, including narrower markets, limited financial and management resources, less liquidity and greater volatility. Management Discussion - -------------------------------------------------------------------------------- Mixed economic data, rising oil prices and interest rates, and concerns about the U.S. trade and budget deficits weighed on the market during the first half of 2005. Value stocks narrowly outperformed growth stocks. For the six months ended June 30, 2005, the total return on IXIS Value Fund was 1.52% based on the net asset value of class A shares and $0.24 in reinvested capital gains. Although the fund slightly lagged its benchmark, the Russell 1000 Value Index, which returned 1.76%, its results were above the -0.60% average return for the funds in Morningstar's Large Blend category. The fund's four segments invest primarily in value stocks. Harris Associates focuses on companies with positive cash flows and favorable growth potential that are trading at discounts to their true business value. Loomis Sayles focuses on companies with below-average valuations and above-average earnings prospects. Vaughan Nelson emphasizes established but undervalued companies that they believe should rebound. Westpeak invests across the capitalization spectrum and employs proprietary research to select stocks based on their value and growth potential, while seeking to manage risk. HARRIS ASSOCIATES' MID-CAP VALUE SEGMENT LOOKED FOR THE BASICS The manager's stock-by-stock investment process led to an emphasis on consumer-oriented areas. The segment's exposure to energy, financials, utilities, and materials was less than the benchmark, which impeded relative performance. Media stocks were also weak even though, in the opinion of Harris Associates, many companies have attractive business prospects. Cablevision Systems, Yum! Brands and Baxter International were the top three performers. Cablevision stock rallied on plans to privatize the company. Yum! Brands rose on strong performance from its KFC operations in China. Baxter International, a healthcare company, is a turnaround story. Disappointments included Time Warner, McDonald's, and Liberty Media Corporation. Time Warner gave back some of its 2004 gains on weak revenues from two of its divisions, but Harris Associates believes the stock price does not adequately reflect the company's attractive stable of assets or cash flow. Although slow revenue growth in Europe hurt McDonald's, Harris still likes the company's long-term prospects. Liberty Media gave back some of its impressive 2004 gains. However, Harris believes the media group represents good value. LOOMIS SAYLES' LARGE-CAP SEGMENT SOUGHT VALUE AND WISE USE OF CASH FLOW Loomis Sayles added to each of its top-performing sectors, which included energy and healthcare. The high-yielding utilities sector was strong because of weakness in bond yields. Favored companies were those that deployed cash flow wisely. These included Universal Health Services, which rebounded after forecasting an earnings shortfall, and retailer JC Penney, which benefited from gains in market share. Exxon Mobil Corporation outperformed on good earnings growth. Stocks in telecommunications services, financials, and industrials struggled. The poorest performers included Avaya, Inc., a designer of communications networks, which declined on lackluster sales; Tyco International, which lost ground because of concerns that growth rates for industrials might slow later in 2005; and McDonald's, which experienced disappointing revenue growth in Europe. VAUGHAN NELSON'S LARGE-CAP SEGMENT EMPHASIZED ATTRACTIVE ABSOLUTE RETURNS This segment's positions in information technology, consumer discretionary, energy and consumer staples were among the biggest contributors. Triad Hospitals was one of the segment's top performers, as the company reduced its bad debt expenses. Pioneer Natural Resources, an oil and gas exploration and production company, and Kerr-McGee Corporation, a global energy company, were also among the best performing stocks. Both companies benefited from positive business fundamentals in the energy industry; both were sold during the period because they appeared overvalued. Individual stocks that detracted from results included International Business Machines (IBM), which missed first quarter earnings estimates and was sold from this segment. Regis Corporation, which owns, operates and franchises hair styling salons and schools in the United States and 12 IXIS VALUE FUND Management Discussion - -------------------------------------------------------------------------------- Europe, declined on reports of slowing growth and rising expenses. Regis is raising prices and a reduced position in the stock remains in the segment. This segment sold its shares of American International Group (AIG) when it became the focus of several investigations. WESTPEAK'S ALL-CAP SEGMENT PURSUED ATTRACTIVELY PRICED STOCKS WITH PRICE MOMENTUM This segment did well by focusing on stocks with positive price momentum and relatively low price/earnings ratios. A shift toward smaller companies and away from higher-yielding stocks was also positive. Investments in the construction, real estate, energy reserves, and electronic equipment industries produced good results. The segment's top three performers were Energizer Holdings, an industrial parts company best known for its batteries, Federated Department Stores, and Tesoro Corporation, a refiner of petroleum products. Energizer stock rose when earnings exceeded estimates; Federated made steady gains on improving sales and profits; and Tesoro benefited from rising oil prices. Holdings in the mining and metals industry posted the biggest declines. Disappointing stocks included Steel Dynamics, which declined on weakening demand for steel. International Business Machines (IBM) was hurt by disappointing first-quarter earnings; and NL Industries, a chemical company, slumped along with industrial companies in general. This segment sold its shares of Steel Dynamics and NL Industries, but retained a reduced position in IBM stock. 13 IXIS VALUE FUND Investment Results through June 30, 2005 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide you with a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] June 30, 1995 through June30, 2005 Maximum Russell 1000 Net Asset Sales Value Value/1/ Charge/2/ Index/4/ ---------- ---------- ------------ 6/30/1995 $10,000 $ 9,425 $10,000 7/31/1995 10,324 9,730 10,348 8/31/1995 10,324 9,730 10,494 9/30/1995 10,639 10,027 10,874 10/31/1995 10,379 9,782 10,766 11/30/1995 10,948 10,319 11,311 12/31/1995 11,121 10,482 11,595 1/31/1996 11,501 10,840 11,957 2/29/1996 11,653 10,983 12,047 3/31/1996 11,692 11,019 12,252 4/30/1996 11,831 11,151 12,299 5/31/1996 12,033 11,341 12,453 6/30/1996 12,033 11,341 12,463 7/31/1996 11,641 10,971 11,992 8/31/1996 11,983 11,294 12,335 9/30/1996 12,663 11,934 12,825 10/31/1996 13,055 12,304 13,321 11/30/1996 14,077 13,268 14,287 12/31/1996 14,048 13,240 14,105 1/31/1997 14,399 13,571 14,789 2/28/1997 14,560 13,723 15,006 3/31/1997 14,004 13,199 14,466 4/30/1997 14,267 13,447 15,074 5/31/1997 15,072 14,205 15,916 6/30/1997 15,862 14,950 16,599 7/31/1997 17,061 16,080 17,848 8/31/1997 16,402 15,459 17,212 9/30/1997 17,096 16,113 18,252 10/31/1997 16,359 15,419 17,742 11/30/1997 16,744 15,781 18,527 12/31/1997 16,990 16,013 19,068 1/31/1998 16,956 15,981 18,798 2/28/1998 18,095 17,055 20,063 3/31/1998 18,815 17,734 21,290 4/30/1998 18,799 17,718 21,433 5/31/1998 18,263 17,213 21,115 6/30/1998 18,246 17,197 21,386 7/31/1998 17,626 16,612 21,008 8/31/1998 14,644 13,802 17,882 9/30/1998 15,478 14,588 18,908 10/31/1998 16,777 15,812 20,373 11/30/1998 17,649 16,635 21,322 12/31/1998 18,189 17,144 22,048 1/31/1999 17,720 16,701 22,224 2/28/1999 17,401 16,401 21,910 3/31/1999 17,476 16,471 22,363 4/30/1999 18,829 17,746 24,452 5/31/1999 18,659 17,586 24,183 6/30/1999 19,148 18,047 24,886 7/31/1999 18,284 17,233 24,157 8/31/1999 17,495 16,489 23,260 9/30/1999 16,485 15,537 22,448 10/31/1999 17,291 16,297 23,740 11/30/1999 17,042 16,062 23,554 12/31/1999 16,932 15,958 23,668 1/31/2000 16,408 15,465 22,896 2/29/2000 14,999 14,136 21,195 3/31/2000 16,544 15,592 23,781 4/30/2000 16,499 15,550 23,504 5/31/2000 16,408 15,465 23,752 6/30/2000 16,023 15,101 22,666 7/31/2000 16,068 15,144 22,950 8/31/2000 17,048 16,067 24,227 9/30/2000 16,753 15,790 24,449 10/31/2000 17,207 16,217 25,049 11/30/2000 16,661 15,703 24,120 12/31/2000 17,274 16,281 25,328 1/31/2001 17,820 16,796 25,425 2/28/2001 17,343 16,346 24,718 3/31/2001 16,751 15,788 23,845 4/30/2001 17,797 16,773 25,014 5/31/2001 18,274 17,223 25,576 6/30/2001 17,956 16,923 25,009 7/31/2001 17,796 16,773 24,956 8/31/2001 17,024 16,045 23,956 9/30/2001 15,592 14,695 22,270 10/31/2001 16,069 15,145 22,078 11/30/2001 17,138 16,152 23,362 12/31/2001 17,501 16,495 23,912 1/31/2002 17,251 16,259 23,728 2/28/2002 17,069 16,088 23,766 3/31/2002 17,819 16,794 24,890 4/30/2002 17,274 16,280 24,037 5/31/2002 17,274 16,280 24,157 6/30/2002 15,933 15,017 22,770 7/31/2002 14,547 13,710 20,654 8/31/2002 14,774 13,924 20,809 9/30/2002 12,979 12,233 18,496 10/31/2002 13,820 13,025 19,866 11/30/2002 14,934 14,075 21,117 12/31/2002 14,093 13,283 20,200 1/31/2003 13,752 12,961 19,711 2/28/2003 13,434 12,662 19,186 3/31/2003 13,457 12,683 19,218 4/30/2003 14,707 13,862 20,909 5/31/2003 15,775 14,868 22,259 6/30/2003 16,070 15,146 22,537 7/31/2003 16,252 15,317 22,873 8/31/2003 16,661 15,703 23,229 9/30/2003 16,298 15,361 23,003 10/31/2003 17,367 16,368 24,410 11/30/2003 17,800 16,776 24,741 12/31/2003 18,549 17,482 26,266 1/31/2004 18,753 17,675 26,728 2/29/2004 19,162 18,060 27,301 3/31/2004 19,049 17,953 27,062 4/30/2004 18,753 17,675 26,401 5/31/2004 18,980 17,889 26,670 6/30/2004 19,345 18,232 27,300 7/31/2004 18,776 17,696 26,916 8/31/2004 18,731 17,654 27,298 9/30/2004 18,958 17,868 27,722 10/31/2004 19,208 18,103 28,182 11/30/2004 20,095 18,940 29,607 12/31/2004 20,658 19,470 30,599 1/31/2005 20,356 19,186 30,056 2/28/2005 20,865 19,665 31,052 3/31/2005 20,588 19,404 30,626 4/30/2005 20,124 18,967 30,077 5/31/2005 20,726 19,534 30,801 6/30/2005 20,969 19,759 31,138 Average Annual Total Returns -- June 30, 2005
6 MONTHS 1 YEAR 5 YEARS 10 YEARS CLASS A (Inception 6/5/70) Net Asset Value/1/ 1.52% 8.41% 5.53% 7.69% With Maximum Sales Charge/2/ -4.28 2.17 4.29 7.05 CLASS B (Inception 9/13/93) Net Asset Value/1/ 1.16 7.69 4.75 6.89 With CDSC/3/ -3.75 2.69 4.42 6.89 CLASS C (Inception 12/30/94) Net Asset Value/1/ 1.16 7.69 4.75 6.89 With CDSC/3/ 0.18 6.69 4.75 6.89 - --------------------------------------------------------------------- COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS Russell 1000 Value Index/4/ 1.76% 14.06% 6.56% 12.03% Morningstar Large Blend Fund Avg./5/ -0.60 6.35 -1.79 8.61
All results represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/05 12/31/04 - -------------------------------------------------------- Common Stocks 96.6 96.9 - -------------------------------------------------------- Short Term Investments and Other 3.4 3.1 - -------------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/05 12/31/04 - -------------------------------------------------------- Exxon Mobil Corp. 3.1 2.4 - -------------------------------------------------------- JPMorgan Chase & Co. 2.5 2.5 - -------------------------------------------------------- McDonald's Corp. 2.2 2.5 - -------------------------------------------------------- Time Warner, Inc. 2.1 2.5 - -------------------------------------------------------- Citigroup, Inc. 2.1 1.8 - -------------------------------------------------------- Baxter International, Inc. 1.9 1.9 - -------------------------------------------------------- Waste Management, Inc. 1.9 2.0 - -------------------------------------------------------- Coca-Cola Co. (The) 1.8 0.5 - -------------------------------------------------------- Cablevision Systems Corp., Class A 1.8 1.3 - -------------------------------------------------------- Cendant Corp. 1.7 1.9 - -------------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/05 12/31/04 - -------------------------------------------------------- Retail 10.4 11.3 - -------------------------------------------------------- Diversified Financial Services 8.6 9.1 - -------------------------------------------------------- Media 7.8 7.6 - -------------------------------------------------------- Oil & Gas 7.5 6.5 - -------------------------------------------------------- Banks 5.1 6.2 - --------------------------------------------------------
Portfolio holdings and asset allocations will vary. Notes to Charts /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 1000 Value Index is an unmanaged index of the 1,000 largest U.S. companies within the Russell 3000 Index with lower price-to-book ratios and lower forecasted growth values. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. 14 VAUGHAN NELSON SMALL CAP VALUE FUND PORTFOLIO PROFILE Objective: Seeks capital appreciation - -------------------------------------------------------------------------------- Strategy: Invests in small-cap companies with a focus on absolute return using a bottom up value oriented investment process - -------------------------------------------------------------------------------- Inception Date: December 31, 1996 - -------------------------------------------------------------------------------- Managers: Mark J. Roach Chris D. Wallis Scott J. Weber - -------------------------------------------------------------------------------- Symbols: Class A NEFJX Class B NEJBX Class C NEJCX
- -------------------------------------------------------------------------------- You Should Know: Investing in small cap stocks carries special risk, including narrower markets, limited financial and management resources, less liquidity and greater volatility than large company stocks. Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion - -------------------------------------------------------------------------------- Although small-cap stocks continued to do relatively well in the first half of 2005, the market made little net progress. Vaughan Nelson Small Cap Value Fund provided a total return of 2.99% for the first half of 2005, based on the net asset value of class A shares. The fund outperformed both its benchmark, the Russell 2000 Value Index, which returned 0.90% for the period, and the 0.96% average return on the funds in Morningstar's Small Value category. FUND'S TOP PERFORMERS WERE IN A VARIETY OF INDUSTRIES Although rising oil prices put the energy sector in the lead, the fund's best performers have come from various sectors. Healthcare Services Group, which provides management and housekeeping services to nursing homes, was one of the fund's largest holdings and had the greatest impact on the fund's positive results year to date. We still like the company, but we have begun to take profits in the stock. The best-performing stock during the period was Southwestern Energy Company. This gas and oil company's operations include exploration, production, marketing, and transportation, primarily in the southwestern United States. Its operations are expanding and we do not expect energy prices to retreat. Another positive contributor among the fund's energy holdings was Oil State International, which provides specialty products and services to oil and gas companies both on and offshore. It is benefiting from increases in drilling activity and we believe the stock is still reasonably priced. Another company that has done well this year is CB Richards Ellis Group, a commercial real estate broker. The company's global exposure allows it to benefit from activity around the world. We continue to like the stock. We have begun to take profits on another good performer, Gold Kist -- a small, profitable company that processes chickens. INDUSTRIAL AND RETAIL SECTORS WERE WEAK The fund's positives were stronger than its negatives during the period. Disappointments included K2 Inc, a retailer of sporting goods equipment that trimmed its earnings forecasts earlier this year. Since we believe the company's longer-term outlook is strong, we have used the price weakness to add to the fund's holdings in K2. The fund's industrial stocks retraced some of their gains from previous periods, including Briggs & Stratton Corporation, which designs and makes gasoline engines, small generators and pressure washing equipment, and Monaco Coach Corporation, which makes recreational vehicles. Consolidated Graphics, a commercial printer, also did some backtracking, but all three names remain in the portfolio. However, we sold all of the fund's steel and aluminum holdings on weakness during the period, taking profits on several positions. FUND HOLDS RELATIVELY FEW REITS OR REGIONAL SAVINGS BANKS We have chosen to underweight REITs (real estate investment trusts) and regional savings banks because we felt their valuations were too high relative to our growth expectations. This decision has cut into the fund's performance results during the past few years. However, the relatively few financial stocks in the portfolio have done well. In general, we look for companies we believe are both reasonably valued and likely to grow, and these are not easy to find. We have actually reduced the number of holdings in the portfolio, narrowing its focus but not its sector concentration. During the down market in May, we took advantage of low prices to build up the fund's energy holdings, but there were no other major changes in the past six months. OUTLOOK FOR 2005 IS FOR MODEST GAINS We believe the Federal Reserve Board may be almost ready to pause in its rate-tightening program, and that oil prices are now at the higher end of their range for the next few months. If this proves to be the case, we expect to see stocks end 2005 in positive territory, although we don't anticipate major gains this year. 15 VAUGHAN NELSON SMALL CAP VALUE FUND Investment Results through June 30, 2005 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide you with a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] December 31, 1996 (inception) through June 30, 2005 Maximum Russell 2000 Net Asset Sales Value Value/1/ Charge/2/ Index/4/ ---------- ---------- ------------ 12/31/1996 $10,000 $ 9,425 $10,000 1/31/1997 10,192 9,606 10,154 2/28/1997 9,920 9,349 10,250 3/31/1997 9,351 8,814 9,975 4/30/1997 9,264 8,731 10,122 5/31/1997 10,447 9,847 10,928 6/30/1997 11,040 10,405 11,481 7/31/1997 11,784 11,106 11,963 8/31/1997 12,104 11,408 12,153 9/30/1997 13,160 12,403 12,961 10/31/1997 12,672 11,943 12,608 11/30/1997 12,375 11,664 12,746 12/31/1997 12,696 11,966 13,178 1/31/1998 12,340 11,631 12,940 2/28/1998 13,348 12,581 13,722 3/31/1998 14,125 13,313 14,279 4/30/1998 13,994 13,189 14,349 5/31/1998 13,135 12,379 13,841 6/30/1998 13,341 12,574 13,763 7/31/1998 12,300 11,593 12,685 8/31/1998 9,624 9,070 10,699 9/30/1998 10,294 9,702 11,303 10/31/1998 10,749 10,131 11,638 11/30/1998 11,758 11,082 11,953 12/31/1998 12,957 12,212 12,328 1/31/1999 13,231 12,470 12,048 2/28/1999 12,122 11,425 11,226 3/31/1999 12,957 12,212 11,133 4/30/1999 13,934 13,133 12,150 5/31/1999 13,818 13,024 12,523 6/30/1999 14,968 14,107 12,976 7/31/1999 14,785 13,935 12,668 8/31/1999 14,654 13,811 12,205 9/30/1999 15,061 14,195 11,961 10/31/1999 16,203 15,271 11,722 11/30/1999 18,066 17,027 11,783 12/31/1999 21,430 20,198 12,145 1/31/2000 21,402 20,172 11,827 2/29/2000 26,682 25,148 12,550 3/31/2000 25,666 24,190 12,609 4/30/2000 22,655 21,352 12,684 5/31/2000 20,815 19,619 12,490 6/30/2000 22,508 21,213 12,855 7/31/2000 20,925 19,722 13,283 8/31/2000 23,526 22,174 13,877 9/30/2000 22,776 21,466 13,799 10/31/2000 20,858 19,659 13,750 11/30/2000 17,223 16,232 13,470 12/31/2000 18,811 17,729 14,917 1/31/2001 19,631 18,502 15,329 2/28/2001 17,102 16,119 15,307 3/31/2001 15,472 14,583 15,062 4/30/2001 17,023 16,044 15,759 5/31/2001 17,375 16,376 16,164 6/30/2001 17,968 16,934 16,815 7/31/2001 16,737 15,774 16,438 8/31/2001 15,711 14,807 16,381 9/30/2001 13,216 12,456 14,572 10/31/2001 14,116 13,304 14,953 11/30/2001 15,358 14,475 16,028 12/31/2001 16,544 15,593 17,009 1/31/2002 16,157 15,228 17,235 2/28/2002 14,869 14,014 17,340 3/31/2002 16,191 15,260 18,638 4/30/2002 15,815 14,906 19,294 5/31/2002 15,051 14,186 18,656 6/30/2002 14,049 13,241 18,243 7/31/2002 11,929 11,243 15,533 8/31/2002 11,917 11,232 15,463 9/30/2002 10,823 10,201 14,359 10/31/2002 11,382 10,727 14,575 11/30/2002 12,259 11,554 15,738 12/31/2002 11,450 10,792 15,066 1/31/2003 10,812 10,190 14,641 2/28/2003 10,436 9,836 14,149 3/31/2003 10,459 9,857 14,300 4/30/2003 11,462 10,803 15,659 5/31/2003 12,636 11,909 17,257 6/30/2003 13,114 12,360 17,550 7/31/2003 13,970 13,166 18,425 8/31/2003 14,688 13,843 19,125 9/30/2003 14,254 13,435 18,906 10/31/2003 15,279 14,401 20,447 11/30/2003 15,724 14,820 21,232 12/31/2003 15,883 14,969 22,000 1/31/2004 16,497 15,549 22,761 2/29/2004 16,407 15,463 23,201 3/31/2004 16,441 15,496 23,522 4/30/2004 15,734 14,829 22,306 5/31/2004 15,791 14,883 22,575 6/30/2004 16,610 15,655 23,721 7/31/2004 15,893 14,979 22,631 8/31/2004 15,734 14,829 22,853 9/30/2004 16,292 15,355 23,757 10/31/2004 16,520 15,570 24,126 11/30/2004 17,774 16,752 26,267 12/31/2004 18,309 17,256 26,894 1/31/2005 17,762 16,740 25,853 2/28/2005 18,343 17,288 26,367 3/31/2005 18,080 17,041 25,824 4/30/2005 17,214 16,224 24,492 5/31/2005 18,125 17,083 25,986 6/30/2005 18,856 17,775 27,135 Average Annual Total Returns -- June 30, 2005
SINCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION CLASS A (Inception 12/31/96) Net Asset Value/1/ 2.99% 13.51% -3.48% 7.75% With Maximum Sales Charge/2/ -2.93 6.98 -4.62 7.01 CLASS B (Inception 12/31/96) Net Asset Value/1/ 2.60 12.61 -4.21 6.94 With CDSC/3/ -2.40 7.61 -4.52 6.94 CLASS C (Inception 12/31/96) Net Asset Value/1/ 2.60 12.60 -4.19 6.95 With CDSC/3/ 1.60 11.60 -4.19 6.95 - ---------------------------------------------------------------------- SINCE COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION Russell 2000 Value Index/4/ 0.90% 14.39% 16.12% 12.46% Morningstar Small Value Fund Avg./5/ 0.96 12.85 14.96 11.67
All results represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/05 12/31/04 - ----------------------------------------------------------- Common Stocks 98.9 98.6 - ----------------------------------------------------------- Short Term Investments and Other 1.1 1.4 - ----------------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/05 12/31/04 - ----------------------------------------------------------- iShares Russell 2000 Value Index Fund 3.5 3.7 - ----------------------------------------------------------- HCC Insurance Holdings, Inc. 2.5 1.8 - ----------------------------------------------------------- DRS Technologies, Inc. 2.3 2.2 - ----------------------------------------------------------- Triad Hospitals, Inc. 2.3 1.8 - ----------------------------------------------------------- Ashford Hospitality Trust, Inc. 2.3 1.9 - ----------------------------------------------------------- Raymond James Financial, Inc. 2.2 2.0 - ----------------------------------------------------------- Jacuzzi Brands, Inc. 2.1 1.4 - ----------------------------------------------------------- Genesee & Wyoming, Inc., Class A 2.1 1.6 - ----------------------------------------------------------- Oil States International, Inc. 2.1 1.3 - ----------------------------------------------------------- Comstock Resources, Inc. 2.0 1.7 - ----------------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/05 12/31/04 - ----------------------------------------------------------- Oil & Gas 8.7 3.2 - ----------------------------------------------------------- Retail 7.1 7.5 - ----------------------------------------------------------- Commercial Services 7.1 7.9 - ----------------------------------------------------------- Aerospace & Defense 6.3 5.7 - ----------------------------------------------------------- Banks 6.1 8.2 - -----------------------------------------------------------
Portfolio holdings and asset allocations will vary. Notes to Charts /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/The Russell 2000 Value Index is an unmanaged index that measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. /5/Morningstar Small Value Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. 16 WESTPEAK CAPITAL GROWTH FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital - -------------------------------------------------------------------------------- Strategy: Invests primarily in common stocks of large- and mid-cap companies in any industry - -------------------------------------------------------------------------------- Inception Date: August 3, 1992 - -------------------------------------------------------------------------------- Manager: Westpeak Global Advisors, L.P. Team Management - -------------------------------------------------------------------------------- Symbols: Class A NEFCX Class B NECBX Class C NECGX
- -------------------------------------------------------------------------------- You Should Know: Growth stocks can be more sensitive to market movements because their prices are based in part on future expectations. Management Discussion - -------------------------------------------------------------------------------- Rising oil prices pumped up the energy sector during the first half of 2005, but in other respects the market lacked a clear direction. For the six months ended June 30, 2005, the total return on class A shares of Westpeak Capital Growth Fund was -0.53% at net asset value -- better results than its benchmark, the Russell 1000 Growth Index, which returned -1.72% for the period, and the -1.78% average return on the funds in Morningstar's Large Growth category. ENERGY STOCKS LED THE MARKET As oil prices reached $60 a barrel, stock prices of most energy and energy-related companies rose during the past six months. Even though energy is not a traditional focus for growth-oriented mutual funds, this fund's diversified portfolio includes energy stocks, and Southwestern Energy was the best-performing stock in the portfolio. Utility stocks also did well, but higher-yielding stocks that are generally regarded as defensive did not do as well as might have been expected during this uncertain market period. Although value stocks performed slightly better than growth stocks for the first half of the year, neither strategy was dominant. FUND'S TECHNOLOGY HOLDINGS WERE MIXED The fund began 2005 with a relatively large exposure to technology. We reduced this position early in the year, although late in the period we began building the position back up again. In general, we focus on what we consider reasonable valuations among high-quality stocks of companies that appear able to deliver sustainable earnings growth. Our core holdings include International Business Machines (IBM), Best Buy, and Intel -- companies we regarded as more stable than others in their respective industries. A world leader in business and information technology, IBM dipped sharply in April, although it has begun to recover. We have also been reducing the fund's holdings in Microsoft, which has been in the portfolio for some time. After lingering in the first quarter, chip-maker Intel staged a brisk recovery in the second quarter, as did Cisco Systems, to a lesser extent. Best Buy -- a leading retailer of consumer electronics -- has been a strong performer for the fund and is now one of our larger holdings. Travelzoo, which provides online marketing services to the travel industry, was a major success story in 2004, but the price of the stock reversed sharply early in the year and we sold the position in January. Even though the fund realized a profit on the sale of Travelzoo, the sharp decline in the stock's value in January had a negative effect on the fund's performance year-to-date. We also sold off Taser International early in the year, as negative news stories about the potential dangers of the non-lethal weapons the company makes sent the price of the stock into a swift decline during the first two weeks of the year. Even though we got out well before the low, the net effect on fund performance was negative. ENERGIZER AND AMERISOURCEBERGEN WERE POSITIVES In addition to Best Buy and Southwestern Energy, the fund's top performers included Energizer Holdings, an industrial parts company best known for its Energizer batteries, and AmerisourceBergen Corporation, a wholesaler and distributor of pharmaceuticals. Both of these stocks are among the fund's larger holdings. MANAGER SEEKS VALUE PLUS PRICE MOMENTUM We continue to focus on stocks that appear to be reasonably valued, maintaining our emphasis on stocks with low price/earnings ratios, as well as on stocks with strong recent price performance. We also favor shares of companies in the smaller-cap range of the fund's mid- and large-cap universe, as they currently appear to have some advantage over shares of larger companies, while always keeping in mind the importance we place on diversification and risk control. Our current industry emphasis is on consumer staples, interest sensitive, and energy-related companies, while limiting the fund's exposure to the basic industry and consumer discretionary sectors. 17 WESTPEAK CAPITAL GROWTH FUND Investment Results through June 30, 2005 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide you with a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. it is not possible to invest directly in an index. investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] June 30, 1995 through June 30, 2005 Maximum Net Asset Sales Russell 1000 Value/1/ Charge/2/ Growth Index/4/ ---------- ---------- --------------- 6/30/1995 $10,000 $ 9,425 $10,000 7/31/1995 10,448 9,847 10,416 8/31/1995 10,636 10,024 10,427 9/30/1995 10,996 10,363 10,908 10/31/1995 10,821 10,199 10,915 11/30/1995 11,084 10,446 11,339 12/31/1995 10,852 10,228 11,404 1/31/1996 11,053 10,417 11,786 2/29/1996 11,341 10,689 12,001 3/31/1996 11,235 10,589 12,017 4/30/1996 11,794 11,116 12,333 5/31/1996 12,148 11,449 12,764 6/30/1996 11,983 11,294 12,781 7/31/1996 11,157 10,516 12,032 8/31/1996 11,581 10,915 12,343 9/30/1996 12,542 11,821 13,242 10/31/1996 12,536 11,815 13,322 11/30/1996 13,160 12,404 14,322 12/31/1996 12,700 11,970 14,041 1/31/1997 13,419 12,647 15,026 2/28/1997 13,050 12,299 14,924 3/31/1997 12,075 11,380 14,117 4/30/1997 12,595 11,871 15,054 5/31/1997 13,702 12,914 16,141 6/30/1997 14,085 13,275 16,787 7/31/1997 15,073 14,207 18,271 8/31/1997 14,381 13,555 17,202 9/30/1997 14,816 13,964 18,048 10/31/1997 14,217 13,400 17,381 11/30/1997 14,590 13,751 18,119 12/31/1997 14,889 14,033 18,322 1/31/1998 15,008 14,145 18,870 2/28/1998 16,037 15,115 20,290 3/31/1998 16,754 15,791 21,099 4/30/1998 17,053 16,072 21,391 5/31/1998 16,642 15,685 20,784 6/30/1998 17,507 16,500 22,057 7/31/1998 17,342 16,345 21,911 8/31/1998 14,588 13,750 18,622 9/30/1998 15,464 14,575 20,053 10/31/1998 16,594 15,640 21,664 11/30/1998 17,590 16,578 23,312 12/31/1998 19,215 18,110 25,414 1/31/1999 20,182 19,021 26,907 2/28/1999 19,047 17,952 25,678 3/31/1999 19,466 18,347 27,030 4/30/1999 19,848 18,707 27,064 5/31/1999 19,485 18,364 26,233 6/30/1999 20,517 19,338 28,070 7/31/1999 20,062 18,908 27,178 8/31/1999 20,238 19,075 27,622 9/30/1999 19,943 18,796 27,042 10/31/1999 21,333 20,106 29,084 11/30/1999 21,967 20,704 30,653 12/31/1999 23,970 22,592 33,841 1/31/2000 22,618 21,318 32,255 2/29/2000 23,561 22,206 33,831 3/31/2000 25,449 23,985 36,253 4/30/2000 24,693 23,273 34,528 5/31/2000 23,540 22,186 32,789 6/30/2000 25,091 23,648 35,274 7/31/2000 24,441 23,036 33,804 8/31/2000 26,352 24,837 36,864 9/30/2000 23,917 22,542 33,377 10/31/2000 23,087 21,760 31,798 11/30/2000 19,973 18,824 27,111 12/31/2000 19,288 18,179 26,253 1/31/2001 20,212 19,050 28,066 2/28/2001 17,467 16,463 23,302 3/31/2001 15,837 14,927 20,766 4/30/2001 17,978 16,945 23,392 5/31/2001 17,774 16,752 23,048 6/30/2001 17,496 16,490 22,514 7/31/2001 16,572 15,620 21,952 8/31/2001 15,238 14,362 20,156 9/30/2001 13,673 12,887 18,144 10/31/2001 14,302 13,480 19,096 11/30/2001 15,547 14,653 20,930 12/31/2001 15,341 14,459 20,891 1/31/2002 15,277 14,399 20,522 2/28/2002 14,724 13,877 19,670 3/31/2002 15,226 14,351 20,351 4/30/2002 14,378 13,551 18,690 5/31/2002 14,069 13,260 18,238 6/30/2002 12,911 12,169 16,551 7/31/2002 11,908 11,223 15,641 8/31/2002 11,921 11,235 15,687 9/30/2002 10,661 10,048 14,060 10/31/2002 11,433 10,775 15,350 11/30/2002 11,805 11,127 16,184 12/31/2002 11,033 10,399 15,066 1/31/2003 10,751 10,133 14,700 2/28/2003 10,802 10,181 14,633 3/31/2003 11,021 10,387 14,905 4/30/2003 11,663 10,993 16,007 5/31/2003 12,306 11,598 16,806 6/30/2003 12,422 11,707 17,037 7/31/2003 12,589 11,865 17,461 8/31/2003 12,744 12,011 17,896 9/30/2003 12,795 12,059 17,704 10/31/2003 13,412 12,641 18,699 11/30/2003 13,566 12,786 18,894 12/31/2003 13,977 13,173 19,548 1/31/2004 14,183 13,367 19,947 2/29/2004 14,183 13,367 20,074 3/31/2004 13,926 13,125 19,701 4/30/2004 13,617 12,834 19,472 5/31/2004 13,860 13,063 19,835 6/30/2004 14,041 13,233 20,083 7/31/2004 13,398 12,627 18,948 8/31/2004 13,384 12,615 18,854 9/30/2004 13,462 12,688 19,033 10/31/2004 13,770 12,978 19,330 11/30/2004 14,285 13,464 19,995 12/31/2004 14,696 13,851 20,779 1/31/2005 14,272 13,451 20,086 2/28/2005 14,387 13,560 20,300 3/31/2005 14,002 13,197 19,930 4/30/2005 13,694 12,906 19,551 5/31/2005 14,440 13,610 20,497 6/30/2005 14,625 13,787 20,421 Average Annual Total Returns -- June 30, 2005
6 MONTHS 1 YEAR 5 YEARS 10 YEARS CLASS A (Inception 8/3/92) Net Asset Value/1/ -0.53% 4.12% -10.24% 3.87% With Maximum Sales Charge/2/ -6.27 -1.90 -11.29 3.26 CLASS B (Inception 9/13/93) Net Asset Value/1/ -1.01 3.25 -10.91 3.05 With CDSC/3/ -5.96 -1.75 -11.20 3.05 CLASS C (Inception 12/30/94) Net Asset Value/1/ -1.01 3.26 -10.98 3.03 With CDSC/3/ -2.00 2.26 -10.98 3.03 - ---------------------------------------------------------------------- COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS Russell 1000 Growth Index/4/ -1.72% 1.68% -10.36% 7.40% Morningstar Large Growth Fund Avg./5/ -1.78 3.24 -8.27 7.37
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/05 12/30/04 - ----------------------------------------------------------- Common Stocks 99.1 98.4 - ----------------------------------------------------------- Short Term Investments and Other 0.9 1.6 - ----------------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/05 12/31/04 - ----------------------------------------------------------- Johnson & Johnson 5.2 2.4 - ----------------------------------------------------------- Intel Corp. 4.8 4.7 - ----------------------------------------------------------- Microsoft Corp. 4.3 5.3 - ----------------------------------------------------------- Cisco Systems, Inc. 4.2 4.3 - ----------------------------------------------------------- Pfizer, Inc. 3.9 3.6 - ----------------------------------------------------------- Home Depot, Inc. 3.3 3.6 - ----------------------------------------------------------- UnitedHealth Group, Inc. 3.2 1.3 - ----------------------------------------------------------- Oracle Corp. 2.8 6.7 - ----------------------------------------------------------- International Business Machines Corp. 2.8 4.0 - ----------------------------------------------------------- Target Corp. 2.8 -- - ----------------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/05 12/31/04 - ----------------------------------------------------------- Pharmaceuticals 11.5 6.8 - ----------------------------------------------------------- Retail 10.7 8.0 - ----------------------------------------------------------- Health Care -- Products 9.4 5.4 - ----------------------------------------------------------- Software 8.1 9.3 - ----------------------------------------------------------- Health Care -- Services 5.7 2.4 - -----------------------------------------------------------
Portfolio holdings and asset allocations will vary. Notes to Charts /1/Does not include a sales charge. /2/Includes maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 1000 Growth Index is an unmanaged index of the 1,000 largest U.S. companies within the Russell 3000 Index with higher price-to-book ratios and higher forecasted growth values. /5/Morningstar Large Growth Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. 18 ADDITIONAL INFORMATION The views expressed in this report reflect those of the portfolio managers as of the dates indicated. The managers' views are subject to change at any time without notice based on changes in market or other conditions. References to specific securities or industries should not be regarded as investment advice. Because the funds are actively managed, there is no assurance that they will continue to invest in the securities or industries mentioned. For more complete information on any IXIS Advisor Fund, contact your financial professional or call IXIS Advisor Funds and ask for a free prospectus, which contains more complete information, including charges and other ongoing expenses. Investors should consider a fund's objective, risks and expenses carefully before investing. This and other fund information can be found in the prospectus. Please read the prospectus carefully before investing. PROXY VOTING INFORMATION A description of the funds' proxy voting policies and procedures is available without charge, upon request, by calling IXIS Advisor Funds at 800-225-5478; on the funds' website at www.ixisadvisorfunds.com; and on the Securities and Exchange Commission's website at www.sec.gov. Information regarding how the funds voted proxies relating to portfolio securities during the 12-month period ended June 30, 2005 is available from the funds' website and the SEC's website. QUARTERLY PORTFOLIO SCHEDULES The funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE 19 UNDERSTANDING YOUR FUND'S EXPENSES As a mutual fund shareholder, you incur different costs: transaction costs, including sales charges (loads) on purchases, redemption fees and certain exchange fees and ongoing costs, including management fees, distribution fees (12b-1 fees), and other fund expenses. In addition, each fund assesses a minimum balance fee of $20 on an annual basis for accounts that fall below the required minimum to establish an account. Certain exemptions may apply. These costs are described in more detail in the funds' prospectus. The examples below are intended to help you understand the ongoing costs of investing in the funds and help you compare these with the ongoing costs of investing in other mutual funds. The first line in the table of each Class of fund shares shows the actual account values and actual fund expenses you would have paid on a $1,000 investment in the fund from January 1, 2005 through June 30, 2005. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual fund returns and expenses. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example $8,600 account value divided by $1,000 = $8.60) and multiply the result by the number in the Expenses Paid During Period column as shown below for your Class. The second line in the table of each Class of fund shares provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid on your investment for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown reflect ongoing costs only, and do not include any transaction costs, such as sales charges, redemption fees or exchange fees. Therefore, the second line in the table of each fund is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. If transaction costs were included, total costs would be higher.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* CGM ADVISOR TARGETED EQUITY FUND 1/1/05 6/30/05 1/1/05 - 6/30/05 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,033.40 $6.55 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.30 $6.51 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,031.00 $10.32 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.60 $10.24 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,029.90 $10.32 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.60 $10.24 - ------------------------------------------------------------------------------------------------------------------ CLASS Y - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,036.00 $5.50 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.40 $5.46
*Expenses are equal to the fund's annualized expense ratio: 1.30%, 2.05%, 2.05%, 1.09% for Class A, B, C and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 20 UNDERSTANDING YOUR FUND'S EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HANSBERGER INTERNATIONAL FUND 1/1/05 6/30/05 1/1/05 - 6/30/05 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $994.20 $8.90 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,015.90 $9.00 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $990.50 $12.59 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.72 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $989.90 $12.58 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.72
*Expenses are equal to the fund's annualized expense ratio: 1.80%, 2.55%, and 2.55% for Class A, B, and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HARRIS ASSOCIATES FOCUSED VALUE FUND 1/1/05 6/30/05 1/1/05 - 6/30/05 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,027.60 $8.35 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.60 $8.30 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,024.40 $12.10 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,012.80 $12.03 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,024.40 $12.10 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,012.80 $12.03
*Expenses are equal to the fund's annualized expense ratio: 1.66%, 2.41%, and 2.41% for Class A, B, and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 21 UNDERSTANDING YOUR FUND'S EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HARRIS ASSOCIATES LARGE CAP VALUE FUND 1/1/05 6/30/05 1/1/05 - 6/30/05 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $961.40 $6.32 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.30 $6.51 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $957.60 $9.95 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.60 $10.24 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $958.30 $9.95 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.60 $10.24 - ------------------------------------------------------------------------------------------------------------------ CLASS Y - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $962.50 $5.06 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.70 $5.21
*Expenses are equal to the fund's annualized expense ratio: 1.43%, 2.18%, 2.18% and 1.04% for Class A, B, C and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* IXIS U.S. DIVERSIFIED PORTFOLIO 1/1/05 6/30/05 1/1/05 - 6/30/05 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $996.30 $9.01 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,015.80 $9.10 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $992.90 $12.70 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.82 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $992.30 $12.70 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,012.10 $12.82 - ------------------------------------------------------------------------------------------------------------------ CLASS Y - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $998.50 $6.84 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.00 $6.90
*Expenses are equal to the fund's annualized expense ratio: 1.82%, 2.57%, 2.57% and 1.38% for Class A, B, C and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 22 UNDERSTANDING YOUR FUND'S EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* IXIS VALUE FUND 1/1/05 6/30/05 1/1/05 - 6/30/05 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,015.20 $7.89 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,017.00 $7.90 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,011.60 $11.62 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,013.20 $11.63 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,011.60 $11.62 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,013.20 $11.68
*Expenses are equal to the fund's annualized expense ratio: 1.58%, 2.33%, and 2.33% for Class A, B, and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* VAUGHAN NELSON SMALL CAP VALUE FUND 1/1/05 6/30/05 1/1/05 - 6/30/05 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,029.90 $9.97 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,015.00 $9.89 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,026.00 $13.71 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,011.30 $13.61 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $1,026.00 $13.71 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,011.30 $13.61
*Expenses are equal to the fund's annualized expense ratio: 1.98%, 2.73%, and 2.73% for Class A, B, and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 23 UNDERSTANDING YOUR FUND'S EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* WESTPEAK CAPITAL GROWTH FUND 1/1/05 6/30/05 1/1/05 - 6/30/05 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $994.70 $9.45 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,015.30 $9.54 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $989.90 $13.12 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,011.60 $13.27 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000 $989.90 $13.12 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,011.60 $13.27
*Expenses are equal to the fund's annualized expense ratio: 1.91%, 2.66%, and 2.66% for Class A, B, and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 24 BOARD APPROVAL OF MANAGEMENT CONTRACTS The Board of Trustees, including the Independent Trustees, considers matters bearing on each Fund's advisory and sub-advisory agreements (collectively, the "Agreements") at most of its meetings throughout the year. Once a year, usually in the spring, the Contract Review and Governance Committee of the Board meets to review the Agreements to determine whether to recommend that the full Board approve the continuation of the Agreements for an additional one-year period. After the Committee has made its recommendation, the full Board, including the Independent Trustees, determines whether to approve the continuation of the Agreements. In connection with these meetings, the Trustees receive materials that the Funds' investment advisers believe to be reasonably necessary for the Trustees to evaluate the Agreements. These materials generally include, among other items, (i) information on the investment performance of the Funds and the performance of peer groups of funds and the Funds' performance benchmarks, (ii) information on the Funds' advisory and sub-advisory fees and other expenses, including information comparing the Funds' expenses to those of peer groups of funds and information about any applicable expense caps and fee "breakpoints," (iii) sales and redemption data in respect of the Funds, (iv) information about the profitability of the Agreements to the Funds' advisers and sub-advisers (collectively, the "Advisers"), and (v) information obtained through the completion of a questionnaire by the Advisers (the Trustees are consulted as to the information requested through that questionnaire). The Board of Trustees, including the Independent Trustees, may also consider other material facts such as (i) each Adviser's financial results and financial condition, (ii) each Fund's investment objective and strategies and the size, education and experience of the Advisers' respective investment staffs and their use of technology, external research and trading cost measurement tools, (iii) arrangements in respect of the distribution of the Funds' shares, (iv) the procedures employed to determine the value of the Funds' assets, (v) the allocation of the Funds' securities transactions, including allocations to brokers affiliated with the Advisers and the use of "soft" commission dollars to pay Fund expenses and to pay for research and other similar services, (vi) the resources devoted to, and the record of compliance with, the Funds' investment policies and restrictions, policies on personal securities transactions and other compliance policies, and (vii) the general economic outlook with particular emphasis on the mutual fund industry. Throughout the process, the Trustees are afforded the opportunity to ask questions of and request additional materials from the Advisers. The Board of Trustees most recently approved the continuation of the Agreements at their meeting held in May, 2005. In considering whether to approve the continuation of the Agreements, the Board of Trustees, including the Independent Trustees, did not identify any single factor as determinative. Matters considered by the Trustees, including the Independent Trustees, in connection with their approval of the Agreements included the following: The nature, extent and quality of the services provided to the Funds under the Agreements. The Trustees considered the nature, extent and quality of the services provided by the Advisers and their affiliates to the Funds and the resources dedicated to the Funds by the Advisers and their affiliates. The Trustees considered not only the advisory services provided by the Advisers to the Funds, but also the monitoring and oversight services provided by IXIS Advisors with respect to sub-advised Funds. For each Fund, the Trustees also considered the benefits to shareholders of investing in a mutual fund that is part of a family of funds offering a variety of investment disciplines and providing for a variety of fund and shareholder services. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the nature, extent and quality of services provided supported the renewal of the Agreements. Investment performance of the Funds and the Advisers. As noted above, the Trustees received information about the performance of the Funds over various time periods, including information which compared the performance of the Funds to the performance of peer groups of funds and the Funds' respective performance benchmarks. In addition, the Trustees also reviewed data prepared by an independent third party which analyzed the performance of the Funds using a variety of performance metrics, including metrics which also measured the performance of the Funds on a risk adjusted basis. With respect to each Fund, the Board concluded that the Fund's performance supported the renewal of the Agreement(s) relating to that Fund. In the case of each Fund that had performance that lagged that of a relevant peer group for certain (although not necessarily all) periods, the Board concluded that other factors relevant to performance supported renewal of the Funds' Agreements. These factors varied from Fund to Fund, but included one or more of the following: (1) that the Fund's performance, although lagging in certain recent periods, was strong over the longer term; (2) that the underperformance was attributable, to a significant extent, to investment decisions by the Fund's Advisers that were reasonable and consistent with the Fund's investment objective and policies; (3) that the Fund's performance was competitive when compared to other relevant performance benchmarks or peer groups; (4) that the Fund's Adviser has taken or is taking steps designed to help improve the Fund's investment performance; and (5) that the Fund's advisory fee or other expenses have recently been, or were proposed to be, reduced, with the goal of helping the Fund's net return to shareholders become more competitive. The Trustees also considered each Adviser's performance and reputation generally, these Funds' performance as a fund family generally, and the historical responsiveness of the Advisers to Trustee concerns about performance and the willingness of the Advisers to take steps intended to improve performance. 25 BOARD APPROVAL OF MANAGEMENT CONTRACTS (continued) After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the performance of the Funds and the Advisers supported the renewal of the Agreements. The costs of the services to be provided and profits to be realized by the Advisers and their affiliates from their respective relationships with the Funds. The Trustees considered the fees charged to the Funds for advisory and sub-advisory services as well as the total expense levels of the Funds. This information included comparisons (provided both by management and also by an independent third party) of the Funds' advisory fees and total expense levels to those of their peer groups and information about the advisory fees charged by the Advisers to comparable accounts. In considering the fees charged to comparable accounts, the Trustees considered, among other things, management's representations about the differences between managing mutual funds as compared to other types of accounts, including the additional resources required to effectively manage mutual fund assets. In evaluating each Fund's advisory and sub-advisory fees, the Trustees also took into account the demands, complexity and quality of the investment management of such Fund. The Trustees considered management's recommendations regarding reductions in advisory fee rates, implementation of advisory fee breakpoints, institution of advisory fee waivers and reductions of expense caps, which impacted 7 of the Funds and resulted in an estimated annual savings to the Funds of $1,287,600. The Trustees noted that U.S. Diversified Portfolio had a total expense ratio and an advisory fee rate that were at or above the median of a peer group of Funds. The Trustees noted that management was proposing fee reductions for this Fund. The Trustees also noted management's stated justification for the fees charged to the Funds, which included information about the performance of the Funds, the services provided to the Funds and management's view as to why it was appropriate that some funds bear advisory fees or total expenses greater than their peer group median. The Trustees also considered the compensation directly or indirectly received by the Advisers and their affiliates from their relationships with the Funds. The Trustees reviewed information provided by management as to the profitability of the Advisers' and their affiliates' relationships with the Funds, and information about the allocation of expenses used to calculate profitability. When reviewing profitability, the Trustees also considered information about court cases in which adviser profitability was an issue in whole or in part, the performance of the relevant Funds, the expense levels of the Funds, and whether the Advisers had implemented breakpoints and/or expense caps with respect to such Funds. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the advisory fees charged to each of the Funds were fair and reasonable, and that the costs of these services generally and the related profitability of the Advisers and their affiliates in respect of their relationships with the Funds supported the renewal of the Agreements. Economies of Scale. The Trustees considered the existence of any economies of scale in the provision of services by the Advisers and whether those economies are shared with the Funds through breakpoints in their investment advisory fees or other means, such as expense waivers. The Trustees noted that 7 of the Funds benefited from breakpoints and/or expense caps, and that for the remaining Fund, management had represented that the Fund's Advisers did not benefit from economies of scale in providing services to the Fund because of the small size of the Fund. In considering these issues, the Trustees also took note of the costs of the services provided (both on an absolute and a relative basis) and the profitability to the Advisers and their affiliates of their relationships with the Funds, as discussed above. After reviewing these and related factors, the Trustees considered, within the context of their overall conclusions regarding each of the Agreements, that the extent to which economies of scale were shared with the Funds supported the renewal of the Agreements. The Trustees also considered other factors, which included but were not limited to the following: .. whether each Fund has operated in accordance with its investment objective and the Fund's record of compliance with its investment restrictions, and the compliance programs of the Funds and the Advisers. They also considered the compliance related resources the Advisers and their affiliates were providing to the Funds. .. the nature, quality, cost and extent of administrative and shareholder services performed by the Advisers and their affiliates, both under the Agreements and under separate agreements covering transfer agency and administrative services. .. so-called "fallout benefits" to the Advisers, such as the engagement of affiliates of the Advisers to provide distribution, brokerage and transfer agency services to the Funds, and the benefits of research made available to the Advisers by reason of brokerage commissions generated by the Funds' securities transactions. The Trustees also considered the fact that IXIS Advisors' parent company benefits from the retention of affiliated Advisers. The Trustees considered the possible conflicts of interest associated with these fallout and other benefits, and the reporting, disclosure and other processes in place to disclose and monitor such possible conflicts of interest Based on their evaluation of all factors that they deemed to be material, including those factors described above, and assisted by the advice of independent counsel, the Trustees, including the Independent Trustees, concluded that each of the existing advisory and sub-advisory agreements should be continued through June 30, 2006. 26 CGM ADVISOR TARGETED EQUITY FUND -- SCHEDULE OF INVESTMENTS Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------- Common Stocks -- 99.2% of Total Net Assets Beverages & Tobacco -- 5.2% 588,000 Altria Group, Inc. $ 38,020,080 ------------ Biotechnology -- 5.0% 459,000 Genentech, Inc.(c) 36,848,520 ------------ Cosmetics & Personal Care -- 4.2% 584,000 Procter & Gamble Co.(d) 30,806,000 ------------ Diversified Financial Services -- 4.8% 340,000 Legg Mason, Inc. 35,397,400 ------------ Health Care -- Services -- 5.4% 700,000 HCA, Inc. 39,669,000 ------------ Heavy Machinery -- 0.3% 25,000 Caterpillar, Inc. 2,382,750 ------------ Insurance -- 7.2% 725,000 Aflac, Inc. 31,378,000 380,000 American International Group, Inc. 22,078,000 ------------ 53,456,000 ------------ Internet -- 3.4% 85,000 Google, Inc., Class A(c)(d) 25,002,750 ------------ Miscellaneous -- Manufacturing -- 1.8% 380,000 General Electric Co. 13,167,000 ------------ Oil & Gas -- 24.8% 50,000 Apache Corp. 3,230,000 630,000 BP PLC, Sponsored ADR 39,299,400 990,000 ConocoPhillips 56,915,100 499,000 Occidental Petroleum Corp. 38,388,070 384,000 Total SA, Sponsored ADR(d) 44,870,400 ------------ 182,702,970 ------------ Oil & Gas Services -- 10.6% 845,000 Halliburton Co. 40,407,900 500,000 Schlumberger, Ltd. 37,970,000 ------------ 78,377,900 ------------ Pharmaceuticals -- 5.1% 850,000 Wyeth Corp. 37,825,000 ------------ Restaurants -- 5.1% 727,000 Yum! Brands, Inc. 37,862,160 ------------ Retail -- 5.2% 730,000 J.C. Penney Co., Inc. 38,383,400 ------------ Semiconductors -- 1.4% 390,000 Intel Corp. 10,163,400 ------------ Telecommunications -- 9.7% 585,000 America Movil SA de CV, Series L, ADR 34,871,850 2,210,000 Corning, Inc. 36,730,200 ------------ 71,602,050 ------------ Total Common Stocks (Identified Cost $670,890,323) 731,666,380 ------------
Principal Amount Description Value (a) - ------------------------------------------------------------------------------------------------- Short Term Investments -- 9.5% $4,973,267 Repurchase Agreement with Investors Bank & Trust Co. dated 6/30/2005 at $4,973,544 on 7/01/2005, collateralized by $4,840,678 Small Business Administration Bond, 5.875% due 1/25/2029 valued at $5,221,930 $ 4,973,267 2,983,939 American Beacon Fund, 3.18%, due 7/01/2005(e) 2,983,939 4,266,969 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 4,266,969 958,869 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 958,869 2,397,174 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 2,397,174 3,926,350 BGI Institutional Money Market Fund(e) 3,926,350 3,918,388 Calyon, 3.09%, due 7/01/2005(e) 3,918,388 2,397,174 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 2,397,174 2,588,948 Compass Securitization, 3.16%, due 7/11/2005(e) 2,588,948 2,617,138 Fairway Finance, 3.26%, due 7/25/2005(e) 2,617,138 2,397,174 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 2,397,174 1,917,739 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 1,917,739 2,032,370 Goldman Sachs Financial Square Prime Obligations Fund(e) 2,032,370 2,468,130 Greyhawk Funding, 3.26%, due 8/01/2005(e) 2,468,130 2,397,174 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 2,397,174 2,397,174 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 2,397,174 306,860 Merrimac Cash Fund-Premium Class(e) 306,860 3,682,303 National Australia Bank, 3.26%, due 7/06/2005(e) 3,682,303 2,397,174 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 2,397,174 2,397,174 Prefco, 3.26%, due 7/26/2005(e) 2,397,174 1,874,029 Rabobank Nederland, 3.35%, due 7/01/2005(e) 1,874,029 2,359,139 Ranger Funding, 3.19%, due 7/15/2005(e) 2,359,139 2,397,174 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 2,397,174 4,794,344 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 4,794,344 2,397,174 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 2,397,174 2,384,269 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 2,384,269 ------------ Total Short Term Investments (Identified Cost $69,627,617) 69,627,617 ------------ Total Investments -- 108.7% (Identified Cost $740,517,940)(b) 801,293,997 Other assets less liabilities (63,911,234) ------------ Total Net Assets -- 100% $737,382,763 ============ (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales): At June 30, 2005, the net unrealized appreciation on investments based on cost of $740,517,940 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 61,701,985 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (925,928) ------------ Net unrealized appreciation $ 60,776,057 ============
See accompanying notes to financial statements. 27 CGM ADVISOR TARGETED EQUITY FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited) At December 31, 2004, the Fund had a capital loss carryover of approximately $141,323,294 which expires on December 31, 2010. This amount may be available to offset future realized capital gains, if any, to the extent provided by regulations. (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2005. (e) Represents investments of securities lending collateral. ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States.
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited) Oil & Gas 24.8% Oil & Gas Services 10.6 Telecommunications 9.7 Insurance 7.2 Health Care -- Services 5.4 Retail 5.2 Beverages & Tobacco 5.2 Restaurants 5.1 Pharmaceuticals 5.1 Biotechnology 5.0 Diversified Financial Services 4.8 Cosmetics & Personal Care 4.2 Internet 3.4 Other, less than 2% each 3.5
See accompanying notes to financial statements. 28 HANSBERGER INTERNATIONAL FUND -- SCHEDULE OF INVESTMENTS Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------------ Common Stocks -- 97.6% of Total Net Assets Australia -- 0.8% 46,400 Woodside Petroleum, Ltd. $ 1,030,956 --------------- Brazil -- 2.1% 15,000 Banco Bradesco SA, Sponsored ADR(c) 530,850 27,000 Cia Energetica de Minas Gerais, Sponsored ADR 859,950 25,860 Petroleo Brasileiro SA, ADR(c) 1,348,082 --------------- 2,738,882 --------------- Canada -- 3.0% 21,200 Alcan, Inc.(c) 636,000 50,000 Celestica, Inc.(d) 670,000 28,500 Manulife Financial Corp.(c) 1,362,585 23,800 Suncor Energy, Inc.(c) 1,126,216 --------------- 3,794,801 --------------- China -- 1.8% 1,910,410 Denway Motors, Ltd. 677,461 451,160 Ping An Insurance Group Co. of China, Ltd.(d) 722,892 23,200 Shanda Interactive Entertainment, Ltd., ADR(c)(d) 853,528 --------------- 2,253,881 --------------- Denmark -- 1.2% 92,200 Vestas Wind Systems AS(c)(d) 1,525,406 --------------- Finland -- 2.0% 52,380 Nokia OYJ 871,589 44,700 Nokia OYJ, Sponsored ADR 743,808 30,000 Tietoenator OYJ 910,559 --------------- 2,525,956 --------------- France -- 13.1% 40,520 Axa 1,008,877 44,200 Axa, Sponsored ADR(c) 1,101,022 12,000 BNP Paribas 819,630 29,500 Bouygues SA 1,219,545 20,380 Carrefour SA 985,665 10,300 Cie Generale D'Optique Essilor International SA 702,516 10,000 Groupe Danone 876,194 9,401 L'Oreal SA 673,155 9,300 Sanofi-Aventis 761,681 22,430 Schneider Electric SA 1,686,763 12,800 Societe Generale, Class A 1,298,015 21,240 Suez SA(c) 574,145 16,400 Technip SA 760,898 42,800 Thomson 1,021,031 5,140 Total SA 1,202,788 11,900 Total SA, Sponsored ADR(c) 1,390,515 18,700 Veolia Environnement 700,013 --------------- 16,782,453 --------------- Germany -- 5.7% 4,750 Adidas-Salomon AG 792,362 8,100 Allianz AG 923,955 11,620 Deutsche Bank AG 904,772 11,710 E.ON AG 1,039,576 8,090 Fresenius Medical Care AG(c) 688,669 9,910 Linde AG 667,108 16,700 SAP AG, Sponsored ADR(c) 723,110 15,380 Schering AG 945,004 9,700 Siemens AG 704,820 --------------- 7,389,376 ---------------
Shares Description Value (a) - ----------------------------------------------------------------------------------- Hong Kong -- 4.5% 194,900 Esprit Holdings, Ltd. $ 1,405,454 64,000 HSBC Holdings PLC (Hong Kong) 1,022,991 178,950 Hutchison Whampoa, Ltd. 1,610,661 1,058,730 Johnson Electric Holdings, Ltd. 969,967 544,217 Shangri-La Asia, Ltd. 839,423 --------------- 5,848,496 --------------- India -- 1.6% 23,300 HDFC Bank, Ltd., ADR 1,083,683 12,600 Infosys Technologies, Ltd., Sponsored ADR(c) 976,122 --------------- 2,059,805 --------------- Indonesia -- 0.6% 1,300,000 PT Indosat Tbk 734,406 --------------- Israel -- 0.6% 24,300 Teva Pharmaceutical Industries, Ltd., Sponsored ADR(c) 756,702 --------------- Italy -- 2.4% 46,420 Eni-Ente Nazionale Idrocarburi SpA(c) 1,192,794 52,040 Saipem SpA 699,890 229,300 UniCredito Italiano SpA(c) 1,208,975 --------------- 3,101,659 --------------- Japan -- 16.7% 90,000 Asahi Glass Co., Ltd.(c) 941,046 21,655 Astellas Pharma, Inc. 737,987 53,000 Bank of Yokohama, Ltd. (The) 304,665 35,400 Canon, Inc. 1,856,562 54,500 Denso Corp. 1,238,245 46,400 JS Group Corp. 784,394 483,000 Kawasaki Heavy Industries, Ltd.(c) 925,054 3,400 Keyence Corp. 758,400 210,000 Marubeni Corp. 716,432 115,000 NEC Corp. 618,844 9,200 Nidec Corp. 970,358 65,000 Nissan Motor Co., Ltd. 642,970 18,900 Nitto Denko Corp. 1,077,527 6,400 ORIX Corp. 956,207 45,000 Pioneer Corp. 680,269 80,000 Sharp Corp. 1,245,542 46,000 Shionogi & Co., Ltd. 591,416 9,800 SMC Corp. 1,063,073 23,400 Sony Corp. 803,760 156 Sumitomo Mitsui Financial Group, Inc. 1,049,654 194,000 Sumitomo Trust & Banking Co., Ltd. (The) 1,174,700 18,600 Takeda Pharmaceutical Co., Ltd. 920,269 18,500 Toyota Motor Corp. 660,574 22,000 World Co., Ltd. 768,387 --------------- 21,486,335 --------------- Netherlands -- 3.0% 37,575 ABN AMRO Holding NV(c) 923,171 16,880 Akzo Nobel NV 663,810 55,400 ASML Holding NV, ADR(c)(d) 867,564 35,028 ING Groep NV 984,580 19,190 Koninklijke Philips Electronics NV 483,381 --------------- 3,922,506 --------------- Republic of Korea -- 3.6% 15,660 Kookmin Bank 706,758 16,200 Kookmin Bank, Sponsored ADR(c) 738,396 16,430 LG Chem, Ltd. 599,392
See accompanying notes to financial statements. 29 HANSBERGER INTERNATIONAL FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------- Republic of Korea -- continued 2,490 Samsung Electronics Co., Ltd. $ 1,179,253 3,400 Samsung Electronics Co., Ltd., GDR, 144A(c) 812,579 1,920 Shinsegae Co., Ltd. 602,334 --------------- 4,638,712 --------------- Russia -- 0.6% 20,000 LUKOIL Sponsored ADR 722,000 --------------- Singapore -- 1.9% 211,140 DBS Group Holdings, Ltd. 1,786,800 93,470 Singapore Airlines, Ltd. 620,136 --------------- 2,406,936 --------------- South Africa -- 0.5% 303,020 Old Mutual PLC 660,368 --------------- Spain -- 3.7% 93,500 Banco Bilbao Vizcaya Argentaria SA 1,436,666 56,000 Banco Santander Central Hispano SA 648,347 128,500 Telefonica Moviles SA(c) 1,357,608 77,390 Telefonica SA 1,262,557 --------------- 4,705,178 --------------- Switzerland -- 8.9% 132,750 ABB, Ltd.(d) 869,847 10,900 Ciba Specialty Chemicals AG 633,586 25,000 Credit Suisse Group(d) 979,597 18,880 Lonza Group AG 1,042,572 6,867 Nestle SA 1,753,647 3,800 Nobel Biocare Holding AG 769,341 42,010 Novartis AG 1,993,794 6,960 Roche Holding AG 877,884 759 Serono SA, Class B 485,658 1,148 Sika AG(d) 715,961 16,100 UBS AG 1,254,637 --------------- 11,376,524 --------------- Taiwan -- 0.6% 449,054 Taiwan Semiconductor Manufacturing Co., Ltd. 781,789 --------------- United Kingdom -- 18.7% 25,000 AstraZeneca PLC, Sponsored ADR 1,030,549 98,818 Barclays PLC 979,374 56,711 BHP Billiton PLC 722,836 12,700 BP PLC, Sponsored ADR 792,226 146,900 British Sky Broadcasting PLC 1,381,653 234,090 Compass Group PLC 980,119 60,351 Exel PLC 915,257 39,595 GlaxoSmithKline PLC 956,621 299,300 Group 4 Securicor PLC(d) 785,663 152,533 HBOS PLC 2,344,812 51,991 ICAP PLC 275,914 37,600 Johnson Matthey PlC 716,722 122,799 Kingfisher PLC 538,665 110,401 Lloyds TSB Group PLC 932,209 29,972 Reckitt Benckiser PLC 880,306 75,742 Royal Bank of Scotland Group PLC 2,280,190 330,070 Signet Group PLC 641,455 81,400 Smith & Nephew PLC 800,149 84,200 Smiths Group PLC 1,381,501 36,380 Standard Chartered PLC 662,701 229,588 Tesco PLC 1,307,788 71,610 Unilever PLC 688,828
Shares Description Value (a) - --------------------------------------------------------------------------------------- United Kingdom -- continued 514,446 Vodafone Group PLC $ 1,250,578 34,300 Vodafone Group PLC, Sponsored ADR 834,176 --------------- 24,080,292 --------------- Total Common Stocks (Identified Cost $112,620,832) 125,323,419 --------------- Preferred Stocks -- 1.3% Brazil -- 0.6% 25,500 Companhia de Bebidas das Americas, ADR 787,950 --------------- Germany -- 0.7% 1,237 Porsche AG(c) 926,766 --------------- Total Preferred Stocks (Identified Cost $1,356,808) 1,714,716 --------------- Principal Amount Description Value (a) - --------------------------------------------------------------------------------------- Short Term Investments -- 16.5% $ 1,848,112 Repurchase Agreement with Investors Bank & Trust Co. dated 6/30/2005 at $1,848,215 on 7/01/2005, collateralized by $1,806,396 Small Business Administration Bond, 6.875% due 4/25/2016 valued at $1,940,517 1,848,112 895,698 American Beacon Fund, 3.18%, due 7/01/2005(e) 895,698 1,280,829 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 1,280,829 287,826 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 287,826 719,566 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 719,566 1,178,584 BGI Institutional Money Market Fund(e) 1,178,584 1,176,194 Calyon, 3.09%, due 7/01/2005(e) 1,176,194 719,566 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 719,566 777,132 Compass Securitization, 3.16%, due 7/11/2005(e) 777,132 785,595 Fairway Finance, 3.26%, due 7/25/2005(e) 785,595 719,566 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 719,566 575,654 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 575,654 610,062 Goldman Sachs Financial Square Prime Obligations Fund(e) 610,062 740,865 Greyhawk Funding, 3.26%, due 8/01/2005(e) 740,865 719,566 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 719,566 719,566 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 719,566 92,111 Merrimac Cash Fund-Premium Class(e) 92,111 1,105,328 National Australia Bank, 3.26%, due 7/06/2005(e) 1,105,328 719,566 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 719,566 719,566 Prefco, 3.26%, due 7/26/2005(e) 719,566 562,533 Rabobank Nederland, 3.35%, due 7/01/2005(e) 562,533 708,149 Ranger Funding, 3.19%, due 7/15/2005(e) 708,149 719,566 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 719,566 1,439,138 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 1,439,138 719,566 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 719,566 715,693 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 715,693 --------------- Total Short Term Investments (Identified Cost $21,255,597) 21,255,597 --------------- Total Investments -- 115.4% (Identified Cost $135,233,237)(b) 148,293,732 Other assets less liabilities (19,831,035) --------------- Total Net Assets -- 100% $ 128,462,697 ===============
See accompanying notes to financial statements. 30 HANSBERGER INTERNATIONAL FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited) (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales): At June 30, 2005, the net unrealized appreciation on investments based on cost of $135,233,237 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $15,749,490 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (2,688,995) ----------- Net unrealized appreciation $13,060,495 =========== At December 31, 2004, the Fund had a capital loss carryover of approximately $8,938,160 of which $1,066,443 expires on December 31, 2009 and $7,871,717 expires on December 31, 2010. These amounts may be available to offset future realized capital gains, if any, to the extent provided by regulations. For the year ended December 31, 2004, the Fund has elected to defer $9,235 of foreign currency attributable to Post-October losses. (c) All or a portion of this security was on loan to brokers at June 30, 2005. (d) Non-income producing security. (e) Represents investments of securities lending collateral. ADR/GDR An American Depositary Receipt (ADR) or Global Depositary Receipt (GDR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs and GDRs are significantly influenced by trading on exchanges not located in the United States. 144A Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registrations, normally to qualified institutional buyers. At the period end, the value of these amounted to $812,579 or 0.6% of net assets.
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited) Banks 17.8% Pharmaceuticals 7.8 Oil & Gas 6.8 Telecommunications 5.6 Insurance 5.3 Electrical Components & Equipment 4.5 Food 4.4 Chemicals 3.1 Hand & Machine Tools 2.9 Electronics 2.6 Miscellaneous -- Manufacturing 2.4 Health Care -- Products 2.2 Engineering & Construction 2.2 Other, less than 2% each 31.3
See accompanying notes to financial statements. 31 HARRIS ASSOCIATES FOCUSED VALUE FUND -- SCHEDULE OF INVESTMENTS Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------------- Common Stocks -- 92.2% of Total Net Assets Aerospace & Defense -- 4.5% 378,600 Raytheon Co. $ 14,810,832 --------------- Apparel -- 2.4% 203,800 Liz Claiborne, Inc. 8,103,088 --------------- Beverages -- 3.6% 548,500 Coca-Cola Enterprises, Inc. 12,072,485 --------------- Commercial Services -- 13.3% 282,500 H&R Block, Inc.(c) 16,483,875 228,400 Moody's Corp.(c) 10,268,864 503,000 RR Donnelley & Sons Co. 17,358,530 --------------- 44,111,269 --------------- Distribution & Wholesale -- 1.0% 55,600 CDW Corp. 3,174,204 --------------- Hand & Machine Tools -- 1.6% 57,500 Black & Decker Corp.(c) 5,166,375 --------------- Health Care -- Products -- 1.9% 170,300 Baxter International, Inc. 6,318,130 --------------- Leisure Time -- 2.7% 179,300 Harley-Davidson, Inc. 8,893,280 --------------- Media -- 12.0% 138,400 Cablevision Systems Corp., Class A(d) 4,456,480 181,400 Knight-Ridder, Inc.(c) 11,127,076 851,200 Liberty Media Corp., Class A(d) 8,673,728 932,700 Time Warner, Inc.(d) 15,585,417 --------------- 39,842,701 --------------- Oil & Gas -- 4.0% 239,200 Burlington Resources, Inc. 13,213,408 --------------- Pharmaceuticals -- 13.7% 480,100 Bristol-Myers Squibb Co.(c) 11,992,898 388,400 Hospira, Inc.(d) 15,147,600 425,900 Omnicare, Inc. 18,070,937 --------------- 45,211,435 --------------- Restaurants -- 5.5% 348,100 Yum! Brands, Inc. 18,129,048 --------------- Retail -- 10.6% 564,800 AutoNation, Inc.(d) 11,589,696 303,900 McDonald's Corp. 8,433,225 611,900 TJX Cos., Inc.(c) 14,899,765 --------------- 34,922,686 --------------- Savings & Loans -- 12.2% 380,300 Sovereign Bancorp, Inc. 8,495,902 782,500 Washington Mutual, Inc.(c) 31,839,925 --------------- 40,335,827 --------------- Semiconductors -- 1.2% 177,900 National Semiconductor Corp. 3,919,137 --------------- Software -- 2.0% 168,700 First Data Corp. 6,771,618 --------------- Total Common Stocks (Identified Cost $239,081,564) 304,995,523 ---------------
Principal Amount Description Value (a) - ---------------------------------------------------------------------------------------------------- Short Term Investments -- 25.5% $ 26,052,899 Repurchase Agreement with Investors Bank & Trust Co. dated 6/30/2005 at 2.01% to be repurchased at $26,054,354 on 7/01/2005, collateralized by $20,793,986 Federal National Mortgage Association Bond, 3.814% due 11/25/2033 valued at $21,000,000 and $5,876,783 Small Business Administration Bond, 6.295% due 3/25/2023 valued at $6,355,544 $ 26,052,899 2,687,343 American Beacon Fund, 3.18%, due 7/01/2005(e) 2,687,343 3,842,842 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 3,842,842 863,560 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 863,560 2,158,900 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 2,158,900 3,536,080 BGI Institutional Money Market Fund(e) 3,536,080 3,528,909 Calyon, 3.09%, due 7/01/2005(e) 3,528,909 2,158,900 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 2,158,900 2,331,612 Compass Securitization, 3.16%, due 7/11/2005(e) 2,331,612 2,357,001 Fairway Finance, 3.26%, due 7/25/2005(e) 2,357,001 2,158,900 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 2,158,900 1,727,120 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 1,727,120 1,830,357 Goldman Sachs Financial Square Prime Obligations Fund(e) 1,830,357 2,222,804 Greyhawk Funding, 3.26%, due 8/01/2005(e) 2,222,804 2,158,900 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 2,158,900 2,158,900 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 2,158,900 276,359 Merrimac Cash Fund-Premium Class(e) 276,359 3,316,291 National Australia Bank, 3.26%, due 7/06/2005(e) 3,316,291 2,158,900 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 2,158,900 2,158,900 Prefco, 3.26%, due 7/26/2005(e) 2,158,900 1,687,755 Rabobank Nederland, 3.35%, due 7/01/2005(e) 1,687,755 2,124,646 Ranger Funding, 3.19%, due 7/15/2005(e) 2,124,646 2,158,900 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 2,158,900 4,317,801 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 4,317,801 2,158,900 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 2,158,900 2,147,278 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 2,147,278 --------------- Total Short Term Investments (Identified Cost $84,280,757) 84,280,757 --------------- Total Investments -- 117.7% (Identified Cost $323,362,321)(b) 389,276,280 Other assets less liabilities (58,673,664) --------------- Total Net Assets -- 100% $ 330,602,616 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales): At June 30, 2005, the net unrealized appreciation on investments based on cost of $323,362,321 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 67,989,617 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (2,075,658) --------------- Net unrealized appreciation $ 65,913,959 =============== At December 31, 2004, the Fund had a capital loss carryover of approximately $10,136,380 which expires on December 31, 2011. This amount may be available to offset future realized capital gains, if any, to the extent provided by regulations. (c) All or a portion of this security was on loan to brokers at June 30, 2005. (d) Non-income producing security. (e) Represents investments of securities lending collateral.
See accompanying notes to financial statements. 32 HARRIS ASSOCIATES FOCUSED VALUE FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited) Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited) Pharmaceuticals 13.7% Commercial Services 13.3 Savings & Loans 12.2 Media 12.0 Retail 10.6 Restaurants 5.5 Aerospace & Defense 4.5 Oil & Gas 4.0 Beverages 3.6 Leisure Time 2.7 Apparel 2.4 Software 2.0 Other, less than 2% each 5.7
See accompanying notes to financial statements. 33 HARRIS ASSOCIATES LARGE CAP VALUE FUND -- SCHEDULE OF INVESTMENTS Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - -------------------------------------------------------------------- Common Stocks -- 98.5% of Total Net Assets Aerospace & Defense -- 2.7% 213,000 Raytheon Co. $ 8,332,560 --------------- Banks -- 0.9% 98,100 U.S. Bancorp 2,864,520 --------------- Beverages -- 5.3% 83,800 Anheuser-Busch Cos., Inc. 3,833,850 38,500 Coca-Cola Co. (The) 1,607,375 144,200 Coca-Cola Enterprises, Inc. 3,173,842 130,100 Diageo PLC, Sponsored ADR(c) 7,714,930 --------------- 16,329,997 --------------- Building Materials -- 2.9% 279,100 Masco Corp.(c) 8,864,216 --------------- Computers -- 4.5% 386,400 Hewlett-Packard Co. 9,084,264 1,241,900 Sun Microsystems, Inc.(d) 4,632,287 --------------- 13,716,551 --------------- Diversified Financial Services -- 11.1% 61,100 American Express Co. 3,252,353 198,800 Citigroup, Inc. 9,190,524 120,300 Fannie Mae 7,025,520 299,300 JPMorgan Chase & Co. 10,571,276 77,500 Morgan Stanley 4,066,425 --------------- 34,106,098 --------------- Electronics -- 2.4% 264,500 Texas Instruments, Inc. 7,424,515 --------------- Environmental Control -- 2.9% 307,300 Waste Management, Inc. 8,708,882 --------------- Food -- 1.8% 60,700 General Mills, Inc. 2,840,153 40,100 Nestle SA, Sponsored ADR 2,564,996 --------------- 5,405,149 --------------- Health Care-Products -- 4.9% 241,200 Baxter International, Inc. 8,948,520 91,000 Johnson & Johnson 5,915,000 --------------- 14,863,520 --------------- Household Products & Wares -- 2.5% 85,600 Fortune Brands, Inc. 7,601,280 --------------- Insurance --1.9% 73,700 Aflac, Inc. 3,189,736 41,600 MGIC Investment Corp. 2,713,152 --------------- 5,902,888 --------------- Leisure Time -- 3.8% 60,300 Carnival Corp. 3,289,365 165,600 Harley-Davidson, Inc.(c) 8,213,760 --------------- 11,503,125 --------------- Media -- 16.6% 207,000 Comcast Corp., Special Class A(d) 6,199,650 313,200 DIRECTV Group (The), Inc.(d) 4,854,600 1,229,700 Liberty Media Corp., Class A(d) 12,530,643 614,000 Time Warner, Inc.(d) 10,259,940 278,200 Viacom, Inc., Class B 8,907,964 322,500 Walt Disney Co. (The) 8,120,550 --------------- 50,873,347 ---------------
Shares Description Value (a) - ------------------------------------------------------------------------------ Miscellaneous--Manufacturing -- 3.0% 120,500 Honeywell International, Inc. $ 4,413,915 164,300 Tyco International, Ltd. 4,797,560 --------------- 9,211,475 --------------- Office & Business Equipment -- 2.6% 586,400 Xerox Corp.(d) 8,086,456 --------------- Oil & Gas -- 1.0% 56,800 Burlington Resources, Inc. 3,137,632 --------------- Pharmaceuticals -- 3.1% 127,400 Abbott Laboratories 6,243,874 131,000 Bristol-Myers Squibb Co.(c) 3,272,380 --------------- 9,516,254 --------------- Retail -- 15.4% 83,500 Costco Wholesale Corp. 3,742,470 395,100 Gap (The), Inc. 7,803,225 257,900 Home Depot, Inc. 10,032,310 109,200 Kohl's Corp.(d) 6,105,372 71,800 Limited Brands, Inc. 1,537,956 438,200 McDonald's Corp. 12,160,050 117,100 Wal-Mart Stores, Inc. 5,644,220 --------------- 47,025,603 --------------- Savings & Loans -- 4.1% 309,300 Washington Mutual, Inc.(c) 12,585,417 --------------- Semiconductors -- 2.0% 238,000 Intel Corp. 6,202,280 --------------- Software -- 1.1% 81,800 First Data Corp. 3,283,452 --------------- Transportation -- 2.0% 95,000 Union Pacific Corp. 6,156,000 --------------- Total Common Stocks (Identified Cost $260,233,076) 301,701,217 ---------------
Principal Amount - ------------------------------------------------------------------------------------- Short Term Investments -- 8.9% $ 2,093,927 Repurchase Agreement with Investors Bank & Trust Co. dated 6/30/2005 at $2,094,044 on 7/01/2005, collateralized by $2,062,123 Small Business Administration Bond, 6.625% due 9/25/2015 valued at 2,198,623 2,093,927 1,168,830 American Beacon Fund, 3.18%, due 7/01/2005(e) 1,168,830 1,671,402 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 1,671,402 375,596 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 375,596 938,990 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 938,990 1,537,980 BGI Institutional Money Market Fund(e) 1,537,980 1,534,861 Calyon, 3.09%, due 7/01/2005(e) 1,534,861 938,990 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 938,990 1,014,109 Compass Securitization, 3.16%, due 7/11/2005(e) 1,014,109 1,025,152 Fairway Finance, 3.26%, due 7/25/2005(e) 1,025,152 938,990 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 938,990 751,192 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 751,192 796,094 Goldman Sachs Financial Square Prime Obligations Fund(e) 796,094 966,784 Greyhawk Funding, 3.26%, due 8/01/2005(e) 966,784 938,990 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 938,990 938,990 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 938,990 120,199 Merrimac Cash Fund-Premium Class(e) 120,199 1,442,385 National Australia Bank, 3.26%, due 7/06/2005(e) 1,442,385 938,990 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 938,990 938,990 Prefco, 3.26%, due 7/26/2005(e) 938,990 734,071 Rabobank Nederland, 3.35%, due 7/01/2005(e) 734,071
See accompanying notes to financial statements. 34 HARRIS ASSOCIATES LARGE CAP VALUE FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Principal Amount Description Value (a) - ------------------------------------------------------------------------------------------------------ Short Term Investments -- continued $ 924,092 Ranger Funding, 3.19%, due 7/15/2005(e) $ 924,092 938,990 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 938,990 1,877,982 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 1,877,982 938,990 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 938,990 933,935 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 933,935 --------------- Total Short Term Investments (Identified Cost $27,419,501) 27,419,501 --------------- Total Investments -- 107.4% (Identified Cost $287,652,577)(b) 329,120,718 Other assets less liabilities (22,806,082) --------------- Total Net Assets -- 100% $ 306,314,636 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales): At June 30, 2005, the net unrealized appreciation on investments based on cost of $287,652,577 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 47,127,925 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (5,659,784) --------------- Net unrealized appreciation $ 41,468,141 =============== At December 31, 2004, the Fund had a capital loss carryover of approximately $134,352,059 of which $16,433,943 expires on December 31, 2008, $83,318,807 expires on December 31, 2009, $24,633,843 expires on December 31, 2010 and $9,965,466 expires on December 31, 2011. These amounts may be available to offset future realized capital gains, if any, to the extent provided by regulations. For the year ended December 31, 2004, the Fund has elected to defer $159,806 of capital losses attributable to Post-October losses. (c) All or a portion of this security was on loan to brokers at June 30, 2005. (d) Non-income producing security. (e) Represents investments of securities lending collateral. ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States.
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited) Media 16.6% Retail 15.4 Diversified Financial Services 11.1 Beverages 5.3 Health Care -- Products 4.9 Computers 4.5 Savings & Loans 4.1 Leisure Time 3.8 Pharmaceuticals 3.1 Miscellaneous -- Manufacturing 3.0 Building Materials 2.9 Environmental Control 2.9 Aerospace & Defense 2.7 Office & Business Equipment 2.6 Household Products & Wares 2.5 Electronics 2.4 Semiconductors 2.0 Transportation 2.0 Other, less than 2% each 6.7
See accompanying notes to financial statements. 35 IXIS U.S. DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ------------------------------------------------------------------ Common Stocks -- 99.3% of Total Net Assets Advertising -- 1.6% 31,225 Getty Images, Inc.(c)(d) $ 2,318,768 66,300 Lamar Advertising Co.(c) 2,835,651 77,700 R.H. Donnelley Corp.(c) 4,815,846 --------------- 9,970,265 --------------- Aerospace & Defense -- 1.3% 29,200 Boeing Co. (The) 1,927,200 26,900 Lockheed Martin Corp. 1,745,003 118,300 Raytheon Co. 4,627,896 --------------- 8,300,099 --------------- Apparel -- 0.9% 127,850 Coach, Inc.(c) 4,291,924 15,300 Nike, Inc., Class B 1,324,980 --------------- 5,616,904 --------------- Auto Parts & Equipment -- 0.2% 19,825 Harman International Industries, Inc. 1,612,962 --------------- Banks -- 3.8% 37,700 Bank of America Corp. 1,719,497 78,700 BOK Financial Corp. 3,629,644 60,125 City National Corp. 4,311,564 168,550 Colonial BancGroup Inc. 3,718,213 84,506 Dearborn Bancorp, Inc.(c) 2,188,705 130,650 South Financial Group (The), Inc.(d) 3,713,073 35,450 SVB Financial Group(c)(d) 1,698,055 100,500 U.S. Bancorp(d) 2,934,600 --------------- 23,913,351 --------------- Beverages -- 2.1% 46,400 Anheuser-Busch Cos., Inc. 2,122,800 21,400 Coca-Cola Co. (The) 893,450 80,100 Coca-Cola Enterprises, Inc. 1,763,001 81,725 Constellation Brands, Inc.(c) 2,410,887 72,200 Diageo PLC, Sponsored ADR(d) 4,281,460 39,200 PepsiCo, Inc. 2,114,056 --------------- 13,585,654 --------------- Biotechnology -- 1.1% 19,175 Affymetrix, Inc.(c)(d) 1,034,108 28,600 Amgen, Inc.(c) 1,729,156 15,950 Celgene Corp.(c) 650,281 42,000 Gilead Sciences, Inc.(c) 1,847,580 22,150 Invitrogen Corp.(c) 1,844,873 --------------- 7,105,998 --------------- Building Materials -- 1.7% 356,875 Comfort Systems USA, Inc.(c) 2,348,237 155,000 Masco Corp.(d) 4,922,800 61,425 Texas Industries, Inc. 3,453,928 --------------- 10,724,965 --------------- Chemicals -- 2.2% 33,900 Air Products & Chemicals, Inc. 2,044,170 154,500 Airgas, Inc.(d) 3,811,515 33,575 Cytec Industries, Inc. 1,336,285 65,900 Dow Chemical Co. (The) 2,934,527 39,000 Du Pont (E.I.) de Nemours & Co. 1,677,390 45,500 Praxair, Inc. 2,120,300 --------------- 13,924,187 ---------------
Shares Description Value (a) - ----------------------------------------------------------------------- Commercial Services -- 3.8% 123,550 Adesa, Inc. $ 2,689,683 143,450 Aramark Corp., Class B(d) 3,787,080 47,925 Arbitron, Inc. 2,055,983 39,275 Corporate Executive Board Co. 3,076,411 92,050 Exponent, Inc.(c) 2,630,789 20,200 Hewitt Associates, Inc., Class A(c) 535,502 33,400 Manpower, Inc. 1,328,652 66,700 Moody's Corp.(d) 2,998,832 109,700 United Rentals, Inc.(c) 2,217,037 105,518 Viad Corp. 2,990,380 --------------- 24,310,349 --------------- Computers -- 2.1% 61,950 Cognizant Technology Solutions Corp.(c) 2,919,703 214,600 Hewlett-Packard Co. 5,045,246 38,925 Micros Systems Inc.(c) 1,741,894 29,150 PalmOne Inc. 867,795 690,600 Sun Microsystems, Inc.(c) 2,575,938 --------------- 13,150,576 --------------- Cosmetics & Personal Care -- 0.5% 58,200 Procter & Gamble Co.(d) 3,070,050 --------------- Distribution & Wholesale -- 0.5% 275,750 BlueLinx Holdings, Inc. 2,917,435 --------------- Diversified Financial Services -- 4.6% 33,800 American Express Co. 1,799,174 141,300 Citigroup, Inc. 6,532,299 66,800 Fannie Mae 3,901,120 21,300 Franklin Resources, Inc. 1,639,674 166,000 JPMorgan Chase & Co. 5,863,120 22,100 Legg Mason, Inc. 2,300,831 43,000 Morgan Stanley 2,256,210 125,825 Nuveen Investments, Class A(d) 4,733,536 --------------- 29,025,964 --------------- Electric -- 2.3% 44,041 Allete, Inc. 2,197,646 193,975 MDU Resources Group, Inc. 5,464,276 183,500 NRG Energy, Inc.(c)(d) 6,899,600 --------------- 14,561,522 --------------- Electrical Components & Equipment -- 0.6% 91,825 Ametek, Inc. 3,842,876 --------------- Electronics -- 2.0% 71,000 Amphenol Corp., Class A 2,852,070 111,200 Avnet, Inc.(c) 2,505,336 65,675 Cogent, Inc.(c) 1,875,021 16,400 Fisher Scientific International, Inc.(c) 1,064,360 146,900 Texas Instruments, Inc. 4,123,483 15,500 Waters Corp.(c) 576,135 --------------- 12,996,405 --------------- Engineering & Construction -- 0.7% 84,625 Washington Group International, Inc.(c)(d) 4,326,030 --------------- Environmental Control -- 1.0% 65,550 Nalco Holding Co.(c)(d) 1,286,746 170,700 Waste Management, Inc. 4,837,638 --------------- 6,124,384 ---------------
See accompanying notes to financial statements. 36 IXIS U.S. DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ---------------------------------------------------------------------------- Food -- 2.3% 159,175 Dean Foods Co.(c) $ 5,609,327 33,700 General Mills, Inc. 1,576,823 43,200 McCormick & Co., Inc. 1,411,776 22,300 Nestle SA, Sponsored ADR 1,426,419 31,835 TreeHouse Foods Inc.(c) 907,616 21,600 Whole Foods Market, Inc. 2,555,280 20,000 WM Wrigley Jr. Co. 1,376,800 --------------- 14,864,041 --------------- Gas -- 1.4% 124,325 Oneok, Inc.(d) 4,059,211 169,150 UGI Corp. 4,719,285 --------------- 8,778,496 --------------- Health Care -- Products -- 5.2% 52,300 Alcon, Inc. 5,719,005 133,900 Baxter International, Inc. 4,967,690 73,100 Boston Scientific Corp.(c) 1,973,700 21,825 Intuitive Surgical, Inc.(c) 1,017,918 125,100 Johnson & Johnson 8,131,500 48,800 Medtronic, Inc. 2,527,352 92,450 St. Jude Medical, Inc.(c) 4,031,744 39,100 Sybron Dental Specialties, Inc.(c) 1,470,942 41,500 Varian Medical Systems, Inc.(c)(d) 1,549,195 36,750 Ventana Medical Systems(c)(d) 1,478,452 --------------- 32,867,498 --------------- Health Care -- Services -- 3.2% 35,300 Caremark Rx, Inc.(c) 1,571,556 53,850 Covance, Inc.(c) 2,416,249 36,700 Sierra Health Services, Inc.(c)(d) 2,622,582 62,725 Triad Hospitals, Inc.(c) 3,427,294 34,025 United Surgical Partners International, Inc.(c) 1,772,022 65,800 UnitedHealth Group, Inc. 3,430,812 76,750 WellPoint, Inc.(c) 5,344,870 --------------- 20,585,385 --------------- Heavy Machinery -- 0.7% 14,500 Caterpillar, Inc. 1,381,995 64,900 National Oilwell Varco, Inc.(c) 3,085,346 --------------- 4,467,341 --------------- Home Builders -- 1.3% 63,950 DR Horton, Inc.(d) 2,405,159 15,000 Meritage Homes Corp.(c) 1,192,500 24,575 Standard-Pacific Corp.(d) 2,161,371 23,175 Toll Brothers, Inc.(c)(d) 2,353,421 --------------- 8,112,451 --------------- Home Furnishings -- 0.3% 73,450 Tempur-Pedic International(c)(d) 1,629,121 --------------- Household Products & Wares -- 1.1% 71,475 Church & Dwight Co., Inc.(d) 2,587,395 47,400 Fortune Brands, Inc. 4,209,120 --------------- 6,796,515 --------------- Insurance -- 3.0% 40,900 Aflac, Inc. 1,770,152 173,175 Assurant, Inc. 6,251,617 23,100 MGIC Investment Corp. 1,506,582 71,875 Old Republic International Corp. 1,817,719 106,725 Platinum Underwriters Holdings, Ltd. 3,395,989 99,250 Protective Life Corp. 4,190,335 --------------- 18,932,394 ---------------
Shares Description Value (a) - ----------------------------------------------------------------------------- Internet -- 1.5% 61,225 Avocent Corp.(c) $ 1,600,422 11,000 Google, Inc., Class A(c)(d) 3,235,650 92,600 VeriSign, Inc.(c)(d) 2,663,176 67,600 Yahoo!, Inc.(c)(d) 2,342,340 --------------- 9,841,588 --------------- Iron & Steel -- 0.1% 52,218 Roanoke Electric Steel Corp. 862,641 --------------- Leisure Time -- 1.2% 61,000 Carnival Corp.(d) 3,327,550 92,300 Harley-Davidson, Inc.(d) 4,578,080 --------------- 7,905,630 --------------- Lodging -- 2.4% 17,475 Choice Hotels International, Inc.(d) 1,148,108 431,800 La Quinta Corp.(c) 4,028,694 38,000 Marriott International, Inc., Class A 2,592,360 68,750 Starwood Hotels & Resorts Worldwide, Inc. 4,026,688 39,400 Station Casinos, Inc. 2,616,160 23,500 Wynn Resorts, Ltd.(c)(d) 1,110,845 --------------- 15,522,855 --------------- Machinery--Diversified -- 1.6% 79,275 Alamo Group, Inc. 1,480,064 104,000 Albany International Corp., Class A 3,339,440 19,900 Deere & Co. 1,303,251 187,650 Wabtec Corp. 4,030,722 --------------- 10,153,477 --------------- Media -- 5.5% 115,000 Comcast Corp., Special Class A(c) 3,444,250 173,900 DIRECTV Group (The), Inc.(c) 2,695,450 700,000 Liberty Media Corp., Class A(c) 7,133,000 84,500 Scholastic Corp.(c) 3,257,475 338,500 Time Warner, Inc.(c) 5,656,335 41,350 Univision Communications, Inc., Class A(c) 1,139,193 155,200 Viacom, Inc., Class B 4,969,504 205,200 Walt Disney Co. (The) 5,166,936 53,150 XM Satellite Radio Holdings, Inc., Class A(c)(d) 1,789,029 --------------- 35,251,172 --------------- Metal Fabricate & Hardware -- 0.4% 31,575 Precision Castparts Corp. 2,459,693 --------------- Miscellaneous -- Manufacturing -- 3.5% 75,300 3M Co. 5,444,190 19,150 Brink's Co.The 689,400 239,500 General Electric Co. 8,298,675 66,800 Honeywell International, Inc. 2,446,884 13,300 ITT Industries, Inc. 1,298,479 43,500 Pall Corp. 1,320,660 91,000 Tyco International, Ltd. 2,657,200 --------------- 22,155,488 --------------- Office & Business Equipment -- 0.7% 325,700 Xerox Corp.(c) 4,491,403 --------------- Office Furnishings -- 0.3% 243,939 Interface, Inc., Class A(c) 1,963,709 --------------- Oil & Gas -- 3.1% 33,400 Baker Hughes, Inc. 1,708,744 31,700 Burlington Resources, Inc. 1,751,108 173,375 Energy Partners, Ltd.(c) 4,544,159 48,725 EOG Resources, Inc. 2,767,580
See accompanying notes to financial statements. 37 IXIS U.S. DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------ Oil & Gas -- continued 44,600 Halliburton Co. $ 2,132,772 34,100 Southwestern Energy Co.(c) 1,602,018 93,050 Transocean, Inc.(c) 5,021,909 --------------- 19,528,290 --------------- Oil & Gas Services -- 1.8% 170,575 FMC Technologies, Inc.(c) 5,453,283 18,600 Grant Prideco, Inc.(c) 491,970 38,000 Schlumberger, Ltd. 2,885,720 78,700 Universal Compression Holdings, Inc.(c) 2,852,088 --------------- 11,683,061 --------------- Pharmaceuticals -- 3.0% 70,500 Abbott Laboratories 3,455,205 49,450 Amylin Pharmaceuticals, Inc.(c)(d) 1,034,989 39,200 Avon Products, Inc. 1,483,720 72,400 Bristol-Myers Squibb Co. 1,808,552 37,700 Express Scripts, Inc.(c)(d) 1,884,246 23,325 Idenix Pharmaceuticals, Inc.(c) 505,686 44,825 Medco Health Solutions, Inc.(c) 2,391,862 96,200 Omnicare, Inc. 4,081,766 167,025 Perrigo Co. 2,328,329 --------------- 18,974,355 --------------- Pipelines -- 0.4% 37,775 Questar Corp. 2,489,373 --------------- Real Estate -- 1.7% 56,725 CB Richard Ellis Group, Inc., Class A(c) 2,487,959 34,725 St. Joe Co. (The)(d) 2,831,477 224,250 Trammell Crow Co.(c) 5,435,820 --------------- 10,755,256 --------------- REITs -- Financial Services -- 0.3% 37,450 CBL & Associates Properties, Inc. 1,612,972 --------------- REITs -- Shopping Centers -- 0.6% 87,975 Developers Diversified Realty Corp. 4,043,331 --------------- Restaurants -- 0.5% 63,000 Yum! Brands, Inc. 3,281,040 --------------- Retail -- 7.6% 40,125 Advance Auto Parts(c) 2,590,069 83,275 Applebee's International, Inc. 2,205,955 71,625 BJ's Wholesale Club, Inc.(c) 2,327,096 27,400 CBRL Group, Inc. 1,064,764 69,750 Chico's FAS, Inc.(c)(d) 2,391,030 46,400 Costco Wholesale Corp. 2,079,648 25,875 Family Dollar Stores 675,338 219,400 Gap (The), Inc. 4,333,150 142,700 Home Depot, Inc. 5,551,030 61,000 Kohl's Corp.(c) 3,410,510 84,700 Limited Brands, Inc. 1,814,274 242,400 McDonald's Corp. 6,726,600 10,000 MSC Industrial Direct Co., Inc. 337,500 7,375 Regis Corp. 288,215 99,950 Staples, Inc. 2,130,934 35,300 Starbucks Corp.(c) 1,823,598 90,725 Talbots, Inc. 2,945,841 43,575 Urban Outfitters, Inc.(c)(d) 2,470,267 65,000 Wal-Mart Stores, Inc. 3,133,000 --------------- 48,298,819 ---------------
Shares Description Value (a) - -------------------------------------------------------------------------------------- Savings & Loans -- 1.1% 170,000 Washington Mutual, Inc.(d) $ 6,917,300 --------------- Semiconductors -- 2.3% 80,700 Cypress Semiconductor Corp.(c) 1,016,013 232,375 Entegris, Inc.(c) 2,300,513 132,500 Intel Corp. 3,452,950 59,700 Marvell Technology Group, Ltd.(c) 2,270,988 107,125 MEMC Electronic Materials, Inc.(c) 1,689,361 87,600 Microsemi Corp.(c) 1,646,880 556,375 ON Semiconductor Corp.(c) 2,559,325 --------------- 14,936,030 --------------- Software -- 3.8% 107,750 Activision, Inc.(c) 1,780,030 51,125 Autodesk, Inc. 1,757,166 156,350 Certegy, Inc.(d) 5,975,697 327,650 Compuware Corp.(c) 2,355,804 21,925 Dun & Bradstreet Corp.(c) 1,351,676 80,300 First Data Corp. 3,223,242 224,800 Microsoft Corp. 5,584,032 125,550 Sybase, Inc.(c) 2,303,843 --------------- 24,331,490 --------------- Telecommunications -- 3.1% 140,875 ADTRAN, Inc. 3,492,291 84,400 Corning, Inc. 1,402,728 101,750 Harris Corp. 3,175,618 108,650 Juniper Networks, Inc.(c)(d) 2,735,807 124,475 Nextel Partners, Inc., Class A(c)(d) 3,133,036 27,525 NII Holdings, Inc., Class B(c)(d) 1,759,949 46,200 Telefonaktiebolaget LM Ericsson, Sponsored ADR(d) 1,476,090 165,175 Valor Communications Group, Inc. 2,279,415 --------------- 19,454,934 --------------- Transportation -- 1.3% 206,750 Laidlaw International, Inc.(c) 4,982,675 53,000 Union Pacific Corp. 3,434,400 --------------- 8,417,075 --------------- Total Common Stocks (Identified Cost $531,112,060) 631,444,200 --------------- Principal Amount - -------------------------------------------------------------------------------------- Short Term Investments --15.1% $ 4,993,909 Repurchase Agreement with Investors Bank & Trust Co. dated 6/30/2005 at $4,994,188 on 7/01/2005, collateralized by $4,874,421 Small Business Administration Bond, 6.125% due 9/25/2022 valued at $5,243,604 4,993,909 4,210,078 American Beacon Fund, 3.18%, due 7/01/2005(e) 4,210,078 6,020,320 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 6,020,320 1,352,881 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 1,352,881 3,382,202 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 3,382,202 5,539,736 BGI Institutional Money Market Fund(e) 5,539,736 5,528,502 Calyon, 3.09%, due 7/01/2005(e) 5,528,502 3,382,202 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 3,382,202 3,652,778 Compass Securitization, 3.16%, due 7/11/2005(e) 3,652,778 3,692,553 Fairway Finance, 3.26%, due 7/25/2005(e) 3,692,553 3,382,202 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 3,382,202 2,705,762 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 2,705,762 2,867,496 Goldman Sachs Financial Square Prime Obligations Fund(e) 2,867,496 3,482,315 Greyhawk Funding, 3.26%, due 8/01/2005(e) 3,482,315 3,382,202 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 3,382,202
See accompanying notes to financial statements. 38 IXIS U.S. DIVERSIFIED PORTFOLIO -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Principal Amount Description Value (a) - ------------------------------------------------------------------------------------------------------ Short Term Investments -- continued $ 3,382,202 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) $ 3,382,202 432,952 Merrimac Cash Fund-Premium Class(e) 432,952 5,195,407 National Australia Bank, 3.26%, due 7/06/2005(e) 5,195,407 3,382,202 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 3,382,202 3,382,202 Prefco, 3.26%, due 7/26/2005(e) 3,382,202 2,644,092 Rabobank Nederland, 3.35%, due 7/01/2005(e) 2,644,092 3,328,539 Ranger Funding, 3.19%, due 7/15/2005(e) 3,328,539 3,382,202 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 3,382,202 6,764,406 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 6,764,406 3,382,202 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 3,382,202 3,363,995 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 3,363,995 --------------- Total Short Term Investments (Identified Cost $96,215,539) 96,215,539 --------------- Total Investments -- 114.4% (Identified Cost $627,327,599)(b) 727,659,739 Other assets less liabilities (91,364,392) --------------- Total Net Assets -- 100% $ 636,295,347 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales): At June 30, 2005, the net unrealized appreciation on investments based on cost of $627,327,599 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 110,643,305 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (10,311,165) --------------- Net unrealized appreciation $ 100,332,140 =============== At December 31, 2004, the Fund had a capital loss carryover of approximately $224,285,919 of which $161,817,021 expires on December 31, 2009 and $62,468,898 expires on December 31, 2010. These amounts may be available to offset future realized capital gains, if any, to the extent provided by regulations. For the year ended December 31, 2004, the Fund has elected to defer $2,008 of foreign currency losses attributable to Post-October losses. (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2005. (e) Represents investments of securities lending collateral. ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States. REITs Real Estate Investment Trusts
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited) Retail 7.6% Media 5.5 Health Care -- Products 5.2 Diversified Financial Services 4.6 Software 3.8 Commercial Services 3.8 Banks 3.8 Miscellaneous -- Manufacturing 3.5 Health Care -- Services 3.2 Oil & Gas 3.1 Telecommunications 3.1 Pharmaceuticals 3.0 Insurance 3.0 Lodging 2.4 Semiconductors 2.3 Food 2.3 Electric 2.3 Chemicals 2.2 Beverages 2.1 Computers 2.1 Electronics 2.0 Other, less than 2% each 28.4
See accompanying notes to financial statements. 39 IXIS VALUE FUND -- SCHEDULE OF INVESTMENTS Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ------------------------------------------------------------------- Common Stocks -- 96.6% of Total Net Assets Aerospace & Defense -- 1.9% 4,600 General Dynamics Corp. $ 503,884 7,600 Lockheed Martin Corp. 493,012 14,650 Northrop Grumman Corp. 809,412 1,000 Raytheon Co. 39,120 10,900 United Technologies Corp. 559,715 --------------- 2,405,143 --------------- Agriculture -- 1.2% 15,900 Altria Group, Inc. 1,028,094 22,400 Archer-Daniels-Midland Co. 478,912 --------------- 1,507,006 --------------- Banks -- 5.1% 18,975 Bank of America Corp. 865,450 3,600 Bear Stearns Cos. (The), Inc. 374,184 900 Comerica, Inc. 52,020 9,000 First Bancorp Puerto Rico 361,350 2,100 M&T Bank Corp.(c) 220,836 5,850 SunTrust Banks, Inc.(c) 422,604 70,500 U.S. Bancorp(c) 2,058,600 16,576 Wachovia Corp. 822,170 21,200 Wells Fargo & Co. 1,305,496 --------------- 6,482,710 --------------- Beverages -- 4.1% 10,100 Anheuser-Busch Cos., Inc. 462,075 55,000 Coca-Cola Co. (The) 2,296,250 65,000 Pepsi Bottling Group, Inc. 1,859,650 11,400 PepsiCo, Inc. 614,802 --------------- 5,232,777 --------------- Biotechnology -- 0.3% 5,300 Amgen, Inc.(d) 320,438 --------------- Building Materials -- 1.0% 15,300 Masco Corp.(c) 485,928 7,900 USG Corp.(c)(d) 335,750 11,600 York International Corp. 440,800 --------------- 1,262,478 --------------- Chemicals -- 0.6% 16,600 Praxair, Inc. 773,560 --------------- Coal -- 0.5% 11,250 Peabody Energy Corp. 585,450 --------------- Commercial Services -- 2.1% 23,050 Accenture, Ltd., Class A(d) 522,543 98,800 Cendant Corp.(c) 2,210,156 --------------- 2,732,699 --------------- Computers -- 1.7% 74,525 Hewlett-Packard Co. 1,752,083 6,500 International Business Machines Corp. 482,300 --------------- 2,234,383 --------------- Diversified Financial Services -- 8.6% 24,850 American Express Co. 1,322,765 19,125 CIT Group, Inc. 821,801 56,908 Citigroup, Inc. 2,630,857 90,597 JPMorgan Chase & Co. 3,199,886 11,600 Lehman Brothers Holdings, Inc.(c) 1,151,648 4,600 MBNA Corp. 120,336 21,500 Merrill Lynch & Co., Inc. 1,182,715
Shares Description Value (a) - ------------------------------------------------------------------------ Diversified Financial Services -- continued 8,250 Morgan Stanley $ 432,877 2,100 SLM Corp. 106,680 --------------- 10,969,565 --------------- Electric -- 4.5% 9,625 Constellation Energy Group, Inc. 555,266 12,200 Dominion Resources, Inc.(c) 895,358 6,300 Entergy Corp.(c) 475,965 21,075 Exelon Corp. 1,081,780 49,825 PG&E Corp. 1,870,430 4,500 TXU Corp. 373,905 12,300 Wisconsin Energy Corp. 479,700 --------------- 5,732,404 --------------- Electrical Components & Equipment -- 0.4% 7,200 Energizer Holdings, Inc.(d) 447,624 --------------- Electronics -- 0.4% 11,400 Amphenol Corp., Class A 457,938 5,100 Applera Corp. -- Applied Biosystems Group 100,317 --------------- 558,255 --------------- Engineering & Construction -- 0.3% 59,600 ABB, Ltd., Sponsored ADR(d) 385,612 --------------- Environmental Control -- 1.9% 87,000 Waste Management, Inc. 2,465,580 --------------- Food -- 0.6% 4,400 Supervalu, Inc. 143,484 36,100 Tyson Foods, Inc., Class A 642,580 --------------- 786,064 --------------- Gas -- 0.1% 1,700 KeySpan Corp.(c) 69,190 2,400 UGI Corp. 66,960 --------------- 136,150 --------------- Health Care -- Products -- 3.7% 67,000 Baxter International, Inc. 2,485,700 8,000 Becton Dickinson & Co. 419,760 21,100 Boston Scientific Corp.(c)(d) 569,700 3,000 Conmed Corp.(d) 92,310 7,300 Cooper, Cos. (The), Inc.(c) 444,278 11,700 Johnson & Johnson 760,500 --------------- 4,772,248 --------------- Health Care -- Services -- 2.9% 1,800 Coventry Health Care, Inc.(d) 127,350 4,900 Genesis Healthcare Corp.(d) 226,772 11,500 Laboratory Corp. of America Holdings(d) 573,850 4,500 Pediatrix Medical Group, Inc.(d) 330,930 10,500 Quest Diagnostics 559,335 9,100 Triad Hospitals, Inc.(d) 497,224 10,900 UnitedHealth Group, Inc. 568,326 12,525 Universal Health Services, Inc., Class B(c) 778,804 --------------- 3,662,591 --------------- Home Builders -- 0.4% 7,800 Beazer Homes USA, Inc.(c) 445,770 3,750 Technical Olympic USA, Inc. 91,050 --------------- 536,820 --------------- Insurance -- 4.2% 9,900 Allmerica Financial Corp.(d) 367,191 19,900 Allstate Corp. (The) 1,189,025
See accompanying notes to financial statements. 40 IXIS VALUE FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - --------------------------------------------------------------------- Insurance -- continued 7,000 AMBAC Financial Group, Inc. $ 488,320 10,875 American International Group, Inc. 631,837 140 Berkshire Hathaway, Inc., Class B(c)(d) 389,690 5,200 Genworth Financial Inc., Class A 157,196 13,100 HCC Insurance Holdings, Inc. 496,097 9,100 Hilb, Rogal & Hobbs Co. 313,040 2,400 Loews Corp. 186,000 12,300 Old Republic International Corp. 311,067 6,500 Principal Financial Group 272,350 9,450 Prudential Financial, Inc. 620,487 --------------- 5,422,300 --------------- Internet -- 0.1% 6,200 Internet Security Systems(d) 125,798 --------------- Iron & Steel -- 0.1% 7,000 Steel Dynamics, Inc. 183,750 --------------- Leisure Time -- 0.9% 20,000 Carnival Corp.(c) 1,091,000 --------------- Lodging -- 0.2% 2,900 Marriott International, Inc., Class A 197,838 --------------- Machinery--Construction & Mining -- 0.1% 3,200 Terex Corp.(d) 126,080 --------------- Media -- 7.8% 70,000 Cablevision Systems Corp., Class A(d) 2,254,000 6,000 Clear Channel Communications, Inc. 185,580 42,675 DIRECTV Group (The), Inc.(d) 661,462 12,000 Liberty Global Inc., Class A(d) 560,040 200,000 Liberty Media Corp., Class A(d) 2,038,000 12,600 McGraw-Hill Cos. (The), Inc. 557,550 44,350 News Corp., Inc., Class A 717,583 162,425 Time Warner, Inc.(d) 2,714,122 11,400 Walt Disney Co. (The) 287,052 --------------- 9,975,389 --------------- Mining -- 0.7% 11,100 Inco, Ltd.(c) 419,025 900 Newmont Mining Corp. 35,127 4,200 Phelps Dodge Corp. 388,500 --------------- 842,652 --------------- Miscellaneous -- Manufacturing -- 2.2% 34,500 General Electric Co. 1,195,425 21,600 Honeywell International, Inc. 791,208 26,925 Tyco International, Ltd. 786,210 --------------- 2,772,843 --------------- Oil & Gas -- 7.5% 1,200 Anadarko Petroleum Corp. 98,580 8,400 BP PLC, Sponsored ADR 523,992 9,600 ChevronTexaco Corp. 536,832 12,300 Comstock Resources, Inc.(d) 311,067 32,300 ConocoPhillips 1,856,927 2,800 Devon Energy Corp. 141,904 69,650 Exxon Mobil Corp. 4,002,785 23,700 GlobalSantaFe Corp. 966,960 3,200 Houston Exploration Co.(d) 169,760 8,050 Quicksilver Resources, Inc.(c)(d) 514,637 9,200 Tesoro Corp. 427,984 --------------- 9,551,428 ---------------
Shares Description Value (a) - ---------------------------------------------------------------------- Oil & Gas Services -- 1.3% 20,950 Halliburton Co. $ 1,001,829 8,000 Oil States International, Inc.(d) 201,360 12,600 Universal Compression Holdings, Inc.(d) 456,624 --------------- 1,659,813 --------------- Pharmaceuticals -- 3.7% 24,100 Abbott Laboratories 1,181,141 6,900 AmerisourceBergen Corp. 477,135 3,100 Cardinal Health, Inc. 178,498 34,100 Merck & Co., Inc.(c) 1,050,280 67,317 Pfizer, Inc. 1,856,603 --------------- 4,743,657 --------------- REITs -- Healthcare -- 0.4% 19,100 Health Care Property Investors, Inc.(c) 516,464 --------------- REITs -- Mortgage -- 0.6% 12,600 American Home Mortgage Investment Corp. 440,496 12,100 Ventas Inc. 365,420 --------------- 805,916 --------------- REITs -- Regional Malls -- 0.4% 6,750 Simon Property Group, Inc.(c) 489,308 --------------- Restaurants -- 1.6% 40,000 Yum! Brands, Inc. 2,083,200 --------------- Retail -- 10.4% 35,000 Costco Wholesale Corp. 1,568,700 11,600 CVS Corp. 337,212 15,225 Federated Department Stores(c) 1,115,688 80,000 Gap (The), Inc. 1,580,000 15,000 Home Depot, Inc. 583,500 18,750 J.C. Penney Co., Inc. 985,875 9,900 Kohl's Corp.(d) 553,509 15,900 Limited Brands, Inc. 340,578 103,300 McDonald's Corp. 2,866,575 16,450 Office Depot, Inc.(d) 375,718 11,000 Outback Steakhouse, Inc. 497,640 8,000 Regis Corp. 312,640 52,000 Tiffany & Co. 1,703,520 15,100 United Auto Group, Inc.(c) 449,980 --------------- 13,271,135 --------------- Savings & Loans -- 3.6% 5,300 Firstfed Financial Corp.(d) 315,933 24,000 People's Bank 725,760 80,000 Sovereign Bancorp, Inc.(c) 1,787,200 45,000 Washington Mutual, Inc.(c) 1,831,050 --------------- 4,659,943 --------------- Semiconductors -- 2.1% 26,415 Freescale Semiconductor, Inc., Class B(d) 559,470 56,200 Intel Corp. 1,464,572 41,200 MEMC Electronic Materials, Inc.(d) 649,724 --------------- 2,673,766 --------------- Software -- 1.1% 10,575 First Data Corp. 424,481 18,700 Microsoft Corp. 464,508 41,400 Oracle Corp.(d) 546,480 --------------- 1,435,469 ---------------
See accompanying notes to financial statements. 41 IXIS VALUE FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ---------------------------------------------------------------------------------------- Telecommunications -- 3.8% 7,700 Alltel Corp.(c) $ 479,556 49,850 Avaya, Inc.(d) 414,752 31,150 BellSouth Corp.(c) 827,656 12,050 CenturyTel, Inc. 417,292 43,100 Cisco Systems, Inc.(d) 823,641 36,400 Motorola, Inc. 664,664 25,300 Nokia OYJ, Sponsored ADR 420,992 34,500 SBC Communications, Inc.(c) 819,375 --------------- 4,867,928 --------------- Toys, Games & Hobbies -- 0.5% 26,150 Hasbro, Inc.(c) 543,659 3,500 Jakks Pacific, Inc.(c)(d) 67,235 --------------- 610,894 --------------- Transportation -- 1.0% 14,100 Burlington Northern Santa Fe Corp. 663,828 11,100 Norfolk Southern Corp. 343,656 5,100 Overseas Shipholding Group 304,215 --------------- 1,311,699 --------------- Total Common Stocks (Identified Cost $100,516,846) 123,407,827 --------------- Principal Amount - ---------------------------------------------------------------------------------------- Short Term Investments --19.3% $ 3,892,302 Repurchase Agreement with Investors Bank & Trust Co. dated 6/30/2005 at 2.01% to be repurchased at $3,892,519 on 07/01/2005, collateralized by $4,064,884 Federal National Mortgage Association Bond, 4.125%, due 05/01/2033, valued at $4,086,917 3,892,302 959,503 American Beacon Fund, 3.18%, due 7/01/2005(e) 959,503 1,372,070 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 1,372,070 308,330 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 308,330 770,825 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 770,825 1,262,540 BGI Institutional Money Market Fund(e) 1,262,540 1,259,980 Calyon, 3.09%, due 7/01/2005(e) 1,259,980 770,825 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 770,825 832,492 Compass Securitization, 3.16%, due 7/11/2005(e) 832,492 841,555 Fairway Finance, 3.26%, due 7/25/2005(e) 841,555 770,824 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 770,824 616,660 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 616,660 653,519 Goldman Sachs Financial Square Prime Obligations Fund(e) 653,519 793,642 Greyhawk Funding, 3.26%, due 8/01/2005(e) 793,642 770,824 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 770,824 770,824 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 770,824 98,673 Merrimac Cash Fund-Premium Class(e) 98,673 1,184,068 National Australia Bank, 3.26%, due 7/06/2005(e) 1,184,068 770,825 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 770,825 770,825 Prefco, 3.26%, due 7/26/2005(e) 770,825 602,605 Rabobank Nederland, 3.35%, due 7/01/2005(e) 602,605 758,595 Ranger Funding, 3.19%, due 7/15/2005(e) 758,595 770,824 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 770,824 1,541,650 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 1,541,650 770,824 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 770,824 766,675 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 766,675 --------------- Total Short Term Investments (Identified Cost $24,682,279) 24,682,279 ---------------
Total Investments -- 115.9% (Identified Cost $125,199,125)(b) $148,090,106 Other assets less liabilities (20,342,763) ------------ Total Net Assets -- 100% $127,747,343 ============ (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales): At June 30, 2005, the net unrealized appreciation on investments based on cost of $125,199,125 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 24,360,776 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (1,469,795) ------------ Net unrealized appreciation $ 22,890,981 ============ (c) All or a portion of this security was on loan to brokers at June 30, 2005. (d) Non-income producing security. (e) Represents investments of securities lending collateral. ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States. REITs Real Estate Investment Trusts
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited) Retail 10.4% Diversified Financial Services 8.6 Media 7.8 Oil & Gas 7.5 Banks 5.1 Electric 4.5 Insurance 4.2 Beverages 4.1 Telecommunications 3.8 Health Care -- Products 3.7 Pharmaceuticals 3.7 Savings & Loans 3.6 Health Care -- Services 2.9 Miscellaneous -- Manufacturing 2.2 Commercial Services 2.1 Semiconductors 2.1 Other, less than 2% each 20.3
See accompanying notes to financial statements. 42 VAUGHAN NELSON SMALL CAP VALUE FUND -- SCHEDULE OF INVESTMENTS Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ---------------------------------------------------------------------- Common Stocks -- 98.9% of Total Net Assets Aerospace & Defense -- 6.3% 30,125 Alliant Techsystems, Inc.(c)(d) $ 2,126,825 48,825 DRS Technologies, Inc.(d) 2,503,746 29,075 Esterline Technologies Corp.(c) 1,165,326 28,612 Moog, Inc., Class A(c)(d) 900,992 --------------- 6,696,889 --------------- Automobiles -- 1.3% 77,925 Monaco Coach Corp.(d) 1,339,531 --------------- Banks -- 6.1% 18,775 City Holding Co. 685,663 26,976 MB Financial, Inc. 1,074,454 47,375 Provident Bankshares Corp. 1,511,736 138,240 Republic Bancorp, Inc. 2,070,835 40,850 WesBanco, Inc. 1,226,317 --------------- 6,569,005 --------------- Building Materials -- 2.4% 182,800 U.S. Concrete, Inc.(c) 1,182,716 36,000 York International Corp. 1,368,000 --------------- 2,550,716 --------------- Commercial Services -- 7.1% 34,300 Consolidated Graphics, Inc.(c) 1,398,411 51,150 Dollar Thrifty Automotive Group, Inc.(c) 1,942,677 64,050 McGrath Rentcorp 1,517,985 25,675 Monro Muffler, Inc.(c) 757,669 3,575 Strayer Education, Inc. 308,379 75,325 Team, Inc.(c) 1,619,487 --------------- 7,544,608 --------------- Distribution & Wholesale -- 1.3% 32,700 Watsco, Inc. 1,393,020 --------------- Diversified Financial Services -- 3.3% 30,850 Financial Federal Corp. 1,192,044 83,975 Raymond James Financial, Inc. 2,372,294 --------------- 3,564,338 --------------- Electric -- 1.6% 71,900 Westar Energy Inc. 1,727,757 --------------- Electrical Components & Equipment -- 1.8% 57,300 MTS Systems Corp. 1,924,134 --------------- Food -- 1.7% 48,125 Corn Products International, Inc. 1,143,450 32,050 Gold Kist, Inc.(c)(d) 691,639 --------------- 1,835,089 --------------- Health Care -- Products -- 1.6% 38,800 Invacare Corp. 1,721,168 --------------- Health Care -- Services -- 5.2% 52,762 Healthcare Services Group, Inc. 1,059,461 28,300 Pediatrix Medical Group, Inc.(c) 2,081,182 45,175 Triad Hospitals, Inc.(c) 2,468,362 --------------- 5,609,005 --------------- Household Products & Wares -- 1.5% 48,625 Yankee Candle Co. (The), Inc. 1,560,862 --------------- Insurance -- 5.7% 40,875 Allmerica Financial Corp.(c) 1,516,054 70,300 HCC Insurance Holdings, Inc. 2,662,261 54,275 Hilb, Rogal & Hobbs Co. 1,867,060 --------------- 6,045,375 ---------------
Shares Description Value (a) - --------------------------------------------------------------------- Investment Companies -- 5.0% 58,050 iShares Russell 2000 Value Index Fund(d) $ 3,732,615 96,100 MCG Capital Corp. 1,641,388 --------------- 5,374,003 --------------- Iron & Steel -- 1.1% 60,862 Gibraltar Industries, Inc. 1,128,381 --------------- Leisure Time -- 1.7% 139,375 K2, Inc.(c) 1,767,275 --------------- Lodging -- 0.8% 90,775 La Quinta Corp.(c) 846,931 --------------- Machinery -- Diversified -- 3.2% 48,950 Briggs & Stratton Corp.(d) 1,694,649 50,300 Nordson Corp. 1,724,284 --------------- 3,418,933 --------------- Media -- 1.3% 82,050 Journal Register Co.(c) 1,436,695 --------------- Miscellaneous -- Manufacturing -- 2.1% 209,725 Jacuzzi Brands, Inc.(c) 2,250,349 --------------- Oil & Gas -- 8.7% 86,025 Comstock Resources, Inc.(c) 2,175,572 39,425 GMX Resources, Inc.(c) 567,326 87,875 Oil States International, Inc.(c) 2,211,814 48,200 Petrohawk Energy Corp.(c)(d) 520,560 26,400 Southwestern Energy Co.(c)(d) 1,240,272 27,200 Ultra Petroleum Corp.(c)(d) 825,792 49,050 Whiting Petroleum Corp.(c) 1,781,005 --------------- 9,322,341 --------------- Oil & Gas Services -- 2.0% 57,875 Universal Compression Holdings, Inc.(c) 2,097,390 --------------- Pipelines -- 1.7% 26,425 Equitable Resources, Inc. 1,796,900 --------------- Real Estate -- 2.0% 49,275 CB Richard Ellis Group, Inc., Class A(c) 2,161,202 --------------- REITs -- Healthcare -- 1.3% 37,425 Healthcare Realty Trust, Inc. 1,444,979 --------------- REITs -- Hotels -- 3.8% 224,825 Ashford Hospitality Trust, Inc. 2,428,110 153,300 Highland Hospitality Corp. 1,601,985 --------------- 4,030,095 --------------- REITs -- Mortgage -- 1.0% 20,100 Redwood Trust, Inc.(d) 1,037,160 --------------- REITs -- Office Buildings -- 1.1% 79,425 American Financial Realty Trust 1,221,557 --------------- Retail -- 7.1% 43,850 Regis Corp. 1,713,658 143,450 Triarc Cos., Inc., Class B(d) 2,131,667 68,925 United Auto Group, Inc.(d) 2,053,965 54,000 Zale Corp.(c) 1,711,260 --------------- 7,610,550 --------------- Semiconductors -- 1.1% 40,675 ATMI, Inc.(c)(d) 1,179,982 --------------- Software -- 1.4% 56,750 Reynolds & Reynolds Co. (The), Class A 1,533,953 ---------------
See accompanying notes to financial statements. 43 VAUGHAN NELSON SMALL CAP VALUE FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - --------------------------------------------------------------------------------------------------- Transportation -- 4.1% 81,825 Arlington Tankers, Ltd. $ 1,782,967 81,650 Genesee & Wyoming, Inc., Class A(c)(d) 2,221,697 13,150 Landstar System, Inc.(c) 396,078 --------------- 4,400,742 --------------- Trucking & Leasing -- 1.5% 29,860 AMERCO, Inc. 1,599,003 --------------- Total Common Stocks (Identified Cost $92,202,088) 105,739,918 --------------- Principal Amount - --------------------------------------------------------------------------------------------------- Short Term Investments -- 18.7% $ 1,424,573 Repurchase Agreement with Investors Bank & Trust Co. dated 6/30/2005 at $1,424,652 on 7/01/2005, collateralized by $1,383,523 Small Business Administration Bond, 6.125% due 08/25/2026 valued at $1,495,801 1,424,573 858,806 American Beacon Fund, 3.18%, due 7/01/2005(e) 858,806 1,228,075 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 1,228,075 275,972 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 275,972 689,930 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 689,930 1,130,041 BGI Institutional Money Market Fund(e) 1,130,041 1,127,749 Calyon, 3.09%, due 7/01/2005(e) 1,127,749 689,930 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 689,930 745,124 Compass Securitization, 3.16%, due 7/11/2005(e) 745,124 753,237 Fairway Finance, 3.26%, due 7/25/2005(e) 753,237 689,930 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 689,930 551,944 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 551,944 584,935 Goldman Sachs Financial Square Prime Obligations Fund(e) 584,935 710,351 Greyhawk Funding, 3.26%, due 8/01/2005(e) 710,351 689,930 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 689,930 689,929 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 689,929 88,317 Merrimac Cash Fund-Premium Class(e) 88,317 1,059,802 National Australia Bank, 3.26%, due 7/06/2005(e) 1,059,802 689,929 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 689,929 689,929 Prefco, 3.26%, due 7/26/2005(e) 689,929 539,364 Rabobank Nederland, 3.35%, due 7/01/2005(e) 539,364 678,983 Ranger Funding, 3.19%, due 7/15/2005(e) 678,983 689,930 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 689,930 1,379,859 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 1,379,859 689,929 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 689,929 686,215 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 686,215 --------------- Total Short Term Investments (Identified Cost $20,032,713) 20,032,713 --------------- Total Investments -- 117.6% (Identified Cost $112 ,234,801)(b) 125,772,631 Other assets less liabilities (18,866,193) --------------- Total Net Assets -- 100% $ 106,906,438 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales): At June 30, 2005, the net unrealized appreciation on investments based on cost of $112,234,801 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 15,206,656 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (1,668,826) --------------- Net unrealized appreciation $ 13,537,830 ===============
At December 31, 2004, the Fund had a capital loss carryover of approximately $42,306,805 of which $15,016,855 expires on December 31, 2009 and $27,289,950 expires on December 31, 2010. These amounts may be available to offset future realized capital gains, if any, to the extent provided by regulations. (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2005. (e) Represents investments of securities lending collateral. REITs Real Estate Investment Trusts
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited) Oil & Gas 8.7% Retail 7.1 Commercial Services 7.1 Aerospace & Defense 6.3 Banks 6.1 Insurance 5.7 Health Care -- Services 5.2 Investment Companies 5.0 Transportation 4.1 REITs -- Hotels 3.8 Diversified Financial Services 3.3 Machinery -- Diversified 3.2 Building Materials 2.4 Miscellaneous -- Manufacturing 2.1 Real Estate 2.0 Oil & Gas Services 2.0 Other, less than 2% each 24.8
See accompanying notes to financial statements. 44 WESTPEAK CAPITAL GROWTH FUND -- SCHEDULE OF INVESTMENTS Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ---------------------------------------------------------------------- Common Stocks -- 99.1% of Total Net Assets Aerospace & Defense -- 2.3% 8,300 Boeing Co. (The) $ 547,800 5,800 General Dynamics Corp. 635,332 8,300 Teledyne Technologies, Inc.(c) 270,414 --------------- 1,453,546 --------------- Apparel Retailers -- 0.5% 4,700 Abercrombie & Fitch Co.(d) 322,890 --------------- Banks -- 0.8% 17,700 U.S. Bancorp(d) 516,840 --------------- Beverages -- 2.5% 9,500 Anheuser-Busch Cos., Inc. 434,625 35,700 Pepsi Bottling Group, Inc. 1,021,377 2,900 PepsiCo, Inc. 156,397 --------------- 1,612,399 --------------- Biotechnology -- 2.5% 27,000 Amgen, Inc.(c)(d) 1,632,420 --------------- Commercial Services -- 0.9% 26,500 Cendant Corp.(d) 592,805 --------------- Computers -- 3.7% 15,500 Dell, Inc.(c) 612,405 24,300 International Business Machines Corp. 1,803,060 --------------- 2,415,465 --------------- Cosmetics & Personal Care -- 2.2% 20,100 Kimberly-Clark Corp. 1,258,059 3,300 Procter & Gamble Co.(d) 174,075 --------------- 1,432,134 --------------- Diversified Financial Services -- 3.0% 24,700 American Express Co. 1,314,781 11,300 E*TRADE Financial Corp.(c) 158,087 2,500 Fannie Mae 146,000 3,800 Franklin Resources, Inc. 292,524 --------------- 1,911,392 --------------- Electrical Components & Equipment -- 2.0% 20,400 Energizer Holdings, Inc.(c) 1,268,268 --------------- Electronics -- 3.0% 29,900 Applera Corp.--Applied Biosystems Group 588,133 47,500 Texas Instruments, Inc. 1,333,325 --------------- 1,921,458 --------------- Food -- 2.2% 4,400 H.J. Heinz Co. 155,848 6,100 Hershey Co. (The)(d) 378,810 3,200 McCormick & Co., Inc. 104,576 11,900 Sanderson Farms, Inc. 540,736 3,300 WM Wrigley Jr. Co. 227,172 --------------- 1,407,142 --------------- Health Care -- Products -- 9.4% 23,900 Becton Dickinson & Co. 1,254,033 38,700 Boston Scientific Corp.(c)(d) 1,044,900 51,900 Johnson & Johnson 3,373,500 7,600 Medtronic, Inc. 393,604 --------------- 6,066,037 --------------- Health Care -- Services -- 5.7% 10,300 Aetna, Inc. 853,046 10,500 Coventry Health Care, Inc.(c) 742,875
Shares Description Value (a) - ----------------------------------------------------------------------- Health Care -- Services -- continued 40,200 UnitedHealth Group, Inc. $ 2,096,028 --------------- 3,691,949 --------------- Home Builders -- 3.3% 11,500 Meritage Homes Corp.(c)(d) 914,250 1,500 NVR, Inc.(c)(d) 1,215,000 --------------- 2,129,250 --------------- Insurance -- 2.2% 5,000 AMBAC Financial Group, Inc. 348,800 12,200 Genworth Financial Inc., Class A 368,806 3,200 Prudential Financial, Inc. 210,112 2,600 Radian Group, Inc. 122,772 10,650 W.R. Berkley Corp. 379,992 --------------- 1,430,482 --------------- Internet -- 0.8% 13,300 Internet Security Systems(c) 269,857 7,700 j2 Global Communications, Inc.(c)(d) 265,188 --------------- 535,045 --------------- Machinery -- Construction & Mining -- 1.3% 22,100 Terex Corp.(c) 870,740 --------------- Media -- 1.3% 32,100 Walt Disney Co. (The) 808,278 --------------- Mining -- 0.2% 3,400 Newmont Mining Corp. 132,702 --------------- Oil & Gas -- 4.3% 5,900 Burlington Resources, Inc. 325,916 26,800 Oil States International, Inc.(c)(d) 674,556 37,700 Southwestern Energy Co.(c)(d) 1,771,146 --------------- 2,771,618 --------------- Oil & Gas Services -- 0.6% 5,800 Lone Star Technologies(c) 263,900 4,800 Maverick Tube Corp.(c) 143,040 --------------- 406,940 --------------- Pharmaceuticals -- 11.5% 19,800 AmerisourceBergen Corp.(d) 1,369,170 27,000 Cardinal Health, Inc. 1,554,660 7,100 Medco Health Solutions, Inc.(c) 378,856 51,600 Merck & Co., Inc.(d) 1,589,280 91,550 Pfizer, Inc. 2,524,949 --------------- 7,416,915 --------------- REITs -- Mortgage -- 0.9% 16,400 American Home Mortgage Investment Corp. 573,344 --------------- Restaurants -- 0.5% 9,100 Darden Restaurants, Inc. 300,118 --------------- Retail -- 10.7% 21,400 American Eagle Outfitters 655,910 25,700 Best Buy Co., Inc. 1,761,735 55,450 Home Depot, Inc. 2,157,005 17,900 Limited Brands, Inc. 383,418 33,000 Target Corp. 1,795,530 3,900 Wal-Mart Stores, Inc. 187,980 --------------- 6,941,578 --------------- Semiconductors -- 5.7% 26,100 Freescale Semiconductor, Inc., Class B(c) 552,798 120,200 Intel Corp. 3,132,412 --------------- 3,685,210 ---------------
See accompanying notes to financial statements. 45 WESTPEAK CAPITAL GROWTH FUND -- SCHEDULE OF INVESTMENTS (continued) Investments as of June 30, 2005 (unaudited)
Shares Description Value (a) - ----------------------------------------------------------------------------------------- Software -- 8.1% 2,400 Fiserv, Inc.(c) $ 103,080 22,300 IMS Health, Inc. 552,371 111,800 Microsoft Corp. 2,777,112 138,400 Oracle Corp.(c) 1,826,880 --------------- 5,259,443 --------------- Telecommunications -- 5.6% 142,000 Cisco Systems, Inc.(c) 2,713,620 14,600 NII Holdings, Inc., Class B(c)(d) 933,524 --------------- 3,647,144 --------------- Transportation -- 1.4% 11,300 FedEx Corp. 915,413 --------------- Total Common Stocks (Identified Cost $65,833,137) 64,068,965 --------------- Principal Amount - ----------------------------------------------------------------------------------------- Short Term Investments -- 16.9% $ 824,161 Repurchase Agreement with Investors Bank & Trust Co. dated 6/30/2005 at $824,207 on 7/01/2005, collateralized by $856,080 Federal Home Loan Mortgage Corporation Bond, 4.30% due 12/15/2023 valued at $865,369 824,161 466,844 American Beacon Fund, 3.18%, due 7/01/2005(e) 466,844 667,578 Bank of Nova Scotia, 3.11%, due 7/11/2005(e) 667,578 150,017 Bank of Nova Scotia, 3.16%, due 7/15/2005(e) 150,017 375,044 Bank of Nova Scotia, 3.30%, due 7/29/2005(e) 375,044 614,287 BGI Institutional Money Market Fund(e) 614,287 613,041 Calyon, 3.09%, due 7/01/2005(e) 613,041 375,044 Clipper Receivables Corp., 3.19%, due 7/14/2005(e) 375,044 405,047 Compass Securitization, 3.16%, due 7/11/2005(e) 405,047 409,459 Fairway Finance, 3.26%, due 7/25/2005(e) 409,459 375,044 Falcon Asset Securitization Corp., 3.17%, due 7/12/2005(e) 375,044 300,035 General Electric Capital Corp., 3.25%, due 7/08/2005(e) 300,035 317,969 Goldman Sachs Financial Square Prime Obligations Fund(e) 317,969 386,143 Greyhawk Funding, 3.26%, due 8/01/2005(e) 386,143 375,043 Jupiter Securitization Corp., 3.21%, due 7/15/2005(e) 375,043 375,044 Lexington Parker Capital Corp., 3.26%, due 7/19/2005(e) 375,044 48,009 Merrimac Cash Fund-Premium Class(e) 48,009 576,105 National Australia Bank, 3.26%, due 7/06/2005(e) 576,105 375,044 Park Avenue Receivables Corp., 3.23%, due 7/20/2005(e) 375,044 375,044 Prefco, 3.26%, due 7/26/2005(e) 375,044 293,196 Rabobank Nederland, 3.35%, due 7/01/2005(e) 293,196 369,093 Ranger Funding, 3.19%, due 7/15/2005(e) 369,093 375,043 Royal Bank of Canada, 3.25%, due 8/05/2005(e) 375,043 750,087 Royal Bank of Scotland, 3.29%, due 7/12/2005(e) 750,087 375,044 Sheffield Receivables Corp., 3.34%, due 7/15/2005(e) 375,044 373,024 Yorktown Capital LLC, 3.24%, due 7/20/2005(e) 373,024 --------------- Total Short Term Investments (Identified Cost $10,939,489) 10,939,489 --------------- Total Investments -- 116.0% (Identified Cost $76,772,626)(b) 75,008,454 Other assets less liabilities (10,345,838) --------------- Total Net Assets -- 100% $ 64,662,616 ===============
(a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales): At June 30, 2005, the net unrealized depreciation on investments based on cost of $76,772,626 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 5,734,671 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (7,498,843) ----------- Net unrealized depreciation $(1,764,172) =========== At December 31, 2004, the Fund had a capital loss carryover of approximately $53,439,207 of which $22,458,247 expires on December 31, 2009, $26,883,047 expires on December 31, 2010 and $4,097,913 expires on December 31, 2011. These amounts may be available to offset future realized capital gains, if any, to the extent provided by regulations. (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2005. (e) Represents investments of securities lending collateral. REITs Real Estate Investment Trusts
Holdings at June 30, 2005 as a Percentage of Net Assets (unaudited) Pharmaceuticals 11.5% Retail 10.7 Health Care -- Products 9.4 Software 8.1 Health Care -- Services 5.7 Semiconductors 5.7 Telecommunications 5.6 Oil & Gas 4.3 Computers 3.7 Home Builders 3.3 Electronics 3.0 Diversified Financial Services 3.0 Biotechnology 2.5 Beverages 2.5 Aerospace & Defense 2.3 Cosmetics & Personal Care 2.2 Insurance 2.2 Food 2.2 Electrical Components & Equipment 2.0 Other, less than 2% each 9.2
See accompanying notes to financial statements. 46 STATEMENTS OF ASSETS & LIABILITIES June 30, 2005 (unaudited)
CGM Advisor Hansberger Harris Associates Targeted Equity International Focused Value Fund Fund Fund --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ASSETS Investments at cost $ 740,517,940 $ 135,233,237 $ 323,362,321 Net unrealized appreciation (depreciation) 60,776,057 13,060,495 65,913,959 --------------------- --------------------- --------------------- Investments at value (a) 801,293,997 148,293,732 389,276,280 Cash 31,735 24,785 1,503 Foreign cash at value (identified cost $77,384) -- 77,236 -- Receivable for Fund shares sold 18,029 26,479 252,508 Receivable for securities sold 64,811,330 643,538 1,145,021 Dividends and interest receivable 1,689,029 324,490 361,912 Tax reclaims receivable 54,246 54,598 -- Securities lending income receivable 23,810 11,797 7,948 Prepaid insurance expense 3,919 671 1,768 --------------------- --------------------- --------------------- TOTAL ASSETS 867,926,095 149,457,326 391,046,940 --------------------- --------------------- --------------------- LIABILITIES Collateral on securities loaned, at value 64,654,350 19,407,485 58,227,858 Payable for securities purchased 63,722,768 1,033,971 128,064 Payable for Fund shares redeemed 842,733 272,857 1,595,192 Payable to custodian bank -- -- -- Management fees payable 423,643 85,491 273,723 Deferred Trustees' fees 575,055 76,080 46,543 Transfer agent fees payable 171,335 58,019 93,683 Administrative fees payable 40,321 6,189 21,610 Other accounts payable and accrued expenses 113,127 54,537 57,651 --------------------- --------------------- --------------------- TOTAL LIABILITIES 130,543,332 20,994,629 60,444,324 --------------------- --------------------- --------------------- NET ASSETS $ 737,382,763 $ 128,462,697 $ 330,602,616 ===================== ===================== ===================== NET ASSETS CONSIST OF: Paid-in capital $ 755,336,207 $ 119,638,127 $ 254,369,912 Undistributed (overdistributed) net investment income (loss) 2,558,977 386,388 (873,892) Accumulated net realized gain (loss) (81,288,478) (4,613,348) 11,192,637 Net unrealized appreciation (depreciation) of investments and foreign currency translations 60,776,057 13,051,530 65,913,959 --------------------- --------------------- --------------------- NET ASSETS $ 737,382,763 $ 128,462,697 $ 330,602,616 ===================== ===================== ===================== COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE: Class A shares: Net assets $ 670,502,445 $ 75,539,705 $ 94,155,861 ===================== ===================== ===================== Shares of beneficial interest 71,753,509 4,439,167 7,014,890 ===================== ===================== ===================== Net asset value and redemption price per share $ 9.34 $ 17.02 $ 13.42 ===================== ===================== ===================== Offering price per share (100/[100-maximum sales charge] of net asset value) $ 9.91 $ 18.06 $ 14.24 ===================== ===================== ===================== Class B shares: (redemption price is equal to net asset value less any applicable contingent deferred sales charges) Net assets $ 53,611,749 $ 35,949,764 $ 104,689,104 ===================== ===================== ===================== Shares of beneficial interest 6,164,604 2,290,190 8,054,196 ===================== ===================== ===================== Net asset value and offering price per share $ 8.70 $ 15.70 $ 13.00 ===================== ===================== ===================== Class C shares: (redemption price is equal to net asset value less any applicable contingent deferred sales charges) Net assets $ 3,403,221 $ 16,973,228 $ 131,757,651 ===================== ===================== ===================== Shares of beneficial interest 391,401 1,080,861 10,135,332 ===================== ===================== ===================== Net asset value and offering price per share $ 8.69 $ 15.70 $ 13.00 ===================== ===================== ===================== Class Y shares: Net assets $ 9,865,348 -- -- ===================== ===================== ===================== Shares of beneficial interest 1,033,556 -- -- ===================== ===================== ===================== Net asset value, offering and redemption price per share $ 9.55 -- -- ===================== ===================== ===================== (a) Including securities on loan with market values of $ 63,083,299 $ 18,597,626 $ 56,416,027 ===================== ===================== =====================
See accompanying notes to financial statements. 47
Harris Associates Vaughan Nelson Westpeak Large Cap Value IXIS U.S. Diversified IXIS Value Small Cap Capital Growth Fund Portfolio Fund Value Fund Fund - --------------------- --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- --------------------- $ 287,652,577 $ 627,327,599 $ 125,199,125 $ 112,234,801 $ 76,772,626 41,468,141 100,332,140 22,890,981 13,537,830 (1,764,172) - --------------------- --------------------- --------------------- --------------------- --------------------- 329,120,718 727,659,739 148,090,106 125,772,631 75,008,454 786 3,670 -- 2,678 328 -- -- -- -- -- 126,247 264,343 10,161 20,913 6,660 8,476,143 7,977,393 1,721,974 -- -- 264,435 594,297 157,800 226,378 58,253 -- 6,239 -- -- -- 21,007 73,279 3,138 15,737 8,011 1,835 3,760 712 573 385 - --------------------- --------------------- --------------------- --------------------- --------------------- 338,011,171 736,582,720 149,983,891 126,038,910 75,082,091 - --------------------- --------------------- --------------------- --------------------- --------------------- 25,325,574 91,221,630 20,789,977 18,608,140 10,115,328 5,366,509 6,470,168 625,342 -- -- 465,143 1,322,227 267,999 216,532 86,392 -- -- 223,914 -- -- 143,178 554,673 79,464 78,797 40,184 232,588 311,395 162,254 81,007 84,669 84,325 243,984 28,040 62,499 34,894 23,406 44,857 8,172 6,405 5,353 55,812 118,439 51,386 79,092 52,655 - --------------------- --------------------- --------------------- --------------------- --------------------- 31,696,535 100,287,373 22,236,548 19,132,472 10,419,475 - --------------------- --------------------- --------------------- --------------------- --------------------- $ 306,314,636 $ 636,295,347 $ 127,747,343 $ 106,906,438 $ 64,662,616 ===================== ===================== ===================== ===================== ===================== $ 387,056,971 $ 728,961,626 $ 97,404,666 $ 131,926,158 $ 119,690,975 (40,983) (3,071,053) (136,045) (358,204) (388,794) (122,169,493) (189,928,237) 7,587,741 (38,199,346) (52,875,393) 41,468,141 100,333,011 22,890,981 13,537,830 (1,764,172) - --------------------- --------------------- --------------------- --------------------- --------------------- $ 306,314,636 $ 636,295,347 $ 127,747,343 $ 106,906,438 $ 64,662,616 ===================== ===================== ===================== ===================== ===================== $ 201,593,454 $ 377,214,685 $ 100,355,320 $ 48,676,743 $ 52,848,467 ===================== ===================== ===================== ===================== ===================== 15,695,002 20,189,894 11,374,515 2,941,830 4,649,871 ===================== ===================== ===================== ===================== ===================== $ 12.84 $ 18.68 $ 8.82 $ 16.55 $ 11.37 ===================== ===================== ===================== ===================== ===================== $ 13.62 $ 19.82 $ 9.36 $ 17.56 $ 12.06 ===================== ===================== ===================== ===================== ===================== $ 66,840,585 $ 187,539,069 $ 24,337,737 $ 44,723,913 $ 10,868,857 ===================== ===================== ===================== ===================== ===================== 5,537,011 11,199,263 3,015,797 2,911,365 1,104,488 ===================== ===================== ===================== ===================== ===================== $ 12.07 $ 16.75 $ 8.07 $ 15.36 $ 9.84 ===================== ===================== ===================== ===================== ===================== $ 22,802,850 $ 50,236,869 $ 3,054,286 $ 13,505,782 $ 945,292 ===================== ===================== ===================== ===================== ===================== 1,891,536 2,996,716 378,498 878,711 96,238 ===================== ===================== ===================== ===================== ===================== $ 12.06 $ 16.76 $ 8.07 $ 15.37 $ 9.82 ===================== ===================== ===================== ===================== ===================== $ 15,077,747 $ 21,304,724 -- -- -- ===================== ===================== ===================== ===================== ===================== 1,141,260 1,076,801 -- -- -- ===================== ===================== ===================== ===================== ===================== $ 13.21 $ 19.79 -- -- -- ===================== ===================== ===================== ===================== ===================== $ 24,621,602 $ 88,651,474 $ 20,218,456 $ 18,018,961 $ 9,818,649 ===================== ===================== ===================== ===================== =====================
48 STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 2005 (unaudited)
CGM Advisor Hansberger Harris Associates Targeted Equity International Focused Value Fund Fund Fund --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- NET INVESTMENT INCOME Dividends $ 8,257,983 $ 2,498,881 $ 2,645,903 Interest 35,148 14,054 179,128 Securities lending income 139,678 81,506 24,901 Less net foreign taxes withheld (345,053) (282,333) -- --------------------- --------------------- --------------------- 8,087,756 2,312,108 2,849,932 --------------------- --------------------- --------------------- Expenses Management fees 2,565,105 525,751 1,687,318 Service fees - Class A 835,286 92,978 124,342 Service and distribution fees - Class B 275,770 200,773 520,120 Service and distribution fees - Class C 15,770 84,502 669,828 Trustees' fees and expenses 44,866 12,135 15,882 Administrative fees 235,514 41,228 111,773 Custodian fees 60,697 77,359 28,564 Transfer agent fees - Class A, Class B, Class C 775,124 284,492 418,175 Transfer agent fees - Class Y 12,123 -- -- Audit and tax services 13,224 19,000 11,609 Legal fees 27,769 5,951 12,893 Shareholder reporting 59,909 23,626 46,236 Registration 32,086 20,791 22,839 Miscellaneous 34,483 10,417 17,392 --------------------- --------------------- --------------------- Total expenses 4,987,726 1,399,003 3,686,971 Less reimbursement/waiver -- -- -- --------------------- --------------------- --------------------- Net expenses 4,987,726 1,399,003 3,686,971 --------------------- --------------------- --------------------- Net investment income (loss) 3,100,030 913,105 (837,039) --------------------- --------------------- --------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gain (loss) on: Investments - net 60,244,053 4,898,789 21,329,017 Foreign currency transactions - net -- (171,778) -- Change in unrealized appreciation (depreciation) of: Investments - net (39,021,813) (6,676,135) (12,814,122) Foreign currency transactions - net -- (15,221) -- --------------------- --------------------- --------------------- Net realized and unrealized gain (loss) on investments and foreign currency transactions 21,222,240 (1,964,345) 8,514,895 --------------------- --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 24,322,270 $ (1,051,240) $ 7,677,856 ===================== ===================== =====================
Harris Associates Large Cap Value Fund --------------------- --------------------- NET INVESTMENT INCOME Dividends $ 2,542,409 Interest 73,965 Securities lending income 32,916 Less net foreign taxes withheld (33,944) --------------------- 2,615,346 --------------------- Expenses Management fees 1,096,496 Service fees - Class A 261,199 Service and distribution fees - Class B 361,010 Service and distribution fees - Class C 122,953 Trustees' fees and expenses 22,475 Administrative fees 107,284 Custodian fees 32,728 Transfer agent fees - Class A, Class B, Class C 493,939 Transfer agent fees - Class Y 15,560 Audit and tax services 12,181 Legal fees 11,307 Shareholder reporting 42,638 Registration 28,551 Miscellaneous 18,591 --------------------- Total expenses 2,626,912 Less reimbursement/waiver (191,766) --------------------- Net expenses 2,435,146 --------------------- Net investment income (loss) 180,200 --------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gain (loss) on: Investments - net 13,988,950 Foreign currency transactions - net -- Change in unrealized appreciation (depreciation) of: Investments - net (27,625,197) Foreign currency transactions - net -- --------------------- Net realized and unrealized gain (loss) on investments and foreign currency transactions (13,636,247) --------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (13,456,047) =====================
See accompanying notes to financial statements. 49
Vaughan Nelson Westpeak IXIS U.S. Diversified IXIS Value Small Cap Value Capital Growth Portfolio Fund Fund Fund - --------------------- --------------------- --------------------- --------------------- $ 3,686,549 $ 1,105,921 $ 792,927 $ 334,086 90,700 34,393 31,402 6,985 108,415 8,480 31,928 17,697 (21,299) (2,954) -- -- - --------------------- --------------------- --------------------- --------------------- 3,864,365 1,145,840 856,257 358,768 - --------------------- --------------------- --------------------- --------------------- 3,408,166 487,865 473,901 245,923 469,250 126,664 56,794 66,535 995,545 128,698 235,090 57,075 264,235 15,133 64,292 4,682 33,296 15,339 11,747 10,962 214,556 42,338 34,352 22,504 80,929 39,275 29,753 24,397 1,115,615 213,292 279,583 182,025 18,552 -- -- -- 18,505 15,034 18,505 12,181 26,779 6,943 4,760 3,075 88,788 18,381 23,358 17,133 33,447 19,939 23,946 18,634 32,696 9,721 10,116 7,558 - --------------------- --------------------- --------------------- --------------------- 6,800,359 1,138,622 1,266,197 672,684 -- -- -- -- - --------------------- --------------------- --------------------- --------------------- 6,800,359 1,138,622 1,266,197 672,684 - --------------------- --------------------- --------------------- --------------------- (2,935,994) 7,218 (409,940) (313,916) - --------------------- --------------------- --------------------- --------------------- 37,519,402 7,913,478 4,190,377 1,014,495 (15,148) -- -- -- (39,141,796) (6,101,624) (1,093,875) (1,338,958) (590) -- -- -- - --------------------- --------------------- --------------------- --------------------- (1,638,132) 1,811,854 3,096,502 (324,463) - --------------------- --------------------- --------------------- --------------------- $ (4,574,126) $ 1,819,072 $ 2,686,562 $ (638,379) ===================== ===================== ===================== =====================
50 STATEMENTS OF CHANGES IN NET ASSETS
CGM Advisor Targeted Equity Fund -------------------------------------------- Six Months Ended June 30, Year Ended 2005 December 31, (unaudited) 2004 --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ 3,100,030 $ 775,706 Net realized gain (loss) on investments and foreign currency transactions 60,244,053 186,920,714 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations (39,021,813) (91,588,409) --------------------- --------------------- Increase (decrease) in net assets resulting from operations 24,322,270 96,108,011 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A (873,231) -- Class B (75,336) -- Class C (4,738) -- Class Y (12,467) -- Long-Term capital gain Class A -- -- Class B -- -- Class C -- -- --------------------- --------------------- (965,772) -- --------------------- --------------------- INCREASE (DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 10) (45,831,221) (127,772,868) --------------------- --------------------- Redemption Fees Class A 4,065 2,396 Class B 330 181 Class C 20 12 Class Y 57 27 --------------------- --------------------- 4,472 2,616 --------------------- --------------------- Total increase (decrease) in net assets (22,470,251) (31,662,241) --------------------- --------------------- NET ASSETS Beginning of period 759,853,014 791,515,255 --------------------- --------------------- End of period $ 737,382,763 $ 759,853,014 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ 2,558,977 $ 424,719 ===================== =====================
Hansberger International Fund -------------------------------------------- Six Months Ended June 30, Year Ended 2005 December 31, (unaudited) 2004 --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ 913,105 $ (307,118) Net realized gain (loss) on investments and foreign currency transactions 4,727,011 25,636,223 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations (6,691,356) (9,265,743) --------------------- --------------------- Increase (decrease) in net assets resulting from operations (1,051,240) 16,063,362 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A -- -- Class B -- -- Class C -- -- Class Y -- -- Long-Term capital gain Class A -- -- Class B -- -- Class C -- -- --------------------- --------------------- -- -- --------------------- --------------------- INCREASE (DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 10) (6,452,528) (12,713,186) --------------------- --------------------- Redemption Fees Class A 355 170 Class B 193 118 Class C 78 38 Class Y -- -- --------------------- --------------------- 626 326 --------------------- --------------------- Total increase (decrease) in net assets (7,503,142) 3,350,502 --------------------- --------------------- NET ASSETS Beginning of period 135,965,839 132,615,337 --------------------- --------------------- End of period $ 128,462,697 $ 135,965,839 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ 386,388 $ (526,717) ===================== =====================
See accompanying notes to financial statements. 51
Harris Associates Focused Value Fund Harris Associates Large Cap Value Fund - -------------------------------------------- -------------------------------------------- Six Months Ended Six Months Ended June 30, Year Ended June 30, Year Ended 2005 December 31, 2005 December 31, (unaudited) 2004 (unaudited) 2004 - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- $ (837,039) $ (2,315,007) $ 180,200 $ 313,635 21,329,017 11,304,168 13,988,950 14,432,239 (12,814,122) 24,626,530 (27,625,197) 14,335,620 - --------------------- --------------------- --------------------- --------------------- 7,677,856 33,615,691 (13,456,047) 29,081,494 - --------------------- --------------------- --------------------- --------------------- -- -- (231,035) -- -- -- (81,762) -- -- -- (28,415) -- -- -- (16,672) -- -- -- -- -- -- -- -- -- -- -- -- -- - --------------------- --------------------- --------------------- --------------------- -- -- (357,884) -- - --------------------- --------------------- --------------------- --------------------- (40,194,938) 2,079,342 (26,673,578) (30,720,612) - --------------------- --------------------- --------------------- --------------------- 6,658 149 -- -- 6,927 149 -- -- 8,955 194 -- -- -- -- -- -- - --------------------- --------------------- --------------------- --------------------- 22,540 492 -- -- - --------------------- --------------------- --------------------- --------------------- (32,494,542) (866,674) (40,487,509) (1,639,118) - --------------------- --------------------- --------------------- --------------------- 363,097,158 327,401,633 346,802,145 348,441,263 - --------------------- --------------------- --------------------- --------------------- $ 330,602,616 $ 363,097,158 $ 306,314,636 $ 346,802,145 ===================== ===================== ===================== ===================== $ (873,892) $ (36,853) $ (40,983) $ 136,701 ===================== ===================== ===================== =====================
IXIS U.S. Diversified Portfolio IXIS Value Fund - -------------------------------------------- -------------------------------------------- Six Months Ended Six Months Ended June 30, Year Ended June 30, Year Ended 2005 December 31, 2005 December 31, (unaudited) 2004 (unaudited) 2004 - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- $ (2,935,994) $ (7,230,862) $ 7,218 $ (187,922) 37,504,254 92,341,964 7,913,478 14,932,687 (39,142,386) (4,149,061) (6,101,624) (382,788) - --------------------- --------------------- --------------------- --------------------- (4,574,126) 80,962,041 1,819,072 14,361,977 - --------------------- --------------------- --------------------- --------------------- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- (2,637,065) (1,926,692) -- -- (697,616) (548,440) -- -- (86,916) (60,195) - --------------------- --------------------- --------------------- --------------------- -- -- (3,421,597) (2,535,327) - --------------------- --------------------- --------------------- --------------------- (59,148,482) (116,500,139) (6,892,401) (17,975,676) - --------------------- --------------------- --------------------- --------------------- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - --------------------- --------------------- --------------------- --------------------- -- -- -- -- - --------------------- --------------------- --------------------- --------------------- (63,722,608) (53,745,002) (8,494,926) (6,149,026) - --------------------- --------------------- --------------------- --------------------- 700,017,955 735,556,053 136,242,269 142,391,295 - --------------------- --------------------- --------------------- --------------------- $ 636,295,347 $ 700,017,955 $ 127,747,343 $ 136,242,269 ===================== ===================== ===================== ===================== $ (3,071,053) $ (135,059) $ (136,045) $ (143,263) ===================== ===================== ===================== =====================
52 STATEMENTS OF CHANGES IN NET ASSETS (continued)
Vaughan Nelson Small Cap Value Fund -------------------------------------------- Six Months Ended June 30, Year Ended 2005 December 31, (unaudited) 2004 --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment (loss) $ (409,940) $ (1,476,110) Net realized gain (loss) on investments 4,190,377 19,642,237 Net change in unrealized appreciation (depreciation) on investments (1,093,875) (3,213,186) --------------------- --------------------- Increase (decrease) in net assets resulting from operations 2,686,562 14,952,941 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: -- -- --------------------- --------------------- INCREASE (DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (9,119,411) (14,761,490) --------------------- --------------------- Redemption Fees Class A 616 188 Class B 643 225 Class C 173 52 --------------------- --------------------- 1,432 465 --------------------- --------------------- Total increase (decrease) in net assets (6,431,417) 191,916 --------------------- --------------------- NET ASSETS Beginning of period 113,337,855 113,145,939 --------------------- --------------------- End of period $ 106,906,438 $ 113,337,855 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (358,204) $ 51,736 ===================== =====================
Westpeak Capital Growth Fund -------------------------------------------- Six Months Ended June 30, Year Ended 2005 December 31, (unaudited) 2004 --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment (loss) $ (313,916) $ (255,163) Net realized gain (loss) on investments 1,014,495 3,895,820 Net change in unrealized appreciation (depreciation) on investments (1,338,958) (286,959) --------------------- --------------------- Increase (decrease) in net assets resulting from operations (638,379) 3,353,698 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: -- -- --------------------- --------------------- INCREASE (DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (6,046,758) (13,044,934) --------------------- --------------------- Redemption Fees Class A -- -- Class B -- -- Class C -- -- --------------------- --------------------- -- -- --------------------- --------------------- Total increase (decrease) in net assets (6,685,137) (9,691,236) --------------------- --------------------- NET ASSETS Beginning of period 71,347,753 81,038,989 --------------------- --------------------- End of period $ 64,662,616 $ 71,347,753 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (388,794) $ (74,878) ===================== =====================
See accompanying notes to financial statements. 53 This Page Intentionally Left Blank 54 FINANCIAL HIGHLIGHTS For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions: ---------------------------------------------- ---------------------------------------------- Net asset value, Net Net realized Dividends Distributions beginning investment and unrealized Total from from from net of income gain (loss) on investment net investment realized Total period (loss) (b) investments operations income capital gains distributions ------------- -------------- -------------- -------------- -------------- -------------- -------------- CGM ADVISOR TARGETED EQUITY FUND Class A 6/30/2005(g) $ 9.05 $ 0.04 $ 0.26 $ 0.30 $ (0.01) $ -- $ (0.01) 12/31/2004 7.94 0.01 1.10 1.11 -- -- -- 12/31/2003 5.56 (0.03) 2.41 2.38 -- -- -- 12/31/2002 7.81 (0.06) (2.19) (2.25) -- -- -- 12/31/2001 9.36 (0.03) (1.49) (1.52) (0.03) -- (0.03) 12/31/2000 11.00 0.09 (0.60) (0.51) (0.06) (1.07) (1.13) Class B 6/30/2005(g) 8.45 0.01 0.25 0.26 (0.01) -- (0.01) 12/31/2004 7.47 (0.04) 1.02 0.98 -- -- -- 12/31/2003 5.28 (0.07) 2.26 2.19 -- -- -- 12/31/2002 7.47 (0.11) (2.08) (2.19) -- -- -- 12/31/2001 9.02 (0.09) (1.43) (1.52) (0.03) -- (0.03) 12/31/2000 10.67 0.01 (0.58) (0.57) (0.01) (1.07) (1.08) Class C 6/30/2005(g) 8.45 0.01 0.24 0.25 (0.01) -- (0.01) 12/31/2004 7.47 (0.04) 1.02 0.98 -- -- -- 12/31/2003 5.27 (0.07) 2.27 2.20 -- -- -- 12/31/2002 7.47 (0.11) (2.09) (2.20) -- -- -- 12/31/2001 9.02 (0.09) (1.43) (1.52) (0.03) -- (0.03) 12/31/2000 10.67 0.01 (0.58) (0.57) (0.01) (1.07) (1.08) Class Y 6/30/2005(g) 9.23 0.05 0.28 0.33 (0.01) -- (0.01) 12/31/2004 8.07 0.04 1.12 1.16 -- -- -- 12/31/2003 5.63 0.01 2.43 2.44 -- -- -- 12/31/2002 7.85 (0.02) (2.20) (2.22) -- -- -- 12/31/2001 9.37 0.01 (1.50) (1.49) (0.03) -- (0.03) 12/31/2000 11.01 0.12 (0.60) (0.48) (0.09) (1.07) (1.16) HANSBERGER INTERNATIONAL FUND Class A 6/30/2005(g) $ 17.12 $ 0.15 $ (0.25) $ (0.10) $ -- $ -- $ -- 12/31/2004 15.07 0.02 2.03 2.05 -- -- -- 12/31/2003 10.84 (0.04) 4.27 4.23 -- -- -- 12/31/2002 13.02 (0.05) (2.08) (2.13) (0.05) -- (0.05) 12/31/2001 14.42 0.13 (1.42) (1.29) (0.03) (0.08) (0.11) 12/31/2000 19.90 (0.02) (2.43) (2.45) -- (3.03) (3.03) Class B 6/30/2005(g) 15.85 0.07 (0.22) (0.15) -- -- -- 12/31/2004 14.06 (0.09) 1.88 1.79 -- -- -- 12/31/2003 10.19 (0.12) 3.99 3.87 -- -- -- 12/31/2002 12.32 (0.14) (1.94) (2.08) (0.05) -- (0.05) 12/31/2001 13.74 0.03 (1.36) (1.33) (0.01) (0.08) (0.09) 12/31/2000 19.26 (0.16) (2.33) (2.49) -- (3.03) (3.03)
Redemption fee Per Share -------------- CGM ADVISOR TARGETED EQUITY FUND Class A 6/30/2005(g) 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- Class B 6/30/2005(g) 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- Class C 6/30/2005(g) 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- Class Y 6/30/2005(g) 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- HANSBERGER INTERNATIONAL FUND Class A 6/30/2005(g) 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- Class B 6/30/2005(g) 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares, and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)Had certain expenses not been reduced during the period total return would have been lower. (d)The investment adviser waived a portion of its advisory fee during the period. Without this waiver, expense would have been higher See accompanying notes to financial statements. 55
Ratios to average net assets: ----------------------------------------------- Net asset Net assets, Expenses after value, Total end of reimbursement/ Net investment Portfolio end of return the period Expenses waiver income turnover the period (%) (a) (000's) (%) (f) (h) (%) (h) (loss) (%) (h) rate (%) - ------------- ------- --------------- -------------- -------------- -------------- -------------- $ 9.34 3.3 $ 670,502 1.30 N/A 0.90 154 9.05 14.0 689,967 1.42 N/A 0.16 265 7.94 42.8 724,214 1.57 N/A (0.40) 261 5.56 (28.8) 602,989 1.47 N/A (0.86) 223 7.81 (16.2) 1,012,161 1.38 N/A (0.39) 243 9.36 (4.6) 1,413,685 1.18 N/A 0.83 266 8.70 3.1 53,612 2.05 N/A 0.14 154 8.45 13.1 57,527 2.17 N/A (0.58) 265 7.47 41.5 56,880 2.32 N/A (1.14) 261 5.28 (29.3) 45,633 2.23 N/A (1.62) 223 7.47 (16.8) 78,744 2.13 N/A (1.14) 243 9.02 (5.2) 107,594 1.93 N/A 0.08 266 8.69 3.0 3,403 2.05 N/A 0.15 154 8.45 13.1 3,214 2.17 N/A (0.58) 265 7.47 41.8 2,647 2.32 N/A (1.14) 261 5.27 (29.5) 2,187 2.23 N/A (1.62) 223 7.47 (16.8) 4,162 2.13 N/A (1.14) 243 9.02 (5.2) 5,830 1.93 N/A 0.08 266 9.55 3.6 9,865 1.09 N/A 1.12 154 9.23 14.4 9,145 1.08 N/A 0.51 265 8.07 43.3 7,773 1.03 N/A 0.16 261 5.63 (28.3) 5,522 0.92 N/A (0.31) 223 7.85 (15.9) 8,785 0.87 N/A 0.13 243 9.37 (4.2) 12,260 0.85 N/A 1.16 266 $ 17.02 (0.6) $ 75,540 1.80 N/A 1.73 24 17.12 13.6(c) 73,707 1.92 1.91(d) 0.14 81 15.07 39.0(c) 59,762 2.32 2.30(d) (0.34) 92 10.84 (16.4) 50,053 2.19 N/A (0.45) 91 13.02 (9.0) 71,536 2.12 N/A 0.98 110 14.42 (12.2) 102,507 2.01 N/A (0.13) 175 15.70 (1.0) 35,950 2.55 N/A 0.92 24 15.85 12.7(c) 45,213 2.67 2.66(d) (0.60) 81 14.06 38.0(c) 60,296 3.07 3.05(d) (1.09) 92 10.19 (17.0) 53,306 2.94 N/A (1.20) 91 12.32 (9.7) 82,861 2.87 N/A 0.23 110 13.74 (12.8) 114,450 2.76 N/A (0.88) 175
(e)Amount rounds to less than $0.01 per share (f)Represents total expenses prior to advisory fee waiver and/or reimbursement of a portion of the Fund's expenses. Prior to 2004, expenses in this table were presented net of such waivers and/or reimbursements. (g)For the six months ended June 30, 2005 (unaudited) (h)Computed on an annualized basis for periods less than one year. 56 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (loss) from investment operations: --------------------------------------- Net asset Net Net realized value, investment and unrealized Total from beginning income gain (loss) on investment of period (loss) (b) investments operations ---------- ---------- -------------- ---------- HANSBERGER INTERNATIONAL FUND (continued) Class C 6/30/2005(j) 15.86 0.08 (0.24) (0.16) 12/31/2004 14.06 (0.09) 1.89 1.80 12/31/2003 10.19 (0.12) 3.99 3.87 12/31/2002 12.33 (0.14) (1.95) (2.09) 12/31/2001 13.75 0.03 (1.36) (1.33) 12/31/2000 19.27 (0.16) (2.33) (2.49) HARRIS ASSOCIATES FOCUSED VALUE FUND Class A 6/30/2005(j) $ 13.06 $ 0.00(h) $ 0.36 $ 0.36 12/31/2004 11.79 (0.02) 1.29 1.27 12/31/2003 9.24 (0.03) 2.58 2.55 12/31/2002 10.96 (0.03) (1.69) (1.72) 12/31/2001(f) 10.00 (0.01) 0.97 0.96 Class B 6/30/2005(j) 12.69 (0.04) 0.35 0.31 12/31/2004 11.55 (0.11) 1.25 1.14 12/31/2003 9.12 (0.10) 2.53 2.43 12/31/2002 10.90 (0.11) (1.67) (1.78) 12/31/2001(f) 10.00 (0.07) 0.97 0.90 Class C 6/30/2005(j) 12.69 (0.04) 0.35 0.31 12/31/2004 11.55 (0.11) 1.25 1.14 12/31/2003 9.12 (0.10) 2.53 2.43 12/31/2002 10.90 (0.11) (1.67) (1.78) 12/31/2001(f) 10.00 (0.07) 0.97 0.90 HARRIS ASSOCIATES LARGE CAP VALUE FUND Class A 6/30/2005(j) $ 13.37 $ 0.02 $ (0.54) $ (0.52) 12/31/2004 12.25 0.04 1.08 1.12 12/31/2003 9.42 0.01 2.82 2.83 12/31/2002 11.78 0.01 (2.37) (2.36) 12/31/2001 13.79 (0.01) (2.00) (2.01) 12/31/2000 15.33 0.01 (1.09) (1.08) Class B 6/30/2005(j) 12.62 (0.03) (0.51) (0.54) 12/31/2004 11.64 (0.05) 1.03 0.98 12/31/2003 9.02 (0.07) 2.69 2.62 12/31/2002 11.37 (0.07) (2.28) (2.35) 12/31/2003 13.40 (0.10) (1.93) (2.03) 12/31/2000 15.03 (0.10) (1.07) (1.17)
Less distributions: ----------------------------------------- Dividends Distributions from from net net investment realized Total Redemption fee income capital gains distributions Per Share -------------- ------------- ------------- -------------- HANSBERGER INTERNATIONAL FUND (continued) Class C 6/30/2005(j) -- -- -- 0.00(h) 12/31/2004 -- -- -- 0.00(h) 12/31/2003 -- -- -- -- 12/31/2002 (0.05) -- (0.05) -- 12/31/2001 (0.01) (0.08) (0.09) -- 12/31/2000 -- (3.03) (3.03) -- HARRIS ASSOCIATES FOCUSED VALUE FUND Class A 6/30/2005(j) $ -- $ -- $ -- 0.00(h) 12/31/2004 -- -- -- 0.00(h) 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001(f) -- -- -- -- Class B 6/30/2005(j) -- -- -- 0.00(h) 12/31/2004 -- -- -- 0.00(h) 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001(f) -- -- -- -- Class C 6/30/2005(j) -- -- -- 0.00(h) 12/31/2004 -- -- -- 0.00(h) 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001(f) -- -- -- -- HARRIS ASSOCIATES LARGE CAP VALUE FUND Class A 6/30/2005(j) $ (0.01) $ -- $ (0.01) -- 12/31/2004 -- -- -- -- 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001 -- -- -- -- 12/31/2000 -- (0.46) (0.46) -- Class B 6/30/2005(j) (0.01) -- (0.01) -- 12/31/2004 -- -- -- -- 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2003 -- -- -- -- 12/31/2000 -- (0.46) (0.46) --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)The investment adviser waived a portion of its advisory fee during the period. Without this waiver, expense would have been higher (d)Had certain expenses been reduced during the period, total return would have been lower. (e)Portfolio turnover excludes the impact of assets as a result of a merger with another Fund. See accompanying notes to financial statements. 57
Ratios to average net assets: -------------------------------------- Net assets, Expenses after Net Net asset Total end of reimbursement investment Portfolio value, end return the period Expenses /waiver income (loss) turnover of the period (%) (a) (000's) (%) (g)(i) (%) (g) (%) (g) rate (%) - ------------- --------- ----------- ---------- -------------- ------------- --------- 15.70 (1.0) 16,973 2.55 N/A 0.98 24 15.86 12.8(d) 17,046 2.67 2.66(c) (0.63) 81 14.06 38.0(d) 12,557 3.07 3.05(c) (1.09) 92 10.19 (17.0) 11,013 2.94 N/A (1.20) 91 12.33 (9.7) 16,493 2.87 N/A 0.23 110 13.75 (12.8) 23,949 2.76 N/A (0.88) 175 $ 13.42 2.8 $ 94,156 1.66 N/A 0.04 12 13.06 10.8 108,042 1.70 N/A (0.15) 26 11.79 27.6(d) 95,957 1.84 1.70(c) (0.28) 30 9.24 (15.7)(d) 68,660 1.79 1.70(c) (0.35) 12 10.96 9.6(d) 45,987 2.08 1.70(c) (0.08) 10 13.00 2.4 104,689 2.41 N/A (0.72) 12 12.69 9.9 110,275 2.45 N/A (0.90) 26 11.55 26.6(d) 107,017 2.59 2.45(c) (1.03) 30 9.12 (16.3)(d) 85,794 2.54 2.45(c) (1.10) 12 10.90 9.0(d) 62,671 2.83 2.45(c) (0.83) 10 13.00 2.4 131,758 2.41 N/A (0.72) 12 12.69 9.9 144,780 2.45 N/A (0.90) 26 11.55 26.6(d) 124,427 2.59 2.45(c) (1.03) 30 9.12 (16.3)(d) 86,269 2.54 2.45(c) (1.10) 12 10.90 9.0(d) 34,406 2.83 2.45(c) (0.86) 10 $ 12.84 (3.9)(d) $ 201,593 1.43 1.30(c) 0.32 19 13.37 9.1(d) 222,434 1.49 1.30(c) 0.30 27 12.25 30.0(d) 215,259 1.62 1.45(c) 0.07 30(e) 9.42 (20.0) 130,751 1.56 N/A 0.07 195 11.78 (14.6) 211,138 1.46 N/A (0.05) 154 13.79 (7.3) 290,714 1.31 N/A 0.04 139 12.07 (4.2)(d) 66,841 2.18 2.05(c) (0.42) 19 12.62 8.4(d) 79,949 2.24 2.05(c) (0.46) 27 11.64 29.1(d) 91,085 2.37 2.20(c) (0.69) 30(e) 9.02 (20.7) 71,436 2.31 N/A (0.68) 195 11.37 (15.1) 120,361 2.21 N/A (0.80) 154 13.40 (8.1) 165,767 2.06 N/A (0.71) 139
(f)For the period March 15, 2001, (inception) through December 31, 2001. (g)Computed on an annualized basis for periods less than one year. (h)Amount rounds to less than $0.01 per share (i)Represents total expenses prior to advisory fee waiver and/or reimbursement of a portion of the Fund's expenses. Prior to 2004, expenses in this table were presented net of such waivers and/or reimbursements. (j)For the six months ended June 30, 2005 (unaudited) 58 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (loss) from investment operations: ---------------------------------------- Net asset value, Net Net realized beginning investment and unrealized Total from of income gain (loss) on investment period loss (b) investments operations ---------- ---------- -------------- ---------- HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued) Class C 6/30/2005(g) 12.60 (0.03) (0.50) (0.53) 12/31/2004 11.63 (0.05) 1.02 0.97 12/31/2003 9.01 (0.07) 2.69 2.62 12/31/2002 11.36 (0.07) (2.28) (2.35) 12/31/2001 13.38 (0.10) (1.92) (2.02) 12/31/2000 15.01 (0.10) (1.07) (1.17) Class Y 6/30/2005(g) 13.74 0.04 (0.56) (0.52) 12/31/2004 12.54 0.07 1.13 1.20 12/31/2003 9.59 0.06 2.89 2.95 12/31/2002 11.93 0.07 (2.41) (2.34) 12/31/2001 13.87 0.06 (2.00) (1.94) 12/31/2000 15.36 0.07 (1.10) (1.03) IXIS U.S. DIVERSIFIED PORTFOLIO Class A 6/30/2005(g) $ 18.75 $ (0.06) $ (0.01) $ (0.07) 12/31/2004 16.61 (0.12) 2.26 2.14 12/31/2003 12.43 (0.13) 4.31 4.18 12/31/2002 15.90 (0.11) (3.36) (3.47) 12/31/2001 17.55 (0.05) (1.59) (1.64) 12/31/2000 24.50 (0.06) (3.87) (3.93) Class B 6/30/2005(g) 16.87 (0.11) (0.01) (0.12) 12/31/2004 15.06 (0.23) 2.04 1.81 12/31/2003 11.35 (0.22) 3.93 3.71 12/31/2002 14.64 (0.20) (3.09) (3.29) 12/31/2001 16.29 (0.16) (1.48) (1.64) 12/31/2000 23.14 (0.22) (3.61) (3.83) Class C 6/30/2005(g) 16.89 (0.11) (0.02) (0.13) 12/31/2004 15.08 (0.23) 2.04 1.81 12/31/2003 11.37 (0.22) 3.93 3.71 12/31/2002 14.66 (0.20) (3.09) (3.29) 12/31/2001 16.30 (0.16) (1.47) (1.63) 12/31/2000 23.16 (0.22) (3.62) (3.84) Class Y 6/30/2005(g) 19.82 (0.02) (0.01) (0.03) 12/31/2004 17.46 (0.05) 2.41 2.36 12/31/2003 12.98 (0.04) 4.52 4.48 12/31/2002 16.50 (0.02) (3.50) (3.52) 12/31/2001 18.13 0.04 (1.66) (1.62) 12/31/2000 25.08 0.03 (3.96) (3.93)
Less distributions: ----------------------------------------- Dividends Distributions from from net net investment realized Total income capital gains distributions -------------- ------------- ------------- HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued) Class C 6/30/2005(g) (0.01) -- (0.01) 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- -- -- 12/31/2000 -- (0.46) (0.46) Class Y 6/30/2005(g) (0.01) -- (0.01) 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- -- -- 12/31/2000 -- (0.46) (0.46) IXIS U.S. DIVERSIFIED PORTFOLIO Class A 6/30/2005(g) -- $ -- $ -- 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- (0.01) (0.01) 12/31/2000 -- (3.02) (3.02) Class B 6/30/2005(g) -- -- -- 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- (0.01) (0.01) 12/31/2000 -- (3.02) (3.02) Class C 6/30/2005(g) -- -- -- 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- (0.01) (0.01) 12/31/2000 -- (3.02) (3.02) Class Y 6/30/2005(g) -- -- -- 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- (0.01) (0.01) 12/31/2000 -- (3.02) (3.02)
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)The investment adviser waived a portion of its advisory fee during the period. Without this waiver, expense would have been higher See accompanying notes to financial statements. 59
Ratios to average net assets: ----------------------------------------- Net asset Net assets, Expenses after value, Total end of reimbursement/ Net investment Portfolio end of return the period Expenses waiver income turnover the period (%) (a) (000's) (%) (h) (%) (h) (loss) (%) (h) rate (%) - ---------- --------- ----------- --------- -------------- -------------- --------- 12.06 (4.2)(d) 22,803 2.18(f) 2.05(c) (0.43) 19 12.60 8.3(d) 26,392 2.24(f) 2.05(c) (0.42) 27 11.63 29.1(d) 15,553 2.37(f) 2.20(c) (0.69) 30(e) 9.01 (20.7) 6,440 2.31(f) N/A (0.68) 195 11.36 (15.1) 10,553 2.21(f) N/A (0.80) 154 13.38 (8.1) 19,373 2.06(f) N/A (0.71) 139 13.21 (3.8) 15,078 1.04(f) N/A 0.59 19 13.74 9.6 18,027 0.99(f) N/A 0.58 27 12.54 30.8 26,545 1.01(f) N/A 0.51 30(e) 9.59 (19.6) 10,569 0.96(f) N/A 0.66 195 11.93 (14.0) 11,918 0.91(f) N/A 0.52 154 13.87 (7.0) 10,131 0.87(f) N/A 0.48 139 $ 18.68 (0.4) $ 377,215 1.82 N/A (0.63) 49 18.75 12.9 392,726 1.87 N/A (0.71) 104 16.61 33.6 354,755 1.99 N/A (0.94) 102 12.43 (21.8) 269,180 1.89 N/A (0.75) 95 15.90 (9.4) 389,405 1.83 N/A (0.31) 183 17.55 (17.0) 525,479 1.62 N/A (0.25) 524 16.75 (0.7) 187,539 2.57 N/A (1.38) 49 16.87 12.0 223,349 2.62 N/A (1.50) 104 15.06 32.7 272,533 2.74 N/A (1.69) 102 11.35 (22.5) 282,361 2.64 N/A (1.50) 95 14.64 (10.1) 491,614 2.58 N/A (1.06) 183 16.29 (17.6) 649,107 2.37 N/A (1.00) 524 16.76 (0.8) 50,237 2.57 N/A (1.38) 49 16.89 12.0 58,883 2.62 N/A (1.48) 104 15.08 32.6 60,783 2.74 N/A (1.69) 102 11.37 (22.4) 54,291 2.64 N/A (1.50) 95 14.66 (10.0) 87,245 2.58 N/A (1.06) 183 16.30 (17.6) 118,921 2.37 N/A (1.00) 524 19.79 (0.2) 21,305 1.38 N/A (0.19) 49 19.82 13.5 25,060 1.33 N/A (0.27) 104 17.46 34.5 47,485 1.34 N/A (0.30) 102 12.98 (21.3) 37,911 1.29 N/A (0.15) 95 16.50 (9.0) 55,970 1.29 N/A 0.23 183 18.13 (16.6) 73,310 1.25 N/A 0.12 524
(d)Had certain expenses been reduced during the period, total return would have been lower. (e)Portfolio turnover excludes the impact of assets as a result of a merger with another Fund. (f)Represents total expenses prior to advisory fee waiver and/or reimbursement of a portion of the Fund's expenses. Prior to 2004, expenses in this table were presented net of such waivers and/or reimbursements. (g)For the six months ended June 30, 2005 (unaudited) (h)Computed on an annualized basis for periods less than one year. 60 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions: ------------------------------------------ ------------------------------------------ Net asset value, Net Net realized Dividends Distributions beginning investment and unrealized Total from from from net of income gain (loss) on investment net investment realized Total period (loss) investments operations income capital gains distributions ---------- ---------- -------------- ---------- -------------- ------------- ------------- IXIS VALUE FUND Class A 6/30/2005(e) $ 8.92 $ 0.01(b) $ 0.13 $ 0.14 $ -- $ (0.24) $ (0.24) 12/31/2004 8.16 0.00(b)(c) 0.93 0.93 -- (0.17) (0.17) 12/31/2003 6.20 (0.01)(b) 1.97 1.96 -- -- -- 12/31/2002 7.70 (0.01)(b) (1.49) (1.50) -- -- -- 12/31/2001 7.60 (0.02)(b) 0.12 0.10 -- -- -- 12/31/2000 7.45 0.01 0.14 0.15 0.00(c) -- 0.00 Class B 6/30/2005(e) 8.21 (0.02)(b) 0.12 0.10 -- (0.24) (0.24) 12/31/2004 7.57 (0.06)(b) 0.87 0.81 -- (0.17) (0.17) 12/31/2003 5.80 (0.06)(b) 1.83 1.77 -- -- -- 12/31/2002 7.26 (0.06)(b) (1.40) (1.46) -- -- -- 12/31/2001 7.22 (0.07)(b) 0.11 0.04 -- -- -- 12/31/2000 7.13 (0.04) 0.13 0.09 0.00(c) -- 0.00 Class C 6/30/2005(e) 8.21 (0.02)(b) 0.12 0.10 -- (0.24) (0.24) 12/31/2004 7.57 (0.05)(b) 0.86 0.81 -- (0.17) (0.17) 12/31/2003 5.80 (0.06)(b) 1.83 1.77 -- -- -- 12/31/2002 7.26 (0.06)(b) (1.40) (1.46) -- -- -- 12/31/2001 7.22 (0.07)(b) 0.11 0.04 -- -- -- 12/31/2000 7.14 (0.05) 0.13 0.08 0.00(c) -- 0.00 VAUGHAN NELSON SMALL CAP VALUE Class A 6/30/2005(e) $ 16.07 $ (0.03)(b) $ 0.51 $ 0.48 $ -- $ -- $ -- 12/31/2004 13.94 (0.13)(b) 2.26 2.13 -- -- -- 12/31/2003 10.05 (0.19)(b) 4.08 3.89 -- -- -- 12/31/2002 14.52 (0.21)(b) (4.26) (4.47) -- -- -- 12/31/2001 16.51 (0.21)(b) (1.78) (1.99) -- -- -- 12/31/2000 23.42 (0.28) (2.30) (2.58) -- (4.33) (4.33) Class B 6/30/2005(e) 14.97 (0.08)(b) 0.47 0.39 -- -- -- 12/31/2004 13.08 (0.22)(b) 2.11 1.89 -- -- -- 12/31/2003 9.51 (0.26)(b) 3.83 3.57 -- -- -- 12/31/2002 13.84 (0.28)(b) (4.05) (4.33) -- -- -- 12/31/2001 15.86 (0.30)(b) (1.72) (2.02) -- -- -- 12/31/2000 22.85 (0.44) (2.22) (2.66) -- (4.33) (4.33) Class C 6/30/2005(e) 14.98 (0.08)(b) 0.47 0.39 -- -- -- 12/31/2004 13.09 (0.22)(b) 2.11 1.89 -- -- -- 12/31/2003 9.51 (0.26)(b) 3.84 3.58 -- -- -- 12/31/2002 13.84 (0.28)(b) (4.05) (4.33) -- -- -- 12/31/2001 15.86 (0.30)(b) (1.72) (2.02) -- -- -- 12/31/2000 22.85 (0.44) (2.22) (2.66) -- (4.33) (4.33)
Redemption fee Per Share -------------- IXIS VALUE FUND Class A 6/30/2005(e) -- 12/31/2004 -- 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- Class B 6/30/2005(e) -- 12/31/2004 -- 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- Class C 6/30/2005(e) -- 12/31/2004 -- 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- VAUGHAN NELSON SMALL CAP VALUE Class A 6/30/2005(e) 0.00(c) 12/31/2004 0.00(c) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- Class B 6/30/2005(e) 0.00(c) 12/31/2004 0.00(c) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 -- Class C 6/30/2005(e) 0.00(c) 12/31/2004 0.00(c) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- 12/31/2000 --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. See accompanying notes to financial statements. 61
Ratios to average net assets: ---------------------------- Net asset Net assets, value, Total end of Net investment Portfolio end of return the period Expenses income turnover the period (%) (a) (000's) (%) (d) (loss) (%) (d) rate (%) ---------- --------- ----------- --------- -------------- --------- $ 8.82 1.5 $ 100,355 1.58 0.18 30 8.92 11.4 105,359 1.66 0.03 56 8.16 31.6 110,228 1.81 (0.15) 75 6.20 (19.5) 99,894 1.68 (0.21) 67 7.70 1.3 137,855 1.64 (0.28) 77 7.60 2.0 154,179 1.62 0.10 129 8.07 1.2 24,338 2.33 (0.57) 30 8.21 10.7 27,804 2.41 (0.72) 56 7.57 30.5 30,029 2.56 (0.90) 75 5.80 (20.1) 27,808 2.43 (0.96) 67 7.26 0.6 44,325 2.39 (1.03) 77 7.22 1.3 45,364 2.37 (0.65) 129 8.07 1.2 3,054 2.33 (0.57) 30 8.21 10.7 3,079 2.41 (0.70) 56 7.57 30.5 2,134 2.56 (0.90) 75 5.80 (20.1) 2,047 2.43 (0.96) 67 7.26 0.6 2,833 2.39 (1.03) 77 7.22 1.1 2,496 2.40 (0.68) 129 $ 16.55 3.0 $ 48,677 1.98 (0.33) 36 16.07 15.3 45,138 2.01 (0.89) 172 13.94 38.7 45,442 2.33 (1.69) 156 10.05 (30.8) 38,441 2.13 (1.72) 160 14.52 (12.1) 69,873 2.08 (1.43) 174 16.51 (12.2) 89,714 1.88 (1.19) 216 15.36 2.6 44,724 2.73 (1.12) 36 14.97 14.5 54,652 2.76 (1.65) 172 13.08 37.5 55,662 3.08 (2.44) 156 9.51 (31.3) 46,215 2.88 (2.47) 160 13.84 (12.7) 82,060 2.83 (2.18) 174 15.86 (12.9) 107,083 2.63 (1.94) 216 15.37 2.6 13,506 2.73 (1.09) 36 14.98 14.4 13,549 2.76 (1.63) 172 13.09 37.6 12,042 3.08 (2.44) 156 9.51 (31.3) 10,930 2.88 (2.47) 160 13.84 (12.7) 22,047 2.83 (2.18) 174 15.86 (12.9) 28,090 2.63 (1.94) 216
(c)Amount rounds to less than $0.01 per share. (d)Computed on an annualized basis for periods less than one year. (e)For the six months ended June 30, 2005 (unaudited) 62 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions: ---------------------------------------- -------------------------- Net asset value, Net realized Distributions beginning Net and unrealized Total from from net of investment gain (loss) on investment realized Total period loss(b) investments operations capital gains distributions ---------- ---------- -------------- ---------- ------------- ------------- WESTPEAK CAPITAL GROWTH Class A 6/30/2005(d) $ 11.43 $ (0.04) $ (0.02) $ (0.06) $ -- $ -- 12/31/2004 10.87 (0.02)(c) 0.58 0.56 -- -- 12/31/2003 8.58 (0.08) 2.37 2.29 -- -- 12/31/2002 11.93 (0.09) (3.26) (3.35) -- -- 12/31/2001 15.04 (0.13) (2.95) (3.08) (0.03) (0.03) 12/31/2000 22.86 (0.18) (4.14) (4.32) (3.50) (3.50) Class B 6/30/2005(d) 9.94 (0.07) (0.03) (0.10) -- -- 12/31/2004 9.52 (0.09)(c) 0.51 0.42 -- -- 12/31/2003 7.56 (0.13) 2.09 1.96 -- -- 12/31/2002 10.61 (0.15) (2.90) (3.05) -- -- 12/31/2001 13.47 (0.20) (2.63) (2.83) (0.03) (0.03) 12/31/2000 21.06 (0.32) (3.77) (4.09) (3.50) (3.50) Class C 6/30/2005(d) 9.92 (0.07) (0.03) (0.10) -- -- 12/31/2004 9.50 (0.09)(c) 0.51 0.42 -- -- 12/31/2003 7.56 (0.13) 2.07 1.94 -- -- 12/31/2002 10.60 (0.14) (2.90) (3.04) -- -- 12/31/2001 13.47 (0.20) (2.64) (2.84) (0.03) (0.03) 12/31/2000 21.06 (0.32) (3.77) (4.09) (3.50) (3.50)
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. See accompanying notes to financial statements. 63
Ratios to average net assets: ------------------------ Net assets, Net asset Total end of Net investment Portfolio value, end return the period Expenses income (loss) turnover of the period (%) (a) (000) (%) (e) (%) (e) rate (%) ------------- --------- ----------- --------- -------------- --------- $ 11.37 (0.5) $ 52,848 1.91 (0.82) 64 11.43 5.2 57,420 1.89 (0.18)(c) 121 10.87 26.7 63,380 1.93 (0.85) 107 8.58 (28.1) 58,729 1.75 (0.84) 103 11.93 (20.5) 98,412 1.62 (0.99) 90 15.04 (19.5) 143,425 1.40 (0.80) 118 9.84 (1.0) 10,869 2.66 (1.57) 64 9.94 4.4 12,916 2.64 (0.97)(c) 121 9.52 25.9 16,485 2.68 (1.60) 107 7.56 (28.8) 16,267 2.50 (1.59) 103 10.61 (21.0) 35,409 2.37 (1.74) 90 13.47 (20.1) 56,884 2.15 (1.55) 118 9.82 (1.0) 945 2.66 (1.57) 64 9.92 4.4 1,013 2.64 (0.94)(c) 121 9.50 25.7 1,174 2.68 (1.60) 107 7.56 (28.7) 847 2.50 (1.59) 103 10.60 (21.1) 1,745 2.37 (1.74) 90 13.47 (20.1) 2,487 2.15 (1.55) 118
(c)Includes special one-time distribution from Microsoft Corp. Without this distribution, net investment loss per share would have been $(0.08), $(0.14) and $(0.14) for Class A, Class B, Class C shares, respectively, and the ratio of net investment loss to average net assets would have been (0.76)%, (1.52)% and (1.51)% for Class A, Class B and Class C shares, respectively. (d)For the six months ended June 30, 2005 (unaudited). (e)Computed on an annual basis for periods less than one year. 64 NOTES TO FINANCIAL STATEMENTS June 30, 2005 (unaudited) 1. Organization. IXIS Advisor Funds Trust I (formerly CDC Nvest Funds Trust I), IXIS Advisor Funds Trust II (formerly CDC Nvest Funds Trust II) and IXIS Advisor Funds Trust III (formerly CDC Nvest Funds Trust III) (the "Trusts" and each a "Trust") are organized as Massachusetts business trusts. Each Trust is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end management investment company. Each Declaration of Trust permits the Board of Trustees to authorize the issuance of an unlimited number of shares of the Trust in multiple series (individually, a "Fund" and collectively, the "Funds"). Information presented in these financial statements pertains to the equity funds of the Trusts; the financial statements of the other Funds of the Trusts are presented in separate reports. The following Funds are included in this report: IXIS Advisor Funds Trust I: IXIS U.S. Diversified Portfolio (the "U.S. Diversified Portfolio"), formerly the CDC Nvest Star Advisers Fund IXIS Value Fund (the "Value Fund"), formerly the CDC Nvest Star Value Fund CGM Advisor Targeted Equity Fund (the "Targeted Equity Fund") Hansberger International Fund (the "International Fund") Vaughan Nelson Small Cap Value Fund (the "Small Cap Value Fund") Westpeak Capital Growth Fund (the "Capital Growth Fund") IXIS Advisor Funds Trust II: Harris Associates Large Cap Value Fund (the "Large Cap Value Fund") IXIS Advisor Funds Trust III: Harris Associates Focused Value Fund (the "Focused Value Fund") Each Fund offers Class A, Class B, and Class C shares. U.S. Diversified Portfolio, Targeted Equity Fund and Large Cap Value Fund also offer Class Y shares. Class A shares are sold with a maximum front end sales charge of 5.75%. Class B shares do not pay a front end sales charge, but pay higher ongoing Rule 12b-1 fees than Class A shares for eight years (at which point they automatically convert to Class A shares), and are subject to a contingent deferred sales charge ("CDSC") if those shares are redeemed within six years of purchase. Class C shares do not pay a front end sales charge, do not convert to any other class of shares and pay a higher ongoing Rule 12b-1 fees than Class A shares and may be subject to a CDSC of 1.00% if those shares are redeemed within one year. Class Y shares do not pay a front end sales charge, a CDSC or Rule 12b-1 fees. They are generally intended for institutional investors with a minimum initial investment of $1,000,000, though some categories of investors are excepted from the minimum investment amount. Most expenses of the Trusts can be directly attributed to a Fund. Expenses which cannot be directly attributed are generally apportioned based on the relative net assets of each of the Funds in the Trusts. Expenses of a Fund are borne pro rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the Rule 12b-1 service and distribution fees and transfer agent fees applicable to such class), and votes as a class only with respect to its own Rule 12b-1 Plan. Shares of each class would receive their pro rata share of the net assets of a Fund if the Fund were liquidated. The Trustees approve separate dividends from net investment income on each class of shares. 2. Significant Accounting Policies. The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements. The Funds' financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. a. Security Valuation. Equity securities for which market quotations are readily available are valued at market price on the basis of valuations furnished to the Fund by a pricing service which has been authorized by the Board of Trustees. The pricing service provides the last reported sale price for securities listed on an applicable securities exchange, or, if no sale was reported and in the case of over-the-counter securities not so listed, the last reported bid price. Securities traded on the NASDAQ National Market are valued at the NASDAQ Official Closing Price ("NOCP"), or if lacking an NOCP, at the most recent bid quotation on the NASDAQ National Market. Debt securities for which market quotations are readily available (other than short-term obligations with a remaining maturity of less than sixty days) are generally valued at market price on the basis of valuations furnished by a pricing service authorized by the Board of Trustees, which service determines valuations for normal, institutional-size trading units of such securities using market information, transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders. Short-term obligations with a remaining maturity of less than sixty days are stated at amortized cost, which approximates market value. Securities traded on foreign exchanges are valued at the market price on the non-U.S. exchange, unless a Fund believes that an occurrence after the closing of that exchange will materially affect a security's value. In that case the security may be fair valued at the time the Fund determines its net asset value by or pursuant to procedures approved by the Board of Trustees. When fair valuing their securities, the Funds may, among other things, use modeling tools or other processes that may take into account factors such as securities market activity and/or significant events that occur after the close of the local market and before the time a Fund's net asset value is calculated. All other securities and assets are valued at their fair value as determined in good faith by the Funds' investment advisers and subadvisers, pursuant to the procedures approved by the Board of Trustees. b. Security Transactions and Related Investment Income. Security transactions are accounted for on trade date. Dividend income is recorded on ex-dividend date, or in the case of certain foreign securities, as soon thereafter as the Fund is notified, and interest income is recorded on an accrual basis. Interest income is increased by the accretion 65 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) of discount and decreased by the amortization of premium. Investment income is recorded net of foreign taxes withheld when recovery of such taxes is uncertain. In determining net gain or loss on securities sold, the cost of securities has been determined on an identified cost basis. Investment income and realized and unrealized gains and losses are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. c. Foreign Currency Translation. The books and records of the Funds are maintained in U.S. dollars. The value of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the period. Purchases and sales of investment securities, income and expenses are translated on the respective dates of such transactions. Since the values of investment securities are presented at the foreign exchange rates prevailing at the end of the period, it is not practical to isolate that portion of the results of operations arising from changes in exchange rates from fluctuations arising from changes in market prices of the investment securities. Such changes are included with the net realized and unrealized gain or loss on investments. Net realized foreign exchange gains or losses arise from: sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds' books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities at the end of the fiscal period, resulting from changes in exchange rates. d. Forward Foreign Currency Contracts. The U.S. Diversified Portfolio, the Value Fund and the International Fund may use foreign currency contracts to facilitate transactions in foreign securities and to manage their currency exposure. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge the Funds' investments against currency fluctuation. Also, a contract to buy or sell can offset a previous contract. These contracts involve market risk in excess of the unrealized gain or loss reflected in the Funds' Statement of Assets and Liabilities. The U.S. dollar value of the currencies a Fund has committed to buy or sell, if any, is shown in the portfolio composition under the caption "Forward Currency Contracts Outstanding." These amounts represent the aggregate exposure to each currency the Fund has acquired or hedged through currency contracts outstanding at period end. All contracts are "marked-to-market" daily at the applicable exchange rates and any gains or losses are recorded for financial statement purposes as unrealized until settlement date. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. e. Federal and Foreign Income Taxes. The Trusts treat each Fund as a separate entity for federal income tax purposes. Each Fund intends to meet the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. Accordingly, no provision for federal income tax has been made. A Fund may be subject to foreign taxes on income and gains on investments that are accrued based upon the Fund's understanding of the tax rules and regulations that exist in the countries in which the Fund invests. Foreign governments may also impose taxes or other payments on investments with respect to foreign securities. Such taxes are accrued as applicable. f. Dividends and Distributions to Shareholders. Dividends and distributions are recorded on ex-dividend date. The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments for book and tax purposes of items such as distributions from real estate investment trusts, net operating losses, non-deductible expenses, foreign currency transactions and gains realized from passive foreign investment companies. Permanent book and tax basis differences relating to shareholder distributions, net investment income, and net realized gains will result in reclassifications to the capital accounts. Distributions from net investment income and short-term capital gains are considered to be ordinary income for tax purposes. g. Repurchase Agreements. Each Fund, through its custodian, receives delivery of the underlying securities collateralizing repurchase agreements. It is each Fund's policy that the market value of the collateral be at least equal to 102% of the repurchase price, including interest. Each Fund's subadviser (or adviser for the Targeted Equity Fund) is responsible for determining that the value of the collateral is at all times at least equal to 102% of the repurchase price, including interest. Repurchase agreements could involve certain risks in the event of default or insolvency of the counterparty including possible delays or restrictions upon a Fund's ability to dispose of the underlying securities. h. Indemnifications. Under the Funds' organizational documents, their officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. 66 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) 3. Purchases and Sales of Securities. For the six months ended June 30, 2005, purchases and sales of securities (excluding short-term investments) were as follows:
Fund Purchases Sales ---- -------------- -------------- Targeted Equity Fund $1,141,483,529 $1,186,301,955 International Fund 30,839,476 35,532,336 Focused Value Fund 36,756,416 69,102,579 Large Cap Value Fund 60,204,082 82,452,367 U.S. Diversified Portfolio 317,681,623 372,601,683 Value Fund 37,576,112 47,912,890 Small Cap Value Fund 37,279,170 46,335,275 Capital Growth Fund 41,724,340 47,492,819
4. Management Fees and Other Transactions with Affiliates. a. Management Fees. IXIS Asset Management Advisors, L.P. ("IXIS Advisors"), formerly CDC IXIS Asset Management Advisers, L.P., is the investment adviser to each of the Funds except the Targeted Equity Fund. Capital Growth Management Limited Partnership ("CGM") is the investment adviser to the Targeted Equity Fund. Under the terms of the management agreements each Fund paid a management fee at the following annual rates, calculated daily and payable monthly, based on each Funds' average daily net assets:
Percentage of Average Daily Net Assets - - ------------------------------------------------------------ First Next Next Next Over Fund $200 million $300 million $500 million $1 billion $2 billion - ---- ------------ ------------ ------------ ---------- ---------- Targeted Equity Fund 0.75% 0.70% 0.65% 0.65% 0.60% International Fund 0.80% 0.75% 0.75% 0.75% 0.75% Focused Value Fund 1.00% 1.00% 1.00% 0.95% 0.95% Large Cap Value Fund 0.70% 0.65% 0.60% 0.60% 0.60% Value Fund 0.75% 0.70% 0.65% 0.65% 0.65% Small Cap Value Fund 0.90% 0.90% 0.90% 0.90% 0.90% Capital Growth Fund 0.75% 0.70% 0.65% 0.65% 0.65%
During the period ended June 30, 2005, U.S. Diversified Portfolio paid management fees at the annual rate of 1.05% of the first $750 million of the Fund's average daily net assets and 0.95% of such assets in excess of $750 million. Effective July 1, 2005, the management fee was reduced to an annual rate of 0.90% of the first $1 billion of the Fund's average daily net assets and 0.80% of such assets in excess of $1 billion. For the six months ended June 30, 2005, the management fees for each Fund were as follows:
Gross Percentage of Management Average Fund Fee Daily Net Assets ---- ---------- ---------------- Targeted Equity Fund $2,565,105 0.70% International Fund 525,751 0.80% Focused Value Fund 1,687,318 1.00% Large Cap Value Fund 1,096,496 0.68% U.S. Diversified Portfolio 3,408,166 1.05% Value Fund 487,865 0.75% Small Cap Value Fund 473,901 0.90% Capital Growth Fund 245,923 0.75%
67 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) IXIS Advisors has entered into subadvisory agreements for each Fund listed below. Payments to IXIS Advisors are reduced in the amount of payments to the subadvisers. U.S. Diversified Portfolio Harris Associates L.P. ("Harris") Loomis, Sayles & Company, L.P. ("Loomis Sayles") Mercury Advisors Value Fund Harris Loomis Sayles Vaughan Nelson Investment Management, L.P. ("Vaughan Nelson") Westpeak Global Advisors, L.P. ("Westpeak") International Fund Hansberger Global Investors, Inc. ("Hansberger") Focused Value Fund Harris Large Cap Value Fund Harris Small Cap Value Fund Vaughan Nelson Capital Growth Fund Westpeak
IXIS Advisors, CGM, Harris, Loomis Sayles, Vaughan Nelson and Westpeak are subsidiaries of IXIS Asset Management North America, L.P. ("IXIS North America"). Hansberger is an affiliated money manager of IXIS North America. Certain officers and directors of IXIS Advisors and its affiliates are also officers or Trustees of the Funds. For the six months ended June 30, 2005, broker commissions paid to affiliated broker/dealers by the Funds were as follows:
Fund Commission ---- ---------- U.S. Diversified Portfolio $62,478
b. Administrative Expense. During the period, IXIS Advisors performed certain administrative services for the Funds and subcontracted with Investors Bank & Trust Company ("IBT") to serve as subadministrator. Pursuant to an agreement among IXIS Advisor Funds Trust I, IXIS Advisor Funds Trust II, IXIS Advisor Funds Trust III, IXIS Advisor Funds Trust IV and IXIS Advisor Cash Management Trust ("IXIS Advisor Funds Trusts") and Loomis Sayles Funds I and Loomis Sayles Funds II ("Loomis Sayles Funds Trusts") and IXIS Advisors, each Fund pays IXIS Advisors its pro rata portion of a group fee for these services representing the higher amount based on the following calculations: (1)Percentage of Eligible Average Daily Net Assets
First Next Over $5 billion $5 billion $10 billion - ---------- ---------- ----------- 0.0675% 0.0625% 0.0500%
or (2)Each Funds' pro rata portion, allocated based on the combined assets of the IXIS Advisor Funds Trusts and Loomis Sayles Funds Trusts, of the annual aggregate minimum fee of $5 million. For the six months ended June 30, 2005, amounts paid to IXIS Advisors for administrative expense were as follows:
Fund Administrative ---- -------------- Targeted Equity Fund $235,514 International Fund 41,228 Focused Value Fund 111,773 Large Cap Value Fund 107,284 U.S. Diversified Portfolio 214,556 Value Fund 42,338 Small Cap Value 34,352 Capital Growth Fund 22,504
c. Transfer Agent Fees. IXIS Asset Management Services Company ("IXIS Services"), formerly CDC IXIS Asset Management Services, Inc., a wholly-owned subsidiary of IXIS North America, is the transfer and shareholder servicing agent for each Fund and has subcontracted with Boston Financial Data Services, Inc. ("BFDS") to serve as sub-transfer agent. During the period, each Load Equity Fund, for its Class A, B and C shares, paid service fees monthly equal to $25.44 for each open account and $2.00 for each closed account, subject to a monthly minimum of $1,500 per class and an annual aggregate minimum fee for all Load Equity Funds of approximately $6.8 million. 68 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) Each Load Equity Fund, for its Class Y shares, paid service fees monthly equal to $25.44 for each open account and $2.00 for each closed account, subject to a monthly minimum of $1,500 per class and an aggregate minimum fee for all No-Load Retail Funds* and Load Funds Class Y** of approximately $1million. * No-Load Retail Funds consist of Loomis Sayles Aggressive Growth Fund, Loomis Sayles Bond Fund, Loomis Sayles Global Bond Fund, Loomis Sayles Small Cap Growth Fund, Loomis Sayles Small Cap Value Fund, Loomis Sayles Tax-Managed Equity Fund, Loomis Sayles Value Fund and Loomis Sayles Worldwide Fund. ** Load Funds - Class Y consist of all Funds with Class Y offered within the IXIS Advisor Funds Trusts and Loomis Sayles Funds Trusts. In addition, pursuant to other servicing agreements, each class pays service fees to other firms that provide similar services for their own shareholder accounts. IXIS Services, BFDS and other firms are also reimbursed by the Funds for out-of-pocket expenses. For the six months ended June 30, 2005, amounts paid to IXIS Services as compensation for its services as transfer agent were as follows:
Transfer Fund Agent Fee ---- --------- Targeted Equity Fund $601,990 International Fund 229,460 Focused Value Fund 278,773 Large Cap Value Fund 410,149 U.S. Diversified Portfolio 914,493 Value Fund 179,213 Small Cap Value Fund 226,971 Capital Growth Fund 151,292
d. Service and Distribution Fees. Pursuant to Rule 12b-1 under the 1940 Act, the Trusts have adopted a Service Plan relating to each Fund's Class A shares (the "Class A Plan") and Service and Distribution Plans relating to each Fund's Class B and Class C shares (the "Class B and Class C Plans"). Under the Class A Plan, each Fund pays IXIS Asset Management Distributors, L.P. ("IXIS Distributors"), the Fund's distributor (a wholly-owned subsidiary of IXIS North America), a monthly service fee at the annual rate of 0.25% of the average daily net assets attributable to the Fund's Class A shares, as reimbursement for expenses incurred by IXIS Distributors in providing personal services to investors in Class A shares and/or the maintenance of shareholder accounts. Under the Class B and Class C Plans, each Fund pays IXIS Distributors a monthly service fee at the annual rate of 0.25% of the average daily net assets attributable to the Fund's Class B and Class C shares, as compensation for services provided and expenses incurred by IXIS Distributors in providing personal services to investors in Class B and Class C shares and/or the maintenance of shareholder accounts. Also under the Class B and Class C Plans, each Fund pays IXIS Distributors a monthly distribution fee at the annual rate of 0.75% of the average daily net assets attributable to the Fund's Class B and Class C shares, as compensation for services provided and expenses incurred by IXIS Distributors in connection with the marketing or sale of Class B and Class C shares. For the six months ended June 30, 2005, the Funds paid the following service and distribution fees:
Service Fee Distribution Fee - -------------------------- ----------------- Fund Class A Class B Class C Class B Class C ---- ------- ------- ------- ------- ------- Targeted Equity Fund $835,286 $ 68,943 $ 3,943 $206,827 $ 11,827 International Fund 92,978 50,193 21,126 150,580 63,376 Focused Value Fund 124,342 130,030 167,457 390,090 502,371 Large Cap Value Fund 261,199 90,253 30,738 270,757 92,215 U.S. Diversified Portfolio 469,250 248,886 66,059 746,659 198,176 Value Fund 126,664 32,175 3,783 96,523 11,350 Small Cap Value Fund 56,794 58,773 16,073 176,317 48,219 Capital Growth Fund 66,535 14,269 1,171 42,806 3,511
69 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) Commissions (including CDSC) on Fund shares paid to IXIS Distributors by investors in shares of the Funds during the six months ended June 30, 2005 were as follows:
Fund ---- - Targeted Equity Fund $188,406 International Fund 56,910 Focused Value Fund 246,763 Large Cap Value Fund 112,590 U.S. Diversified Portfolio 346,821 Value Fund 49,771 Small Cap Value Fund 72,691 Capital Growth Fund 41,928
e. Trustees Fees and Expenses. The IXIS Advisor Funds Trusts and the Loomis Sayles Funds Trusts do not pay any compensation directly to their officers or Trustees who are directors, officers or employees of IXIS Advisors, IXIS Distributors, IXIS North America, IXIS Services or their affiliates. Each Trustee who is an independent Trustee of the IXIS Advisor Funds Trusts and the Loomis Sayles Funds Trusts receives, in the aggregate, a retainer fee at the annual rate of $50,000 and meeting attendance fees of $5,000 for each meeting of the Board of Trustees attended. Each committee chairman receives an additional retainer fee at the annual rate of $7,000. Each committee member receives a meeting attendance fee of $3,750 per committee meeting attended. The co-chairmen of the Board each receive an additional annual retainer of $25,000. These fees are allocated to the various series of the IXIS Advisor Funds Trusts and the Loomis Sayles Funds Trusts based on a formula that takes into account, among other factors, the relative net assets of each Fund. Trustees are reimbursed for travel expenses in connection with attendance at meetings. A deferred compensation plan (the "Plan") is available to the Trustees on a voluntary basis. Each participating Trustee will receive an amount equal to the value that such deferred compensation would have been had it been invested in a designated fund or certain other funds of the IXIS Advisor Funds Trusts and the Loomis Sayles Funds Trusts on the normal payment date. Deferred amounts remain in the Funds until distributed in accordance with the Plan. Additionally, the Board of Trustees has approved the use of Fund assets to pay its portion of the annual salary for 2005 of an employee of IXIS Advisors who supports the Fund's Chief Compliance Officer. For the period ended June 30, 2005, each Fund's portion of such expense was $354. f. Redemption fees. Class A shareholders of Targeted Equity Fund, Focused Value Fund, Small Cap Value Fund, and International Fund are charged a 2% redemption fee if they redeem, including redeeming by exchange, Class A shares of these Funds within 60 days of their acquisition (including acquisition by exchange). The redemption fee is intended to offset the costs to the Funds of short-term trading, such as portfolio transaction and market impact costs associated with redemption activity and administrative costs associated with processing redemptions. The redemption fee is deducted from the shareholder's redemption or exchange proceeds and is paid to the Fund. The "first-in, first-out" (FIFO) method is used to determine the holding period of redeemed or exchange shares, which means that if you acquired shares on different days, the shares acquired first will be redeemed or exchanged first for purposes of determining whether the redemption fee applies. A new holding period begins with each purchase or exchange. These fees are broken out on the Statements of Changes in Net Assets. g. Publishing Services. IXIS Services performs certain desktop publishing services for the Funds. Fees for these services are presented in the Statements of Operations as a part of shareholder reporting. For the six months ended June 30, 2005 there were no amounts paid to IXIS Services. 5. Line of Credit. Each Fund, along with certain other portfolios, participates in a $50,000,000 committed line of credit provided by IBT under a credit agreement (the "Agreement") dated April 30, 2002. Advances under the Agreement are taken primarily for temporary or emergency purposes. Interest is charged to each participating Fund based on its borrowings at a rate per annum equal to the Federal Funds rate plus 0.45%. In addition, the Funds are charged a facility fee equal to 0.10% per annum on the unused portion of the line of credit. The annual cost of maintaining the line of credit and the facility fee is apportioned pro rata among the participating Funds. There were no borrowings during the six months ended June 30, 2005. 6. Security Lending. Each Fund has entered into an agreement with IBT, as an agent of the Funds, to lend securities to certain designated borrowers. The loans are collateralized at all times with cash or securities with a market value at least equal to the market value of the securities on loan. The Funds receive fees for lending their securities. The market value of securities on loan to borrowers and the value of collateral held by the Funds with respect to such loans at June 30, 2005 were as follows: 70 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited)
Market Value of Value of Collateral Fund Securities on Loan Received ---- ------------------ -------- Targeted Equity Fund $63,083,299 $64,654,350 International Fund 18,597,626 19,407,485 Focused Value Fund 56,416,027 58,227,858 Large Cap Value Fund 24,621,602 25,325,574 U.S. Diversified Portfolio 88,651,474 91,221,630 Value Fund 20,218,456 20,789,977 Small Cap Value Fund 18,018,961 18,608,140 Capital Growth Fund 9,818,649 10,115,328
7. Brokerage Commission Recapture. Each Fund has entered into agreements with certain brokers whereby the brokers will rebate a portion of brokerage commissions. All amounts rebated by the brokers are returned to the Funds under such agreements and are presented as realized gains in the Statements of Operations. For the six months ended June 30, 2005, amounts rebated under these agreements were as follows:
Fund Reductions ---- ---------- Targeted Equity Fund $274,367 International Fund 16,289 Focused Value Fund 18,549 Large Cap Value Fund 30,589 U.S. Diversified Portfolio 110,799 Value Fund 20,342 Small Cap Value Fund 33,715 Capital Growth Fund 10,623
Previously, such rebates were presented as a reduction of expenses in Statement of Operations. This reclassification has no impact on total net assets of the Funds. 8. Contingent Expense Obligations. IXIS Advisors has given binding undertakings to certain Funds to defer its management fees and, if necessary, bear certain expenses associated with these Funds to limit their operating expenses. These undertakings are in effect until the dates under "Expiration of Waiver" below and will be reevaluated on an annual basis. For the six months ended June 30, 2005, certain class level expenses have been reimbursed as follows: Large Cap Value Fund: $191,766. IXIS Advisors shall be permitted to recover expenses it has borne (whether through reduction of its management fee or otherwise) in later periods to the extent the Funds' expenses fall below the expense limits, provided, however, that the Funds are not obligated to pay such deferred fees more than one year after the end of the fiscal year in which the fee was deferred. At June 30, 2005, the expense limits as a percentage of average daily net assets and amounts subject to possible reimbursement under the expense limitation agreements were as follows:
Expenses Expenses Expense Limit as a Percentage of Average Subject to Subject to Daily Net Assets Possible Possible - - --------------------------------------- Expiration of Reimbursement Reimbursement Fund Class A Class B Class C Class Y Waiver through 2005 through 2006 - ---- ------- ------- ------- ------- -------------- ------------- ------------- Focused Value Fund 1.70% 2.45% 2.45% --% April 30, 2006 $ -- $ -- Large Cap Value Fund 1.30% 2.05% 2.05% 1.05% April 30, 2006 613,592 191,766
9. Concentration of Risk. Focused Value Fund is a non-diversified Fund. Compared with diversified mutual funds, the Fund may invest a greater percentage of its assets in a particular company. Therefore, the Fund's returns could be significantly affected by the performance of any one of the small number of stocks in its portfolio. International Fund had the following geographic concentrations in excess of 10% of its total net assets at June 30, 2005: France 13.1%, Japan 16.7%, and the United Kingdom 18.7%. The Fund pursues its objectives by investing in foreign securities. There are certain risks involved in investing in foreign securities that are in addition to the usual risks inherent in domestic investments. These risks include those resulting from future adverse political or economic developments and the possible imposition of currency exchange blockages or other foreign governmental laws or restrictions. 71 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) 10. Capital Shares. Each Fund may issue an unlimited number of shares of beneficial interest. Transactions in capital shares were as follows: Six Months Ended June 30, 2005 ----------------------------------- CGM Advisor Targeted Equity Fund Shares Amount - -------------------------------- ---------------- ----------------- Class A Shares sold 988,835 $ 9,002,202 Shares Issued in connection with the reinvestment of: Dividends from net investment income 90,813 839,111 ---------------- ----------------- 1,079,648 9,841,313 Shares repurchased (5,573,352) (50,723,382) ---------------- ----------------- Net increase (decrease) (4,493,704) $ (40,882,069) ---------------- ----------------- Class B Shares sold 234,073 $ 1,988,078 Shares Issued in connection with the reinvestment of: Dividends from net investment income 8,192 70,535 ---------------- ----------------- 242,265 2,058,613 Shares repurchased (882,103) (7,510,418) ---------------- ----------------- Net increase (decrease) (639,838) $ (5,451,805) ---------------- ----------------- Class C Shares sold 60,368 $ 514,469 Shares Issued in connection with the reinvestment of: Dividends from net investment income 427 3,675 ---------------- ----------------- 60,795 518,144 Shares repurchased (49,593) (421,366) ---------------- ----------------- Net increase (decrease) 11,202 $ 96,778 ---------------- ----------------- Class Y Shares sold 91,867 $ 853,770 Shares Issued in connection with the reinvestment of: Dividends from net investment income 1,321 12,467 ---------------- ----------------- 93,188 866,237 Shares repurchased (50,091) (460,362) ---------------- ----------------- Net increase (decrease) 43,097 $ 405,875 ---------------- ----------------- Increase (decrease) derived from capital shares transactions (5,079,243) $ (45,831,221) ================ =================
Year Ended December 31, 2004 ----------------------------------- CGM Advisor Targeted Equity Fund Shares Amount - -------------------------------- ---------------- ----------------- Class A Shares sold 2,521,858 $ 20,870,954 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- ---------------- ----------------- 2,521,858 20,870,954 Shares repurchased (17,497,433) (142,925,716) ---------------- ----------------- Net increase (decrease) (14,975,575) $ (122,054,762) ---------------- ----------------- Class B Shares sold 584,350 $ 4,509,878 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- ---------------- ----------------- 584,350 4,509,878 Shares repurchased (1,391,402) (10,654,125) ---------------- ----------------- Net increase (decrease) (807,052) $ (6,144,247) ---------------- ----------------- Class C Shares sold 105,596 $ 786,319 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- ---------------- ----------------- 105,596 786,319 Shares repurchased (79,774) (611,842) ---------------- ----------------- Net increase (decrease) 25,822 $ 174,477 ---------------- ----------------- Class Y Shares sold 129,331 $ 1,094,935 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- ---------------- ----------------- 129,331 1,094,935 Shares repurchased (101,673) (843,271) ---------------- ----------------- Net increase (decrease) 27,658 $ 251,664 ---------------- ----------------- Increase (decrease) derived from capital shares transactions (15,729,147) $ (127,772,868) ================ =================
72 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) 10. Capital Shares (continued). Six Months Ended June 30, 2005 ----------------------------------- Hansberger International Fund Shares Amount - ----------------------------- ---------------- ----------------- Class A Shares sold 568,330 $ 9,750,800 Shares repurchased (434,015) (7,412,519) ---------------- ----------------- Net increase (decrease) 134,315 $ 2,338,281 ---------------- ----------------- Class B Shares sold 110,584 $ 1,754,922 Shares repurchased (672,203) (10,638,121) ---------------- ----------------- Net increase (decrease) (561,619) $ (8,883,199) ---------------- ----------------- Class C Shares sold 92,590 $ 1,463,489 Shares repurchased (86,623) (1,371,099) ---------------- ----------------- Net increase (decrease) 5,967 $ 92,390 ---------------- ----------------- Increase (decrease) derived from capital shares transactions (421,337) $ (6,452,528) ================ =================
Year Ended December 31, 2004 ----------------------------------- Hansberger International Fund Shares Amount - ----------------------------- ---------------- ----------------- Class A Shares sold 1,378,026 $ 21,181,534 Shares repurchased (1,039,791) (15,979,778) ---------------- ----------------- Net increase (decrease) 338,235 $ 5,201,756 ---------------- ----------------- Class B Shares sold 234,404 $ 3,365,251 Shares repurchased (1,672,509) (23,865,174) ---------------- ----------------- Net increase (decrease) (1,438,105) $ (20,499,923) ---------------- ----------------- Class C Shares sold 324,631 $ 4,638,364 Shares repurchased (142,798) (2,053,383) ---------------- ----------------- Net increase (decrease) 181,833 $ 2,584,981 ---------------- ----------------- Increase (decrease) derived from capital shares transactions (918,037) $ (12,713,186) ================ =================
73 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) 10. Capital Shares (continued). Six Months Ended June 30, 2005 ----------------------------------- Harris Associates Focused Value Fund Shares Amount - ------------------------------------ ---------------- ----------------- Class A Shares sold 641,417 $ 8,224,257 Shares repurchased (1,900,102) (24,582,855) ---------------- ----------------- Net increase (decrease) (1,258,685) $ (16,358,598) ---------------- ----------------- Class B Shares sold 195,352 $ 2,434,884 Shares repurchased (829,149) (10,389,311) ---------------- ----------------- Net increase (decrease) (633,797) $ (7,954,427) ---------------- ----------------- Class C Shares sold 429,381 $ 5,354,872 Shares repurchased (1,698,689) (21,236,785) ---------------- ----------------- Net increase (decrease) (1,269,308) $ (15,881,913) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (3,161,790) $ (40,194,938) ================ =================
Year Ended December 31, 2004 ----------------------------------- Harris Associates Focused Value Fund Shares Amount - ------------------------------------ ---------------- ----------------- Class A Shares sold 2,211,604 $ 26,494,287 Shares repurchased (2,074,206) (24,982,274) ---------------- ----------------- Net increase (decrease) 137,398 $ 1,512,013 ---------------- ----------------- Class B Shares sold 773,815 $ 9,061,361 Shares repurchased (1,352,436) (15,825,604) ---------------- ----------------- Net increase (decrease) (578,621) $ (6,764,243) ---------------- ----------------- Class C Shares sold 2,570,290 $ 30,041,268 Shares repurchased (1,937,670) (22,709,696) ---------------- ----------------- Net increase (decrease) 632,620 $ 7,331,572 ---------------- ----------------- Increase (decrease) derived from capital shares transactions 191,397 $ 2,079,342 ================ =================
74 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) 10. Capital Shares (continued). Six Months Ended June 30, 2005 ----------------------------------- Harris Associates Large Cap Value Fund Shares Amount - -------------------------------------- ---------------- ----------------- Class A Shares sold 604,456 $ 7,859,481 Shares Issued in connection with the reinvestment of: Dividends from net investment income 14,687 191,231 ---------------- ----------------- 619,143 8,050,712 Shares repurchased (1,554,986) (20,198,445) ---------------- ----------------- Net decrease (935,843) $ (12,147,733) ---------------- ----------------- Class B Shares sold 155,517 $ 1,902,126 Shares Issued in connection with the reinvestment of: Dividends from net investment income 6,033 73,844 ---------------- ----------------- 161,550 1,975,970 Shares repurchased (960,869) (11,757,194) ---------------- ----------------- Net decrease (799,319) $ (9,781,224) ---------------- ----------------- Class C Shares sold 151,841 $ 1,857,251 Shares Issued in connection with the reinvestment of: Dividends from net investment income 976 11,938 ---------------- ----------------- 152,817 1,869,189 Shares repurchased (355,854) (4,350,287) ---------------- ----------------- Net increase (decrease) (203,037) $ (2,481,098) ---------------- ----------------- Class Y Shares sold 45,250 $ 604,566 Shares issued in connection with the reinvestment of: Dividends from net investment income 1,195 16,006 ---------------- ----------------- 46,445 620,572 Shares repurchased (217,392) (2,884,095) ---------------- ----------------- Net decrease (170,947) $ (2,263,523) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (2,109,146) $ (26,673,578) ================ =================
Year Ended December 31, 2004 ----------------------------------- Harris Associates Large Cap Value Fund Shares Amount - -------------------------------------- ---------------- ----------------- Class A Shares sold 2,114,459 $ 26,293,904 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- ---------------- ----------------- 2,114,459 26,293,904 Shares repurchased (3,058,528) (38,152,674) ---------------- ----------------- Net decrease (944,069) $ (11,858,770) ---------------- ----------------- Class B Shares sold 539,873 $ 6,373,696 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- ---------------- ----------------- 539,873 6,373,696 Shares repurchased (2,028,413) (23,942,400) ---------------- ----------------- Net decrease (1,488,540) $ (17,568,704) ---------------- ----------------- Class C Shares sold 1,068,463 $ 12,555,826 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- ---------------- ----------------- 1,068,463 12,555,826 Shares repurchased (311,574) (3,687,561) ---------------- ----------------- Net increase (decrease) 756,889 $ 8,868,265 ---------------- ----------------- Class Y Shares sold 278,070 $ 3,599,061 Shares issued in connection with the reinvestment of: Dividends from net investment income -- -- ---------------- ----------------- 278,070 3,599,061 Shares repurchased (1,082,092) (13,760,464) ---------------- ----------------- Net decrease (804,022) $ (10,161,403) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (2,479,742) $ (30,720,612) ================ =================
75 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) 10. Capital Shares (continued). Six Months Ended June 30, 2005 ----------------------------------- IXIS U.S. Diversified Portfolio Shares Amount - ------------------------------- ---------------- ----------------- Class A Shares sold 1,437,447 $ 26,345,179 Shares repurchased (2,190,111) (40,175,338) ---------------- ----------------- Net decrease (752,664) $ (13,830,159) ---------------- ----------------- Class B Shares sold 374,802 $ 6,156,108 Shares repurchased (2,414,955) (39,756,412) ---------------- ----------------- Net decrease (2,040,153) $ (33,600,304) ---------------- ----------------- Class C Shares sold 56,183 $ 928,570 Shares repurchased (546,002) (8,991,129) ---------------- ----------------- Net increase (decrease) (489,819) $ (8,062,559) ---------------- ----------------- Class Y Shares sold 68,927 $ 1,330,957 Shares repurchased (256,724) (4,986,417) ---------------- ----------------- Net decrease (187,797) $ (3,655,460) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (3,470,433) $ (59,148,482) ================ =================
Year Ended December 31, 2004 ----------------------------------- IXIS U.S. Diversified Portfolio Shares Amount - ------------------------------- ---------------- ----------------- Class A Shares sold 3,621,946 $ 61,819,311 Shares repurchased (4,042,630) (69,134,083) ---------------- ----------------- Net decrease (420,684) $ (7,314,772) ---------------- ----------------- Class B Shares sold 1,023,105 $ 15,892,084 Shares repurchased (5,878,024) (90,809,102) ---------------- ----------------- Net decrease (4,854,919) $ (74,917,018) ---------------- ----------------- Class C Shares sold 189,049 $ 2,929,359 Shares repurchased (734,192) (11,393,435) ---------------- ----------------- Net increase (decrease) (545,143) $ (8,464,076) ---------------- ----------------- Class Y Shares sold 218,190 $ 3,966,766 Shares repurchased (1,673,188) (29,771,039) ---------------- ----------------- Net decrease (1,454,998) $ (25,804,273) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (7,275,744) $ (116,500,139) ================ =================
76 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) 10. Capital Shares (continued). Six Months Ended June 30, 2005 ----------------------------------- IXIS Value Fund Shares Amount - --------------- ---------------- ----------------- Class A Shares sold 415,947 $ 3,694,757 Shares Issued in connection with the reinvestment of: Dividends from net investment income (22) -- Distributions from net realized gain 291,053 2,570,629 ---------------- ----------------- 706,978 6,265,386 Shares repurchased (1,145,811) (10,147,451) ---------------- ----------------- Net decrease (438,833) $ (3,882,065) ---------------- ----------------- Class B Shares sold 141,027 $ 1,150,736 Shares Issued in connection with the reinvestment of: Dividends from net investment income (2) -- Distributions from net realized gain 82,723 668,587 ---------------- ----------------- 223,748 1,819,323 Shares repurchased (595,455) (4,855,765) ---------------- ----------------- Net decrease (371,707) $ (3,036,442) ---------------- ----------------- Class C Shares sold 29,804 $ 244,388 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- Distributions from net realized gain 7,866 63,582 ---------------- ----------------- 37,670 307,970 Shares repurchased (34,362) (281,864) ---------------- ----------------- Net increase (decrease) 3,308 $ 26,106 ---------------- ----------------- Increase (decrease) derived from capital shares transactions (807,232) $ (6,892,401) ================ =================
Year Ended December 31, 2004 ----------------------------------- IXIS Value Fund Shares Amount - --------------- ---------------- ----------------- Class A Shares sold 963,269 $ 8,089,262 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- Distributions from net realized gain 214,596 1,883,282 ---------------- ----------------- 1,177,865 9,972,544 Shares repurchased (2,880,533) (24,188,526) ---------------- ----------------- Net decrease (1,702,668) $ (14,215,982) ---------------- ----------------- Class B Shares sold 406,698 $ 3,154,676 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- Distributions from net realized gain 65,280 527,181 ---------------- ----------------- 471,978 3,681,857 Shares repurchased (1,049,412) (8,162,688) ---------------- ----------------- Net decrease (577,434) $ (4,480,831) ---------------- ----------------- Class C Shares sold 139,514 $ 1,078,896 Shares Issued in connection with the reinvestment of: Dividends from net investment income -- -- Distributions from net realized gain 5,506 44,489 ---------------- ----------------- 145,020 1,123,385 Shares repurchased (51,629) (402,248) ---------------- ----------------- Net increase (decrease) 93,391 $ 721,137 ---------------- ----------------- Increase (decrease) derived from capital shares transactions (2,186,711) $ (17,975,676) ================ =================
77 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2005 (unaudited) 10. Capital Shares (continued). Six Months Ended June 30, 2005 ----------------------------------- Vaughan Nelson Small Cap Value Fund Shares Amount - ----------------------------------- ---------------- ----------------- Class A Shares sold 550,137 $ 8,668,939 Shares repurchased (417,386) (6,598,206) ---------------- ----------------- Net increase (decrease) 132,751 $ 2,070,733 ---------------- ----------------- Class B Shares sold 96,421 $ 1,411,516 Shares repurchased (834,949) (12,229,487) ---------------- ----------------- Net increase (decrease) (738,528) $ (10,817,971) ---------------- ----------------- Class C Shares sold 92,260 $ 1,357,477 Shares repurchased (117,887) (1,729,650) ---------------- ----------------- Net increase (decrease) (25,627) $ (372,173) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (631,404) $ (9,119,411) ================ ================= Six Months Ended June 30, 2005 ----------------------------------- Westpeak Capital Growth Fund Shares Amount - ---------------------------- ---------------- ----------------- Class A Shares sold 146,537 $ 1,620,890 Shares repurchased (518,334) (5,736,305) ---------------- ----------------- Net increase (decrease) (371,797) $ (4,115,415) ---------------- ----------------- Class B Shares sold 55,996 $ 537,338 Shares repurchased (251,042) (2,413,268) ---------------- ----------------- Net increase (decrease) (195,046) $ (1,875,930) ---------------- ----------------- Class C Shares sold 3,472 $ 33,048 Shares repurchased (9,294) (88,461) ---------------- ----------------- Net increase (decrease) (5,822) $ (55,413) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (572,665) $ (6,046,758) ================ =================
Year Ended December 31, 2004 ----------------------------------- Vaughan Nelson Small Cap Value Fund Shares Amount - ----------------------------------- ---------------- ----------------- Class A Shares sold 397,634 $ 5,765,216 Shares repurchased (849,371) (12,182,549) ---------------- ----------------- Net increase (decrease) (451,737) $ (6,417,333) ---------------- ----------------- Class B Shares sold 291,248 $ 3,924,012 Shares repurchased (895,799) (12,076,096) ---------------- ----------------- Net increase (decrease) (604,551) $ (8,152,084) ---------------- ----------------- Class C Shares sold 171,240 $ 2,309,106 Shares repurchased (186,838) (2,501,179) ---------------- ----------------- Net increase (decrease) (15,598) $ (192,073) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (1,071,886) $ (14,761,490) ================ ================= Year Ended December 31, 2004 ----------------------------------- Westpeak Capital Growth Fund Shares Amount - ---------------------------- ---------------- ----------------- Class A Shares sold 313,633 $ 3,392,393 Shares repurchased (1,124,317) (12,133,801) ---------------- ----------------- Net increase (decrease) (810,684) $ (8,741,408) ---------------- ----------------- Class B Shares sold 142,812 $ 1,353,045 Shares repurchased (575,435) (5,454,484) ---------------- ----------------- Net increase (decrease) (432,623) $ (4,101,439) ---------------- ----------------- Class C Shares sold 14,061 $ 133,009 Shares repurchased (35,626) (335,096) ---------------- ----------------- Net increase (decrease) (21,565) $ (202,087) ---------------- ----------------- Increase (decrease) derived from capital shares transactions (1,264,872) $ (13,044,934) ================ =================
78 ADDITIONAL INFORMATION Shareholder Meetings (Unaudited) At a special shareholders' meeting held on June 2, 2005, shareholders of IXIS Advisor Funds Trust I of which the CGM Advisor Targeted Equity Fund, Hansberger International Fund, IXIS U.S. Diversified Portfolio (formerly CDC Nvest Star Advisers Fund), IXIS Value Fund (formerly CDC Nvest Star Value Fund), Vaughan Nelson Small Cap Value Fund and Westpeak Capital Growth Fund are series, voted for the following proposals: 1. Election of Trustees for IXIS Advisor Funds Trust I ("Trust I")
Votes Votes For Withheld Total Votes - --------- -------- ----------- Graham T. Allison, Jr. 131,745,061.272 3,213,785.211 134,958,846.483 Edward A. Benjamin 131,812,753.170 3,146,093.313 134,958,846.483 Daniel M. Cain 131,896,620.650 3,062,225.833 134,958,846.483 Paul G. Chenault 131,736,188.725 3,222,657.758 134,958,846.483 Kenneth J. Cowan 131,624,646.555 3,334,199.928 134,958,846.483 Richard Darman 131,920,983.533 3,037,862.950 134,958,846.483 Sandra O. Moose 131,873,816.605 3,085,029.878 134,958,846.483 John A. Shane 131,718.823.070 3,240,023.413 134,958,846.483 Charles D. Baker 131,824.162.901 3,134,683.582 134,958,846.483 Cynthia L. Walker 131,866.957.031 3,091,889.452 134,958,846.483 Robert J. Blanding 131,879,975.460 3,078,871.023 134,958,846.483 John T. Hailer 131,817,344.611 3,141,501.872 134,958,846.483
2. Approval of an Amended and Restated Agreement and Declaration of Trust for Trust I
Voted Voted For Against Abstained Votes Broker Non-Votes Total Votes --------- ------- --------------- ---------------- ----------- 96,227,281.438 3,171,004.690 3,467,338.355 32,093,222.000 134,958,846.483
At a special shareholders' meeting held on June 2, 2005, shareholders of IXIS Advisor Funds Trust II of which the Harris Associates Large Cap Value Fund is a series, voted for the following proposals: 1. Election of Trustees for IXIS Advisor Funds Trust II ("Trust II")
Votes Votes For Withheld Total Votes - --------- -------- ----------- Graham T. Allison, Jr. 22,764,239.374 514,958.204 23,279,197.578 Edward A. Benjamin 22,770,172.406 509,025.172 23,279,197.578 Daniel M. Cain 22,772,091.712 507,105.866 23,279,197.578 Paul G. Chenault 22,749,975.557 529,222.021 23,279,197.578 Kenneth J. Cowan 22,758,192.528 521,005.050 23,279,197.578 Richard Darman 22,761,355.077 517,842.501 23,279,197.578 Sandra O. Moose 22,783,421.156 495,776.422 23,279,197.578 John A. Shane 22,758,852.839 520,344.739 23,279,197.578 Charles D. Baker 22,746,708.764 532,488.814 23,279,197.578 Cynthia L. Walker 22,774,049.885 505,147.693 23,279,197.578 Robert J. Blanding 22,771,113.391 508,084.187 23,279,197.578 John T. Hailer 22,773,708.397 505,489.181 23,279,197.578
2. Approval of an Amended and Restated Agreement and Declaration of Trust for Trust II
Voted Voted For Against Abstained Votes Broker Non-Votes Total Votes --------- ------- --------------- ---------------- ----------- 16,078,256.237 402,230.847 539,405.494 6,259,305.000 23,279,197.578
79 ADDITIONAL INFORMATION At a special shareholders' meeting held on June 2, 2005, shareholders of IXIS Advisor Funds Trust III, of which the the Harris Associates Focused Value Fund is a series, voted for the following proposals: 1. Election of Trustees for IXIS Advisor Funds Trust III ("Trust III")
Votes Votes For Withheld Total - --------- -------- ----- Graham T. Allison, Jr. 22,076,494.115 290,487.571 22,366,981.686 Edward A. Benjamin 22,073,775.314 293,206.372 22,366,981.686 Daniel M. Cain 22,085,370.115 281,611.571 22,366,981.686 Paul G. Chenault 22,032,781.880 334,199.806 22,366,981.686 Kenneth J. Cowan 22,018,840.798 348,140.888 22,366,981.686 Richard Darman 22,085,245.115 281,736.571 22,366,981.686 Sandra O. Moose 22,076,808.115 290,173.571 22,366,981.686 John A. Shane 22,049.440.364 317,541.322 22,366,981.686 Charles D. Baker 22,066,708.875 300,272.811 22,366,981.686 Cynthia L. Walker 22,060,761.741 306,219.945 22,366,981.686 Robert J. Blanding 22,080,201.115 286,780.571 22,366,981.686 John T. Hailer 22,063,445.448 303,536.238 22,366,981.686
2. Approval of an Amended and Restated Agreement and Declaration of Trust for Trust III
Voted Voted For Against Abstained Votes Broker Non-Votes Total Votes --------- ------- --------------- ---------------- ----------- 12,060,980.712 306,967.971 435,847.003 9,563,186.000 22,366,981.686
With respect to this proposal, the meeting was adjourned initially to June 22, 2005 and again to July 21, 2005 due to insufficient votes to pass the proposal. 80 Item 2. Code of Ethics. Not applicable Item 3. Audit Committee Financial Expert. Not applicable Item 4. Principal Accountant Fees and Services. Not applicable Item 5. Audit Committee of Listed Registrants. Not applicable Item 6. Schedule of Investments. Included as part of the Report to Shareholders filed as Item 1 herewith. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable Item 8. Portfolio Managers of Closed-End Management Investment Companies Not applicable Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers. Not applicable Item 10. Submission of Matters to a Vote of Securities Holders. There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees. Item 11. Controls and Procedures. The Registrant's principal executive officer and principal financial officer have concluded that the Registrant's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Registrant in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. There were no changes in the Registrant's internal control over financial reporting that occurred during the Registrant's last fiscal quarter of the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. Item 12. Exhibits. (a) (1) Not applicable. (a) (2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 30a-2 under the Investment Company Act of 1940 (17 CFR 270.30a-2), as herewith as exhibit (a)(2)(1) and a(2)(2), respectively. (a) (3) Not applicable. (b) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 are filed herewith as Exhibit (b) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IXIS Advisor Funds Trust II By: /s/ John T. Hailer ------------------------------------ Name: John T. Hailer Title: President and Chief Executive Officer Date: August 26, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/ John T. Hailer ------------------------------------ Name: John T. Hailer Title: President and Chief Executive Officer Date: August 26, 2005 By: /s/ Michael C. Kardok ------------------------------------ Name: Michael C. Kardok Title: Treasurer Date: August 26, 2005 EX-99.(CERT) 2 dex99cert.txt SECTION 302 CERTIFICATIONS Exhibit (a)(2)(1) IXIS Advisor Funds Trust II Exhibit to SEC Form N-CSR Section 302 Certification I, John T. Hailer, certify that: 1. I have reviewed this report on Form N-CSR of IXIS Advisor Funds Trust II; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materials respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 26, 2005 /s/ John T. Hailer ------------------------------------- John T. Hailer President and Chief Executive Officer Exhibit (a)(2)(2) IXIS Advisor Funds Trust II Exhibit to SEC Form N-CSR Section 302 Certification I, Michael C. Kardok, certify that: 1. I have reviewed this report on Form N-CSR of IXIS Advisor Funds Trust II; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materials respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 26, 2005 /s/ Michael C. Kardok ------------------------------------- Michael C. Kardok Treasurer EX-99.(906CERT) 3 dex99906cert.txt SECTION 906 CERTIFICATION Exhibit (b) IXIS Advisor Funds Trust II Section 906 Certification In connection with the report on Form N-CSR for the period ended June 30, 2005 for the Registrant (the "Report"), the undersigned each hereby certifies to the best of his knowledge, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: 1. the Report complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as applicable; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. By: By: President & Chief Executive Officer Treasurer IXIS Advisor Funds Trust II IXIS Advisor Funds Trust II /s/ John T. Hailer /s/ Michael C. Kardok - ------------------------------------ ------------------------------------- John T. Hailer Michael C. Kardok Date: August 26, 2005 Date: August 26, 2005 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the IXIS Advisor Funds Trust II, and will be retained by the IXIS Advisor Funds Trust II and furnished to the Securities and Exchange Commission (the "Commission") or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----