-----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, SaPLuX4oSC/pcTLftYyDcLrRD7IYOP//YN3/Nl5TjgzkloNSqIQnlNTsgIHQA0he TJG3EHIaTZLN7J+xrqrERQ== 0001193125-06-182279.txt : 20060830 0001193125-06-182279.hdr.sgml : 20060830 20060830104340 ACCESSION NUMBER: 0001193125-06-182279 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060830 DATE AS OF CHANGE: 20060830 EFFECTIVENESS DATE: 20060830 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: 061064329 BUSINESS ADDRESS: STREET 1: 399 BOYLSTON STREET CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 800-399-7788 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 0000052136 S000008033 Harris Associates Large Cap Value Fund C000021802 Class A NEFOX C000021803 Class B NEGBX C000021804 Class C NECOX C000021805 Class Y NEOYX N-CSRS 1 dncsrs.txt IXIS ADVISOR FUNDS TRUST II N-CSRS 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, 2006 Item 1. Reports to Stockholders. The Registrant's semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: [LOGO] IXIS ADVISOR FUNDS Equity Funds Semiannual Report June 30, 2006 CGM Advisor Targeted Equity Fund Hansberger International Fund Harris Associates Focused Value Fund Harris Associates Large Cap Value Fund IXIS U.S. Diversified Portfolio Harris Associates Loomis, Sayles & Company Mercury Advisors IXIS Value Fund Harris Associates Loomis, Sayles & Company Vaughan Nelson Investment Management Westpeak Global Advisors Vaughan Nelson Small Cap Value Fund Westpeak Capital Growth Fund TABLE OF CONTENTS Management Discussion and Performance.......Page 1 Portfolio of Investments...................Page 28 Financial Statements.......................Page 47 CGM ADVISOR TARGETED EQUITY FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital through investments in equity securities of companies whose earnings are expected to grow at a faster rate than the overall U.S. economy - -------------------------------------------------------------------------------- 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
- -------------------------------------------------------------------------------- What You Should Know: The fund invests in a small number of securities, which may result in greater volatility than more diversified funds. Growth stocks can be more sensitive to market movements because their prices are based in part on future expectations. The fund may invest in foreign securities that involve risks not associated with domestic securities. Management Discussion - -------------------------------------------------------------------------------- Positive stock selection and an emphasis on the energy sector fueled CGM Advisor Targeted Equity Fund's performance during the first half of 2006. For the six months ended June 30, 2006, the fund returned 4.41% based on the net asset value of Class A shares. The fund outperformed its benchmark, the S&P 500 Index, which returned 2.71%, and came in above the 2.39% average return of the funds in Morningstar's Large Blend category. FUND POSITIONED FOR GLOBAL ECONOMIC GROWTH During the first half of 2006, the fund was fully invested, seeking opportunities created by continued global economic growth. The Federal Reserve Board maintained upward pressure on interest rates during the period, in an effort to curb inflation by reining in the U.S. economy. Although economic growth is faster in other parts of the world, we are not concerned about inflationary pressures or an economic slowdown there. PORTFOLIO SHIFTED TOWARD CYCLICAL STOCKS, ADDED ENERGY In order to increase exposure to economic growth, we sold stocks of some companies whose profitability is less impacted by economic cycles. These included insurance firms American International Group and AFLAC, soft drink giant Pepsico, and several drug companies. We used the proceeds to establish new positions in more economically sensitive companies, including aerospace leader Boeing, computer giant Hewlett Packard, mining company Rio Tinto and retailer JC Penney. Energy consumption in the developing world is also cyclical, and we increased the fund's weighting in energy-related companies during the period, from 29% to 40% of total assets. Continued growth in Asia, India, the former Soviet Union, and the Middle East is expected to maintain high energy prices in the face of limited supply growth. Energy stocks drove the fund's positive results, including service companies that generate profits by helping oil companies improve their efficiency. For example, Schlumberger, the fund's top performer, helps increase oil well output through pressure pumping and other processes. Both Schlumberger and Halliburton, another leading oil service provider, benefited from strong growth for their services and significant pricing flexibility. The market also responded positively to Halliburton's decision to spin off its construction subsidiary. ConocoPhillips, a leading global oil and gas production company and a major refiner, saw its stock price climb as a result of rising oil and gas prices and increasing refinery margins. The company also recently purchased a major stake in LUKOIL, the Russian oil company, and acquired the major domestic natural gas producer, Burlington Resources. Other positives included America Movil, the leading Latin American cellular telephone company, which is enjoying widespread growth in Mexico and Latin America. We sold the stock on strength. United Technologies, which provides a broad range of high technology products and services, benefited from strong growth in its diversified global businesses, including Otis (elevators), Pratt & Whitney (aircraft engines), and Carrier (heating and air conditioning systems). SEVERAL ISSUES PROVED DISAPPOINTING The fund's weakest stock was Apple Computer - a top performer last year. Although iPod sales were strong, growth in the personal computer business failed to meet expectations. Corning, Inc., a leader in fiber optic cables for telephone communications and glass for flat panel television sets, also proved disappointing, as growth in the flat panel business was lower than we had anticipated. Diversified financial services giant General Electric also failed to meet our expectations. All three positions were sold. FORECAST IS FOR CONTINUED MODERATE ECONOMIC GROWTH Although the world has been faced with significant increases in oil and gas prices, and a moderate rise in interest rates, this does not appear to have constrained economic activity. We believe that the global economy will continue to expand in the coming year, with moderate inflation, which should provide a positive environment for stocks. 1 CGM ADVISOR TARGETED EQUITY FUND Investment Results through June 30, 2006 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] June 30, 1996 through June 30, 2006 Month Cumulative Class A @M.S.C. S&P 500 Index End Value Cumulative Value Cumulative Value - ---------- ---------- ---------------- ---------------- 6/30/1996 10,000 9,425 10,000 7/31/1996 9,415 8,874 9,558 8/31/1996 9,505 8,959 9,760 9/30/1996 10,157 9,573 10,309 10/31/1996 10,755 10,136 10,593 11/30/1996 11,593 10,926 11,394 12/31/1996 11,479 10,819 11,168 1/31/1997 12,515 11,796 11,866 2/28/1997 12,308 11,600 11,959 3/31/1997 11,785 11,107 11,468 4/30/1997 12,456 11,740 12,152 5/31/1997 13,068 12,317 12,892 6/30/1997 13,651 12,866 13,470 7/31/1997 14,974 14,113 14,542 8/31/1997 14,204 13,387 13,727 9/30/1997 14,931 14,073 14,479 10/31/1997 14,346 13,521 13,995 11/30/1997 14,182 13,367 14,643 12/31/1997 14,182 13,367 14,895 1/31/1998 14,413 13,585 15,059 2/28/1998 15,680 14,779 16,146 3/31/1998 16,689 15,729 16,972 4/30/1998 17,329 16,333 17,143 5/31/1998 17,057 16,077 16,848 6/30/1998 17,970 16,937 17,533 7/31/1998 18,065 17,026 17,346 8/31/1998 14,618 13,778 14,838 9/30/1998 14,722 13,876 15,789 10/31/1998 16,205 15,273 17,073 11/30/1998 17,553 16,544 18,108 12/31/1998 18,919 17,831 19,151 1/31/1999 20,201 19,040 19,952 2/28/1999 18,753 17,675 19,332 3/31/1999 19,203 18,099 20,105 4/30/1999 19,136 18,035 20,884 5/31/1999 18,519 17,455 20,391 6/30/1999 19,884 18,741 21,523 7/31/1999 19,417 18,301 20,851 8/31/1999 19,384 18,269 20,747 9/30/1999 18,235 17,186 20,179 10/31/1999 18,935 17,846 21,456 11/30/1999 19,651 18,521 21,892 12/31/1999 21,790 20,538 23,181 1/31/2000 20,086 18,932 22,016 2/29/2000 21,870 20,613 21,600 3/31/2000 22,109 20,837 23,713 4/30/2000 21,277 20,054 22,999 5/31/2000 20,426 19,252 22,527 6/30/2000 20,506 19,327 23,083 7/31/2000 19,852 18,710 22,722 8/31/2000 20,793 19,597 24,133 9/30/2000 20,040 18,888 22,859 10/31/2000 20,082 18,927 22,762 11/30/2000 19,893 18,749 20,968 12/31/2000 20,800 19,604 21,071 1/31/2001 18,955 17,865 21,818 2/28/2001 18,355 17,299 19,829 3/31/2001 17,888 16,860 18,573 4/30/2001 18,666 17,593 20,016 5/31/2001 18,289 17,238 20,150 6/30/2001 18,414 17,355 19,659 7/31/2001 17,878 16,850 19,466 8/31/2001 16,405 15,462 18,247 9/30/2001 14,820 13,968 16,774 10/31/2001 14,909 14,052 17,094 11/30/2001 16,494 15,545 18,405 12/31/2001 17,431 16,428 18,566 1/31/2002 17,966 16,933 18,295 2/28/2002 17,139 16,154 17,942 3/31/2002 17,429 16,427 18,617 4/30/2002 17,474 16,470 17,488 5/31/2002 17,296 16,302 17,360 6/30/2002 16,737 15,775 16,123 7/31/2002 14,885 14,029 14,867 8/31/2002 14,885 14,029 14,964 9/30/2002 13,969 13,166 13,338 10/31/2002 13,634 12,850 14,511 11/30/2002 13,299 12,534 15,366 12/31/2002 12,406 11,693 14,463 1/31/2003 12,406 11,693 14,084 2/28/2003 12,317 11,609 13,873 3/31/2003 12,606 11,881 14,007 4/30/2003 13,409 12,638 15,161 5/31/2003 14,569 13,732 15,960 6/30/2003 14,814 13,962 16,164 7/31/2003 14,524 13,689 16,449 8/31/2003 14,903 14,046 16,769 9/30/2003 15,082 14,214 16,591 10/31/2003 16,956 15,981 17,530 11/30/2003 17,626 16,613 17,684 12/31/2003 17,716 16,697 18,612 1/31/2004 17,314 16,318 18,953 2/29/2004 18,363 17,307 19,217 3/31/2004 19,211 18,107 18,927 4/30/2004 17,694 16,676 18,630 5/31/2004 18,118 17,076 18,885 6/30/2004 18,274 17,223 19,252 7/31/2004 17,404 16,404 18,615 8/31/2004 17,604 16,592 18,691 9/30/2004 18,698 17,623 18,893 10/31/2004 18,920 17,832 19,182 11/30/2004 19,768 18,631 19,958 12/31/2004 20,191 19,030 20,637 1/31/2005 20,013 18,862 20,134 2/28/2005 21,352 20,124 20,558 3/31/2005 20,415 19,241 20,193 4/30/2005 19,857 18,716 19,810 5/31/2005 20,415 19,241 20,441 6/30/2005 20,866 19,667 20,470 7/31/2005 21,939 20,678 21,231 8/31/2005 22,163 20,888 21,037 9/30/2005 22,989 21,668 21,208 10/31/2005 22,454 21,163 20,854 11/30/2005 22,811 21,499 21,643 12/31/2005 22,856 21,542 21,650 1/31/2006 23,839 22,469 22,224 2/28/2006 23,012 21,689 22,284 3/31/2006 23,661 22,300 22,561 4/30/2006 24,756 23,333 22,864 5/31/2006 23,907 22,533 22,206 6/30/2006 23,868 22,492 22,236 Average Annual Total Returns -- June 30, 2006
SINCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION Class A (Inception 11/27/68) Net Asset Value/1/ 4.41% 14.36% 5.33% 9.09% -- With Maximum Sales Charge/2/ -1.56 7.79 4.10 8.44 -- Class B (Inception 2/28/97) Net Asset Value/1/ 4.12 13.46 4.56 -- 6.55% With CDSC/3/ -0.88 8.46 4.22 -- 6.55 Class C (Inception 9/1/98) Net Asset Value/1/ 4.12 13.59 4.53 -- 4.94 With CDSC/3/ 3.12 12.59 4.53 -- 4.94 Class Y (Inception 6/30/99) Net Asset Value/1/ 4.61 14.52 5.78 -- 3.04 - -----------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------ SINCE SINCE SINCE CLASS B CLASS C CLASS Y COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ INCEPTION/6/ INCEPTION/6/ S&P 500 Index/4/ 2.71% 8.63% 2.49% 8.32% 6.87% 5.30% 0.47% Morningstar Large Blend Fund Avg./5/ 2.39 8.84 2.31 7.39 6.40 5.69 1.23 - ------------------------------------------------------------------------------------------------------------
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those noted. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to certain institutional investors only. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/06 12/31/05 - ------------------------------------------------------ Common Stocks 99.4 99.0 - ------------------------------------------------------ Commercial Paper 0.7 0.8 - ------------------------------------------------------ Short-Term Investments and Other -0.1 0.2 - ------------------------------------------------------ % of Net Assets as of TEN LARGEST HOLDINGS 6/30/06 12/31/05 - ------------------------------------------------------ Schlumberger, Ltd. 6.8 5.1 - ------------------------------------------------------ Total SA 6.4 6.2 - ------------------------------------------------------ BP PLC 5.8 5.3 - ------------------------------------------------------ ConocoPhillips 5.5 4.9 - ------------------------------------------------------ Union Pacific Corp. 5.5 -- - ------------------------------------------------------ Altria Group, Inc. 5.5 5.6 - ------------------------------------------------------ Halliburton Co. 5.4 4.8 - ------------------------------------------------------ CVS Corp. 5.4 1.4 - ------------------------------------------------------ Toyota Motor Corp. 5.3 5.3 - ------------------------------------------------------ Rio Tinto PLC 5.2 -- - ------------------------------------------------------ % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/06 12/31/05 - ------------------------------------------------------ Oil & Gas 24.7 19.3 - ------------------------------------------------------ Oil & Gas Services 17.2 9.9 - ------------------------------------------------------ Aerospace & Defense 9.6 3.2 - ------------------------------------------------------ Retail 9.5 1.4 - ------------------------------------------------------ Transportation 5.5 -- - ------------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P 500 Index is an unmanaged index of U.S. common stocks. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception comparative performance figures shown for each Class of fund shares are calculated as follows: Class B from 3/1/97; Class C from 9/1/98; and Class Y from 7/1/99. 2 HANSBERGER INTERNATIONAL FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital - -------------------------------------------------------------------------------- Strategy: Invests in common stocks of small-, mid- and large-cap companies located outside the United States. Assets are diversified across developed and emerging markets - -------------------------------------------------------------------------------- Inception Date: December 29, 1995 - -------------------------------------------------------------------------------- Managers: Growth: Trevor Graham 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
- -------------------------------------------------------------------------------- What You Should Know: Foreign securities involve risks not associated with domestic securities, such as currency fluctuations, differing political, economic conditions and accounting standards. Growth stocks can be more sensitive to market movements because their prices are based in part on future expectations. Value stocks may fall out of favor and underperform the overall market during any given period. Management Discussion - -------------------------------------------------------------------------------- Hansberger International Fund's total return for the six months ended June 30, 2006 was 7.95%, based on the net asset value of Class A shares. For the same period, the fund's benchmarks, the MSCI EAFE Index and the MSCI ACWI ex-U.S. Index, returned 10.50% and 9.99%, respectively. The average performance of Morningstar's Foreign Large Blend category was 8.90%. Neither the fund nor its benchmarks includes U.S. stocks, and the Morningstar category has only limited exposure to domestic equities. Two teams of international equity specialists at Hansberger manage the fund - one focuses on value and the other seeks growth potential. For the first half of 2006, value stocks outperformed growth stocks. On a regional basis, Europe took the lead. DESPITE SOME STRONG HOLDINGS, GROWTH SELECTIONS GENERALLY LAGGED Although European markets led the world during the period, and dominated the fund's growth segment, some of the stocks selected proved disappointing. These included Carnival Corporation, an international cruise line incorporated in Great Britain, and Smith & Nephew, a British maker of orthopedic devices. Standard & Poor's downgraded Carnival's credit rating based on a softer-than-expected operating environment. Healthcare budget constraints in the United States, United Kingdom, and Germany, combined with restructuring activity, contributed to slow revenue growth for Smith & Nephew. Elsewhere, Israeli-based drug manufacturer Teva Pharmaceuticals was hurt by concerns regarding Teva's generic version of the anti-cholesterol drug, Zocor. In addition, Japan's Nidec Corporation, a world leader in the production of brushless disc drives, experienced seasonally weak results in the fiercely competitive computer business. The Pacific Ex-Japan region and Canada were this segment's best-performing regions. Top performers included Canada's Suncor Energy, with its large reserves of oil sands; Singapore's Keppel Corporation, a leader in offshore oil rigs; and Hong Kong apparel and footwear manufacturer, Esprit Holdings. Other strong performers included Denmark's Vestas Wind Systems, a world leader and producer of giant wind turbines, and Aracruz Celulose, a Brazilian pulp manufacturer benefiting from its manufacturing technology and reserves of fast-growing eucalyptus trees. Historically, growth stocks have performed best late in the business cycle. The managers believe a flight to higher quality may be in the offing as the world economies slow, which would benefit growth investors. CANADIAN MINING HOLDINGS AND EUROPEAN BUSINESSES POWERED THE VALUE SEGMENT Canada's Alcan Inc., a major aluminum producer with extensive bauxite mining operations, and Inco Ltd, which mines nickel, copper and precious metals, contributed handsomely to the value segment's performance. European holdings were the second best group, including Germany's Schering AG, which was acquired by another German pharmaceutical company, and Switzerland's ABB Limited, a manufacturer of power and automation equipment whose restructuring efforts paid off in increased orders early in 2006. ABB was sold at a profit. Still in the portfolio is France's Carrefour S.A., a leading supermarket chain that is expanding business in Europe, Asia and Latin America. One of the best performing sectors was energy, including Russia's LUKOIL and Brazil's Petrobras. Both stocks remain in the segment. Utility and healthcare selections also did well. Although the segment's industrial selections appreciated, this group was relatively weak. Disappointments included Korea's LG Chemicals, which declined with chemical companies generally, as high oil prices and the rising cost of raw materials hurt profits. LG was sold. Hong Kong's Johnson Electric also hurt performance, but it remains in the segment because the managers believe the company's strong lead in the manufacture of micro-motors is not reflected in the price of its shares. Materials and consumer discretionary companies were also weak, but these groups, too, ended the period in positive territory. The managers believe economic growth prospects seem positive for Canada, Switzerland and Japan, as well as many emerging markets, and that international markets in general are trading at attractive valuation levels relative to the United States. 3 HANSBERGER INTERNATIONAL FUND Investment Results through June 30, 2006 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/7/ [CHART] June 30, 1996 through June 30, 2006 Class A MSCI MSCI @ M.S.C. Index Index Month Cumulative Cumulative Cumulative Cumulative End Value Value Value Value - ---------- ---------- ---------- ---------- ---------- 6/30/1996 10,000 9,425 10,000 10,000 7/31/1996 9,542 8,993 9,710 9,668 8/31/1996 9,800 9,236 9,734 9,724 9/30/1996 9,964 9,391 9,995 9,966 10/31/1996 9,886 9,317 9,895 9,866 11/30/1996 10,286 9,694 10,291 10,246 12/31/1996 10,438 9,838 10,162 10,128 1/31/1997 10,859 10,234 9,808 9,942 2/28/1997 11,084 10,446 9,971 10,124 3/31/1997 10,975 10,344 10,010 10,103 4/30/1997 11,084 10,446 10,065 10,188 5/31/1997 11,657 10,986 10,723 10,817 6/30/1997 12,193 11,492 11,316 11,414 7/31/1997 12,656 11,928 11,502 11,645 8/31/1997 11,946 11,259 10,645 10,729 9/30/1997 12,600 11,875 11,244 11,309 10/31/1997 11,686 11,014 10,382 10,346 11/30/1997 11,549 10,885 10,279 10,217 12/31/1997 11,762 11,086 10,371 10,335 1/31/1998 11,724 11,050 10,847 10,644 2/28/1998 12,523 11,803 11,546 11,354 3/31/1998 13,032 12,283 11,904 11,746 4/30/1998 13,108 12,354 12,001 11,830 5/31/1998 12,842 12,103 11,945 11,616 6/30/1998 12,576 11,853 12,039 11,572 7/31/1998 12,538 11,817 12,163 11,682 8/31/1998 10,552 9,945 10,659 10,035 9/30/1998 10,453 9,852 10,335 9,823 10/31/1998 11,214 10,569 11,415 10,852 11/30/1998 11,815 11,136 12,003 11,435 12/31/1998 12,233 11,530 12,479 11,829 1/31/1999 12,659 11,931 12,445 11,816 2/28/1999 12,500 11,781 12,152 11,552 3/31/1999 13,010 12,262 12,662 12,109 4/30/1999 13,709 12,921 13,178 12,715 5/31/1999 13,367 12,598 12,502 12,118 6/30/1999 14,150 13,336 12,992 12,675 7/31/1999 13,990 13,186 13,381 12,972 8/31/1999 13,891 13,092 13,433 13,017 9/30/1999 13,571 12,791 13,571 13,105 10/31/1999 14,050 13,242 14,083 13,593 11/30/1999 15,100 14,232 14,575 14,136 12/31/1999 16,835 15,867 15,886 15,485 1/31/2000 16,209 15,277 14,879 14,644 2/29/2000 17,223 16,233 15,283 15,040 3/31/2000 17,273 16,280 15,878 15,606 4/30/2000 16,021 15,100 15,045 14,735 5/31/2000 15,294 14,414 14,681 14,358 6/30/2000 15,742 14,837 15,258 14,969 7/31/2000 15,318 14,437 14,622 14,378 8/31/2000 15,776 14,869 14,752 14,556 9/30/2000 15,183 14,310 14,036 13,749 10/31/2000 14,608 13,768 13,708 13,312 11/30/2000 13,943 13,141 13,196 12,715 12/31/2000 14,778 13,928 13,669 13,149 1/31/2001 15,065 14,199 13,662 13,346 2/28/2001 14,102 13,291 12,639 12,289 3/31/2001 13,180 12,422 11,802 11,421 4/30/2001 14,030 13,223 12,630 12,197 5/31/2001 14,194 13,378 12,194 11,861 6/30/2001 14,076 13,267 11,700 11,406 7/31/2001 13,819 13,024 11,488 11,152 8/31/2001 13,520 12,743 11,199 10,875 9/30/2001 12,109 11,413 10,068 9,721 10/31/2001 12,346 11,636 10,325 9,994 11/30/2001 13,047 12,297 10,706 10,451 12/31/2001 13,452 12,678 10,770 10,585 1/31/2002 13,132 12,377 10,199 10,132 2/28/2002 13,163 12,406 10,271 10,205 3/31/2002 13,949 13,147 10,881 10,802 4/30/2002 13,856 13,059 10,910 10,829 5/31/2002 13,939 13,137 11,058 10,947 6/30/2002 13,091 12,339 10,622 10,474 7/31/2002 11,836 11,155 9,574 9,454 8/31/2002 11,856 11,174 9,555 9,454 9/30/2002 10,393 9,795 8,531 8,452 10/31/2002 10,963 10,333 8,990 8,906 11/30/2002 11,752 11,076 9,399 9,334 12/31/2002 11,243 10,596 9,084 9,033 1/31/2003 10,848 10,225 8,705 8,715 2/28/2003 10,548 9,941 8,506 8,539 3/31/2003 10,413 9,814 8,346 8,373 4/30/2003 11,502 10,841 9,173 9,180 5/31/2003 12,321 11,612 9,737 9,765 6/30/2003 12,601 11,876 9,978 10,035 7/31/2003 12,860 12,121 10,221 10,303 8/31/2003 13,264 12,501 10,470 10,610 9/30/2003 13,440 12,668 10,795 10,907 10/31/2003 14,395 13,567 11,468 11,614 11/30/2003 14,644 13,802 11,725 11,867 12/31/2003 15,629 14,731 12,642 12,773 1/31/2004 15,982 15,063 12,821 12,978 2/29/2004 16,179 15,249 13,119 13,308 3/31/2004 16,024 15,102 13,198 13,390 4/30/2004 15,567 14,672 12,911 12,974 5/31/2004 15,618 14,720 12,951 13,003 6/30/2004 15,878 14,965 13,256 13,297 7/31/2004 15,162 14,290 12,828 12,909 8/31/2004 15,296 14,417 12,887 13,013 9/30/2004 15,691 14,789 13,226 13,431 10/31/2004 16,148 15,219 13,678 13,898 11/30/2004 17,091 16,108 14,616 14,863 12/31/2004 17,754 16,733 15,258 15,501 1/31/2005 17,370 16,372 14,979 15,234 2/28/2005 18,324 17,270 15,630 15,986 3/31/2005 17,816 16,792 15,243 15,552 4/30/2005 17,401 16,401 14,902 15,168 5/31/2005 17,464 16,460 14,925 15,263 6/30/2005 17,651 16,636 15,129 15,551 7/31/2005 18,325 17,271 15,594 16,124 8/31/2005 18,895 17,809 15,992 16,537 9/30/2005 19,403 18,288 16,708 17,390 10/31/2005 18,864 17,779 16,221 16,757 11/30/2005 19,434 18,316 16,622 17,320 12/31/2005 20,615 19,430 17,397 18,154 1/31/2006 22,118 20,846 18,466 19,420 2/28/2006 21,733 20,483 18,428 19,363 3/31/2006 22,418 21,129 19,044 19,926 4/30/2006 23,350 22,008 19,968 20,953 5/31/2006 22,395 21,108 19,217 19,987 6/30/2006 22,262 20,985 19,224 19,967 Average Annual Total Returns -- June 30, 2006
6 MONTHS 1 YEAR 5 YEARS/7/ 10 YEARS/7/ CLASS A (Inception 12/29/95) Net Asset Value/1/ 7.95% 26.09% 9.60% 8.33% With Maximum Sales Charge/2/ 1.76 18.83 8.31 7.69 CLASS B (Inception 12/29/95) Net Asset Value/1/ 7.56 25.17 8.79 7.54 With CDSC/3/ 2.56 20.17 8.50 7.54 CLASS C (Inception 12/29/95) Net Asset Value/1/ 7.56 25.23 8.78 7.54 With CDSC/3/ 6.56 24.23 8.78 7.54 - ----------------------------------------------------------------------------------- COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS MSCI EAFE Index/4/ 10.50% 27.07% 10.45% 6.75% MSCI ACWI ex-U.S. Index/5/ 9.99 28.40 11.85 7.16 Morningstar Foreign Large Blend Fund Avg./6/ 8.90 26.38 8.08 6.35 - -----------------------------------------------------------------------------------
All results represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/06 12/31/05 - -------------------------------------------------------- Common Stocks 99.2 98.3 - -------------------------------------------------------- Preferred Stock 0.0 0.5 - -------------------------------------------------------- Short-Term Investments and Other 0.8 1.2 - -------------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/06 12/31/05 - -------------------------------------------------------- UniCredito Italiano SpA 2.0 1.7 - -------------------------------------------------------- Novartis AG 1.9 1.5 - -------------------------------------------------------- British Sky Broadcasting PLC 1.7 1.4 - -------------------------------------------------------- DBS Group Holdings, Ltd. 1.5 1.2 - -------------------------------------------------------- Telefonica SA 1.4 0.9 - -------------------------------------------------------- HBOS PLC 1.3 1.7 - -------------------------------------------------------- Schneider Electric SA 1.2 1.3 - -------------------------------------------------------- Banco Santander Central Hispano SA 1.2 1.2 - -------------------------------------------------------- Banco Bilbao Vizcaya Argentaria SA 1.2 1.1 - -------------------------------------------------------- ORIX Corp. 1.2 1.2 - -------------------------------------------------------- % of Net Assets as of FIVE LARGEST COUNTRIES 6/30/06 12/31/05 - -------------------------------------------------------- Japan 18.7 18.9 - -------------------------------------------------------- United Kingdom 18.4 19.8 - -------------------------------------------------------- France 11.1 10.2 - -------------------------------------------------------- Switzerland 9.4 8.3 - -------------------------------------------------------- Germany 4.2 5.2 - --------------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Morgan Stanley Capital International Europe Australasia and Far East Index (MSCI EAFE Index) is an unmanaged index designed to measure developed market equity performance, excluding the United States and Canada. /5/Morgan Stanley Capital International All Countries World Index ex-U.S. (MSCI ACWI ex-U.S. Index) is an unmanaged index designed to measure equity market performance in developed and emerging markets, excluding the United States. /6/Morningstar Foreign Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /7/Fund performance has been increased by expense waivers/reimbursements, without which performance would have been lower. 4 HARRIS ASSOCIATES FOCUSED VALUE FUND PORTFOLIO PROFILE Objective: Seeks long-term capital appreciation - -------------------------------------------------------------------------------- Strategy: Focuses on 25 to 30 stocks of mid- to large-cap U.S. companies - -------------------------------------------------------------------------------- Inception Date: March 15, 2001 - -------------------------------------------------------------------------------- Managers: Floyd J. Bellman Robert M. Levy - -------------------------------------------------------------------------------- Symbols: Class A NRSAX Class B NRSBX Class C NRSCX
- -------------------------------------------------------------------------------- What You Should Know: The fund invests in a small number of securities, which may result in greater volatility than more diversified funds. Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion - -------------------------------------------------------------------------------- Investors' appetite for riskier stocks with high valuations drove the kinds of companies we emphasize from the spotlight over the past six months. However, as the period ended, a shift toward stocks of more established companies appeared to be underway. Harris Associates Focused Value Fund's total return for the six months ended June 30, 2006 was -0.07%, based on the net asset value of Class A shares. Performance trailed the fund's benchmark, the Standard & Poor's 500 Index, which returned 2.71% for the period, and the 4.70% return on Morningstar's Large Value category. MEDIA, CONSUMER, DEFENSE AND FINANCIAL ISSUES LED RESULTS Cablevision was the fund's leading performer in the first half of 2006. After weighing privatization and the possible sale of the company, management retained the status quo and declared a sizeable cash dividend, helping to boost shares. Cosmetics maker Estee Lauder benefited from increased sales beyond traditional department stores as well as in overseas markets. Strong defense spending fueled earnings growth at Raytheon, whose business aircraft division is also growing. More reliance on fee income and less on mortgages improved earnings at Washington Mutual, which rose despite near-term concerns over the housing market. Consumer staples and financial services also added to results. However, the fund's limited exposure to strong-performing energy and utility stocks and the absence of telecommunications holdings account for most of the fund's under-performance during the period. Our buildup in technology also hurt, as this sector underperformed. STOCK-SPECIFIC ISSUES BROUGHT DECLINES A rival company cost chipmaker Intel some market share and drove down the price of its stock excessively, in our opinion. Intel dominates in an expanding industry, with strong fundamentals and competitive new products on the way. Price cuts tied to inventory reduction, plus European tariffs, cut earnings expectations at Timberland, makers of shoes and apparel. Timberland is reviewing its store operations and arrangements with other retailers. We believe shareholders will be rewarded by management's skillful use of capital and long-term business focus. Profit-taking drove down the stock price of Omnicare, which provides prescription services for nursing homes. Omnicare navigated the cumbersome transition to Medicare Part D prescription coverage successfully, but incurred significant costs. EW Scripps, a diversified media company, suffered when an unrelated newspaper chain was purchased for a lower-than-expected price, depressing the price of most media stocks across the board. Newspapers are a small portion of Scripps's operations and all other segments are thriving. PORTFOLIO CHANGES WERE DIVERSE We sold the fund's positions in AutoNation, Burlington Resources and Liberty Media at a profit, and eliminated H&R Block and R.R. Donnelly in favor of other opportunities that seemed stronger. We added Bausch & Lomb after problems with its contact lens solution drove shares down; the fallout from this incident appears to be well contained and the stock price seems attractively low. We also found the valuation of homebuilder D.R. Horton attractive despite a housing slowdown, and added natural gas company EnCana, based on its potential profitability in a range of pricing scenarios. New management, attractive value and turnaround potential led us to International Flavors & Fragrances, whose products are used in the cosmetics and food industries. POSITIONED FOR A RISK-AVERSE MARKET The Federal Reserve Board continues to walk a fine line, attempting to restrain inflation by raising interest rates appropriately without stifling economic growth. Any economic slowdown would add to uncertainty regarding smaller companies and increase the attractiveness of large-cap issues. As investors discover the risks inherent in smaller, unproven companies, we think they will turn toward larger companies with dominant market share, solid financials and stable outlooks - where this fund focuses. If valuations among small, mid, and large companies remain roughly equal, we may be able to buy companies with well-grounded fundamentals and established profit histories without the premium that they traditionally command. 5 HARRIS ASSOCIATES FOCUSED VALUE FUND Investment Results through June 30, 2006 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/7/ [CHART] March 15, 2001 (inception) through June 30, 2006 Class A S&P 500 @ M.S.C. Index Cumulative Cumulative Cumulative Month End Value Value Value - ---------- ---------- ---------- ---------- 3/15/2001 10,000 9,425 10,000 3/31/2001 10,090 9,510 $10,000 4/30/2001 10,420 9,821 10,777 5/31/2001 10,690 10,075 10,849 6/30/2001 10,990 10,358 10,585 7/31/2001 11,310 10,660 10,481 8/31/2001 10,870 10,245 9,825 9/30/2001 10,240 9,651 9,032 10/31/2001 10,000 9,425 9,204 11/30/2001 10,680 10,066 9,910 12/31/2001 10,960 10,330 9,997 1/31/2002 10,890 10,264 9,851 2/28/2002 10,600 9,990 9,661 3/31/2002 10,910 10,282 10,024 4/30/2002 10,859 10,235 9,416 5/31/2002 10,929 10,300 9,347 6/30/2002 10,079 9,499 8,681 7/31/2002 9,619 9,066 8,005 8/31/2002 9,959 9,386 8,057 9/30/2002 8,568 8,076 7,181 10/31/2002 8,968 8,453 7,813 11/30/2002 9,468 8,924 8,273 12/31/2002 9,238 8,707 7,787 1/31/2003 9,008 8,490 7,583 2/28/2003 8,888 8,377 7,469 3/31/2003 8,988 8,471 7,542 4/30/2003 9,507 8,960 8,163 5/31/2003 10,117 9,535 8,593 6/30/2003 10,336 9,742 8,703 7/31/2003 10,256 9,667 8,856 8/31/2003 10,676 10,062 9,029 9/30/2003 10,556 9,949 8,933 10/31/2003 11,196 10,552 9,439 11/30/2003 11,687 11,015 9,522 12/31/2003 11,787 11,109 10,021 1/31/2004 12,097 11,401 10,205 2/29/2004 12,177 11,477 10,347 3/31/2004 11,937 11,251 10,191 4/30/2004 11,777 11,100 10,031 5/31/2004 12,037 11,345 10,168 6/30/2004 11,907 11,223 10,366 7/31/2004 11,677 11,006 10,023 8/31/2004 11,627 10,959 10,064 9/30/2004 11,938 11,251 10,173 10/31/2004 12,148 11,449 10,328 11/30/2004 12,648 11,921 10,746 12/31/2004 13,058 12,307 11,111 1/31/2005 12,608 11,883 10,841 2/28/2005 12,987 12,240 11,069 3/31/2005 12,817 12,080 10,873 4/30/2005 12,597 11,872 10,667 5/31/2005 13,046 12,296 11,006 6/30/2005 13,415 12,644 11,022 7/31/2005 13,876 13,078 11,431 8/31/2005 13,856 13,059 11,327 9/30/2005 13,607 12,824 11,419 10/31/2005 13,156 12,400 11,229 11/30/2005 13,626 12,843 11,653 12/31/2005 13,806 13,012 11,657 1/31/2006 13,966 13,163 11,966 2/28/2006 14,023 13,217 11,998 3/31/2006 14,103 13,292 12,148 4/30/2006 14,366 13,540 12,311 5/31/2006 13,874 13,076 11,957 6/30/2006 13,800 13,006 11,973 Average Annual Total Returns -- June 30, 2006
SINCE 6 MONTHS 1 YEAR 5 YEARS/7/ INCEPTION/7/ CLASS A (Inception 3/15/01) Net Asset Value/1/ -0.07% 2.83% 4.66% 6.27% With Maximum Sales Charge/2/ -5.84 -3.09 3.43 5.09 CLASS B (Inception 3/15/01) Net Asset Value/1/ -0.42 2.02 3.87 5.48 With CDSC/3/ -5.23 -2.26 3.52 5.33 CLASS C (Inception 3/15/01) Net Asset Value/1/ -0.42 2.02 3.87 5.48 With CDSC/3/ -1.39 1.16 3.87 5.48 - ---------------------------------------------------------------------------- SINCE COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION/6/ S&P 500 Index/4/ 2.71% 8.63% 2.49% 3.49% Morningstar Large Value Fund Avg./5/ 4.70 10.28 4.94 5.66
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/06 12/31/05 - ------------------------------------------------------ Common Stocks 94.7 93.9 - ------------------------------------------------------ Short-Term Investments and Other 5.3 6.1 - ------------------------------------------------------ % of Net Assets as of TEN LARGEST HOLDINGS 6/30/06 12/31/05 - ------------------------------------------------------ Washington Mutual, Inc. 6.7 5.5 - ------------------------------------------------------ Intel Corp. 4.5 2.5 - ------------------------------------------------------ Liz Claiborne, Inc. 4.2 3.6 - ------------------------------------------------------ McDonald's, Inc. 4.1 3.8 - ------------------------------------------------------ TJX Cos., Inc. 4.0 3.9 - ------------------------------------------------------ Yum! Brands, Inc. 4.0 4.4 - ------------------------------------------------------ Lauder Estee Co., Inc. (The) 3.9 3.0 - ------------------------------------------------------ National Semiconductor Corp. 3.8 2.3 - ------------------------------------------------------ Raytheon Co. 3.8 5.0 - ------------------------------------------------------ Morgan Stanley 3.7 1.6 - ------------------------------------------------------ % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/06 12/31/05 - ------------------------------------------------------ Media 12.9 17.8 - ------------------------------------------------------ Semiconductors 10.5 4.8 - ------------------------------------------------------ Savings & Loans 10.0 8.3 - ------------------------------------------------------ Restaurants 8.0 8.2 - ------------------------------------------------------ Insurance 4.8 3.7 - ------------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P 500 Index is an unmanaged index of U.S. common stocks. /5/Morningstar Large Value Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception comparative performance figures shown are calculated from 4/1/01. /7/Fund performance has been increased by expense waivers/reimbursements, without which performance would have been lower. 6 HARRIS ASSOCIATES LARGE CAP VALUE FUND PORTFOLIO PROFILE Objective: Seeks opportunities for long-term capital growth and income - -------------------------------------------------------------------------------- Strategy: Invests primarily in common stock of large- and mid-cap companies in any industry - -------------------------------------------------------------------------------- Inception Date: May 6, 1931 - -------------------------------------------------------------------------------- Managers: Edward S. Loeb Michael J. Mangan Diane Mustain - -------------------------------------------------------------------------------- Symbols: Class A NEFOX Class B NEGBX Class C NECOX Class Y NEOYX
- -------------------------------------------------------------------------------- What You Should Know: Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion - -------------------------------------------------------------------------------- After a strong first quarter for the equity markets, uncertainty about the direction of interest rates under a new Federal Reserve Board chairman, coupled with record energy costs, combined to increase volatility late in the period. Harris Associates Large Cap Value Fund's sub-par performance reflects issues at individual companies and investors' failure to respond positively to strong earnings at many portfolio holdings. For the six months ended June 30, 2006, Class A shares of the fund provided a total return of 0.93% at net asset value, significantly behind the Russell 1000 Value Index, which returned 6.56%. The average return on the funds in Morningstar's Large Blend category was 2.39%. DISNEY, UNION PACIFIC WERE AMONG TOP PERFORMERS Walt Disney Company's acquisition of Pixar Studios, although costly, has greatly strengthened Disney's animation franchise. More importantly, financial results improved at the company's ABC and ESPN networks, as well as at its resort properties. The turnaround continued at Union Pacific, thanks to strong demand for coal hauling and better operations overall. In finance, Morgan Stanley rebounded on strong earnings, as its new CEO revitalized the weakened retail brokerage and investment banking divisions. Strong financial results also boosted shares of Diageo, a major global distributor of alcoholic beverages. CONSUMER, HOMEBUILDING AND TECHNOLOGY STOCKS HURT RESULTS The unfolding housing slowdown pressured shares of Home Depot despite good current earnings and a large stock-repurchase program. Fortune Brands, a conglomerate active in home and hardware products, also declined. Both holdings have rewarded shareholders over the years, but lost ground to date in 2006. Despite the housing slump, we purchased shares of premiere homebuilders Pulte Homes and Lennar Corp., whose lowered valuations seem to reflect likely industry challenges; shares of both are trading near book value. Carnival Corp., another long-time success story, was hurt by higher fuel costs and lower bookings for Caribbean cruises. Among media holdings, Time Warner continued to disappoint, although earnings are in line with our expectations. The company also accelerated its share purchase program following a failed restructuring attempt by an outside investor. Strong advertising revenues, cost cutting, and retention initiatives have improved the health of Time Warner's troubled AOL division despite a shrinking subscriber list. Computer maker Dell and chipmaker Intel declined as investors focused on short-term pressures while each company goes through periods of transition. Intel is rolling out newer, faster chips that will find their way into Dell computers. Dell could also benefit from an upgrade cycle triggered by new products from Microsoft (not in the portfolio). Both companies maintain strong competitive positions. Our relatively small position in energy also detracted from the fund's results, but less so than in earlier periods. We have recently avoided commodity-oriented businesses with unpredictable earnings, instead emphasizing businesses that we believe have more attractive valuations and stronger long-term prospects. FUND COULD BENEFIT FROM SHIFT IN MARKET'S TONE We are always disappointed when strong profit performance for portfolio companies is not rewarded with good stock performance. However, we are encouraged by recent market trends. In our view, 12 straight quarters of economic growth have led to investor complacency regarding riskier holdings. As a result, valuations have not varied widely between quality issues and more risky companies. The volatility in stock prices that began in May could signal lackluster markets ahead, an environment more favorable to value investors and unfriendly to speculative holdings. In addition, increasing corporate profitability has led to numerous dividend increases and expanded buyback programs, leaving investors flush with cash that could find its way into attractively valued companies like those we favor. More broadly, we believe economic expansion is likely to slow from its current pace, while productivity increases plus a globally competitive world may help keep inflation in check. 7 HARRIS ASSOCIATES LARGE CAP VALUE FUND Investment Results through June 30, 2006 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/7/ [CHART] June 30, 1996 through June 30, 2006 . Russell 1000 Cumulative Class A @ M.S.C Value Index Month End Value Cumulative Value Cumulative Value - ---------- ---------- ---------------- ---------------- 6/30/1996 10,000 9,425 10,000 7/31/1996 9,503 8,957 9,622 8/31/1996 9,731 9,172 9,897 9/30/1996 10,229 9,641 10,291 10/31/1996 10,544 9,938 10,689 11/30/1996 11,482 10,822 11,464 12/31/1996 11,283 10,634 11,317 1/31/1997 11,844 11,163 11,866 2/28/1997 11,991 11,301 12,040 3/31/1997 11,469 10,810 11,607 4/30/1997 12,072 11,378 12,095 5/31/1997 12,846 12,108 12,771 6/30/1997 13,476 12,701 13,319 7/31/1997 14,325 13,501 14,321 8/31/1997 13,916 13,116 13,810 9/30/1997 14,775 13,926 14,645 10/31/1997 14,128 13,316 14,236 11/30/1997 14,737 13,890 14,865 12/31/1997 15,055 14,190 15,299 1/31/1998 15,144 14,273 15,083 2/28/1998 16,360 15,419 16,098 3/31/1998 17,283 16,289 17,083 4/30/1998 17,371 16,372 17,197 5/31/1998 17,135 16,149 16,942 6/30/1998 17,851 16,824 17,159 7/31/1998 17,576 16,565 16,856 8/31/1998 14,919 14,061 14,348 9/30/1998 15,661 14,761 15,171 10/31/1998 16,792 15,827 16,347 11/30/1998 17,555 16,545 17,108 12/31/1998 18,657 17,584 17,690 1/31/1999 19,198 18,094 17,832 2/28/1999 18,737 17,660 17,580 3/31/1999 18,996 17,904 17,944 4/30/1999 20,122 18,965 19,620 5/31/1999 20,032 18,880 19,404 6/30/1999 20,657 19,469 19,967 7/31/1999 20,047 18,895 19,383 8/31/1999 19,777 18,640 18,664 9/30/1999 18,976 17,885 18,011 10/31/1999 19,737 18,602 19,048 11/30/1999 19,794 18,656 18,899 12/31/1999 20,423 19,249 18,990 1/31/2000 19,357 18,244 18,371 2/29/2000 18,705 17,629 17,006 3/31/2000 20,224 19,061 19,081 4/30/2000 19,890 18,746 18,859 5/31/2000 19,278 18,169 19,058 6/30/2000 19,530 18,407 18,187 7/31/2000 19,411 18,295 18,414 8/31/2000 20,713 19,522 19,439 9/30/2000 19,767 18,630 19,617 10/31/2000 19,822 18,682 20,099 11/30/2000 18,641 17,569 19,353 12/31/2000 18,930 17,841 20,322 1/31/2001 18,943 17,854 20,401 2/28/2001 17,818 16,793 19,833 3/31/2001 16,816 15,849 19,132 4/30/2001 18,189 17,143 20,071 5/31/2001 18,216 17,168 20,522 6/30/2001 17,584 16,573 20,066 7/31/2001 16,981 16,004 20,024 8/31/2001 15,938 15,022 19,222 9/30/2001 14,607 13,767 17,869 10/31/2001 15,129 14,259 17,715 11/30/2001 16,200 15,268 18,745 12/31/2001 16,172 15,242 19,186 1/31/2002 16,090 15,165 19,039 2/28/2002 15,663 14,763 19,069 3/31/2002 16,089 15,164 19,971 4/30/2002 15,636 14,737 19,286 5/31/2002 15,567 14,672 19,383 6/30/2002 14,633 13,792 18,270 7/31/2002 13,699 12,912 16,572 8/31/2002 14,042 13,234 16,697 9/30/2002 12,148 11,449 14,840 10/31/2002 12,601 11,876 15,940 11/30/2002 13,451 12,678 16,944 12/31/2002 12,929 12,186 16,208 1/31/2003 12,614 11,889 15,816 2/28/2003 12,215 11,513 15,394 3/31/2003 12,367 11,656 15,420 4/30/2003 13,533 12,755 16,777 5/31/2003 14,549 13,713 17,860 6/30/2003 14,865 14,010 18,083 7/31/2003 14,728 13,881 18,352 8/31/2003 15,223 14,348 18,638 9/30/2003 14,894 14,038 18,457 10/31/2003 15,594 14,698 19,586 11/30/2003 16,143 15,215 19,852 12/31/2003 16,816 15,849 21,075 1/31/2004 16,941 15,967 21,446 2/29/2004 17,339 16,342 21,906 3/31/2004 17,079 16,097 21,714 4/30/2004 17,079 16,097 21,183 5/31/2004 17,092 16,110 21,399 6/30/2004 17,340 16,343 21,905 7/31/2004 16,709 15,748 21,596 8/31/2004 16,791 15,826 21,904 9/30/2004 16,791 15,826 22,243 10/31/2004 17,149 16,163 22,613 11/30/2004 17,615 16,602 23,756 12/31/2004 18,357 17,301 24,552 1/31/2005 17,999 16,964 24,116 2/28/2005 17,930 16,899 24,915 3/31/2005 17,712 16,693 24,573 4/30/2005 17,354 16,356 24,133 5/31/2005 17,779 16,757 24,714 6/30/2005 17,647 16,633 24,985 7/31/2005 18,210 17,163 25,707 8/31/2005 17,923 16,892 25,596 9/30/2005 17,867 16,840 25,955 10/31/2005 17,633 16,619 25,296 11/30/2005 18,361 17,305 26,127 12/31/2005 18,321 17,267 26,283 1/31/2006 18,348 17,293 27,304 2/28/2006 18,554 17,487 27,471 3/31/2006 18,828 17,746 27,843 4/30/2006 18,938 17,849 28,551 5/31/2006 18,553 17,486 27,829 6/30/2006 18,486 17,420 28,007 Average Annual Total Returns -- June 30, 2006
SINCE 6 MONTHS/7/ 1 YEAR/7/ 5 YEARS/7/ 10 YEARS/7/ INCEPTION/7/ CLASS A (Inception 5/6/31) Net Asset Value/1/ 0.93% 4.78% 1.01% 6.34% -- With Maximum Sales Charge/2/ -4.85 -1.22 -0.18 5.71 -- CLASS B (Inception 9/13/93) Net Asset Value/1/ 0.51 3.92 0.24 5.55 -- With CDSC/3/ -4.49 -1.08 -0.16 5.55 -- CLASS C (Inception 5/1/95) Net Asset Value/1/ 0.51 3.84 0.24 5.54 -- With CDSC/3/ -0.49 2.84 0.24 5.54 -- CLASS Y (Inception 11/18/98) Net Asset Value/1/ 1.05 4.95 1.43 -- 1.31% - ----------------------------------------------------------------------------------------------- SINCE CLASS Y COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ Russell 1000 Value Index/4/ 6.56% 12.10% 6.90% 10.85% 6.72% Morningstar Large Blend Fund Avg./5/ 2.39 8.84 2.31 7.39 3.35
All returns represents past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to certain institutional investors only. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/06 12/31/05 - ------------------------------------------------------ Common Stocks 97.9 99.0 - ------------------------------------------------------ Short-Term Investments and Other 2.1 1.0 - ------------------------------------------------------ % of Net Assets as of TEN LARGEST HOLDINGS 6/30/06 12/31/05 - ------------------------------------------------------ Time Warner, Inc. 4.7 4.3 - ------------------------------------------------------ Morgan Stanley 4.7 4.2 - ------------------------------------------------------ McDonald's Corp. 4.6 4.6 - ------------------------------------------------------ Intel Corp. 4.3 4.0 - ------------------------------------------------------ Tyco International, Ltd. 4.1 4.3 - ------------------------------------------------------ Dell, Inc. 4.1 2.3 - ------------------------------------------------------ Hewlett-Packard Co. 4.1 4.7 - ------------------------------------------------------ JPMorgan Chase & Co. 3.8 4.4 - ------------------------------------------------------ Washington Mutual, Inc. 3.8 3.7 - ------------------------------------------------------ Wal-Mart Stores, Inc. 3.6 3.5 - ------------------------------------------------------ % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/06 12/31/05 - ------------------------------------------------------ Diversified Financial Services 14.4 15.0 - ------------------------------------------------------ Media 14.0 14.9 - ------------------------------------------------------ Computers 10.1 8.6 - ------------------------------------------------------ Retail 8.4 11.9 - ------------------------------------------------------ Semiconductors 6.8 6.7 - ------------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 1000 Value Index is an unmanaged index that measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception comparative performance figures shown for Class Y are calculated from 12/1/98. /7/Fund performance has been increased by expense waivers/reimbursements, without which performance would have been lower. 8 IXIS U.S. DIVERSIFIED PORTFOLIO PORTFOLIO PROFILE Objective: Seeks long-term growth of capital - -------------------------------------------------------------------------------- Strategy: Features growth and value investments through a diversified portfolio of complementary equity investment disciplines provided by specialized money managers - -------------------------------------------------------------------------------- Inception Date: July 7, 1994 - -------------------------------------------------------------------------------- Subadvisors: Harris Associates, L.P. Loomis, Sayles & Company, L.P. Mercury Advisors - -------------------------------------------------------------------------------- Symbols: Class A NEFSX Class B NESBX Class C NECCX
- -------------------------------------------------------------------------------- What You Should Know: Growth stocks can be more sensitive to market movements because their values are based on future expectations. Value stocks may fall out of favor with investors and underperform the overall market. Small-cap stocks carry special risks, including narrower markets, limited financial and management resources, less liquidity and greater volatility. Management Discussion - -------------------------------------------------------------------------------- After a strong start early in the year, U.S. equities lost value in May and June, as concerns surfaced about rising interest rates and geopolitical issues. For the six months ended June 30, 2006, value stocks outperformed growth, and small-cap stocks outperformed large-caps. For this period, IXIS U.S. Diversified Portfolio returned 4.71% based on the net asset value of Class A shares. This was better than the 2.71% return of the Standard & Poor's 500 Index and above the 4.24% return of the Standard & Poor's Midcap 400 Index. Although the portfolio fell short of the 5.51% return of the Dow Jones Wilshire 4500 Index, it outpaced the 2.88% average return of the funds in Morningstar's Mid-Cap Growth category. Each of the fund's four segments is managed using a different investment discipline, providing investors with exposure to a wide spectrum of large-, medium- and small-cap stocks, using both growth and value investment styles. The segment managed by Harris Associates invests primarily in common stocks of large- and mid-cap companies that the manager believes are trading at a substantial discount to their "true business value." Loomis Sayles manages two segments. One invests in mid-cap growth stocks, and the other focuses on small-cap value stocks. The Mercury Advisors segment seeks long-term growth of capital in companies of any size, with an emphasis on those with capitalizations greater than $2 billion. HARRIS ASSOCIATES SEES APPRECIATION POTENTIAL FROM LOW P/E RATIOS ON LARGER COMPANIES Noting that price/earnings ratios on the S&P 500 Index, which gives greatest weight to larger companies, have declined significantly over the past five years, Harris Associates believes this tier of the market offers attractive opportunities. This segment's best performers during the period included Walt Disney, Morgan Stanley and Hewlett-Packard (HP). Two quarters of relatively strong earnings and improved business fundamentals boosted the price of Disney stock, with a substantial portion of earnings coming from its Media Network (ABC) and Disney's Parks & Resorts division. While expensive, Disney's recent Pixar acquisition was viewed as positive because it has the potential to solidify the company's animation franchise. Morgan Stanley was buoyed by a sharp rise in earnings during the period and attractive business prospects. HP reported strong first-quarter sales in personal computers and printers. The company's emphasis on raising operating profits and building a more effective sales organization - two areas that had not been a primary focus in the past - also contributed to the rise in HP's stock price. On the negative side, Harris Associates' small weighting in energy and other commodity-related stocks, and its exposure to certain consumer stocks, detracted from the segment's performance. Poor performers included Intel, Carnival Corp. and Dell. Weaker-than-expected product demand and a slight loss in market share reduced Intel's revenues and pushed its share price lower. Carnival shares weakened as a result of higher fuel costs and reduced sales of Caribbean cruises. In both cases, Harris Associates believes these companies' shares are undervalued and expects them to appreciate over time. Dell's earnings and stock price also declined, but Harris Associates believes the company's low-cost business model will continue to drive healthy long-term profitability. They also believe the personal computer industry is large and growing, and that Dell is poised to remain a dominant player. TECHNOLOGY AND FINANCIAL STOCKS POWERED LOOMIS SAYLES MID-CAP SEGMENT Individual stock selections, particularly in the technology and financial sectors, drove this segment's performance. The strong showing in technology was broad-based, but company-specific factors rather than one over-riding theme was responsible for results. Among financial companies, exposure to the capital markets was positive, as investors anticipated increases in electronic trading of publicly held stocks. The real estate services companies Loomis selected benefited from a global upturn in commercial leasing, as well as from increased money flows into real estate as an asset class. Top individual selections included Akamai Technologies, 9 IXIS U.S. DIVERSIFIED PORTFOLIO Management Discussion - -------------------------------------------------------------------------------- which expedites the internet distribution of audio and video content; NII Holdings (previously Nextel International), which provides wireless telecommunications service to small businesses in Mexico, Brazil, Argentina and Peru; and Chicago Mercantile Exchange Holdings, because of its near-monopoly pricing power on its key interest-rate and equity products. Although two of this segment's biotech holdings did well, most of its healthcare stocks were weak. Notably, Omnicare, the largest provider of pharmacy services to nursing homes, proved disappointing and the stock was sold. Confusion and extra costs associated with the implementation of the new Medicare drug benefit and inquiries from the Centers for Medicare and Medicaid Services into the industry's drug rebate practices contributed to the decline in Omnicare shares. Despite a strong start to the quarter, Trinity Industries, the largest supplier of rail cars, lost value late in the quarter as investors became concerned that capital goods companies were approaching peak earnings. The position was sold. National Oilwell Varco (a leading manufacturer of drilling rigs and components) detracted from the segment's performance because demand for its equipment is largely tied to drilling for gas in North America, and gas prices were weakening. The stock was sold. STRONG STOCK SELECTION IN VARIOUS CATEGORIES BENEFITED LOOMIS SAYLES SMALL CAP SEGMENT The top-performing market sectors for the period - materials and processing, and energy - were both areas this segment emphasized. Consumer discretionary selections were also strong performers, including music publisher Warner Music Group, and Aramark, an outsourcer of food and maintenance services. The top-performing stocks for this segment included Chaparral Steel Company, FMC Technologies, and Live Nation. Chaparral benefited from robust first-quarter earnings, a strong forecast for the commercial construction market and stable scrap metal prices. An energy company specializing in offshore exploration and production of crude oil and natural gas, FMC was helped by increased demand for deepwater and undersea drilling equipment. Live Nation, a spin-off from Clear Channel Communications, promotes and produces live entertainment events in North America and Europe. The stock did well after the company announced several initiatives to create shareholder value and increase sales. Technology and the producer durable sectors were the segment's weakest contributors. Actuant Corp., a diversified industrial products manufacturer, declined after near-term weakness in its trucking operations caused the company to issue a conservative earnings forecast. However, Loomis believes the decline was an overreaction to what may prove to be a temporary situation. The segment's weakest stocks included Adtran, Inc., a manufacturer of communications equipment, which gave back some of the double-digit gains it made in 2005 because of delays in customer orders; and Avnet Inc., an electronic components distributor that fell from favor on concerns that the electronics spending cycle was nearing an end. Although both Adtran and Avnet were weak, along with the technology sector as a whole, Loomis believes the stocks are attractively valued and both companies' long-term prospects appear solid. Shares of CBRL Group, the operator of Cracker Barrel Old Country Store and Logan's Roadhouse restaurants, declined because of a weak consumer environment and were sold. MERCURY LOOKS FOR STRONG GLOBAL DEMAND FOR U.S. GOODS This segment held relatively large positions in energy, industrials and materials, each of which yielded positive results. Information technology, consumer staples, finance and healthcare were underweighted relative to the segment's benchmark. Although the segment's relatively minor position in information technology was a positive, as the sector was weak during the period, its underweight in consumer staples detracted from performance, as this sector was strong. Mercury's energy selections were among the segment's best-performing individual stocks. These included Schlumberger Ltd., one of the world's largest oil field services companies; Baker Hughes, which provides drilling services and equipment used to produce oil and natural gas; and Halliburton, one of the largest engineering and construction companies in the world. Healthcare, consumer staples, financials and technology were the segment's weakest sectors. Individual stocks that detracted from results included two healthcare companies: Alcon, an eye-care products company, and UnitedHealth Group Inc., which provides healthcare plans and other services. Internet giant Google was another disappointment during the period. Alcon and Google remain in the segment, but UnitedHealth was sold. Mercury's strategies reflect their confidence that real global economic growth should continue, along with strong demand for U.S.-manufactured industrial and commercial goods, especially from Asia. They cite China and India, in particular, as countries that are generating real economic growth and contributing to Mercury's positive outlook for global businesses. 10 IXIS U.S. DIVERSIFIED PORTFOLIO Investment Results through June 30, 2006 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] June 30, 1996 through June 30, 2006 Class A S&P 500 S&P 400 Wilshire @ M.S.C. Index Index 4500 Index Cumulative Cumulative Cumulative Cumulative Monthly Month End Value Value Value Value Performance - ---------- ---------- ---------- ---------- ---------- ----------- 6/30/1996 10,000 9,425 10,000 $10,000 10,000 7/31/1996 9,233 8,702 9,558 9,323 9,249 8/31/1996 9,683 9,126 9,760 9,861 9,748 9/30/1996 10,221 9,633 10,309 10,291 10,213 10/31/1996 10,135 9,552 10,593 10,321 10,062 11/30/1996 10,636 10,024 11,394 10,902 10,487 12/31/1996 10,562 9,955 11,168 10,914 10,581 1/31/1997 11,034 10,399 11,866 11,324 10,923 2/28/1997 10,667 10,054 11,959 11,231 10,693 3/31/1997 10,220 9,633 11,468 10,752 10,134 4/30/1997 10,418 9,818 12,152 11,031 10,160 5/31/1997 11,202 10,558 12,892 11,996 11,171 6/30/1997 11,661 10,991 13,470 12,333 11,700 7/31/1997 12,596 11,872 14,542 13,554 12,505 8/31/1997 12,236 11,533 13,727 13,537 12,619 9/30/1997 12,828 12,091 14,479 14,315 13,493 10/31/1997 12,414 11,700 13,995 13,692 12,979 11/30/1997 12,510 11,790 14,643 13,895 12,983 12/31/1997 12,694 11,964 14,895 14,435 13,301 1/31/1998 12,749 12,016 15,059 14,160 13,111 2/28/1998 13,685 12,898 16,146 15,333 14,114 3/31/1998 14,257 13,437 16,972 16,025 14,844 4/30/1998 14,418 13,589 17,143 16,317 15,032 5/31/1998 14,020 13,214 16,848 15,583 14,330 6/30/1998 14,468 13,636 17,533 15,681 14,554 7/31/1998 14,035 13,228 17,346 15,073 13,729 8/31/1998 11,708 11,035 14,838 12,267 11,068 9/30/1998 12,559 11,837 15,789 13,412 11,867 10/31/1998 13,330 12,564 17,073 14,611 12,541 11/30/1998 13,996 13,191 18,108 15,340 13,321 12/31/1998 15,138 14,267 19,151 17,194 14,448 1/31/1999 15,849 14,938 19,952 16,524 14,681 2/28/1999 15,380 14,496 19,332 15,659 13,882 3/31/1999 16,303 15,365 20,105 16,097 14,424 4/30/1999 16,953 15,978 20,884 17,366 15,573 5/31/1999 16,484 15,536 20,391 17,441 15,438 6/30/1999 17,520 16,513 21,523 18,375 16,086 7/31/1999 16,939 15,965 20,851 17,985 15,599 8/31/1999 16,871 15,901 20,747 17,368 15,210 9/30/1999 16,932 15,958 20,179 16,832 15,092 10/31/1999 17,540 16,531 21,456 17,690 15,863 11/30/1999 19,032 17,938 21,892 18,618 17,202 12/31/1999 22,171 20,896 23,181 19,725 19,572 1/31/2000 21,898 20,639 22,016 19,169 19,337 2/29/2000 24,585 23,171 21,600 20,511 22,344 3/31/2000 24,332 22,932 23,713 22,228 21,517 4/30/2000 22,458 21,167 22,999 21,451 18,929 5/31/2000 20,612 19,427 22,527 21,184 17,532 6/30/2000 21,010 19,802 23,083 21,495 19,637 7/31/2000 20,468 19,291 22,722 21,834 19,080 8/31/2000 22,072 20,803 24,133 24,272 21,209 9/30/2000 21,423 20,192 22,859 24,106 20,346 10/31/2000 20,408 19,235 22,762 23,289 18,684 11/30/2000 17,941 16,909 20,968 21,531 15,504 12/31/2000 18,405 17,347 21,071 23,178 16,485 1/31/2001 18,930 17,841 21,818 23,694 17,382 2/28/2001 17,031 16,052 19,829 22,342 15,270 3/31/2001 15,878 14,965 18,573 20,681 13,870 4/30/2001 17,272 16,279 20,016 22,962 15,337 5/31/2001 17,440 16,437 20,150 23,497 15,701 6/30/2001 17,342 16,345 19,659 23,402 15,828 7/31/2001 17,039 16,059 19,466 23,054 15,092 8/31/2001 16,315 15,376 18,247 22,300 14,358 9/30/2001 14,584 13,745 16,774 19,526 12,512 10/31/2001 14,951 14,091 17,094 20,390 13,167 11/30/2001 16,179 15,248 18,405 21,906 14,191 12/31/2001 16,682 15,723 18,566 23,038 14,951 1/31/2002 16,535 15,584 18,295 22,918 14,660 2/28/2002 16,221 15,288 17,942 22,946 14,245 3/31/2002 17,019 16,040 18,617 24,587 15,211 4/30/2002 16,568 15,615 17,488 24,472 15,061 5/31/2002 16,347 15,407 17,360 24,059 14,729 6/30/2002 15,025 14,161 16,123 22,298 13,720 7/31/2002 13,703 12,915 14,867 20,136 12,385 8/31/2002 13,808 13,014 14,964 20,240 12,457 9/30/2002 12,423 11,709 13,338 18,609 11,617 10/31/2002 13,000 12,252 14,511 19,415 11,999 11/30/2002 13,765 12,974 15,366 20,539 12,828 12/31/2002 13,041 12,291 14,463 19,695 12,288 1/31/2003 12,706 11,976 14,084 19,119 12,023 2/28/2003 12,570 11,847 13,873 18,664 11,716 3/31/2003 12,665 11,936 14,007 18,821 11,890 4/30/2003 13,651 12,866 15,161 20,187 12,880 5/31/2003 14,659 13,816 15,960 21,861 14,104 6/30/2003 14,858 14,004 16,164 22,139 14,439 7/31/2003 15,235 14,359 16,449 22,925 15,114 8/31/2003 15,980 15,061 16,769 23,965 15,747 9/30/2003 15,582 14,686 16,591 23,598 15,552 10/31/2003 16,715 15,754 17,530 25,382 16,729 11/30/2003 17,135 16,150 17,684 26,266 17,301 12/31/2003 17,428 16,426 18,612 26,710 17,661 1/31/2004 17,837 16,812 18,953 27,288 18,293 2/29/2004 17,994 16,960 19,217 27,944 18,613 3/31/2004 18,036 16,999 18,927 28,062 18,692 4/30/2004 17,668 16,652 18,630 27,141 17,940 5/31/2004 17,940 16,908 18,885 27,704 18,213 6/30/2004 18,401 17,343 19,252 28,335 18,688 7/31/2004 17,352 16,354 18,615 27,013 17,647 8/31/2004 17,142 16,156 18,691 26,942 17,654 9/30/2004 17,687 16,670 18,893 27,740 18,375 10/31/2004 18,013 16,977 19,182 28,184 18,788 11/30/2004 18,904 17,817 19,958 29,862 20,066 12/31/2004 19,670 18,539 20,637 31,112 20,940 1/31/2005 19,125 18,025 20,134 30,318 20,254 2/28/2005 19,513 18,391 20,558 31,335 20,620 3/31/2005 19,156 18,055 20,193 30,988 20,255 4/30/2005 18,547 17,481 19,810 29,784 19,571 5/31/2005 19,324 18,213 20,441 31,578 20,731 6/30/2005 19,597 18,470 20,470 32,310 21,399 7/31/2005 20,520 19,340 21,231 34,007 22,576 8/31/2005 20,394 19,222 21,037 33,628 22,309 9/30/2005 20,645 19,458 21,208 33,886 22,448 10/31/2005 20,206 19,044 20,854 33,158 21,965 11/30/2005 21,119 19,905 21,643 34,778 22,993 12/31/2005 21,161 19,944 21,650 35,019 23,092 1/31/2006 22,190 20,914 22,224 37,082 24,544 2/28/2006 22,116 20,845 22,284 36,771 24,321 3/31/2006 22,767 21,457 22,561 37,689 25,230 4/30/2006 22,944 21,625 22,864 38,220 25,349 5/31/2006 22,052 20,784 22,206 36,496 24,325 6/30/2006 22,160 20,889 22,236 36,504 24,364 Average Annual Total Returns -- June 30, 2006
6 MONTHS 1 YEAR 5 YEARS 10 YEARS CLASS A (Inception 7/7/94) Net Asset Value/1/ 4.71% 13.06% 5.02% 8.28% With Maximum Sales Charge/2/ -1.31 6.56 3.78 7.64 CLASS B (Inception 7/7/94) Net Asset Value/1/ 4.33 12.18 4.22 7.47 With CDSC/3/ -0.67 7.18 3.88 7.47 CLASS C (Inception 7/7/94) Net Asset Value/1/ 4.33 12.23 4.23 7.47 With CDSC/3/ 3.33 11.23 4.23 7.47 CLASS Y (Inception 11/15/94) Net Asset Value/1/ 4.86 13.44 5.60 8.78 - ------------------------------------------------------------------------ COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS S&P Midcap 400 Index/4/ 4.24% 12.98% 9.29% 13.82% S&P 500 Index/5/ 2.71 8.63 2.49 8.32 Dow Jones Wilshire 4500 Index/6/ 5.51 13.86 9.01 9.32 Morningstar Mid-Cap Growth Fund Avg./7/ 2.88 12.66 3.23 7.69
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. Class Y shares are available to certain institutional investors only. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/06 12/31/05 - ---------------------------------------------------- Common Stocks 98.7 98.1 - ---------------------------------------------------- Short-Term Investments and Other 1.3 1.9 - ---------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/06 12/31/05 - ---------------------------------------------------- Morgan Stanley 1.3 1.2 - ---------------------------------------------------- McDonald's Corp. 1.3 1.3 - ---------------------------------------------------- Time Warner, Inc. 1.2 1.2 - ---------------------------------------------------- Intel Corp. 1.2 1.1 - ---------------------------------------------------- Citigroup, Inc. 1.1 1.1 - ---------------------------------------------------- Dell, Inc. 1.1 0.8 - ---------------------------------------------------- Tyco International, Ltd. 1.1 1.1 - ---------------------------------------------------- Hewlett-Packard Co. 1.1 1.3 - ---------------------------------------------------- Exxon Mobil Corp. 1.1 1.1 - ---------------------------------------------------- JPMorgan Chase & Co. 1.0 1.2 - ---------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/06 12/31/05 - ---------------------------------------------------- Diversified Financial Services 7.3 8.3 - ---------------------------------------------------- Retail 5.5 6.4 - ---------------------------------------------------- Oil & Gas Services 5.0 4.0 - ---------------------------------------------------- Commercial Services 4.9 3.9 - ---------------------------------------------------- Computers 4.2 3.5 - ----------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P Midcap 400 Index is an unmanaged index of U.S. mid-sized companies. /5/S&P 500 Index is an unmanaged index of U.S. common stocks. /6/Dow Jones Wilshire 4500 Index is an unmanaged index of 4,500 mid- and small-sized companies. /7/Morningstar Mid-Cap Growth Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. 11 IXIS VALUE FUND PORTFOLIO PROFILE Objective: Seeks a reasonable, long-term investment return from a combination of market appreciation and dividend income from equity securities - -------------------------------------------------------------------------------- Strategy: Features value investments through a diversified portfolio of complementary equity investment disciplines provided by specialized money managers - -------------------------------------------------------------------------------- Inception Date: June 5, 1970 - -------------------------------------------------------------------------------- Subadvisors: Harris Associates, L.P. Loomis, Sayles & Company, L.P. Vaughan Nelson Investment Management, L.P. Westpeak Global Advisors, L.P. - -------------------------------------------------------------------------------- Symbols: Class A NEFVX Class B NEVBX Class C NECVX
- -------------------------------------------------------------------------------- What You Should Know: Value stocks may fall out of favor with investors and underperform the overall market. Small cap stocks carry special risks, including narrower markets, limited financial and management resources, less liquidity and greater volatility. Management Discussion - -------------------------------------------------------------------------------- Value stocks outperformed growth stocks during the first half of 2006. For the six months ended June 30, 2006, the total return on IXIS Value Fund was 4.50% based on the net asset value of Class A shares. The fund underperformed its benchmark, the Russell 1000 Value Index, which returned 6.56% but its results were above the 2.39% average return of funds in Morningstar's Large Blend category. Each of IXIS Value Fund's segments is managed by a different investment manager, providing four distinct approaches to value investing. The segment managed by Harris Associates focuses on large- and mid-cap value stocks that Harris believes are trading at a substantial discount to their true business value. The Loomis Sayles segment favors large-cap companies with attractive valuations and positive earnings prospects. The segment managed by Vaughan Nelson emphasizes established companies that appear to be undervalued because they are misunderstood or out of favor. Westpeak Global Advisors invests across the capitalization spectrum, employing proprietary research to select stocks based on value and growth potential, while seeking to manage risk. HARRIS ASSOCIATES FAVORED COMPANIES WITH BELOW-AVERAGE RISK PROFILES This segment's emphasis on technology and exposure to certain consumer stocks hurt performance, but Harris Associates believes the business fundamentals of the companies they selected are solid. The segment also had relatively small positions in energy, telecommunications, utilities and materials - all sectors that performed well. Top-performing stocks for the Harris segment included Cablevision Systems, Pepsi Bottling Group (PBG), and Morgan Stanley. Cablevision, which provides service to three million subscribers in the New York City area, benefited from its ability to maintain customers in its "triple-play" bundle of services (cable, internet and telephone service). The world's leading manufacturer and distributor of PepsiCola beverages, PBG reported strong growth in revenues and operating earnings. Morgan Stanley's earnings rose strongly and its business fundamentals remain attractive. Carnival Corp. was one of the worst performers in the segment. Higher fuel costs and reduced sales of Caribbean cruises cut into earnings. Computer maker Dell also hurt the segment's return. While Dell's earnings and stock price declined, Harris Associates believes the company's low-cost business model will continue to drive long-term profitability, and that Dell is poised to be a dominant player in the computer industry. Another segment holding, high-end jewelry retailer Tiffany, had mixed results, with substantial operating strength in Japan offset by weakness in U.S. sales. The company is focused on reducing capital expenditures and has implemented a share-repurchase program. The stock remains in the segment. LOOMIS SAYLES SOUGHT STOCKS TRADING AT A DISCOUNT TO THEIR INTRINSIC VALUE Loomis focused on companies that appeared to be well managed and likely to benefit at this stage in the business cycle. Strength was broad-based and individual companies in a variety of sectors performed well. Additions included information technology and the consumer discretionary sector. In the latter group, for example, Loomis added cable operator Comcast, which has been building its subscriber lists. The segment's telecommunications holdings performed well, in large part because of BellSouth, which moved considerably higher after AT&T offered to acquire it. Swiss-based ABB Limited, an electrical equipment manufacturer, was a major contributor to the segment's performance, reflecting the industrial sector's efforts to strengthen infrastructure. The segment's holdings were trimmed when Loomis took profits in Aramark, a global outsourcer of food services. Individual stocks that proved weak included Motorola, which experienced some pressure as investors became concerned that global demand for handsets might slow after a strong start early in the year. Loomis believes Motorola's array of new products and a seasonal gain in its earnings should improve investor sentiment for the stock later this year. Insurer American International Group underperformed slightly as interest rates rose and the yield curve flattened. 12 IXIS VALUE FUND Management Discussion - -------------------------------------------------------------------------------- VAUGHAN NELSON LOOKED FOR STOCKS THAT SHOULD DO WELL IN ANY ENVIRONMENT This segment's strong performance in the first quarter was partially offset by a weak second quarter, as the Federal Reserve Board disappointed investors who had expected an end to rising interest rates. Vaughan Nelson's emphasis on consumer staples helped performance during a volatile market period. The segment's best-performing individual stocks included WESCO International, an electrical component distribution company that benefited from the company's shift toward commercial construction and away from maintenance. Amphenol Corporation enjoyed strong growth in its cable and connector businesses, which serve a variety of markets; the position was sold at a profit. Integrated oil giant Exxon Mobil also prospered as supply/demand imbalances worldwide pushed up energy prices. Disappointments during the period included chip-maker Intel, which experienced losses when a smaller competitor cut into its market share and its plants were running below capacity, but Vaughan Nelson remains positive about Intel's long-term prospects. Product delays and recalls from recently acquired Guidant continued to haunt Boston Scientific, a medical device manufacturer that may be best known for its cardiac stents. Vaughan Nelson believes the ensuing price decline in Boston Scientific shares does not reflect the company's potential. Product delays from its promising pipeline drugs, coupled with new competition from traditional drug makers took a toll on Amgen, one of the world's largest biotech companies, leaving the stock price at a level that the manager feels is unduly low. For the next six to 12 months, Vaughan Nelson believes the market should continue to struggle for leadership and direction, and they plan to remain steadfast in their pursuit of stocks that appear to be attractively valued. Their focus will be on companies with the potential to provide positive returns regardless of the prevailing market environment. WESTPEAK EMPHASIZED REASONABLE VALUATIONS AND STRONG FUNDAMENTALS Westpeak's emphasis on momentum stocks, and the segment's relatively minor positions in high-growth and higher-yielding stocks, helped boost the segment's performance. Railroads, energy reserves, mining and metals, and oil refining industries were the primary contributors to return. Holdings in basic industry, transportation and energy-related companies were also helpful. The best-performing stocks in the segment included Commercial Metals Company, which rallied with other commodity stocks on strong demand; Harvest Natural Resources, an energy company whose shares rose in value with energy prices; and USG Corporation, the world's largest wallboard maker, which emerged from bankruptcy and rallied on plans to settle asbestos claims. Both Commercial Metals and USG were sold. Poor timing in the electronic equipment industry held back the segment's return, as did its emphasis on computer software, which was trimmed during the period. Chip maker Intel was one of the segment's biggest detractors. The stock declined as the company lost market share, experienced poor earnings, and was downgraded by analysts. Although Westpeak still feels the stock is worth holding, the position was trimmed. Another disappointment was Intergraph, which provides spatial information management software. A lowered earnings forecast caused the shares to decline sharply early in the year; although they subsequently rallied, shares slid again and the position was sold. Analysts' downgrades in the wake of earnings problems caused Aetna shares to decline sharply. The position was pared back, but it remains in the segment. Westpeak believes that, after a period when more speculative stocks outperformed, investors are beginning to avoid the more risky parts of the market. The segment is positioned to take advantage of what may be renewed investor emphasis on higher-quality companies. 13 IXIS VALUE FUND Investment Results through June 30, 2006 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/6/ [CHART] June 30, 1996 through June 30, 2006 Russell 1000 Class A Value @ M.S.C. Index Month Cumulative Cumulative Cumulative End Value Value Value - --------- ---------- ---------- ---------- 6/30/1996 10,000 9,425 10,000 7/31/1996 9,674 9,118 9,622 8/31/1996 9,958 9,386 9,897 9/30/1996 10,523 9,918 10,291 10/31/1996 10,849 10,225 10,689 11/30/1996 11,699 11,026 11,464 12/31/1996 11,674 11,003 11,317 1/31/1997 11,966 11,278 11,866 2/28/1997 12,100 11,404 12,040 3/31/1997 11,638 10,969 11,607 4/30/1997 11,857 11,175 12,095 5/31/1997 12,525 11,805 12,771 6/30/1997 13,182 12,424 13,319 7/31/1997 14,178 13,363 14,321 8/31/1997 13,631 12,847 13,810 9/30/1997 14,208 13,391 14,645 10/31/1997 13,595 12,813 14,236 11/30/1997 13,915 13,115 14,865 12/31/1997 14,119 13,307 15,299 1/31/1998 14,091 13,281 15,083 2/28/1998 15,038 14,173 16,098 3/31/1998 15,636 14,737 17,083 4/30/1998 15,622 14,724 17,197 5/31/1998 15,177 14,304 16,942 6/30/1998 15,163 14,292 17,159 7/31/1998 14,648 13,806 16,856 8/31/1998 12,169 11,470 14,348 9/30/1998 12,863 12,123 15,171 10/31/1998 13,942 13,141 16,347 11/30/1998 14,667 13,824 17,108 12/31/1998 15,116 14,247 17,690 1/31/1999 14,726 13,879 17,832 2/28/1999 14,461 13,630 17,580 3/31/1999 14,523 13,688 17,944 4/30/1999 15,647 14,748 19,620 5/31/1999 15,507 14,615 19,404 6/30/1999 15,913 14,998 19,967 7/31/1999 15,195 14,321 19,383 8/31/1999 14,539 13,703 18,664 9/30/1999 13,700 12,912 18,011 10/31/1999 14,370 13,543 19,048 11/30/1999 14,163 13,348 18,899 12/31/1999 14,071 13,262 18,990 1/31/2000 13,636 12,852 18,371 2/29/2000 12,465 11,748 17,006 3/31/2000 13,749 12,958 19,081 4/30/2000 13,711 12,923 18,859 5/31/2000 13,636 12,852 19,058 6/30/2000 13,316 12,550 18,187 7/31/2000 13,353 12,585 18,414 8/31/2000 14,167 13,353 19,439 9/30/2000 13,922 13,122 19,617 10/31/2000 14,300 13,477 20,099 11/30/2000 13,846 13,050 19,353 12/31/2000 14,356 13,530 20,322 1/31/2001 14,809 13,958 20,401 2/28/2001 14,413 13,584 19,833 3/31/2001 13,921 13,121 19,132 4/30/2001 14,790 13,939 20,071 5/31/2001 15,186 14,313 20,522 6/30/2001 14,922 14,064 20,066 7/31/2001 14,789 13,939 20,024 8/31/2001 14,147 13,334 19,222 9/30/2001 12,957 12,212 17,869 10/31/2001 13,354 12,586 17,715 11/30/2001 14,242 13,423 18,745 12/31/2001 14,544 13,708 19,186 1/31/2002 14,336 13,512 19,039 2/28/2002 14,185 13,370 19,069 3/31/2002 14,808 13,957 19,971 4/30/2002 14,355 13,530 19,286 5/31/2002 14,355 13,530 19,383 6/30/2002 13,241 12,480 18,270 7/31/2002 12,089 11,394 16,572 8/31/2002 12,278 11,572 16,697 9/30/2002 10,786 10,166 14,840 10/31/2002 11,485 10,824 15,940 11/30/2002 12,411 11,697 16,944 12/31/2002 11,712 11,038 16,208 1/31/2003 11,428 10,771 15,816 2/28/2003 11,164 10,522 15,394 3/31/2003 11,183 10,540 15,420 4/30/2003 12,222 11,520 16,777 5/31/2003 13,110 12,356 17,860 6/30/2003 13,355 12,587 18,083 7/31/2003 13,506 12,729 18,352 8/31/2003 13,846 13,050 18,638 9/30/2003 13,544 12,765 18,457 10/31/2003 14,433 13,603 19,586 11/30/2003 14,792 13,942 19,852 12/31/2003 15,415 14,529 21,075 1/31/2004 15,584 14,688 21,446 2/29/2004 15,924 15,009 21,906 3/31/2004 15,830 14,920 21,714 4/30/2004 15,585 14,689 21,183 5/31/2004 15,773 14,866 21,399 6/30/2004 16,076 15,152 21,905 7/31/2004 15,604 14,706 21,596 8/31/2004 15,566 14,671 21,904 9/30/2004 15,755 14,849 22,243 10/31/2004 15,962 15,045 22,613 11/30/2004 16,700 15,740 23,756 12/31/2004 17,168 16,180 24,552 1/31/2005 16,917 15,944 24,116 2/28/2005 17,340 16,343 24,915 3/31/2005 17,109 16,125 24,573 4/30/2005 16,724 15,763 24,133 5/31/2005 17,224 16,234 24,714 6/30/2005 17,428 16,425 24,985 7/31/2005 18,060 17,022 25,707 8/31/2005 17,961 16,928 25,596 9/30/2005 18,139 17,096 25,955 10/31/2005 17,703 16,685 25,296 11/30/2005 18,277 17,226 26,127 12/31/2005 18,233 17,185 26,283 1/31/2006 18,802 17,721 27,304 2/28/2006 18,845 17,762 27,471 3/31/2006 19,173 18,071 27,843 4/30/2006 19,589 18,463 28,551 5/31/2006 19,041 17,946 27,829 6/30/2006 19,053 17,957 28,007 Average Annual Total Returns -- June 30, 2006
6 MONTHS 1 YEAR/6/ 5 YEARS/6/ 10 YEARS/6/ CLASS A (Inception 6/5/70) Net Asset Value/1/ 4.50% 9.33% 5.01% 6.66% With Maximum Sales Charge/2/ -1.54 3.02 3.78 6.03 CLASS B (Inception 9/13/93) Net Asset Value/1/ 3.92 8.41 4.23 5.85 With CDSC/3/ -1.08 3.67 3.89 5.85 CLASS C (Inception 12/30/94) Net Asset Value/1/ 4.06 8.41 4.23 5.86 With CDSC/3/ 3.06 7.46 4.23 5.86 - ------------------------------------------------------------------------------ COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS Russell 1000 Value Index/4/ 6.56% 12.10% 6.90% 10.85% Morningstar Large Blend Fund Avg./5/ 2.39 8.84 2.31 7.39
All results represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/06 12/31/05 - ------------------------------------------------------ Common Stocks 96.6 98.0 - ------------------------------------------------------ Short-Term Investments and Other 3.4 2.0 - ------------------------------------------------------ % of Net Assets as of TEN LARGEST HOLDINGS 6/30/06 12/31/05 - ------------------------------------------------------ Exxon Mobil Corp. 3.6 3.3 - ------------------------------------------------------ JPMorgan Chase & Co. 2.7 2.6 - ------------------------------------------------------ Citigroup, Inc. 2.5 2.2 - ------------------------------------------------------ Hewlett-Packard Co. 2.5 2.2 - ------------------------------------------------------ Time Warner, Inc. 2.4 2.4 - ------------------------------------------------------ McDonald's Corp. 2.3 2.4 - ------------------------------------------------------ Morgan Stanley 2.2 1.9 - ------------------------------------------------------ Intel Corp. 2.0 1.2 - ------------------------------------------------------ Tyco International, Ltd. 2.0 1.5 - ------------------------------------------------------ Yum! Brands, Inc. 1.7 1.5 - ------------------------------------------------------ % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/06 12/31/05 - ------------------------------------------------------ Diversified Financial Services 14.2 13.3 - ------------------------------------------------------ Oil & Gas 7.5 7.7 - ------------------------------------------------------ Media 6.6 6.7 - ------------------------------------------------------ Retail 6.4 8.0 - ------------------------------------------------------ Banks 5.8 6.3 - ------------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 1000 Value Index is an unmanaged index that measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/Fund performance has been increased by expense waivers/reimbursements, without which performance would have been lower. 14 VAUGHAN NELSON SMALL CAP VALUE FUND PORTFOLIO PROFILE Objective: Seeks capital appreciation - -------------------------------------------------------------------------------- Strategy: Invests in small-cap companies with a focus on absolute return using a bottom up value-oriented investment process - -------------------------------------------------------------------------------- Inception Date: December 31, 1996 - -------------------------------------------------------------------------------- Managers: Mark J. Roach Chris D. Wallis Scott J. Weber - -------------------------------------------------------------------------------- Symbols: Class A NEFJX Class B NEJBX Class C NEJCX
- -------------------------------------------------------------------------------- What You Should Know: Investing in small-cap stocks carries special risk, including narrower markets, limited financial and management resources, less liquidity and greater volatility than large company stocks. Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion - -------------------------------------------------------------------------------- Vaughan Nelson Small Cap Value Fund's total return for the six months ended June 30, 2006 was 8.99% based on the net asset value of Class A shares. This was below its benchmark, the Russell 2000 Value Index, which returned 10.44%, but above the 7.03% average return on the funds in Morningstar's Small Blend category. Adjustments to the Russell 2000 indexes affected the fund's second quarter performance, as several holdings were moved from one index to the other at the end of the reporting period. As some institutional investors with indexed funds adjusted their portfolios accordingly, some of the fund's holdings experienced selling pressure on trading volume well in excess of daily norms. However, this was offset somewhat as some companies "graduated" from small-cap to mid-cap indexes. FUND SOLD SOME ENERGY HOLDINGS ON STRENGTH The fund benefited from the strong market for energy stocks in 2004 and 2005, and we continue to believe energy will do well over the long term. However, we reduced the fund's energy holdings during the first half of 2006 in anticipation of a near-term oversupply of natural gas. We took profits on sales of Southwestern Energy, Petrohawk, and GMX Resources - all companies active in the exploration and development of oil and natural gas. Two other oil and gas exploration companies, Arena Resources and Gulfport Energy are both more focused on oil, and they remain in the portfolio. SOME ENERGY-RELATED COMPANIES MAY OUTPERFORM Another stock that did well during the period was Universal Compression Holdings, which provides compression services and products to the natural gas industry domestically and internationally. Compressors are used to push natural gas through gathering systems and pipelines. Universal's 16-18-month waiting list gives it a predictable, growing business that does not seem to be fully reflected in the stock's price. Universal's earnings tend to be less volatile than earnings of production companies because they are not directly impacted by natural gas prices. Some companies that are not directly in the energy business may benefit from increased exploration activity. A case in point is Birch Mountain Resources, a Canadian company that owns industrial mineral rights in Alberta. Their assets include limestone quarries near a large concentration of oil sands that is not yet fully developed. Birch is developing a processing facility to produce quicklime, cement and other products, but their current income is negligible. We elected to hold the stock because Birch has a high-quality product and we believe its proximity to potentially oil-rich areas in a politically stable region may benefit investors with long-term perspectives. MANAGER SEEKS OPPORTUNITIES IN OUT-OF-FAVOR STOCKS AND INDUSTRIES Whenever possible, we look for situations where there is relatively little competition from other investors. A case in point is Lennox International, a global provider of climate control solutions for residences and industry. We believe the stock is undervalued and we have been adding to it in the face of reduced expectations for residential construction. In fact, replacement units and commercial customers account for much of the company's growth. We believe that the healthcare industry may be one of tomorrow's leaders, although investors currently seem to be focused - not without justification - on pricing pressures from Medicare. One of the fund's top performers during the period was LHC Group, which provides post-acute healthcare services primarily to Medicare patients in the rural South. The company is a low-cost provider competing primarily with smaller providers. Overall, we anticipate relatively thin trading volume in the coming quarter, with continued price volatility, as investors wait to see what the Federal Reserve Board will do next. A "choppy" market scenario like this tests investors' patience, but we try to take a long-term approach. 15 VAUGHAN NELSON SMALL CAP VALUE FUND Investment Results through June 30, 2006 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/6/ [CHART] December 31, 1996 (inception) through June 30, 2006 Class A Russell 2000 @ M.S.C. Value Cumulative Cumulative Cumulative Month End Value Value Value - ---------- ---------- ----------- ------------ 12/31/1996 10,000 9,425 $10,000 1/31/1997 10,192 9,606 10,154 2/28/1997 9,920 9,349 10,250 3/31/1997 9,351 8,814 9,975 4/30/1997 9,264 8,731 10,122 5/31/1997 10,447 9,847 10,928 6/30/1997 11,040 10,405 11,481 7/31/1997 11,784 11,106 11,963 8/31/1997 12,104 11,408 12,153 9/30/1997 13,160 12,403 12,961 10/31/1997 12,672 11,943 12,608 11/30/1997 12,375 11,664 12,746 12/31/1997 12,696 11,966 13,178 1/31/1998 12,340 11,631 12,940 2/28/1998 13,348 12,581 13,722 3/31/1998 14,125 13,313 14,279 4/30/1998 13,994 13,189 14,349 5/31/1998 13,135 12,379 13,841 6/30/1998 13,341 12,574 13,763 7/31/1998 12,300 11,593 12,685 8/31/1998 9,624 9,070 10,699 9/30/1998 10,294 9,702 11,303 10/31/1998 10,749 10,131 11,638 11/30/1998 11,758 11,082 11,953 12/31/1998 12,957 12,212 12,328 1/31/1999 13,231 12,470 12,048 2/28/1999 12,122 11,425 11,226 3/31/1999 12,957 12,212 11,133 4/30/1999 13,934 13,133 12,150 5/31/1999 13,818 13,024 12,523 6/30/1999 14,968 14,107 12,976 7/31/1999 14,785 13,935 12,668 8/31/1999 14,654 13,811 12,205 9/30/1999 15,061 14,195 11,961 10/31/1999 16,203 15,271 11,722 11/30/1999 18,066 17,027 11,783 12/31/1999 21,430 20,198 12,145 1/31/2000 21,402 20,172 11,827 2/29/2000 26,682 25,148 12,550 3/31/2000 25,666 24,190 12,609 4/30/2000 22,655 21,352 12,684 5/31/2000 20,815 19,619 12,490 6/30/2000 22,508 21,213 12,855 7/31/2000 20,925 19,722 13,283 8/31/2000 23,526 22,174 13,877 9/30/2000 22,776 21,466 13,799 10/31/2000 20,858 19,659 13,750 11/30/2000 17,223 16,232 13,470 12/31/2000 18,811 17,729 14,917 1/31/2001 19,631 18,502 15,329 2/28/2001 17,102 16,119 15,307 3/31/2001 15,472 14,583 15,062 4/30/2001 17,023 16,044 15,759 5/31/2001 17,375 16,376 16,164 6/30/2001 17,968 16,934 16,815 7/31/2001 16,737 15,774 16,438 8/31/2001 15,711 14,807 16,381 9/30/2001 13,216 12,456 14,572 10/31/2001 14,116 13,304 14,953 11/30/2001 15,358 14,475 16,028 12/31/2001 16,544 15,593 17,009 1/31/2002 16,157 15,228 17,235 2/28/2002 14,869 14,014 17,340 3/31/2002 16,191 15,260 18,638 4/30/2002 15,815 14,906 19,294 5/31/2002 15,051 14,186 18,656 6/30/2002 14,049 13,241 18,243 7/31/2002 11,929 11,243 15,533 8/31/2002 11,917 11,232 15,463 9/30/2002 10,823 10,201 14,359 10/31/2002 11,382 10,727 14,575 11/30/2002 12,259 11,554 15,738 12/31/2002 11,450 10,792 15,066 1/31/2003 10,812 10,190 14,641 2/28/2003 10,436 9,836 14,149 3/31/2003 10,459 9,857 14,300 4/30/2003 11,462 10,803 15,659 5/31/2003 12,636 11,909 17,257 6/30/2003 13,114 12,360 17,550 7/31/2003 13,970 13,166 18,425 8/31/2003 14,688 13,843 19,125 9/30/2003 14,254 13,435 18,906 10/31/2003 15,279 14,401 20,447 11/30/2003 15,724 14,820 21,232 12/31/2003 15,883 14,969 22,000 1/31/2004 16,497 15,549 22,761 2/29/2004 16,407 15,463 23,201 3/31/2004 16,441 15,496 23,522 4/30/2004 15,734 14,829 22,306 5/31/2004 15,791 14,883 22,575 6/30/2004 16,610 15,655 23,721 7/31/2004 15,893 14,979 22,631 8/31/2004 15,734 14,829 22,853 9/30/2004 16,292 15,355 23,757 10/31/2004 16,520 15,570 24,126 11/30/2004 17,774 16,752 26,267 12/31/2004 18,309 17,256 26,894 1/31/2005 17,762 16,740 25,853 2/28/2005 18,343 17,288 26,367 3/31/2005 18,080 17,041 25,824 4/30/2005 17,214 16,224 24,492 5/31/2005 18,125 17,083 25,986 6/30/2005 18,853 17,769 27,135 7/31/2005 19,857 18,715 28,679 8/31/2005 19,708 18,574 28,020 9/30/2005 19,901 18,756 27,974 10/31/2005 19,308 18,197 27,271 11/30/2005 20,140 18,982 28,378 12/31/2005 20,152 18,993 28,160 1/31/2006 21,724 20,475 30,488 2/28/2006 21,609 20,366 30,486 3/31/2006 22,691 21,386 31,963 4/30/2006 22,782 21,472 32,048 5/31/2006 21,973 20,710 30,721 6/30/2006 21,967 20,708 31,099 Average Annual Total Returns -- June 30, 2006
SINCE 6 MONTHS/6/ 1 YEAR/6/ 5 YEARS/6/ INCEPTION/6/ CLASS A (Inception 12/31/96) Net Asset Value/1/ 8.99% 16.50% 4.10% 8.64% With Maximum Sales Charge/2/ 2.72 9.80 2.88 7.97 CLASS B (Inception 12/31/96) Net Asset Value/1/ 8.62 15.69 3.32 7.83 With CDSC/3/ 3.62 10.69 2.97 7.83 CLASS C (Inception 12/31/96) Net Asset Value/1/ 8.61 15.68 3.34 7.84 With CDSC/3/ 7.61 14.68 3.34 7.84 - ---------------------------------------------------------------------------------- SINCE COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS INCEPTION/7/ Russell 2000 Value Index/4/ 10.44% 14.61% 13.09% 12.69% Morningstar Small Blend Fund Avg./5/ 7.03 14.11 9.84 10.81
All results represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/06 12/31/05 - ----------------------------------------------------------- Common Stocks 94.2 95.1 - ----------------------------------------------------------- Short-Term Investments and Other 5.8 4.9 - ----------------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/06 12/31/05 - ----------------------------------------------------------- Universal Compression Holdings, Inc. 3.1 2.9 - ----------------------------------------------------------- HCC Insurance Holdings, Inc. 2.4 1.9 - ----------------------------------------------------------- Alliant Techsystems, Inc. 2.3 2.1 - ----------------------------------------------------------- Pediatrix Medical Group, Inc. 2.3 2.5 - ----------------------------------------------------------- Waste Connections, Inc. 2.2 1.9 - ----------------------------------------------------------- Nordson Corp. 2.1 2.0 - ----------------------------------------------------------- Arena Resources, Inc. 2.0 -- - ----------------------------------------------------------- Lennox International, Inc. 2.0 -- - ----------------------------------------------------------- Dollar Thrifty Automotive Group, Inc. 2.0 1.9 - ----------------------------------------------------------- AMERCO, Inc. 1.9 2.0 - ----------------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/06 12/31/05 - ----------------------------------------------------------- Commercial Services 10.6 9.0 - ----------------------------------------------------------- Aerospace & Defense 8.2 7.4 - ----------------------------------------------------------- Health Care -- Services 7.4 5.8 - ----------------------------------------------------------- Insurance 5.2 4.0 - ----------------------------------------------------------- Retail 5.1 4.6 - -----------------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 2000 Value Index is an unmanaged index that measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. /5/Morningstar Small Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/Fund performance has been increased by expense waivers/reimbursements, without which performance would have been lower. /7/The since-inception comparative performance figures shown are calculated from 1/1/97. 16 WESTPEAK CAPITAL GROWTH FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital - -------------------------------------------------------------------------------- Strategy: Invests primarily in common stocks of large- and mid-cap companies in any industry - -------------------------------------------------------------------------------- Inception Date: August 3, 1992 - -------------------------------------------------------------------------------- Manager: Westpeak Global Advisors, L.P. Team Management - -------------------------------------------------------------------------------- Symbols: Class A NEFCX Class B NECBX Class C NECGX
- -------------------------------------------------------------------------------- What You Should Know: Growth stocks can be more sensitive to market movements because their prices are based in part on future expectations. Management Discussion - -------------------------------------------------------------------------------- Stock-price trends were mixed during the first half of 2006, but Westpeak Capital Growth Fund's results were generally favorable. For the six months ended June 30, 2006, the fund's total return was 1.44%, based on the net asset value of Class A shares, while the fund's benchmark, the Russell 1000 Growth Index returned -0.93%, and the average return on the funds in Morningstar's Large Growth category was -1.34%. During the first quarter, small-cap stocks were stronger than other market areas and the fund benefited from its holdings in that group. Times changed in early May when value stocks - both large- and small-cap - took the lead over growth stocks. Industry groups that had done well, including energy, commodities, metals and heavy machinery, slumped until about mid June, when the market began to stabilize. ENERGY, TRANSPORTATION, FINANCIAL SERVICES BENEFITED THE FUND On average, refining and oil services stocks continued to do well during the first half of 2006, although the energy sector lost the lead it held in 2004 and 2005. Transportation took over as the best-performing sector, including rails and trucking. Even when energy costs are high, a vital economy makes transportation essential. Airlines also began to recover as rising demand made it possible for the companies to raise prices. Financial companies also did well, including asset management firms, which are featured in the fund's portfolio. Despite a slowdown in the housing markets as interest rates rose, REITs (Real Estate Investment Trusts) also performed well, but the fund's participation in this group is limited. Utility companies, including telephones, did well, but utilities are considered a value sector and, here too, the fund's participation was limited. The fund also had relatively little exposure to consumer staples, such as food and beverages, which detracted from results. TOP PERFORMERS INCLUDED A CASINO OPERATOR, AN AIRCRAFT COMPANY AND A STEEL MAKER Although we sold the stock at a profit in March, Las Vegas Sands was one of the fund's best-performing stocks. Its facilities include the Venetian Casino Resort in the Las Vegas Strip, and it recently acquired the rights to build Singapore's first casino-resort. Another top performer was Boeing, which builds commercial and military aircraft. A steady climber for most of the year, the company may profit from setbacks at one of its competitors. Management has been cutting costs and strengthening operations, and the stock remains in the portfolio. One of the fund's small-cap holdings, Reliance Steel & Aluminum, was also among its top performers, rising in value on strong demand for steel and positive sentiment following a stock split. It weakened toward the end of the period, but not enough to erase its strong start for the year. DISAPPOINTMENTS INCLUDED COMPUTER AND MEDICAL TECHNOLOGY COMPANIES Disappointments during the period included Intel, which issued a negative earnings announcement on declining market share in the competitive world of computer chips. Although we trimmed the position shortly after the end of the period, Intel is still a substantial holding because we believe it is modestly valued, with decent earnings quality, in a sector where many stocks appear over-priced. We also continue to hold Amgen, even though projected sales of its new cancer drug were tempered when another company launched a competing medication. We believe Amgen is reasonably valued for a biotech stock, with good profitability and favorable analyst sentiment. ENERGY, BASIC INDUSTRIES, REMAIN POSITIVE Going forward, we believe investors are likely to focus on attractively valued stocks. We continue to like the energy and basic industries sectors as well as transportation, but we are less positive about technology over the near term. 17 WESTPEAK CAPITAL GROWTH FUND Investment Results through June 30, 2006 - -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/6/ [CHART] June 30, 1996 through June 30, 2006 Russell 1000 Class A Growth @ M.S.C. Index Cumulative Cumulative Cumulative Month End Value Value Value - ---------- ---------- ---------- ------------ 6/30/1996 10,000 9,425 10,000 7/31/1996 9,311 8,776 9,414 8/31/1996 9,665 9,109 9,657 9/30/1996 10,467 9,865 10,360 10/31/1996 10,462 9,860 10,423 11/30/1996 10,983 10,351 11,205 12/31/1996 10,598 9,989 10,986 1/31/1997 11,198 10,554 11,756 2/28/1997 10,890 10,264 11,677 3/31/1997 10,077 9,497 11,045 4/30/1997 10,511 9,907 11,778 5/31/1997 11,435 10,777 12,628 6/30/1997 11,754 11,078 13,134 7/31/1997 12,579 11,856 14,295 8/31/1997 12,002 11,312 13,459 9/30/1997 12,364 11,653 14,121 10/31/1997 11,865 11,183 13,599 11/30/1997 12,176 11,475 14,177 12/31/1997 12,425 11,711 14,335 1/31/1998 12,525 11,804 14,764 2/28/1998 13,384 12,614 15,875 3/31/1998 13,982 13,178 16,507 4/30/1998 14,231 13,413 16,736 5/31/1998 13,888 13,089 16,261 6/30/1998 14,610 13,770 17,257 7/31/1998 14,473 13,641 17,143 8/31/1998 12,175 11,474 14,570 9/30/1998 12,905 12,163 15,689 10/31/1998 13,848 13,052 16,950 11/30/1998 14,679 13,835 18,240 12/31/1998 16,036 15,114 19,884 1/31/1999 16,842 15,874 21,052 2/28/1999 15,896 14,982 20,090 3/31/1999 16,245 15,311 21,148 4/30/1999 16,564 15,611 21,175 5/31/1999 16,261 15,326 20,524 6/30/1999 17,122 16,138 21,962 7/31/1999 16,742 15,780 21,264 8/31/1999 16,890 15,919 21,611 9/30/1999 16,643 15,686 21,157 10/31/1999 17,803 16,779 22,755 11/30/1999 18,332 17,278 23,983 12/31/1999 20,004 18,854 26,477 1/31/2000 18,876 17,790 25,236 2/29/2000 19,663 18,532 26,470 3/31/2000 21,238 20,016 28,364 4/30/2000 20,607 19,422 27,014 5/31/2000 19,645 18,515 25,654 6/30/2000 20,939 19,735 27,598 7/31/2000 20,397 19,224 26,448 8/31/2000 21,992 20,727 28,843 9/30/2000 19,960 18,812 26,114 10/31/2000 19,267 18,159 24,878 11/30/2000 16,668 15,710 21,211 12/31/2000 16,096 15,171 20,540 1/31/2001 16,867 15,897 21,959 2/28/2001 14,577 13,739 18,231 3/31/2001 13,217 12,457 16,247 4/30/2001 15,004 14,141 18,302 5/31/2001 14,833 13,980 18,033 6/30/2001 14,601 13,762 17,615 7/31/2001 13,830 13,035 17,175 8/31/2001 12,717 11,986 15,770 9/30/2001 11,411 10,755 14,196 10/31/2001 11,936 11,249 14,941 11/30/2001 12,974 12,228 16,376 12/31/2001 12,803 12,067 16,345 1/31/2002 12,749 12,016 16,056 2/28/2002 12,288 11,581 15,390 3/31/2002 12,707 11,976 15,922 4/30/2002 11,999 11,309 14,623 5/31/2002 11,741 11,066 14,269 6/30/2002 10,775 10,155 12,949 7/31/2002 9,937 9,366 12,237 8/31/2002 9,948 9,376 12,274 9/30/2002 8,897 8,385 11,001 10/31/2002 9,541 8,992 12,010 11/30/2002 9,852 9,286 12,662 12/31/2002 9,208 8,678 11,787 1/31/2003 8,972 8,456 11,501 2/28/2003 9,015 8,497 11,449 3/31/2003 9,197 8,668 11,662 4/30/2003 9,733 9,174 12,524 5/31/2003 10,270 9,679 13,149 6/30/2003 10,366 9,770 13,330 7/31/2003 10,506 9,902 13,662 8/31/2003 10,635 10,024 14,002 9/30/2003 10,678 10,064 13,852 10/31/2003 11,193 10,549 14,630 11/30/2003 11,321 10,670 14,783 12/31/2003 11,664 10,994 15,294 1/31/2004 11,836 11,155 15,606 2/29/2004 11,836 11,155 15,706 3/31/2004 11,622 10,953 15,414 4/30/2004 11,364 10,710 15,235 5/31/2004 11,567 10,902 15,519 6/30/2004 11,717 11,044 15,713 7/31/2004 11,181 10,538 14,825 8/31/2004 11,169 10,527 14,751 9/30/2004 11,234 10,588 14,892 10/31/2004 11,492 10,831 15,124 11/30/2004 11,921 11,236 15,644 12/31/2004 12,265 11,559 16,258 1/31/2005 11,910 11,225 15,715 2/28/2005 12,007 11,316 15,883 3/31/2005 11,685 11,013 15,593 4/30/2005 11,428 10,771 15,296 5/31/2005 12,051 11,358 16,036 6/30/2005 12,201 11,500 15,977 7/31/2005 12,824 12,086 16,758 8/31/2005 12,588 11,864 16,542 9/30/2005 12,630 11,904 16,619 10/31/2005 12,298 11,591 16,457 11/30/2005 12,857 12,117 17,167 12/31/2005 12,674 11,945 17,113 1/31/2006 13,092 12,339 17,414 2/28/2006 13,071 12,320 17,386 3/31/2006 13,350 12,582 17,643 4/30/2006 13,360 12,592 17,619 5/31/2006 12,791 12,056 17,022 6/30/2006 12,860 12,121 16,954 Average Annual Total Returns -- June 30, 2006
6 MONTHS/6/ 1 YEAR/6/ 5 YEARS/6/ 10 YEARS/6/ CLASS A (Inception 8/3/92) Net Asset Value/1/ 1.44% 5.37% -2.51% 2.55% With Maximum Sales Charge/2/ -4.39 -0.66 -3.66 1.94 CLASS B (Inception 9/13/93) Net Asset Value/1/ 1.08 4.67 -3.23 1.74 With CDSC/3/ -3.92 -0.33 -3.62 1.74 CLASS C (Inception 12/30/94) Net Asset Value/1/ 1.08 4.68 -3.26 1.73 With CDSC/3/ 0.08 3.68 -3.26 1.73 - ---------------------------------------------------------------------------------- COMPARATIVE PERFORMANCE 6 MONTHS 1 YEAR 5 YEARS 10 YEARS Russell 1000 Growth Index/4/ -0.93% 6.12% -0.76% 5.42% Morningstar Large Growth Fund Avg./5/ -1.34 6.83 -0.56 5.68
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.ixisadvisorfunds.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 6/30/06 12/31/05 - ----------------------------------------------------------- Common Stocks 99.6 99.1 - ----------------------------------------------------------- Short-Term Investments and Other 0.4 0.9 - ----------------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 6/30/06 12/31/05 - ----------------------------------------------------------- Microsoft Corp. 5.1 5.7 - ----------------------------------------------------------- Intel Corp. 3.9 3.9 - ----------------------------------------------------------- Amgen, Inc. 3.2 3.1 - ----------------------------------------------------------- International Business Machines Corp. 3.2 3.0 - ----------------------------------------------------------- Boeing Co. (The) 3.0 2.9 - ----------------------------------------------------------- Cisco Systems, Inc. 2.9 2.7 - ----------------------------------------------------------- American Express Co. 2.9 2.9 - ----------------------------------------------------------- Texas Instruments, Inc. 2.6 2.8 - ----------------------------------------------------------- General Electric Co. 2.5 2.9 - ----------------------------------------------------------- Lowes Cos., Inc. 2.5 -- - ----------------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 6/30/06 12/31/05 - ----------------------------------------------------------- Retail 7.8 4.1 - ----------------------------------------------------------- Semiconductors 7.1 6.7 - ----------------------------------------------------------- Software 6.8 10.3 - ----------------------------------------------------------- Oil & Gas 5.9 4.6 - ----------------------------------------------------------- Aerospace & Defense 5.3 4.2 - -----------------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 1000 Growth Index is an unmanaged index of the 1,000 largest U.S. companies within the Russell 3000 Index, with higher price-to-book ratios and higher forecasted growth values. /5/Morningstar Large Growth Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/Fund performance has been increased by expense waivers/reimbursements, without which performance would have been lower. 18 ADDITIONAL INFORMATION The views expressed in this report reflect those of the portfolio managers as of the dates indicated. The managers' views are subject to change at any time without notice based on changes in market or other conditions. References to specific securities or industries should not be regarded as investment advice. Because the funds are actively managed, there is no assurance that they will continue to invest in the securities or industries mentioned. For more complete information on any IXIS Advisor Fund, contact your financial professional or call IXIS Advisor Funds and ask for a free prospectus, which contains more complete information, including charges and other ongoing expenses. Investors should consider a fund's objective, risks and expenses carefully before investing. This and other fund information can be found in the prospectus. Please read the prospectus carefully before investing. PROXY VOTING INFORMATION A description of the funds' proxy voting policies and procedures is available without charge, upon request, by calling IXIS Advisor Funds at 1-800-225-5478; on the funds' website at www.ixisadvisorfunds.com; and on the Securities and Exchange Commission's (SEC) website at www.sec.gov. Information regarding how the funds voted proxies relating to portfolio securities during the 12-month period ended June 30, 2006 is available from the funds' website and the SEC's website. QUARTERLY PORTFOLIO SCHEDULES The funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE 19 UNDERSTANDING FUND EXPENSES As a mutual fund shareholder, you incur different costs: transaction costs, including sales charges (loads) on purchases, redemption fees and certain exchange fees and ongoing costs, including management fees, distribution fees (12b-1 fees), and other fund expenses. In addition, each fund assesses a minimum balance fee of $20 on an annual basis for accounts that fall below the required minimum to establish an account. Certain exemptions may apply. These costs are described in more detail in the funds' prospectus. The examples below are intended to help you understand the ongoing costs of investing in the funds and help you compare these with the ongoing costs of investing in other mutual funds. The first line in the table of each Class of fund shares shows the actual account values and actual fund expenses you would have paid on a $1,000 investment in the fund from January 1, 2006 through June 30, 2006. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example $8,600 account value divided by $1,000 = 8.60) and multiply the result by the number in the Expenses Paid During Period column as shown below for your Class. The second line in the table of each Class of fund shares provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid on your investment for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown reflect ongoing costs only, and do not include any transaction costs, such as sales charges, redemption fees or exchange fees. Therefore, the second line in the table of each fund is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. If transaction costs were included, total costs would be higher.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* CGM ADVISOR TARGETED EQUITY FUND 1/1/06 6/30/06 1/1/06 - 6/30/06 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,044.10 $6.13 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,018.79 $6.06 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,041.20 $9.92 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,015.08 $9.79 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,041.20 $9.92 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,015.08 $9.79 - ------------------------------------------------------------------------------------------------------------------ CLASS Y - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,046.10 $4.57 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,020.33 $4.51
*Expenses are equal to the fund's annualized expense ratio: 1.21%, 1.96%, 1.96% and 0.90% for Class A, B, C and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 20 UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HANSBERGER INTERNATIONAL FUND 1/1/06 6/30/06 1/1/06 - 6/30/06 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,079.50 $8.25 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,016.86 $8.00 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,075.60 $12.09 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.14 $11.73 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,075.60 $12.09 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.14 $11.73
*Expenses are equal to the fund's annualized expense ratio : 1.60%, 2.35% and 2.35% for Class A, B, and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HARRIS ASSOCIATES FOCUSED VALUE FUND 1/1/06 6/30/06 1/1/06 - 6/30/06 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $999.30 $8.08 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,016.71 $8.15 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $995.80 $11.78 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,012.99 $11.88 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $995.80 $11.78 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,012.99 $11.88
*Expenses are equal to the fund's annualized expense ratio : 1.63%, 2.38% and 2.38% for Class A, B, and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 21 UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HARRIS ASSOCIATES LARGE CAP VALUE FUND 1/1/06 6/30/06 1/1/06 - 6/30/06 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,009.30 $6.48 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,018.35 $6.51 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,005.10 $10.19 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,014.63 $10.24 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,005.10 $10.19 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,014.63 $10.24 - ------------------------------------------------------------------------------------------------------------------ CLASS Y - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,010.50 $5.23 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,019.59 $5.26
*Expenses are equal to the fund's annualized expense ratio (after waiver/reimbursement): 1.30%, 2.05%, 2.05% and 1.05% for Class A, B, C and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* IXIS U.S. DIVERSIFIED PORTFOLIO 1/1/06 6/30/06 1/1/06 - 6/30/06 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,047.10 $7.92 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,017.06 $7.80 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,043.30 $11.70 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.34 $11.53 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,043.30 $11.70 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.34 $11.53 - ------------------------------------------------------------------------------------------------------------------ CLASS Y - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,048.60 $5.94 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,018.99 $5.86
*Expenses are equal to the fund's annualized expense ratio: 1.56%, 2.31%, 2.31% and 1.17% for Class A, B, C and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 22 UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* IXIS VALUE FUND 1/1/06 6/30/06 1/1/06 - 6/30/06 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,045.00 $7.50 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,017.46 $7.40 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,039.20 $11.28 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.74 $11.13 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,040.60 $11.28 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.74 $11.13
*Expenses are equal to the fund's annualized expense ratio : 1.48%, 2.23% and 2.23% for Class A, B and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* VAUGHAN NELSON SMALL CAP VALUE FUND 1/1/06 6/30/06 1/1/06 - 6/30/06 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,089.90 $8.81 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,016.36 $8.50 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,086.20 $12.72 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,012.60 $12.28 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,086.10 $12.67 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,012.65 $12.23
*Expenses are equal to the fund's annualized expense ratio (after waiver/reimbursement): 1.70%, 2.46% and 2.45% for Class A, B and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 23 UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* WESTPEAK CAPITAL GROWTH FUND 1/1/06 6/30/06 1/1/06 - 6/30/06 - ------------------------------------------------------------------------------------------------------------------ CLASS A - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,014.40 $8.54 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,016.31 $8.55 - ------------------------------------------------------------------------------------------------------------------ CLASS B - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,010.80 $12.26 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,012.60 $12.28 - ------------------------------------------------------------------------------------------------------------------ CLASS C - ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,010.80 $12.26 - ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,012.60 $12.28
*Expenses are equal to the fund's annualized expense ratio (after waiver/reimbursement): 1.71%, 2.46% and 2.46% for Class A, B and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year divided by 365 (to reflect the half-year period). 24 BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS The Board of Trustees, including the Independent Trustees, considers matters bearing on each Fund's advisory and sub-advisory agreements (collectively, the "Agreements") at most of its meetings throughout the year. Once a year, usually in the spring, the Contract Review and Governance Committee of the Board meets to review the Agreements to determine whether to recommend that the full Board approve the continuation of the Agreements for an additional one-year period. After the Committee has made its recommendation, the full Board, including the Independent Trustees, determines whether to approve the continuation of the Agreements. In connection with these meetings, the Trustees receive materials that the Funds' investment advisers believe to be reasonably necessary for the Trustees to evaluate the Agreements. These materials generally include, among other items, (i) information on the investment performance of the Funds and the performance of peer groups of funds and the Funds' performance benchmarks, (ii) information on the Funds' advisory and sub-advisory fees, if any, and other expenses, including information comparing the Funds' expenses to those of peer groups of funds and information about any applicable expense caps and fee "breakpoints," (iii) sales and redemption data in respect of the Funds, (iv) information about the profitability of the Agreements to the Funds' advisers and sub-advisers (collectively, the "Advisers"), and (v) information obtained through the completion of a questionnaire by the Advisers (the Trustees are consulted as to the information requested through that questionnaire). The Board of Trustees, including the Independent Trustees, also consider other matters such as (i) each Adviser's financial results and financial condition, (ii) each Fund's investment objective and strategies and the size, education and experience of the Advisers' respective investment staffs and their use of technology, external research and trading cost measurement tools, (iii) arrangements in respect of the distribution of the Funds' shares, (iv) the procedures employed to determine the value of the Funds' assets, (v) the allocation of the Funds' brokerage, if any, including allocations to brokers affiliated with the Advisers and the use of "soft" commission dollars to pay Fund expenses and to pay for research and other similar services, (vii) the resources devoted to, and the record of compliance with, the Funds' investment policies and restrictions, policies on personal securities transactions and other compliance policies, and (viii) the general economic outlook with particular emphasis on the mutual fund industry. Throughout the process, the Trustees are afforded the opportunity to ask questions of and request additional materials from the Advisers. The Board of Trustees most recently approved the continuation of the Agreements at their meeting held in May, 2006. In considering whether to approve the continuation of the Agreements, the Board of Trustees, including the Independent Trustees, did not identify any single factor as determinative. Matters considered by the Trustees, including the Independent Trustees, in connection with their approval of the Agreements included the following: The nature, extent and quality of the services provided to the Funds under the Agreements. The Trustees considered the nature, extent and quality of the services provided by the Advisers and their affiliates to the Funds and the resources dedicated to the Funds by the Advisers and their affiliates, including recent or planned investments by certain of the Advisers in additional personnel or other resources. They also took note of the competitive market for talented personnel, in particular, for personnel who have contributed to the generation of strong investment performance. They also considered the need for the Advisers to offer competitive compensation in order to attract and retain capable personnel. The Trustees considered not only the advisory services provided by the Advisers to the Funds, but also the monitoring and oversight services provided by IXIS Advisors with respect to sub-advised Funds and the Funds for which IXIS Advisors provides advisory oversight services. In particular, the Trustees noted that IXIS Advisors had over the past year (i) recommended changes in certain of the Funds' advisory arrangements as a result of performance-related issues, and (ii) negotiated changes to the Funds' transfer agency and custodial arrangements, resulting in significant cost savings for the Funds. The Trustees also noted that some of these changes had resulted in increases in costs or decreases in revenues for IXIS Advisors and its affiliates. They also considered the administrative services provided by IXIS Advisors and its affiliates to the Funds. For each Fund, the Trustees also considered the benefits to shareholders of investing in a mutual fund that is part of a family of funds offering a variety of investment disciplines and providing for a variety of fund and shareholder services. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the nature, extent and quality of services provided supported the renewal of the Agreements. Investment performance of the Funds and the Advisers. As noted above, the Trustees received information about the performance of the Funds over various time periods, including information which compared the performance of the Funds to the performance of peer groups of funds and the Funds' respective performance benchmarks. In addition, the Trustees also reviewed data prepared by an independent third party which analyzed the performance of the Funds using a variety of performance metrics, including metrics which also measured the performance of the Funds on a risk adjusted basis. 25 BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS With respect to each Fund, the Board concluded that the Fund's performance or other relevant factors supported the renewal of the Agreement(s) relating to that Fund. In the case of each Fund that had performance that lagged that of a relevant peer group for certain (although not necessarily all) periods, the Board concluded that other factors relevant to performance supported renewal of the Funds' Agreements. These factors varied from Fund to Fund, but included one or more of the following: (1) that the Fund's performance, although lagging in certain recent periods, was strong over the longer term; (2) that the underperformance was attributable, to a significant extent, to investment decisions by the Fund's Advisers that were reasonable and consistent with the Fund's investment objective and policies; (3) that the Fund's performance was competitive when compared to other relevant performance benchmarks or peer groups; (4) that the Fund's advisory fee had recently been, or is proposed to be, reduced or the Fund's expenses capped, with the goal of helping the Fund's net return to shareholders become more competitive; and (5) that reductions in the Fund's expense levels resulting from decreased expenses and/or increased assets were not yet fully reflected in the Fund's performance results. The Trustees also considered each Adviser's performance and reputation generally, the Funds' performance as a fund family generally, and the historical responsiveness of the Advisers to Trustee concerns about performance and the willingness of the Advisers to take steps intended to improve performance. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the performance of the Funds and the Advisers supported the renewal of the Agreements. The costs of the services to be provided and profits to be realized by the Advisers and their affiliates from their respective relationships with the Funds. The Trustees considered the fees charged to the Funds for advisory and sub-advisory services as well as the total expense levels of the Funds. This information included comparisons (provided both by management and also by an independent third party) of the Funds' advisory fees and total expense levels to those of their peer groups and information about the advisory fees charged by the Advisers to comparable accounts. In considering the fees charged to comparable accounts, the Trustees considered, among other things, management's representations about the differences between managing mutual funds as compared to other types of accounts, including the additional resources required to effectively manage mutual fund assets. In evaluating each Fund's advisory and sub-advisory fees, the Trustees also took into account the demands, complexity and quality of the investment management of such Fund. The Trustees considered that over the past several years, management had made recommendations regarding reductions in advisory fee rates, implementation of advisory fee breakpoints and the institution of advisory fee waivers and expense caps. They noted that currently four of the eight IXIS Advisor Equity Funds in this report have expense caps in place, and they considered the amounts waived or reimbursed by the Advisers under these caps. The Trustees noted that several Funds had total expense ratios or advisory fee rates that were above the median of a peer group of Funds. The Trustees considered the circumstances that accounted for such relatively higher expenses. The Trustees noted that for several of these Funds, the relatively higher expense ratios resulted to a significant extent from relatively higher transfer agency expenses. The Trustees also noted that management was proposing a reduction in the advisory fee for the Harris Associates Focused Value Fund. The Trustees also considered the compensation directly or indirectly received by the Advisers and their affiliates from their relationships with the Funds. The Trustees reviewed information provided by management as to the profitability of the Advisers' and their affiliates' relationships with the Funds, and information about the allocation of expenses used to calculate profitability. In this regard, the Funds, at the request of the Independent Trustees, retained an independent accounting firm to review the cost allocation methods used by several of the Advisers to determine profitability, and engaged in extensive discussions with the Advisers regarding such methods and Adviser profitability generally. The Trustees also considered that IXIS Advisors had proposed changes to the Funds' transfer agency and custodial arrangements which, although beneficial to the Funds, had resulted in increased costs and/or decreased revenues to IXIS Advisors. They also reviewed information provided by management about the effect of distribution costs and Fund growth on Adviser profitability. When reviewing profitability, the Trustees also considered information about court cases in which adviser profitability was an issue, the performance of the relevant Funds, the expense levels of the Funds, and whether the Advisers had implemented breakpoints and/or expense caps with respect to such Funds. After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the advisory fees charged to each of the Funds were fair and reasonable, and that the costs of these services generally and the related profitability of the Advisers and their affiliates in respect of their relationships with the Funds supported the renewal of the Agreements. 26 BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS Economies of Scale. The Trustees considered the existence of any economies of scale in the provision of services by the Advisers and whether those economies are shared with the Funds through breakpoints in their investment advisory fees or other means, such as expense waivers. The Trustees noted that seven Funds had breakpoints in their advisory fees and that the remaining Fund, was subject to an expense cap. The Trustees also noted that management's proposed reduction in the advisory fee for Harris Associates Focused Value Fund would result in a fee structure without any breakpoints but that the advisory fees would be payable at a lower rate than under the former arrangements, even after giving effect to the former breakpoints and the Fund would be subject to an expense cap. The Trustees also considered management's representation that for certain Funds the Funds' Advisers did not benefit from economies of scale in providing services to the Funds (because of the investment style of the Fund, the small size of the Fund or for other reasons) or were capacity constrained with respect to the relevant investment strategy. In considering these issues, the Trustees also took note of the costs of the services provided (both on an absolute and a relative basis) and the profitability to the Advisers and their affiliates of their relationships with the Funds, as discussed above. After reviewing these and related factors, the Trustees considered, within the context of their overall conclusions regarding each of the Agreements, that the extent to which economies of scale were shared with the Funds supported the renewal of the Agreements. The Trustees also considered other factors, which included but were not limited to the following: .. whether each Fund has operated in accordance with its investment objective and the Fund's record of compliance with its investment restrictions, and the compliance programs of the Funds and the Advisers. They also considered the compliance related resources the Advisers and their affiliates were providing to the Funds. .. the nature, quality, cost and extent of administrative and shareholder services performed by the Advisers and their affiliates, both under the Agreements and under separate agreements covering transfer agency and administrative services. .. so-called "fallout benefits" to the Advisers, such as the engagement of affiliates of the Advisers to provide distribution and brokerage services to the Funds, and the benefits of research made available to the Advisers by reason of brokerage commissions generated by the Funds' securities transactions. The Trustees also considered the fact that IXIS Advisors' parent company benefits from the retention of affiliated Advisers. The Trustees considered the possible conflicts of interest associated with these fallout and other benefits, and the reporting, disclosure and other processes in place to disclose and monitor such possible conflicts of interest Based on their evaluation of all factors that they deemed to be material, including those factors described above, and assisted by the advice of independent counsel, the Trustees, including the Independent Trustees, concluded that each of the existing advisory and sub-advisory agreements should be continued through June 30, 2007. 27 CGM ADVISOR TARGETED EQUITY FUND -- PORTFOLIO OF INVESTMENTS Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------------- Common Stocks -- 99.4% of Net Assets Aerospace & Defense -- 9.6% 475,000 Boeing Co. (The) $ 38,907,250 540,000 United Technologies Corp. 34,246,800 --------------- 73,154,050 --------------- Auto Manufacturers -- 5.3% 385,000 Toyota Motor Corp.(c) 40,267,150 --------------- Computers -- 4.0% 960,000 Hewlett-Packard Co. 30,412,800 --------------- Cosmetics & Personal Care -- 5.1% 700,000 Procter & Gamble Co. 38,920,000 --------------- Mining -- 5.2% 190,000 Rio Tinto PLC, Sponsored ADR(c) 39,844,900 --------------- Miscellaneous -- Manufacturing -- 4.1% 390,600 3M Co. 31,548,762 --------------- Oil & Gas -- 24.7% 630,000 BP PLC, Sponsored ADR 43,854,300 640,000 ConocoPhillips 41,939,200 630,000 Exxon Mobil Corp. 38,650,500 165,000 Petroleo Brasileiro SA, ADR 14,736,150 748,000 Total SA, Sponsored ADR 49,008,960 --------------- 188,189,110 --------------- Oil & Gas Services -- 17.2% 459,000 Baker Hughes, Inc. 37,569,150 555,000 Halliburton Co. 41,186,550 800,000 Schlumberger, Ltd.(c) 52,088,000 --------------- 130,843,700 --------------- Pharmaceuticals -- 3.7% 630,000 Wyeth Corp. 27,978,300 --------------- Retail -- 9.5% 1,330,000 CVS Corp. 40,831,000 460,000 JC Penney Co., Inc. 31,054,600 --------------- 71,885,600 --------------- Tobacco -- 5.5% 568,000 Altria Group, Inc. 41,708,240 --------------- Transportation -- 5.5% 450,000 Union Pacific Corp. 41,832,000 --------------- Total Common Stocks (Identified Cost $646,441,711) 756,584,612 ---------------
Principal Amount/ Shares Description Value (a) - ------------------------------------------------------------------------------------------------------ Short-Term Investments -- 3.0% $ 5,675,000 American Express Credit Corp., 5.10%, due 7/03/2006 $ 5,675,000 16,743,644 State Street Securities Lending Quality Trust(d) 16,743,644 --------------- Total Short-Term Investments (Identified Cost $22,418,644) 22,418,644 --------------- Total Investments -- 102.4% (Identified Cost $668,860,355)(b) 779,003,256 Other assets less liabilities -- (2.4)% (17,994,745) --------------- Net Assets -- 100% $ 761,008,511 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales.): At June 30, 2006, the net unrealized appreciation on investments based on cost of $668,860,355 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value of tax cost $ 113,729,767 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (3,586,866) --------------- Net unrealized appreciation $ 110,142,901 =============== (c) All or a portion of this security was on loan to brokers at June 30, 2006. (d) Represents investment of securities lending collateral. ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States.
Holdings at June 30, 2006 as a Percentage of Net Assets Oil & Gas 24.7% Oil & Gas Services 17.2 Aerospace & Defense 9.6 Retail 9.5 Transportation 5.5 Tobacco 5.5 Auto Manufacturers 5.3 Mining 5.2 Cosmetics & Personal Care 5.1 Miscellaneous -- Manufacturing 4.1 Computers 4.0 Pharmaceuticals 3.7
See accompanying notes to financial statements. 28 HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - -------------------------------------------------------------------------------------- Common Stocks -- 99.2% of Net Assets Australia -- 2.1% 148,000 Computershare, Ltd.(d) $ 863,334 65,778 Westpac Banking Corp. 1,137,918 37,097 Woodside Petroleum, Ltd. 1,212,938 --------------- 3,214,190 --------------- Austria -- 0.6% 16,460 Erste Bank Der Oesterreichischen Sparkassen AG(d) 926,339 --------------- Belgium -- 0.7% 20,400 InBev NV 1,000,652 --------------- Brazil -- 2.5% 16,700 Aracruz Celulose SA(d) 875,414 46,800 Cia Vale do Rio Doce, Sponsored ADR(d) 963,144 20,400 Companhia Energetica de Minas Gerais, Sponsored ADR(d) 869,244 12,860 Petroleo Brasileiro SA, ADR(d) 1,148,527 --------------- 3,856,329 --------------- Canada -- 3.8% 25,200 Alcan, Inc. 1,182,888 21,300 Cameco Corp.(d) 851,361 69,416 Celestica, Inc.(c)(d) 662,229 15,000 Inco, Ltd.(d) 988,500 34,000 Manulife Financial Corp.(d) 1,080,180 14,055 Suncor Energy, Inc. 1,138,595 --------------- 5,903,753 --------------- China -- 2.3% 1,500,000 China Petroleum & Chemical Corp., Class A 859,483 2,204,410 Denway Motors, Ltd. 737,992 517,000 Foxconn International Holdings, Ltd.(c) 1,101,728 1,050,000 Yanzhou Coal Mining Co., Ltd. 777,397 --------------- 3,476,600 --------------- Denmark -- 1.1% 59,800 Vestas Wind Systems A/S(c)(d) 1,635,519 --------------- Finland -- 1.0% 36,480 Nokia OYJ 744,690 56,680 Nokian Renkaat OYJ 745,265 --------------- 1,489,955 --------------- France -- 11.1% 468 Arkema, Sponsored ADR(c) 18,100 29,920 Axa(c)(d) 981,987 13,830 BNP Paribas(d) 1,324,042 26,780 Carrefour SA(d) 1,570,156 7,941 Cie Generale d'Optique Essilor International SA(d) 799,351 32,000 Credit Agricole SA(d) 1,217,656 50,700 France Telecom SA(d) 1,090,092 8,109 LVMH Moet Hennessy Louis Vuitton SA 804,853 18,230 Schneider Electric SA(d) 1,900,343 45,400 STMicroelectronics NV(d) 731,087 19,340 Suez SA(d) 803,947 17,853 Technip SA 988,751 18,560 Total SA 1,221,381 18,800 Total SA, Sponsored ADR 1,231,776 18,800 Veolia Environnement(d) 971,705 36,700 Vivendi(d) 1,286,187 --------------- 16,941,414 ---------------
Shares Description Value (a) - -------------------------------------------------------------------------------------- Germany -- 4.2% 34,600 Adidas-Salomon AG(d) $ 1,654,257 5,015 Allianz AG 792,311 11,010 E.ON AG 1,267,693 9,800 RWE AG, Sponsored ADR(d) 815,382 15,700 SAP AG, Sponsored ADR(d) 824,564 13,348 Siemens AG 1,161,460 --------------- 6,515,667 --------------- Greece -- 0.4% 27,300 Folli-Follie SA 638,302 --------------- Hong Kong -- 2.4% 184,400 Esprit Holdings, Ltd. 1,507,719 64,950 Hutchison Whampoa, Ltd. 592,104 967,730 Johnson Electric Holdings, Ltd. 704,026 426,217 Shangri-La Asia, Ltd. 820,461 --------------- 3,624,310 --------------- India -- 1.4% 15,100 HDFC Bank, Ltd., ADR(d) 823,705 11,600 Infosys Technologies, Ltd., Sponsored ADR(d) 886,356 34,800 Patni Computer Systems, Ltd., ADR 496,944 --------------- 2,207,005 --------------- Israel -- 0.9% 34,700 Check Point Software Technologies, Ltd.(c) 610,026 24,800 Teva Pharmaceutical Industries, Ltd., Sponsored ADR(d) 783,432 --------------- 1,393,458 --------------- Italy -- 3.2% 42,420 ENI-Ente Nazionale Idrocarburi SpA 1,249,546 28,340 Saipem SpA(d) 644,857 383,000 UniCredito Italiano SpA 2,998,043 --------------- 4,892,446 --------------- Japan -- 18.7% 88,000 Ajinomoto Co., Inc., ADR 974,275 62,000 Asahi Glass Co., Ltd.(d) 786,106 106,000 Bank of Yokohama, Ltd. (The) 819,731 24,300 Canon, Inc.(d) 1,191,218 53,000 Chugoku Bank 722,475 44,700 Denso Corp. 1,460,835 20,200 Ibiden Co., Ltd.(d) 970,814 216,000 Isuzu Motors, Ltd.(d) 700,245 147,000 Joyo Bank, Ltd. (The)(d) 891,454 40,400 JS Group Corp. 849,021 161 KDDI Corp. 989,016 148,000 Marubeni Corp. 788,885 16,500 Nidec Corp.(d) 1,182,279 7,400 Nintendo Co., Ltd. 1,241,524 76,400 Nissan Motor Co., Ltd. 834,498 15,900 Nitto Denko Corp.(d) 1,132,340 49,000 Nomura Holdings, Inc.(d) 918,429 7,430 ORIX Corp. 1,814,650 77,000 Sharp Corp.(d) 1,216,498 65,000 Shionogi & Co., Ltd.(d) 1,158,686 8,800 SMC Corp. 1,244,949 61,000 Sumitomo Corp. 804,343 125 Sumitomo Mitsui Financial Group, Inc. 1,321,653 137,000 Sumitomo Trust & Banking Co., Ltd. (The) 1,496,417
See accompanying notes to financial statements. 29 HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ----------------------------------------------------------------------- Japan -- continued 16,100 Takeda Pharmaceutical Co., Ltd. $ 1,001,678 39,500 THK Co., Ltd.(d) 1,176,992 17,200 Toyota Motor Corp. 900,280 --------------- 28,589,291 --------------- Mexico -- 1.1% 13,500 Cemex SA De CV, Sponsored ADR 769,095 30,576 Wal-Mart de Mexico SA de CV(d) 851,554 --------------- 1,620,649 --------------- Netherlands -- 2.2% 28,761 ABN AMRO Holding NV 786,869 28,328 ING Groep NV 1,113,438 25,200 Koninklijke (Royal) Philips Electronics NV 784,728 17,300 Royal Numico NV 776,457 --------------- 3,461,492 --------------- Norway -- 0.4% 42,000 Norske Skogindustrier ASA(d) 615,673 --------------- Republic of Korea -- 2.2% 10,500 Kookmin Bank, Sponsored ADR(c) 872,130 1,300 Samsung Electronics Co., Ltd. 826,245 2,574 Samsung Electronics Co., Ltd., GDR, 144A 808,880 1,840 Shinsegae Co., Ltd. 921,212 --------------- 3,428,467 --------------- Russia -- 0.8% 21,400 Evraz Group SA, GDR 533,930 8,800 LUKOIL, Sponsored ADR 732,160 --------------- 1,266,090 --------------- Singapore -- 2.2% 198,140 DBS Group Holdings, Ltd. 2,265,745 116,000 Keppel Corp., Ltd. 1,077,297 --------------- 3,343,042 --------------- South Africa -- 0.2% 9,800 Sasol, Ltd. 375,872 --------------- Spain -- 3.8% 88,400 Banco Bilbao Vizcaya Argentaria SA(d) 1,818,134 127,525 Banco Santander Central Hispano SA 1,862,727 124,754 Telefonica SA 2,077,558 --------------- 5,758,419 --------------- Sweden -- 1.1% 76,000 Eniro AB(d) 799,944 36,200 Svenska Handelsbanken(d) 933,074 --------------- 1,733,018 --------------- Switzerland -- 9.4% 12,400 Ciba Specialty Chemicals AG 691,227 30,601 Credit Suisse Group(d) 1,712,084 15,100 Holcim, Ltd., ADR 1,157,311 14,580 Lonza Group AG 999,986 5,748 Nestle SA(d) 1,805,433 53,810 Novartis AG(d) 2,913,764 8,640 Roche Holding AG 1,428,280 1,300 Serono SA, Class B(d) 898,000 8,634 Syngenta AG(c) 1,147,622 7,038 Synthes, Inc. 849,131 7,290 UBS AG 799,035 --------------- 14,401,873 ---------------
Shares Description Value (a) - ------------------------------------------------------------------------------------------------------ Taiwan -- 1.0% 430,589 Taiwan Semiconductor Manufacturing Co., Ltd. $ 776,662 87,960 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR 807,475 --------------- 1,584,137 --------------- United Kingdom -- 18.4% 556,839 ARM Holdings PLC 1,166,144 23,000 AstraZeneca PLC 1,388,232 114,318 Barclays PLC 1,299,035 89,411 BHP Billiton PLC 1,734,405 57,939 BP PLC 675,523 16,400 BP PLC, Sponsored ADR 1,141,604 241,924 British Sky Broadcasting PLC 2,565,645 21,696 Carnival Corp. 883,850 153,728 Cattles PLC 935,972 35,858 GlaxoSmithKline PLC 1,001,924 344,277 Hays PLC 859,461 115,965 HBOS PLC 2,015,761 65,200 HSBC Holdings PLC 1,141,753 194,477 Kingfisher PLC 857,711 23,500 Man Group PLC 1,107,265 281,020 Old Mutual PLC 848,349 121,303 Prudential PLC 1,370,557 22,715 Reckitt Benckiser PLC 848,493 142,000 Reuters Group PLC 1,010,958 24,098 Royal Bank of Scotland Group PLC 792,313 384,270 Signet Group PLC 682,169 215,568 Smith & Nephew PLC 1,660,288 168,884 Tesco PLC 1,043,084 512,353 Vodafone Group PLC 1,091,929 --------------- 28,122,425 --------------- Total Common Stocks (Identified Cost $125,246,361) 152,016,387 --------------- Shares/ Principal Amount - ------------------------------------------------------------------------------------------------------ Short-Term Investments -- 30.4% of Net Assets 45,792,193 State Street Securities Lending Quality Trust(e) 45,792,193 $ 868,993 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 6/30/2006 at 3.450% to be repurchased at $869,243 on 7/03/2006, collateralized by $795,000 U.S. Treasury Bond, 6.250% due 8/15/2023 valued at $889,055 868,993 --------------- Total Short-Term Investments (Identified Cost $46,661,186) 46,661,186 --------------- Total Investments -- 129.6% (Identified Cost $171,907,547)(b) 198,677,573 Other assets less liabilities -- (29.6)% (45,445,834) --------------- Net Assets -- 100% $ 153,231,739 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales.): At June 30, 2006, the net unrealized appreciation on investments based on cost of $171,907,547 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value of tax cost $ 29,747,137 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (2,977,111) --------------- Net unrealized appreciation $ 26,770,026 ===============
See accompanying notes to financial statements. 30 HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited) (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2006. (e) Represents investment of securities lending collateral. ADR/GDR An American Depositary Receipt (ADR) or Global Depositary Receipt (GDR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs and GDRs are significantly influenced by trading on exchanges not located in the United States. 144A Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2006, the value of these securities amounted to $808,880 or 0.5% of net assets
Holdings at June 30, 2006 as a Percentage of Net Assets Banking 19.6% Oil & Gas 7.2 Pharmaceuticals 6.9 Telecommunications 4.6 Insurance 4.0 Food 4.0 Media 3.7 Electrical Components & Equipment 3.6 Semiconductors 3.3 Diversified Financial Services 3.1 Chemicals 2.6 Retail 2.6 Hand & Machine Tools 2.3 Building Materials 2.3 Mining 2.3 Healthcare -- Products 2.2 Auto Manufacturers 2.1 Distribution & Wholesale 2.0 Others, less than 2% each 20.8
See accompanying notes to financial statements. 31 HARRIS ASSOCIATES FOCUSED VALUE FUND -- PORTFOLIO OF INVESTMENTS Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------ Common Stocks -- 94.7% of Net Assets Aerospace & Defense -- 3.8% 205,700 Raytheon Co. $ 9,168,049 --------------- Apparel -- 4.2% 276,800 Liz Claiborne, Inc. 10,258,208 --------------- Apparel Retailers -- 3.6% 340,200 Timberland Co.(c)(d) 8,879,220 --------------- Beverages -- 2.6% 92,000 Molson Coors Brewing Co. 6,244,960 --------------- Chemicals -- 2.1% 142,700 International Flavors & Fragrances, Inc. 5,028,748 --------------- Cosmetics & Personal Care -- 3.9% 246,900 Estee Lauder Co., Inc. (The) 9,547,623 --------------- Distribution & Wholesale -- 3.7% 162,900 CDW Corp. 8,902,485 --------------- Diversified Financial Services -- 3.7% 143,900 Morgan Stanley 9,095,919 --------------- Food -- 2.0% 166,300 Smithfield Foods, Inc.(c) 4,794,429 --------------- Health Care -- Products -- 1.3% 65,000 Bausch & Lomb, Inc.(d) 3,187,600 --------------- Home Builders -- 2.2% 228,100 D.R. Horton, Inc. 5,433,342 --------------- Insurance -- 4.8% 367,700 Conseco, Inc.(c) 8,493,870 49,300 PartnerRe, Ltd. 3,157,665 --------------- 11,651,535 --------------- Leisure Time -- 3.7% 162,200 Harley-Davidson, Inc. 8,903,158 --------------- Media -- 12.9% 370,700 Cablevision Systems Corp., Class A(c) 7,951,515 604,420 Discovery Holding Co.(c)(d) 8,842,664 208,800 EW Scripps Co.(d) 9,007,632 327,900 Time Warner, Inc. 5,672,670 --------------- 31,474,481 --------------- Miscellaneous -- Manufacturing -- 3.4% 297,500 Tyco International, Ltd. 8,181,250 --------------- Oil & Gas -- 0.7% 30,000 EnCana Corp. 1,579,200 --------------- Pharmaceuticals -- 3.6% 186,900 Omnicare, Inc.(d) 8,862,798 --------------- Restaurants -- 8.0% 296,600 McDonald's Corp. 9,965,760 191,500 Yum! Brands, Inc. 9,626,705 --------------- 19,592,465 --------------- Retail -- 4.0% 425,400 TJX Cos., Inc. 9,724,644 --------------- Savings & Loans -- 10.0% 399,315 Sovereign Bancorp, Inc. 8,110,088 358,900 Washington Mutual, Inc.(d) 16,358,662 --------------- 24,468,750 ---------------
Shares Description Value (a) - -------------------------------------------------------------------------------------------------- Semiconductors -- 10.5% 583,900 Intel Corp. $ 11,064,905 133,800 International Rectifier Corp.(c) 5,228,904 391,900 National Semiconductor Corp. 9,346,815 --------------- 25,640,624 --------------- Total Common Stocks (Identified Cost $212,993,888) 230,619,488 --------------- Shares/ Principal Amount - -------------------------------------------------------------------------------------------------- Short-Term Investments -- 19.8% 36,044,953 State Street Securities Lending Quality Trust(e) 36,044,953 $ 12,157,793 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 6/30/2006 at 3.450% to be repurchased at $12,161,288 on 7/03/2006, collateralized by $9,095,000 U.S. Treasury Bond, 8.750% due 8/15/2020 valued at $12,403,079 12,157,793 --------------- Total Short-Term Investments (Identified Cost $48,202,746) 48,202,746 --------------- Total Investments -- 114.5% (Identified Cost $261,196,634)(b) 278,822,234 Other assets less liabilities -- (14.5)% (35,262,305) --------------- Net Assets -- 100% $ 243,559,929 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information: (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales.): At June 30, 2006, the net unrealized appreciation on investments based on cost of $261,196,634 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 25,057,912 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (7,432,312) --------------- Net unrealized appreciation $ 17,625,600 =============== (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2006. (e) Represents investment of securities lending collateral.
See accompanying notes to financial statements. 32 HARRIS ASSOCIATES FOCUSED VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited) Holdings at June 30, 2006 as a Percentage of Net Assets Media 12.9% Semiconductors 10.5 Savings & Loans 10.0 Restaurants 8.0 Insurance 4.8 Apparel 4.2 Retail 4.0 Cosmetics & Personal Care 3.9 Aerospace & Defense 3.8 Diversified Financial Services 3.7 Leisure Time 3.7 Distribution & Wholesale 3.7 Apparel Retailers 3.6 Pharmaceuticals 3.6 Miscellaneous -- Manufacturing 3.4 Beverages 2.6 Home Builders 2.2 Chemicals 2.1 Food 2.0 Other, Less than 2% each 2.0
See accompanying notes to financial statements. 33 HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------------------- Common Stocks -- 97.9% of Net Assets Aerospace & Defense -- 4.6% 97,000 Honeywell International, Inc. $ 3,909,100 174,500 Raytheon Co. 7,777,465 --------------- 11,686,565 --------------- Banks -- 0.9% 77,500 U.S. Bancorp 2,393,200 --------------- Beverages -- 2.5% 63,200 Coca-Cola Co. (The) 2,718,864 54,100 Diageo PLC, Sponsored ADR 3,654,455 --------------- 6,373,319 --------------- Chemicals -- 1.5% 100,500 Dow Chemical Co. 3,922,515 --------------- Computers -- 10.1% 428,500 Dell, Inc.(c) 10,459,685 326,800 Hewlett-Packard Co. 10,353,024 1,197,500 Sun Microsystems, Inc.(c)(d) 4,969,625 --------------- 25,782,334 --------------- Diversified Financial Services -- 14.4% 141,100 American Express Co. 7,509,342 155,200 Citigroup, Inc. 7,486,848 230,800 JPMorgan Chase & Co. 9,693,600 188,100 Morgan Stanley 11,889,801 --------------- 36,579,591 --------------- Health Care -- Products -- 3.6% 162,500 Baxter International, Inc. 5,973,500 53,000 Johnson & Johnson 3,175,760 --------------- 9,149,260 --------------- Home Builders -- 1.7% 43,000 Lennar Corp., Class A(d) 1,907,910 87,200 Pulte Homes, Inc.(d) 2,510,488 --------------- 4,418,398 --------------- Household Products & Wares -- 1.9% 69,300 Fortune Brands, Inc. 4,920,993 --------------- Insurance -- 1.9% 57,900 Aflac, Inc. 2,683,665 32,200 MGIC Investment Corp. 2,093,000 --------------- 4,776,665 --------------- Leisure Time -- 6.2% 211,500 Carnival Corp. 8,828,010 125,300 Harley-Davidson, Inc.(d) 6,877,717 --------------- 15,705,727 --------------- Media -- 14.0% 159,400 CBS Corp., Class B(d) 4,311,770 17,050 Liberty Media Holding Corp. -- Interactive -- Class A(c) 294,283 47,010 Liberty Media Holding Corp. -- Capital Series A(c) 3,938,027 691,500 Time Warner, Inc. 11,962,951 241,900 Viacom, Inc., Class B(c)(d) 8,669,696 212,400 Walt Disney Co. (The) 6,372,000 --------------- 35,548,727 --------------- Miscellaneous -- Manufacturing -- 4.1% 380,600 Tyco International, Ltd. 10,466,500 --------------- Office & Business Equipment -- 1.4% 265,800 Xerox Corp.(c) 3,697,278 ---------------
Shares Description Value (a) - --------------------------------------------------------------------------------------------------------- Pharmaceuticals -- 2.7% 50,000 Abbott Laboratories $ 2,180,500 247,500 Schering-Plough Corp. 4,709,925 --------------- 6,890,425 --------------- Restaurants -- 4.6% 348,300 McDonald's Corp. 11,702,880 --------------- Retail -- 8.4% 209,200 Home Depot, Inc. 7,487,268 47,200 Kohl's Corp.(c) 2,790,464 71,800 Limited Brands, Inc. 1,837,362 192,000 Wal-Mart Stores, Inc. 9,248,640 --------------- 21,363,734 --------------- Savings & Loans -- 3.8% 209,900 Washington Mutual, Inc.(d) 9,567,242 --------------- Semiconductors -- 6.8% 579,200 Intel Corp. 10,975,840 209,100 Texas Instruments, Inc. 6,333,639 --------------- 17,309,479 --------------- Transportation -- 2.8% 76,900 Union Pacific Corp. 7,148,624 --------------- Total Common Stocks (Identified Cost $221,680,265) 249,403,456 --------------- Shares/ Principal Amount - --------------------------------------------------------------------------------------------------------- Short-Term Investments -- 6.5% 13,010,211 State Street Securities Lending Quality Trust(e) 13,010,211 $ 3,547,839 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 6/30/2006 at 3.450% to be repurchased at $3,548,859 on 7/03/2006, collateralized by $2,655,000 U.S. Treasury Bond, 8.750% due 8/15/2020 valued at $3,620,690 3,547,839 --------------- Total Short-Term Investments (Identified Cost $16,558,050) 16,558,050 --------------- Total Investments -- 104.4% (Identified Cost $238,238,315)(b) 265,961,506 Other assets less liabilities -- (4.4)% (11,193,865) --------------- Net Assets -- 100% $ 254,767,641 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales.): At June 30, 2006, the net unrealized appreciation on investments based on cost of $238,238,315 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value of tax cost $ 36,872,230 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (9,149,039) --------------- Net unrealized appreciation $ 27,723,191 =============== (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2006. (e) Represents investment of securities lending collateral. ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States.
See accompanying notes to financial statements. 34 HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited) Holdings at June 30, 2006 as a Percentage of Net Assets Diversified Financial Services 14.4% Media 14.0 Computers 10.1 Retail 8.4 Semiconductors 6.8 Leisure Time 6.2 Restaurants 4.6 Aerospace & Defense 4.6 Miscellaneous -- Manufacturing 4.1 Savings & Loans 3.8 Health Care -- Products 3.6 Transportation 2.8 Pharmaceuticals 2.7 Beverages 2.5 Others, less than 2% each 9.3
See accompanying notes to financial statements. 35 IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - --------------------------------------------------------------------------- Common Stocks -- 98.7% of Net Assets Advertising -- 0.3% 2,100 Interpublic Group of Cos. (The), Inc.(c)(d) $ 17,535 31,350 R.H. Donnelley Corp.(c)(d) 1,695,095 --------------- 1,712,630 --------------- Aerospace & Defense -- 2.6% 24,500 Boeing Co. (The) 2,006,795 63,700 Honeywell International, Inc. 2,567,110 25,900 Lockheed Martin Corp. 1,858,066 114,500 Raytheon Co. 5,103,265 46,625 Rockwell Collins, Inc. 2,604,939 26,900 United Technologies Corp. 1,705,998 --------------- 15,846,173 --------------- Apparel -- 0.5% 54,200 Coach, Inc.(c) 1,620,580 18,000 Nike, Inc., Class B 1,458,000 --------------- 3,078,580 --------------- Banks -- 3.9% 52,800 Bank of America Corp. 2,539,680 80,900 BOK Financial Corp.(d) 4,018,303 15,625 City National Corp.(d) 1,017,031 129,150 Colonial BancGroup, Inc. 3,316,572 53,475 Commerce Bancorp, Inc.(d) 1,907,453 80,231 Dearborn Bancorp, Inc. 1,781,117 74,225 East West Bancorp, Inc. 2,813,870 33,375 Northern Trust Corp. 1,845,638 87,325 Security Bank Corp.(d) 1,944,728 93,975 Superior Bancorp(c)(d) 1,033,725 51,000 U.S. Bancorp 1,574,880 --------------- 23,792,997 --------------- Beverages -- 1.1% 41,700 Coca-Cola Co. (The) 1,793,934 35,700 Diageo PLC, Sponsored ADR 2,411,535 37,000 PepsiCo, Inc. 2,221,480 --------------- 6,426,949 --------------- Biotechnology -- 1.0% 47,700 Amgen, Inc.(c) 3,111,471 35,400 Celgene Corp.(c) 1,679,022 26,500 Genzyme Corp.(c) 1,617,825 --------------- 6,408,318 --------------- Building Materials -- 1.0% 227,975 Comfort Systems USA, Inc. 3,257,763 51,100 Texas Industries, Inc.(d) 2,713,410 --------------- 5,971,173 --------------- Chemicals -- 2.4% 40,000 Air Products & Chemicals, Inc. 2,556,800 80,150 Airgas, Inc. 2,985,587 36,125 Cytec Industries, Inc. 1,938,468 66,400 Dow Chemical Co. (The) 2,591,592 36,100 Du Pont (E.I.) de Nemours & Co. 1,501,760 53,900 Praxair, Inc. 2,910,600 --------------- 14,484,807 --------------- Coal -- 0.4% 43,750 Peabody Energy Corp. 2,439,063 ---------------
Shares Description Value (a) - -------------------------------------------------------------------------- Commercial Services -- 4.9% 33,375 Adesa, Inc. $ 742,260 73,725 Aramark Corp., Class B 2,441,035 39,275 Corporate Executive Board Co.(d) 3,935,355 149,900 Exponent, Inc.(c)(d) 2,533,310 95,175 FTI Consulting, Inc.(c)(d) 2,547,835 205,100 Live Nation, Inc.(c)(d) 4,175,836 98,425 Paychex, Inc. 3,836,607 78,325 Pharmaceutical Product Development, Inc. 2,750,774 191,025 Rent-A-Center, Inc.(c) 4,748,881 69,425 Sotheby's(c) 1,822,406 --------------- 29,534,299 --------------- Computers -- 4.2% 85,950 Cognizant Technology Solutions Corp.(c) 5,790,451 282,200 Dell, Inc.(c) 6,888,502 214,900 Hewlett-Packard Co. 6,808,032 73,850 Network Appliance, Inc.(c) 2,606,905 786,100 Sun Microsystems, Inc.(c)(d) 3,262,315 --------------- 25,356,205 --------------- Cosmetics & Personal Care -- 1.2% 68,050 Alberto-Culver Co. 3,315,396 76,600 Procter & Gamble Co. 4,258,960 --------------- 7,574,356 --------------- Diversified Financial Services -- 7.3% 92,800 American Express Co. 4,938,816 19,625 BlackRock, Inc., Class A 2,731,211 115,000 Charles Schwab Corp. (The) 1,837,700 9,850 Chicago Mercantile Exchange Holdings, Inc. 4,837,827 143,100 Citigroup, Inc. 6,903,144 14,100 Franklin Resources, Inc. 1,224,021 52,925 Investment Technology Group, Inc.(c) 2,691,766 28,600 Janus Capital Group, Inc. 511,940 151,800 JPMorgan Chase & Co. 6,375,600 123,800 Morgan Stanley 7,825,398 109,850 Nuveen Investments, Class A(d) 4,729,043 --------------- 44,606,466 --------------- Electric -- 1.7% 37,441 Allete, Inc.(d) 1,772,831 202,900 CMS Energy Corp.(c)(d) 2,625,526 73,900 MDU Resources Group, Inc. 2,705,479 34,525 NRG Energy, Inc.(c) 1,663,414 53,250 Portland General Electric Co.(d) 1,329,653 --------------- 10,096,903 --------------- Electrical Components & Equipment -- 0.8% 69,925 AMETEK, Inc.(d) 3,313,047 15,700 Emerson Electric Co. 1,315,817 --------------- 4,628,864 --------------- Electronics -- 2.6% 76,100 Amphenol Corp., Class A(d) 4,258,556 122,125 Avnet, Inc.(c) 2,444,942 42,225 Cymer, Inc.(c)(d) 1,961,774 23,050 Garmin, Ltd. 2,430,392 53,050 Mettler Toledo International, Inc.(c) 3,213,238 74,700 PerkinElmer, Inc. 1,561,230 --------------- 15,870,132 ---------------
See accompanying notes to financial statements. 36 IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - --------------------------------------------------------------------------- Energy-Alternate Sources -- 0.2% 12,775 Aventine Renewable Energy Holdings, Inc.(c) $ 496,948 32,050 VeraSun Energy Corp.(c)(d) 840,992 --------------- 1,337,940 --------------- Engineering & Construction -- 0.6% 8,400 Fluor Corp. 780,612 6,700 Jacobs Engineering Group, Inc.(c) 533,588 47,575 Washington Group International, Inc.(c)(d) 2,537,651 --------------- 3,851,851 --------------- Entertainment -- 0.3% 55,200 Warner Music Group Corp. 1,627,296 --------------- Environmental Control -- 0.6% 51,500 Nalco Holding Co.(c) 907,945 39,900 Stericycle, Inc.(c)(d) 2,597,490 --------------- 3,505,435 --------------- Food -- 0.9% 117,925 Spartan Stores, Inc.(d) 1,725,243 21,000 Sysco Corp. 641,760 48,525 Whole Foods Market, Inc. 3,136,656 --------------- 5,503,659 --------------- Forest Products & Paper -- 0.4% 69,688 Potlatch Corp.(d) 2,630,722 --------------- Gas -- 1.5% 99,275 Oneok, Inc. 3,379,321 222,250 UGI Corp. 5,471,795 --------------- 8,851,116 --------------- Health Care -- Products -- 3.6% 40,800 Alcon, Inc. 4,020,840 106,900 Baxter International, Inc. 3,929,644 59,875 Beckman Coulter, Inc. 3,326,056 36,675 C.R. Bard, Inc. 2,686,810 20,775 Intuitive Surgical, Inc.(c) 2,450,827 35,000 Johnson & Johnson 2,097,200 29,600 Medtronic, Inc. 1,388,832 43,550 Ventana Medical Systems, Inc.(c)(d) 2,054,689 --------------- 21,954,898 --------------- Health Care -- Services -- 1.6% 10,200 Covance, Inc.(c) 624,444 37,200 Humana, Inc.(c) 1,997,640 16,800 Sierra Health Services, Inc.(c) 756,504 72,125 Triad Hospitals, Inc.(c) 2,854,707 46,500 WellPoint, Inc.(c) 3,383,805 --------------- 9,617,100 --------------- Home Builders -- 0.7% 28,000 Lennar Corp., Class A 1,242,360 57,700 Pulte Homes, Inc.(d) 1,661,183 44,900 Winnebago Industries(d) 1,393,696 --------------- 4,297,239 --------------- Household Products & Wares -- 1.3% 57,225 Church & Dwight Co., Inc.(d) 2,084,134 46,100 Fortune Brands, Inc. 3,273,561 140,100 Fossil, Inc.(c)(d) 2,523,201 --------------- 7,880,896 ---------------
Shares Description Value (a) - --------------------------------------------------------------------------------- Insurance -- 2.7% 38,100 Aflac, Inc. $ 1,765,935 243,525 AmCOMP, Inc.(c) 2,566,753 92,525 Assurant, Inc. 4,478,210 21,200 MGIC Investment Corp.(d) 1,378,000 25,175 Navigators Group, Inc.(c) 1,103,169 74,075 Protective Life Corp. 3,453,376 60,600 United Fire & Casualty Co. 1,825,878 --------------- 16,571,321 --------------- Internet -- 2.4% 124,375 Akamai Technologies, Inc.(c)(d) 4,501,131 28,275 Ctrip.com International Ltd., ADR(d) 1,443,439 2,900 Google, Inc., Class A(c) 1,216,057 95,600 McAfee, Inc.(c) 2,320,212 180,575 NetRatings, Inc.(c)(d) 2,508,187 80,100 Yahoo!, Inc.(c) 2,643,300 --------------- 14,632,326 --------------- Iron & Steel -- 0.6% 50,075 Chaparral Steel Co.(c) 3,606,402 --------------- Leisure Time -- 1.7% 138,000 Carnival Corp. 5,760,120 82,500 Harley-Davidson, Inc.(d) 4,528,425 --------------- 10,288,545 --------------- Lodging -- 1.1% 94,300 Hilton Hotels Corp. 2,666,804 54,475 Starwood Hotels & Resorts Worldwide, Inc. 3,287,021 6,400 Station Casinos, Inc. 435,712 --------------- 6,389,537 --------------- Machinery -- Construction & Mining -- 0.3% 21,800 Caterpillar, Inc. 1,623,664 --------------- Machinery -- Diversified -- 1.4% 102,125 Albany International Corp., Class A(d) 4,329,079 118,075 Wabtec Corp. 4,416,005 --------------- 8,745,084 --------------- Manufacturing -- 0.5% 62,250 Actuant Corp.(d) 3,109,388 --------------- Media -- 4.1% 104,900 CBS Corp., Class B 2,837,545 30,805 Liberty Media Holding Corp. - Capital Series A(c)(d) 2,580,535 11,025 Liberty Media Holding Corp. - Interactive A(c) 190,291 419,800 Time Warner, Inc. 7,262,540 162,500 Viacom, Inc., Class B(c) 5,824,000 202,000 Walt Disney Co. (The) 6,060,000 --------------- 24,754,911 --------------- Metal Fabricate & Hardware -- 0.6% 57,100 Precision Castparts Corp. 3,412,296 --------------- Mining -- 0.6% 69,400 Glamis Gold, Ltd.(c)(d) 2,627,484 21,800 Rio Tinto, Ltd. 1,260,327 --------------- 3,887,811 --------------- Miscellaneous -- Manufacturing -- 2.8% 30,900 3M Co. 2,495,793 158,400 General Electric Co. 5,220,864 24,600 ITT Industries, Inc. 1,217,700
See accompanying notes to financial statements. 37 IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------ Miscellaneous -- Manufacturing -- continued 42,600 Pall Corp.(d) $ 1,192,800 250,400 Tyco International, Ltd. 6,886,000 --------------- 17,013,157 --------------- Office & Business Equipment -- 0.4% 174,800 Xerox Corp.(c) 2,431,468 --------------- Office Furnishings -- 0.5% 246,314 Interface, Inc., Class A(c) 2,820,295 --------------- Oil & Gas -- 3.1% 75,875 Denbury Resources, Inc.(c) 2,402,961 105,100 Exxon Mobil Corp. 6,447,885 35,475 GlobalSantaFe Corp. 2,048,681 23,600 Sunoco, Inc. 1,635,244 42,600 Transocean, Inc.(c) 3,421,632 44,900 Valero Energy Corp. 2,986,748 --------------- 18,943,151 --------------- Oil & Gas Services -- 5.0% 30,600 Baker Hughes, Inc. 2,504,610 29,700 Dril-Quip, Inc.(c)(d) 2,448,468 62,825 FMC Technologies, Inc.(c) 4,238,174 43,200 Grant Prideco, Inc.(c) 1,933,200 39,900 Halliburton Co. 2,960,979 53,900 Helix Energy Solutions Group, Inc.(c)(d) 2,175,404 31,200 National Oilwell Varco, Inc.(c) 1,975,584 53,250 Oceaneering International, Inc.(c) 2,441,513 59,900 Schlumberger, Ltd. 3,900,089 45,700 Universal Compression Holdings, Inc.(c) 2,877,729 63,850 Weatherford International, Ltd.(c) 3,168,237 --------------- 30,623,987 --------------- Pharmaceuticals -- 2.1% 33,000 Abbott Laboratories 1,439,130 23,800 Allergan, Inc. 2,552,788 23,175 Amylin Pharmaceuticals, Inc.(c)(d) 1,144,150 46,000 GlaxoSmithKline PLC 1,285,306 19,200 MGI Pharma, Inc.(c)(d) 412,800 34,500 Novartis AG 1,868,144 51,700 Perrigo Co. 832,370 162,500 Schering-Plough Corp. 3,092,375 --------------- 12,627,063 --------------- Pipelines -- 0.2% 12,425 Questar Corp. 1,000,088 --------------- Real Estate -- 1.4% 108,550 CB Richard Ellis Group, Inc., Class A(c) 2,702,895 31,600 Jones Lang LaSalle, Inc.(d) 2,766,580 85,025 Trammell Crow Co.(c)(d) 2,990,329 --------------- 8,459,804 --------------- REITs -- Shopping Centers -- 0.5% 66,425 Developers Diversified Realty Corp. 3,466,057 --------------- REITs -- Financial Services -- 0.4% 63,850 CBL & Associates Properties, Inc. 2,485,681 --------------- Restaurants -- 1.5% 229,700 McDonald's Corp. 7,717,920 27,100 Yum! Brands, Inc. 1,362,317 --------------- 9,080,237 ---------------
Shares Description Value (a) - ------------------------------------------------------------------------------- Retail -- 5.5% 46,675 AnnTaylor Stores Corp.(c) $ 2,024,762 131,475 Applebee's International, Inc.(d) 2,526,950 94,125 Circuit City Stores, Inc. 2,562,082 124,912 Coldwater Creek, Inc.(c)(d) 3,342,645 136,400 Home Depot, Inc. (The) 4,881,756 31,000 Kohl's Corp.(c) 1,832,720 75,500 Limited Brands, Inc. 1,932,045 47,600 Office Depot, Inc.(c) 1,808,800 59,325 Petsmart, Inc.(d) 1,518,720 98,450 Staples, Inc. 2,394,304 69,000 Starbucks Corp.(c) 2,605,440 128,800 Wal-Mart Stores, Inc. 6,204,296 --------------- 33,634,520 --------------- Savings & Loans -- 1.0% 138,100 Washington Mutual, Inc. 6,294,598 --------------- Semiconductors -- 2.8% 381,400 Intel Corp. 7,227,530 24,000 Marvell Technology Group, Ltd.(c) 1,063,920 87,475 MEMC Electronic Materials, Inc.(c) 3,280,312 273,025 ON Semiconductor Corp.(c)(d) 1,605,387 137,500 Texas Instruments, Inc. 4,164,875 --------------- 17,342,024 --------------- Software -- 1.8% 94,525 Fidelity National Information Services, Inc. 3,346,185 17,900 Infosys Technologies, Ltd., Sponsored ADR(d) 1,367,739 25,000 SAP AG, Sponsored ADR 1,313,000 38,500 Satyam Computer Services, Ltd.(d) 1,275,890 93,800 Sybase, Inc.(c) 1,819,720 62,675 VeriFone Holdings, Inc.(c)(d) 1,910,334 --------------- 11,032,868 --------------- Telecommunications -- 2.7% 93,425 ADTRAN, Inc. 2,095,523 63,750 Embarq Corp.(c) 2,613,113 56,975 Harris Corp. 2,365,032 50,325 Leap Wireless International, Inc.(c) 2,387,921 68,575 NII Holdings, Inc., Class B(c) 3,866,258 28,000 QUALCOMM, Inc. 1,121,960 57,600 Telefonaktiebolaget LM Ericsson, Sponsored ADR 1,903,104 --------------- 16,352,911 --------------- Tobacco -- 0.4% 37,200 Altria Group, Inc. 2,731,596 --------------- Transportation -- 3.0% 68,225 CH Robinson Worldwide, Inc.(d) 3,636,392 69,500 Expeditors International of Washington, Inc. 3,892,695 74,050 Horizon Lines, Inc., Class A(d) 1,186,281 190,650 Laidlaw International, Inc. 4,804,380 50,600 Union Pacific Corp. 4,703,776 --------------- 18,223,524 --------------- Total Common Stocks (Identified Cost $504,048,794) 600,470,381 ---------------
See accompanying notes to financial statements. 38 IXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited)
Shares/ Principal Amount Description Value (a) - ------------------------------------------------------------------------------------------------------ Short-Term Investments -- 14.0% 75,130,129 State Street Securities Lending Quality Trust(e) $ 75,130,129 $ 9,693,376 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 6/30/2006 at 3.450% to be repurchased at $9,696,163 on 7/03/2006, collateralized by $3,240,000 U.S. Treasury Bond, 8.750% due 8/15/2020 valued at $4,418,469 and $4,900,000 U.S. Treasury Bond, 6.250% due 8/15/2023 valued at $5,479,709 9,693,376 --------------- Total Short-Term Investments (Identified Cost $84,823,505) 84,823,505 --------------- Total Investments -- 112.7% (Identified Cost $588,872,299)(b) 685,293,886 Other assets less liabilities -- (12.7)% (77,000,982) --------------- Total Net Assets -- 100% $ 608,292,904 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Portfolio's fiscal year for tax purposes. Such adjustments are primarily due to wash sales.): At June 30, 2006, the net unrealized appreciation on investments based on cost of $588,872,299 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 108,299,168 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (11,877,581) --------------- Net unrealized appreciation $ 96,421,587 =============== (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2006. (e) Represents investment of securities lending collateral. ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States. REITs Real Estate Investment Trusts
Holdings at June 30, 2006 as a Percentage of Net Assets Diversified Financial Services 7.3% Retail 5.5 Oil & Gas Services 5.0 Commercial Services 4.9 Computers 4.2 Media 4.1 Banks 3.9 Health Care -- Products 3.6 Oil & Gas 3.1 Transportation 3.0 Semiconductors 2.8 Miscellaneous -- Manufacturing 2.8 Insurance 2.7 Telecommunications 2.7 Electronics 2.6 Aerospace & Defense 2.6 Internet 2.4 Chemicals 2.4 Pharmaceuticals 2.1 Others, less than 2% each 31.0
See accompanying notes to financial statements. 39 IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ------------------------------------------------------------------ Common Stocks -- 96.6% of Net Assets Aerospace & Defense -- 2.8% 5,100 Boeing Co. (The) $ 417,741 5,950 General Dynamics Corp. 389,487 14,700 Northrop Grumman Corp. 941,682 17,725 Raytheon Co. 790,003 13,525 United Technologies Corp. 857,756 --------------- 3,396,669 --------------- Banks -- 5.8% 22,150 Bank of America Corp. 1,065,415 8,925 BOK Financial Corp.(d) 443,305 2,600 Capital Crossing Bank(c)(d) 63,960 7,100 Comerica, Inc. 369,129 25,825 Mellon Financial Corp. 889,155 11,500 National City Corp. 416,185 4,100 State Street Corp. 238,169 53,650 U.S. Bancorp 1,656,712 20,075 UCBH Holdings, Inc.(d) 332,040 22,850 Wells Fargo & Co. 1,532,778 --------------- 7,006,848 --------------- Beverages -- 2.5% 4,200 Anheuser-Busch Cos., Inc. 191,478 7,400 Coca-Cola Enterprises, Inc. 150,738 9,875 Molson Coors Brewing Co.(d) 670,315 35,000 Pepsi Bottling Group, Inc. (The) 1,125,250 8,200 PepsiAmericas, Inc.(d) 181,302 12,225 PepsiCo, Inc. 733,989 --------------- 3,053,072 --------------- Biotechnology -- 0.6% 10,625 Amgen, Inc.(c) 693,069 --------------- Building Materials -- 0.5% 16,600 Lennox International, Inc. 439,568 2,700 Texas Industries, Inc.(d) 143,370 --------------- 582,938 --------------- Chemicals -- 1.3% 16,475 Agrium, Inc. 382,549 15,000 Praxair, Inc. 810,000 5,900 Sherwin-Williams Co. (The) 280,132 1,700 Westlake Chemical Corp.(d) 50,660 --------------- 1,523,341 --------------- Commercial Services -- 1.2% 8,200 Apollo Group, Inc. Class A(c) 423,694 9,950 Aramark Corp., Class B 329,445 5,300 Convergys Corp.(c) 103,350 11,525 Equifax, Inc.(d) 395,768 13,100 MPS Group, Inc.(c)(d) 197,286 --------------- 1,449,543 --------------- Computers -- 4.2% 62,000 Dell, Inc.(c) 1,513,420 94,875 Hewlett-Packard Co. 3,005,640 7,200 International Business Machines Corp. 553,104 --------------- 5,072,164 --------------- Distribution & Wholesale -- 0.3% 4,800 WESCO International, Inc.(c)(d) 331,200 ---------------
Shares Description Value (a) - ------------------------------------------------------------------------------- Diversified Financial Services -- 14.2% 33,675 American Express Co. $ 1,792,183 11,000 Ameriprise Financial, Inc. 491,370 11,600 Capital One Financial Corp. 991,220 23,925 CIT Group, Inc. 1,251,038 63,083 Citigroup, Inc. 3,043,124 4,050 Goldman Sachs Group, Inc. 609,242 18,800 Janus Capital Group, Inc. 336,520 78,025 JPMorgan Chase & Co. 3,277,050 12,000 Lehman Brothers Holdings, Inc. 781,800 22,775 Merrill Lynch & Co., Inc. 1,584,229 42,600 Morgan Stanley 2,692,746 4,700 Ocwen Financial Corp.(c)(d) 59,737 --------------- 16,910,259 --------------- Electric -- 2.8% 5,800 Dominion Resources, Inc.(d) 433,782 12,825 Entergy Corp. 907,369 12,700 Exelon Corp. 721,741 6,000 IDACORP, Inc.(d) 205,740 10,625 NRG Energy, Inc.(c) 511,912 10,125 TXU Corp. 605,374 --------------- 3,385,918 --------------- Electrical Components & Equipment -- 0.2% 3,300 Emerson Electric Co. 276,573 --------------- Electronics -- 0.7% 11,600 Agilent Technologies, Inc.(c) 366,096 43,075 Flextronics International, Ltd.(c) 457,457 --------------- 823,553 --------------- Engineering & Construction -- 1.2% 73,800 ABB, Ltd., Sponsored ADR 956,448 17,725 Chicago Bridge & Iron Co., N.V.(d) 428,059 --------------- 1,384,507 --------------- Environmental Control -- 0.2% 7,925 Waste Connections, Inc.(c)(d) 288,470 --------------- Forest Products & Paper -- 0.3% 15,900 Louisiana-Pacific Corp. 348,210 --------------- Hand & Machine Tools -- 0.5% 6,600 Black & Decker Corp. (The) 557,436 --------------- Health Care -- Capital Equipment -- 0.3% 12,600 Applera Corp. -- Applied Biosystems Group(d) 407,610 --------------- Health Care -- Products -- 3.3% 51,075 Baxter International, Inc. 1,877,517 8,050 Beckman Coulter, Inc. 447,177 2,900 Becton Dickinson & Co. 177,277 25,200 Boston Scientific Corp.(c) 424,368 18,275 Johnson & Johnson 1,095,038 --------------- 4,021,377 --------------- Health Care -- Services -- 0.7% 3,400 Aetna, Inc. 135,762 11,725 Quest Diagnostics, Inc. 702,562 --------------- 838,324 --------------- Home Builders -- 0.8% 21,000 Lennar Corp., Class A 931,770 --------------- Insurance -- 3.7% 18,775 Allstate Corp. (The) 1,027,556 14,375 American International Group, Inc. 848,844
See accompanying notes to financial statements. 40 IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ------------------------------------------------------------------- Insurance -- continued 165 Berkshire Hathaway, Inc., Class B(c) $ 502,095 4,100 CIGNA Corp. 403,891 2,400 Genworth Financial, Inc., Class A 83,616 12,000 Loews Corp. 425,400 1,000 MGIC Investment Corp. 65,000 3,750 Old Republic International Corp.(d) 80,137 13,300 Prudential Financial, Inc.(d) 1,033,410 --------------- 4,469,949 --------------- Internet -- 0.1% 200 Google, Inc., Class A(c) 83,866 --------------- Iron & Steel -- 0.8% 2,900 Nucor Corp.(d) 157,325 4,600 Reliance Steel & Aluminum Co. 381,570 6,000 United States Steel Corp. 420,720 --------------- 959,615 --------------- Leisure Time -- 1.3% 36,000 Carnival Corp. 1,502,640 --------------- Lodging -- 0.2% 5,400 Marriott International, Inc., Class A 205,848 --------------- Machinery -- Diversified -- 0.2% 7,500 AGCO Corp.(c)(d) 197,400 --------------- Media -- 6.6% 50,000 Cablevision Systems Corp., Class A(c) 1,072,500 25,475 Comcast Corp., Class A(c) 834,052 56,025 DIRECTV Group (The), Inc.(c) 924,412 10,898 Liberty Global, Inc., Class A(d) 234,307 11,052 Liberty Global, Inc., Class C(c)(d) 227,340 3,600 Liberty Media Holding Corp.(c) 62,136 10,000 Liberty Media Holding Corp.(c) 837,700 44,350 News Corp., Inc., Class A 850,633 170,000 Time Warner, Inc. 2,941,000 --------------- 7,984,080 --------------- Mining -- 0.0% 800 Newmont Mining Corp. 42,344 --------------- Miscellaneous -- Manufacturing -- 3.4% 40,700 General Electric Co. 1,341,472 5,100 Parker Hannifin Corp. 395,760 86,750 Tyco International, Ltd. 2,385,625 --------------- 4,122,857 --------------- Oil & Gas -- 7.5% 7,350 ConocoPhillips 481,646 3,300 Devon Energy Corp. 199,353 70,000 Exxon Mobil Corp. 4,294,500 15,750 GlobalSantaFe Corp. 909,562 26,400 Harvest Natural Resources, Inc.(c)(d) 357,456 11,300 Occidental Petroleum Corp. 1,158,815 14,900 Southwestern Energy Co.(c)(d) 464,284 5,100 Todco, Class A(d) 208,335 6,900 Valero Energy Corp. 458,988 10,300 XTO Energy, Inc. 455,981 --------------- 8,988,920 --------------- Oil & Gas Services -- 1.2% 20,100 Halliburton Co. 1,491,621 ---------------
Shares Description Value (a) - ------------------------------------------------------------- Pharmaceuticals -- 2.2% 13,500 Abbott Laboratories $ 588,735 5,800 AmerisourceBergen Corp. 243,136 6,500 Cardinal Health, Inc. 418,145 4,700 Hospira, Inc.(c) 201,818 14,600 Merck & Co., Inc. 531,878 29,425 Pfizer, Inc. 690,605 --------------- 2,674,317 --------------- REITs -- Diversified -- 0.2% 5,700 Longview Fibre Co. 108,813 9,500 Newkirk Realty Trust, Inc.(d) 164,920 --------------- 273,733 --------------- REITs -- Hotels -- 0.2% 11,500 FelCor Lodging Trust, Inc. 250,010 --------------- REITs -- Regional Malls -- 0.4% 5,200 Simon Property Group, Inc. 431,288 --------------- Restaurants -- 4.0% 82,500 McDonald's Corp. 2,772,000 40,000 Yum! Brands, Inc. 2,010,800 --------------- 4,782,800 --------------- Retail -- 6.4% 17,900 AutoNation, Inc.(c) 383,776 4,650 AutoZone, Inc.(c) 410,130 13,550 Burger King Holdings, Inc.(c)(d) 213,413 19,375 CVS Corp. 594,812 4,600 Dollar Tree Stores, Inc.(c)(d) 121,900 18,250 Federated Department Stores 667,950 24,900 Gap (The), Inc. 433,260 900 J.C. Penney Co., Inc. 60,759 10,800 Kohl's Corp.(c) 638,496 7,300 Lowe's Cos., Inc. 442,891 21,600 Office Depot, Inc.(c) 820,800 10,975 OSI Restaurant Partners, Inc.(d) 379,735 45,000 Tiffany & Co. 1,485,900 21,250 Wal-Mart Stores, Inc. 1,023,612 --------------- 7,677,434 --------------- Savings & Loans -- 1.3% 35,000 Washington Mutual, Inc.(d) 1,595,300 --------------- Semiconductors -- 3.1% 127,775 Intel Corp. 2,421,336 28,750 LSI Logic Corp.(c)(d) 257,313 28,000 National Semiconductor Corp. 667,800 13,400 Texas Instruments, Inc. 405,886 --------------- 3,752,335 --------------- Software -- 2.1% 9,000 Fiserv, Inc.(c) 408,240 66,825 Microsoft Corp. 1,557,022 41,200 Oracle Corp.(c) 596,988 --------------- 2,562,250 --------------- Telecommunications -- 4.7% 27,150 AT&T, Inc. 757,213 49,850 Avaya, Inc.(c)(d) 569,287 36,150 BellSouth Corp. 1,308,630 11,200 CenturyTel, Inc.(d) 416,080 52,075 Cisco Systems, Inc.(c) 1,017,025 10,400 Embarq Corp.(c) 426,296
See accompanying notes to financial statements. 41 IXIS VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------------------------------------ Telecommunications -- continued 34,400 Motorola, Inc. $ 693,160 19,825 Nokia OYJ, Sponsored ADR 401,655 --------------- 5,589,346 --------------- Tobacco -- 0.6% 10,200 Altria Group, Inc. 748,986 --------------- Toys, Games & Hobbies -- 0.4% 28,300 Hasbro, Inc.(d) 512,513 --------------- Transportation -- 1.6% 9,650 Burlington Northern Santa Fe Corp. 764,762 2,600 FedEx Corp. 303,836 3,900 Norfolk Southern Corp. 207,558 7,725 Ryder System, Inc.(d) 451,372 2,300 Union Pacific Corp. 213,808 --------------- 1,941,336 --------------- Total Common Stocks (Identified Cost $97,635,534) 116,123,639 --------------- Shares/ Principal Amount - ------------------------------------------------------------------------------------------------------ Short-Term Investments -- 9.9% 8,910,402 State Street Securities Lending Quality Trust(e) 8,910,402 $ 2,965,681 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 6/30/2006 at 3.450% to be repurchased at $2,966,533 on 7/03/2006, collateralized by $1,840,000 U.S. Treasury Bond, 7.875% due 2/15/2021 valued at $2,348,300 and $610,000 U.S. Treasury Bond, 6.250% due 8/15/2023 valued at $682,168 2,965,681 --------------- Total Short-Term Investments (Identified Cost $11,876,083) 11,876,083 --------------- Total Investments -- 106.5% (Identified Cost $109,511,617)(b) 127,999,722 Other assets less liabilities -- (6.5)% (7,846,729) --------------- Net Assets -- 100% $ 120,152,993 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales.): At June 30, 2006, the net unrealized appreciation on investments based on cost of $109,511,617 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value of tax cost $ 21,311,464 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (2,823,359) --------------- Net unrealized appreciation $ 18,488,105 =============== (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2006. (e) Represents investment of securities lending collateral. ADR An American Depositary Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States. REITs Real Estate Investment Trusts
Holdings at June 30, 2006 as a Percentage of Net Assets Diversified Financial Services 14.2% Oil & Gas 7.5 Media 6.6 Retail 6.4 Banks 5.8 Telecommunications 4.7 Computers 4.2 Restaurants 4.0 Insurance 3.7 Miscellaneous -- Manufacturing 3.4 Health Care -- Products 3.3 Semiconductors 3.1 Aerospace & Defense 2.8 Electric 2.8 Beverages 2.5 Pharmaceuticals 2.2 Software 2.1 Others, less than 2% each 17.3
See accompanying notes to financial statements. 42 VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ---------------------------------------------------------------------- Common Stocks -- 94.2% of Net Assets Aerospace & Defense -- 8.2% 37,270 Alliant Techsystems, Inc.(c)(d) $ 2,845,564 36,500 DRS Technologies, Inc.(d) 1,779,375 57,275 EDO Corp.(d) 1,394,074 48,500 Esterline Technologies Corp.(c)(d) 2,017,115 59,137 Moog, Inc., Class A(c) 2,023,668 --------------- 10,059,796 --------------- Banks -- 3.2% 51,326 MB Financial, Inc.(d) 1,814,888 9,425 PrivateBancorp, Inc.(d) 390,289 107,530 UCBH Holdings, Inc.(d) 1,778,546 --------------- 3,983,723 --------------- Biotechnology -- 1.6% 63,725 Serologicals Corp.(c)(d) 2,003,514 --------------- Building Materials -- 2.0% 94,250 Lennox International, Inc.(d) 2,495,740 --------------- Chemicals -- 1.1% 25,025 Cytec Industries, Inc.(d) 1,342,842 --------------- Commercial Services -- 10.6% 70,415 Aaron Rents, Inc.(d) 1,892,755 61,325 ACE Cash Express, Inc.(c)(d) 1,794,983 54,950 Dollar Thrifty Automotive Group, Inc.(c) 2,476,596 69,585 McGrath Rentcorp(d) 1,935,159 26,680 Monro Muffler, Inc. 868,701 16,075 Strayer Education, Inc. 1,561,204 27,020 Team, Inc.(c)(d) 676,851 85,550 Universal Technical Institute, Inc.(c)(d) 1,883,811 --------------- 13,090,060 --------------- Computer Services -- 0.9% 95,725 Tyler Technologies, Inc.(c)(d) 1,072,120 --------------- Computers -- 1.3% 35,345 MICROS Systems, Inc.(c)(d) 1,543,870 --------------- Distribution & Wholesale -- 2.4% 22,405 Watsco, Inc. 1,340,267 22,995 WESCO International, Inc.(c)(d) 1,586,655 --------------- 2,926,922 --------------- Diversified Financial Services -- 4.1% 21,400 Affiliated Managers Group, Inc.(c)(d) 1,859,446 42,224 Financial Federal Corp.(d) 1,174,250 67,294 Raymond James Financial, Inc.(d) 2,036,989 --------------- 5,070,685 --------------- Electric -- 3.1% 105,950 Pike Electric Corp.(c)(d) 2,040,597 86,280 Westar Energy, Inc.(d) 1,816,194 --------------- 3,856,791 --------------- Electronics -- 0.5% 117,675 International DisplayWorks, Inc.(c)(d) 611,910 --------------- Engineering & Construction -- 1.0% 58,825 Dycom Industries, Inc.(c)(d) 1,252,384 --------------- Environmental Control -- 2.2% 73,485 Waste Connections, Inc.(c)(d) 2,674,854 --------------- Food -- 1.5% 61,425 Corn Products International, Inc.(d) 1,879,605 ---------------
Shares Description Value (a) - -------------------------------------------------------------------- Health Care -- Products -- 1.5% 36,740 Invacare Corp.(d) $ 914,091 40,071 Medical Action Industries, Inc.(c) 885,169 --------------- 1,799,260 --------------- Health Care -- Services -- 7.4% 17,875 Amedisys, Inc.(c)(d) 677,463 78,712 Healthcare Services Group, Inc.(d) 1,649,016 157,700 Healthsouth Corp.(c)(d) 607,145 76,775 LHC Group, Inc.(c)(d) 1,529,358 61,925 Pediatrix Medical Group, Inc.(c)(d) 2,805,203 46,385 Triad Hospitals, Inc.(c) 1,835,918 --------------- 9,104,103 --------------- Insurance -- 5.2% 99,237 HCC Insurance Holdings, Inc.(d) 2,921,537 48,975 Hilb, Rogal & Hobbs Co.(d) 1,825,298 53,145 United Fire & Casualty Co.(d) 1,601,259 --------------- 6,348,094 --------------- Internet -- 0.5% 45,025 Vignette Corp.(c)(d) 656,465 --------------- Iron & Steel -- 1.7% 72,012 Gibraltar Industries, Inc.(d) 2,088,348 --------------- Machinery -- Diversified -- 3.6% 59,225 Briggs & Stratton Corp.(d) 1,842,490 51,565 Nordson Corp.(d) 2,535,966 --------------- 4,378,456 --------------- Manufacturing -- 1.3% 30,900 Actuant Corp., Class A 1,543,455 --------------- Mining -- 0.6% 159,200 Birch Mountain Resources, Ltd.(c)(d) 792,816 --------------- Miscellaneous -- Manufacturing -- 1.2% 168,600 Jacuzzi Brands, Inc.(c)(d) 1,483,680 --------------- Oil & Gas -- 3.1% 73,550 Arena Resources, Inc.(c)(d) 2,522,029 118,975 Gulfport Energy Corp.(c) 1,313,484 --------------- 3,835,513 --------------- Oil & Gas Services -- 3.1% 60,225 Universal Compression Holdings, Inc.(c) 3,792,368 --------------- REITs -- Health Care -- 1.2% 45,830 Healthcare Realty Trust, Inc.(d) 1,459,685 --------------- REITs -- Hotels -- 2.4% 95,400 Ashford Hospitality Trust, Inc.(d) 1,203,948 122,000 Highland Hospitality Corp.(d) 1,717,760 --------------- 2,921,708 --------------- REITs -- Mortgage -- 2.3% 196,575 MFA Mortgage Investments, Inc. 1,352,436 30,220 Redwood Trust, Inc.(d) 1,475,643 --------------- 2,828,079 --------------- Retail -- 5.1% 31,825 Regis Corp.(d) 1,133,288 74,252 Sonic Corp.(c)(d) 1,543,699 127,100 Triarc Cos., Inc., Class B(d) 1,986,573 74,000 United Auto Group, Inc.(d) 1,579,900 --------------- 6,243,460 ---------------
See accompanying notes to financial statements. 43 VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ----------------------------------------------------------------------------------------------- Savings & Loans -- 1.2% 100,885 BankAtlantic Bancorp, Inc., Class A(d) $ 1,497,133 --------------- Semiconductors -- 0.9% 45,975 ATMI, Inc.(c)(d) 1,131,905 --------------- Software -- 1.2% 49,675 Reynolds & Reynolds Co. (The), Class A(d) 1,523,532 --------------- Telecommunications -- 1.2% 115,250 Tekelec(c)(d) 1,423,338 --------------- Transportation -- 3.9% 89,250 Arlington Tankers, Ltd.(d) 2,024,190 26,585 Genesee & Wyoming, Inc., Class A(c)(d) 942,970 40,080 Landstar System, Inc.(d) 1,892,978 --------------- 4,860,138 --------------- Trucking & Leasing -- 1.9% 23,660 AMERCO, Inc.(d) 2,381,616 --------------- Total Common Stocks (Identified Cost $103,337,358) 115,957,968 --------------- Shares/ Principal Amount - ----------------------------------------------------------------------------------------------- Short-Term Investments -- 30.2% 31,207,203 State Street Securities Lending Quality Trust(e) 31,207,203 $ 6,013,151 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 6/30/2006 at 3.450% to be repurchased at $6,014,880 on 7/03/2006, collateralized by $5,485,000 U.S. Treasury Bond, 6.250% due 8/15/2023 valued at $6,133,919 6,013,151 --------------- Total Short-Term Investments (Identified Cost $37,220,354) 37,220,354 --------------- Total Investments -- 124.4% (Identified Cost $140,557,712)(b) 153,178,322 Other assets less liabilities -- (24.4)% (30,014,019) --------------- Net Assets -- 100% $ 123,164,303 --------------- (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales.): At June 30, 2006, the net unrealized appreciation on investments based on cost of $140,557,712 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value of tax cost $ 16,697,396 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (4,076,786) --------------- Net unrealized appreciation $ 12,620,610 =============== (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2006. (e) Represents investment of securities lending collateral. REITs Real Estate Investment Trusts
Holdings at June 30, 2006 as a Percentage of Net Assets Commercial Services 10.6% Aerospace & Defense 8.2 Health Care -- Services 7.4 Insurance 5.2 Retail 5.1 Diversified Financial Services 4.1 Transportation 3.9 Machinery -- Diversified 3.6 Banks 3.2 Electric 3.1 Oil & Gas 3.1 Oil & Gas Services 3.1 Distribution & Wholesale 2.4 REITs -- Hotels 2.4 REITs -- Mortgage 2.3 Environmental Control 2.2 Building Materials 2.0 Other, less than 2% each 22.3
See accompanying notes to financial statements. 44 WESTPEAK CAPITAL GROWTH FUND -- PORTFOLIO OF INVESTMENTS Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ------------------------------------------------------------------------ Common Stocks -- 99.6% of Net Assets Aerospace & Defense -- 5.3% 21,100 Boeing Co. (The) $ 1,728,301 9,400 Lockheed Martin Corp. 674,356 14,100 Raytheon Co. 628,437 --------------- 3,031,094 --------------- Agriculture -- 1.5% 10,200 Monsanto Co. 858,738 --------------- Banks -- 0.4% 7,100 Mellon Financial Corp. 244,453 --------------- Beverages -- 1.5% 11,400 Anheuser-Busch Cos., Inc. 519,726 10,300 Pepsi Bottling Group, Inc. (The) 331,145 --------------- 850,871 --------------- Biotechnology -- 3.2% 27,900 Amgen, Inc.(c) 1,819,917 --------------- Building Materials -- 0.9% 10,000 NCI Building Systems, Inc.(c)(d) 531,700 --------------- Commercial Services -- 1.0% 34,700 Cendant Corp. 565,263 --------------- Computers -- 3.7% 5,300 Affiliated Computer Services, Inc.(c) 273,533 23,600 International Business Machines Corp. 1,812,952 --------------- 2,086,485 --------------- Cosmetics & Personal Care -- 1.7% 17,600 Procter & Gamble Co. 978,560 --------------- Distribution & Wholesale -- 5.1% 16,500 Tech Data Corp.(c) 632,115 23,400 United Stationers, Inc.(c) 1,154,088 15,900 WESCO International, Inc.(c) 1,097,100 --------------- 2,883,303 --------------- Diversified Financial Services -- 4.9% 30,800 American Express Co. 1,639,176 7,700 Goldman Sachs Group, Inc. 1,158,311 --------------- 2,797,487 --------------- Electrical Components & Equipment -- 1.0% 6,800 Emerson Electric Co. 569,908 --------------- Electronics -- 1.6% 28,100 Agilent Technologies, Inc.(c) 886,836 --------------- Food -- 1.2% 513 Seaboard Corp.(d) 656,640 --------------- Health Care -- Products -- 4.9% 6,600 Beckman Coulter, Inc. 366,630 14,600 Becton Dickinson & Co. 892,498 14,300 IDEXX Laboratories, Inc.(c) 1,074,359 7,700 Johnson & Johnson 461,384 --------------- 2,794,871 --------------- Health Care -- Services -- 5.3% 23,200 Humana, Inc.(c) 1,245,840 13,500 UnitedHealth Group, Inc. 604,530 22,600 Universal Health Services, Inc., Class B(d) 1,135,876 --------------- 2,986,246 ---------------
Shares Description Value (a) - ---------------------------------------------------------------------- Internet -- 3.2% 1,500 Google, Inc., Class A(c) $ 628,995 50,900 VeriSign, Inc.(c) 1,179,353 --------------- 1,808,348 --------------- Iron & Steel -- 2.0% 13,400 Reliance Steel & Aluminum Co. 1,111,530 --------------- Machinery -- Diversified -- 2.3% 9,000 Deere & Co. 751,410 7,600 Rockwell Automation, Inc. 547,276 --------------- 1,298,686 --------------- Miscellaneous -- Manufacturing -- 4.6% 43,400 General Electric Co. 1,430,464 17,000 Illinois Tool Works, Inc. 807,500 4,500 Parker Hannifin Corp. 349,200 --------------- 2,587,164 --------------- Oil & Gas -- 5.9% 18,500 EOG Resources, Inc. 1,282,790 14,300 Sunoco, Inc. 990,847 26,000 Todco, Class A(d) 1,062,100 --------------- 3,335,737 --------------- Pharmaceuticals -- 5.0% 7,900 AmerisourceBergen Corp. 331,168 17,600 Cardinal Health, Inc. 1,132,208 38,100 Merck & Co., Inc. 1,387,983 --------------- 2,851,359 --------------- REITs -- Hotels -- 1.2% 11,500 Starwood Hotels & Resorts Worldwide, Inc. 693,910 --------------- REITs -- Storage -- 0.7% 4,800 Public Storage, Inc. 364,320 --------------- Restaurants -- 0.6% 7,900 Darden Restaurants, Inc. 311,260 --------------- Retail -- 7.8% 44,600 Dollar Tree Stores, Inc.(c)(d) 1,181,900 23,800 Home Depot, Inc. (The) 851,802 14,700 JC Penney Co., Inc. 992,397 23,500 Lowe's Cos, Inc. 1,425,745 --------------- 4,451,844 --------------- Semiconductors -- 7.1% 116,100 Intel Corp. 2,200,095 23,400 Micron Technology, Inc.(c) 352,404 49,500 Texas Instruments, Inc. 1,499,355 --------------- 4,051,854 --------------- Software -- 6.8% 22,200 Fiserv, Inc.(c) 1,006,992 123,500 Microsoft Corp. 2,877,550 --------------- 3,884,542 --------------- Telecommunications -- 4.3% 84,100 Cisco Systems, Inc.(c) 1,642,473 32,200 Corning, Inc.(c) 778,918 --------------- 2,421,391 --------------- Tobacco -- 1.1% 8,200 Altria Group, Inc. 602,126 ---------------
See accompanying notes to financial statements. 45 WESTPEAK CAPITAL GROWTH FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of June 30, 2006 (Unaudited)
Shares Description Value (a) - ----------------------------------------------------------------------------------------------- Transportation -- 3.8% 14,700 Arkansas Best Corp.(d) $ 738,087 18,700 Norfolk Southern Corp. 995,214 13,900 Swift Transportation Co., Inc.(c)(d) 441,464 --------------- 2,174,765 --------------- Total Common Stocks (Identified Cost $56,339,068) 56,491,208 --------------- Shares/ Principal Amount - ----------------------------------------------------------------------------------------------- Short-Term Investments -- 10.5% 5,455,932 State Street Securities Lending Quality Trust(e) 5,455,932 $ 528,631 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 6/30/2006 at 3.450% to be repurchased at $528,783 on 7/03/2006, collateralized by $485,000 U.S. Treasury Bond, 6.25% due 8/15/2023 valued at $542,379 528,631 --------------- Total Short-Term Investments (Identified Cost $5,984,563) 5,984,563 --------------- Total Investments -- 110.1% (Identified Cost $62,323,631)(b) 62,475,771 Other assets less liabilities -- (10.1)% (5,728,679) --------------- Net Assets -- 100% $ 56,747,092 =============== (a) See Note 2a of Notes to Financial Statements. (b) Federal Tax Information (Amounts exclude certain adjustments made at the end of the Fund's fiscal year for tax purposes. Such adjustments are primarily due to wash sales.): At June 30, 2006, the net unrealized appreciation on investments based on cost of $62,323,631 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 2,915,558 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (2,763,418) --------------- Net unrealized appreciation $ 152,140 =============== (c) Non-income producing security. (d) All or a portion of this security was on loan to brokers at June 30, 2006. (e) Represents investment of securities lending collateral. REITs Real Estate Investment Trusts
Holdings at June 30, 2006 as a Percentage of Net Assets Retail 7.8% Semiconductors 7.1 Software 6.8 Oil & Gas 5.9 Aerospace & Defense 5.3 Health Care -- Services 5.3 Distribution & Wholesale 5.1 Pharmaceuticals 5.0 Diversified Financial Services 4.9 Health Care -- Products 4.9 Miscellaneous -- Manufacturing 4.6 Telecommunications 4.3 Transportation 3.8 Computers 3.7 Biotechnology 3.2 Internet 3.2 Machinery --Diversified 2.3 Iron & Steel 2.0 Others, less than 2% each 14.4
See accompanying notes to financial statements. 46 STATEMENTS OF ASSETS AND LIABILITIES June 30, 2006 (unaudited)
CGM Advisor Hansberger Harris Associates Targeted Equity International Focused Value Fund Fund Fund --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ASSETS Investments at cost $ 668,860,355 $ 171,907,547 $ 261,196,634 Net unrealized appreciation 110,142,901 26,770,026 17,625,600 --------------------- --------------------- --------------------- Investments at value (a) 779,003,256 198,677,573 278,822,234 Cash 4,886 79,883 468,930 Foreign currency at value (identified cost $0, $100,643, $0, $0, $2,998, $0, $0 and $0) -- 101,568 -- Receivable for Fund shares sold 302,287 161,859 105,868 Receivable for securities sold -- 500,893 2,557,163 Receivable from investment advisor (Note 4) -- -- -- Dividends and interest receivable 760,604 334,436 78,554 Tax reclaims receivable 9,439 59,589 -- Securities lending income receivable 3,519 6,422 2,229 Other assets -- -- 584 --------------------- --------------------- --------------------- TOTAL ASSETS 780,083,991 199,922,223 282,035,562 --------------------- --------------------- --------------------- LIABILITIES Collateral on securities loaned, at value (Note 2) 16,743,644 45,792,193 36,044,953 Payable for securities purchased -- 129,154 1,052,164 Payable for Fund shares redeemed 799,371 381,504 859,714 Management fees payable 425,152 97,653 202,234 Deferred Trustees' fees 657,828 94,969 67,340 Administrative fees payable 35,970 7,200 11,934 Other accounts payable and accrued expenses 413,515 187,811 237,294 --------------------- --------------------- --------------------- TOTAL LIABILITIES 19,075,480 46,690,484 38,475,633 --------------------- --------------------- --------------------- NET ASSETS $ 761,008,511 $ 153,231,739 $ 243,559,929 ===================== ===================== ===================== NET ASSETS CONSIST OF: Paid-in capital $ 682,657,562 $ 115,565,227 $ 205,010,742 Undistributed (overdistributed) net investment income (loss) 1,957,721 (442,544) (1,289,166) Accumulated net realized gain (loss) on investments and foreign currency transactions (33,749,673) 11,331,680 22,212,753 Net unrealized appreciation on investments and foreign currency translations 110,142,901 26,777,376 17,625,600 --------------------- --------------------- --------------------- NET ASSETS $ 761,008,511 $ 153,231,739 $ 243,559,929 ===================== ===================== ===================== COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE: Class A shares: Net assets $ 691,662,658 $ 99,463,020 $ 65,192,507 ===================== ===================== ===================== Shares of beneficial interest 65,239,643 4,731,261 5,581,473 ===================== ===================== ===================== Net asset value and redemption price per share $ 10.60 $ 21.02 $ 11.68 ===================== ===================== ===================== Offering price per share (100/[100-maximum sales charge] of net asset value) (Note 1) $ 11.25 $ 22.30 $ 12.39 ===================== ===================== ===================== Class B shares: (redemption price per share is equal to net asset value less any applicable contingent deferred sales charge) (Note 1) Net assets $ 49,948,603 $ 32,392,315 $ 81,668,959 ===================== ===================== ===================== Shares of beneficial interest 5,097,397 1,686,028 7,324,444 ===================== ===================== ===================== Net asset value and offering price per share $ 9.80 $ 19.21 $ 11.15 ===================== ===================== ===================== Class C shares: (redemption price per share is equal to net asset value less any applicable contingent deferred sales charge) (Note 1) Net assets $ 7,663,995 $ 21,376,404 $ 96,698,463 ===================== ===================== ===================== Shares of beneficial interest 782,367 1,112,353 8,670,901 ===================== ===================== ===================== Net asset value and offering price per share (Note 1) $ 9.80 $ 19.22 $ 11.15 ===================== ===================== ===================== Class Y shares: Net assets $ 11,733,255 $ -- $ -- ===================== ===================== ===================== Shares of beneficial interest 1,082,890 -- -- ===================== ===================== ===================== Net asset value, offering and redemption price per share $ 10.84 $ -- $ -- ===================== ===================== ===================== (a) Including securities on loan with market values of: $ 16,573,677 $ 44,666,859 $ 35,003,399 ===================== ===================== =====================
See accompanying notes to financial statements. 47
Harris Associates Vaughan Nelson Westpeak Large Cap Value IXIS U.S. Diversified IXIS Value Small Cap Capital Growth Fund Portfolio Fund Value Fund Fund - --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- $ 238,238,315 $ 588,872,299 $ 109,511,617 $ 140,557,712 $ 62,323,631 27,723,191 96,421,587 18,488,105 12,620,610 152,140 - --------------------- --------------------- --------------------- --------------------- --------------------- 265,961,506 685,293,886 127,999,722 153,178,322 62,475,771 282 -- 116,001 -- 73 -- 3,048 -- -- -- 19,174 134,728 51,958 613,748 4,742 4,554,814 5,557,356 1,573,370 2,217,555 -- 2,737 -- -- 4,968 7,568 192,809 426,688 151,340 155,694 40,294 -- 6,375 43 -- -- 584 13,913 920 2,487 358 -- -- 4,690 15,597 2,899 - --------------------- --------------------- --------------------- --------------------- --------------------- 270,731,906 691,435,994 129,898,044 156,188,371 62,531,705 - --------------------- --------------------- --------------------- --------------------- --------------------- 13,010,211 75,130,129 8,910,402 31,207,203 5,455,932 1,789,825 5,346,621 169,989 1,134,790 -- 427,498 1,281,885 270,052 322,320 85,562 146,904 443,856 73,635 88,192 34,485 269,792 366,153 188,450 99,425 101,920 12,327 29,091 5,789 5,780 2,712 307,708 545,355 126,734 166,358 104,002 - --------------------- --------------------- --------------------- --------------------- --------------------- 15,964,265 83,143,090 9,745,051 33,024,068 5,784,613 - --------------------- --------------------- --------------------- --------------------- --------------------- $ 254,767,641 $ 608,292,904 $ 120,152,993 $ 123,164,303 $ 56,747,092 ===================== ===================== ===================== ===================== ===================== $ 323,016,007 $ 618,610,018 $ 93,690,710 $ 130,256,584 $ 107,812,326 (187,938) (1,289,799) (105,758) (528,311) (357,510) (95,783,619) (105,448,952) 8,079,936 (19,184,580) (50,859,864) 27,723,191 96,421,637 18,488,105 12,620,610 152,140 - --------------------- --------------------- --------------------- --------------------- --------------------- $ 254,767,641 $ 608,292,904 $ 120,152,993 $ 123,164,303 $ 56,747,092 ===================== ===================== ===================== ===================== ===================== $ 178,291,004 $ 384,343,282 $ 98,624,292 $ 71,618,358 $ 46,916,709 ===================== ===================== ===================== ===================== ===================== 13,289,475 18,199,330 11,567,187 3,714,184 3,915,220 ===================== ===================== ===================== ===================== ===================== $ 13.42 $ 21.12 $ 8.53 $ 19.28 $ 11.98 ===================== ===================== ===================== ===================== ===================== $ 14.24 $ 22.41 $ 9.05 $ 20.46 $ 12.71 ===================== ===================== ===================== ===================== ===================== $ 46,242,497 $ 157,225,937 $ 18,768,218 $ 35,799,684 $ 9,044,574 ===================== ===================== ===================== ===================== ===================== 3,695,901 8,368,563 2,456,381 2,014,328 878,411 ===================== ===================== ===================== ===================== ===================== $ 12.51 $ 18.79 $ 7.64 $ 17.77 $ 10.30 ===================== ===================== ===================== ===================== ===================== $ 17,370,142 $ 46,329,626 $ 2,760,483 $ 15,746,261 $ 785,809 ===================== ===================== ===================== ===================== ===================== 1,390,277 2,463,227 361,274 885,652 76,459 ===================== ===================== ===================== ===================== ===================== $ 12.49 $ 18.81 $ 7.64 $ 17.78 $ 10.28 ===================== ===================== ===================== ===================== ===================== $ 12,863,998 $ 20,394,059 $ -- $ -- $ -- ===================== ===================== ===================== ===================== ===================== 929,926 908,257 -- -- -- ===================== ===================== ===================== ===================== ===================== $ 13.83 $ 22.45 $ -- $ -- $ -- ===================== ===================== ===================== ===================== ===================== $ 12,744,565 $ 74,028,354 $ 8,733,294 $ 30,408,314 $ 5,474,635 ===================== ===================== ===================== ===================== =====================
48 STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 2006 (unaudited)
CGM Advisor Hansberger Harris Associates Targeted Equity International Focused Value Fund Fund Fund --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- INVESTMENT INCOME Dividends $ 7,272,824 $ 2,525,356 $ 1,496,617 Interest 268,137 32,480 245,574 Securities lending income 60,049 56,627 13,285 Less net foreign taxes withheld (136,345) (263,278) (450) --------------------- --------------------- --------------------- 7,464,665 2,351,185 1,755,026 --------------------- --------------------- --------------------- Expenses Management fees 2,670,520 610,461 1,369,577 Service fees - Class A 871,919 121,616 91,843 Service and distribution fees - Class B 262,391 171,502 451,968 Service and distribution fees - Class C 32,405 105,112 550,238 Trustees' fees and expenses 33,519 12,104 13,904 Administrative fees 234,514 41,301 99,349 Custodian fees and expenses 32,573 64,951 16,843 Transfer agent fees and expenses - Class A, Class B, Class C 572,015 227,310 290,594 Transfer agent fees and expenses - Class Y 4,899 -- -- Audit fees 13,877 19,504 11,827 Legal fees 24,181 4,979 13,317 Shareholder reporting expenses 73,811 24,276 43,013 Registration fees 29,776 20,590 26,442 Expense waiver recapture - Class Y (Note 4) -- -- -- Miscellaneous expenses 10,718 6,177 6,552 --------------------- --------------------- --------------------- Total expenses 4,867,118 1,429,883 2,985,467 Less reimbursement/waiver (Note 4) -- -- -- --------------------- --------------------- --------------------- Net expenses 4,867,118 1,429,883 2,985,467 --------------------- --------------------- --------------------- Net investment income (loss) 2,597,547 921,302 (1,230,441) --------------------- --------------------- --------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gain (loss) on: Investments - net 23,387,677 11,582,491 22,212,904 Foreign currency transactions - net -- (66,794) -- Change in unrealized appreciation (depreciation) on: Investments - net 7,508,077 (1,285,911) (20,895,004) Foreign currency translations - net -- 10,148 -- --------------------- --------------------- --------------------- Net realized and unrealized gain on investments and foreign currency transactions 30,895,754 10,239,934 1,317,900 --------------------- --------------------- --------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 33,493,301 $ 11,161,236 $ 87,459 ===================== ===================== =====================
Harris Associates Large Cap Value Fund --------------------- --------------------- INVESTMENT INCOME Dividends $ 2,012,289 Interest 54,327 Securities lending income 2,969 Less net foreign taxes withheld -- --------------------- 2,069,585 --------------------- Expenses Management fees 923,193 Service fees - Class A 229,439 Service and distribution fees - Class B 264,234 Service and distribution fees - Class C 94,379 Trustees' fees and expenses 17,503 Administrative fees 90,441 Custodian fees and expenses 18,151 Transfer agent fees and expenses - Class A, Class B, Class C 370,555 Transfer agent fees and expenses - Class Y 9,098 Audit fees 12,047 Legal fees 15,639 Shareholder reporting expenses 44,852 Registration fees 30,863 Expense waiver recapture - Class Y (Note 4) 2,887 Miscellaneous expenses 7,074 --------------------- Total expenses 2,130,355 Less reimbursement/waiver (Note 4) (131,071) --------------------- Net expenses 1,999,284 --------------------- Net investment income (loss) 70,301 --------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gain (loss) on: Investments - net 14,596,229 Foreign currency transactions - net -- Change in unrealized appreciation (depreciation) on: Investments - net (12,087,667) Foreign currency translations - net -- --------------------- Net realized and unrealized gain on investments and foreign currency transactions 2,508,562 --------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,578,863 =====================
See accompanying notes to financial statements. 49
Vaughan Nelson Westpeak IXIS U.S. Diversified IXIS Value Small Cap Value Capital Growth Portfolio Fund Fund Fund - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- $ 4,509,067 $ 1,029,917 $ 689,348 $ 271,415 165,909 42,402 78,798 11,016 92,639 4,176 16,614 1,683 (15,037) (4,215) -- -- - --------------------- --------------------- --------------------- --------------------- 4,752,578 1,072,280 784,760 284,114 - --------------------- --------------------- --------------------- --------------------- 2,843,572 462,137 539,361 222,387 490,920 124,224 82,883 61,072 849,960 105,035 193,636 47,699 240,858 14,251 74,121 4,530 26,148 13,120 11,478 10,375 194,087 39,463 32,495 19,282 37,737 15,569 12,419 10,830 823,465 160,793 222,701 135,929 14,329 -- -- -- 18,788 14,925 13,028 12,101 23,884 5,984 4,090 2,497 92,915 19,537 24,453 17,432 29,151 21,680 19,621 17,886 -- -- -- -- 8,333 5,802 4,537 4,066 - --------------------- --------------------- --------------------- --------------------- 5,694,147 1,002,520 1,234,823 566,086 -- -- (13,780) (19,670) - --------------------- --------------------- --------------------- --------------------- 5,694,147 1,002,520 1,221,043 546,416 - --------------------- --------------------- --------------------- --------------------- (941,569) 69,760 (436,283) (262,302) - --------------------- --------------------- --------------------- --------------------- 36,022,385 8,601,412 10,124,490 2,042,829 9,674 -- -- -- (6,324,777) (3,338,936) 130,174 (888,908) 50 -- -- -- - --------------------- --------------------- --------------------- --------------------- 29,707,332 5,262,476 10,254,664 1,153,921 - --------------------- --------------------- --------------------- --------------------- $ 28,765,763 $ 5,332,236 $ 9,818,381 $ 891,619 ===================== ===================== ===================== =====================
50 STATEMENTS OF CHANGES IN NET ASSETS
CGM Advisor Targeted Equity Fund -------------------------------------------- Six Months Ended Year Ended June 30, 2006 December 31, (unaudited) 2005 --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ 2,597,547 $ 5,455,563 Net realized gain on investments and foreign currency transactions 23,387,677 84,395,181 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations 7,508,077 2,836,954 --------------------- --------------------- Net increase (decrease) in net assets resulting from operations 33,493,301 92,687,698 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A (4,328,157) (1,593,713) Class B (344,673) (75,336) Class C (50,730) (4,738) Class Y (72,922) (49,839) Net realized capital gain Class A -- -- Class B -- -- Class C -- -- --------------------- --------------------- Total distributions (4,796,482) (1,723,626) --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) (31,127,555) (87,386,245) --------------------- --------------------- Redemption fees Class A 125 7,519 Class B 10 600 Class C 1 39 Class Y 2 110 --------------------- --------------------- 138 8,268 --------------------- --------------------- Net increase (decrease) in net assets (2,430,598) 3,586,095 --------------------- --------------------- NET ASSETS Beginning of the period 763,439,109 759,853,014 --------------------- --------------------- End of the period $ 761,008,511 $ 763,439,109 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ 1,957,721 $ 4,156,656 ===================== =====================
Hansberger International Fund -------------------------------------------- Six Months Ended Year Ended June 30, 2006 December 31, (unaudited) 2005 --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ 921,302 $ 460,052 Net realized gain on investments and foreign currency transactions 11,515,697 10,947,858 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations (1,275,763) 8,310,253 --------------------- --------------------- Net increase (decrease) in net assets resulting from operations 11,161,236 19,718,163 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A (748,398) -- Class B (278,489) -- Class C (176,990) -- Class Y -- -- Net realized capital gain Class A (1,171,107) -- Class B (436,300) -- Class C (277,416) -- --------------------- --------------------- Total distributions (3,088,700) -- --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) 2,718,085 (13,245,555) --------------------- --------------------- Redemption fees Class A 1,259 411 Class B 425 216 Class C 272 88 Class Y -- -- --------------------- --------------------- 1,956 715 --------------------- --------------------- Net increase (decrease) in net assets 10,792,577 6,473,323 --------------------- --------------------- NET ASSETS Beginning of the period 142,439,162 135,965,839 --------------------- --------------------- End of the period $ 153,231,739 $ 142,439,162 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (442,544) $ (159,969) ===================== =====================
See accompanying notes to financial statements. 51
Harris Associates Focused Value Fund Harris Associates Large Cap Value Fund - -------------------------------------------- -------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended June 30, 2006 December 31, June 30, 2006 December 31, (unaudited) 2005 (unaudited) 2005 - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- $ (1,230,441) $ (1,906,104) $ 70,301 $ 595,285 22,212,904 57,991,221 14,596,229 25,778,595 (20,895,004) (40,207,477) (12,087,667) (29,282,480) - --------------------- --------------------- --------------------- --------------------- 87,459 15,877,640 2,578,863 (2,908,600) - --------------------- --------------------- --------------------- --------------------- -- -- (435,185) (231,035) -- -- (124,956) (81,761) -- -- (46,052) (28,415) -- -- (30,568) (16,672) (2,111,684) (10,494,877) -- -- (2,779,035) (12,897,474) -- -- (3,271,855) (16,300,067) -- -- - --------------------- --------------------- --------------------- --------------------- (8,162,574) (39,692,418) (636,761) (357,883) - --------------------- --------------------- --------------------- --------------------- (50,665,114) (37,006,144) (29,506,069) (61,204,054) - --------------------- --------------------- --------------------- --------------------- 283 6,748 -- -- 353 7,032 -- -- 419 9,087 -- -- -- -- -- -- - --------------------- --------------------- --------------------- --------------------- 1,055 22,867 -- -- - --------------------- --------------------- --------------------- --------------------- (58,739,174) (60,798,055) (27,563,967) (64,470,537) - --------------------- --------------------- --------------------- --------------------- 302,299,103 363,097,158 282,331,608 346,802,145 - --------------------- --------------------- --------------------- --------------------- $ 243,559,929 $ 302,299,103 $ 254,767,641 $ 282,331,608 ===================== ===================== ===================== ===================== $ (1,289,166) $ (58,725) $ (187,938) $ 378,522 ===================== ===================== ===================== =====================
IXIS U.S. Diversified Portfolio IXIS Value Fund - -------------------------------------------- -------------------------------------------- Six Months Ended Year Ended Six Months Ended Year Ended June 30, 2006 December 31, June 30, 2006 December 31, (unaudited) 2005 (unaudited) 2005 - --------------------- --------------------- --------------------- --------------------- - --------------------- --------------------- --------------------- --------------------- $ (941,569) $ (5,426,695) $ 69,760 $ 36,516 36,032,059 85,718,676 8,601,412 14,669,814 (6,324,727) (36, 729,033) (3,338,936) (7,165,564) - --------------------- --------------------- --------------------- --------------------- 28,765,763 43,562,948 5,332,236 7,540,766 - --------------------- --------------------- --------------------- --------------------- -- -- (34,389) -- -- -- (10,477) -- -- -- (1,244) -- -- -- -- -- -- -- (1,779,572) (12,510,896) -- -- (389,601) (3,162,413) -- -- (55,512) (411,818) - --------------------- --------------------- --------------------- --------------------- -- -- (2,270,795) (16,085,127) - --------------------- --------------------- --------------------- --------------------- (50,008,495) (114,045,267) (6,635,801) (3,970,555) - --------------------- --------------------- --------------------- --------------------- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - --------------------- --------------------- --------------------- --------------------- -- -- -- -- - --------------------- --------------------- --------------------- --------------------- (21,242,732) (70,482,319) (3,574,360) (12,514,916) - --------------------- --------------------- --------------------- --------------------- 629,535,636 700,017,955 123,727,353 136,242,269 - --------------------- --------------------- --------------------- --------------------- $ 608,292,904 $ 629,535,636 $ 120,152,993 $ 123,727,353 ===================== ===================== ===================== ===================== $ (1,289,799) $ (348,230) $ (105,758) $ (129,408) ===================== ===================== ===================== =====================
52 STATEMENTS OF CHANGES IN NET ASSETS (continued)
Vaughan Nelson Small Cap Value Fund -------------------------------------------- Six Months Ended Year Ended June 30, 2006 December 31, (unaudited) 2005 --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ (436,283) $ (950,930) Net realized gain on investments and foreign currency transactions 10,124,490 12,955,895 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations 130,174 (2,141,269) --------------------- --------------------- Net increase (decrease) in net assets resulting from operations 9,818,381 9,863,696 --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) 1,979,597 (11,845,326) --------------------- --------------------- Redemption fees Class A 2,676 2,646 Class B 1,501 2,033 Class C 595 649 Class Y -- -- --------------------- --------------------- 4,772 5,328 --------------------- --------------------- Net increase (decrease) in net assets 11,802,750 (1,976,302) --------------------- --------------------- NET ASSETS Beginning of the period 111,361,553 113,337,855 --------------------- --------------------- End of the period $ 123,164,303 $ 111,361,553 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (528,311) $ (92,028) ===================== =====================
Westpeak Capital Growth Fund -------------------------------------------- Six Months Ended Year Ended June 30, 2006 December 31, (unaudited) 2005 --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ (262,302) $ (632,456) Net realized gain on investments and foreign currency transactions 2,042,829 984,436 Net change in unrealized appreciation (depreciation) on investments and foreign currency translations (888,908) 1,466,262 --------------------- --------------------- Net increase (decrease) in net assets resulting from operations 891,619 1,818,242 --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) (4,624,460) (12,686,062) --------------------- --------------------- Redemption fees Class A -- -- Class B -- -- Class C -- -- Class Y -- -- --------------------- --------------------- -- -- --------------------- --------------------- Net increase (decrease) in net assets (3,732,841) (10,867,820) --------------------- --------------------- NET ASSETS Beginning of the period 60,479,933 71,347,753 --------------------- --------------------- End of the period $ 56,747,092 $ 60,479,933 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (357,510) $ (95,208) ===================== =====================
See accompanying notes to financial statements. 53 This Page Intentionally Left Blank 54 FINANCIAL HIGHLIGHTS For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions: ---------------------------------------- ----------------------------------------- Net asset value, Net Dividends Distributions beginning investment Net realized Total from from from net of income and unrealized investment net investment realized Total period (loss) (b) gain (loss) operations income capital gains distributions ---------- ---------- -------------- ---------- -------------- ------------- ------------- CGM ADVISOR TARGETED EQUITY FUND Class A 06/30/2006(g) $ 10.22 $ 0.04 $ 0.41 $ 0.45 $ (0.07) $ -- $ (0.07) 12/31/2005 9.05 0.07 1.12 1.19 (0.02) -- (0.02) 12/31/2004 7.94 0.01 1.10 1.11 -- -- -- 12/31/2003 5.56 (0.03) 2.41 2.38 -- -- -- 12/31/2002 7.81 (0.06) (2.19) (2.25) -- -- -- 12/31/2001 9.36 (0.03) (1.49) (1.52) (0.03) -- (0.03) Class B 06/30/2006(g) 9.48 (0.00)(e) 0.39 0.39 (0.07) -- (0.07) 12/31/2005 8.45 0.00(e) 1.04 1.04 (0.01) -- (0.01) 12/31/2004 7.47 (0.04) 1.02 0.98 -- -- -- 12/31/2003 5.28 (0.07) 2.26 2.19 -- -- -- 12/31/2002 7.47 (0.11) (2.08) (2.19) -- -- -- 12/31/2001 9.02 (0.09) (1.43) (1.52) (0.03) -- (0.03) Class C 06/30/2006(g) 9.48 0.00(e) 0.39 0.39 (0.07) -- (0.07) 12/31/2005 8.45 0.00(e) 1.04 1.04 (0.01) -- (0.01) 12/31/2004 7.47 (0.04) 1.02 0.98 -- -- -- 12/31/2003 5.27 (0.07) 2.27 2.20 -- -- -- 12/31/2002 7.47 (0.11) (2.09) (2.20) -- -- -- 12/31/2001 9.02 (0.09) (1.43) (1.52) (0.03) -- (0.03) Class Y 06/30/2006(g) 10.42 0.06 0.43 0.49 (0.07) -- (0.07) 12/31/2005 9.23 0.10 1.14 1.24 (0.05) -- (0.05) 12/31/2004 8.07 0.04 1.12 1.16 -- -- -- 12/31/2003 5.63 0.01 2.43 2.44 -- -- -- 12/31/2002 7.85 (0.02) (2.20) (2.22) -- -- -- 12/31/2001 9.37 0.01 (1.50) (1.49) (0.03) -- (0.03) HANSBERGER INTERNATIONAL FUND Class A 06/30/2006(g) $ 19.88 $ 0.16 $ 1.39 $ 1.55 $ (0.16) $ (0.25) $ (0.41) 12/31/2005 17.12 0.11 2.65 2.76 -- -- -- 12/31/2004 15.07 0.02 2.03 2.05 -- -- -- 12/31/2003 10.84 (0.04) 4.27 4.23 -- -- -- 12/31/2002 13.02 (0.05) (2.08) (2.13) (0.05) -- (0.05) 12/31/2001 14.42 0.13 (1.42) (1.29) (0.03) (0.08) (0.11) Class B 06/30/2006(g) 18.27 0.07 1.28 1.35 (0.16) (0.25) (0.41) 12/31/2005 15.85 0.00(e) 2.42 2.42 -- -- -- 12/31/2004 14.06 (0.09) 1.88 1.79 -- -- -- 12/31/2003 10.19 (0.12) 3.99 3.87 -- -- -- 12/31/2002 12.32 (0.14) (1.94) (2.08) (0.05) -- (0.05) 12/31/2001 13.74 0.03 (1.36) (1.33) (0.01) (0.08) (0.09)
Redemption fee ---------- CGM ADVISOR TARGETED EQUITY FUND Class A 06/30/2006(g) $ 0.00(e) 12/31/2005 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- Class B 06/30/2006(g) 0.00(e) 12/31/2005 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- Class C 06/30/2006(g) 0.00(e) 12/31/2005 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- Class Y 06/30/2006(g) 0.00(e) 12/31/2005 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- HANSBERGER INTERNATIONAL FUND Class A 06/30/2006(g) $ 0.00(e) 12/31/2005 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 -- Class B 06/30/2006(g) 0.00(e) 12/31/2005 0.00(e) 12/31/2004 0.00(e) 12/31/2003 -- 12/31/2002 -- 12/31/2001 --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares, and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)Had certain expenses not been reduced during the period, total return would have been lower. (d)The investment adviser agreed to reimburse a portion of the Fund's expenses and/or waive its management fee during the period. Without this reimbursement/waiver, expenses would have been higher. See Note 4. See accompanying notes to financial statements. 55
Ratios to average net assets: --------------------------------------- Net asset Net assets, value, Total end of Gross Net Net investment Portfolio end of return period expenses expenses income (loss) turnover period (%) (a) (000's) (%) (h) (%) (h) (%) (h) rate (%) - ---------- --------- ----------- --------- --------- -------------- --------- $ 10.60 4.4 $ 691,663 1.21 N/A 0.73 55 10.22 13.2 694,121 1.28 N/A 0.78 196 9.05 14.0 689,967 1.42 N/A 0.16 265 7.94 42.8 724,214 1.57 N/A (0.40) 261 5.56 (28.8) 602,989 1.47 N/A (0.86) 223 7.81 (16.2) 1,012,161 1.38 N/A (0.39) 243 9.80 4.1 49,949 1.96 N/A (0.02) 55 9.48 12.4 53,005 2.03 N/A 0.03 196 8.45 13.1 57,527 2.17 N/A (0.58) 265 7.47 41.5 56,880 2.32 N/A (1.14) 261 5.28 (29.3) 45,633 2.23 N/A (1.62) 223 7.47 (16.8) 78,744 2.13 N/A (1.14) 243 9.80 4.1 7,664 1.96 N/A 0.02 55 9.48 12.4 5,133 2.04 N/A 0.03 196 8.45 13.1 3,214 2.17 N/A (0.58) 265 7.47 41.8 2,647 2.32 N/A (1.14) 261 5.27 (29.5) 2,187 2.23 N/A (1.62) 223 7.47 (16.8) 4,162 2.13 N/A (1.14) 243 10.84 4.6 11,733 0.90 N/A 1.05 55 10.42 13.4 11,181 1.07 N/A 0.99 196 9.23 14.4 9,145 1.08 N/A 0.51 265 8.07 43.3 7,773 1.03 N/A 0.16 261 5.63 (28.3) 5,522 0.92 N/A (0.31) 223 7.85 (15.9) 8,785 0.87 N/A 0.13 243 $ 21.02 8.0 $ 99,463 1.60 N/A 1.48 29 19.88 16.1 89,663 1.81 N/A 0.62 45 17.12 13.6(c) 73,707 1.92(f) 1.91(d) 0.14 81 15.07 39.0(c) 59,762 2.32(f) 2.30(d) (0.34) 92 10.84 (16.4) 50,053 2.19 N/A (0.45) 91 13.02 (9.0) 71,536 2.12 N/A 0.98 110 19.21 7.6 32,392 2.35 N/A 0.71 29 18.27 15.3 33,388 2.55 N/A (0.02) 45 15.85 12.7(c) 45,213 2.67(f) 2.66(d) (0.60) 81 14.06 38.0(c) 60,296 3.07(f) 3.05(d) (1.09) 92 10.19 (17.0) 53,306 2.94 N/A (1.20) 91 12.32 (9.7) 82,861 2.87 N/A 0.23 110
(e)Amount rounds to less than $0.01 per share. (f)Represents total expenses prior to advisory fee waiver and/or reimbursement of a portion of the Fund's expenses. (g)For the six months ended June 30, 2006 (unaudited). (h)Computed on an annualized basis for periods less than one year. 56 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (loss) from investment operations: ---------------------------------------- Net asset value, Net beginning investment Net realized Total from of income and unrealized investment period (loss) (b) gain (loss) operations ---------- ---------- -------------- ---------- HANSBERGER INTERNATIONAL FUND (continued) Class C 06/30/2006(j) $ 18.28 $ 0.07 $ 1.28 $ 1.35 12/31/2005 15.86 (0.02) 2.44 2.42 12/31/2004 14.06 (0.09) 1.89 1.80 12/31/2003 10.19 (0.12) 3.99 3.87 12/31/2002 12.33 (0.14) (1.95) (2.09) 12/31/2001 13.75 0.03 (1.36) (1.33) HARRIS ASSOCIATES FOCUSED VALUE FUND Class A 06/30/2006(j) $ 12.08 $ (0.02) $ 0.00(h) $ (0.02) 12/31/2005 13.06 0.00(h) 0.76 0.76 12/31/2004 11.79 (0.02) 1.29 1.27 12/31/2003 9.24 (0.03) 2.58 2.55 12/31/2002 10.96 (0.03) (1.69) (1.72) 12/31/2001(f) 10.00 (0.01) 0.97 0.96 Class B 06/30/2006(j) 11.59 (0.06) 0.00(h) (0.06) 12/31/2005 12.69 (0.10) 0.74 0.64 12/31/2004 11.55 (0.11) 1.25 1.14 12/31/2003 9.12 (0.10) 2.53 2.43 12/31/2002 10.90 (0.11) (1.67) (1.78) 12/31/2001(f) 10.00 (0.07) 0.97 0.90 Class C 06/30/2006(j) 11.59 (0.06) 0.00(h) (0.06) 12/31/2005 12.69 (0.10) 0.74 0.64 12/31/2004 11.55 (0.11) 1.25 1.14 12/31/2003 9.12 (0.10) 2.53 2.43 12/31/2002 10.90 (0.11) (1.67) (1.78) 12/31/2001(f) 10.00 (0.07) 0.97 0.90 HARRIS ASSOCIATES LARGE CAP VALUE FUND Class A 06/30/2006(j) $ 13.33 $ 0.02 $ 0.10 $ 0.12 12/31/2005 13.37 0.05 (0.08) (0.03) 12/31/2004 12.25 0.04 1.08 1.12 12/31/2003 9.42 0.01 2.82 2.83 12/31/2002 11.78 0.01 (2.37) (2.36) 12/31/2001 13.79 (0.01) (2.00) (2.01) Class B 06/30/2006(j) 12.48 (0.03) 0.09 0.06 12/31/2005 12.62 (0.04) (0.09) (0.13) 12/31/2004 11.64 (0.05) 1.03 0.98 12/31/2003 9.02 (0.07) 2.69 2.62 12/31/2002 11.37 (0.07) (2.28) (2.35) 12/31/2001 13.40 (0.10) (1.93) (2.03)
Less distributions: ----------------------------------------- Dividends Distributions from from net net investment realized Total Redemption income capital gains distributions fee -------------- ------------- ------------- ---------- HANSBERGER INTERNATIONAL FUND (continued) Class C 06/30/2006(j) $ (0.16) $ (0.25) $ (0.41) $ 0.00(h) 12/31/2005 -- -- -- 0.00(h) 12/31/2004 -- -- -- 0.00(h) 12/31/2003 -- -- -- -- 12/31/2002 (0.05) -- (0.05) -- 12/31/2001 (0.01) (0.08) (0.09) -- HARRIS ASSOCIATES FOCUSED VALUE FUND Class A 06/30/2006(j) $ -- $ (0.38) $ (0.38) $ 0.00(h) 12/31/2005 -- (1.74) (1.74) 0.00(h) 12/31/2004 -- -- -- 0.00(h) 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001(f) -- -- -- -- Class B 06/30/2006(j) -- (0.38) (0.38) 0.00(h) 12/31/2005 -- (1.74) (1.74) 0.00(h) 12/31/2004 -- -- -- 0.00(h) 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001(f) -- -- -- -- Class C 06/30/2006(j) -- (0.38) (0.38) 0.00(h) 12/31/2005 -- (1.74) (1.74) 0.00(h) 12/31/2004 -- -- -- 0.00(h) 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001(f) -- -- -- -- HARRIS ASSOCIATES LARGE CAP VALUE FUND Class A 06/30/2006(j) $ (0.03) $ -- $ (0.03) $ -- 12/31/2005 (0.01) -- (0.01) -- 12/31/2004 -- -- -- -- 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001 -- -- -- -- Class B 06/30/2006(j) (0.03) -- (0.03) -- 12/31/2005 (0.01) -- (0.01) -- 12/31/2004 -- -- -- -- 12/31/2003 -- -- -- -- 12/31/2002 -- -- -- -- 12/31/2001 -- -- -- --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)The investment adviser agreed to reimburse a portion of the Fund's expenses and/or waive its management fee during the period. Without this reimbursement/waiver, expenses would have been higher. See Note 4. (d)Had certain expenses not been reduced during the period, total return would have been lower. See accompanying notes to financial statements. 57
Ratios to average net assets: --------------------------------------- Net assets, Net asset Total end of Gross Net Net investment Portfolio value, end return period expenses expenses income (loss) turnover of period (%) (a) (000's) (%) (g) (%) (g) (%) (g) rate (%) - ---------- --------- ----------- --------- --------- -------------- --------- $19.22 7.6 $ 21,376 2.35 N/A 0.75 29 18.28 15.3 19,388 2.56 N/A (0.11) 45 15.86 12.8(d) 17,046 2.67(i) 2.66(c) (0.63) 81 14.06 38.0(d) 12,557 3.07(i) 3.05(c) (1.09) 92 10.19 (17.0) 11,013 2.94 N/A (1.20) 91 12.33 (9.7) 16,493 2.87 N/A 0.23 110 $11.68 (0.1) $ 65,193 1.63 N/A (0.35) 25 12.08 5.7 82,298 1.68 N/A (0.04) 39 13.06 10.8 108,042 1.70 N/A (0.15) 26 11.79 27.6(d) 95,957 1.84(i) 1.70(c) (0.28) 30 9.24 (15.7)(d) 68,660 1.79(i) 1.70(c) (0.35) 12 10.96 9.6(d) 45,987 2.08(i) 1.70(c) (0.08) 10 11.15 (0.4) 81,669 2.38 N/A (1.10) 25 11.59 5.0 97,256 2.43 N/A (0.80) 39 12.69 9.9 110,275 2.45 N/A (0.90) 26 11.55 26.6(d) 107,017 2.59(i) 2.45(c) (1.03) 30 9.12 (16.3)(d) 85,794 2.54(i) 2.45(c) (1.10) 12 10.90 9.0(d) 62,671 2.83(i) 2.45(c) (0.83) 10 11.15 (0.4) 96,698 2.38 N/A (1.10) 25 11.59 5.0 122,745 2.43 N/A (0.79) 39 12.69 9.9 144,780 2.45 N/A (0.90) 26 11.55 26.6(d) 124,427 2.59(i) 2.45(c) (1.03) 30 9.12 (16.3)(d) 86,269 2.54(i) 2.45(c) (1.10) 12 10.90 9.0(d) 34,406 2.83(i) 2.45(c) (0.86) 10 $13.42 0.9(d) $ 178,291 1.40(i) 1.30(c) 0.24 13 13.33 (0.2)(d) 188,763 1.46(i) 1.30(c) 0.40 39 13.37 9.1(d) 222,434 1.49(i) 1.30(c) 0.30 27 12.25 30.0(d) 215,259 1.62(i) 1.45(c) 0.07 30(e) 9.42 (20.0) 130,751 1.56 N/A 0.07 195 11.78 (14.6) 211,138 1.46 N/A (0.05) 154 12.51 0.5(d) 46,242 2.15(i) 2.05(c) (0.51) 13 12.48 (1.0)(d) 59,035 2.21(i) 2.05(c) (0.35) 39 12.62 8.4(d) 79,949 2.24(i) 2.05(c) (0.46) 27 11.64 29.1(d) 91,085 2.37(i) 2.20(c) (0.69) 30(e) 9.02 (20.7) 71,436 2.31 N/A (0.68) 195 11.37 (15.1) 120,361 2.21 N/A (0.80) 154
(e)Portfolio turnover excludes the impact of assets as a result of a merger with another Fund. (f)For the period March 15, 2001, (inception) through December 31, 2001. (g)Computed on an annualized basis for periods less than one year. (h)Amount rounds to less than $0.01 per share. (i)Represents total expenses prior to advisory fee waiver and/or reimbursement of a portion of the Fund's expenses. (j)For the six months ended June 30, 2006 (unaudited). 58 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (loss) from investment operations: ---------------------------------------- Net asset value, Net beginning investment Net realized Total from of income and unrealized investment period (loss) (b) gain (loss) operations ---------- ---------- -------------- ---------- HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued) Class C 06/30/2006(g) $ 12.46 $ (0.03) $ 0.09 $ 0.06 12/31/2005 12.60 (0.04) (0.09) (0.13) 12/31/2004 11.63 (0.05) 1.02 0.97 12/31/2003 9.01 (0.07) 2.69 2.62 12/31/2002 11.36 (0.07) (2.28) (2.35) 12/31/2001 13.38 (0.10) (1.92) (2.02) Class Y 06/30/2006(g) 13.72 0.03 0.11 0.14 12/31/2005 13.74 0.09 (0.10) (0.01) 12/31/2004 12.54 0.07 1.13 1.20 12/31/2003 9.59 0.06 2.89 2.95 12/31/2002 11.93 0.07 (2.41) (2.34) 12/31/2001 13.87 0.06 (2.00) (1.94) IXIS U.S. DIVERSIFIED PORTFOLIO Class A 06/30/2006(g) $ 20.17 $ (0.01) $ 0.96 $ 0.95 12/31/2005 18.75 (0.11) 1.53 1.42 12/31/2004 16.61 (0.12) 2.26 2.14 12/31/2003 12.43 (0.13) 4.31 4.18 12/31/2002 15.90 (0.11) (3.36) (3.47) 12/31/2001 17.55 (0.05) (1.59) (1.64) Class B 06/30/2006(g) 18.01 (0.07) 0.85 0.78 12/31/2005 16.87 (0.22) 1.36 1.14 12/31/2004 15.06 (0.23) 2.04 1.81 12/31/2003 11.35 (0.22) 3.93 3.71 12/31/2002 14.64 (0.20) (3.09) (3.29) 12/31/2001 16.29 (0.16) (1.48) (1.64) Class C 06/30/2006(g) 18.03 (0.07) 0.85 0.78 12/31/2005 16.89 (0.22) 1.36 1.14 12/31/2004 15.08 (0.23) 2.04 1.81 12/31/2003 11.37 (0.22) 3.93 3.71 12/31/2002 14.66 (0.20) (3.09) (3.29) 12/31/2001 16.30 (0.16) (1.47) (1.63) Class Y 06/30/2006(g) 21.41 0.04 1.00 1.04 12/31/2005 19.82 (0.03) 1.62 1.59 12/31/2004 17.46 (0.05) 2.41 2.36 12/31/2003 12.98 (0.04) 4.52 4.48 12/31/2002 16.50 (0.02) (3.50) (3.52) 12/31/2001 18.13 0.04 (1.66) (1.62)
Less distributions: ----------------------------------------- Dividends Distributions from from net net investment realized Total income capital gains distributions -------------- ------------- ------------- HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued) Class C 06/30/2006(g) $ (0.03) $ -- $ (0.03) 12/31/2005 (0.01) -- (0.01) 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- -- -- Class Y 06/30/2006(g) (0.03) -- (0.03) 12/31/2005 (0.01) -- (0.01) 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- -- -- IXIS U.S. DIVERSIFIED PORTFOLIO Class A 06/30/2006(g) $ -- $ -- $ -- 12/31/2005 -- -- -- 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- (0.01) (0.01) Class B 06/30/2006(g) -- -- -- 12/31/2005 -- -- -- 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- (0.01) (0.01) Class C 06/30/2006(g) -- -- -- 12/31/2005 -- -- -- 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- (0.01) (0.01) Class Y 06/30/2006(g) -- -- -- 12/31/2005 -- -- -- 12/31/2004 -- -- -- 12/31/2003 -- -- -- 12/31/2002 -- -- -- 12/31/2001 -- (0.01) (0.01)
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)The investment adviser agreed to reimburse a portion of the Fund's expenses and/or waive its management fee during the period. Without this reimbursement/waiver, expenses would have been higher. See Note 4. (d)Had certain expenses not been reduced during the period, total return would have been lower. See accompanying notes to financial statements. 59
Ratios to average net assets: --------------------------------------- Net asset Net assets, value, Total end of Gross Net Net investment Portfolio end of return period expenses expenses income turnover period (%) (a) (000's) (%) (h) (%) (h) (loss) (%) (h) rate (%) - ---------- --------- ----------- --------- --------- -------------- --------- $ 12.49 0.5(d) $ 17,370 2.15(f) 2.05(c) (0.51) 13 12.46 (1.0)(d) 20,308 2.21(f) 2.05(c) (0.35) 39 12.60 8.3(d) 26,392 2.24(f) 2.05(c) (0.42) 27 11.63 29.1(d) 15,553 2.37(f) 2.20(c) (0.69) 30(e) 9.01 (20.7) 6,440 2.31 N/A (0.68) 195 11.36 (15.1) 10,553 2.21 N/A (0.80) 154 13.83 1.10(d) 12,864 1.05(i) N/A 0.49 13 13.72 (0.0)(d) 14,226 1.09(f) 1.05(c) 0.65 39 13.74 9.6 18,027 0.99 N/A 0.58 27 12.54 30.8 26,545 1.01 N/A 0.51 30(e) 9.59 (19.6) 10,569 0.96 N/A 0.66 195 11.93 (14.0) 11,918 0.91 N/A 0.52 154 $ 21.12 4.7 $ 384,343 1.56 N/A (0.05) 37 20.17 7.6 386,084 1.73 N/A (0.57) 97 18.75 12.9 392,726 1.87 N/A (0.71) 104 16.61 33.6 354,755 1.99 N/A (0.94) 102 12.43 (21.8) 269,180 1.89 N/A (0.75) 95 15.90 (9.4) 389,405 1.83 N/A (0.31) 183 18.79 4.3 157,226 2.31 N/A (0.80) 37 18.01 6.8 174,745 2.48 N/A (1.32) 97 16.87 12.0 223,349 2.62 N/A (1.50) 104 15.06 32.7 272,533 2.74 N/A (1.69) 102 11.35 (22.5) 282,361 2.64 N/A (1.50) 95 14.64 (10.1) 491,614 2.58 N/A (1.06) 183 18.81 4.3 46,330 2.31 N/A (0.80) 37 18.03 6.8 48,262 2.48 N/A (1.32) 97 16.89 12.0 58,883 2.62 N/A (1.48) 104 15.08 32.6 60,783 2.74 N/A (1.69) 102 11.37 (22.4) 54,291 2.64 N/A (1.50) 95 14.66 (10.0) 87,245 2.58 N/A (1.06) 183 22.45 4.9 20,394 1.17 N/A 0.33 37 21.41 8.0 20,445 1.32 N/A (0.16) 97 19.82 13.5 25,060 1.33 N/A (0.27) 104 17.46 34.5 47,485 1.34 N/A (0.30) 102 12.98 (21.3) 37,911 1.29 N/A (0.15) 95 16.50 (9.0) 55,970 1.29 N/A 0.23 183
(e)Portfolio turnover excludes the impact of assets as a result of a merger with another Fund. (f)Represents total expenses prior to advisory fee waiver and/or reimbursement of a portion of the Fund's expenses. (g)For the six months ended June 30, 2006 (unaudited). (h)Computed on an annualized basis for periods less than one year. (i)Includes expense waiver recapture of 0.04%. See Note 4. 60 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions: --------------------------------------- -------------------------- Net asset value, Net Distributions beginning investment Net realized Total from from net of income and unrealized investment realized Total Redemption period (loss) (b) gain (loss) operations capital gains distributions fee --------- ---------- -------------- ---------- ------------- ------------- ---------- IXIS VALUE FUND Class A 06/30/2006(e) $ 8.32 $ 0.01 $ 0.36 $ 0.37 $(0.16) $(0.16) $ -- 12/31/2005 8.92 0.02 0.54 0.56 (1.16) (1.16) -- 12/31/2004 8.16 0.00(c) 0.93 0.93 (0.17) (0.17) -- 12/31/2003 6.20 (0.01) 1.97 1.96 -- -- -- 12/31/2002 7.70 (0.01) (1.49) (1.50) -- -- -- 12/31/2001 7.60 (0.02) 0.12 0.10 -- -- -- Class B 06/30/2006(e) 7.51 (0.02) 0.31 0.29 (0.16) (0.16) -- 12/31/2005 8.21 (0.05) 0.51 0.46 (1.16) (1.16) -- 12/31/2004 7.57 (0.06) 0.87 0.81 (0.17) (0.17) -- 12/31/2003 5.80 (0.06) 1.83 1.77 -- -- -- 12/31/2002 7.26 (0.06) (1.40) (1.46) -- -- -- 12/31/2001 7.22 (0.07) 0.11 0.04 -- -- -- Class C 06/30/2006(e) 7.50 (0.02) 0.32 0.30 (0.16) (0.16) -- 12/31/2005 8.21 (0.05) 0.50 0.45 (1.16) (1.16) -- 12/31/2004 7.57 (0.05) 0.86 0.81 (0.17) (0.17) -- 12/31/2003 5.80 (0.06) 1.83 1.77 -- -- -- 12/31/2002 7.26 (0.06) (1.40) (1.46) -- -- -- 12/31/2001 7.22 (0.07) 0.11 0.04 -- -- -- VAUGHAN NELSON SMALL CAP VALUE FUND Class A 06/30/2006(e) $17.69 $(0.04) $ 1.63 $ 1.59 $ -- $ -- $0.00(c) 12/31/2005 16.07 (0.08) 1.70 1.62 -- -- 0.00(c) 12/31/2004 13.94 (0.13) 2.26 2.13 -- -- 0.00(c) 12/31/2003 10.05 (0.19) 4.08 3.89 -- -- -- 12/31/2002 14.52 (0.21) (4.26) (4.47) -- -- -- 12/31/2001 16.51 (0.21) (1.78) (1.99) -- -- -- Class B 06/30/2006(e) 16.36 (0.10) 1.51 1.41 -- -- 0.00(c) 12/31/2005 14.97 (0.19) 1.58 1.39 -- -- 0.00(c) 12/31/2004 13.08 (0.22) 2.11 1.89 -- -- 0.00(c) 12/31/2003 9.51 (0.26) 3.83 3.57 -- -- -- 12/31/2002 13.84 (0.28) (4.05) (4.33) -- -- -- 12/31/2001 15.86 (0.30) (1.72) (2.02) -- -- -- Class C 06/30/2006(e) 16.37 (0.10) 1.51 1.41 -- -- 0.00(c) 12/31/2005 14.98 (0.19) 1.58 1.39 -- -- 0.00(c) 12/31/2004 13.09 (0.22) 2.11 1.89 -- -- 0.00(c) 12/31/2003 9.51 (0.26) 3.84 3.58 -- -- -- 12/31/2002 13.84 (0.28) (4.05) (4.33) -- -- -- 12/31/2001 15.86 (0.30) (1.72) (2.02) -- -- --
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)Amount rounds to less than $0.01 per share. (d)Effect of voluntary waiver of expenses by advisor was less than 0.005%. (e)For the six months ended June 30, 2006 (unaudited). See accompanying notes to financial statements. 61
Ratios to average net assets --------------------------------------- Net asset Net assets, value, Total end of Gross Net Net investment Portfolio end of return period expenses expenses income (loss) turnover period (%) (a) (000's) (%) (f) (%) (f) (%) (f) rate (%) - ---------- --------- ----------- --------- --------- -------------- --------- $ 8.53 4.5 $ 98,624 1.48 N/A 0.26 30 8.32 6.2 98,353 1.60(d) N/A 0.19 62 8.92 11.4 105,359 1.66 N/A 0.03 56 8.16 31.6 110,228 1.81 N/A (0.15) 75 6.20 (19.5) 99,894 1.68 N/A (0.21) 67 7.70 1.3 137,855 1.64 N/A (0.28) 77 7.64 3.9 18,768 2.23 N/A (0.50) 30 7.51 5.5 22,458 2.35(d) N/A (0.56) 62 8.21 10.7 27,804 2.41 N/A (0.72) 56 7.57 30.5 30,029 2.56 N/A (0.90) 75 5.80 (20.1) 27,808 2.43 N/A (0.96) 67 7.26 0.6 44,325 2.39 N/A (1.03) 77 7.64 4.1 2,760 2.23 N/A (0.50) 30 7.50 5.4 2,916 2.35(d) N/A (0.56) 62 8.21 10.7 3,079 2.41 N/A (0.70) 56 7.57 30.5 2,134 2.56 N/A (0.90) 75 5.80 (20.1) 2,047 2.43 N/A (0.96) 67 7.26 0.6 2,833 2.39 N/A (1.03) 77 $ 19.28 9.0(h) $ 71,618 1.72(i) 1.70(g) (0.38) 40 17.69 10.1 58,963 1.92 N/A (0.47) 80 16.07 15.3 45,138 2.01 N/A (0.89) 172 13.94 38.7 45,442 2.33 N/A (1.69) 156 10.05 (30.8) 38,441 2.13 N/A (1.72) 160 14.52 (12.1) 69,873 2.08 N/A (1.43) 174 17.77 8.6(h) 35,800 2.48(i) 2.46(g) (1.17) 40 16.36 9.3 38,732 2.66 N/A (1.24) 80 14.97 14.5 54,652 2.76 N/A (1.65) 172 13.08 37.5 55,662 3.08 N/A (2.44) 156 9.51 (31.3) 46,215 2.88 N/A (2.47) 160 13.84 (12.7) 82,060 2.83 N/A (2.18) 174 17.78 8.6(h) 15,746 2.47(i) 2.45(g) (1.14) 40 16.37 9.3 13,667 2.67 N/A (1.23) 80 14.98 14.4 13,549 2.76 N/A (1.63) 172 13.09 37.6 12,042 3.08 N/A (2.44) 156 9.51 (31.3) 10,930 2.88 N/A (2.47) 160 13.84 (12.7) 22,047 2.83 N/A (2.18) 174
(f)Computed on an annualized basis for periods less than one year. (g)The investment adviser agreed to reimburse a portion of the Fund's expenses and/or waive its management fee during the period. Without this reimbursement/waiver, expenses would have been higher. See Note 4. (h)Had certain expenses not been reduced during the period, total return would have been lower. (i)Represents total expenses prior to advisory fee waiver and/or reimbursement of a portion of the Fund's expenses. 62 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (loss) from investment operations: Less distributions: ---------------------------------------- -------------------------- Net asset value, Net Distributions beginning investment Net realized Total from from net of income and unrealized investment realized Total period (loss) (b) gain (loss) operations capital gains distributions ---------- ---------- -------------- ---------- ------------- ------------- WESTPEAK CAPITAL GROWTH FUND Class A 06/30/2006(d) $ 11.81 $ (0.05) $ 0.22 $ 0.17 $ -- $ -- 12/31/2005 11.43 (0.10) 0.48 0.38 -- -- 12/31/2004 10.87 (0.02)(c) 0.58 0.56 -- -- 12/31/2003 8.58 (0.08) 2.37 2.29 -- -- 12/31/2002 11.93 (0.09) (3.26) (3.35) -- -- 12/31/2001 15.04 (0.13) (2.95) (3.08) (0.03) (0.03) Class B 06/30/2006(d) 10.19 (0.08) 0.19 0.11 -- -- 12/31/2005 9.94 (0.16) 0.41 0.25 -- -- 12/31/2004 9.52 (0.09)(c) 0.51 0.42 -- -- 12/31/2003 7.56 (0.13) 2.09 1.96 -- -- 12/31/2002 10.61 (0.15) (2.90) (3.05) -- -- 12/31/2001 13.47 (0.20) (2.63) (2.83) (0.03) (0.03) Class C 06/30/2006(d) 10.17 (0.08) 0.19 0.11 -- -- 12/31/2005 9.92 (0.16) 0.41 0.25 -- -- 12/31/2004 9.50 (0.09)(c) 0.51 0.42 -- -- 12/31/2003 7.56 (0.13) 2.07 1.94 -- -- 12/31/2002 10.60 (0.14) (2.90) (3.04) -- -- 12/31/2001 13.47 (0.20) (2.64) (2.84) (0.03) (0.03)
(a)A sales charge for Class A shares and Class C (prior to February 1, 2004) shares, and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)Includes special one-time distribution from Microsoft Corp. Without this distribution, net investment loss per share would have been $(0.08), $(0.14) and $(0.14) for Class A, Class B and Class C shares, respectively, and the ratio of net investment loss to average net assets would have been (0.76)%, (1.52)% and (1.51)% for Class A, Class B and Class C shares, respectively. (d)For the six months ended June 30, 2006 (unaudited). See accompanying notes to financial statements. 63
Ratios to average net assets: ------------------------------------- Net asset Net assets, value, Total end of Gross Net Net investment Portfolio end of return period Expenses Expenses income (loss) turnover period (%) (a) (000's) (%) (h) (%) (e) (%) (e) rate (%) - ---------- --------- ----------- --------- --------- -------------- --------- $ 11.98 1.4(g) $ 46,917 1.78(e) 1.71(f) (0.75) 76 11.81 3.3 49,680 1.88 N/A (0.84) 132 11.43 5.2 57,420 1.89 N/A (0.18)(c) 121 10.87 26.7 63,380 1.93 N/A (0.85) 107 8.58 (28.1) 58,729 1.75 N/A (0.84) 103 11.93 (20.5) 98,412 1.62 N/A (0.99) 90 10.30 1.1(g) 9,045 2.53(e) 2.46(f) (1.50) 76 10.19 2.5 9,864 2.63 N/A (1.59) 132 9.94 4.4 12,916 2.64 N/A (0.97)(c) 121 9.52 25.9 16,485 2.68 N/A (1.60) 107 7.56 (28.8) 16,267 2.50 N/A (1.59) 103 10.61 (21.0) 35,409 2.37 N/A (1.74) 90 10.28 1.1(g) 786 2.53(e) 2.46(f) (1.50) 76 10.17 2.5 936 2.63 N/A (1.59) 132 9.92 4.4 1,013 2.64 N/A (0.94)(c) 121 9.50 25.7 1,174 2.68 N/A (1.60) 107 7.56 (28.7) 847 2.50 N/A (1.59) 103 10.60 (21.1) 1,745 2.37 N/A (1.74) 90
(e)Computed on an annualized basis for periods less than one year. (f)The investment adviser agreed to reimburse a portion of the Fund's expenses and/or waive its management fee during the period. Without this reimbursement/waiver, expenses would have been higher. See Note 4. (g)Had certain expenses not been reduced during the period, total return would have been lower. (h)Represents total expenses prior to advisory fee waiver and/or reimbursement of a portion of the Fund's expenses. 64 NOTES TO FINANCIAL STATEMENTS June 30, 2006 (Unaudited) 1. Organization. IXIS Advisor Funds Trust I, IXIS Advisor Funds Trust II and IXIS Advisor Funds Trust III (the "Trusts" and each a "Trust") are each organized as a Massachusetts business trust. Each Trust is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end management investment company. Each Declaration of Trust permits the Board of Trustees to authorize the issuance of an unlimited number of shares of the Trust in multiple series (individually, a "Fund" and collectively, the "Funds"). Information presented in these financial statements pertains to certain equity Funds of the Trusts; the financial statements for the other funds of the Trusts are presented in separate reports. The following Funds are included in this report: IXIS Advisor Funds Trust I: CGM Advisor Targeted Equity Fund (the "Targeted Equity Fund") Hansberger International Fund (the "International Fund") IXIS U.S. Diversified Portfolio (the "U.S. Diversified Portfolio") IXIS Value Fund (the "Value Fund") Vaughan Nelson Small Cap Value Fund (the "Small Cap Value Fund") Westpeak Capital Growth Fund (the "Capital Growth Fund") IXIS Advisor Funds Trust II: Harris Associates Large Cap Value Fund (the "Large Cap Value Fund") IXIS Advisor Funds Trust III: Harris Associates Focused Value Fund (the "Focused Value Fund") Each Fund offers Class A, Class B, and Class C shares. Targeted Equity Fund, Large Cap Value Fund and U.S. Diversified Portfolio also offer Class Y shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares do not pay a front-end sales charge, but pay higher Rule 12b-1 fees than Class A shares for eight years (at which point they automatically convert to Class A shares), and are subject to a contingent deferred sales charge ("CDSC") if those shares are redeemed within six years of purchase. Class C shares do not pay a front-end sales charge, do not convert to any other class of shares and pay higher 12b-1 fees than Class A shares and may be subject to a CDSC of 1.00% if those shares are redeemed within one year. Class Y shares do not pay a front-end sales charge, a CDSC or Rule 12b-1 fees. They are generally intended for institutional investors with a minimum initial investment of $1,000,000, though some categories of investors are excepted from the minimum investment amount. Most expenses of the Trusts can be directly attributed to a Fund. Expenses which cannot be directly attributed to a Fund are generally apportioned based on the relative net assets of each of the Funds in the Trusts. Expenses of a Fund are borne pro rata by the holders of each Class of shares, except that each Class bears expenses unique to that Class (including the Rule 12b-1 service and distribution fees and, for those Funds that offer Class Y shares, transfer agent fees applicable to such class). In addition, each Class votes as a Class only with respect to its own Rule 12b-1 Plan. Shares of each Class would receive their pro rata share of the net assets of a Fund if the Fund were liquidated. The Trustees approve separate dividends from net investment income on each Class of shares. 2. Significant Accounting Policies. The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements. The Funds' financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. a. Security Valuation. Equity securities for which market quotations are readily available are valued at market value, as reported by pricing services recommended by the investment adviser's pricing committee and approved by the Board of Trustees. Such pricing services generally use the security's last sale price on the exchange or market where primarily traded or, if there is no reported sale during the day, the closing bid price. Securities traded on the NASDAQ National Market are valued at the NASDAQ Official Closing Price ("NOCP"), or if lacking a NOCP, at the most recent bid quotation on the NASDAQ National Market. Debt securities for which market quotations are readily available (other than short-term obligations with a remaining maturity of less than sixty days) are generally valued at market price on the basis of valuations furnished to the Funds by a pricing service authorized by the Board of Trustees, which service determines valuations for normal, institutional-size trading units of such securities using market information, transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders. Short-term obligations with a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Funds' investment adviser using consistently applied procedures under the general supervision of the Board of Trustees. Investments in other open-end investment companies are valued at the net asset value each day. The Funds may hold securities traded in foreign markets. Foreign securities are valued at the market price in the foreign market. However, if events occurring after the close of the foreign market (but before the close of regular trading on the New York Stock Exchange) are believed to materially affect the value of those securities, such securities are fair valued pursuant to procedures approved by the Board of Trustees. When fair valuing equity securities, a Fund may, among other things, use modeling tools or other processes that may take into account factors such as securities market activity and/or significant events that occur after the close of the foreign market and before the Fund calculates its net asset value. 65 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) b. Security Transactions and Related Investment Income. Security transactions are accounted for on trade date. Dividend income is recorded on ex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified, and interest income is recorded on an accrual basis. Interest income is increased by the accretion of discount and decreased by the amortization of premium. Investment income is recorded net of foreign taxes withheld when applicable. In determining net gain or loss on securities sold, the cost of securities has been determined on an identified cost basis. Investment income and realized and unrealized gains and losses are allocated on a pro rata basis to each Class based on the relative net assets of each Class to the total net assets of the Fund. c. Foreign Currency Translation. The books and records of the Funds are maintained in U.S. dollars. The value of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the period. Purchases and sales of investment securities, income and expenses are translated on the respective dates of such transactions. Since the values of investment securities are presented at the foreign exchange rates prevailing at the end of the period, it is not practical to isolate that portion of the results of operations arising from changes in exchange rates from fluctuations arising from changes in market prices of the investment securities. Such changes are included with the net realized and unrealized gain or loss on investments. Net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds' books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than investment securities, at the end of the fiscal period, resulting from changes in exchange rates. The Funds use foreign currency exchange contracts to facilitate transactions in foreign-denominated investments. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. Each Fund may purchase investments of foreign issuers. Investing in securities of foreign issuers involves special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include revaluation of currencies and the risk of appropriation. Moreover, the markets for securities of many foreign issuers may be less liquid and the price of such securities may be more volatile that those of comparable U.S. companies and the U.S. government. d. Forward Foreign Currency Contracts. The International Fund, the U.S. Diversified Portfolio and the Value Fund may enter into forward foreign currency contracts. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell are used to hedge a Fund's investments against currency fluctuation. Also, a contract to buy or sell can offset a previous contract. These contracts involve market risk in excess of the unrealized gain or loss reflected in the Funds' Statement of Assets and Liabilities. These amounts represent the aggregate exposure to each currency the Fund has acquired or hedged through currency contracts outstanding at period end. All contracts are "marked-to-market" daily at the applicable exchange rates and any gains or losses are recorded for financial statement purposes as unrealized until settlement date. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At June 30, 2006, there were no open forward currency contracts. e. Federal and Foreign Income Taxes. The Trusts treat each Fund as a separate entity for federal income tax purposes. Each Fund intends to meet the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. Accordingly, no provision for federal income tax has been made. A Fund may be subject to foreign taxes on income and gains on investments that are accrued based upon the Fund's understanding of the tax rules and regulations that exist in the countries in which the Fund invests. Foreign governments may also impose taxes or other payments on investments with respect to foreign securities. Such taxes are accrued as applicable. f. Dividends and Distributions to Shareholders. Dividends and distributions are recorded on ex-dividend date. The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. Permanent differences are primarily due to differing treatments for book and tax purposes of items such as net operating losses and foreign currency transactions. Permanent book and tax basis differences relating to shareholder distributions, net investment income, and net realized gains will result in reclassifications to capital accounts. Temporary differences between book and tax distributable earnings are primarily due to deferred Trustees' fees, capital loss carryforwards, wash sales, distributions from REITs and gains realized from passive foreign investment companies. Distributions from net investment income and short-term capital gains are considered to be ordinary income for tax purposes. 66 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) Tax characterization of distributions is determined on an annual basis. The tax character of distributions paid to shareholders during the year ended December 31, 2005 was as follows:
2005 Distributions Paid From: - ------------------------------------ Ordinary Long-Term Fund Income Capital Gains Total ---- ------ ------------- ----- Targeted Equity Fund $1,723,626 $ -- $ 1,723,626 International Fund -- -- -- Focused Value Fund -- 39,692,418 39,692,418 Large Cap Value Fund 357,883 -- 357,883 U.S. Diversified Portfolio -- -- -- Value Fund 2,535,529 13,549,598 16,085,127 Small Cap Value Fund -- -- -- Capital Growth Fund -- -- --
As of December 31, 2005, capital loss carryforwards and post-October losses were as follows:
Targeted International Focused Large Cap U.S. Diversified Value Equity Fund Fund Value Fund Value Fund Portfolio Fund - - ----------- ---- ---------- ---------- --------- ---- Capital loss carryforward: Expires December 31, 2009 $ -- $ -- $ -- $ (75,393,915) $ (77,008,343) $ -- Expires December 31, 2010 (55,280,538) -- -- (24,633,843) (62,468,898) -- Expires December 31, 2011 -- -- -- (9,965,466) -- -- ------------ ----------- ----------- ------------- ------------- ----------- Total capital loss carryforward (55,280,538) -- -- (109,993,224) (139,477,241) -- ------------ ----------- ----------- ------------- ------------- ----------- Deferred net capital losses (post-October) -- -- -- -- -- -- ============ =========== =========== ============= ============= ===========
Small Cap Capital Value Fund Growth Fund - - ---------- ----------- Capital loss carryforward: Expires December 31, 2009 $ (1,984,150) $(21,116,910) Expires December 31, 2010 (27,289,950) (26,883,047) Expires December 31, 2011 -- (4,097,913) ------------ ------------ Total capital loss carryforward (29,274,100) (52,097,870) ------------ ------------ Deferred net capital losses (post-October) -- (314,439) ============ ============
g. Repurchase Agreements. Each Fund, through its custodian, receives delivery of the underlying securities collateralizing repurchase agreements. It is each Fund's policy that the market value of the collateral be at least equal to 102% of the repurchase price, including interest. The repurchase agreements are tri-party agreements whereby the collateral is held at the custodian bank in a segregated account for the benefit of the Fund and on behalf of the counterparty. Repurchase agreements could involve certain risks in the event of default or insolvency of the counterparty including possible delays or restrictions upon a Fund's ability to dispose of the underlying securities. h. Securities Lending. The Funds have entered into an agreement with State Street Bank and Trust Company ("State Street Bank"), as agent of the Funds, to lend securities to certain designated borrowers. The loans are collateralized with cash or securities in an amount equal to at least 105% or 102% of the market value of the loaned international or domestic securities, respectively, when the loan is initiated. Thereafter, the value of the collateral must remain at least 102% of the market value of loaned securities for U.S. equities and U.S. corporate debt; at least 105% of the market value of loaned securities for non-U.S. equities; and at least 100% of the market value of loaned securities for U.S. government securities, sovereign debt issued by non-U.S. governments and non-U.S. corporate debt. In the event that the market value of the collateral falls below the required percentages described above, the borrower will deliver additional collateral on the next business day. As with other extensions of credit, the Funds may bear the risk of loss with respect to the investment of the collateral. The Funds invest cash collateral in short-term investments, a portion of the income from which is remitted to the borrowers and the remainder allocated between the Funds and State Street Bank as lending agent. The market value of securities on loan to borrowers and the value of collateral held by the Funds with respect to such loans at June 30, 2006 were as follows:
Market Value of Value of Collateral Fund Securities on Loan Received ---- ------------------ -------- Targeted Equity Fund $16,573,677 $16,743,644 International Fund 44,666,859 45,792,193 Focused Value Fund 35,003,399 36,044,953 Large Cap Value Fund 12,744,565 13,010,211 U.S. Diversified Portfolio 74,028,354 75,130,129 Value Fund 8,733,294 8,910,402 Small Cap Value Fund 30,408,314 31,207,203 Capital Growth Fund 5,474,635 5,455,932
67 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) i. Indemnifications. Under the Funds' organizational documents, their officers and Trustees are indemnified against certain liability arising out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. 3. Purchases and Sales of Securities. For the six months ended June 30, 2006, purchases and sales of securities (excluding short-term investments) were as follows:
Fund Purchases Sales ---- --------- ----- Targeted Equity Fund $419,536,583 $449,378,438 International Fund 44,342,789 43,370,924 Focused Value Fund 63,319,887 113,861,420 Large Cap Value Fund 34,317,144 66,858,455 U.S. Diversified Portfolio 234,066,061 280,708,587 Value Fund 36,172,521 46,092,174 Small Cap Value Fund 45,948,153 46,090,952 Capital Growth Fund 45,099,321 49,682,090
4. Management Fees and Other Transactions with Affiliates. a. Management Fees. IXIS Asset Management Advisors, L.P. ("IXIS Advisors") serves as investment adviser to each Fund except the Targeted Equity Fund. Capital Growth Management Limited Partnership ("CGM") is the investment adviser to the Targeted Equity Fund. Under the terms of the management agreements, each Fund pays a management fee at the following annual rates, calculated daily and payable monthly, based on each Fund's average daily net assets:
Percentage of Average Daily Net Assets - - ------------------------------------------------------------ First Next Next Next Over Fund $200 million $300 million $500 million $1 billion $2 billion - ---- ------------ ------------ ------------ ---------- ---------- Targeted Equity Fund 0.75% 0.70% 0.65% 0.65% 0.60% International Fund 0.80% 0.75% 0.75% 0.75% 0.75% Focused Value Fund 1.00% 1.00% 1.00% 0.95% 0.95% Large Cap Value Fund 0.70% 0.65% 0.60% 0.60% 0.60% U.S. Diversified Portfolio 0.90% 0.90% 0.90% 0.80% 0.80% Value Fund 0.75% 0.70% 0.65% 0.65% 0.65% Small Cap Value Fund 0.90% 0.90% 0.90% 0.90% 0.90% Capital Growth Fund 0.75% 0.70% 0.65% 0.65% 0.65%
Effective July 1, 2006, the management fee for Focused Value Fund was reduced to an annual rate of 0.90% of the Fund's average daily net assets. IXIS Advisors has entered into subadvisory agreements for each Fund as listed below. International Fund Hansberger Global Investors, Inc. ("Hansberger") Focused Value Fund Harris Associates L.P. ("Harris") Large Cap Value Fund Harris U.S. Diversified Portfolio Harris Loomis, Sayles & Company, L.P. ("Loomis Sayles") Mercury Advisors Value Fund Harris Loomis Sayles Vaughan Nelson Investment Management, L.P. ("Vaughan Nelson") Westpeak Global Advisors, L.P. ("Westpeak") Small Cap Value Fund Vaughan Nelson Capital Growth Fund Westpeak
Payments to IXIS Advisors are reduced in the amount of payments to the subadvisers. Mercury Advisors serves as a subadviser to a segment of the U.S. Diversified Portfolio. "Mercury Advisors" is the name under which Fund Asset Management, L.P., a wholly owned subsidiary of Merrill Lynch & Co., Inc. conducts certain business. Merrill Lynch & Co., Inc. and BlackRock, Inc. have announced that they have reached an agreement to merge Fund Asset Management, BlackRock, Inc., and certain other affiliates of Merrill Lynch & Co., Inc., in order to create a new independent company. The transaction is expected to be closed in the third quarter of 2006. 68 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) IXIS Advisors has given binding undertakings to the Funds to defer its management fees and/or reimburse certain expenses associated with these Funds to limit their operating expenses. These undertakings are in effect until April 30, 2007 and will be reevaluated on an annual basis. At June 30, 2006, the expense limits as a percentage of average daily net assets under the expense limitation agreements were as follows:
Expense Limit as a Percentage of Average Daily Net Assets - ---------------------------------------- Fund Class A Class B Class C Class Y ---- ------- ------- ------- ------- Focused Value Fund 1.70% 2.45% 2.45% --% Large Cap Value Fund 1.30% 2.05% 2.05% 1.05% Small Cap Value Fund 1.60% 2.35% 2.35% --% Capital Growth Fund 1.50% 2.25% 2.25% --%
Prior to May 1, 2006, Small Cap Value Fund and Capital Growth Fund had no expense limit. For the six months ended June 30, 2006, the management fees and waivers of management fees for each Fund were as follows:
Percentage of Average Gross Waiver of Net Daily Net Assets - Management Management Management ---------------- Fund Fee Fee Fee Gross Net ---- ---------- ---------- ---------- ----- --- Targeted Equity Fund $2,670,520 $-- 2,670,520 0.70% 0.70% International Fund 610,461 -- 610,461 0.80% 0.80% Focused Value Fund 1,369,577 -- 1,369,577 1.00% 1.00% Large Cap Value Fund 923,193 -- 923,193 0.69% 0.69% U.S. Diversified Portfolio 2,843,572 -- 2,843,572 0.90% 0.90% Value Fund 462,137 -- 462,137 0.75% 0.75% Small Cap Value Fund 539,361 -- 539,361 0.90% 0.90% Capital Growth Fund 222,387 -- 222,387 0.75% 0.75%
For the six months ended June 30, 2006, expenses have been reimbursed as follows: Large Cap Value Fund $131,071, Small Cap Value Fund $13,780 and Capital Growth Fund $19,670. IXIS Advisors shall be permitted to recover expenses it has borne under the expense limitation agreement (whether through reduction of its management fees or otherwise) in later periods to the extent the Funds' expenses fall below the expense limits, provided, however, that the Funds are not obligated to pay such deferred fees more than one year after the end of the fiscal year in which the fee was deferred. At June 30, 2006, the amounts subject to possible reimbursement under the expense limitation agreements were as follows:
Expenses Subject Expenses Subject to Possible to Possible Reimbursement Reimbursement Fund until December 31, 2006 until December 31, 2007 ---- ----------------------- ----------------------- Large Cap Value Fund $479,821 $131,071 Small Cap Value Fund -- 13,780 Capital Growth Fund -- 19,670
Certain officers and directors of IXIS Advisors and its affiliates are also officers or Trustees of the Funds. IXIS Advisors, CGM, Harris, Loomis Sayles, Vaughan Nelson and Westpeak are subsidiaries of IXIS Asset Management US Group, L.P. ("IXIS US Group") (formerly, IXIS Asset Management North America, L.P.), which is part of IXIS Asset Management Group, an international asset management group based in Paris, France. IXIS Asset Management Group is ultimately owned principally, directly or indirectly by three large affiliated French financial services entities: the Caisse Nationale des Caisses d'Epargne, a financial institution owned by CDC (as defined below) and by French regional savings banks known as Caisses d'Epargne; the Caisse des Depots et Consignations ("CDC"), a public sector financial institution created by the French government in 1816; and CNP Assurances, a large French life insurance company. Hansberger is an affiliated money manager of IXIS US Group. b. Administrative Expense. IXIS Advisors performs certain administrative services for the Funds and has subcontracted with State Street Bank to serve as sub-administrator. Pursuant to an agreement among IXIS Advisor Funds Trust I, IXIS Advisor Funds Trust II, IXIS Advisor Funds Trust III, IXIS Advisor Funds Trust IV, IXIS Advisor 69 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) Cash Management Trust ("IXIS Advisor Funds Trusts"), Loomis Sayles Funds I, Loomis Sayles Funds II ("Loomis Sayles Funds Trusts") and IXIS Advisors, each Fund pays IXIS Advisors monthly its pro rata portion of fees equal to an annual rate of 0.0675% of the first $5 billion of the average daily net assets of the IXIS Advisor Funds Trusts and Loomis Sayles Funds Trusts, 0.0625% of the next $5 billion, and 0.0500% of such assets in excess of $10 billion, subject to an annual aggregate minimum fee for the IXIS Advisor Funds Trusts and Loomis Sayles Funds Trusts of $5 million, which is reevaluated on an annual basis. For the six months ended June 30, 2006, amounts paid to IXIS Advisors for administrative fees were as follows:
Administrative Fund Fees ---- ---- Targeted Equity Fund $234,514 International Fund 41,301 Focused Value Fund 99,349 Large Cap Value Fund 90,441 U.S. Diversified Portfolio 194,087 Value Fund 39,463 Small Cap Value Fund 32,495 Capital Growth Fund 19,282
c. Service and Distribution Fees. The Trusts have entered into a distribution agreement with IXIS Asset Management Distributors, L.P. ("IXIS Distributors"), a wholly-owned subsidiary of IXIS US Group. Pursuant to this agreement, IXIS Distributors serves as principal underwriter of the Funds. Pursuant to Rule 12b-1 under the 1940 Act, the Trusts have adopted a Service Plan relating to each Fund's Class A shares (the "Class A Plan") and Service and Distribution Plans relating to each Fund's Class B and Class C shares (the "Class B and Class C Plans"). Under the Class A Plan, each Fund pays IXIS Distributors a monthly service fee at the annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund's Class A shares, as reimbursement for expenses incurred by IXIS Distributors in providing personal services to investors in Class A shares and/or the maintenance of shareholder accounts. Under the Class B and Class C Plans, each Fund pays IXIS Distributors a monthly service fee at the annual rate of 0.25% of the average daily net assets attributable to the Fund's Class B and Class C shares, as compensation for services provided and expenses incurred by IXIS Distributors in providing personal services to investors in Class B and Class C shares and/or the maintenance of shareholder accounts. Also under the Class B and Class C Plans, each Fund pays IXIS Distributors a monthly distribution fee at the annual rate of 0.75% of the average daily net assets attributable to the Fund's Class B and Class C shares, as compensation for services provided and expenses incurred by IXIS Distributors in connection with the marketing or sale of Class B and Class C shares. For the six months ended June 30, 2006, the Funds paid the following service and distribution fees:
Service Fee Distribution Fee - -------------------------- ----------------- Fund Class A Class B Class C Class B Class C ---- ------- ------- ------- ------- ------- Targeted Equity Fund $871,919 $ 65,598 $ 8,101 $196,793 $ 24,304 International Fund 121,616 42,875 26,278 128,627 78,834 Focused Value Fund 91,843 112,992 137,559 338,976 412,679 Large Cap Value Fund 229,439 66,059 23,595 198,175 70,784 U.S. Diversified Portfolio 490,920 212,490 60,214 637,470 180,644 Value Fund 124,224 26,259 3,563 78,776 10,688 Small Cap Value Fund 82,883 48,409 18,530 145,227 55,591 Capital Growth Fund 61,072 11,925 1,132 35,774 3,398
70 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) d. Commissions. The Funds have been informed that commissions (including CDSC) on Fund shares paid to IXIS Distributors by investors in shares of the Funds during the six months ended June 30, 2006 were as follows:
Fund Commission ---- ---------- Targeted Equity Fund $217,086 International Fund 68,155 Focused Value Fund 225,259 Large Cap Value Fund 86,641 U.S. Diversified Portfolio 285,125 Value Fund 76,179 Small Cap Value Fund 73,749 Capital Growth Fund 34,588
For the six months ended June 30, 2006, brokerage commissions for portfolio transactions paid to affiliated broker/dealers by the Funds were as follows:
Fund Commissions ---- ----------- U.S. Diversified Portfolio $451
e. Trustees Fees and Expenses. The Funds do not pay any compensation directly to their officers or Trustees who are directors, officers or employees of IXIS Advisors, IXIS Distributors, IXIS US Group, or their affiliates. The Chairperson of the Board receives a retainer fee at the annual rate of $200,000. The Chairperson does not receive any meeting attendance fees for Board of Trustees meetings or committee meetings that she attends. Each independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the annual rate of $55,000. Each independent Trustee also receives a meeting attendance fee of $6,000 for each meeting of the Board of Trustees that he or she attends in person and $3,000 for each meeting of the Board of Trustees that he or she attends telephonically. In addition, each committee chairman receives an additional retainer fee at the annual rate of $10,000. Each Contract Review and Governance Committee member is compensated $4,000 for each Committee meeting that he or she attends in person and $2,000 for each meeting that he or she attends telephonically. Each Audit Committee member is compensated $5,000 for each Committee meeting that he or she attends in person and $2,500 for each meeting that he or she attends telephonically. These fees are allocated among the Funds in the Trusts based on a formula that takes into account, among other factors, the relative net assets of each Fund. Trustees are reimbursed for travel expenses in connection with attendance at meetings. A deferred compensation plan (the "Plan") is available to the Trustees on a voluntary basis. Each participating Trustee will receive an amount equal to the value that such deferred compensation would have been had it been invested in a designated Fund or certain other Funds of the IXIS Advisor Funds Trusts and the Loomis Sayles Funds Trusts on the normal payment date. Deferred amounts remain in the Funds until distributed in accordance with the Plan. f. Redemption Fees. Shareholders of Class A shares of Targeted Equity Fund, International Fund, Focused Value Fund and Small Cap Value Fund are charged a 2% redemption fee if they redeem, including redeeming by exchange, Class A shares and Class Y shares within 60 days of their acquisition (including acquisition by exchange). The redemption fee is intended to offset the costs to the Funds of short-term trading, such as portfolio transaction and market impact costs associated with redemption activity and administrative costs associated with processing redemptions. The redemption fee is deducted from the shareholder's redemption or exchange proceeds and is paid to the Fund. The "first-in, first-out" (FIFO) method is used to determine the holding period of redeemed or exchanged shares, which means that if a shareholder acquired shares on different days, the shares acquired first will be redeemed or exchanged first for purposes of determining whether the redemption fee applies. A new holding period begins with each purchase or exchange. These fees are accounted for as an addition to paid-in capital and are presented in the Statements of Changes in Net Assets. 5. Line of Credit. Each Fund, together with certain other Funds of IXIS Advisor Funds Trusts and Loomis Sayles Funds Trusts, participates in a $75,000,000 committed line of credit provided by State Street Bank. Interest is charged to each participating Portfolio or Fund based on its borrowing at a rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.09% per annum, payable at the end of each calendar quarter, is accrued and apportioned among the participating Portfolios or Funds based on their average daily unused portion of the line of credit. For the six months ended June 30, 2006, the Funds had no borrowings under this agreement. 71 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) 6. Brokerage Commission Recapture. Each Fund has entered into agreements with certain brokers whereby the brokers will rebate a portion of brokerage commissions. All amounts rebated by the brokers are returned to the Funds under such agreements and are included in realized gains on investments in the Statements of Operations. For the six months ended June 30, 2006, amounts rebated under these agreements were as follows:
Fund Rebates ---- ------- Targeted Equity Fund $208,144 International Fund 9,876 Focused Value Fund 81,744 Large Cap Value Fund 38,753 U.S. Diversified Portfolio 97,472 Value Fund 28,638 Small Cap Value Fund 15,988 Capital Growth Fund 10,545
7. Concentration of Risk. Focused Value Fund is a non-diversified Fund. Compared with diversified mutual funds, the Focused Value Fund may invest a greater percentage of its assets in a particular company. Therefore, the Focused Value Fund's returns could be significantly affected by the performance of any one of the small number of stocks in its portfolio. International Fund had the following geographic concentrations in excess of 10% of its total net assets at June 30, 2006: France 11.1%, Japan 18.7%, and the United Kingdom 18.4%. The International Fund pursues its objectives by investing in foreign securities. There are certain risks involved in investing in foreign securities that are in addition to the usual risks inherent in domestic investments. These risks include those resulting from future adverse political or economic developments and the possible imposition of currency exchange blockages or other foreign governmental laws or restrictions. 72 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) 8. Capital Shares. The Funds may issue an unlimited number of shares of beneficial interest without par value. Transactions in capital shares were as follows: Six Months Ended June 30, 2006 ----------------------------------- Targeted Equity Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 1,531,700 $ 16,304,478 Shares issued in connection with the reinvestment of distributions 415,904 4,138,251 ---------------- ----------------- 1,947,604 20,442,729 Shares repurchased (4,636,901) (49,214,698) ---------------- ----------------- Net increase (decrease) (2,689,297) $ (28,771,969) ---------------- ----------------- Class B Shares sold 319,383 $ 3,136,658 Shares issued in connection with the reinvestment of distributions 34,317 315,721 ---------------- ----------------- 353,700 3,452,379 Shares repurchased (844,946) (8,300,591) ---------------- ----------------- Net increase (decrease) (491,246) $ (4,848,212) ---------------- ----------------- Class C Shares sold 308,153 $ 3,045,220 Shares issued in connection with the reinvestment of distributions 3,355 30,834 ---------------- ----------------- 311,508 3,076,054 Shares repurchased (70,483) (686,327) ---------------- ----------------- Net increase (decrease) 241,025 $ 2,389,727 ---------------- ----------------- Class Y Shares sold 81,283 $ 869,813 Shares issued in connection with the reinvestment of distributions 7,177 72,922 ---------------- ----------------- 88,460 942,735 Shares repurchased (78,094) (839,836) ---------------- ----------------- Net increase (decrease) 10,366 $ 102,899 ---------------- ----------------- Increase (decrease) from capital share transactions (2,929,152) $ (31,127,555) ================ =================
Year Ended December 31, 2005 ----------------------------------- Targeted Equity Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 2,114,436 $ 20,342,978 Shares issued in connection with the reinvestment of distributions 157,595 1,531,634 ---------------- ----------------- 2,272,031 21,874,612 Shares repurchased (10,590,304) (100,805,465) ---------------- ----------------- Net increase (decrease) (8,318,273) $ (78,930,853) ---------------- ----------------- Class B Shares sold 479,091 $ 4,271,772 Shares issued in connection with the reinvestment of distributions 8,192 70,535 ---------------- ----------------- 487,283 4,342,307 Shares repurchased (1,703,082) (15,113,085) ---------------- ----------------- Net increase (decrease) (1,215,799) $ (10,770,778) ---------------- ----------------- Class C Shares sold 247,891 $ 2,279,688 Shares issued in connection with the reinvestment of distributions 427 3,675 ---------------- ----------------- 248,318 2,283,363 Shares repurchased (87,175) (772,409) ---------------- ----------------- Net increase (decrease) 161,143 $ 1,510,954 ---------------- ----------------- Class Y Shares sold 154,883 $ 1,499,898 Shares issued in connection with the reinvestment of distributions 4,853 49,839 ---------------- ----------------- 159,736 1,549,737 Shares repurchased (77,671) (745,305) ---------------- ----------------- Net increase (decrease) 82,065 $ 804,432 ---------------- ----------------- Increase (decrease) from capital share transactions (9,290,864) $ (87,386,245) ================ =================
Six Months Ended June 30, 2006 ----------------------------------- International Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 499,394 $ 10,570,553 Shares issued in connection with the reinvestment of distributions 87,076 1,724,970 ---------------- ----------------- 586,470 12,295,523 Shares repurchased (365,278) (7,767,963) ---------------- ----------------- Net increase (decrease) 221,192 $ 4,527,560 ---------------- ----------------- Class B Shares sold 164,693 $ 3,212,037 Shares issued in connection with the reinvestment of distributions 36,329 657,916 ---------------- ----------------- 201,022 3,869,953 Shares repurchased (342,160) (6,657,762) ---------------- ----------------- Net increase (decrease) (141,138) $ (2,787,809) ---------------- ----------------- Class C Shares sold 109,274 $ 2,134,472 Shares issued in connection with the reinvestment of distributions 18,744 339,625 ---------------- ----------------- 128,018 2,474,097 Shares repurchased (76,434) (1,495,763) ---------------- ----------------- Net increase (decrease) 51,584 $ 978,334 ---------------- ----------------- Increase (decrease) from capital share transactions 131,638 $ 2,718,085 ================ =================
Year Ended December 31, 2005 ----------------------------------- International Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 1,043,158 $ 18,504,622 Shares issued in connection with the reinvestment of distributions 0 0 ---------------- ----------------- 1,043,158 18,504,622 Shares repurchased (837,941) (14,808,970) ---------------- ----------------- Net increase (decrease) 205,217 $ 3,695,652 ---------------- ----------------- Class B Shares sold 203,605 $ 3,346,613 Shares issued in connection with the reinvestment of distributions 0 0 ---------------- ----------------- 203,605 3,346,613 Shares repurchased (1,228,248) (20,075,132) ---------------- ----------------- Net increase (decrease) (1,024,643) $ (16,728,519) ---------------- ----------------- Class C Shares sold 171,446 $ 2,829,915 Shares issued in connection with the reinvestment of distributions 0 0 ---------------- ----------------- 171,446 2,829,915 Shares repurchased (185,571) (3,042,603) ---------------- ----------------- Net increase (decrease) (14,125) $ (212,688) ---------------- ----------------- Increase (decrease) from capital share transactions (833,551) $ (13,245,555) ================ =================
73 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) 8. Capital Shares (continued). Six Months Ended June 30, 2006 ----------------------------------- Focused Value Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 347,189 $ 4,211,868 Shares issued in connection with the reinvestment of distributions 127,832 1,459,839 ---------------- ----------------- 475,021 5,671,707 Shares repurchased (1,707,898) (20,906,354) ---------------- ----------------- Net increase (decrease) (1,232,877) $ (15,234,647) ---------------- ----------------- Class B Shares sold 174,599 $ 1,997,007 Shares issued in connection with the reinvestment of distributions 177,886 1,938,952 ---------------- ----------------- 352,485 3,935,959 Shares repurchased (1,419,269) (16,611,781) ---------------- ----------------- Net increase (decrease) (1,066,784) $ (12,675,822) ---------------- ----------------- Class C Shares sold 350,162 $ 4,017,349 Shares issued in connection with the reinvestment of distributions 160,499 1,751,028 ---------------- ----------------- 510,661 5,768,377 Shares repurchased (2,428,667) (28,523,022) ---------------- ----------------- Net increase (decrease) (1,918,006) $ (22,754,645) ---------------- ----------------- Increase (decrease) from capital share transactions (4,217,667) $ (50,665,114) ================ ================= Six Months Ended June 30, 2006 ----------------------------------- Large Cap Value Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 714,388 $ 9,704,788 Shares issued in connection with the reinvestment of distributions 27,510 358,466 ---------------- ----------------- 741,898 10,063,254 Shares repurchased (1,616,243) (21,922,659) ---------------- ----------------- Net increase (decrease) (874,345) $ (11,859,405) ---------------- ----------------- Class B Shares sold 97,283 $ 1,235,928 Shares issued in connection with the reinvestment of distributions 9,192 111,771 ---------------- ----------------- 106,475 1,347,699 Shares repurchased (1,141,785) (14,481,128) ---------------- ----------------- Net increase (decrease) (1,035,310) $ (13,133,429) ---------------- ----------------- Class C Shares sold 80,799 $ 1,021,076 Shares issued in connection with the reinvestment of distributions 1,655 20,078 ---------------- ----------------- 82,454 1,041,154 Shares repurchased (322,035) (4,073,558) ---------------- ----------------- Net increase (decrease) (239,581) $ (3,032,404) ---------------- ----------------- Class Y Shares sold 37,913 $ 528,666 Shares issued in connection with the reinvestment of distributions 2,239 30,077 ---------------- ----------------- 40,152 558,743 Shares repurchased (146,805) (2,039,574) ---------------- ----------------- Net increase (decrease) (106,653) $ (1,480,831) ---------------- ----------------- Increase (decrease) from capital share transactions (2,255,889) $ (29,506,069) ================ =================
Year Ended December 31, 2005 ----------------------------------- Focused Value Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 1,278,667 $ 16,573,289 Shares issued in connection with the reinvestment of distributions 580,779 7,068,077 ---------------- ----------------- 1,859,446 23,641,366 Shares repurchased (3,318,671) (43,905,787) ---------------- ----------------- Net increase (decrease) (1,459,225) $ (20,264,421) ---------------- ----------------- Class B Shares sold 576,120 $ 7,060,801 Shares issued in connection with the reinvestment of distributions 766,254 8,949,845 ---------------- ----------------- 1,342,374 16,010,646 Shares repurchased (1,639,139) (21,010,935) ---------------- ----------------- Net increase (decrease) (296,765) $ (5,000,289) ---------------- ----------------- Class C Shares sold 1,319,958 $ 16,274,937 Shares issued in connection with the reinvestment of distributions 758,307 8,857,031 ---------------- ----------------- 2,078,265 25,131,968 Shares repurchased (2,893,997) (36,873,402) ---------------- ----------------- Net increase (decrease) (815,732) $ (11,741,434) ---------------- ----------------- Increase (decrease) from capital share transactions (2,571,722) $ (37,006,144) ================ ================= Year Ended December 31, 2005 ----------------------------------- Large Cap Value Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 1,068,733 $ 13,952,739 Shares issued in connection with the reinvestment of distributions 14,688 191,232 ---------------- ----------------- 1,083,421 14,143,971 Shares repurchased (3,550,446) (46,275,347) ---------------- ----------------- Net increase (decrease) (2,467,025) $ (32,131,376) ---------------- ----------------- Class B Shares sold 262,250 $ 3,214,063 Shares issued in connection with the reinvestment of distributions 6,033 73,844 ---------------- ----------------- 268,283 3,287,907 Shares repurchased (1,873,402) (22,992,338) ---------------- ----------------- Net increase (decrease) (1,605,119) $ (19,704,431) ---------------- ----------------- Class C Shares sold 233,814 $ 2,864,911 Shares issued in connection with the reinvestment of distributions 976 11,942 ---------------- ----------------- 234,790 2,876,853 Shares repurchased (699,505) (8,571,119) ---------------- ----------------- Net increase (decrease) (464,715) $ (5,694,266) ---------------- ----------------- Class Y Shares sold 68,963 $ 925,029 Shares issued in connection with the reinvestment of distributions 1,195 16,006 ---------------- ----------------- 70,158 941,035 Shares repurchased (345,786) (4,615,016) ---------------- ----------------- Net increase (decrease) (275,628) $ (3,673,981) ---------------- ----------------- Increase (decrease) from capital share transactions (4,812,487) $ (61,204,054) ================ =================
74 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) 8. Capital Shares (continued). Six Months Ended June 30, 2006 ----------------------------------- U.S. Diversified Portfolio Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 958,991 $ 20,372,247 Shares repurchased (1,898,038) (40,136,455) ---------------- ----------------- Net increase (decrease) (939,047) $ (19,764,208) ---------------- ----------------- Class B Shares sold 331,164 $ 6,281,315 Shares repurchased (1,663,170) (31,456,529) ---------------- ----------------- Net increase (decrease) (1,332,006) $ (25,175,214) ---------------- ----------------- Class C Shares sold 52,348 $ 993,575 Shares repurchased (265,401) (5,034,839) ---------------- ----------------- Net increase (decrease) (213,053) $ (4,041,264) ---------------- ----------------- Class Y Shares sold 65,140 $ 1,468,518 Shares repurchased (111,879) (2,496,327) ---------------- ----------------- Net increase (decrease) (46,739) $ (1,027,809) ---------------- ----------------- Increase (decrease) from capital share transactions (2,530,845) $ (50,008,495) ================ ================= Six Months Ended June 30, 2006 ----------------------------------- Value Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 463,574 $ 4,012,291 Shares issued in connection with the reinvestment of distributions 214,251 1,776,460 ---------------- ----------------- 677,825 5,788,751 Shares repurchased (926,136) (8,009,858) ---------------- ----------------- Net increase (decrease) (248,311) $ (2,221,107) ---------------- ----------------- Class B Shares sold 113,022 $ 875,825 Shares issued in connection with the reinvestment of distributions 50,525 375,430 ---------------- ----------------- 163,547 1,251,255 Shares repurchased (699,431) (5,450,636) ---------------- ----------------- Net increase (decrease) (535,884) $ (4,199,381) ---------------- ----------------- Class C Shares sold 14,782 $ 114,703 Shares issued in connection with the reinvestment of distributions 5,804 43,128 ---------------- ----------------- 20,586 157,831 Shares repurchased (47,929) (373,144) ---------------- ----------------- Net increase (decrease) (27,343) $ (215,313) ---------------- ----------------- Increase (decrease) from capital share transactions (811,538) $ (6,635,801) ================ =================
Year Ended December 31, 2005 ----------------------------------- U.S. Diversified Portfolio Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 2,385,720 $ 44,954,334 Shares repurchased (4,189,901) (79,262,654) ---------------- ----------------- Net increase (decrease) (1,804,181) $ (34,308,320) ---------------- ----------------- Class B Shares sold 669,095 $ 11,320,578 Shares repurchased (4,207,942) (71,182,972) ---------------- ----------------- Net increase (decrease) (3,538,847) $ (59,862,394) ---------------- ----------------- Class C Shares sold 102,734 $ 1,746,851 Shares repurchased (912,989) (15,415,642) ---------------- ----------------- Net increase (decrease) (810,255) $ (13,668,791) ---------------- ----------------- Class Y Shares sold 142,301 $ 2,842,762 Shares repurchased (451,903) (9,048,524) ---------------- ----------------- Net increase (decrease) (309,602) $ (6,205,762) ---------------- ----------------- Increase (decrease) from capital share transactions (6,462,885) $ (114,045,267) ================ ================= Year Ended December 31, 2005 ----------------------------------- Value Fund Shares Amount - --------------------------------------------------------------------- ---------------- ----------------- Class A Shares sold 752,413 $ 6,758,994 Shares issued in connection with the reinvestment of distributions 1,432,023 12,200,602 ---------------- ----------------- 2,184,436 18,959,596 Shares repurchased (2,182,286) (19,556,017) ---------------- ----------------- Net increase (decrease) 2,150 $ (596,421) ---------------- ----------------- Class B Shares sold 229,964 $ 1,881,852 Shares issued in connection with the reinvestment of distributions 393,062 3,030,283 ---------------- ----------------- 623,026 4,912,135 Shares repurchased (1,018,265) (8,370,264) ---------------- ----------------- Net increase (decrease) (395,239) $ (3,458,129) ---------------- ----------------- Class C Shares sold 51,464 $ 417,159 Shares issued in connection with the reinvestment of distributions 39,420 303,708 ---------------- ----------------- 90,884 720,867 Shares repurchased (77,457) (636,872) ---------------- ----------------- Net increase (decrease) 13,427 $ 83,995 ---------------- ----------------- Increase (decrease) from capital share transactions (379,662) $ (3,970,555) ================ =================
75 NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (Unaudited) 8. Capital Shares (continued). Six Months Ended June 30, 2006 ----------------------------------- Small Cap Value Fund Shares Amount - ------------------------------------------------------ ---------------- ----------------- Class A Shares sold 806,988 $ 15,491,762 Shares repurchased (426,569) (8,170,923) ---------------- ----------------- Net increase (decrease) 380,419 $ 7,320,839 ---------------- ----------------- Class B Shares sold 84,641 $ 1,503,322 Shares repurchased (437,483) (7,769,319) ---------------- ----------------- Net increase (decrease) (352,842) $ (6,265,997) ---------------- ----------------- Class C Shares sold 219,691 $ 3,917,142 Shares repurchased (168,959) (2,992,387) ---------------- ----------------- Net increase (decrease) 50,732 $ 924,755 ---------------- ----------------- Increase (decrease) from capital share transactions 78,309 $ 1,979,597 ================ ================= Six Months Ended June 30, 2006 ----------------------------------- Capital Growth Fund Shares Amount - ------------------------------------------------------ ---------------- ----------------- Class A Shares sold 112,648 $ 1,375,864 Shares repurchased (403,482) (4,907,319) ---------------- ----------------- Net increase (decrease) (290,834) $ (3,531,455) ---------------- ----------------- Class B Shares sold 42,210 $ 444,951 Shares repurchased (131,918) (1,377,931) ---------------- ----------------- Net increase (decrease) (89,708) $ (932,980) ---------------- ----------------- Class C Shares sold 2,010 $ 21,084 Shares repurchased (17,619) (181,109) ---------------- ----------------- Net increase (decrease) (15,609) $ (160,025) ---------------- ----------------- Increase (decrease) from capital share transactions (396,151) $ (4,624,460) ================ =================
Year Ended December 31, 2005 ----------------------------------- Small Cap Value Fund Shares Amount - ------------------------------------------------------ ---------------- ----------------- Class A Shares sold 1,322,502 $ 21,908,202 Shares repurchased (797,816) (13,154,538) ---------------- ----------------- Net increase (decrease) 524,686 $ 8,753,664 ---------------- ----------------- Class B Shares sold 172,453 $ 2,628,609 Shares repurchased (1,455,176) (22,158,268) ---------------- ----------------- Net increase (decrease) (1,282,723) $ (19,529,659) ---------------- ----------------- Class C Shares sold 177,290 $ 2,719,736 Shares repurchased (246,708) (3,789,067) ---------------- ----------------- Net increase (decrease) (69,418) $ (1,069,331) ---------------- ----------------- Increase (decrease) from capital share transactions (827,455) $ (11,845,326) ================ ================= Year Ended December 31, 2005 ----------------------------------- Capital Growth Fund Shares Amount - ------------------------------------------------------ ---------------- ----------------- Class A Shares sold 241,489 $ 2,743,935 Shares repurchased (1,057,103) (12,074,125) ---------------- ----------------- Net increase (decrease) (815,614) $ (9,330,190) ---------------- ----------------- Class B Shares sold 93,730 $ 919,070 Shares repurchased (425,145) (4,178,212) ---------------- ----------------- Net increase (decrease) (331,415) $ (3,259,142) ---------------- ----------------- Class C Shares sold 5,876 $ 57,428 Shares repurchased (15,868) (154,158) ---------------- ----------------- Net increase (decrease) (9,992) $ (96,730) ---------------- ----------------- Increase (decrease) from capital share transactions (1,157,021) $ (12,686,062) ================ =================
76 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 Trust'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 23, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/ John T. Hailer --------------------------------- Name: John T. Hailer Title: President and Chief Executive Officer Date: August 23, 2006 By: /s/ Michael C. Kardok --------------------------------- Name: Michael C. Kardok Title: Treasurer Date: August 23, 2006 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 23, 2006 /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. ased 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 23, 2006 /s/ Michael C. Kardok ----------------------------- Michael C. Kardok Treasurer EX-99.906CT 3 dex99906ct.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, 2006 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 23, 2006 Date: August 23, 2006 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-----