N-CSR 1 dncsr.txt NATIXIS FUNDS TRUST II UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-00242 NATIXIS FUNDS TRUST II (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) 399 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02116 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) NATIXIS DISTRIBUTORS, L.P. 399 BOYLSTON STREET BOSTON, MASSACHUSETTS 02116 (NAME AND ADDRESS OF AGENT FOR SERVICE) Registrant's telephone number, including area code: (617) 449-2810 Date of fiscal year end: December 31 Date of reporting period: December 31, 2007 ITEM 1. REPORTS TO STOCKHOLDERS. The Registrant's annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows: LOGO EQUITY FUNDS ANNUAL REPORT December 31, 2007 CGM Advisor Targeted Equity Fund Hansberger International Fund Harris Associates Focused Value Fund Harris Associates Large Cap Value Fund Natixis U.S. Diversified Portfolio BlackRock Investment Management Harris Associates Loomis, Sayles & Company Vaughan Nelson Small Cap Value Fund Westpeak 130/30 Growth Fund [Formerly Westpeak Capital Growth Fund] [GRAPHIC] TABLE OF CONTENTS Management Discussion and Performance ....................................page 1 Portfolio of Investments ................................................page 22 Financial Statements.................................................... page 39 CGM ADVISOR TARGETED EQUITY FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital through investments in equity securities of companies whose earnings are expected to grow at a faster rate than the overall U.S. economy -------------------------------------------------------------------------------- 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 -------------------------------------------------------------------------------- An emphasis on globally oriented companies and good stock selection helped CGM Advisor Targeted Equity Fund achieve strong returns for the year ended December 31, 2007. Total return for Class A shares based on net asset value was 34.42% for the year, including $0.13 in dividends and $1.15 in capital gains reinvested during the period. The fund significantly outperformed the 5.49% return on its benchmark, the S&P 500 Index, and the 6.16% average return of the funds in Morningstar's Large Blend category. FUND EMPHASIZED GLOBAL BUSINESSES Throughout 2007, the fund remained fully invested in anticipation of continued strong global economic growth. While the U.S. economy was hurt by weakness in the housing market and rising mortgage foreclosures, the fund emphasized U.S. companies with a global reach as well as businesses domiciled overseas in such rapidly growing economies as Brazil. The fund began 2007 with modest weightings in agriculture and energy, which were increased greatly during the year to benefit from rising grain and oil prices. New positions were established in Brazilian mining company Vale (formerly Companhia Vale do Rio Doce) and Banco Itau, one of Brazil's largest commercial banks. We also focused on domestic companies with major foreign exposure, including Research in Motion, a leader in wireless communications products, and Johnson & Johnson, a multi-national provider of healthcare products and related services. In the course of the year we sold large positions in investment banks, including Lehman Brothers and Merrill Lynch, as well as European discount airline Ryanair Holdings, and automobile manufacturer Toyota Motors, using the proceeds to invest in companies we believed were better positioned for growth. APPRECIATION IN INDIVIDUAL STOCKS DRIVEN BY STRONG ECONOMIES AND SECTORS The three biggest contributors to the fund's positive returns underscore our commitment to global growth. Petroleo Brasileiro (more commonly known as Petrobras), Vale (mentioned above), and Deere & Company all benefited from strong economic growth outside of the United States. Petrobras is one of Brazil's leading oil and gas producers and one of the few major oil companies expected to increase oil and gas production over the next five years. The company recently announced a significant deep offshore discovery - a new oil frontier that could rival the world's most important oil fields. Brazilian mining giant, Vale, is a world leader in iron ore production. Worldwide demand for iron ore drove prices higher in 2007 and we look for further price increases in 2008. In addition, last year Vale purchased Canada's leading nickel miner, Inco Limited. Nickel prices are expected to continue to rise as producers strain to meet growing demand from developing countries. Deere & Company, the world's leading manufacturer of agricultural machinery, is benefiting from a boom in the farm economy, driven by near-record soybean and corn prices. We expect these prices to remain elevated as demand increases and supply falls short. Currently, over 30% of the U.S. corn crop is converted to ethanol. This, coupled with increased demand for grain in emerging markets, is creating a favorable earnings outlook for Deere. CASINOS AND AUTOMOBILE ISSUES PROVED DISAPPOINTING During the year, the fund had a sizeable loss in Las Vegas Sands, a leading casino company that experienced disappointing results from its new mega-casino in Macau, China. The share price of automobile giant Toyota also tumbled, as increased competition eroded the company's prospects. Both positions were sold. COMPANIES WITH GLOBAL EXPOSURE REMAIN BEST OPPORTUNITIES In our judgment, the best opportunities going forward remain in companies with exposure to economies outside the United States. We plan to focus on both foreign and U.S. companies doing business internationally - firms that we believe may benefit from global economic trends. We will continue to target stocks of relatively few companies in industries we believe will experience the strongest growth. 1 CGM ADVISOR TARGETED EQUITY FUND Investment Results through December 31, 2007 -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] December 31, 1997 through December 31, 2007 Net Asset Maximum Sales S&P 500 Value/1/ Charge/2/ Index/4/ ------------ --------------- ------------ 12/31/1997 $10,000 $ 9,425 $10,000 1/31/1998 10,163 9,579 10,111 2/28/1998 11,056 10,421 10,840 3/31/1998 11,767 11,091 11,395 4/30/1998 12,219 11,517 11,510 5/31/1998 12,027 11,336 11,312 6/30/1998 12,671 11,942 11,771 7/31/1998 12,738 12,005 11,646 8/31/1998 10,307 9,715 9,962 9/30/1998 10,381 9,784 10,600 10/31/1998 11,426 10,769 11,463 11/30/1998 12,377 11,665 12,157 12/31/1998 13,340 12,573 12,858 1/31/1999 14,244 13,425 13,396 2/28/1999 13,223 12,462 12,979 3/31/1999 13,540 12,761 13,498 4/30/1999 13,493 12,717 14,021 5/31/1999 13,058 12,307 13,690 6/30/1999 14,021 13,214 14,450 7/31/1999 13,691 12,904 13,999 8/31/1999 13,668 12,882 13,929 9/30/1999 12,857 12,118 13,548 10/31/1999 13,351 12,583 14,405 11/30/1999 13,856 13,059 14,698 12/31/1999 15,365 14,481 15,563 1/31/2000 14,163 13,349 14,781 2/29/2000 15,421 14,534 14,502 3/31/2000 15,589 14,692 15,920 4/30/2000 15,003 14,140 15,441 5/31/2000 14,403 13,574 15,124 6/30/2000 14,459 13,627 15,497 7/31/2000 13,998 13,193 15,255 8/31/2000 14,661 13,818 16,203 9/30/2000 14,130 13,318 15,347 10/31/2000 14,160 13,346 15,282 11/30/2000 14,027 13,220 14,078 12/31/2000 14,666 13,823 14,146 1/31/2001 13,366 12,597 14,648 2/28/2001 12,942 12,198 13,313 3/31/2001 12,613 11,888 12,469 4/30/2001 13,162 12,405 13,438 5/31/2001 12,896 12,154 13,528 6/30/2001 12,984 12,237 13,199 7/31/2001 12,606 11,881 13,069 8/31/2001 11,567 10,902 12,251 9/30/2001 10,450 9,849 11,262 10/31/2001 10,512 9,908 11,476 11/30/2001 11,630 10,961 12,357 12/31/2001 12,290 11,584 12,465 1/31/2002 12,668 11,939 12,283 2/28/2002 12,085 11,390 12,046 3/31/2002 12,289 11,583 12,499 4/30/2002 12,321 11,613 11,741 5/31/2002 12,196 11,494 11,655 6/30/2002 11,802 11,123 10,825 7/31/2002 10,495 9,892 9,981 8/31/2002 10,495 9,892 10,046 9/30/2002 9,850 9,283 8,955 10/31/2002 9,613 9,061 9,743 11/30/2002 9,377 8,838 10,316 12/31/2002 8,748 8,245 9,710 1/31/2003 8,748 8,245 9,456 2/28/2003 8,685 8,185 9,314 3/31/2003 8,889 8,378 9,404 4/30/2003 9,455 8,911 10,179 5/31/2003 10,273 9,682 10,715 6/30/2003 10,445 9,845 10,852 7/31/2003 10,241 9,652 11,043 8/31/2003 10,508 9,904 11,259 9/30/2003 10,634 10,023 11,139 10/31/2003 11,956 11,268 11,769 11/30/2003 12,428 11,714 11,873 12/31/2003 12,492 11,773 12,495 1/31/2004 12,208 11,506 12,725 2/29/2004 12,948 12,203 12,902 3/31/2004 13,546 12,767 12,707 4/30/2004 12,476 11,759 12,508 5/31/2004 12,775 12,041 12,679 6/30/2004 12,885 12,144 12,926 7/31/2004 12,272 11,566 12,498 8/31/2004 12,413 11,699 12,549 9/30/2004 13,184 12,426 12,684 10/31/2004 13,341 12,574 12,878 11/30/2004 13,938 13,137 13,399 12/31/2004 14,237 13,418 13,855 1/31/2005 14,111 13,300 13,518 2/28/2005 15,055 14,190 13,802 3/31/2005 14,394 13,567 13,558 4/30/2005 14,001 13,196 13,300 5/31/2005 14,395 13,567 13,724 6/30/2005 14,713 13,867 13,743 7/31/2005 15,469 14,580 14,254 8/31/2005 15,627 14,729 14,124 9/30/2005 16,210 15,278 14,239 10/31/2005 15,832 14,922 14,001 11/30/2005 16,084 15,159 14,531 12/31/2005 16,116 15,190 14,536 1/31/2006 16,809 15,843 14,921 2/28/2006 16,226 15,293 14,961 3/31/2006 16,683 15,724 15,147 4/30/2006 17,456 16,452 15,351 5/31/2006 16,857 15,888 14,909 6/30/2006 16,827 15,859 14,929 7/31/2006 16,923 15,950 15,021 8/31/2006 16,796 15,830 15,379 9/30/2006 16,446 15,501 15,775 10/31/2006 17,002 16,025 16,289 11/30/2006 17,050 16,070 16,599 12/31/2006 17,490 16,484 16,832 1/31/2007 17,719 16,700 17,086 2/28/2007 17,065 16,084 16,752 3/31/2007 17,540 16,531 16,939 4/30/2007 18,292 17,240 17,690 5/31/2007 19,126 18,026 18,307 6/30/2007 19,564 18,439 18,003 7/31/2007 19,783 18,646 17,445 8/31/2007 19,969 18,821 17,706 9/30/2007 22,150 20,876 18,368 10/31/2007 23,468 22,118 18,661 11/30/2007 22,876 21,561 17,880 12/31/2007 23,510 22,158 17,756 Average Annual Total Returns -- December 31, 2007
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION CLASS A (Inception 11/27/68) Net Asset Value/1/ 34.42% 21.86% 8.93% -- With Maximum Sales Charge/2/ 26.72 20.42 8.28 -- CLASS B (Inception 2/28/97) Net Asset Value/1/ 33.41 20.93 8.12 -- With CDSC/3/ 28.41 20.75 8.12 -- CLASS C (Inception 9/1/98) Net Asset Value/1/ 33.47 20.97 -- 7.79% With CDSC/3/ 32.47 20.97 -- 7.79 CLASS Y (Inception 6/30/99) Net Asset Value/1/ 34.75 22.25 -- 6.66
SINCE SINCE CLASS C CLASS Y COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ INCEPTION/6/ S&P 500 Index/4/ 5.49% 12.83% 5.91% 6.39% 2.45% Morningstar Large Blend Fund Avg./5/ 6.16 12.63 5.92 6.88 3.26
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary, and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those noted. For performance current to the most recent month-end, visit www.funds.natixis.com. Class Y shares are only available to certain investors, as outlined in the prospectus. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 12/31/07 12/31/06 --------------------------------------------------- Common Stocks 95.8 99.0 --------------------------------------------------- Short-Term Investments and Other 4.2 1.0 --------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 12/31/07 12/31/06 --------------------------------------------------- Petroleo Brasileiro SA, ADR 9.1 -- --------------------------------------------------- Schlumberger, Ltd. 6.6 4.9 --------------------------------------------------- Deere & Co. 6.6 5.1 --------------------------------------------------- Monsanto Co. 5.9 -- --------------------------------------------------- Banco Itau Holding Financeira SA, ADR 5.6 -- --------------------------------------------------- Apple, Inc. 5.4 -- --------------------------------------------------- Research in Motion, Ltd. 5.3 -- --------------------------------------------------- MasterCard, Inc., Class A 5.2 5.0 --------------------------------------------------- Companhia Vale do Rio Doce, ADR 5.0 -- --------------------------------------------------- McDonald's Corp. 5.0 5.0 --------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 12/31/07 --------------------------------------------------- Energy Equipment & Services 11.1 --------------------------------------------------- Chemicals 10.7 --------------------------------------------------- Commercial Banks 9.6 --------------------------------------------------- Oil, Gas & Consumable Fuels 9.1 --------------------------------------------------- Insurance 8.9 ---------------------------------------------------
Portfolio holdings and asset allocations will vary EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio Net Expense Ratio --------------------------------------------------- A 1.16% 1.16% --------------------------------------------------- B 1.91 1.91 --------------------------------------------------- C 1.90 1.90 --------------------------------------------------- Y 0.87 0.87 ---------------------------------------------------
NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P 500 Index is an unmanaged index of U.S. common stocks. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception comparative performance figures shown for each Class of fund shares are calculated as follows: Class C from 9/1/98; and Class Y from 7/1/99. 2 HANSBERGER INTERNATIONAL FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital -------------------------------------------------------------------------------- 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 Lauretta Reeves -------------------------------------------------------------------------------- Symbols: Class A NEFDX Class B NEDBX Class C NEDCX
-------------------------------------------------------------------------------- What You Should Know: Foreign securities involve risks not associated with domestic securities, such as currency fluctuations, differing political and economic conditions and different accounting standards. Growth stocks can be more sensitive to market movements because their prices are based in part on future expectations. Value stocks may fall out of favor and underperform the overall market during any given period. Management Discussion -------------------------------------------------------------------------------- Hansberger International Fund's total return for the year ended December 31, 2007 was 16.38%, based on the net asset value of Class A shares, including $0.40 in dividends and $2.40 in capital gains reinvested during the period. By comparison, the fund's benchmarks, the MSCI EAFE Index and the MSCI ACWI ex USA Index, returned 11.63% and 17.12%, respectively, expressed in U.S. dollars. The average performance of the fund's Morningstar peer group, the Foreign Large Blend category, was 12.71%. Neither the fund nor its benchmarks include U.S. stocks, and the Morningstar category has only limited exposure to domestic equities. International markets - notably emerging market countries - led the way in 2007, significantly outperforming the U.S. market, as measured by the S&P 500 Index, which returned just 5.49% for the year. Brazil, India, China and Russia were among the strongest markets, and U.S. investors who owned internationally diversified portfolios benefited from the weakening U.S. dollar. Two teams of Hansberger's international equity specialists manage the fund. One team focuses on value and the other seeks growth potential. Growth investors fared better than value investors in 2007, although stock selection had a positive influence on both the fund's segments. FINANCIALS, JAPAN LAGGED, BUT STOCK SELECTION WAS POSITIVE The subprime crisis and the credit crunch in the United States disturbed financial markets all over the world in 2007, and the value portfolio's financial holdings suffered. Disappointments included Sumitomo Trust and Banking, one of Japan's largest financial institutions, although the stock remains in the portfolio in anticipation of improving prospects. Also hard hit was Japan's Daiei Inc., a general merchandise and supermarket retailer. Consumer confidence in Japan remains low and we sold the stock. Materials, energy and telecom benefited the value portfolio. Companhia Vale do Rio Doce in Brazil (recently renamed Vale), the world's largest iron ore mining company, benefited from strong demand, particularly from China and other developing economies. Even though Japanese equities performed poorly this year, the value team's selections included Nintendo, the game console manufacturer whose "Wii" console was stronger than expected, causing the company to revise its earnings outlook upward several times. Both stocks remain in the portfolio. GROWTH TEAM LOOKS FOR COMPANIES NOT TIED TO ECONOMIC CYCLES For the first time in several years, growth-oriented investors outperformed value investors in 2007, as slowing economic growth made investors more willing to pay a higher premium for solid growth prospects. The types of stocks Hansberger's Growth team favors are companies able to generate opportunities through their own businesses rather than depending on economic cycles. For example, recent investments include Autonomy, a British software company that developed a unique search platform to help customers analyze unstructured data. Another example is Denmark's Vestas Wind Systems, which has been a strong performer for the fund for several years. Vestas' order backlogs continue to increase its visibility for both earnings and revenue growth worldwide as the demand for green energy grows. From a sector standpoint, the portfolio's best performers were those regarded as more defensive, including consumer staples, energy, telecommunication services and utilities. Earnings of companies in these sectors are expected to hold up relatively well even during less favorable economic periods. The worst sectors were information technology, industrials, financials and consumer discretionary companies, which were hurt by reduced capital spending and the global credit crisis. EMERGING MARKETS EXPECTED TO CONTINUE TO LEAD IN 2008 As 2008 unfolds, we believe high-quality stocks, which have been under a cloud for some time, will return to favor. Although the U.S. economy could enter a recession, we expect continued strength in emerging markets, particularly China and India. This may create a healthy growth scenario, with a soft landing for global economies. Much will turn on what happens in the United States, both politically and from an economic standpoint. 3 HANSBERGER INTERNATIONAL FUND Investment Results through December 31, 2007 -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/7/ [CHART] December 31, 1997 through December 31, 2007 MSCI MSCI Class A Class A EAFE ACWI ex USA @ N.A. @ M.S.C. Index Index Cumulative Cumulative Cumulative Cumulative Month End Value/1/ Value/2/ Value/4/ Value/5/ ---------- ---------- ---------- ---------- ----------- 12/31/1997 $10,000 $ 9,425 $10,000 $10,000 1/31/1998 9,968 9,395 10,460 10,299 2/28/1998 10,647 10,035 11,133 10,986 3/31/1998 11,080 10,443 11,479 11,366 4/30/1998 11,144 10,504 11,572 11,447 5/31/1998 10,918 10,290 11,519 11,240 6/30/1998 10,692 10,077 11,608 11,198 7/31/1998 10,660 10,047 11,729 11,304 8/31/1998 8,972 8,456 10,278 9,710 9/30/1998 8,887 8,376 9,966 9,505 10/31/1998 9,534 8,986 11,007 10,500 11/30/1998 10,045 9,468 11,574 11,065 12/31/1998 10,401 9,803 12,033 11,446 1/31/1999 10,763 10,144 12,001 11,434 2/28/1999 10,627 10,016 11,717 11,178 3/31/1999 11,061 10,425 12,209 11,717 4/30/1999 11,656 10,986 12,707 12,303 5/31/1999 11,364 10,711 12,055 11,725 6/30/1999 12,030 11,339 12,528 12,264 7/31/1999 11,894 11,211 12,903 12,552 8/31/1999 11,810 11,131 12,953 12,595 9/30/1999 11,538 10,875 13,086 12,681 10/31/1999 11,946 11,259 13,579 13,153 11/30/1999 12,838 12,100 14,054 13,679 12/31/1999 14,313 13,490 15,318 14,983 1/31/2000 13,781 12,988 14,348 14,170 2/29/2000 14,643 13,801 14,737 14,553 3/31/2000 14,686 13,841 15,311 15,101 4/30/2000 13,621 12,838 14,508 14,258 5/31/2000 13,003 12,255 14,156 13,893 6/30/2000 13,384 12,614 14,713 14,485 7/31/2000 13,024 12,275 14,099 13,913 8/31/2000 13,413 12,642 14,224 14,085 9/30/2000 12,909 12,166 13,535 13,304 10/31/2000 12,419 11,705 13,218 12,881 11/30/2000 11,854 11,173 12,725 12,303 12/31/2000 12,564 11,842 13,180 12,723 1/31/2001 12,808 12,072 13,174 12,914 2/28/2001 11,990 11,300 12,187 11,891 3/31/2001 11,206 10,561 11,380 11,051 4/30/2001 11,928 11,243 12,178 11,802 5/31/2001 12,068 11,374 11,758 11,477 6/30/2001 11,968 11,280 11,282 11,036 7/31/2001 11,749 11,073 11,077 10,791 8/31/2001 11,495 10,834 10,799 10,523 9/30/2001 10,295 9,703 9,708 9,406 10/31/2001 10,497 9,893 9,956 9,670 11/30/2001 11,093 10,455 10,324 10,112 12/31/2001 11,437 10,779 10,385 10,243 1/31/2002 11,165 10,523 9,834 9,804 2/28/2002 11,191 10,548 9,904 9,874 3/31/2002 11,860 11,178 10,492 10,452 4/30/2002 11,780 11,103 10,520 10,479 5/31/2002 11,851 11,169 10,663 10,593 6/30/2002 11,130 10,490 10,242 10,135 7/31/2002 10,063 9,484 9,232 9,148 8/31/2002 10,080 9,500 9,213 9,148 9/30/2002 8,836 8,328 8,226 8,179 10/31/2002 9,321 8,785 8,669 8,617 11/30/2002 9,991 9,417 9,063 9,032 12/31/2002 9,559 9,009 8,759 8,740 1/31/2003 9,223 8,693 8,394 8,433 2/28/2003 8,968 8,452 8,202 8,262 3/31/2003 8,853 8,344 8,047 8,102 4/30/2003 9,779 9,217 8,845 8,883 5/31/2003 10,475 9,873 9,389 9,449 6/30/2003 10,713 10,097 9,622 9,710 7/31/2003 10,934 10,305 9,856 9,969 8/31/2003 11,277 10,629 10,096 10,266 9/30/2003 11,427 10,770 10,409 10,553 10/31/2003 12,238 11,535 11,059 11,238 11/30/2003 12,450 11,734 11,306 11,483 12/31/2003 13,288 12,524 12,190 12,359 1/31/2004 13,588 12,807 12,363 12,558 2/29/2004 13,755 12,964 12,651 12,877 3/31/2004 13,623 12,840 12,727 12,956 4/30/2004 13,235 12,474 12,450 12,554 5/31/2004 13,279 12,515 12,488 12,582 6/30/2004 13,499 12,723 12,783 12,866 7/31/2004 12,890 12,149 12,369 12,491 8/31/2004 13,005 12,257 12,427 12,591 9/30/2004 13,341 12,574 12,753 12,996 10/31/2004 13,729 12,939 13,189 13,448 11/30/2004 14,531 13,695 14,094 14,382 12/31/2004 15,094 14,226 14,713 14,999 1/31/2005 14,768 13,919 14,444 14,741 2/28/2005 15,579 14,683 15,071 15,468 3/31/2005 15,148 14,277 14,698 15,048 4/30/2005 14,795 13,944 14,369 14,677 5/31/2005 14,848 13,994 14,391 14,769 6/30/2005 15,007 14,144 14,588 15,047 7/31/2005 15,580 14,684 15,036 15,602 8/31/2005 16,065 15,141 15,421 16,002 9/30/2005 16,497 15,548 16,111 16,827 10/31/2005 16,038 15,116 15,641 16,214 11/30/2005 16,522 15,572 16,028 16,760 12/31/2005 17,527 16,519 16,775 17,566 1/31/2006 18,805 17,723 17,806 18,791 2/28/2006 18,478 17,415 17,769 18,736 3/31/2006 19,060 17,964 18,364 19,281 4/30/2006 19,852 18,711 19,254 20,275 5/31/2006 19,040 17,946 18,530 19,340 6/30/2006 18,919 17,831 18,537 19,321 7/31/2006 19,134 18,034 18,722 19,518 8/31/2006 19,647 18,517 19,242 20,072 9/30/2006 19,791 18,653 19,276 20,085 10/31/2006 20,519 19,339 20,027 20,903 11/30/2006 21,186 19,968 20,631 21,661 12/31/2006 21,743 20,493 21,280 22,337 1/31/2007 22,017 20,751 21,426 22,420 2/28/2007 21,977 20,714 21,602 22,557 3/31/2007 22,575 21,277 22,163 23,192 4/30/2007 23,415 22,068 23,167 24,268 5/31/2007 24,225 22,832 23,604 24,933 6/30/2007 24,528 23,117 23,641 25,146 7/31/2007 24,280 22,884 23,295 25,074 8/31/2007 23,896 22,522 22,937 24,689 9/30/2007 25,395 23,934 24,168 26,324 10/31/2007 26,893 25,347 25,120 27,793 11/30/2007 25,788 24,305 24,301 26,544 12/31/2007 25,308 23,853 23,755 26,161 Average Annual Total Returns -- December 31, 2007/7/
1 YEAR 5 YEARS 10 YEARS CLASS A (Inception 12/29/95) Net Asset Value/1/ 16.38% 21.51% 9.73% With Maximum Sales Charge/2/ 9.70 20.08 9.09 CLASS B (Inception 12/29/95) Net Asset Value/1/ 15.63 20.62 8.94 With CDSC/3/ 10.63 20.43 8.94 CLASS C (Inception 12/29/95) Net Asset Value/1/ 15.54 20.61 8.92 With CDSC/3/ 14.54 20.61 8.92 -------------------------------------------------------------------- COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS MSCI EAFE Index/4/ 11.63% 22.08% 9.04% MSCI ACWI ex-U.S.A. Index/5/ 17.12 24.52 10.09 Morningstar Foreign Large Blend Fund Avg./6/ 12.71 20.31 7.94
All results represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary, and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.funds.natixis.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 12/31/07 12/31/06 ------------------------------------------------- Common Stocks 97.3 99.1 ------------------------------------------------- Preferred Stock 1.3 -- ------------------------------------------------- Short-Term Investments and Other 1.4 0.9 ------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 12/31/07 12/31/06 ------------------------------------------------- Petroleo Brasileiro SA, ADR 2.2 1.1 ------------------------------------------------- Nintendo Co., Ltd. 1.9 0.8 ------------------------------------------------- Adidas AG 1.9 1.0 ------------------------------------------------- Banco Santander Central Hispano SA 1.7 1.1 ------------------------------------------------- UniCredito Italiano SpA 1.6 1.9 ------------------------------------------------- Saipem SpA 1.6 1.6 ------------------------------------------------- Axa 1.5 0.7 ------------------------------------------------- Tesco PLC 1.4 0.6 ------------------------------------------------- Nestle SA 1.3 1.2 ------------------------------------------------- Infosys Technologies, Ltd., Sponsored ADR 1.3 0.7 ------------------------------------------------- % of Net Assets as of FIVE LARGEST COUNTRIES 12/31/07 12/31/06 ------------------------------------------------- Japan 14.0 18.3 ------------------------------------------------- United Kingdom 13.0 17.0 ------------------------------------------------- France 9.9 8.7 ------------------------------------------------- Switzerland 8.9 10.4 ------------------------------------------------- Germany 6.6 3.2 -------------------------------------------------
Portfolio holdings and asset allocations will vary. EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio Net Expense Ratio --------------------------------------------------- A 1.50% 1.50% --------------------------------------------------- B 2.25 2.25 --------------------------------------------------- C 2.25 2.25 ---------------------------------------------------
NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Morgan Stanley Capital International Europe Australasia and Far East Index (MSCI EAFE Index) is an unmanaged index designed to measure developed market equity performance, excluding the United States and Canada. /5/Morgan Stanley Capital International All Countries World Index ex USA (MSCI ACWI ex USA Index) is an unmanaged index designed to measure equity market performance in developed and emerging markets, excluding the United States. /6/Morningstar Foreign Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /7/Fund performance has been increased by expense reductions/reimbursements, without which performance would have been lower. 4 HARRIS ASSOCIATES FOCUSED VALUE FUND PORTFOLIO PROFILE Objective: Seeks long-term capital appreciation -------------------------------------------------------------------------------- Strategy: Focuses on 25 to 30 stocks of mid- to large-cap U.S. companies -------------------------------------------------------------------------------- Inception Date: March 15, 2001 -------------------------------------------------------------------------------- Managers: Robert M. Levy Michael Mangan -------------------------------------------------------------------------------- Symbols: Class A NRSAX Class B NRSBX Class C NRSCX
-------------------------------------------------------------------------------- What You Should Know: The fund invests in a small number of securities, which may result in greater volatility than more diversified funds. Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion -------------------------------------------------------------------------------- Faced with turmoil in the credit markets and falling housing prices, stock prices began to decline in July, as investors sought short-term safety. For Harris Associates Focused Value Fund, holdings in weak sectors and a lack of representation in stronger market segments brought disappointing results for 2007, despite solid returns in the first half of the year. For the 12 months ended December 31, 2007, Class A shares of the fund provided a total return of -6.81% based on net asset value with $1.76 in capital gains reinvested during the period. These results were well behind the fund's benchmark, the S&P 500 Index, which returned 5.49% for the period and below the 6.16% average return on the funds in Morningstar's Large Blend category. TECH STOCKS AND CONSUMER ISSUES LED GAINERS In 2006 we purchased Intel, a leading maker of microprocessors, when competitive challenges had driven its shares lower. Intel rebounded in 2007, as a major competitor encountered difficulties launching new products, reaffirming Intel's dominant industry position. Discovery Holding Co., owners of the Discovery and History cable channels, among others, was another positive contributor. A complex corporate structure had kept investors away from this issue, but after management transformed Discovery from a holding company to a traditional corporation, investors came to recognize the value inherent in its strong channel lineup. McDonald's extended its successful turnaround, building on improved service and enhanced menu choices. Yum! Brands, operators of Pizza Hut, Taco Bell and other fast-food chains, benefited from its early entry into China and the strong reception there of its KFC brand. Buyouts of Huntsman Chemical and Bausch & Lomb also aided the fund's returns, as did the merger of brewers Molson and Coors. The combined company, Molson Coors Brewing Company, has generated sizeable cost savings and other synergies that helped boost its stock price. We took profits in all three stocks. The fund was underweight relative to the benchmark in the embattled financial sector, which was a positive, and the financial stocks we selected performed relatively well. SOME SECTOR EXPOSURES AND INDIVIDUAL ISSUES HURT RESULTS Unlike the benchmark, the fund held no utilities, telecommunications or energy companies during the year, which caused the fund's performance to lag, as all three sectors delivered impressive returns. Timberland, retailers of outdoor gear, declined in the wake of earnings shortfalls, tighter margins and declining U.S. revenues. Timberland enjoys good return on capital and strong cash flow and, in our view, management's focus on cost control and store closings should benefit the stock over the longer term. Chipmaker Micron Technology, a recent addition, fell toward year-end due to an oversupply of microchips and weak pricing. Although our commitment to the stock may have been premature, we believe Micron is undervalued and will benefit from any rebound for the chip markets. With hindsight, we were late to sell D.R. Horton, taking losses in this major homebuilder because a housing recovery may be some time off. We were also in the process of eliminating Sovereign Bancorp from the portfolio at year-end. Like so many financial services stocks, Sovereign was tainted by the credit crisis. We used the proceeds from sales to buy other stocks that had fallen in price to what we believed to be attractive levels. POSITIONED FOR BUYING OPPORTUNITIES We believe shares of financial companies may have been beaten down more than the facts warrant. As falling prices make values more compelling, we have been adding to the fund's holdings in financial giants like Merrill Lynch and Morgan Stanley. Close examination of other possible investments, including some mid-cap issues, also suggests that opportunities continue to emerge for our value-based, bottom-up selection process. Although the coming months may see further economic slowing, we attempt to look past the market's ups and downs in an effort to assess companies' potential in light of their current valuations. 5 HARRIS ASSOCIATES FOCUSED VALUE FUND Investment Results through December 31, 2007 -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/7/ [CHART] March 15, 2001 (inception) through December 31, 2007 Class A Class A S&P 500 @ N.A. @ M.S.C. Index Cumulative Cumulative Cumulative Month End Value/1/ Value/2/ Value/4/ ---------- ---------- ---------- ---------- 3/15/2001 $10,000 $9,425 3/31/2001 10,090 9,510 $10,000 4/30/2001 10,420 9,821 10,777 5/31/2001 10,690 10,075 10,849 6/30/2001 10,990 10,358 10,585 7/31/2001 11,310 10,660 10,481 8/31/2001 10,870 10,245 9,825 9/30/2001 10,240 9,651 9,032 10/31/2001 10,000 9,425 9,204 11/30/2001 10,680 10,066 9,910 12/31/2001 10,960 10,330 9,997 1/31/2002 10,890 10,264 9,851 2/28/2002 10,600 9,990 9,661 3/31/2002 10,910 10,282 10,024 4/30/2002 10,859 10,235 9,416 5/31/2002 10,929 10,300 9,347 6/30/2002 10,079 9,499 8,681 7/31/2002 9,619 9,066 8,005 8/31/2002 9,959 9,386 8,057 9/30/2002 8,568 8,076 7,181 10/31/2002 8,968 8,453 7,813 11/30/2002 9,468 8,924 8,273 12/31/2002 9,238 8,707 7,787 1/31/2003 9,008 8,490 7,583 2/28/2003 8,888 8,377 7,469 3/31/2003 8,988 8,471 7,542 4/30/2003 9,507 8,960 8,163 5/31/2003 10,117 9,535 8,593 6/30/2003 10,336 9,742 8,703 7/31/2003 10,256 9,667 8,856 8/31/2003 10,676 10,062 9,029 9/30/2003 10,556 9,949 8,933 10/31/2003 11,196 10,552 9,439 11/30/2003 11,687 11,015 9,522 12/31/2003 11,787 11,109 10,021 1/31/2004 12,097 11,401 10,205 2/29/2004 12,177 11,477 10,347 3/31/2004 11,937 11,251 10,191 4/30/2004 11,777 11,100 10,031 5/31/2004 12,037 11,345 10,168 6/30/2004 11,907 11,223 10,366 7/31/2004 11,677 11,006 10,023 8/31/2004 11,627 10,959 10,064 9/30/2004 11,938 11,251 10,173 10/31/2004 12,148 11,449 10,328 11/30/2004 12,648 11,921 10,746 12/31/2004 13,058 12,307 11,111 1/31/2005 12,608 11,883 10,841 2/28/2005 12,987 12,240 11,069 3/31/2005 12,817 12,080 10,873 4/30/2005 12,597 11,872 10,667 5/31/2005 13,046 12,296 11,006 6/30/2005 13,415 12,644 11,022 7/31/2005 13,876 13,078 11,431 8/31/2005 13,856 13,059 11,327 9/30/2005 13,607 12,824 11,419 10/31/2005 13,156 12,400 11,229 11/30/2005 13,626 12,843 11,653 12/31/2005 13,806 13,012 11,657 1/31/2006 13,966 13,163 11,966 2/28/2006 14,023 13,217 11,998 3/31/2006 14,103 13,292 12,148 4/30/2006 14,366 13,540 12,311 5/31/2006 13,874 13,076 11,957 6/30/2006 13,795 13,002 11,973 7/31/2006 13,653 12,868 12,047 8/31/2006 13,983 13,179 12,333 9/30/2006 14,444 13,613 12,651 10/31/2006 15,010 14,147 13,063 11/30/2006 15,422 14,536 13,312 12/31/2006 15,560 14,665 13,498 1/31/2007 15,815 14,906 13,703 2/28/2007 15,465 14,576 13,435 3/31/2007 15,263 14,385 13,585 4/30/2007 15,976 15,057 14,187 5/31/2007 16,742 15,780 14,682 6/30/2007 16,684 15,725 14,438 7/31/2007 15,895 14,981 13,990 8/31/2007 15,391 14,506 14,200 9/30/2007 15,839 14,928 14,731 10/31/2007 15,866 14,953 14,965 11/30/2007 14,792 13,941 14,340 12/31/2007 14,496 13,662 14,240 Average Annual Total Returns -- December 31, 2007/7/
SINCE 1 YEAR 5 YEARS INCEPTION CLASS A (Inception 3/15/01) Net Asset Value/1/ -6.81% 9.44% 5.63% With Maximum Sales Charge/2/ -12.20 8.16 4.71 CLASS B (Inception 3/15/01) Net Asset Value/1/ -7.39 8.63 4.85 With CDSC/3/ -11.23 8.37 4.85 CLASS C (Inception 3/15/01) Net Asset Value/1/ -7.39 8.63 4.85 With CDSC/3/ -8.16 8.63 4.85 ----------------------------------------------------------------- SINCE COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS INCEPTION/6/ S&P 500 Index/4/ 5.49% 12.83% 5.38% Morningstar Large Blend Fund Avg./5/ 6.16 12.63 5.43
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary, and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.funds.natixis.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 12/31/07 12/31/06 ----------------------------------------------------- Common Stocks 100.0 100.2 ----------------------------------------------------- Short-Term Investments and Other 0.0 -0.2 ----------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 12/31/07 12/31/06 ----------------------------------------------------- Intel Corp. 9.0 5.0 ----------------------------------------------------- National Semiconductor Corp. 6.1 4.7 ----------------------------------------------------- Liberty Media Holding Corp.-- Interactive, Class A 5.5 -- ----------------------------------------------------- Virgin Media, Inc. 5.2 -- ----------------------------------------------------- PerkinElmer, Inc. 5.2 -- ----------------------------------------------------- Discovery Holding Co. 5.1 3.5 ----------------------------------------------------- Yum! Brands, Inc. 5.0 4.5 ----------------------------------------------------- Robert Half International, Inc. 4.9 -- ----------------------------------------------------- Hospira, Inc. 4.9 -- ----------------------------------------------------- Avon Products, Inc. 4.7 -- ----------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 12/31/07 ----------------------------------------------------- Semiconductors & Semiconductor Equipment 21.7 ----------------------------------------------------- Media 18.6 ----------------------------------------------------- Life Sciences Tools & Services 9.2 ----------------------------------------------------- Hotels, Restaurants & Leisure 6.8 ----------------------------------------------------- Internet & Catalog Retail 5.5 -----------------------------------------------------
Portfolio holdings and asset allocations will vary. NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P 500 Index is an unmanaged index of U.S. common stocks. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception comparative performance figures shown are calculated from 4/1/01. /7/Fund performance has been increased by expense reductions/reimbursements, without which performance would have been lower. 6 EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio Net Expense Ratio --------------------------------------------------- A 1.46% 1.46% --------------------------------------------------- B 2.21 2.21 --------------------------------------------------- C 2.22 2.22 ---------------------------------------------------
HARRIS ASSOCIATES LARGE CAP VALUE FUND PORTFOLIO PROFILE Objective: Seeks opportunities for long-term capital growth and income -------------------------------------------------------------------------------- Strategy: Invests primarily in common stock of large- and mid-cap companies in any industry -------------------------------------------------------------------------------- Inception Date: May 6, 1931 -------------------------------------------------------------------------------- Managers: Edward S. Loeb Michael J. Mangan Diane Mustain -------------------------------------------------------------------------------- Symbols: Class A NEFOX Class B NEGBX Class C NECOX Class Y NEOYX
-------------------------------------------------------------------------------- What You Should Know: Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion -------------------------------------------------------------------------------- Momentum and economic optimism carried stocks higher during the first half of 2007, but early summer brought a sudden shift, as the subprime mortgage crisis and slumping home values caused investors to retreat. Harris Associates Large Cap Value Fund recorded disappointing returns for the year, despite comparatively favorable first half results. For the 12 months ended December 31, 2007, Class A shares of the fund provided a total return of -2.94% based on net asset value with $0.09 in dividends reinvested during the period. These results trailed the fund's benchmark for the year and its Morningstar peer group. The Russell 1000 Value Index returned -0.17%, while the average return on the funds in Morningstar's Large Blend category was 6.16%. SECTOR ALLOCATIONS PROVIDED MIXED RESULTS Our underweight position in financial stocks compared to the benchmark was a positive during the year. However, that advantage was offset by the fund's limited exposure to the strong energy and commodity-related sectors. We have downplayed these sectors for some time because we think that current price up-trends for oil and other commodities are unsustainable. In addition, the second half of the year rewarded strategies that rely on active trading on short-term stock-price movements. Those tactics are at odds with our value-focused, long-term approach to stock selection. DIVERSE GROUP OF ISSUES LED THE WAY Intel and Hewlett-Packard, two names that have been in the fund for some time, rose in value in 2007. Both companies are dominant global businesses with strong balance sheets and commanding industry positions. Intel has recaptured market share from a leading competitor whose latest product offerings suffered technical setbacks. Union Pacific (UP) continued its vigorous turnaround, as high oil prices boosted demand from utilities for less costly coal, swelling the railroad's coal-hauling business. A tight focus on costs by UP's new management team also aided results. McDonald's extended its successful turnaround, recording steady growth in same-store sales thanks to improved service and well-received menu changes. Not all financial services stocks suffered. Our large position in Bank of New York Mellon added modestly to results. We believe this recently merged company will produce better-than-expected operating synergies and cost savings. FINANCE, BUILDING AND TELECOM WERE AREAS OF CONCERN Portfolio adjustments in July led us to sell a portion of the fund's Washington Mutual holdings. Although modest gains resulted from this sale, the sharp drop in our remaining shares made Washington Mutual the period's most negative stock. Credit-card issuer Capital One was another detractor, but we added to this position as its valuation grew more attractive. Investors appear to be overestimating the threat of charge offs if credit woes lead consumers to retrench. Shares of Home Depot (HD) fell on the weak housing outlook, despite having a new CEO and completing the timely sale of its supply business. We believe the impact of the housing slowdown on the company will be less severe than expected, and HD has a major share repurchase program in progress. We took losses in Sprint Nextel, which faces heavy competition from larger companies and was overlooked in the initial rollout of Apple's iPhone. TimeWarner's shares also continued to languish, but we believe management action in 2008 should unlock shareholder value. VOLATILE MARKETS COULD MEAN BUYING OPPORTUNITIES Using our customary value-centered approach, we are repositioning the portfolio, using the opportunities the market presents to build positions in beaten-down financial and consumer-sensitive companies. We think overall economic conditions are better than many headlines imply. And although the economy is clearly slowing, we believe a sharp downturn is unlikely. U.S. exports remain strong and interest rates may fall further, but if a recession does occur, investors should bear in mind that stocks can rise during recessions just as they can fall during prosperous periods. 7 HARRIS ASSOCIATES LARGE CAP VALUE FUND Investment Results through December 31, 2007 -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/7/ [CHART] December 31, 1997 through December 31, 2007 Class A Class A Russell 1000 @ N.A. @ M.S.C Value Index Cumulative Cumulative Cumulative Month End Value/1/ Value/2/ Value/4/ ---------- ---------- -------------- ---------------- 12/31/1997 $10,000 $ 9,425 $10,000 1/31/1998 10,059 9,481 9,859 2/28/1998 10,867 10,242 10,522 3/31/1998 11,480 10,820 11,166 4/30/1998 11,538 10,875 11,240 5/31/1998 11,381 10,727 11,074 6/30/1998 11,857 11,175 11,216 7/31/1998 11,674 11,003 11,018 8/31/1998 9,909 9,339 9,378 9/30/1998 10,403 9,805 9,916 10/31/1998 11,154 10,512 10,685 11/30/1998 11,660 10,990 11,182 12/31/1998 12,392 11,680 11,563 1/31/1999 12,752 12,019 11,655 2/28/1999 12,446 11,730 11,491 3/31/1999 12,618 11,892 11,729 4/30/1999 13,366 12,597 12,824 5/31/1999 13,306 12,541 12,683 6/30/1999 13,721 12,932 13,051 7/31/1999 13,316 12,550 12,669 8/31/1999 13,136 12,381 12,199 9/30/1999 12,604 11,879 11,773 10/31/1999 13,110 12,356 12,450 11/30/1999 13,148 12,392 12,353 12/31/1999 13,566 12,786 12,413 1/31/2000 12,858 12,118 12,008 2/29/2000 12,424 11,710 11,115 3/31/2000 13,433 12,661 12,472 4/30/2000 13,211 12,452 12,327 5/31/2000 12,805 12,068 12,457 6/30/2000 12,972 12,226 11,887 7/31/2000 12,893 12,152 12,036 8/31/2000 13,758 12,967 12,706 9/30/2000 13,130 12,375 12,822 10/31/2000 13,166 12,409 13,137 11/30/2000 12,382 11,670 12,649 12/31/2000 12,574 11,851 13,283 1/31/2001 12,582 11,859 13,334 2/28/2001 11,835 11,154 12,964 3/31/2001 11,170 10,528 12,505 4/30/2001 12,081 11,387 13,119 5/31/2001 12,099 11,404 13,413 6/30/2001 11,680 11,008 13,116 7/31/2001 11,279 10,630 13,088 8/31/2001 10,586 9,978 12,564 9/30/2001 9,702 9,145 11,680 10/31/2001 10,049 9,471 11,579 11/30/2001 10,760 10,142 12,252 12/31/2001 10,742 10,124 12,541 1/31/2002 10,687 10,073 12,444 2/28/2002 10,404 9,806 12,464 3/31/2002 10,687 10,072 13,054 4/30/2002 10,386 9,788 12,606 5/31/2002 10,340 9,745 12,669 6/30/2002 9,720 9,161 11,942 7/31/2002 9,099 8,576 10,832 8/31/2002 9,327 8,791 10,914 9/30/2002 8,069 7,605 9,700 10/31/2002 8,370 7,888 10,419 11/30/2002 8,935 8,421 11,075 12/31/2002 8,588 8,094 10,594 1/31/2003 8,378 7,897 10,338 2/28/2003 8,114 7,647 10,062 3/31/2003 8,214 7,742 10,079 4/30/2003 8,989 8,472 10,966 5/31/2003 9,664 9,108 11,674 6/30/2003 9,874 9,306 11,820 7/31/2003 9,783 9,220 11,996 8/31/2003 10,111 9,530 12,183 9/30/2003 9,893 9,324 12,064 10/31/2003 10,358 9,762 12,802 11/30/2003 10,723 10,106 12,976 12/31/2003 11,170 10,528 13,775 1/31/2004 11,252 10,605 14,018 2/29/2004 11,517 10,855 14,318 3/31/2004 11,344 10,692 14,193 4/30/2004 11,344 10,692 13,846 5/31/2004 11,353 10,700 13,987 6/30/2004 11,518 10,856 14,318 7/31/2004 11,099 10,460 14,116 8/31/2004 11,153 10,512 14,317 9/30/2004 11,153 10,512 14,539 10/31/2004 11,391 10,736 14,780 11/30/2004 11,700 11,028 15,528 12/31/2004 12,193 11,492 16,048 1/31/2005 11,955 11,268 15,763 2/28/2005 11,910 11,225 16,285 3/31/2005 11,764 11,088 16,062 4/30/2005 11,527 10,864 15,774 5/31/2005 11,809 11,130 16,154 6/30/2005 11,722 11,048 16,331 7/31/2005 12,096 11,400 16,803 8/31/2005 11,905 11,220 16,730 9/30/2005 11,868 11,185 16,965 10/31/2005 11,712 11,039 16,534 11/30/2005 12,196 11,495 17,077 12/31/2005 12,169 11,469 17,179 1/31/2006 12,187 11,487 17,847 2/28/2006 12,324 11,615 17,956 3/31/2006 12,506 11,787 18,199 4/30/2006 12,579 11,856 18,661 5/31/2006 12,323 11,615 18,190 6/30/2006 12,282 11,575 18,306 7/31/2006 12,181 11,480 18,751 8/31/2006 12,528 11,808 19,065 9/30/2006 13,151 12,394 19,445 10/31/2006 13,608 12,826 20,082 11/30/2006 13,810 13,016 20,540 12/31/2006 14,176 13,361 21,001 1/31/2007 14,478 13,645 21,270 2/28/2007 14,048 13,240 20,938 3/31/2007 13,993 13,188 21,262 4/30/2007 14,716 13,870 22,048 5/31/2007 15,256 14,379 22,843 6/30/2007 15,041 14,176 22,309 7/31/2007 14,408 13,580 21,277 8/31/2007 14,444 13,613 21,516 9/30/2007 14,646 13,804 22,255 10/31/2007 14,967 14,106 22,257 11/30/2007 14,123 13,311 21,169 12/31/2007 13,760 12,969 20,965 Average Annual Total Returns -- December 31, 2007/7/
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION CLASS A (Inception 5/6/31) Net Asset Value/1/ -2.94% 9.88% 3.24% -- With Maximum Sales Charge/2/ -8.55 8.60 2.63 -- CLASS B (Inception 9/13/93) Net Asset Value/1/ -3.68 9.06 2.47 -- With CDSC/3/ -8.48 8.77 2.47 -- CLASS C (Inception 5/1/95) Net Asset Value/1/ -3.69 9.05 2.46 -- With CDSC/3/ -4.65 9.05 2.46 -- CLASS Y (Inception 11/18/98) Net Asset Value/1/ -2.59 10.29 -- 2.43% ------------------------------------------------------------------------- SINCE CLASS Y COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS INCEPTION/6/ Russell 1000 Value Index/4/ -0.17% 14.63% 7.68% 7.16% Morningstar Large Blend Fund Avg./5/ 6.16 12.63 5.92 4.92
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary, and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.funds.natixis.com. Class Y shares are only available to certain investors, as outlined in the prospectus. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 12/31/07 12/31/06 --------------------------------------------------- Common Stocks 96.4 97.8 --------------------------------------------------- Short-Term Investments and Other 3.6 2.2 --------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 12/31/07 12/31/06 --------------------------------------------------- Intel Corp. 6.9 4.0 --------------------------------------------------- Union Pacific Corp. 5.4 4.2 --------------------------------------------------- Hewlett-Packard Co. 5.0 4.0 --------------------------------------------------- Bank of New York Mellon Corp. 4.8 -- --------------------------------------------------- Dell, Inc. 4.4 4.3 --------------------------------------------------- Carnival Corp. 4.2 3.4 --------------------------------------------------- Time Warner, Inc. 3.6 4.4 --------------------------------------------------- Capital One Financial Corp. 3.5 -- --------------------------------------------------- JPMorgan Chase & Co. 3.5 3.8 --------------------------------------------------- Viacom, Inc., Class B 3.3 4.3 --------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 12/31/07 --------------------------------------------------- Media 12.2 --------------------------------------------------- Computers & Peripherals 10.9 --------------------------------------------------- Capital Markets 10.2 --------------------------------------------------- Semiconductors & Semiconductor Equipment 9.4 --------------------------------------------------- Consumer Finance 7.9 ---------------------------------------------------
Portfolio holdings and asset allocations will vary. EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio/8/ Net Expense Ratio/9/ ------------------------------------------------------- A 1.30% 1.30% ------------------------------------------------------- B 2.07 2.05 ------------------------------------------------------- C 2.06 2.05 ------------------------------------------------------- Y 0.91 0.91 -------------------------------------------------------
NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 1000 Value Index is an unmanaged index that measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. /5/Morningstar Large Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/The since-inception comparative performance figures shown for Class Y are calculated from 12/1/98. /7/Fund performance has been increased by expense reductions/reimbursements, without which performance would have been lower. /8/Before reductions and reimbursements. /9/After reductions and reimbursements. Expense reductions are contractual and are set to expire on 4/30/08. 8 NATIXIS U.S. DIVERSIFIED PORTFOLIO PORTFOLIO PROFILE Objective: Seeks long-term growth of capital -------------------------------------------------------------------------------- Strategy: Features growth and value investments through a diversified portfolio of complementary equity investment disciplines provided by specialized money managers -------------------------------------------------------------------------------- Inception Date: July 7, 1994 -------------------------------------------------------------------------------- Subadvisors: BlackRock Investment Management, LLC Harris Associates, L.P. Loomis, Sayles & Company, L.P. -------------------------------------------------------------------------------- Symbols: Class A NEFSX Class B NESBX Class C NECCX Class Y NESYX
-------------------------------------------------------------------------------- What You Should Know: Growth stocks can be more sensitive to market movements because their values are based on future expectations. Value stocks may fall out of favor with investors and underperform the overall market. Small-cap stocks carry special risks, including narrower markets, limited financial and management resources, less liquidity and greater volatility. Management Discussion -------------------------------------------------------------------------------- Deteriorating credit conditions and concerns about weakness in the U.S. economy heavily influenced the equity markets during the year, causing investors to become more defensive, especially during the second half of 2007. For the year, large-cap stocks outperformed both small- and mid-cap stocks and growth outperformed value. Each of this fund's four segments is managed using a different discipline, providing investors with exposure to a wide spectrum of large-, medium- and small-cap stocks using both growth and value investment styles. The BlackRock segment seeks long-term growth of capital in companies of any size, with an emphasis on those with capitalizations greater than $2 billion. The segment managed by Harris Associates invests primarily in common stocks of large- and mid-cap companies that the manager believes are trading at a substantial discount to their "true business value." Loomis Sayles manages two portfolio segments. One invests in mid-cap growth stocks, and the other focuses on small-cap value stocks. For the 12 months ended December 31, 2007, Natixis U.S. Diversified Portfolio returned 13.69% based on the net asset value of Class A shares, including $0.31 in capital gains reinvested during the period. This return was significantly ahead of the 5.49% return of the S&P 500 Index and the 7.98% return of the S&P MidCap 400 Index. The portfolio's return also outpaced the 5.78% return of the Dow Jones Wilshire 4500 Index and came in ahead of the 13.35% average return of the funds in Morningstar's Large Growth category. BLACKROCK EMPHASIZED COMPANIES TIED TO GLOBAL GROWTH While the U.S. experienced uneven economic growth in 2007, other countries enjoyed more consistent expansions. This created attractive investment opportunities in industries geared to global economic growth, such as materials, industrials and information technology. This segment had relatively large positions in these areas and relatively small positions in consumer staples, energy, consumer discretionary and finance. With the exception of the underweight in energy and consumer staples, BlackRock's sector positioning was a positive. The segment's three best-performing stocks were: Intuitive Surgical Inc., a designer of robotic surgical systems; Monsanto, the world's largest seed producer; and National Oilwell Varco Inc., an energy equipment and services company. An underweight position in volatile oil giant Exxon Mobil Corporation, poor performance from Comcast Corp. and Japanese information technology company Akamai Technologies Inc. were the primary detractors from return. Exxon Mobil and Comcast were eliminated from the segment. The position in Akamai Technologies was reduced as part of a broader strategy of emphasizing companies that may benefit from the ongoing growth of internet commerce. HARRIS ASSOCIATES' BOTTOM-UP PROCESS GOVERNED SECTOR ALLOCATION Harris Associates focused on stronger, higher-quality businesses. Lack of exposure to the energy sector detracted meaningfully from return. Although performance was also held back by too great an emphasis on consumer discretionary businesses, specific consumer-related holdings were positive contributors. These included restaurant chain McDonald's; athletic apparel manufacturer NIKE; specialty retailer Best Buy; and media companies Liberty Media and Viacom. Investments in the telecommunications sector generally held back results, and by year-end all the segment's holdings in the sector had been eliminated. The segment's underweight position in financial stocks relative to the benchmark was positive because the sector did poorly, but the performance of some of the financial stocks and the segment's technology holdings were positive. The segment's three best performers were Intel, Union Pacific and McDonald's. Intel consistently reported better-than-expected earnings and delivered a year of solid performance. Going forward, Intel may benefit from a growing demand for processor power and the trend toward mobile computing. Union Pacific generated impressive earnings, as did McDonald's, which continued to successfully execute its strategy for operational improvements. Washington Mutual, 9 NATIXIS U.S. DIVERSIFIED PORTFOLIO Management Discussion -------------------------------------------------------------------------------- Capital One and Home Depot had the most negative impact on return. The deterioration in the housing market, coupled with significant loan write-offs, eroded Washington Mutual's earnings power. Capital One declined on expectations of increased write-offs due to pessimism about the economy and the weak housing market. Home Depot declined on lower earnings, as the company continued to face a tough economic environment. All three stocks remain in the segment as Harris Associates believes they are undervalued at current levels. LOOMIS SAYLES' MID-CAP GROWTH FAVORED COMPANIES LINKED TO OVERSEAS CONSUMERS Strong stock selection in consumer discretionary, materials and processing and energy drove performance. In general, many of the segment's larger holdings were the best performers, including Precision Castparts, IntercontinentalExchange and Stericycle. In terms of sectors, consumer discretionary had the most positive impact. Examples include GameStop, a nationwide retailer of computer and video games, and apparel company Guess?. Stocks of both companies rose on better-than-expected earnings. Loomis took profits in Guess?. Many of our best performers are either foreign domiciled or have strong markets overseas. Stocks in the materials and processing sector were also good performers. Precision Castparts benefited from an upturn in the commercial aerospace cycle, and Mosaic, a fertilizer company, was aided by strength in agriculture. In energy, service stocks with exposure to oil and international operations were leaders, as were alternative energy companies First Solar and SunPower. Even though the financial sector was weak, Loomis Sayles' stock selection was positive, including IntercontinentalExchange, which operates internet-based specialized securities markets, and BlackRock, a major U.S. investment management firm. Auctioneer Sotheby's proved disappointing and was sold. Returns on some telecommunications companies were disappointing, although utility companies, particularly wireless providers, were strong. In addition to Mosaic, the segment's most successful individual selections included Intuitive Surgical, a designer of robotic surgical systems, and Vimpel-Communications, one of Russia's largest wireless carriers. Disappointing stocks in this segment included F5 Networks, an internet traffic management and security software company; General Cable, a manufacturer of wire and cable products that we held only briefly; and PDL BioPharma, a biotechnology company. All three were sold. LOOMIS SAYLES' SMALL-CAP VALUE SOUGHT COMPANIES WITH STRONG MARKET NICHES A focus on higher-quality stocks led to outperformance in several sectors and resulted in acquisition offers for several companies in this segment. Technology investments were among the best contributors, with leadership coming from GeoEye, a satellite operator; Amphenol Corporation, a manufacturer of electronic and fiber connectors and cables; and Avnet, Inc., a distributor of computer products. Certain industrial stocks benefited from a strong demand in the aerospace industry and from infrastructure development. Three of the most positive companies were: Actuant Corporation, an industrial products manufacturer; BE Aerospace, the world's largest manufacturer of cabin interior components; and Ametek, Inc., a global manufacturer of electronic instruments. The segment's healthcare position was enhanced by Perrigo Co., a supplier of private label over-the-counter drugs, Beckman Coulter, Inc., a manufacturer of laboratory and analytical equipment, and Hospira, Inc., a marketer of medical delivery systems. Problems in the subprime mortgage market, rising energy prices and a severe housing slowdown contributed to relatively poor performance in the consumer discretionary, autos and transportation and financial services areas. Individual stocks that disappointed included Avis Budget Group, a car and truck rental company; Colonial BancGroup, Inc. a regional bank with major operations in Florida; and Developers Diversified Realty, which acquires, develops and manages shopping centers. All three remain in the segment because Loomis Sayles believes they are undervalued. 10 NATIXIS U.S. DIVERSIFIED PORTFOLIO Investment Results through December 31, 2007 -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares [CHART] December 31, 1997 through December 31, 2007 Class A Class A S&P 500 S&P 400 Wilshire @ N.A. @ M.S.C. Index Index 4500 Index Cumulative Cumulative Cumulative Cumulative Monthly Month End Value/1/ Value/2/ Value/5/ Value/4/ Performance/6/ ---------- ---------- ---------- ---------- ---------- -------------- 12/31/1997 $10,000 $ 9,425 $10,000 $10,000 $10,000 1/31/1998 10,044 9,466 10,111 9,810 9,857 2/28/1998 10,781 10,161 10,840 10,622 10,611 3/31/1998 11,232 10,586 11,395 11,101 11,160 4/30/1998 11,359 10,706 11,510 11,304 11,301 5/31/1998 11,045 10,410 11,312 10,796 10,773 6/30/1998 11,398 10,742 11,771 10,863 10,941 7/31/1998 11,057 10,421 11,646 10,442 10,321 8/31/1998 9,224 8,693 9,962 8,499 8,321 9/30/1998 9,894 9,325 10,600 9,292 8,922 10/31/1998 10,502 9,898 11,463 10,122 9,429 11/30/1998 11,026 10,392 12,157 10,627 10,015 12/31/1998 11,925 11,240 12,858 11,911 10,863 1/31/1999 12,486 11,768 13,396 11,448 11,037 2/28/1999 12,116 11,420 12,979 10,848 10,437 3/31/1999 12,843 12,105 13,498 11,151 10,844 4/30/1999 13,356 12,588 14,021 12,031 11,709 5/31/1999 12,986 12,239 13,690 12,083 11,607 6/30/1999 13,803 13,009 14,450 12,730 12,095 7/31/1999 13,344 12,577 13,999 12,459 11,729 8/31/1999 13,291 12,527 13,929 12,032 11,437 9/30/1999 13,339 12,572 13,548 11,661 11,349 10/31/1999 13,818 13,023 14,405 12,255 11,929 11/30/1999 14,994 14,131 14,698 12,898 12,935 12/31/1999 17,466 16,462 15,563 13,665 14,718 1/31/2000 17,251 16,259 14,781 13,280 14,542 2/29/2000 19,368 18,254 14,502 14,209 16,803 3/31/2000 19,168 18,066 15,920 15,399 16,182 4/30/2000 17,692 16,675 15,441 14,861 14,235 5/31/2000 16,238 15,304 15,124 14,676 13,184 6/30/2000 16,552 15,600 15,497 14,891 14,768 7/31/2000 16,125 15,197 15,255 15,126 14,348 8/31/2000 17,389 16,389 16,203 16,815 15,950 9/30/2000 16,877 15,907 15,347 16,700 15,301 10/31/2000 16,077 15,153 15,282 16,134 14,050 11/30/2000 14,134 13,321 14,078 14,916 11,659 12/31/2000 14,500 13,666 14,146 16,057 12,397 1/31/2001 14,913 14,056 14,648 16,415 13,071 2/28/2001 13,417 12,646 13,313 15,478 11,483 3/31/2001 12,509 11,790 12,469 14,327 10,430 4/30/2001 13,607 12,825 13,438 15,908 11,534 5/31/2001 13,739 12,949 13,528 16,278 11,807 6/30/2001 13,662 12,877 13,199 16,212 11,903 7/31/2001 13,423 12,651 13,069 15,971 11,349 8/31/2001 12,853 12,114 12,251 15,449 10,798 9/30/2001 11,489 10,828 11,262 13,527 9,409 10/31/2001 11,778 11,101 11,476 14,125 9,902 11/30/2001 12,746 12,013 12,357 15,176 10,672 12/31/2001 13,142 12,386 12,465 15,960 11,244 1/31/2002 13,026 12,277 12,283 15,877 11,024 2/28/2002 12,779 12,044 12,046 15,897 10,712 3/31/2002 13,407 12,637 12,499 17,033 11,439 4/30/2002 13,052 12,302 11,741 16,953 11,327 5/31/2002 12,879 12,138 11,655 16,668 11,076 6/30/2002 11,837 11,156 10,825 15,448 10,318 7/31/2002 10,795 10,174 9,981 13,950 9,314 8/31/2002 10,878 10,253 10,046 14,021 9,368 9/30/2002 9,787 9,224 8,955 12,892 8,736 10/31/2002 10,241 9,652 9,743 13,450 9,024 11/30/2002 10,844 10,221 10,316 14,229 9,647 12/31/2002 10,274 9,683 9,710 13,644 9,241 1/31/2003 10,010 9,434 9,456 13,245 9,042 2/28/2003 9,903 9,333 9,314 12,930 8,811 3/31/2003 9,977 9,403 9,404 13,039 8,941 4/30/2003 10,754 10,136 10,179 13,985 9,686 5/31/2003 11,548 10,884 10,715 15,144 10,606 6/30/2003 11,705 11,032 10,852 15,337 10,859 7/31/2003 12,002 11,312 11,043 15,882 11,366 8/31/2003 12,589 11,865 11,259 16,602 11,842 9/30/2003 12,276 11,570 11,139 16,348 11,695 10/31/2003 13,168 12,411 11,769 17,584 12,581 11/30/2003 13,499 12,723 11,873 18,197 13,011 12/31/2003 13,730 12,940 12,495 18,504 13,282 1/31/2004 14,052 13,244 12,725 18,905 13,757 2/29/2004 14,176 13,361 12,902 19,359 13,998 3/31/2004 14,209 13,392 12,707 19,441 14,057 4/30/2004 13,919 13,118 12,508 18,803 13,492 5/31/2004 14,133 13,320 12,679 19,193 13,697 6/30/2004 14,496 13,663 12,926 19,630 14,054 7/31/2004 13,670 12,884 12,498 18,714 13,271 8/31/2004 13,505 12,728 12,549 18,665 13,277 9/30/2004 13,934 13,133 12,684 19,217 13,818 10/31/2004 14,190 13,374 12,878 19,525 14,129 11/30/2004 14,893 14,036 13,399 20,688 15,090 12/31/2004 15,496 14,605 13,855 21,554 15,748 1/31/2005 15,067 14,200 13,518 21,004 15,231 2/28/2005 15,373 14,489 13,802 21,708 15,507 3/31/2005 15,091 14,224 13,558 21,468 15,233 4/30/2005 14,611 13,771 13,300 20,634 14,718 5/31/2005 15,224 14,348 13,724 21,876 15,590 6/30/2005 15,438 14,551 13,743 22,383 16,092 7/31/2005 16,165 15,236 14,254 23,559 16,978 8/31/2005 16,067 15,143 14,124 23,296 16,777 9/30/2005 16,264 15,329 14,239 23,476 16,881 10/31/2005 15,918 15,003 14,001 22,971 16,518 11/30/2005 16,637 15,681 14,531 24,094 17,291 12/31/2005 16,671 15,712 14,536 24,260 17,366 1/31/2006 17,481 16,476 14,921 25,689 18,458 2/28/2006 17,423 16,421 14,961 25,474 18,290 3/31/2006 17,935 16,904 15,147 26,110 18,974 4/30/2006 18,075 17,036 15,351 26,478 19,063 5/31/2006 17,372 16,373 14,909 25,283 18,293 6/30/2006 17,456 16,452 14,929 25,289 18,322 7/31/2006 17,084 16,102 15,021 24,568 17,809 8/31/2006 17,323 16,327 15,379 24,849 18,203 9/30/2006 17,702 16,685 15,775 25,016 18,410 10/31/2006 18,372 17,315 16,289 26,056 19,327 11/30/2006 18,842 17,758 16,599 26,894 20,054 12/31/2006 18,949 17,860 16,832 26,763 20,156 1/31/2007 19,576 18,451 17,086 27,736 20,827 2/28/2007 19,502 18,381 16,752 27,939 20,721 3/31/2007 19,650 18,520 16,939 28,315 20,945 4/30/2007 20,369 19,198 17,690 29,176 21,429 5/31/2007 21,270 20,047 18,307 30,638 22,314 6/30/2007 21,081 19,868 18,003 29,969 22,051 7/31/2007 20,577 19,394 17,445 28,679 21,124 8/31/2007 20,651 19,463 17,706 28,943 21,317 9/30/2007 21,493 20,257 18,368 29,709 22,003 10/31/2007 22,452 21,161 18,661 30,490 22,736 11/30/2007 21,493 20,257 17,880 28,954 21,413 12/31/2007 21,541 20,302 17,756 28,899 21,320 Average Annual Total Returns -- December 31, 2007
1 YEAR 5 YEARS 10 YEARS CLASS A (Inception 7/7/94) Net Asset Value/1/ 13.69% 15.97% 7.98% With Maximum Sales Charge/2/ 7.15 14.60 7.34 CLASS B (Inception 7/7/94) Net Asset Value/1/ 12.83 15.11 7.17 With CDSC/3/ 7.83 14.88 7.17 CLASS C (Inception 7/7/94) Net Asset Value/1/ 12.82 15.09 7.17 With CDSC/3/ 11.82 15.09 7.17 CLASS Y (Inception 11/15/94) Net Asset Value/1/ 14.02 16.52 8.46 ------------------------------------------------------------- COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS S&P MidCap 400 Index/4/ 7.98% 16.20% 11.19% S&P 500 Index/5/ 5.49 12.83 5.91 Dow Jones Wilshire 4500 Index/6/ 5.78 18.20 7.86 Morningstar Large Growth Fund Avg./7/ 13.35 12.75 5.28
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary, and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.funds.natixis.com. Class Y shares are only available to certain investors, as outlined in the prospectus. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 12/31/07 12/31/06 ----------------------------------------------------- Common Stocks 98.0 99.0 ----------------------------------------------------- Short-Term Investments and Other 2.0 1.0 ----------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 12/31/07 12/31/06 ----------------------------------------------------- Intel Corp. 2.1 1.2 ----------------------------------------------------- Hewlett-Packard Co. 1.6 1.2 ----------------------------------------------------- Union Pacific Corp. 1.4 1.2 ----------------------------------------------------- Bank of New York Mellon Corp. 1.3 -- ----------------------------------------------------- Dell, Inc. 1.2 1.3 ----------------------------------------------------- McDonald's Corp. 1.1 1.6 ----------------------------------------------------- Broadridge Financial Solutions, Inc. 1.1 -- ----------------------------------------------------- Carnival Corp. 1.1 1.0 ----------------------------------------------------- GeoEye, Inc. 1.0 -- ----------------------------------------------------- Capital One Financial Corp. 0.9 -- ----------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 12/31/07 ----------------------------------------------------- Computers & Peripherals 5.0 ----------------------------------------------------- Health Care Equipment & Supplies 4.7 ----------------------------------------------------- Media 4.6 ----------------------------------------------------- Capital Markets 4.2 ----------------------------------------------------- Chemicals 4.2 -----------------------------------------------------
Portfolio holdings and asset allocations will vary EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio Net Expense Ratio --------------------------------------------------- A 1.46% 1.46% --------------------------------------------------- B 2.22 2.22 --------------------------------------------------- C 2.22 2.22 --------------------------------------------------- Y 1.03 1.03 ---------------------------------------------------
NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/S&P MidCap 400 Index is an unmanaged index of U.S. mid-sized companies. /5/S&P 500 Index is an unmanaged index of U.S. common stocks. /6/Dow Jones Wilshire 4500 Index is an unmanaged index of 4,500 mid- and small-sized companies. /7/Morningstar Large Growth Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. 11 This Page Intentionally Left Blank VAUGHAN NELSON SMALL CAP VALUE FUND PORTFOLIO PROFILE Objective: Seeks capital appreciation -------------------------------------------------------------------------------- Strategy: Invests in small-cap companies with a focus on absolute return, using a bottom-up value-oriented investment process -------------------------------------------------------------------------------- Inception Date: December 31, 1996 -------------------------------------------------------------------------------- Managers: Chris D. Wallis Scott J. Weber -------------------------------------------------------------------------------- Symbols: Class A NEFJX Class B NEJBX Class C NEJCX Class Y NEJYX
-------------------------------------------------------------------------------- What You Should Know: Investing in small-cap stocks carries special risk, including narrower markets, limited financial and management resources, less liquidity and greater volatility than large company stocks. Value stocks may fall out of favor with investors and underperform the overall market during any given period. Management Discussion -------------------------------------------------------------------------------- Despite a challenging market background, Vaughan Nelson Small Cap Value Fund outperformed its benchmark by a wide margin in 2007. Successful stock selection and a focus on areas of economic strength were key factors. This helped the fund side-step much of the turmoil that beset markets late in the year. For the 12 months ended December 31, 2007, the fund's total return was 5.84% based on the net asset value of Class A shares. For the same period, the Russell 2000 Value Index, the fund's benchmark, returned -9.78%, while the average performance of funds in Morningstar's Small Blend category was -1.10%. A SHIFT FROM FINANCE TO ENERGY AND TECHNOLOGY DROVE RESULTS Disarray in the credit markets and the severe contraction in housing topped the concerns that produced high volatility during much of 2007. Large-cap companies outperformed smaller issues and, for the first time in several years, growth-style market indexes outperformed value. The fund's sizeable underweight position in interest-rate sensitive sectors was a significant contributor to its strong outperformance versus its benchmark. When risks among financial companies seemed to outweigh their reward potential, the fund eliminated real estate investment trusts and firms dependent on securities backed by mortgages and other assets. Proceeds from these sales largely went into energy and areas where values appeared more attractive. Specifically, the fund emphasized companies positioned to capitalize on the worldwide need to repair and rebuild infrastructure, a long-term necessity that may provide investment opportunities for years to come. INDUSTRIAL, ENERGY AND TECH COMPANIES WERE AMONG LEADERS Cleveland-Cliffs, a major producer of iron ore to the steel industry, rose as infrastructure needs boosted demand for steel. The fund took profits in this stock early in the year, then reinvested at lower prices before shares moved higher again. Aerospace supplier Alliant Techsystems also rose, thanks to solid demand for its munitions products from the military and law enforcement, and for its space systems. Team, Inc. saw growing demand for its specialized oil field and industrial services. Arena Resources, an oil and gas exploration and production company, increased output at its existing properties and acquired additional acreage at attractive prices. Strong results also boosted shares of CommScope, which serves communications networks and cable TV companies with specialized cables and connectors. CONSUMER AND FINANCIAL ISSUES LED DECLINES Disappointments for the fund were few, with most occurring in the consumer and financial areas. The fund eliminated California-based Central Garden and Pet, an underperforming wholesaler of lawn, garden and pet supplies whose earnings declined amid shrinking margins and competitive pressures. The fund also sold Sterling Financial, a Washington state bank, when it had to increase its loan loss reserves. Shares of Triarc declined through the year; in addition to franchising Arby's restaurants, Triarc owns non-strategic assets, including an investment advisory firm. The fund added to this position as management moved to shed the investment subsidiary and concentrate on its core restaurant business. The fund also capitalized on the price decline in First Cash Financial Services shares, adding to its position in this specialty financial-services company that operates pawn shops and "buy here/pay here" used car outlets. First Cash is expanding into Mexico and has designed a pricing structure and credit controls appropriate to these higher-risk businesses, yet the price of shares plummeted at the end of 2007 despite positive earnings momentum. VOLATILITY AMONG SMALLER COMPANIES MAY PROVIDE OPPORTUNITIES Small-cap stocks ceded dominance to large caps in 2007, as investors favored financially strong companies with a global reach. Even though smaller companies face greater hurdles from tighter credit or a slowing economy, market volatility may bring opportunities that offset these disadvantages. Through our disciplined, value-based, bottom-up selection process, the fund expects to uncover attractively valued stocks and seeks to deliver solid returns over time by investing in small companies. 13 VAUGHAN NELSON SMALL CAP VALUE FUND Investment Results through December 31, 2007 -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/6/ [CHART] December 31, 1997 through December 31, 2007 Class A Class A Russell 2000 @ N.A. @ M.S.C. Value Cumulative Cumulative Cumulative Month End Value/1/ Value/2/ Value/4/ ---------- ---------- ----------- ------------ 12/31/1997 $10,000 $ 9,425 $10,000 1/31/1998 9,720 9,161 9,819 2/28/1998 10,514 9,910 10,413 3/31/1998 11,126 10,486 10,835 4/30/1998 11,023 10,389 10,889 5/31/1998 10,346 9,751 10,503 6/30/1998 10,508 9,904 10,444 7/31/1998 9,689 9,131 9,626 8/31/1998 7,580 7,144 8,118 9/30/1998 8,108 7,642 8,577 10/31/1998 8,466 7,979 8,831 11/30/1998 9,261 8,729 9,070 12/31/1998 10,206 9,619 9,355 1/31/1999 10,421 9,822 9,143 2/28/1999 9,548 8,999 8,518 3/31/1999 10,206 9,619 8,448 4/30/1999 10,975 10,344 9,219 5/31/1999 10,884 10,258 9,503 6/30/1999 11,790 11,112 9,847 7/31/1999 11,646 10,976 9,613 8/31/1999 11,542 10,879 9,262 9/30/1999 11,863 11,181 9,076 10/31/1999 12,762 12,029 8,895 11/30/1999 14,230 13,412 8,941 12/31/1999 16,880 15,909 9,216 1/31/2000 16,858 15,889 8,975 2/29/2000 21,017 19,808 9,523 3/31/2000 20,216 19,054 9,568 4/30/2000 17,845 16,819 9,625 5/31/2000 16,396 15,453 9,478 6/30/2000 17,729 16,709 9,755 7/31/2000 16,482 15,535 10,080 8/31/2000 18,531 17,465 10,530 9/30/2000 17,940 16,908 10,471 10/31/2000 16,429 15,485 10,433 11/30/2000 13,566 12,786 10,221 12/31/2000 14,816 13,965 11,319 1/31/2001 15,462 14,573 11,632 2/28/2001 13,471 12,696 11,616 3/31/2001 12,187 11,486 11,429 4/30/2001 13,408 12,637 11,958 5/31/2001 13,686 12,899 12,266 6/30/2001 14,153 13,339 12,759 7/31/2001 13,183 12,425 12,473 8/31/2001 12,375 11,663 12,430 9/30/2001 10,410 9,811 11,058 10/31/2001 11,119 10,479 11,347 11/30/2001 12,097 11,402 12,162 12/31/2001 13,031 12,282 12,907 1/31/2002 12,726 11,994 13,078 2/28/2002 11,712 11,038 13,158 3/31/2002 12,753 12,020 14,143 4/30/2002 12,457 11,741 14,641 5/31/2002 11,855 11,174 14,157 6/30/2002 11,066 10,430 13,843 7/31/2002 9,396 8,856 11,786 8/31/2002 9,387 8,847 11,734 9/30/2002 8,525 8,035 10,896 10/31/2002 8,965 8,449 11,060 11/30/2002 9,656 9,101 11,942 12/31/2002 9,019 8,500 11,432 1/31/2003 8,516 8,027 11,110 2/28/2003 8,220 7,747 10,737 3/31/2003 8,238 7,764 10,851 4/30/2003 9,028 8,509 11,882 5/31/2003 9,953 9,380 13,095 6/30/2003 10,330 9,736 13,317 7/31/2003 11,003 10,371 13,981 8/31/2003 11,569 10,904 14,512 9/30/2003 11,228 10,582 14,346 10/31/2003 12,035 11,343 15,516 11/30/2003 12,385 11,673 16,111 12/31/2003 12,510 11,791 16,694 1/31/2004 12,994 12,247 17,271 2/29/2004 12,923 12,180 17,605 3/31/2004 12,950 12,205 17,849 4/30/2004 12,393 11,681 16,926 5/31/2004 12,438 11,723 17,130 6/30/2004 13,083 12,331 18,000 7/31/2004 12,518 11,798 17,173 8/31/2004 12,393 11,680 17,341 9/30/2004 12,833 12,095 18,027 10/31/2004 13,013 12,264 18,307 11/30/2004 14,000 13,195 19,932 12/31/2004 14,422 13,592 20,407 1/31/2005 13,990 13,186 19,618 2/28/2005 14,448 13,617 20,008 3/31/2005 14,241 13,422 19,596 4/30/2005 13,559 12,779 18,585 5/31/2005 14,276 13,456 19,718 6/30/2005 14,850 13,996 20,590 7/31/2005 15,640 14,741 21,762 8/31/2005 15,523 14,630 21,262 9/30/2005 15,675 14,774 21,227 10/31/2005 15,208 14,334 20,694 11/30/2005 15,864 14,951 21,533 12/31/2005 15,873 14,960 21,368 1/31/2006 17,111 16,127 23,135 2/28/2006 17,020 16,042 23,134 3/31/2006 17,873 16,845 24,254 4/30/2006 17,945 16,913 24,319 5/31/2006 17,308 16,312 23,312 6/30/2006 17,299 16,304 23,598 7/31/2006 16,905 15,933 23,271 8/31/2006 17,067 16,085 23,967 9/30/2006 17,219 16,229 24,200 10/31/2006 18,107 17,066 25,432 11/30/2006 18,529 17,464 26,157 12/31/2006 18,744 17,666 26,385 1/31/2007 18,978 17,887 26,781 2/28/2007 18,995 17,903 26,452 3/31/2007 19,246 18,140 26,771 4/30/2007 19,310 18,199 27,049 5/31/2007 20,513 19,333 28,040 6/30/2007 20,422 19,248 27,387 7/31/2007 19,542 18,419 25,056 8/31/2007 19,919 18,774 25,558 9/30/2007 20,288 19,121 25,673 10/31/2007 20,826 19,628 25,953 11/30/2007 19,874 18,731 24,008 12/31/2007 19,838 18,697 23,806 Average Annual Total Returns -- December 31, 2007/6/
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION CLASS A (Inception 12/31/96) Net Asset Value/1/ 5.84% 17.08% 7.09% -- With Maximum Sales Charge/2/ -0.23 15.71 6.46 -- CLASS B (Inception 12/31/96) Net Asset Value/1/ 5.06 16.20 6.29 -- With CDSC/3/ 0.06 15.98 6.29 -- CLASS C (Inception 12/31/96) Net Asset Value/1/ 5.05 16.21 6.29 -- With CDSC/3/ 4.05 16.21 6.29 -- CLASS Y (Inception 8/31/06) Net Asset Value/1/ 6.12 -- -- 12.25% ------------------------------------------------------------------------- COMPARATIVE PERFORMANCE SINCE CLASS Y 1 YEAR 5 YEARS 10 YEARS INCEPTION/7/ Russell 2000 Value Index/4/ -9.78% 15.80% 9.06% -0.50% Morningstar Small Blend Fund Avg./5/ -1.10 15.72 8.30 6.22
All results represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary, and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.funds.natixis.com. Class Y shares are only available to certain investors, as outlined in the prospectus. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 12/31/07 12/31/06 ----------------------------------------------------- Common Stocks 95.4 93.8 ----------------------------------------------------- Investment Companies -- 2.7 ----------------------------------------------------- Short-Term Investments and Other 4.6 3.5 ----------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 12/31/07 12/31/06 ----------------------------------------------------- Raymond James Financial, Inc. 2.3 1.6 ----------------------------------------------------- General Cable Corp. 2.3 1.3 ----------------------------------------------------- Affiliated Managers Group, inc. 2.3 2.1 ----------------------------------------------------- HCC Insurance Holdings, Inc. 2.0 1.6 ----------------------------------------------------- Alliant Techsystems, Inc. 1.9 2.5 ----------------------------------------------------- Sybase, Inc. 1.9 -- ----------------------------------------------------- Waddell & Reed Financial, Inc. 1.8 -- ----------------------------------------------------- CommScope, Inc. 1.8 0.8 ----------------------------------------------------- Vectren Corp. 1.8 0.8 ----------------------------------------------------- Ralcorp Holdings, Inc. 1.8 -- ----------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 12/31/07 ----------------------------------------------------- Oil, Gas & Consumable Fuels 8.9 ----------------------------------------------------- Capital Markets 7.3 ----------------------------------------------------- Machinery 6.8 ----------------------------------------------------- Insurance 5.9 ----------------------------------------------------- Chemicals 5.5 -----------------------------------------------------
Portfolio holdings and asset allocations will vary. EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio/8/ Net Expense Ratio/9/ ------------------------------------------------------- A 1.61% 1.47% ------------------------------------------------------- B 2.39 2.22 ------------------------------------------------------- C 2.37 2.22 ------------------------------------------------------- Y 1.92 1.22 -------------------------------------------------------
NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes the maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 2000 Value Index is an unmanaged index that measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. /5/Morningstar Small Blend Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/Fund performance has been increased by expense reductions/reimbursements, without which performance would have been lower. /7/The since-inception comparative performance figures shown are calculated from 9/1/06. /8/Before reductions and reimbursements. /9/After reductions and reimbursements. Expense reductions are contractual and are set to expire 4/30/08. 14 WESTPEAK 130/30 GROWTH FUND PORTFOLIO PROFILE Objective: Seeks long-term growth of capital -------------------------------------------------------------------------------- Strategy: Seeks long-term growth of capital by establishing long and short positions in equity securities issued by large- and mid capitalization U.S. companies. -------------------------------------------------------------------------------- Inception Date: August 3, 1992 -------------------------------------------------------------------------------- Manager: Westpeak Global Advisors, L.P. Team Management -------------------------------------------------------------------------------- Symbols: Class A NEFCX Class B NECBX Class C NECGX
-------------------------------------------------------------------------------- What You Should Know: Growth stocks can be more sensitive to market movements because their prices are based in part on future expectations. Short sales expose the fund to the risk that it may be required to buy a security it previously sold short at a time when the security has appreciated in value. Short sales may also give rise to leverage risk. Management Discussion -------------------------------------------------------------------------------- Growth stocks did well in the first part of 2007, but attractively valued stocks with good quality earnings - the stocks we have traditionally favored - began to fall behind pure growth situations. As the year progressed, so too did concerns about a possible recession, which made investors in general more willing to pay a premium for growth. For the year ended December 31, 2007, Westpeak 130/30 Growth Fund (formerly Westpeak Capital Growth Fund) returned -4.35%, while the fund's benchmark, the Russell 1000 Growth Index, returned 11.81% and the funds in Morningstar's Large Growth category had an average return of 13.35%. To illustrate the widening gap between growth and value during the period, the Russell 1000 Value Index returned -0.17% for the period. WESTPEAK TAKES QUANTITATIVE APPROACH TO SECURITY ANALYSIS Westpeak is noted for our quantitative approach to determining the relative attractiveness of a stock by examining its measurable characteristics, using financial statement and market sentiment factors. Stocks with high scores are potential candidates for long positions that we believe may appreciate over time. Stocks with low scores are potential short-sale candidates. Since markets continually evolve, we constantly monitor our signals and search for new investment ideas. Our quantitative approach has worked well for the fund in the past because we seek "growth at a reasonable price." However, beginning in the second quarter of 2007, many attractively priced growth stocks either underperformed or were negative. As economic concerns spread through the markets in July and August, we experienced the most difficult period we have witnessed in many years. Although this coincided with the change in the Fund's strategy at the beginning of August (described in the fund's prospectus), the change was not the primary contributor to the fund's disappointing results. BOTH SHORT AND LONG POSITIONS ADDED VALUE One example of a stock that dropped in value and benefited the fund was Micron Technologies, a semiconductor company. We took a short position in Micron during the first week that the fund shifted to its new strategy, and the stock has declined consistently since then. In fact, we added to the short position in October as it continued to slide. Among the fund's long positions, technology has been one of the best-performing sectors this year, and one of our best-performing stocks, Hewlett-Packard, is the fund's largest individual holding. Another solid performer for the fund is AGCO, a manufacturer of agricultural equipment and related replacement parts. The stock benefited as prices of agricultural commodities rose worldwide. CONSUMER DISCRETIONARY STOCKS WERE POOR PERFORMERS Disappointments included consumer discretionary stocks. We sold specialty retailer Office Depot in August. We would have sold it even if we had not been converting to a 130/30 strategy, but the conversion made us move a little more aggressively. Office Depot shares dropped considerably further after we sold it, but the fund's overall performance was still hurt in the first half. Another poor performer was a long position in McGraw-Hill, which we sold. McGraw-Hill stock dropped sharply when its Standard & Poor's subsidiary was criticized for giving too high a rating to certain debt structures. McGraw-Hill's analyst rating dropped, and the president of its Standard & Poor's subsidiary stepped down. NEAR-TERM OUTLOOK CONTINUES TO FAVOR GROWTH STOCKS Both the energy and basic industry sectors have reached high valuations, but we believe basic industries may still have some upward potential. Stocks with the strongest growth potential may also continue to do well as the economy slows, but we believe attractively valued growth stocks will return to favor eventually. Valuations in the interest-sensitive sector seem temptingly low, but we believe it may be too early to move back into financials. In pursuit of more consistent growth, we think some healthcare services companies, like drug distribution companies and healthcare insurers, look attractive. 15 WESTPEAK 130/30 GROWTH FUND Investment Results through December 31, 2007 -------------------------------------------------------------------------------- PERFORMANCE IN PERSPECTIVE The charts comparing the fund's performance to an index provide a general sense of how it performed. The fund's total return for the period shown below appears with and without sales charges and includes fund expenses and fees. An index measures the performance of a theoretical portfolio. Unlike a fund, the index is unmanaged and does not have expenses that affect the results. It is not possible to invest directly in an index. Investors would incur transaction costs and other expenses if they purchased the securities necessary to match the index. Growth of a $10,000 Investment in Class A Shares/6/ [CHART] December 31, 1997 through December 31, 2007 Russell 1000 Class A Class A Growth @ N.A.V. @ M.S.C. Index Cumulative Cumulative Cumulative Month End Value/1/ Value/2/ Value/4/ ---------- ---------- ---------- ------------ 12/31/1997 $10,000 $ 9,425 $10,000 1/31/1998 10,080 9,500 10,299 2/28/1998 10,771 10,152 11,074 3/31/1998 11,253 10,606 11,515 4/30/1998 11,453 10,795 11,675 5/31/1998 11,177 10,535 11,343 6/30/1998 11,758 11,082 12,038 7/31/1998 11,648 10,978 11,958 8/31/1998 9,798 9,235 10,164 9/30/1998 10,386 9,789 10,944 10/31/1998 11,145 10,505 11,824 11/30/1998 11,814 11,135 12,723 12/31/1998 12,906 12,164 13,871 1/31/1999 13,555 12,775 14,685 2/28/1999 12,793 12,057 14,014 3/31/1999 13,075 12,323 14,752 4/30/1999 13,331 12,564 14,771 5/31/1999 13,087 12,334 14,317 6/30/1999 13,780 12,988 15,320 7/31/1999 13,475 12,700 14,833 8/31/1999 13,593 12,811 15,076 9/30/1999 13,395 12,624 14,759 10/31/1999 14,328 13,504 15,873 11/30/1999 14,754 13,905 16,730 12/31/1999 16,099 15,174 18,470 1/31/2000 15,191 14,318 17,604 2/29/2000 15,825 14,915 18,464 3/31/2000 17,092 16,110 19,786 4/30/2000 16,585 15,631 18,845 5/31/2000 15,810 14,901 17,896 6/30/2000 16,852 15,883 19,252 7/31/2000 16,416 15,472 18,449 8/31/2000 17,699 16,682 20,120 9/30/2000 16,064 15,140 18,217 10/31/2000 15,507 14,615 17,355 11/30/2000 13,415 12,643 14,796 12/31/2000 12,955 12,210 14,328 1/31/2001 13,575 12,795 15,318 2/28/2001 11,732 11,057 12,718 3/31/2001 10,637 10,025 11,334 4/30/2001 12,075 11,381 12,767 5/31/2001 11,938 11,251 12,579 6/30/2001 11,751 11,076 12,288 7/31/2001 11,131 10,491 11,981 8/31/2001 10,235 9,646 11,001 9/30/2001 9,184 8,656 9,903 10/31/2001 9,606 9,054 10,422 11/30/2001 10,442 9,841 11,423 12/31/2001 10,304 9,712 11,402 1/31/2002 10,261 9,671 11,200 2/28/2002 9,889 9,321 10,736 3/31/2002 10,227 9,639 11,107 4/30/2002 9,657 9,102 10,201 5/31/2002 9,449 8,906 9,954 6/30/2002 8,672 8,173 9,033 7/31/2002 7,998 7,538 8,536 8/31/2002 8,007 7,546 8,562 9/30/2002 7,160 6,749 7,674 10/31/2002 7,679 7,237 8,378 11/30/2002 7,929 7,473 8,833 12/31/2002 7,410 6,984 8,223 1/31/2003 7,221 6,806 8,023 2/28/2003 7,255 6,838 7,986 3/31/2003 7,402 6,976 8,135 4/30/2003 7,834 7,383 8,736 5/31/2003 8,265 7,790 9,172 6/30/2003 8,343 7,863 9,299 7/31/2003 8,455 7,969 9,530 8/31/2003 8,559 8,067 9,767 9/30/2003 8,594 8,100 9,663 10/31/2003 9,008 8,490 10,205 11/30/2003 9,112 8,588 10,312 12/31/2003 9,388 8,848 10,669 1/31/2004 9,526 8,978 10,887 2/29/2004 9,526 8,978 10,956 3/31/2004 9,353 8,815 10,753 4/30/2004 9,146 8,620 10,628 5/31/2004 9,309 8,774 10,826 6/30/2004 9,430 8,888 10,961 7/31/2004 8,998 8,481 10,341 8/31/2004 8,989 8,472 10,290 9/30/2004 9,042 8,522 10,388 10/31/2004 9,249 8,717 10,550 11/30/2004 9,594 9,043 10,913 12/31/2004 9,871 9,303 11,341 1/31/2005 9,586 9,034 10,963 2/28/2005 9,663 9,108 11,079 3/31/2005 9,404 8,863 10,877 4/30/2005 9,197 8,668 10,670 5/31/2005 9,699 9,141 11,187 6/30/2005 9,820 9,255 11,145 7/31/2005 10,321 9,727 11,690 8/31/2005 10,131 9,548 11,540 9/30/2005 10,165 9,581 11,593 10/31/2005 9,898 9,329 11,480 11/30/2005 10,347 9,752 11,975 12/31/2005 10,200 9,614 11,938 1/31/2006 10,537 9,931 12,147 2/28/2006 10,520 9,915 12,128 3/31/2006 10,744 10,126 12,307 4/30/2006 10,753 10,134 12,290 5/31/2006 10,295 9,703 11,874 6/30/2006 10,346 9,751 11,827 7/31/2006 10,122 9,540 11,602 8/31/2006 10,320 9,727 11,964 9/30/2006 10,614 10,004 12,292 10/31/2006 10,969 10,338 12,725 11/30/2006 11,297 10,647 12,977 12/31/2006 11,306 10,655 13,021 1/31/2007 11,590 10,924 13,356 2/28/2007 11,331 10,679 13,105 3/31/2007 11,443 10,785 13,176 4/30/2007 11,754 11,078 13,796 5/31/2007 12,108 11,412 14,292 6/30/2007 11,659 10,988 14,079 7/31/2007 11,227 10,582 13,861 8/31/2007 11,331 10,679 14,082 9/30/2007 11,702 11,030 14,671 10/31/2007 11,849 11,167 15,171 11/30/2007 11,166 10,524 14,612 12/31/2007 10,812 10,191 14,559 Average Annual Total Returns -- December 31, 2007/6/
1 YEAR 5 YEARS 10 YEARS CLASS A (Inception 8/3/92) Net Asset Value/1/ -4.35% 7.85% 0.79% With Maximum Sales Charge/2/ -9.86 6.59 0.19 CLASS B (Inception 9/13/93) Net Asset Value/1/ -5.00 7.07 0.03 With CDSC/3/ -9.75 6.77 0.03 CLASS C (Inception 12/30/94) Net Asset Value/1/ -5.01 7.03 0.01 With CDSC/3/ -5.96 7.03 0.01 ------------------------------------------------------------- COMPARATIVE PERFORMANCE 1 YEAR 5 YEARS 10 YEARS Russell 1000 Growth Index/4/ 11.81% 12.11% 3.83% Morningstar Large Growth Fund Avg./5/ 13.35 12.75 5.28
All returns represent past performance and do not guarantee future results. Periods of less than one year are not annualized. Share price and return will vary, and you may have a gain or loss when you sell your shares. All results include reinvestment of dividends and capital gains. Current returns may be higher or lower than those shown. For performance current to the most recent month-end, visit www.funds.natixis.com. The table and graph do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. PORTFOLIO FACTS
% of Net Assets as of FUND COMPOSITION 12/31/07 12/31/06 ------------------------------------------------------- Common Stocks 127.1 99.4 ------------------------------------------------------- Common Stocks Sold Short -27.5 -- ------------------------------------------------------- Short-Term Investments and Other 0.4 0.6 ------------------------------------------------------- % of Net Assets as of TEN LARGEST HOLDINGS 12/31/07 12/31/06 ------------------------------------------------------- Long Positions ------------------------------------------------------- Hewlett-Packard Co. 4.7 4.1 ------------------------------------------------------- Cisco Systems, Inc. 4.1 5.4 ------------------------------------------------------- UnitedHealth Group, Inc. 4.0 -- ------------------------------------------------------- Honeywell International, Inc. 3.5 -- ------------------------------------------------------- Boeing Co. (The) 3.5 3.9 ------------------------------------------------------- Short Positions ------------------------------------------------------- W&T Offshore, Inc. -2.0 -- ------------------------------------------------------- Quest Diagnostics, Inc. -1.9 -- ------------------------------------------------------- Scientific Games Corp. -1.9 -- ------------------------------------------------------- Arch Coal, Inc. -1.9 -- ------------------------------------------------------- Eagle Materials, Inc. -1.6 -- ------------------------------------------------------- % of Net Assets as of FIVE LARGEST INDUSTRIES 12/31/07 ------------------------------------------------------- Health Care Providers & Services* 17.0 ------------------------------------------------------- Aerospace & Defense 10.4 ------------------------------------------------------- Computers & Peripherals 9.9 ------------------------------------------------------- Energy Equipment & Services* 7.5 ------------------------------------------------------- Chemicals 7.2 -------------------------------------------------------
* Net of securities sold short. Portfolio holdings and asset allocations will vary. EXPENSE RATIOS AS STATED IN THE MOST RECENT PROSPECTUS
Share Class Gross Expense Ratio/7/ Net Expense Ratio/8/ ------------------------------------------------------- A 2.11% 1.95% ------------------------------------------------------- B 2.86 2.70 ------------------------------------------------------- C 2.86 2.70 -------------------------------------------------------
NOTES TO CHARTS /1/Does not include a sales charge. /2/Includes maximum sales charge of 5.75%. /3/Performance for Class B shares assumes a maximum 5.00% contingent deferred sales charge ("CDSC") applied when you sell shares, which declines annually between years 1-6 according to the following schedule: 5, 4, 3, 3, 2, 1, 0%. Class C share performance assumes a 1.00% CDSC applied when you sell shares within one year of purchase. /4/Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. /5/Morningstar Large Growth Fund Average is the average performance without sales charges of funds with similar investment objectives, as calculated by Morningstar, Inc. /6/Fund performance has been increased by expense reductions/reimbursements, without which performance would have been lower. /7/Before reductions and reimbursements. /8/After reductions and reimbursements. Expense reductions are contractual and are set to expire 4/30/08. 16 ADDITIONAL INFORMATION The views expressed in this report reflect those of the portfolio managers as of the dates indicated. The managers' views are subject to change at any time without notice based on changes in market or other conditions. References to specific securities or industries should not be regarded as investment advice. Because the funds are actively managed, there is no assurance that they will continue to invest in the securities or industries mentioned. For more complete information on any Natixis Fund, contact your financial professional or call Natixis Funds and ask for a free prospectus, which contains more complete information, including charges and other ongoing expenses. Investors should consider a fund's objective, risks and expenses carefully before investing. This and other fund information can be found in the prospectus. Please read the prospectus carefully before investing. PROXY VOTING INFORMATION A description of the funds' proxy voting policies and procedures is available without charge, upon request, by calling Natixis Funds at 800-225-5478; on the funds' website at www.funds.natixis.com; and on the Securities and Exchange Commission's (SEC) website at www.sec.gov. Information regarding how the funds voted proxies relating to portfolio securities during the 12-month period ended June 30, 2007 is available from the funds' website and the SEC's website. QUARTERLY PORTFOLIO SCHEDULES The funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE 17 UNDERSTANDING FUND EXPENSES As a mutual fund shareholder, you incur different costs: transaction costs, including sales charges (loads) on purchases, redemption fees and certain exchange fees and ongoing costs, including management fees, distribution fees (12b-1 fees), and other fund expenses. In addition, each fund assesses a minimum balance fee of $20 on an annual basis for accounts that fall below the required minimum to establish an account. Certain exemptions may apply. These costs are described in more detail in the funds' prospectus. The examples below are intended to help you understand the ongoing costs of investing in the funds and help you compare these with the ongoing costs of investing in other mutual funds. The first line in the table of each Class of fund shares shows the actual account values and actual fund expenses you would have paid on a $1,000 investment in the fund from July 1, 2007 through December 31, 2007. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example $8,600 account value divided by $1,000 = 8.60) and multiply the result by the number in the Expenses Paid During Period column as shown below for your Class. The second line in the table of each Class of fund shares provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid on your investment for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown reflect ongoing costs only, and do not include any transaction costs, such as sales charges, redemption fees or exchange fees. Therefore, the second line in the table of each fund is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. If transaction costs were included, total costs would be higher.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* CGM ADVISOR TARGETED EQUITY FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007 ------------------------------------------------------------------------------------------------------------------ CLASS A ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,201.70 $6.49 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,019.31 $5.96 ------------------------------------------------------------------------------------------------------------------ CLASS B ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,196.90 $10.63 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,015.53 $9.75 ------------------------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,197.30 $10.69 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,015.48 $9.80 ------------------------------------------------------------------------------------------------------------------ CLASS Y ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,203.40 $5.00 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,020.67 $4.58 ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio:1.17%,1.92%, 1.93% and 0.90% for Class A, B, C and Y, respectively, multiplied by the average account value over the period multiplied by the number of days in the most recent fiscal half-year, divided by 365 (to reflect the half-year period). 18 UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HANSBERGER INTERNATIONAL FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007 ------------------------------------------------------------------------------------------------------------------ CLASS A ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,031.90 $7.53 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,017.80 $7.48 ------------------------------------------------------------------------------------------------------------------ CLASS B ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,028.70 $11.35 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,014.01 $11.27 ------------------------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,028.30 $11.35 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,014.01 $11.27
*Expenses are equal to the Fund's annualized expense ratio: 1.47%, 2.22%, and 2.22% for Class A, B, and C, respectively, multiplied by the average account value over the period multiplied by the number of days in the most recent fiscal half-year, divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HARRIS ASSOCIATES FOCUSED VALUE FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007 ------------------------------------------------------------------------------------------------------------------ CLASS A ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $869.00 $7.30 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,017.39 $7.88 ------------------------------------------------------------------------------------------------------------------ CLASS B ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $866.80 $10.82 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.61 $11.67 ------------------------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $866.10 $10.82 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.61 $11.67
*Expenses are equal to the Fund's annualized expense ratio: 1.55%, 2.30% and 2.30% for Class A, B and C, respectively, multiplied by the average account value over the period multiplied by the number of days in the most recent fiscal half-year, divided by 365 (to reflect the half-year period). 19 UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* HARRIS ASSOCIATES LARGE CAP VALUE FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007 ------------------------------------------------------------------------------------------------------------------ CLASS A ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $914.80 $6.32 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,018.60 $6.67 ------------------------------------------------------------------------------------------------------------------ CLASS B ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $911.00 $9.92 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,014.82 $10.46 ------------------------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $910.90 $9.92 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,014.82 $10.46 ------------------------------------------------------------------------------------------------------------------ CLASS Y ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $916.00 $4.64 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,020.37 $4.89
*Expenses are equal to the fund's annualized expense ratio: 1.31%, 2.06%, 2.06% and 0.96% for Class A, B, C and Y, respectively, multiplied by the average account value over the period multiplied by the number of days in the most recent fiscal half-year, divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* NATIXIS U.S. DIVERSIFIED PORTFOLIO 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007 ------------------------------------------------------------------------------------------------------------------ CLASS A ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,021.90 $7.64 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,017.64 $7.63 ------------------------------------------------------------------------------------------------------------------ CLASS B ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,018.10 $11.45 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.86 $11.42 ------------------------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,018.10 $11.45 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,013.86 $11.42 ------------------------------------------------------------------------------------------------------------------ CLASS Y ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $1,023.00 $6.27 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,019.00 $6.26
*Expenses are equal to the Fund's annualized expense ratio (after advisory reduction/reimbursement): 1.50%, 2.25%, 2.25% and 1.23% for Class A, B, C and Y, respectively, multiplied by the average account value over the period multiplied by the number of days in the most recent fiscal half-year, divided by 365 (to reflect the half-year period). 20 UNDERSTANDING FUND EXPENSES (continued)
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* VAUGHAN NELSON SMALL CAP VALUE FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007 ------------------------------------------------------------------------------------------------------------------ CLASS A ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $971.40 $7.21 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,017.90 $7.37 ------------------------------------------------------------------------------------------------------------------ CLASS B ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $967.80 $10.91 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,014.12 $11.17 ------------------------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $967.80 $10.91 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,014.12 $11.17 ------------------------------------------------------------------------------------------------------------------ CLASS Y ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $972.80 $5.82 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,019.31 $5.96
*Expenses are equal to the Fund's annualized expense ratio: 1.45%, 2.20%, 2.20% and 1.17% for Class A, B, C and Y, respectively, multiplied by the average account value over the period multiplied by the number of days in the most recent fiscal half-year, divided by 365 (to reflect the half-year period).
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD* WESTPEAK 130/30 GROWTH FUND 7/1/2007 12/31/2007 7/1/2007 - 12/31/2007 ------------------------------------------------------------------------------------------------------------------ CLASS A ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $927.40 $8.99 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,015.88 $9.40 ------------------------------------------------------------------------------------------------------------------ CLASS B ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $924.40 $12.61 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,012.10 $13.19 ------------------------------------------------------------------------------------------------------------------ CLASS C ------------------------------------------------------------------------------------------------------------------ Actual $1,000.00 $924.30 $12.61 ------------------------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000.00 $1,012.10 $13.19 ------------------------------------------------------------------------------------------------------------------
*Expenses are equal to the Fund's annualized expense ratio: 1.85%, 2.60% and 2.60% for Class A, B, and C, respectively, multiplied by the average account value over the period multiplied by the number of days in the most recent fiscal half-year, divided by 365 (to reflect the half-year period). 21 CGM ADVISOR TARGETED EQUITY FUND -- PORTFOLIO OF INVESTMENTS Investments as of December 31, 2007
Shares Description Value (+) ------------------------------------------------------------------------------- Common Stocks -- 95.8% of Net Assets Chemicals -- 10.7% 475,000 Monsanto Co. $ 53,052,750 486,200 Praxair, Inc. 43,130,802 --------------- 96,183,552 --------------- Commercial Banks -- 9.6% 1,933,000 Banco Itau Holding Financeira SA, ADR 49,987,380 1,205,000 Wells Fargo & Co.(b) 36,378,950 --------------- 86,366,330 --------------- Communications Equipment -- 5.3% 415,000 Research In Motion, Ltd.(c) 47,061,000 --------------- Computers & Peripherals -- 5.4% 245,000 Apple, Inc.(c) 48,529,600 --------------- Diversified Financial Services -- 3.1% 670,000 Bank of America Corp. 27,644,200 --------------- Energy Equipment & Services -- 11.1% 1,070,000 Halliburton Co. 40,563,700 600,000 Schlumberger, Ltd. 59,022,000 --------------- 99,585,700 --------------- Hotel, Restaurant & Leisure-- 5.0% 760,000 McDonald's Corp. 44,771,600 --------------- Insurance -- 8.9% 635,000 MetLife, Inc. 39,128,700 435,000 Prudential Financial, Inc. 40,472,400 --------------- 79,601,100 --------------- IT Services -- 5.2% 215,000 MasterCard, Inc., Class A(b) 46,268,000 --------------- Machinery -- 6.5% 630,000 Deere & Co. 58,665,600 --------------- Metals & Mining -- 5.0% 1,375,000 Companhia Vale do Rio Doce, ADR 44,921,250 --------------- Oil, Gas & Consumable Fuels -- 9.1% 705,000 Petroleo Brasileiro SA, ADR 81,244,200 --------------- Pharmaceuticals -- 4.8% 650,000 Johnson & Johnson 43,355,000 --------------- Software -- 1.3% 500,000 Oracle Corp.(c) 11,290,000 --------------- Wireless Telecommunication Services -- 4.8% 705,000 America Movil SAB de CV, Series L, ADR 43,279,950 --------------- Total Common Stocks (Identified Cost $648,206,857) 858,767,082 ---------------
Principal Amount/ Shares Description Value (+) ----------------------------------------------------------------------------------------------------- Short-Term Investments -- 6.5% $ 37,580,000 American Express Credit Corp., 3.800%, due 1/02/2008 $ 37,580,000 20,829,727 State Street Navigator Securities Lending Prime Portfolio(d) 20,829,727 --------------- Total Short-Term Investments (Identified Cost $58,409,727) 58,409,727 --------------- Total Investments -- 102.3% (Identified Cost $706,616,584)(a) 917,176,809 Other assets less liabilities -- (2.3)% (20,739,963) --------------- Net Assets -- 100% $ 896,436,846 =============== (+) See Note 2a of Notes to Financial Statements. (a) Federal Tax Information: At December 31, 2007, the net unrealized appreciation on investments based on a cost of $712,758,328 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 216,522,690 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (12,104,209) --------------- Net unrealized appreciation $ 204,418,481 =============== (b) All or a portion of this security was on loan to brokers at December 31, 2007. (c) Non-income producing security. (d) Represents investment of security lending collateral. ADR An American Depositary Receipt is a certificate issued by a custodian bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States.
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited) Energy Equipment & Services 11.1% Chemicals 10.7 Commercial Banks 9.6 Oil, Gas & Consumable Fuels 9.1 Insurance 8.9 Machinery 6.5 Computers & Peripherals 5.4 Communications Equipment 5.3 IT Services 5.2 Hotels, Restaurants & Leisure 5.0 Metals & Mining 5.0 Pharmaceuticals 4.8 Wireless Telecommunication Services 4.8 Diversified Financial Services 3.1 Software 1.3
See accompanying notes to financial statements. 22 HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS Investments as of December 31, 2007
Shares Description Value (+) ---------------------------------------------------------------------------------- Common Stocks -- 97.3% of Net Assets Australia -- 3.3% 40,616 BHP Billiton, Ltd. $ 1,419,859 15,453 Rio Tinto, Ltd.(b) 1,797,702 54,687 Westpac Banking Corp. 1,329,824 35,324 Woodside Petroleum, Ltd. 1,548,316 --------------- 6,095,701 --------------- Austria -- 0.6% 14,831 Erste Bank Der Oesterreichischen Sparkassen AG 1,047,187 --------------- Brazil -- 4.8% 41,837 Banco Itau Holding Financeira SA, ADR(b) 1,081,905 14,034 Companhia de Bebidas das Americas, Preferred ADR 996,835 50,927 Companhia Energetica de Minas Gerais, ADR(b) 940,112 54,372 Companhia Vale do Rio Doce, ADR 1,776,333 34,323 Petroleo Brasileiro SA, ADR 3,955,383 --------------- 8,750,568 --------------- Canada -- 3.3% 17,586 Bank of Nova Scotia 895,916 36,783 Cameco Corp. 1,464,331 16,834 IGM Financial, Inc. 853,341 41,379 Manulife Financial Corp. 1,686,194 11,076 Suncor Energy, Inc. 1,204,294 --------------- 6,104,076 --------------- China -- 2.1% 12,100 China Medical Technologies, Inc., Sponsored ADR(b) 537,119 376,000 Cosco Pacific, Ltd. 980,865 2,016,410 Denway Motors, Ltd. 1,267,296 20,202 Focus Media Holding Ltd.(b)(c) 1,147,676 --------------- 3,932,956 --------------- Denmark -- 1.2% 20,542 Vestas Wind Systems A/S(c) 2,218,140 --------------- France -- 9.9% 70,702 Axa 2,818,812 10,823 BNP Paribas(b) 1,174,294 26,220 Carrefour SA(b) 2,040,776 13,051 Electricite de France 1,554,534 17,665 Iliad SA(b) 1,899,760 8,344 LVMH Moet Hennessy Louis Vuitton SA 1,008,365 4,857 PPR 780,175 10,156 Schneider Electric SA(b) 1,375,565 34,464 Societe Television Franciase 1(b) 918,874 16,496 Suez SA(b) 1,122,815 19,925 Total SA 1,649,797 11,711 Total SA, ADR 967,329 21,311 Vivendi SA(b) 978,452 --------------- 18,289,548 --------------- Germany -- 6.6% 46,132 Adidas AG(b) 3,430,015 28,821 Commerzbank AG 1,096,542 4,652 E.ON AG 988,982 6,500 Merck KGaA 840,628 27,792 SAP AG(b) 1,430,545 21,401 SAP AG, ADR(b) 1,092,521 12,536 Siemens AG (Registered) 1,993,251 4,388 Wacker Chemie AG 1,265,732 --------------- 12,138,216 ---------------
Shares Description Value (+) ----------------------------------------------------------------------------------- Greece -- 1.3% 23,388 Folli-Follie SA $ 868,424 22,051 National Bank of Greece SA 1,512,148 --------------- 2,380,572 --------------- Hong Kong -- 1.6% 136,300 Esprit Holdings, Ltd. 2,022,625 444,000 Foxconn International Holdings, Ltd.(c) 988,507 --------------- 3,011,132 --------------- India -- 2.2% 12,194 HDFC Bank, Ltd., ADR(b) 1,590,707 52,125 Infosys Technologies, Ltd., ADR(b) 2,364,390 --------------- 3,955,097 --------------- Ireland -- 0.8% 45,180 Anglo Irish Bank Corp. PLC 724,351 20,902 Ryanair Holdings PLC, Sponsored ADR(b)(c) 824,375 --------------- 1,548,726 --------------- Israel -- 0.7% 27,666 Teva Pharmaceutical Industries, Ltd., Sponsored ADR(b) 1,285,916 --------------- Italy -- 4.1% 45,290 ENI SpA 1,652,918 72,959 Saipem SpA(b) 2,913,527 358,670 UniCredito Italiano SpA 2,950,203 --------------- 7,516,648 --------------- Japan -- 14.0% 140,000 Bank of Yokohama (The), Ltd. 975,436 17,600 Canon, Inc.(b) 805,491 25,800 Denso Corp. 1,049,911 198,000 Isuzu Motors, Ltd.(b) 888,912 30,900 Millea Holdings, Inc. 1,037,389 34,000 NGK Insulators, Ltd. 911,584 18,300 Nidec Corp. 1,322,214 5,900 Nintendo Co., Ltd. 3,464,194 26,000 Nitto Denko Corp. 1,366,479 50,100 Nomura Holdings, Inc.(b) 839,418 6,740 ORIX Corp. 1,133,581 40,900 Promise Co., Ltd.(b) 1,007,036 16,600 Shin-Etsu Chemical Co., Ltd. 1,032,373 56,000 Shionogi & Co., Ltd. 992,829 8,100 SMC Corp. 963,605 94,200 Sumitomo Corp.(b) 1,317,987 191,000 Sumitomo Trust & Banking Co., Ltd. 1,258,832 46,200 THK Co., Ltd. 933,773 137,000 Toshiba Corp.(b) 1,011,055 22,100 Toyota Motor Corp. 1,177,017 12,500 Yamada Denki Co., Ltd.(b) 1,410,064 71,000 Yaskawa Electric Corp. 957,790 --------------- 25,856,970 --------------- Kazakhstan -- 0.1% 12,820 Eurasian Natural Resources Corp., 144A(c) 163,325 --------------- Luxembourg -- 0.9% 14,260 Millicom International Cellular S.A.(b)(c) 1,681,824 --------------- Mexico -- 1.7% 26,690 America Movil SAB de C.V., Series L, ADR 1,638,499 21,273 Cemex SAB de CV, Sponsored ADR(b)(c) 549,907 26,901 Wal-Mart de Mexico SA de CV, Sponsored ADR, Series V 928,085 --------------- 3,116,491 ---------------
See accompanying notes to financial statements. 23 HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007
Shares Description Value (+) ---------------------------------------------------------------------------------------- Netherlands -- 1.1% 18,689 ING Groep NV $ 728,223 30,610 Koninklijke (Royal) Philips Electronics NV 1,308,578 --------------- 2,036,801 --------------- Norway -- 1.5% 21,300 Norske Skogindustrier ASA(b) 175,612 32,399 Renewable Energy Corp. A/S(b)(c) 1,625,086 42,100 Subsea 7, Inc.(c) 935,523 --------------- 2,736,221 --------------- Republic of Korea -- 3.0% 26,265 Hyundai Motor Co., Ltd.(c) 1,990,628 12,012 Kookmin Bank, Sponsored ADR(b) 880,720 2,788 Samsung Electronics Co., Ltd. 1,640,731 3,519 Samsung Electronics Co., Ltd., GDR, 144A 1,030,187 --------------- 5,542,266 --------------- Russia -- 3.1% 20,602 Evraz Group SA, GDR, 144A 1,596,655 18,335 LUKOIL, ADR 1,585,978 5,463 Mining and Metallurgical Co. Norilsk Nickel, ADR 1,479,107 19,342 OAO Gazprom, Sponsored ADR 1,096,691 --------------- 5,758,431 --------------- Singapore -- 1.8% 80,000 DBS Group Holdings, Ltd. 1,135,437 131,000 Keppel Corp., Ltd.(b) 1,167,298 215,000 Keppel Land, Ltd. 1,075,737 --------------- 3,378,472 --------------- South Africa -- 0.6% 53,719 MTN Group, Ltd. 1,006,139 --------------- Spain -- 3.6% 68,452 Banco Bilbao Vizcaya Argentaria SA 1,666,404 147,057 Banco Santander Central Hispano SA 3,176,129 55,303 Telefonica SA 1,792,717 --------------- 6,635,250 --------------- Switzerland -- 8.9% 61,314 ABB, Ltd. 1,767,791 14,672 Credit Suisse Group 883,189 12,942 Holcim, Ltd. (Registered) 1,379,624 12,444 Lonza Group AG 1,504,990 5,186 Nestle SA 2,381,360 3,711 Nobel Biocare Holding AG(c) 988,313 40,587 Novartis AG 2,219,595 9,038 Roche Holding AG 1,562,360 4,675 Syngenta AG 1,186,329 8,334 Synthes, Inc.(c) 1,036,198 32,201 UBS AG 1,484,714 --------------- 16,394,463 --------------- Taiwan -- 1.0% 505,619 Taiwan Semiconductor Manufacturing Co., Ltd. 958,647 96,369 Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR 959,835 --------------- 1,918,482 --------------- Thailand -- 0.5% 278,100 Bangkok Bank PLC 982,184 --------------- United Kingdom -- 13.0% 465,017 ARM Holdings PLC(b) 1,146,844 21,725 AstraZeneca PLC 935,104 85,772 Autonomy Corp. PLC(c) 1,507,652
Shares Description Value (+) --------------------------------------------------------------------------------------------- United Kingdom -- continued 40,229 BHP Billiton PLC $ 1,226,715 167,091 British Sky Broadcasting PLC 2,055,348 36,672 GlaxoSmithKline PLC 931,341 68,940 HBOS PLC 1,002,457 71,000 HSBC Holdings PLC 1,193,805 100,011 ICAP PLC 1,441,217 131,158 Man Group PLC 1,488,870 200,727 Michael Page International PLC 1,142,776 257,109 Old Mutual PLC 856,620 123,680 Prudential PLC 1,741,511 17,539 Reckitt Benckiser Group PLC 1,019,190 148,779 Smith & Nephew PLC 1,706,938 278,807 Tesco PLC 2,652,157 497,873 Vodafone Group PLC 1,868,970 --------------- 23,917,515 --------------- Total Common Stocks (Identified Cost $135,881,740) 179,399,317 --------------- Preferred Stocks -- 1.3% Brazil -- 1.0% 65,715 Companhia Vale do Rio Doce, Sponsored ADR(b) 1,838,706 --------------- Germany -- 0.3% 5,871 Fresenius SE-PFD 487,708 --------------- Total Preferred Stocks (Identified Cost $1,200,752) 2,326,414 --------------- Shares/ Principal Amount --------------------------------------------------------------------------------------------- Short-Term Investments -- 18.7% 31,403,828 State Street Navigator Securities Lending Prime Portfolio(d) 31,403,828 $ 3,143,412 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2007 at 3.25% to be repurchased at $3,143,979 on 1/02/2008, collateralized by $3,120,000 Federal Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at $3,209,700 including accrued interest (Note 2h of Notes to Financial Statements) 3,143,412 --------------- Total Short-Term Investments (Identified Cost $34,547,240) 34,547,240 --------------- Total Investments -- 117.3% (Identified Cost $171,629,732)(a) 216,272,971 Other assets less liabilities -- (17.3)% (31,864,176) --------------- Net Assets -- 100% $ 184,408,795 =============== (+) See Note 2a of Notes to Financial Statements. (a) Federal Tax Information: At December 31, 2007, the net unrealized appreciation on investments based on a cost of $173,965,089 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 45,498,471 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (3,190,589) --------------- Net unrealized appreciation $ 42,307,882 =============== (b) All or a portion of this security was on loan to brokers at December 31, 2007. (c) Non-income producing security. (d) Represents investment of security lending collateral.
See accompanying notes to financial statements. 24 HANSBERGER INTERNATIONAL FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007 144A Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these amounted to $2,790,167 or 1.5% of net assets. ADR/GDR An American Depositary Receipt or Global Depositary Receipt is a certificate issued by a custodian bank representing the right to receive securities of the foreign issuer described. The values of ADRs and GDRs are significantly influenced by trading on exchanges not located in the United States.
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited) Commercial Banks 13.9% Oil, Gas & Consumable Fuels 8.2 Metals & Mining 6.1 Pharmaceuticals 4.8 Insurance 4.4 Software 4.1 Capital Markets 3.8 Electrical Equipment 3.8 Wireless Telecommunication Services 3.4 Semiconductors & Semiconductor 3.1 Food & Staples Retailing 3.0 Automobiles 2.9 Textiles, Apparel & Luxury Good 2.9 Media 2.8 Chemicals 2.6 Health Care Equipment & Supplies 2.6 Industrial Conglomerates 2.4 Energy Equipment & Services 2.1 Diversified Telecommunication Services 2.0 Other, less than 2% each 19.7
See accompanying notes to financial statements. 25 HARRIS ASSOCIATES FOCUSED VALUE FUND -- PORTFOLIO OF INVESTMENTS Investments as of December 31, 2007
Shares Description Value (+) ---------------------------------------------------------------------------------- Common Stocks -- 100.0% of Net Assets Capital Markets -- 5.0% 51,500 Merrill Lynch & Co., Inc. $ 2,764,520 76,500 Morgan Stanley 4,062,915 --------------- 6,827,435 --------------- Chemicals -- 3.0% 87,100 International Flavors & Fragrances, Inc.(b) 4,192,123 --------------- Commercial Services & Supplies -- 4.9% 248,200 Robert Half International, Inc. 6,711,328 --------------- Computers & Peripherals -- 2.4% 61,300 Dell, Inc.(c) 1,502,463 66,000 Teradata Corp.(c) 1,809,060 --------------- 3,311,523 --------------- Consumer Finance -- 3.0% 270,400 Discover Financial Services 4,077,632 --------------- Health Care Equipment & Supplies -- 4.9% 156,500 Hospira, Inc.(c) 6,673,160 --------------- Health Care Providers & Services -- 3.3% 891,000 Tenet Healthcare Corp.(b)(c) 4,526,280 --------------- Hotels, Restaurants & Leisure -- 6.8% 44,000 McDonald's Corp. 2,592,040 177,900 Yum! Brands, Inc. 6,808,233 --------------- 9,400,273 --------------- Internet & Catalog Retail -- 5.5% 394,900 Liberty Media Holding Corp. - Interactive, Class A(c) 7,534,692 --------------- Life Sciences Tools & Services -- 9.2% 284,000 MDS, Inc.(b) 5,523,800 272,300 PerkinElmer, Inc. 7,085,246 --------------- 12,609,046 --------------- Media -- 18.6% 115,700 Cablevision Systems Corp., Class A(c) 2,834,650 280,720 Discovery Holding Co.(c) 7,057,301 38,000 Liberty Media Corp. - Capital, Series A(c) 4,426,620 246,000 Time Warner, Inc. 4,061,460 415,300 Virgin Media, Inc.(b) 7,118,242 --------------- 25,498,273 --------------- Personal Products -- 4.7% 163,700 Avon Products, Inc. 6,471,061 --------------- Semiconductors & Semiconductor Equipment -- 21.7% 464,900 Intel Corp. 12,394,234 106,200 International Rectifier Corp.(c) 3,607,614 739,600 Micron Technology, Inc.(b)(c) 5,362,100 368,900 National Semiconductor Corp. 8,351,896 --------------- 29,715,844 --------------- Specialty Retail -- 2.7% 82,100 Tiffany & Co. 3,779,063 --------------- Textiles, Apparel & Luxury Goods -- 3.7% 277,600 Timberland Co.(b)(c) 5,019,008 ---------------
Shares Description Value (+) --------------------------------------------------------------------------------------------- Thrifts & Mortgage Finance -- 0.6% 71,215 Sovereign Bancorp, Inc. $ 811,851 --------------- Total Common Stocks (Identified Cost $137,248,070) 137,158,592 --------------- Shares/ Principal Amount --------------------------------------------------------------------------------------------- Short-Term Investments -- 17.6% 18,890,517 State Street Navigator Securities Lending Prime Portfolio(d) 18,890,517 $ 5,322,641 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2007 at 3.250% to be repurchased at $5,323,602 on 1/2/2008, collateralized by $5,280,000 Federal Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at $5,431,800, including accrued interest (Note 2h of Notes to Financial Statements) 5,322,641 --------------- Total Short-Term Investments (Identified Cost $24,213,158) 24,213,158 --------------- Total Investments -- 117.6% (Identified Cost $161,461,228)(a) 161,371,750 Other assets less liabilities -- (17.6)% (24,172,737) --------------- Net Assets -- 100% $ 137,199,013 =============== (+) See Note 2a of Notes to Financial Statements. (a) Federal Tax Information: At December 31, 2007, the net unrealized depreciation on investments based on a cost of $161,472,109 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 15,117,291 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (15,217,650) --------------- Net unrealized depreciation $ (100,359) =============== (b) All or a portion of this security was on loan to brokers at December 31, 2007. (c) Non-income producing security. (d) Represents investment of securities lending collateral.
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited) Semiconductors & Semiconductor Equipment 21.7% Media 18.6 Life Sciences Tools & Services 9.2 Hotels, Restaurants & Leisure 6.8 Internet & Catalog Retail 5.5 Capital Markets 5.0 Commercial Services & Supplies 4.9 Health Care Equipment & Supplies 4.9 Personal Products 4.7 Textiles, Apparel & Luxury Goods 3.7 Health Care Providers & Services 3.3 Chemicals 3.0 Consumer Finance 3.0 Specialty Retail 2.7 Computers & Peripherals 2.4 Thrifts & Mortgage Finance 0.6
See accompanying notes to financial statements. 26 HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS Investments as of December 31, 2007
Shares Description Value (+) ----------------------------------------------------------------------------- Common Stocks -- 96.4% of Net Assets Air Freight & Logistics -- 3.0% 74,700 FedEx Corp. $ 6,660,999 --------------- Automobiles -- 1.7% 83,000 Harley-Davidson, Inc.(b) 3,876,930 --------------- Beverages -- 1.9% 27,400 Coca-Cola Co. (The) 1,681,538 28,700 Diageo PLC, Sponsored ADR 2,463,321 --------------- 4,144,859 --------------- Capital Markets -- 10.2% 222,300 Bank of New York Mellon Corp. 10,839,348 106,500 Merrill Lynch & Co., Inc. 5,716,920 118,000 Morgan Stanley 6,266,980 --------------- 22,823,248 --------------- Chemicals -- 1.8% 102,000 Dow Chemical Co. (The) 4,020,840 --------------- Communications Equipment -- 3.3% 453,700 Motorola, Inc. 7,277,348 --------------- Computers & Peripherals -- 10.9% 406,000 Dell, Inc.(c) 9,951,060 221,000 Hewlett-Packard Co. 11,156,080 184,975 Sun Microsystems, Inc.(c) 3,353,597 --------------- 24,460,737 --------------- Consumer Finance -- 7.9% 111,100 American Express Co. 5,779,422 168,000 Capital One Financial Corp. 7,939,680 261,550 Discover Financial Services(b) 3,944,174 --------------- 17,663,276 --------------- Diversified Financial Services -- 3.5% 179,100 JPMorgan Chase & Co. 7,817,715 --------------- Electronic Equipment & Instruments -- 0.5% 30,800 Tyco Electronics, Ltd. 1,143,604 --------------- Health Care Equipment & Supplies -- 3.2% 30,300 Covidien, Ltd. 1,341,987 117,000 Medtronic, Inc. 5,881,590 --------------- 7,223,577 --------------- Hotels, Restaurants & Leisure -- 7.4% 213,700 Carnival Corp. 9,507,513 119,000 McDonald's Corp. 7,010,290 --------------- 16,517,803 --------------- Household Durables -- 2.1% 53,300 Fortune Brands, Inc. 3,856,788 87,200 Pulte Homes, Inc.(b) 919,088 --------------- 4,775,876 --------------- Insurance -- 1.3% 45,900 Aflac, Inc. 2,874,717 --------------- Media -- 12.2% 129,800 Comcast Corp., Special Class A(c) 2,351,976 40,310 Liberty Media Corp. - Capital, Series A(b)(c) 4,695,712 47,500 Omnicom Group, Inc. 2,257,675 482,000 Time Warner, Inc. 7,957,820 167,300 Viacom, Inc., Class B(c) 7,347,816 87,100 Walt Disney Co. (The) 2,811,588 --------------- 27,422,587 ---------------
Shares Description Value (+) ----------------------------------------------------------------------------------------------------- Office Electronics -- 1.0% 137,400 Xerox Corp. $ 2,224,506 --------------- Pharmaceuticals -- 1.1% 49,000 GlaxoSmithKline PLC, Sponsored ADR 2,469,110 --------------- Road & Rail -- 5.4% 97,000 Union Pacific Corp. 12,185,140 --------------- Semiconductors & Semiconductor Equipment -- 9.4% 581,400 Intel Corp. 15,500,124 164,800 Texas Instruments, Inc. 5,504,320 --------------- 21,004,444 --------------- Specialty Retail -- 5.6% 85,900 Best Buy Co., Inc.(b) 4,522,635 244,500 Home Depot, Inc. 6,586,830 71,800 Limited Brands, Inc.(b) 1,359,174 --------------- 12,468,639 --------------- Textiles, Apparel & Luxury Goods -- 2.3% 79,300 NIKE, Inc., Class B 5,094,232 --------------- Thrifts & Mortgage Finance -- 0.7% 112,400 Washington Mutual, Inc.(b) 1,529,764 --------------- Total Common Stocks (Identified Cost $190,631,088) 215,679,951 --------------- Shares/ Principal Amount ----------------------------------------------------------------------------------------------------- Short-Term Investments -- 12.5% 16,389,229 State Street Navigator Securities Lending Prime Portfolio(d) 16,389,229 $ 11,629,319 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2007 at 3.250% to be repurchased at $11,631,419 on 1/2/2008, collateralized by $11,535,000 Federal Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at $11,866,631, including accrued interest (Note 2h of Notes to Financial Statements) 11,629,319 --------------- Total Short-Term Investments (Identified Cost $28,018,548) 28,018,548 --------------- Total Investments -- 108.9% (Identified Cost $218,649,636)(a) 243,698,499 Other assets less liabilities -- (8.9)% (19,857,573) --------------- Net Assets -- 100% $ 223,840,926 =============== (+) See Note 2a of Notes to Financial Statements. (a) Federal Tax Information: At December 31, 2007, the net unrealized appreciation on investments based on a cost of $218,745,298 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 37,949,348 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (12,996,147) --------------- Net unrealized appreciation $ 24,953,201 =============== (b) All or a portion of this security was on loan to brokers at December 31, 2007. (c) Non-income producing security. (d) Represents investment of securities lending collateral. ADR An American Depositary Receipt is a certificate issued by a custodian bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States.
See accompanying notes to financial statements. 27 HARRIS ASSOCIATES LARGE CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007 Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited) Media 12.2% Computers & Peripherals 10.9 Capital Markets 10.2 Semiconductors & Semiconductor Equipment 9.4 Consumer Finance 7.9 Hotels, Restaurants & Leisure 7.4 Specialty Retail 5.6 Road and Rail 5.4 Diversified Financial Services 3.5 Communications Equipment 3.3 Health Care Equipment & Supplies 3.2 Air Freight & Logistics 3.0 Textiles, Apparel & Luxury Goods 2.3 Household Durables 2.1 Other, less than 2% each 10.0
See accompanying notes to financial statements. 28 NATIXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS Investments as of December 31, 2007
Shares Description Value (+) ----------------------------------------------------------------------------- Common Stocks -- 98.0% of Net Assets Aerospace & Defense -- 2.1% 89,452 BE Aerospace, Inc.(b) $ 4,732,011 17,800 Boeing Co. (The) 1,556,788 16,500 Lockheed Martin Corp. 1,736,790 15,320 Precision Castparts Corp. 2,124,884 15,000 Spirit Aerosystems Holdings, Inc., Class A(b)(c) 517,500 19,500 United Technologies Corp. 1,492,530 --------------- 12,160,503 --------------- Air Freight & Logistics -- 0.8% 51,400 FedEx Corp.(c) 4,583,338 --------------- Airlines -- 0.5% 86,123 UAL Corp.(b)(c) 3,071,146 --------------- Auto Components -- 0.2% 24,288 WABCO Holdings, Inc. 1,216,586 --------------- Automobiles -- 0.6% 55,900 Harley-Davidson, Inc. 2,611,089 36,615 Winnebago Industries(c) 769,647 --------------- 3,380,736 --------------- Beverages -- 1.2% 45,600 Coca-Cola Co. (The) 2,798,472 19,600 Diageo PLC, Sponsored ADR 1,682,268 35,700 PepsiCo, Inc. 2,709,630 --------------- 7,190,370 --------------- Biotechnology -- 0.9% 38,269 BioMarin Pharmaceuticals, Inc.(b)(c) 1,354,722 34,900 Celgene Corp.(b)(c) 1,612,729 45,600 Gilead Sciences, Inc.(b) 2,098,056 --------------- 5,065,507 --------------- Building Products -- 1.1% 87,257 Armstrong World Industries, Inc.(b)(c) 3,499,878 58,538 Trane, Inc. 2,734,310 --------------- 6,234,188 --------------- Capital Markets -- 4.2% 4,300 Affiliated Managers Group, Inc.(b)(c) 505,078 152,200 Bank of New York Mellon Corp. 7,421,272 12,634 BlackRock, Inc.(c) 2,739,051 50,400 Charles Schwab Corp. (The) 1,287,720 8,500 Franklin Resources, Inc. 972,655 58,849 Janus Capital Group, Inc.(c) 1,933,190 73,000 Merrill Lynch & Co., Inc. 3,918,640 79,800 Morgan Stanley 4,238,178 21,200 State Street Corp. 1,721,440 --------------- 24,737,224 --------------- Chemicals -- 4.2% 8,400 Air Products & Chemicals, Inc. 828,492 34,232 CF Industries Holdings, Inc. 3,767,574 36,421 Cytec Industries, Inc. 2,242,805 69,800 Dow Chemical Co. (The) 2,751,516 55,027 Ecolab, Inc. 2,817,933 24,200 Monsanto Co. 2,702,898 56,660 Mosaic Co. (The)(b) 5,345,304 4,400 Potash Corp. of Saskatchewan, Inc. 633,424 16,300 Praxair, Inc. 1,445,973 41,555 Scotts Miracle-Gro Co. (The), Class A(c) 1,554,988 40,658 Zep, Inc.(b)(c) 563,927 --------------- 24,654,834 ---------------
Shares Description Value (+) ---------------------------------------------------------------------------------------------- Commercial Banks -- 1.2% 67,909 BOK Financial Corp. $ 3,510,895 156,853 Colonial BancGroup, Inc.(c) 2,123,790 67,636 East West Bancorp, Inc.(c) 1,638,820 --------------- 7,273,505 --------------- Commercial Services & Supplies -- 3.6% 15,702 ABM Industries, Inc. 320,164 129,747 Comfort Systems USA, Inc.(c) 1,658,167 91,164 Corrections Corp. of America(b) 2,690,249 21,155 Dun & Bradstreet Corp.(c) 1,874,968 99,158 Exponent, Inc.(b)(c) 2,681,232 169,366 GeoEye, Inc.(b)(c) 5,699,166 128,494 Hill International, Inc.(b) 1,820,760 71,565 Stericycle, Inc.(b)(c) 4,250,961 --------------- 20,995,667 --------------- Communications Equipment -- 1.8% 140,400 Cisco Systems, Inc.(b) 3,800,628 309,100 Motorola, Inc. 4,957,964 18,537 Research In Motion, Ltd.(b) 2,102,096 --------------- 10,860,688 --------------- Computers & Peripherals -- 5.0% 19,800 Apple, Inc.(b) 3,921,984 277,900 Dell, Inc.(b) 6,811,329 83,800 EMC Corp.(b) 1,552,814 189,700 Hewlett-Packard Co. 9,576,056 119,069 NCR Corp.(b)(c) 2,988,632 125,700 Sun Microsystems, Inc.(b)(c) 2,278,941 77,044 Teradata Corp.(b) 2,111,776 --------------- 29,241,532 --------------- Construction & Engineering -- 1.7% 23,086 Fluor Corp.(c) 3,364,092 22,393 Foster Wheeler, Ltd.(b) 3,471,363 7,800 Jacobs Engineering Group, Inc.(b)(c) 745,758 66,726 KBR, Inc.(b) 2,588,968 --------------- 10,170,181 --------------- Construction Materials -- 0.4% 30,917 Texas Industries, Inc.(c) 2,167,282 --------------- Consumer Finance -- 2.0% 75,800 American Express Co. 3,943,116 115,100 Capital One Financial Corp. 5,439,626 178,550 Discover Financial Services(c) 2,692,534 --------------- 12,075,276 --------------- Containers & Packaging -- 0.5% 52,756 Crown Holdings, Inc.(b) 1,353,192 88,751 Temple-Inland, Inc.(c) 1,850,458 --------------- 3,203,650 --------------- Diversified Consumer Services -- 1.1% 265,166 INVESTools, Inc.(b)(c) 4,704,045 25,111 New Oriental Education & Technology Group, Inc., Sponsored ADR(b) 2,023,695 --------------- 6,727,740 --------------- Diversified Financial Services -- 3.0% 2,900 CME Group, Inc.(c) 1,989,400 28,154 IntercontinentalExchange, Inc.(b) 5,419,645 122,600 JPMorgan Chase & Co. 5,351,490 54,536 Nasdaq Stock Market, Inc.(b)(c) 2,698,986 16,557 Nymex Holdings, Inc. 2,212,181 --------------- 17,671,702 ---------------
See accompanying notes to financial statements. 29 NATIXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007
Shares Description Value (+) ---------------------------------------------------------------------------------- Diversified Telecommunication Services -- 0.5% 53,779 Embarq Corp. $ 2,663,674 --------------- Electric Utilities -- 0.4% 38,589 Allete, Inc.(c) 1,527,353 29,644 Portland General Electric Co. 823,510 --------------- 2,350,863 --------------- Electrical Equipment -- 3.3% 58,990 Acuity Brands, Inc.(c) 2,654,550 62,807 AMETEK, Inc. 2,941,880 27,700 Emerson Electric Co. 1,569,482 7,014 First Solar, Inc.(b)(c) 1,873,720 44,084 General Cable Corp.(b)(c) 3,230,476 37,928 Roper Industries, Inc.(c) 2,372,017 16,407 SunPower Corp., Class A(b)(c) 2,139,309 31,142 Suntech Power Holdings Co., Ltd., Sponsored ADR(b)(c) 2,563,609 --------------- 19,345,043 --------------- Electronic Equipment & Instruments -- 2.1% 84,824 Amphenol Corp., Class A(c) 3,933,289 54,523 Avnet, Inc.(b) 1,906,669 127,347 Ingram Micro, Inc.(b) 2,297,340 32,305 Mettler-Toledo International, Inc.(b) 3,676,309 20,725 Tyco Electronics, Ltd. 769,519 --------------- 12,583,126 --------------- Energy Equipment & Services -- 3.1% 13,400 Baker Hughes, Inc. 1,086,740 41,080 Cameron International Corp.(b) 1,977,180 20,400 Grant Prideco, Inc.(b)(c) 1,132,404 85,587 Helix Energy Solutions Group, Inc.(b)(c) 3,551,860 61,524 National-Oilwell Varco, Inc.(b) 4,519,553 25,453 Oceaneering International, Inc.(b) 1,714,260 17,800 Schlumberger, Ltd. 1,750,986 10,124 Transocean, Inc.(b) 1,449,251 18,300 Weatherford International, Ltd.(b) 1,255,380 --------------- 18,437,614 --------------- Food & Staples Retailing -- 1.4% 71,200 CVS Caremark Corp. 2,830,200 183,015 Spartan Stores, Inc.(c) 4,181,893 77,029 Winn-Dixie Stores, Inc.(b)(c) 1,299,479 --------------- 8,311,572 --------------- Food Products -- 0.3% 17,520 Bunge, Ltd. 2,039,503 --------------- Gas Utilities -- 1.1% 33,028 Oneok, Inc. 1,478,663 31,797 Questar Corp. 1,720,218 127,520 UGI Corp. 3,474,920 --------------- 6,673,801 --------------- Health Care Equipment & Supplies -- 4.7% 8,300 Alcon, Inc. 1,187,232 51,361 Beckman Coulter, Inc. 3,739,081 20,425 Covidien, Ltd. 904,623 27,473 Gen-Probe, Inc.(b) 1,728,876 26,159 Hologic, Inc.(b)(c) 1,795,554 119,565 Hospira, Inc.(b)(c) 5,098,252 42,672 IDEXX Laboratories, Inc.(b) 2,501,859 15,578 Intuitive Surgical, Inc.(b) 5,055,061 79,000 Medtronic, Inc. 3,971,330 37,648 Mindray Medical International, Ltd.(c) 1,617,734 --------------- 27,599,602 ---------------
Shares Description Value (+) ---------------------------------------------------------------------------------- Health Care Providers & Services -- 0.6% 30,700 Aetna, Inc. $ 1,772,311 68,554 CorVel Corp.(b)(c) 1,578,113 --------------- 3,350,424 --------------- Hotels, Restaurants & Leisure -- 3.2% 145,700 Carnival Corp.(c) 6,482,193 39,120 Ctrip.com International, Ltd., ADR 2,248,227 105,995 Mccormick & Schmick's Seafood Restaurants, Inc.(b)(c) 1,264,520 112,900 McDonald's Corp. 6,650,939 99,013 Wyndham Worldwide Corp.(c) 2,332,746 --------------- 18,978,625 --------------- Household Durables -- 0.8% 36,300 Fortune Brands, Inc.(c) 2,626,668 17,680 Garmin, Ltd.(c) 1,714,960 51,900 Pulte Homes, Inc.(c) 547,026 --------------- 4,888,654 --------------- Household Products -- 1.0% 35,203 Church & Dwight Co., Inc.(c) 1,903,426 56,300 Procter & Gamble Co. 4,133,546 --------------- 6,036,972 --------------- Independent Power Producers & Energy Traders -- 0.8% 25,697 Constellation Energy Group 2,634,713 48,978 NRG Energy, Inc.(b)(c) 2,122,707 --------------- 4,757,420 --------------- Industrial Conglomerates -- 1.2% 73,100 General Electric Co. 2,709,817 37,485 McDermott International, Inc.(b) 2,212,740 15,653 Teleflex, Inc. 986,295 16,200 Textron, Inc. 1,155,060 --------------- 7,063,912 --------------- Insurance -- 2.2% 31,300 Aflac, Inc. 1,960,319 158,373 AmCOMP, Inc.(b) 1,480,787 58,611 Assurant, Inc.(c) 3,921,076 91,136 Employers Holdings, Inc. 1,522,883 54,035 HCC Insurance Holdings, Inc. 1,549,724 60,233 National Financial Partners Corp.(c) 2,747,227 --------------- 13,182,016 --------------- Internet & Catalog Retail -- 0.9% 20,100 Amazon.com, Inc.(b)(c) 1,862,064 30,983 Priceline.com, Inc.(b)(c) 3,558,707 --------------- 5,420,771 --------------- Internet Software & Services -- 1.4% 33,800 Akamai Technologies, Inc.(b)(c) 1,169,480 33,900 eBay, Inc.(b) 1,125,141 6,500 Google, Inc., Class A(b) 4,494,620 121,802 United Online, Inc.(c) 1,439,700 --------------- 8,228,941 --------------- IT Services -- 2.4% 296,448 Broadridge Financial Solutions, Inc. 6,649,329 16,700 Cognizant Technology Solutions Corp., Class A(b) 566,798 64,043 Fidelity National Information Services, Inc. 2,663,548 18,300 Infosys Technologies, Ltd., Sponsored ADR(c) 830,088 5,300 MasterCard, Inc., Class A(c) 1,140,560 71,873 Wright Express Corp.(b) 2,550,773 --------------- 14,401,096 ---------------
See accompanying notes to financial statements. 30 NATIXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007
Shares Description Value (+) -------------------------------------------------------------------------------- Life Sciences Tools & Services -- 1.5% 10,600 Covance, Inc.(b) $ 918,172 39,391 Illumina, Inc.(b)(c) 2,334,311 103,921 PerkinElmer, Inc. 2,704,024 35,300 Thermo Fisher Scientific, Inc.(b)(c) 2,036,104 11,400 Waters Corp.(b) 901,398 --------------- 8,894,009 --------------- Machinery -- 2.0% 120,340 Actuant Corp., Class A(c) 4,092,764 48,192 AGCO Corp.(b) 3,276,092 9,200 Deere & Co. 856,704 8,800 Flowserve Corp. 846,560 74,782 Wabtec Corp. 2,575,492 --------------- 11,647,612 --------------- Media -- 4.6% 18,420 Central European Media Enterprises Ltd., Class A(b) 2,136,352 88,700 Comcast Corp., Special Class A(b) 1,607,244 35,345 Focus Media Holding Ltd., ADR(b)(c) 2,007,949 130,920 Interactive Data Corp. 4,321,669 27,205 Liberty Media Corp. - Capital, Series A(b)(c) 3,169,111 32,500 Omnicom Group, Inc. 1,544,725 326,400 Time Warner, Inc. 5,388,864 114,200 Viacom, Inc., Class B(b) 5,015,664 59,600 Walt Disney Co. (The) 1,923,888 --------------- 27,115,466 --------------- Metals & Mining -- 0.4% 26,500 Barrick Gold Corp. 1,114,325 10,600 Freeport-McMoRan Copper & Gold, Inc. 1,085,864 --------------- 2,200,189 --------------- Multi Utilities -- 0.5% 50,879 CMS Energy Corp.(c) 884,277 81,361 MDU Resources Group, Inc.(c) 2,246,377 --------------- 3,130,654 --------------- Office Electronics -- 0.3% 94,100 Xerox Corp. 1,523,479 --------------- Oil, Gas & Consumable Fuels -- 1.5% 43,408 Arena Resources, Inc.(b)(c) 1,810,548 19,600 CONSOL Energy, Inc. 1,401,792 92,036 Denbury Resources, Inc.(b) 2,738,071 57,109 Range Resources Corp.(c) 2,933,118 --------------- 8,883,529 --------------- Paper & Forest Products -- 0.2% 162,024 Domtar Corp.(b)(c) 1,245,964 --------------- Personal Products -- 0.7% 166,248 Alberto-Culver Co. 4,079,726 --------------- Pharmaceuticals -- 2.4% 35,100 Abbott Laboratories 1,970,865 29,561 Allergan, Inc. 1,898,999 33,000 GlaxoSmithKline PLC, Sponsored ADR(c) 1,662,870 36,200 Merck & Co., Inc. 2,103,582 149,718 Perrigo Co.(c) 5,241,627 30,100 Teva Pharmaceutical Industries, Ltd., Sponsored ADR 1,399,048 --------------- 14,276,991 --------------- REITs -- 0.9% 59,901 Developers Diversified Realty Corp. 2,293,609 63,244 Potlatch Corp.(c) 2,810,564 --------------- 5,104,173 ---------------
Shares Description Value (+) ------------------------------------------------------------------------------- Real Estate Management & Development -- 0.1% 59,168 Forestar Real Estate Group, Inc.(b) $ 697,880 --------------- Road & Rail -- 1.7% 142,130 Avis Budget Group, Inc.(b)(c) 1,847,690 66,400 Union Pacific Corp. 8,341,168 --------------- 10,188,858 --------------- Semiconductors & Semiconductor Equipment -- 4.0% 463,100 Intel Corp. 12,346,246 38,851 MEMC Electronic Materials, Inc.(b) 3,437,925 31,700 NVIDIA Corp.(b) 1,078,434 302,070 ON Semiconductor Corp.(b)(c) 2,682,381 112,300 Texas Instruments, Inc. 3,750,820 --------------- 23,295,806 --------------- Software -- 3.0% 37,000 Adobe Systems, Inc.(b) 1,581,010 61,686 McAfee, Inc.(b) 2,313,225 43,787 MICROS Systems, Inc.(b) 3,072,096 104,700 Microsoft Corp. 3,727,320 89,591 Nuance Communications, Inc.(b)(c) 1,673,560 65,800 Oracle Corp.(b) 1,485,764 35,461 Salesforce.com, Inc.(b)(c) 2,223,050 15,688 VMware, Inc., Class A(b)(c) 1,333,323 --------------- 17,409,348 --------------- Specialty Retail -- 3.0% 58,100 Best Buy Co., Inc.(c) 3,058,965 160,553 Borders Group, Inc.(c) 1,709,890 54,046 GameStop Corp., Class A(b)(c) 3,356,797 166,000 Home Depot, Inc. 4,472,040 64,500 Limited Brands, Inc.(c) 1,220,985 43,412 PetSmart, Inc.(c) 1,021,484 214,120 Sally Beauty Holdings, Inc.(b)(c) 1,937,786 37,381 Tween Brands, Inc.(b) 989,849 --------------- 17,767,796 --------------- Textiles, Apparel & Luxury Goods -- 1.7% 77,910 Fossil, Inc.(b) 3,270,662 118,058 Hanesbrands, Inc.(b)(c) 3,207,636 54,300 NIKE, Inc., Class B 3,488,232 --------------- 9,966,530 --------------- Thrifts & Mortgage Finance -- 0.3% 59,168 Guaranty Financial Group, Inc.(b) 473,339 75,700 Washington Mutual, Inc.(c) 1,030,277 --------------- 1,503,616 --------------- Tobacco -- 0.3% 25,400 Altria Group, Inc. 1,919,731 --------------- Wireless Telecommunication Services -- 1.4% 12,700 China Mobile, Ltd., Sponsored ADR(c) 1,103,249 18,736 Millicom International Cellular S.A.(b)(c) 2,209,724 70,569 Turkcell Iletisim Hizmetleri AS, Sponsored ADR 1,945,587 78,771 Vimpel-Communications, Sponsored ADR 3,276,874 --------------- 8,535,434 --------------- Total Common Stocks (Identified Cost $473,658,959) 578,382,075 ---------------
See accompanying notes to financial statements. 31 NATIXIS U.S. DIVERSIFIED PORTFOLIO -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007
Shares/ Principal Amount Description Value (+) ------------------------------------------------------------------------------------------------- Short-Term Investments -- 26.2% 135,549,039 State Street Navigator Securities Lending Prime Portfolio(d) $ 135,549,039 $ 18,854,482 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2007 at 3.250% to be repurchased at $18,857,886 on 1/2/2008, collateralized by $18,705,000 Federal Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at $19,242,769 including accrued interest (Note 2h of Notes to Financial Statements) 18,854,482 --------------- Total Short-Term Investments (Identified Cost $154,403,521) 154,403,521 --------------- Total Investments -- 124.2% (Identified Cost $628,062,480)(a) 732,785,596 Other assets less liabilities -- (24.2)% (142,641,565) --------------- Net Assets -- 100% $ 590,144,031 =============== (+) See Note 2a of Notes to Financial Statements. (a) Federal Tax Information: At December 31, 2007, the net unrealized appreciation on investments based on a cost of $629,140,403 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 122,759,946 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (19,114,753) --------------- Net unrealized appreciation $ 103,645,193 =============== (b) Non-income producing security. (c) All or a portion of this security was on loan to brokers at December 31, 2007. (d) Represents investment of securities lending collateral. ADR An American Depositary Receipt is a certificate issued by a custodian bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States. REITs Real Estate Investment Trusts
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited) Computers & Peripherals 5.0% Health Care Equipment & Supplies 4.7 Media 4.6 Capital Markets 4.2 Chemicals 4.2 Semiconductors & Semiconductor Equipment 4.0 Commercial Services & Supplies 3.6 Electrical Equipment 3.3 Hotels, Restaurants & Leisure 3.2 Energy Equipment & Services 3.1 Specialty Retail 3.0 Diversified Financial Services 3.0 Software 3.0 IT Services 2.4 Pharmaceuticals 2.4 Insurance 2.2 Electronic Equipment & Instruments 2.1 Aerospace & Defense 2.1 Consumer Finance 2.0 Machinery 2.0 Other, less than 2% each 33.9
See accompanying notes to financial statements. 32 VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS Investments as of December 31, 2007
Shares Description Value (+) --------------------------------------------------------------------- Common Stocks -- 95.4% of Net Assets Aerospace & Defense -- 4.4% 25,370 Alliant Techsystems, Inc.(b)(c) $ 2,886,091 31,600 DRS Technologies, Inc.(b) 1,714,932 46,137 Moog, Inc., Class A(c) 2,113,536 --------------- 6,714,559 --------------- Air Freight & Logistics -- 1.1% 52,125 Forward Air Corp.(b) 1,624,736 --------------- Building Products -- 1.7% 63,325 Lennox International, Inc. 2,622,922 --------------- Capital Markets -- 7.3% 29,500 Affiliated Managers Group, Inc.(b)(c) 3,465,070 50,025 KBW, Inc.(b)(c) 1,280,140 107,819 Raymond James Financial, Inc.(b) 3,521,369 77,450 Waddell & Reed Financial, Inc., Class A 2,795,170 --------------- 11,061,749 --------------- Chemicals -- 5.5% 43,400 Airgas, Inc.(b) 2,261,574 18,025 Cytec Industries, Inc. 1,109,979 27,725 FMC Corp.(b) 1,512,399 46,250 Scotts Miracle-Gro Co. (The), Class A(b) 1,730,675 80,700 Valspar Corp.(b) 1,818,978 --------------- 8,433,605 --------------- Commercial Banks -- 4.8% 39,775 Cullen/Frost Bankers, Inc.(b) 2,015,001 74,300 Prosperity Bancshares, Inc.(b) 2,183,677 37,500 Provident Bankshares Corp.(b) 802,125 41,050 United Bankshares, Inc.(b) 1,150,221 47,100 Whitney Holding Corp.(b) 1,231,665 --------------- 7,382,689 --------------- Commercial Services & Supplies -- 2.5% 75,693 Healthcare Services Group, Inc.(b) 1,603,178 22,065 Team, Inc.(c) 807,138 44,327 Waste Connections, Inc.(b)(c) 1,369,704 --------------- 3,780,020 --------------- Communications Equipment -- 1.8% 55,825 CommScope, Inc.(b)(c) 2,747,148 --------------- Construction & Engineering -- 2.2% 34,025 Granite Construction, Inc.(b) 1,231,025 38,000 URS Corp.(c) 2,064,540 --------------- 3,295,565 --------------- Consumer Finance -- 2.0% 108,700 First Cash Financial Services, Inc.(c) 1,595,716 57,935 McGrath Rentcorp 1,491,826 --------------- 3,087,542 --------------- Distributors -- 1.0% 38,995 WESCO International, Inc.(b)(c) 1,545,762 --------------- Diversified Consumer Services -- 0.9% 47,175 Regis Corp.(b) 1,319,013 --------------- Electric Utilities -- 1.1% 63,705 Westar Energy, Inc.(b) 1,652,508 --------------- Electrical Equipment -- 3.6% 47,300 General Cable Corp.(b)(c) 3,466,144 45,475 Regal-Beloit Corp.(b) 2,044,101 --------------- 5,510,245 ---------------
Shares Description Value (+) --------------------------------------------------------------------- Energy Equipment & Services -- 3.6% 22,125 Atwood Oceanics, Inc.(b)(c) $ 2,217,810 49,875 Oil States International, Inc.(b)(c) 1,701,735 45,150 Superior Energy Services, Inc.(c) 1,554,063 --------------- 5,473,608 --------------- Food Products -- 2.9% 46,400 Corn Products International, Inc.(b) 1,705,200 44,750 Ralcorp Holdings, Inc.(c) 2,720,352 --------------- 4,425,552 --------------- Gas Utilities -- 1.8% 94,425 Vectren Corp.(b) 2,739,269 --------------- Health Care Equipment & Supplies -- 0.9% 63,581 Medical Action Industries, Inc.(c) 1,325,664 --------------- Health Care Providers & Services -- 5.2% 96,350 Healthspring, Inc.(c) 1,835,468 82,925 LHC Group, Inc.(c) 2,071,466 36,100 Owens & Minor, Inc.(b) 1,531,723 35,600 Pediatrix Medical Group, Inc.(b)(c) 2,426,140 --------------- 7,864,797 --------------- Hotels, Restaurants & Leisure -- 1.9% 103,050 AFC Enterprises, Inc.(c) 1,166,526 193,900 Triarc Cos., Inc., Class B 1,698,564 --------------- 2,865,090 --------------- Household Durables -- 1.1% 62,825 Tempur-Pedic International, Inc.(b) 1,631,565 --------------- Industrial Conglomerates -- 1.5% 35,075 Teleflex, Inc. 2,210,076 --------------- Insurance -- 5.9% 105,262 HCC Insurance Holdings, Inc. 3,018,914 45,700 Hilb, Rogal & Hobbs Co.(b) 1,854,049 73,875 IPC Holdings, Ltd.(b) 2,132,771 65,995 United Fire & Casualty Co. 1,919,795 --------------- 8,925,529 --------------- Internet Software & Services -- 0.7% 71,900 Vignette Corp.(c) 1,050,459 --------------- Leisure Equipment & Products -- 0.6% 54,650 Brunswick Corp.(b) 931,783 --------------- Machinery -- 6.8% 71,550 Actuant Corp., Class A(b) 2,433,416 55,200 Kennametal, Inc. 2,089,872 34,825 Lincoln Electric Holdings, Inc.(b) 2,478,843 40,365 Nordson Corp.(b) 2,339,555 19,350 Rofin-Sinar Technologies, Inc.(c) 930,929 --------------- 10,272,615 --------------- Metals & Mining -- 1.1% 17,475 Cleveland-Cliffs, Inc.(b) 1,761,480 --------------- Oil, Gas & Consumable Fuels -- 8.9% 49,075 Arena Resources, Inc.(c) 2,046,918 125,275 Concho Resources, Inc.(b)(c) 2,581,918 100,125 Continental Resources, Inc.(b)(c) 2,616,266 115,100 Gulfport Energy Corp.(c) 2,101,726 107,200 Petrohawk Energy Corp.(b)(c) 1,855,632 160,525 PetroQuest Energy, Inc.(c) 2,295,508 --------------- 13,497,968 ---------------
See accompanying notes to financial statements. 33 VAUGHAN NELSON SMALL CAP VALUE FUND -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007
Shares Description Value (+) --------------------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment -- 4.2% 47,600 ATMI, Inc.(b)(c) $ 1,535,100 125,700 Brooks Automation, Inc.(b)(c) 1,660,497 88,350 Microsemi Corp.(b)(c) 1,956,069 97,625 Ultra Clean Holdings, Inc.(b)(c) 1,191,025 --------------- 6,342,691 --------------- Software -- 3.9% 25,070 MICROS Systems, Inc.(b)(c) 1,758,911 108,050 Sybase, Inc.(b)(c) 2,819,024 101,175 Tyler Technologies, Inc.(c) 1,304,146 --------------- 5,882,081 --------------- Specialty Retail -- 3.5% 99,465 Aaron Rents, Inc. 1,913,707 48,775 Men's Wearhouse, Inc. (The)(b) 1,315,950 64,470 Monro Muffler, Inc. 1,256,520 53,224 Stage Stores, Inc.(b) 787,715 --------------- 5,273,892 --------------- Textiles, Apparel & Luxury Goods -- 1.0% 34,154 Columbia Sportswear Co.(b) 1,505,850 --------------- Total Common Stocks (Identified Cost $132,589,942) 144,758,032 --------------- Shares/ Principal Amount --------------------------------------------------------------------------------------------- Short-Term Investments -- 30.5% 39,044,059 State Street Navigator Securities Lending Prime Portfolio(d) 39,044,059 $ 7,365,019 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2007 at 3.250% to be repurchased at $7,366,349 on 1/2/2008, collateralized by $7,305,000 Federal Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at $7,515,019 including accrued interest (Note 2h of Notes to Financial Statements) 7,365,019 --------------- Total Short-Term Investments (Identified Cost $46,409,078) 46,409,078 --------------- Total Investments -- 125.9% (Identified Cost $178,999,020)(a) 191,167,110 Other assets less liabilities -- (25.9)% (39,365,960) --------------- Net Assets -- 100% $ 151,801,150 =============== (+) See Note 2a of Notes to Financial Statements. (a) Federal Tax Information: At December 31, 2007, the net unrealized appreciation on investments based on a cost of $179,096,407 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost $ 20,744,698 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value (8,673,995) --------------- Net unrealized appreciation $ 12,070,703 =============== (b) All or a portion of this security was on loan to brokers at December 31, 2007. (c) Non-income producing security. (d) Represents investment of securities lending collateral.
Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited) Oil, Gas & Consumable Fuels 8.9% Capital Markets 7.3 Machinery 6.8 Insurance 5.9 Chemicals 5.5 Health Care Providers & Services 5.2 Commercial Banks 4.8 Aerospace & Defense 4.4 Semiconductors & Semiconductor Equipment 4.2 Software 3.9 Electrical Equipment 3.6 Energy Equipment & Services 3.6 Specialty Retail 3.5 Food Products 2.9 Commercial Services & Supplies 2.5 Construction & Engineering 2.2 Consumer Finance 2.0 Other, less than 2% each 18.2
See accompanying notes to financial statements. 34 WESTPEAK 130/30 GROWTH FUND* -- PORTFOLIO OF INVESTMENTS Investments as of December 31, 2007
Shares Description Value (+) ----------------------------------------------------------------------- Common Stocks -- 127.1% of Net Assets Aerospace & Defense -- 10.4% 18,595 Boeing Co. (The)(c) $ 1,626,319 26,900 Honeywell International, Inc.(c) 1,656,233 10,500 Precision Castparts Corp.(c) 1,456,350 1,800 United Technologies Corp. 137,772 --------------- 4,876,674 --------------- Auto Components -- 1.0% 9,200 Autoliv, Inc. 484,932 --------------- Biotechnology -- 0.9% 5,800 Genzyme Corp.(b) 431,752 --------------- Capital Markets -- 3.5% 6,784 Goldman Sachs Group, Inc.(c) 1,458,899 5,700 Janus Capital Group, Inc. 187,245 --------------- 1,646,144 --------------- Chemicals -- 7.2% 36,700 Cabot Corp.(c) 1,223,578 25,000 Celanese Corp.(c) 1,058,000 10,400 Lubrizol Corp. 563,264 4,700 Monsanto Co. 524,943 --------------- 3,369,785 --------------- Commercial Services & Supplies -- 1.5% 8,000 Dun & Bradstreet Corp.(c) 709,040 --------------- Communications Equipment -- 6.3% 71,180 Cisco Systems, Inc.(b)(c) 1,926,843 30,300 Juniper Networks, Inc.(b)(c) 1,005,960 --------------- 2,932,803 --------------- Computers & Peripherals -- 9.9% 5,200 Apple, Inc.(b) 1,030,016 73,500 EMC Corp.(b) 1,361,955 43,400 Hewlett-Packard Co.(c) 2,190,832 3,200 Network Appliance, Inc.(b) 79,872 --------------- 4,662,675 --------------- Containers & Packaging -- 1.7% 29,100 Pactiv Corp.(b)(c) 774,933 --------------- Diversified Consumer Services -- 2.1% 11,800 ITT Educational Services, Inc.(b)(c) 1,006,186 --------------- Electrical Equipment -- 2.1% 19,800 Thomas & Betts Corp.(b)(c) 970,992 --------------- Electronic Equipment & Instruments -- 3.0% 12,500 Mettler-Toledo International, Inc.(b)(c) 1,422,500 --------------- Energy Equipment & Services -- 8.0% 36,700 Dresser-Rand Group, Inc.(b)(c) 1,433,135 32,600 Global Industries, Ltd.(b) 698,292 21,900 National-Oilwell Varco, Inc.(b)(c) 1,608,774 --------------- 3,740,201 --------------- Food & Staples Retailing -- 1.4% 23,800 Kroger Co. 635,698 --------------- Health Care Providers & Services -- 20.5% 26,600 Aetna, Inc.(c) 1,535,618 32,300 AmerisourceBergen Corp.(c) 1,449,301 24,700 Cardinal Health, Inc.(c) 1,426,425 22,600 CIGNA Corp.(c) 1,214,298 6,200 Health Net, Inc.(b) 299,460 6,800 McKesson Corp. 445,468
Shares Description Value (+) ----------------------------------------------------------------------------- Health Care Providers & Services -- continued 32,400 UnitedHealth Group, Inc.(c) $ 1,885,680 15,500 WellPoint, Inc.(b)(c) 1,359,815 --------------- 9,616,065 --------------- Hotels, Restaurants & Leisure -- 2.5% 21,700 Starwood Hotels & Resorts Worldwide, Inc. 955,451 9,000 Wendy's International, Inc.(c) 232,560 --------------- 1,188,011 --------------- Internet & Catalog Retail -- 5.2% 13,700 Amazon.com, Inc.(b)(c) 1,269,168 4,600 Expedia, Inc.(b)(c) 145,452 38,300 IAC/InterActiveCorp.(b)(c) 1,031,036 --------------- 2,445,656 --------------- Internet Software & Services -- 2.5% 5,900 eBay, Inc.(b) 195,821 1,400 Google, Inc., Class A(b) 968,072 --------------- 1,163,893 --------------- IT Services -- 3.7% 11,600 Accenture, Ltd., Class A 417,948 20,900 Fiserv, Inc.(b)(c) 1,159,741 4,200 Hewitt Associates, Inc., Class A(b) 160,818 --------------- 1,738,507 --------------- Life Sciences Tools & Services -- 3.0% 14,900 Invitrogen Corp.(b)(c) 1,391,809 --------------- Machinery -- 7.9% 20,600 AGCO Corp.(b)(c) 1,400,388 11,700 Caterpillar, Inc. 848,952 1,000 Cummins, Inc. 127,370 28,200 Ingersoll-Rand Co., Ltd., Class A(c) 1,310,454 --------------- 3,687,164 --------------- Media -- 3.0% 61,100 DIRECTV Group, Inc. (The)(b)(c) 1,412,632 --------------- Metals & Mining -- 1.1% 2,900 AK Steel Holding Corp.(b) 134,096 1,300 Freeport-McMoRan Copper & Gold, Inc. 133,172 1,700 Newmont Mining Corp. 83,011 3,300 Reliance Steel & Aluminum Co. 178,860 --------------- 529,139 --------------- Multiline Retail -- 2.7% 19,400 Big Lots, Inc.(b)(c) 310,206 36,100 Dollar Tree Stores, Inc.(b)(c) 935,712 --------------- 1,245,918 --------------- Oil, Gas & Consumable Fuels -- 0.5% 5,200 Continental Resources, Inc.(b) 135,876 2,400 Massey Energy Co. 85,800 --------------- 221,676 --------------- Pharmaceuticals -- 2.9% 37,500 Forest Laboratories, Inc.(b)(c) 1,366,875 --------------- Semiconductors & Semiconductor Equipment -- 5.3% 44,800 Analog Devices, Inc.(c) 1,420,160 47,600 Applied Materials, Inc. 845,376 17,300 Integrated Device Technology, Inc.(b) 195,663 --------------- 2,461,199 ---------------
See accompanying notes to financial statements. 35 WESTPEAK 130/30 GROWTH FUND* -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007
Shares Description Value (+) ------------------------------------------------------------------------------------------- Software -- 5.3% 44,500 Compuware Corp.(b) $ 395,160 11,100 Microsoft Corp. 395,160 80,900 Novell, Inc.(b) 555,783 43,300 Synopsys, Inc.(b)(c) 1,122,769 --------------- 2,468,872 --------------- Tobacco -- 1.2% 7,400 Altria Group, Inc. 559,292 --------------- Wireless Telecommunication Services -- 0.8% 5,700 Telephone & Data Systems, Inc. 356,820 --------------- Total Common Stocks (Identified Cost $58,398,356) 59,517,843 --------------- Principal Amount ------------------------------------------------------------------------------------------- Short-Term Investments -- 0.9% $ 417,199 Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2007 at 3.250% to be repurchased at $417,274 on 1/2/2008, collateralized by $415,000 Federal Home Loan Mortgage Corp., 5.875% due 9/21/2022 valued at $426,931, including accrued interest (Note 2h of Notes to Financial Statements) 417,199 --------------- Total Short-Term Investments (Identified Cost $417,199) 417,199 --------------- Total Investments -- 128.0% (Identified Cost $58,815,555)(a) 59,935,042 Other assets less liabilities -- (28.0)% (13,092,923) --------------- Net Assets -- 100% $ 46,842,119 =============== Shares ------------------------------------------------------------------------------------------- Common Stocks Sold Short -- 27.5% of Net Assets Biotechnology -- 1.5% 10,250 Abraxis Bioscience, Inc.(b) 704,893 --------------- Commercial Services & Supplies -- 1.1% 13,900 Pitney Bowes, Inc. 528,756 --------------- Construction Materials -- 1.6% 21,000 Eagle Materials, Inc. 745,080 --------------- Electrical Equipment -- 0.3% 1,700 General Cable Corp.(b) 124,576 --------------- Energy Equipment & Services -- 0.5% 4,300 Nabors Industries, Ltd.(b) 117,777 7,000 Tetra Technologies, Inc.(b) 108,990 --------------- 226,767 --------------- Health Care Providers & Services -- 3.5% 32,000 Omnicare, Inc. 729,920 17,200 Quest Diagnostics, Inc. 909,880 --------------- 1,639,800 --------------- Health Care Technology -- 0.9% 7,500 Cerner Corp.(b) 423,000 --------------- Hotels, Restaurants & Leisure -- 1.9% 27,100 Scientific Games Corp.(b) 901,075 --------------- Household Durables -- 0.5% 22,100 Pulte Homes, Inc. 232,934 --------------- Machinery -- 3.0% 18,000 Graco, Inc. 670,680 26,600 Trinity Industries, Inc. 738,416 --------------- 1,409,096 ---------------
Shares Description Value (+) -------------------------------------------------------------------------------------------------- Oil, Gas & Consumable Fuels -- 4.9% 20,000 Arch Coal, Inc. $ 898,600 13,000 CNX Gas Corp.(b) 415,350 31,871 W&T Offshore, Inc. 954,855 --------------- 2,268,805 --------------- Personal Products -- 0.9% 16,200 Bare Escentuals, Inc.(b) 392,850 --------------- Pharmaceuticals -- 0.9% 41,000 APP Pharmaceuticals, Inc.(b) 421,070 --------------- REITs -- 1.5% 40,800 CapitalSource, Inc. 717,672 --------------- Semiconductors & Semiconductor Equipment -- 1.9% 6,800 International Rectifier Corp.(b) 230,996 92,400 Micron Technology, Inc.(b) 669,900 --------------- 900,896 --------------- Specialty Retail -- 1.3% 16,700 Tractor Supply Co.(b) 600,198 --------------- Trading Companies & Distributors -- 1.3% 15,500 Fastenal Co. 626,510 --------------- Total Common Stocks Sold Short (Proceeds $14,030,602) 12,863,978 --------------- * Formerly Westpeak Capital Growth Fund. (+) See Note 2a of Notes to Financial Statements. (a) Federal Tax Information: At December 31, 2007, the net unrealized appreciation on investments based on a cost of $58,837,858 (excludes proceeds received from short sales of $14,030,602) for federal income tax purposes was as follows: Aggregate gross unrealized appreciation (in which there is an excess of value over tax cost): Investment securities $ 4,529,357 Securities sold short 2,036,967 Aggregate gross unrealized depreciation (in which there is an excess of tax cost over value): Investment securities (3,432,173) Securities sold short (870,343) --------------- Net unrealized appreciation $ 2,263,808 =============== (b) Non-income producing security. (c) Securities held as collateral for short sales. REITs Real Estate Investment Trusts
See accompanying notes to financial statements. 36 WESTPEAK 130/30 GROWTH FUND* -- PORTFOLIO OF INVESTMENTS (continued) Investments as of December 31, 2007 Holdings at December 31, 2007 as a Percentage of Net Assets (unaudited) * Health Care Providers & Services 17.0% Aerospace & Defense 10.4 Computers & Peripherals 9.9 * Energy Equipment & Services 7.5 Chemicals 7.2 Communications Equipment 6.3 Software 5.3 Internet & Catalog Retail 5.2 * Machinery 4.9 IT Services 3.7 Capital Markets 3.5 * Semiconductors & Semiconductor Equipment 3.4 Electronic Equipment & Instruments 3.0 Media 3.0 Life Sciences Tools & Services 3.0 Multiline Retail 2.7 Internet Software & Services 2.5 Diversified Consumer Services 2.1 * Pharmaceuticals 2.0 * Oil, Gas & Consumable Fuels (4.4) * Other, less than 2% each 1.4
* Net of securities sold short. See accompanying notes to financial statements. 37 This Page Intentionally Left Blank STATEMENTS OF ASSETS AND LIABILITIES December 31, 2007
CGM Advisor Hansberger Harris Associates Targeted Equity Fund International Fund Focused Value Fund --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ASSETS Investments at cost $ 706,616,584 $ 171,629,732 $ 161,461,228 Net unrealized appreciation (depreciation) 210,560,225 44,643,239 (89,478) --------------------- --------------------- --------------------- Investments at value(a) 917,176,809 216,272,971 161,371,750 Cash 4,507 6,652 -- Foreign currency at value (identified cost $0, $126,030, $0, $0, $0, $0, $0) -- 126,887 -- Receivable for Fund shares sold 5,179,967 174,272 60,060 Receivable for securities sold 12,612,949 222,290 252,718 Dividends and interest receivable 1,122,244 149,937 69,837 Tax reclaims receivable 3,534 100,323 -- Securities lending income receivable 32,108 23,616 10,720 Other assets -- -- -- --------------------- --------------------- --------------------- TOTAL ASSETS 936,132,118 217,076,948 161,765,085 --------------------- --------------------- --------------------- LIABILITIES Collateral on securities loaned, at value (Note 2) 20,829,727 31,403,828 18,890,517 Securities sold short (proceeds $0, $0, $0, $0, $0, $0, $14,030,602) -- -- -- Payable for securities purchased 16,560,319 681,316 3,993,224 Payable for Fund shares redeemed 617,987 144,723 1,353,248 Management fees payable (Note 4) 515,137 125,532 109,537 Deferred Trustees' fees (Note 4) 857,488 135,214 101,843 Administrative fees payable (Note 4) 73,547 15,863 13,190 Prime Broker expense payable -- -- -- Dividends payable for short sales -- -- -- Other accounts payable and accrued expenses 241,067 161,677 104,513 --------------------- --------------------- --------------------- TOTAL LIABILITIES 39,695,272 32,668,153 24,566,072 --------------------- --------------------- --------------------- NET ASSETS $ 896,436,846 $ 184,408,795 $ 137,199,013 ===================== ===================== ===================== NET ASSETS CONSIST OF: Paid-in capital $ 660,607,048 $ 138,413,647 $ 135,415,565 Overdistributed net investment income (798,914) (1,964,958) (101,844) Accumulated net realized gain (loss) on investments, foreign currency transactions and short sales 26,068,487 3,313,542 1,974,770 Net unrealized appreciation (depreciation) on investments, foreign currency translations and short sales 210,560,225 44,646,564 (89,478) --------------------- --------------------- --------------------- NET ASSETS $ 896,436,846 $ 184,408,795 $ 137,199,013 ===================== ===================== ===================== COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE: Class A shares: Net assets $ 826,866,706 $ 128,224,237 $ 40,869,170 ===================== ===================== ===================== Shares of beneficial interest 63,534,373 5,784,641 4,509,688 ===================== ===================== ===================== Net asset value and redemption price per share $ 13.01 $ 22.17 $ 9.06 ===================== ===================== ===================== Offering price per share (100/[100-maximum sales charge] of net asset value) (Note 1) $ 13.80 $ 23.52 $ 9.61 ===================== ===================== ===================== Class B shares: (redemption price per share is equal to net asset value less any applicable contingent deferred sales charge) (Note 1) Net assets $ 32,296,513 $ 29,770,148 $ 47,194,309 ===================== ===================== ===================== Shares of beneficial interest 2,734,625 1,497,594 5,627,350 ===================== ===================== ===================== Net asset value and offering price per share $ 11.81 $ 19.88 $ 8.39 ===================== ===================== ===================== Class C shares: (redemption price per share is equal to net asset value less any applicable contingent deferred sales charge) (Note 1) Net assets $ 19,753,489 $ 26,414,410 $ 49,135,534 ===================== ===================== ===================== Shares of beneficial interest 1,675,190 1,333,307 5,857,843 ===================== ===================== ===================== Net asset value and offering price per share $ 11.79 $ 19.81 $ 8.39 ===================== ===================== ===================== Class Y shares: Net assets $ 17,520,138 $ -- $ -- ===================== ===================== ===================== Shares of beneficial interest 1,315,535 -- -- ===================== ===================== ===================== Net asset value, offering and redemption price per share $ 13.32 $ -- $ -- ===================== ===================== ===================== (a) Including securities on loan with market values of: $ 20,856,845 $ 30,183,464 $ 18,322,482 ===================== ===================== =====================
* Formerly Westpeak Capital Growth Fund. See accompanying notes to financial statements. 39
Harris Associates Vaughan Nelson Westpeak Large Cap Value Natixis U.S. Diversified Small Cap Value 130/30 Growth Fund Portfolio Fund Fund* --------------------- ------------------------ --------------------- --------------------- --------------------- --------------------- --------------------- $ 218,649,636 $ 628,062,480 $ 178,999,020 $ 58,815,555 25,048,863 104,723,116 12,168,090 1,119,487 --------------------- --------------------- --------------------- --------------------- 243,698,499 732,785,596 191,167,110 59,935,042 -- 27,021 -- 13,506 -- -- -- -- 190,959 134,705 603,077 43,934 -- 4,549,195 599,926 -- 233,867 438,887 119,151 36,759 -- 20,951 -- -- 9,019 71,441 17,743 -- 304,637 -- -- -- --------------------- --------------------- --------------------- --------------------- 244,436,981 738,027,796 192,507,007 60,029,241 --------------------- --------------------- --------------------- --------------------- 16,389,229 135,549,039 39,044,059 -- -- -- -- 12,863,978 3,229,080 7,714,199 1,127,322 -- 283,310 3,288,631 178,486 65,339 149,503 457,894 97,578 7,463 357,178 487,139 140,039 141,206 20,185 50,837 13,033 4,231 -- -- -- 13,301 -- -- -- 19,968 167,570 336,026 105,340 71,636 --------------------- --------------------- --------------------- --------------------- 20,596,055 147,883,765 40,705,857 13,187,122 --------------------- --------------------- --------------------- --------------------- $ 223,840,926 $ 590,144,031 $ 151,801,150 $ 46,842,119 ===================== ===================== ===================== ===================== $ 262,063,397 $ 477,716,070 $ 139,684,366 $ 94,194,846 (340,402) (487,139) (140,040) (141,206) (62,930,932) 8,190,600 88,734 (49,497,632) 25,048,863 104,724,500 12,168,090 2,286,111 --------------------- --------------------- --------------------- --------------------- $ 223,840,926 $ 590,144,031 $ 151,801,150 $ 46,842,119 ===================== ===================== ===================== ===================== $ 172,467,646 $ 407,227,589 $ 103,719,298 $ 40,370,001 ===================== ===================== ===================== ===================== 11,523,980 15,806,068 4,691,044 3,224,027 ===================== ===================== ===================== ===================== $ 14.97 $ 25.76 $ 22.11 $ 12.52 ===================== ===================== ===================== ===================== $ 15.88 $ 27.33 $ 23.46 $ 13.28 ===================== ===================== ===================== ===================== $ 23,916,150 $ 119,028,411 $ 25,075,528 $ 5,899,204 ===================== ===================== ===================== ===================== 1,728,112 5,259,544 1,244,536 554,520 ===================== ===================== ===================== ===================== $ 13.84 $ 22.63 $ 20.15 $ 10.64 ===================== ===================== ===================== ===================== $ 15,616,298 $ 47,238,801 $ 21,765,113 $ 572,914 ===================== ===================== ===================== ===================== 1,130,124 2,085,387 1,079,688 53,934 ===================== ===================== ===================== ===================== $ 13.82 $ 22.65 $ 20.16 $ 10.62 ===================== ===================== ===================== ===================== $ 11,840,832 $ 16,649,230 $ 1,241,211 $ -- ===================== ===================== ===================== ===================== 765,279 603,768 55,923 -- ===================== ===================== ===================== ===================== $ 15.47 $ 27.58 $ 22.20 $ -- ===================== ===================== ===================== ===================== $ 15,469,371 $ 131,450,548 $ 37,866,232 $ -- ===================== ===================== ===================== =====================
40 STATEMENTS OF OPERATIONS For the Year Ended December 31, 2007
Harris Associates CGM Advisor Hansberger Focused Value Targeted Equity Fund International Fund Fund --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- INVESTMENT INCOME Dividends $ 11,839,637 $ 4,153,683 $ 1,689,118 Interest 633,555 108,171 133,977 Securities lending income (Note 2) 316,857 142,499 58,333 Less net foreign taxes withheld (181,133) (350,902) -- --------------------- --------------------- --------------------- 12,608,916 4,053,451 1,881,428 --------------------- --------------------- --------------------- Expenses Management fees (Note 4) 5,402,846 1,441,589 1,732,909 Service fees - Class A (Note 4) 1,796,683 305,801 135,107 Service and distribution fees - Class B (Note 4) 353,570 323,413 661,646 Service and distribution fees - Class C (Note 4) 103,588 255,374 723,380 Trustees' fees and expenses (Note 4) 175,724 33,778 28,133 Administrative fees (Note 4) 408,927 100,153 95,792 Custodian fees and expenses 51,034 123,181 22,891 Transfer agent fees and expenses - Class A (Note 4) 785,369 222,023 102,079 Transfer agent fees and expenses - Class B (Note 4) 39,071 57,956 123,861 Transfer agent fees and expenses - Class C (Note 4) 11,489 46,328 135,009 Transfer agent fees and expenses - Class Y (Note 4) 11,111 -- -- Audit fees 36,359 42,126 33,959 Legal fees 19,902 4,951 3,699 Shareholder reporting expenses 98,958 40,245 59,858 Registration fees 49,222 34,120 25,641 Expense waiver recapture - Class A (Note 4) -- -- -- Expense waiver recapture - Class B (Note 4) -- -- -- Expense waiver recapture - Class C (Note 4) -- -- -- Expense waiver recapture - Class Y (Note 4) -- -- -- Dividend expense on securities sold short -- -- -- Miscellaneous expenses 71,977 21,123 23,289 --------------------- --------------------- --------------------- Total expenses 9,415,830 3,052,161 3,907,253 Less fee reduction and/or expense reimbursement (Note 4) (5,490) (1,190) (978) --------------------- --------------------- --------------------- Net expenses 9,410,340 3,050,971 3,906,275 --------------------- --------------------- --------------------- Net investment income (loss) 3,198,576 1,002,480 (2,024,847) --------------------- --------------------- --------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY TRANSACTIONS AND SHORT SALES Net realized gain (loss) on: Investments 80,201,690 20,268,048 26,572,372* Foreign currency transactions -- (102,405) -- Short sales -- -- -- Payments by affiliates (Note 4) -- -- -- Net change in unrealized appreciation (depreciation) on: Investments 149,502,525 5,253,276 (35,355,327) Foreign currency translations -- 317 -- Short sales -- -- -- --------------------- --------------------- --------------------- Total net realized and unrealized gain (loss) on investments, foreign currency transactions and short sales 229,704,215 25,419,236 (8,782,955) --------------------- --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 232,902,791 $ 26,421,716 $ (10,807,802) ===================== ===================== =====================
Harris Associates Large Cap Value Fund --------------------- --------------------- INVESTMENT INCOME Dividends $ 3,834,035 Interest 324,718 Securities lending income (Note 2) 28,350 Less net foreign taxes withheld -- --------------------- 4,187,103 --------------------- Expenses Management fees (Note 4) 1,774,740 Service fees - Class A (Note 4) 481,059 Service and distribution fees - Class B (Note 4) 339,629 Service and distribution fees - Class C (Note 4) 174,627 Trustees' fees and expenses (Note 4) 75,651 Administrative fees (Note 4) 136,965 Custodian fees and expenses 27,864 Transfer agent fees and expenses - Class A (Note 4) 344,239 Transfer agent fees and expenses - Class B (Note 4) 59,623 Transfer agent fees and expenses - Class C (Note 4) 31,187 Transfer agent fees and expenses - Class Y (Note 4) 8,536 Audit fees 33,626 Legal fees 4,765 Shareholder reporting expenses 67,661 Registration fees 46,271 Expense waiver recapture - Class A (Note 4) 5,520 Expense waiver recapture - Class B (Note 4) 7,469 Expense waiver recapture - Class C (Note 4) 1,507 Expense waiver recapture - Class Y (Note 4) -- Dividend expense on securities sold short -- Miscellaneous expenses 26,296 --------------------- Total expenses 3,647,235 Less fee reduction and/or expense reimbursement (Note 4) (7,002) --------------------- Net expenses 3,640,233 --------------------- Net investment income (loss) 546,870 --------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY TRANSACTIONS AND SHORT SALES Net realized gain (loss) on: Investments 22,651,455 * Foreign currency transactions -- Short sales -- Payments by affiliates (Note 4) -- Net change in unrealized appreciation (depreciation) on: Investments (28,970,313) Foreign currency translations -- Short sales -- --------------------- Total net realized and unrealized gain (loss) on investments, foreign currency transactions and short sales (6,318,858) --------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (5,771,988) =====================
* Amount includes a litigation payment of $427,091 for Harris Associates Focused Value Fund and $304,637 for Harris Associates Large Cap Value Fund. See Note 2. ** Formerly Westpeak Capital Growth Fund. See accompanying notes to financial statements. 41
Natixis Vaughan Nelson Westpeak U.S. Diversified Small Cap Value 130/30 Growth Portfolio Fund Fund** --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- $ 6,344,257 $ 1,710,933 $ 354,223 837,019 245,108 86,955 353,735 81,928 3,036 (20,547) -- -- --------------------- --------------------- --------------------- 7,514,464 2,037,969 444,214 --------------------- --------------------- --------------------- 5,539,020 1,324,569 402,851 1,023,056 240,992 151,561 1,380,162 295,218 79,158 473,124 206,751 7,300 104,237 34,147 32,812 327,564 81,626 28,554 47,464 25,240 18,040 768,643 198,205 117,487 255,618 59,175 18,766 88,830 42,367 1,731 18,109 119 -- 40,926 31,726 41,906 14,925 4,068 4,846 141,782 52,321 23,085 63,364 67,764 34,465 -- -- -- -- -- -- -- -- -- -- 237 -- -- -- 58,557 59,595 17,686 12,228 --------------------- --------------------- --------------------- 10,346,419 2,682,211 1,033,347 (3,833) (116,984) (76,874) --------------------- --------------------- --------------------- 10,342,586 2,565,227 956,473 --------------------- --------------------- --------------------- (2,828,122) (527,258) (512,259) --------------------- --------------------- --------------------- 87,628,640 14,196,089 3,611,532 (7,111) -- -- -- -- (1,566,401) 34,706 -- -- (7,025,776) (6,164,382) (4,717,164) 1,091 -- -- -- -- 1,166,624 --------------------- --------------------- --------------------- 80,631,550 8,031,707 (1,505,409) --------------------- --------------------- --------------------- $ 77,803,428 $ 7,504,449 $ (2,017,668) ===================== ===================== =====================
42 STATEMENTS OF CHANGES IN NET ASSETS
CGM Advisor Targeted Equity Fund -------------------------------------------- Year Ended Year Ended December 31, December 31, 2007 2006 --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ 3,198,576 $ 5,415,878 Net realized gain on investments, foreign currency transactions and short sales 80,201,690 98,076,120 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and short sales 149,502,525 (41,577,124) --------------------- --------------------- Net increase (decrease) in net assets resulting from operations 232,902,791 61,914,874 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A (7,741,811) (4,805,342) Class B (251,226) (344,672) Class C (80,296) (50,730) Class Y (178,444) (117,501) Net realized capital gain Class A (68,451,630) (18,905,325) Class B (3,157,063) (1,296,659) Class C (1,397,920) (261,882) Class Y (1,283,819) (317,675) --------------------- --------------------- Total distributions (82,542,209) (26,099,786) --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) 2,733,857 (55,926,861) --------------------- --------------------- Redemption fees Class A 10,214 3,687 Class B 448 250 Class C 171 46 Class Y 191 64 --------------------- --------------------- 11,024 4,047 --------------------- --------------------- Net increase (decrease) in net assets 153,105,463 (20,107,726) --------------------- --------------------- NET ASSETS Beginning of the year 743,331,383 763,439,109 --------------------- --------------------- End of the year $ 896,436,846 $ 743,331,383 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (798,914) $ 4,251,080 ===================== =====================
Hansberger International Fund -------------------------------------------- Year Ended Year Ended December 31, December 31, 2007 2006 --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ 1,002,480 $ 772,749 Net realized gain on investments, foreign currency transactions and short sales 20,165,643 21,300,725 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and short sales 5,253,593 11,339,832 --------------------- --------------------- Net increase (decrease) in net assets resulting from operations 26,421,716 33,413,306 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A (2,121,366) (1,649,325) Class B (325,097) (308,165) Class C (304,997) (228,856) Class Y -- -- Net realized capital gain Class A (12,588,474) (12,651,380) Class B (3,324,922) (4,129,524) Class C (2,884,783) (2,916,961) Class Y -- -- --------------------- --------------------- Total distributions (21,549,639) (21,884,211) --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) 10,155,626 15,400,963 --------------------- --------------------- Redemption fees Class A 6,284 1,759 Class B 1,563 582 Class C 1,306 378 Class Y -- -- --------------------- --------------------- 9,153 2,719 --------------------- --------------------- Net increase (decrease) in net assets 15,036,856 26,932,777 --------------------- --------------------- NET ASSETS Beginning of the year 169,371,939 142,439,162 --------------------- --------------------- End of the year $ 184,408,795 $ 169,371,939 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (1,964,958) $ (828,914) ===================== =====================
Harris Associates Focused Value Fund -------------------------------------------- Year Ended Year Ended December 31, December 31, 2007 2006 --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- FROM OPERATIONS: Net investment income (loss) $ (2,024,847) $ (1,712,199) Net realized gain on investments, foreign currency transactions and short sales 26,572,372 32,289,793 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and short sales (35,355,327) (3,254,755) --------------------- --------------------- Net increase (decrease) in net assets resulting from operations (10,807,802) 27,322,839 --------------------- --------------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A -- -- Class B -- -- Class C -- -- Class Y -- -- Net realized capital gain Class A (6,965,375) (9,867,493) Class B (8,645,512) (13,053,352) Class C (9,181,053) (14,611,917) Class Y -- -- --------------------- --------------------- Total distributions (24,791,940) (37,532,762) --------------------- --------------------- NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 8) (55,787,929) (63,505,817) --------------------- --------------------- Redemption fees Class A 103 801 Class B 126 1,006 Class C 136 1,149 Class Y -- -- --------------------- --------------------- 365 2,956 --------------------- --------------------- Net increase (decrease) in net assets (91,387,306) (73,712,784) --------------------- --------------------- NET ASSETS Beginning of the year 228,586,319 302,299,103 --------------------- --------------------- End of the year $ 137,199,013 $ 228,586,319 ===================== ===================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME (LOSS) $ (101,844) $ (77,212) ===================== =====================
* Formerly Westpeak Capital Growth Fund. See accompanying notes to financial statements. 43
Harris Associates Large Cap Value Fund Natixis U.S. Diversified Portfolio -------------------------------------------- -------------------------------------------- Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2007 2006 2007 2006 --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- $ 546,870 $ 704,299 $ (2,828,122) $ (459,770) 22,651,455 24,797,461 87,656,235 69,057,546 (28,970,313) 14,208,318 (7,024,685) 9,002,821 --------------------- --------------------- --------------------- --------------------- (5,771,988) 39,710,078 77,803,428 77,600,597 --------------------- --------------------- --------------------- --------------------- (1,054,288) (435,177) -- -- (108,220) (124,953) -- -- (53,175) (46,052) (117,660) (30,568) -- -- -- -- (4,889,025) -- -- -- (1,624,487) -- -- -- (642,678) -- -- -- (217,377) -- --------------------- --------------------- --------------------- --------------------- (1,333,343) (636,750) (7,373,567) -- --------------------- --------------------- --------------------- --------------------- (39,807,186) (50,651,493) (88,754,703) (98,667,360) --------------------- --------------------- --------------------- --------------------- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --------------------- --------------------- --------------------- --------------------- -- -- -- -- --------------------- --------------------- --------------------- --------------------- (46,912,517) (11,578,165) (18,324,842) (21,066,763) --------------------- --------------------- --------------------- --------------------- 270,753,443 282,331,608 608,468,873 629,535,636 --------------------- --------------------- --------------------- --------------------- $ 223,840,926 $ 270,753,443 $ 590,144,031 $ 608,468,873 ===================== ===================== ===================== ===================== $ (340,402) $ 446,071 $ (487,139) $ (404,299) ===================== ===================== ===================== =====================
Vaughan Nelson Small Cap Value Fund Westpeak 130/30 Growth Fund* -------------------------------------------- -------------------------------------------- Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 2007 2006 2007 2006 --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- $ (527,258) $ (767,140) $ (512,259) $ (417,676) 14,196,089 15,201,715 2,045,131 1,359,930 (6,164,382) 5,842,036 (3,550,540) 4,795,603 --------------------- --------------------- --------------------- --------------------- 7,504,449 20,276,611 (2,017,668) 5,737,857 --------------------- --------------------- --------------------- --------------------- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --------------------- --------------------- --------------------- --------------------- -- -- -- -- --------------------- --------------------- --------------------- --------------------- 7,783,917 4,860,769 (7,829,470) (9,528,533) --------------------- --------------------- --------------------- --------------------- 5,305 3,304 -- -- 1,559 1,780 -- -- 1,134 731 -- -- 38 -- -- -- --------------------- --------------------- --------------------- --------------------- 8,036 5,815 -- -- --------------------- --------------------- --------------------- --------------------- 15,296,402 25,143,195 (9,847,138) (3,790,676) --------------------- --------------------- --------------------- --------------------- 136,504,748 111,361,553 56,689,257 60,479,933 --------------------- --------------------- --------------------- --------------------- $ 151,801,150 $ 136,504,748 $ 46,842,119 $ 56,689,257 ===================== ===================== ===================== ===================== $ (140,040) $ (110,178) $ (141,206) $ (112,145) ===================== ===================== ===================== =====================
44 STATEMENT OF CASH FLOWS FOR WESTPEAK 130/30 GROWTH FUND* For the Year Ended December 31, 2007 Increase (Decrease) in Cash Cash Flows From Operating Activities Change in net assets resulting from operations $ (2,017,668) Adjustments to reconcile change in net assets resulting from operations to net cash used in operating activities: Purchase of investment securities (88,155,317) Proceeds from sale of investment securities 83,863,968 Net sales of short-term investment securities 201,404 Purchases to cover securities sold short (12,869,364) Proceeds from securities sold short 25,333,565 Decrease in income receivable 16,662 Increase in payable for accrued expenses 46,803 Decrease in management fee payable (93,717) Net realized gain on investments and short sales (2,027,764) Net unrealized depreciation on investments and short sales 3,550,540 --------------------- NET CASH USED IN OPERATING ACTIVITIES 7,849,112 ===================== Cash Flows From Financing Activities: Proceeds from sale of shares 3,881,425 Payment for shares redeemed (11,717,031) --------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES (7,835,606) ===================== NET INCREASE IN CASH 13,506 ===================== Cash: Cash at beginning of period 0 --------------------- Cash at end of period $ 13,506 ===================== Supplemental disclosure of cash flow information: Non cash financing activities, which typically consist of reinvestment of dividends, were zero. Interest and taxes paid were zero.
* Formerly Westpeak Capital Growth Fund See accompanying notes to financial statements. 45 This Page Intentionally Left Blank FINANCIAL HIGHLIGHTS For a share outstanding throughout each period.
Income (Loss) from Investment Operations: Less Distributions: --------------------------------------- -------------------------------------- Net asset value, Net Dividends Distributions beginning investment Net realized Total from from net from net of income and unrealized investment investment realized Total the period (loss) (b) gain (loss) operations income capital gains distributions ---------- ---------- -------------- ---------- ---------- ------------- ------------- CGM ADVISOR TARGETED EQUITY FUND Class A 12/31/2007 $ 10.70 $ 0.05 $ 3.54 $ 3.59 $ (0.13) $ (1.15) $ (1.28) 12/31/2006 10.22 0.08 0.78 0.86 (0.07) (0.31) (0.38) 12/31/2005 9.05 0.07 1.12 1.19 (0.02) -- (0.02) 12/31/2004 7.94 0.01 1.10 1.11 -- -- -- 12/31/2003 5.56 (0.03) 2.41 2.38 -- -- -- Class B 12/31/2007 9.84 (0.04) 3.24 3.20 (0.08) (1.15) (1.23) 12/31/2006 9.48 0.00(f) 0.74 0.74 (0.07) (0.31) (0.38) 12/31/2005 8.45 0.00(f) 1.04 1.04 (0.01) -- (0.01) 12/31/2004 7.47 (0.04) 1.02 0.98 -- -- -- 12/31/2003 5.28 (0.07) 2.26 2.19 -- -- -- Class C 12/31/2007 9.84 (0.03) 3.22 3.19 (0.09) (1.15) (1.24) 12/31/2006 9.48 0.00(f) 0.74 0.74 (0.07) (0.31) (0.38) 12/31/2005 8.45 0.00(f) 1.04 1.04 (0.01) -- (0.01) 12/31/2004 7.47 (0.04) 1.02 0.98 -- -- -- 12/31/2003 5.27 (0.07) 2.27 2.20 -- -- -- Class Y 12/31/2007 10.93 0.09 3.61 3.70 (0.16) (1.15) (1.31) 12/31/2006 10.42 0.11 0.82 0.93 (0.11) (0.31) (0.42) 12/31/2005 9.23 0.10 1.14 1.24 (0.05) -- (0.05) 12/31/2004 8.07 0.04 1.12 1.16 -- -- -- 12/31/2003 5.63 0.01 2.43 2.44 -- -- -- HANSBERGER INTERNATIONAL FUND Class A 12/31/2007 $ 21.50 $ 0.18 $ 3.29 $ 3.47 $ (0.40) $ (2.40) $ (2.80) 12/31/2006 19.88 0.16 4.51 4.67 (0.35) (2.70) (3.05) 12/31/2005 17.12 0.11 2.65 2.76 -- -- -- 12/31/2004 15.07 0.02 2.03 2.05 -- -- -- 12/31/2003 10.84 (0.04) 4.27 4.23 -- -- -- Class B 12/31/2007 19.51 0.01 2.98 2.99 (0.22) (2.40) (2.62) 12/31/2006 18.27 0.01 4.11 4.12 (0.18) (2.70) (2.88) 12/31/2005 15.85 0.00(f) 2.42 2.42 -- -- -- 12/31/2004 14.06 (0.09) 1.88 1.79 -- -- -- 12/31/2003 10.19 (0.12) 3.99 3.87 -- -- --
Redemption fees (f) ---------- CGM ADVISOR TARGETED EQUITY FUND Class A 12/31/2007 $ 0.00 12/31/2006 0.00 12/31/2005 0.00 12/31/2004 0.00 12/31/2003 -- Class B 12/31/2007 0.00 12/31/2006 0.00 12/31/2005 0.00 12/31/2004 0.00 12/31/2003 -- Class C 12/31/2007 0.00 12/31/2006 0.00 12/31/2005 0.00 12/31/2004 0.00 12/31/2003 -- Class Y 12/31/2007 0.00 12/31/2006 0.00 12/31/2005 0.00 12/31/2004 0.00 12/31/2003 -- HANSBERGER INTERNATIONAL FUND Class A 12/31/2007 $ 0.00 12/31/2006 0.00 12/31/2005 0.00 12/31/2004 0.00 12/31/2003 -- Class B 12/31/2007 0.00 12/31/2006 0.00 12/31/2005 0.00 12/31/2004 0.00 12/31/2003 --
(a)A sales charge for Class A and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year, if applicable, are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)Had certain expenses not been reduced during the period, total return would have been lower. See accompanying notes to financial statements. 47
Ratios to Average Net Assets: --------------------------------- Net asset Net assets, value, Total end of Net Gross Net investment Portfolio end of return the period expenses expenses income (loss) turnover the period (%) (a) (c) (000's) (%) (d) (%) (e) (%) rate (%) ---------- ----------- ----------- --------- --------- -------------- --------- $ 13.01 34.4 $ 826,867 1.17 1.17 0.45 179 10.70 8.5 679,897 1.16 1.16 0.76 171 10.22 13.2 694,121 1.28 1.28 0.78 196 9.05 14.0 689,967 1.42 1.42 0.16 265 7.94 42.8 724,214 1.57 1.57 (0.40) 261 11.81 33.4 32,297 1.92 1.92 (0.34) 179 9.84 7.8 43,032 1.91 1.91 0.02 171 9.48 12.4 53,005 2.03 2.03 0.03 196 8.45 13.1 57,527 2.17 2.17 (0.58) 265 7.47 41.5 56,880 2.32 2.32 (1.14) 261 11.79 33.5 19,753 1.93 1.93 (0.24) 179 9.84 7.7 8,688 1.90 1.90 0.04 171 9.48 12.4 5,133 2.04 2.04 0.03 196 8.45 13.1 3,214 2.17 2.17 (0.58) 265 7.47 41.8 2,647 2.32 2.32 (1.14) 261 13.32 34.8 17,520 0.90 0.90 0.74 179 10.93 9.0 11,714 0.87 0.87 1.05 171 10.42 13.4 11,181 1.07 1.07 0.99 196 9.23 14.4 9,145 1.08 1.08 0.51 265 8.07 43.3 7,773 1.03 1.03 0.16 261 $ 22.17 16.4 $ 128,224 1.45 1.45 0.79 47 21.50 24.1 112,814 1.49 1.49 0.75 49 19.88 16.1 89,663 1.81 1.81 0.62 45 17.12 13.6 73,707 1.91 1.92 0.14 81 15.07 39.0 59,762 2.30 2.32 (0.34) 92 19.88 15.6 29,770 2.20 2.20 0.06 47 19.51 23.2 33,016 2.25 2.25 0.03 49 18.27 15.3 33,388 2.55 2.55 (0.02) 45 15.85 12.7 45,213 2.66 2.67 (0.60) 81 14.06 38.0 60,296 3.05 3.07 (1.09) 92
(d)The investment adviser has agreed to reimburse a portion of the Fund's expenses and/or reduce its management fee during the period. Without this reimbursement/fee reduction, if applicable, expenses would have been higher. (e)Represents the total expenses prior to advisory fee reduction and/or reimbursement of a portion of the Fund's expenses, if applicable. (f)Amount rounds to less than $0.01 per share, if applicable. 48 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (Loss) from Investment Operations: ------------------------------------------ Net asset value, Net beginning investment Net realized Total from of income and unrealized investment the period (loss) (b) gain (loss) operations ---------- ---------- -------------- ---------- HANSBERGER INTERNATIONAL FUND (continued) Class C 12/31/2007 $ 19.48 $ 0.01 $ 2.97 $ 2.98 12/31/2006 18.28 0.00(f) 4.11 4.11 12/31/2005 15.86 (0.02) 2.44 2.42 12/31/2004 14.06 (0.09) 1.89 1.80 12/31/2003 10.19 (0.12) 3.99 3.87 HARRIS ASSOCIATES FOCUSED VALUE FUND Class A 12/31/2007 $ 11.56 $ (0.06) $ (0.68)(h) $ (0.74) 12/31/2006 12.08 (0.02) 1.50 1.48 12/31/2005 13.06 (0.00)(f) 0.76 0.76 12/31/2004 11.79 (0.02) 1.29 1.27 12/31/2003 9.24 (0.03) 2.58 2.55 Class B 12/31/2007 10.92 (0.14) (0.63)(h) (0.77) 12/31/2006 11.59 (0.10) 1.43 1.33 12/31/2005 12.69 (0.10) 0.74 0.64 12/31/2004 11.55 (0.11) 1.25 1.14 12/31/2003 9.12 (0.10) 2.53 2.43 Class C 12/31/2007 10.92 (0.14) (0.63)(h) (0.77) 12/31/2006 11.59 (0.10) 1.43 1.33 12/31/2005 12.69 (0.10) 0.74 0.64 12/31/2004 11.55 (0.11) 1.25 1.14 12/31/2003 9.12 (0.10) 2.53 2.43 HARRIS ASSOCIATES LARGE CAP VALUE FUND Class A 12/31/2007 $ 15.49 $ 0.05 $ (0.48)(h) $ (0.43) 12/31/2006 13.33 0.06 2.13 2.19 12/31/2005 13.37 0.05 (0.08) (0.03) 12/31/2004 12.25 0.04 1.08 1.12 12/31/2003 9.42 0.01 2.82 2.83 Class B 12/31/2007 14.39 (0.06) (0.45)(h) (0.51) 12/31/2006 12.48 (0.04) 1.98 1.94 12/31/2005 12.62 (0.04) (0.09) (0.13) 12/31/2004 11.64 (0.05) 1.03 0.98 12/31/2003 9.02 (0.07) 2.69 2.62
Less Distributions: -------------------------------------- Dividends Distributions from net from net investment realized Total Redemption income capital gains distributions fees (f) ---------- ------------- ------------- ---------- HANSBERGER INTERNATIONAL FUND (continued) Class C 12/31/2007 $ (0.25) $ (2.40) $ (2.65) $ 0.00 12/31/2006 (0.21) (2.70) (2.91) 0.00 12/31/2005 -- -- -- 0.00 12/31/2004 -- -- -- 0.00 12/31/2003 -- -- -- -- HARRIS ASSOCIATES FOCUSED VALUE FUND Class A 12/31/2007 $ -- $ (1.76) $ (1.76) $ 0.00 12/31/2006 -- (2.00) (2.00) 0.00 12/31/2005 -- (1.74) (1.74) 0.00 12/31/2004 -- -- -- 0.00 12/31/2003 -- -- -- -- Class B 12/31/2007 -- (1.76) (1.76) 0.00 12/31/2006 -- (2.00) (2.00) 0.00 12/31/2005 -- (1.74) (1.74) 0.00 12/31/2004 -- -- -- 0.00 12/31/2003 -- -- -- -- Class C 12/31/2007 -- (1.76) (1.76) 0.00 12/31/2006 -- (2.00) (2.00) 0.00 12/31/2005 -- (1.74) (1.74) 0.00 12/31/2004 -- -- -- 0.00 12/31/2003 -- -- -- -- HARRIS ASSOCIATES LARGE CAP VALUE FUND Class A 12/31/2007 $ (0.09) $ -- $ (0.09) $ -- 12/31/2006 (0.03) -- (0.03) -- 12/31/2005 (0.01) -- (0.01) -- 12/31/2004 -- -- -- -- 12/31/2003 -- -- -- -- Class B 12/31/2007 (0.04) -- (0.04) -- 12/31/2006 (0.03) -- (0.03) -- 12/31/2005 (0.01) -- (0.01) -- 12/31/2004 -- -- -- -- 12/31/2003 -- -- -- --
(a)A sales charge for Class A and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year, if applicable, are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)The investment adviser has agreed to reimburse a portion of the Fund's expenses and/or reduce its management fee during the period. Without this reimbursement/fee reduction, if applicable, expenses would have been higher. (d)Had certain expenses not been reduced during the period, if applicable, total return would have been lower. See accompanying notes to financial statements. 49
Ratios to Average Net Assets: ------------------------------------------ Net assets, Net asset Total end of Net Gross Net investment Portfolio value, end return the period expenses expenses income (loss) turnover of the period (%) (a) (d) (000's) (%) (c) (%) (g) (%) rate (%) ------------- ----------- ----------- --------- --------- -------------- --------- $ 19.81 15.5 $ 26,414 2.20 2.20 0.04 47 19.48 23.1 23,541 2.25 2.25 0.01 49 18.28 15.3 19,388 2.56 2.56 (0.11) 45 15.86 12.8 17,046 2.66 2.67 (0.63) 81 14.06 38.0 12,557 3.05 3.07 (1.09) 92 $ 9.06 (6.8) $ 40,869 1.49 1.49 (0.51) 51 11.56 12.7 62,603 1.51 1.51 (0.12) 36 12.08 5.7 82,298 1.68 1.68 (0.04) 39 13.06 10.8 108,042 1.70 1.70 (0.15) 26 11.79 27.6 95,957 1.70 1.84 (0.28) 30 8.39 (7.4) 47,194 2.24 2.24 (1.26) 51 10.92 11.9 78,950 2.26 2.26 (0.87) 36 11.59 5.0 97,256 2.43 2.43 (0.80) 39 12.69 9.9 110,275 2.45 2.45 (0.90) 26 11.55 26.6 107,017 2.45 2.59 (1.03) 30 8.39 (7.4) 49,136 2.24 2.24 (1.26) 51 10.92 11.9 87,033 2.27 2.27 (0.88) 36 11.59 5.0 122,745 2.43 2.43 (0.79) 39 12.69 9.9 144,780 2.45 2.45 (0.90) 26 11.55 26.6 124,427 2.45 2.59 (1.03) 30 $ 14.97 (2.9) $ 172,468 1.28(i)(j) 1.28(i) 0.35 30 15.49 16.5 195,714 1.30 1.30 0.44 23 13.33 (0.2) 188,763 1.30 1.46 0.40 39 13.37 9.1 222,434 1.30 1.49 0.30 27 12.25 30.0 215,259 1.45 1.62 0.07 30(e) 13.84 (3.7) 23,916 2.04(i)(j) 2.04 (i) (0.44) 30 14.39 15.6 42,894 2.05 2.07 (0.33) 23 12.48 (1.0) 59,035 2.05 2.21 (0.35) 39 12.62 8.4 79,949 2.05 2.24 (0.46) 27 11.64 29.1 91,085 2.20 2.37 (0.69) 30(e)
(e)Portfolio turnover excludes the impact of assets resulting from a merger with another fund. (f)Amount rounds to less than $0.01 per share, if applicable. (g)Represents the total expenses prior to advisory fee reduction and/or reimbursement of a portion of the Fund's expenses, if applicable. (h)Includes a litigation payment of $0.02 per share. See Note 2. (i)Includes expense recapture of 0.00%, and 0.02% for Class A and B, respectively. (j)Effect of voluntary waiver of expenses by adviser was less than 0.005%. 50 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (Loss) from Investment Operations: --------------------------------------- ----------- Net asset value, Net Dividends beginning investment Net realized Total from from net of income and unrealized investment investment the period (loss) (b) gain (loss) operations income ---------- ---------- -------------- ---------- ---------- HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued) Class C 12/31/2007 $ 14.37 $ (0.06) $ (0.45)(j) $ (0.51) $ (0.04) 12/31/2006 12.46 (0.04) 1.98 1.94 (0.03) 12/31/2005 12.60 (0.04) (0.09) (0.13) (0.01) 12/31/2004 11.63 (0.05) 1.02 0.97 -- 12/31/2003 9.01 (0.07) 2.69 2.62 -- Class Y 12/31/2007 16.01 0.12 (0.51)(j) (0.39) (0.15) 12/31/2006 13.72 0.12 2.20 2.32 (0.03) 12/31/2005 13.74 0.09 (0.10) (0.01) (0.01) 12/31/2004 12.54 0.07 1.13 1.20 -- 12/31/2003 9.59 0.06 2.89 2.95 -- NATIXIS U.S. DIVERSIFIED PORTFOLIO Class A 12/31/2007 $ 22.94 $ (0.06) $ 3.19 $ 3.13 $ -- 12/31/2006 20.17 0.04 2.73 2.77 -- 12/31/2005 18.75 (0.11) 1.53 1.42 -- 12/31/2004 16.61 (0.12) 2.26 2.14 -- 12/31/2003 12.43 (0.13) 4.31 4.18 -- Class B 12/31/2007 20.33 (0.22) 2.83 2.61 -- 12/31/2006 18.01 (0.11) 2.43 2.32 -- 12/31/2005 16.87 (0.22) 1.36 1.14 -- 12/31/2004 15.06 (0.23) 2.04 1.81 -- 12/31/2003 11.35 (0.22) 3.93 3.71 -- Class C 12/31/2007 20.36 (0.22) 2.82 2.60 -- 12/31/2006 18.03 (0.11) 2.44 2.33 -- 12/31/2005 16.89 (0.22) 1.36 1.14 -- 12/31/2004 15.08 (0.23) 2.04 1.81 -- 12/31/2003 11.37 (0.22) 3.93 3.71 -- Class Y 12/31/2007 24.45 0.03 3.41 3.44 -- 12/31/2006 21.41 0.14 2.90 3.04 -- 12/31/2005 19.82 (0.03) 1.62 1.59 -- 12/31/2004 17.46 (0.05) 2.41 2.36 -- 12/31/2003 12.98 (0.04) 4.52 4.48 --
Less Distributions: ------------------------------- Distributions from net realized Total capital gains distributions (f) ------------- ----------------- HARRIS ASSOCIATES LARGE CAP VALUE FUND (continued) Class C 12/31/2007 $ -- $ (0.04) 12/31/2006 -- (0.03) 12/31/2005 -- (0.01) 12/31/2004 -- -- 12/31/2003 -- -- Class Y 12/31/2007 -- (0.15) 12/31/2006 -- (0.03) 12/31/2005 -- (0.01) 12/31/2004 -- -- 12/31/2003 -- -- NATIXIS U.S. DIVERSIFIED PORTFOLIO Class A 12/31/2007 $ (0.31) $ (0.31) 12/31/2006 -- -- 12/31/2005 -- -- 12/31/2004 -- -- 12/31/2003 -- -- Class B 12/31/2007 (0.31) (0.31) 12/31/2006 -- -- 12/31/2005 -- -- 12/31/2004 -- -- 12/31/2003 -- -- Class C 12/31/2007 (0.31) (0.31) 12/31/2006 -- -- 12/31/2005 -- -- 12/31/2004 -- -- 12/31/2003 -- -- Class Y 12/31/2007 (0.31) (0.31) 12/31/2006 -- -- 12/31/2005 -- -- 12/31/2004 -- -- 12/31/2003 -- --
(a)A sales charge for Class A and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year, if applicable, are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)The investment adviser has agreed to reimburse a portion of the Fund's expenses and/or reduce its management fee during the period. Without this reimbursement/fee reduction, if applicable, expenses would have been higher. (d)Had certain expenses not been reduced during the period, if applicable, total return would have been lower. See accompanying notes to financial statements. 51 G
Ratios to Average Net Assets: ------------------------------------------ Net assets, Net asset Total end of Net Gross Net investment Portfolio value, end return the period expenses expenses income (loss) turnover of the period (%) (a) (d) (000's) (%) (c) (%) (f) (%) rate (%) ------------- ----------- ----------- --------- --------- -------------- --------- $ 13.82 (3.7) $ 15,616 2.04(i)(h) 2.04(h) (0.41) 30 14.37 15.6 18,089 2.05 2.06 (0.32) 23 12.46 (1.0) 20,308 2.05 2.21 (0.35) 39 12.60 8.3 26,392 2.05 2.24 (0.42) 27 11.63 29.1 15,553 2.20 2.37 (0.69) 30(e) 15.47 (2.6) 11,840 0.91(i) 0.91 0.72 30 16.01 17.0 14,057 0.91(g) 0.91(g) 0.82 23 13.72 (0.0) 14,226 1.05 1.09 0.65 39 13.74 9.6 18,027 0.99 0.99 0.58 27 12.54 30.8 26,545 1.01 1.01 0.51 30(e) $ 25.76 13.7 $ 407,228 1.47 1.47 (0.24) 82 22.94 13.7 393,430 1.46 1.46 0.17 83 20.17 7.6 386,084 1.73 1.73 (0.57) 97 18.75 12.9 392,726 1.87 1.87 (0.71) 104 16.61 33.6 354,755 1.99 1.99 (0.94) 102 22.63 12.8 119,028 2.21 2.21 (1.00) 82 20.33 12.9 147,819 2.22 2.22 (0.60) 83 18.01 6.8 174,745 2.48 2.48 (1.32) 97 16.87 12.0 223,349 2.62 2.62 (1.50) 104 15.06 32.7 272,533 2.74 2.74 (1.69) 102 22.65 12.8 47,239 2.22 2.22 (0.99) 82 20.36 12.9 46,064 2.22 2.22 (0.59) 83 18.03 6.8 48,262 2.48 2.48 (1.32) 97 16.89 12.0 58,883 2.62 2.62 (1.48) 104 15.08 32.6 60,783 2.74 2.74 (1.69) 102 27.58 14.0 16,649 1.12 1.12 0.10 82 24.45 14.2 21,155 1.03 1.03 0.60 83 21.41 8.0 20,445 1.32 1.32 (0.16) 97 19.82 13.5 25,060 1.33 1.33 (0.27) 104 17.46 34.5 47,485 1.34 1.34 (0.30) 102
(e)Portfolio turnover excludes the impact of assets resulting from a merger with another fund. (f)Represents total expenses prior to advisory fee reduction and/or reimbursement of a portion of the Fund's expenses, if applicable. (g)Includes expense recapture of 0.04%. (h)Includes expense recapture of 0.01%. (i)Effect of voluntary waiver of expenses by adviser was less than 0.005%. (j)Includes a litigation payment of $0.02 per share. See Note 2. 52 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (Loss) from Investment Operations: ----------------------------------------- Net asset value, Net beginning investment Net realized Total from of income and unrealized investment Redemption the period (loss) (b) gain (loss) operations fees (c) ---------- ---------- -------------- ---------- ---------- VAUGHAN NELSON SMALL CAP VALUE FUND Class A 12/31/2007 $ 20.90 $ (0.02) $ 1.23 $ 1.21 $ 0.00 12/31/2006 17.69 (0.05) 3.26 3.21 0.00 12/31/2005 16.07 (0.08) 1.70 1.62 0.00 12/31/2004 13.94 (0.13) 2.26 2.13 0.00 12/31/2003 10.05 (0.19) 4.08 3.89 -- Class B 12/31/2007 19.19 (0.17) 1.13 0.96 0.00 12/31/2006 16.36 (0.20) 3.03 2.83 0.00 12/31/2005 14.97 (0.19) 1.58 1.39 0.00 12/31/2004 13.08 (0.22) 2.11 1.89 0.00 12/31/2003 9.51 (0.26) 3.83 3.57 -- Class C 12/31/2007 19.19 (0.17) 1.14 0.97 0.00 12/31/2006 16.37 (0.19) 3.01 2.82 0.00 12/31/2005 14.98 (0.19) 1.58 1.39 0.00 12/31/2004 13.09 (0.22) 2.11 1.89 0.00 12/31/2003 9.51 (0.26) 3.84 3.58 -- Class Y 12/31/2007 20.91 0.04 1.25 1.29 0.00 12/31/2006(d) 19.02 0.02 1.87 1.89 --
(a)A sales charge for Class A and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year, if applicable, are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)Amount rounds to less than $0.01 per share, if applicable. (d)From commencement of Class operations on August 31, 2006 through December 31, 2006. See accompanying notes to financial statements. 53
Ratios to Average Net Assets: ----------------------------------------- Net assets, Net asset Total end of Net Gross Net investment Portfolio value, end return the period expenses expenses income (loss) turnover of the period (%) (a) (f) (000's) (%) (e) (h) (%) (g) (h) (%) (h) rate (%) ------------- ----------- ----------- ----------- ----------- -------------- --------- $ 22.11 5.8 $ 103,719 1.49 1.57 (0.11) 78 20.90 18.1 85,285 1.59 1.59 (0.28) 88 17.69 10.1 58,963 1.92 1.92 (0.47) 80 16.07 15.3 45,138 2.01 2.01 (0.89) 172 13.94 38.7 45,442 2.33 2.33 (1.69) 156 20.15 5.1 25,076 2.24 2.31 (0.84) 78 19.19 17.2 32,606 2.37 2.37 (1.10) 88 16.36 9.3 38,732 2.66 2.66 (1.24) 80 14.97 14.5 54,652 2.76 2.76 (1.65) 172 13.08 37.5 55,662 3.08 3.08 (2.44) 156 20.16 5.1 21,765 2.24 2.32 (0.85) 78 19.19 17.2 18,186 2.35 2.35 (1.04) 88 16.37 9.3 13,667 2.67 2.67 (1.23) 80 14.98 14.4 13,549 2.76 2.76 (1.63) 172 13.09 37.6 12,042 3.08 3.08 (2.44) 156 22.20 6.1 1,241 1.19(i) 1.19(i) 0.17 78 20.91 9.9 427 1.35 1.90 0.35 88
(e)The investment adviser has agreed to reimburse a portion of the Fund's expenses and/or reduce its management fee during the period. Without this reimbursement/fee reduction, if applicable, expenses would have been higher. (f)Had certain expenses not been reduced during the period, total return would have been lower. (g)Represents total expenses prior to advisory fee reduction and/or reimbursement of a portion of the Fund's expenses, if applicable. (h)Computed on an annualized basis for periods less than one year, if applicable. (i)Includes expense recapture of 0.04%. 54 FINANCIAL HIGHLIGHTS (continued) For a share outstanding throughout each period.
Income (Loss) from Investment Operations: ---------------------------------------- Net asset value, Net Net assets, beginning investment Net realized Total from Net asset Total end of of income and unrealized investment value, end return the period the period (loss) (b) gain (loss) operations of the period (%) (a) (d) (000's) ---------- ---------- -------------- ---------- ------------- ----------- ----------- WESTPEAK 130/30 GROWTH FUND* Class A 12/31/2007 $ 13.09 $ (0.11) $ (0.46) $ (0.57) $ 12.52 (4.4) $ 40,370 12/31/2006 11.81 (0.07) 1.35 1.28 13.09 10.8 47,332 12/31/2005 11.43 (0.10) 0.48 0.38 11.81 3.3 49,680 12/31/2004 10.87 (0.02)(g) 0.58 0.56 11.43 5.2 57,420 12/31/2003 8.58 (0.08) 2.37 2.29 10.87 26.7 63,380 Class B 12/31/2007 11.20 (0.18) (0.38) (0.56) 10.64 (5.0) 5,899 12/31/2006 10.19 (0.14) 1.15 1.01 11.20 9.9 8,599 12/31/2005 9.94 (0.16) 0.41 0.25 10.19 2.5 9,864 12/31/2004 9.52 (0.09)(g) 0.51 0.42 9.94 4.4 12,916 12/31/2003 7.56 (0.13) 2.09 1.96 9.52 25.9 16,485 Class C 12/31/2007 11.18 (0.18) (0.38) (0.56) 10.62 (5.0) 573 12/31/2006 10.17 (0.14) 1.15 1.01 11.18 9.9 758 12/31/2005 9.92 (0.16) 0.41 0.25 10.17 2.5 936 12/31/2004 9.50 (0.09)(g) 0.51 0.42 9.92 4.4 1,013 12/31/2003 7.56 (0.13) 2.07 1.94 9.50 25.7 1,174
* Formerly Westpeak Capital Growth Fund. (a)A sales charge for Class A and Class C (prior to February 1, 2004) shares and a contingent deferred sales charge for Class B and Class C shares are not reflected in total return calculations. Periods less than one year, if applicable, are not annualized. (b)Per share net investment income (loss) has been calculated using the average shares outstanding during the period. (c)The investment adviser has agreed to reimburse a portion of the Fund's expenses and/or reduce its management fee during the period. Without this reimbursement/fee reduction, if applicable, expenses would have been higher. See accompanying notes to financial statements. 55
Ratios to Average Net Assets: --------------------------------------------------------------------------------------- Net expenses Gross expenses Net expenses Gross expenses (including (including (excluding (excluding dividend dividend dividend dividend expense for expense for expense for expense for Net investment Portfolio securities sold securities sold securities sold securities sold income (loss) turnover short) (%) (c) (f) short) (%) (e) (f) short) (%) (c) (f) short) (%) (e) (f) (%) (f) rate (%) ------------------ ------------------ ------------------ ------------------ -------------- --------- 1.56 1.69 1.45 1.58 (0.84) 143 1.61 1.62 -- -- (0.59) 126 1.88 1.88 -- -- (0.84) 132 1.89 1.89 -- -- (0.18)(g) 121 1.93 1.93 -- -- (0.85) 107 2.31 2.43 2.21 2.33 (1.59) 143 2.36 2.38 -- -- (1.35) 126 2.63 2.63 -- -- (1.59) 132 2.64 2.64 -- -- (0.97)(g) 121 2.68 2.68 -- -- (1.60) 107 2.31 2.43 2.20 2.33 (1.59) 143 2.36 2.38 -- -- (1.35) 126 2.63 2.63 -- -- (1.59) 132 2.64 2.64 -- -- (0.94)(g) 121 2.68 2.68 -- -- (1.60) 107
(d)Had certain expenses not been reduced during the period, total return would have been lower. (e)Represents total expenses prior to advisory fee reduction and/or reimbursement of a portion of the Fund's expenses, if applicable. (f)Computed on an annualized basis for periods less than one year, if applicable. (g)Includes special one-time distribution from Microsoft Corp. Without this distribution, net investment loss per share would have been $(0.08), $(0.14) and $(0.14) for Class A, Class B and Class C shares, respectively, and the ratio of net investment loss to average net assets would have been (0.76)%, (1.52)% and (1.51)% for Class A, Class B and Class C shares, respectively. 56 NOTES TO FINANCIAL STATEMENTS December 31, 2007 1. Organization. Natixis Funds Trust I, Natixis Funds Trust II, and Natixis Funds Trust III (the "Trusts" and each a "Trust") are each organized as a Massachusetts business trust. Each Trust is registered under the Investment Company Act of 1940, as amended ("1940 Act"), as an open-end management investment company. Each Declaration of Trust permits the Board of Trustees to authorize the issuance of an unlimited number of shares of the Trust in multiple series. Information presented in these financial statements pertains to certain equity funds of the Trusts; the financial statements for the other funds of the Trusts are presented in separate reports. The following funds (individually, a "Fund" and collectively, the "Funds") are included in this report: Natixis Funds Trust I: CGM Advisor Targeted Equity Fund (the "Targeted Equity Fund") Hansberger International Fund (the "International Fund") Natixis U.S. Diversified Portfolio (the "U.S. Diversified Portfolio") Vaughan Nelson Small Cap Value Fund (the "Small Cap Value Fund") Westpeak 130/30 Growth Fund (formerly Westpeak Capital Growth Fund) (the "130/30 Growth Fund") Natixis Funds Trust II: Harris Associates Large Cap Value Fund (the "Large Cap Value Fund") Natixis Funds Trust III: Harris Associates Focused Value Fund (the "Focused Value Fund") Each Fund offers Class A and Class C shares. Targeted Equity Fund, Small Cap Value Fund, Large Cap Value Fund and U.S. Diversified Portfolio also offer Class Y shares. On June 1, 2007, the Board of Trustees of the Natixis Funds approved the termination of offering of Class B shares. Effective July 30, 2007, no new accounts may be opened in Class B shares. Effective October 12, 2007, no additional investments may be made in Class B shares. Existing Class B shareholders may continue to reinvest dividends into Class B shares and exchange their Class B shares for Class B shares of other Natixis Funds subject to existing exchange privileges as described in the Prospectus. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class B shares do not pay a front-end sales charge, but pay higher Rule 12b-1 fees than Class A shares for eight years (at which point they automatically convert to Class A shares), and are subject to a contingent deferred sales charge ("CDSC") if those shares are redeemed within six years of purchase. Class C shares do not pay a front-end sales charge, do not convert to any other class of shares and pay higher Rule 12b-1 fees than Class A shares and may be subject to a CDSC of 1.00% if those shares are redeemed within one year. Class Y shares do not pay a front-end sales charge, a CDSC or Rule 12b-1 fees. They are generally intended for institutional investors with a minimum initial investment of $100,000, though some categories of investors are exempted from the minimum investment amount as outlined in the Funds' prospectus. Prior to March 16, 2007, the minimum initial investment for Class Y shares was $1,000,000. Most expenses of the Trusts can be directly attributed to a fund. Expenses which cannot be directly attributed to a fund are generally apportioned based on the relative net assets of each of the funds in the Trusts. Expenses of a fund are borne pro rata by the holders of each class of shares, except that each class bears expenses unique to that class (including the Rule 12b-1 service and distribution fees and transfer agent fees applicable to such class). In addition, each class votes as a class only with respect to its own Rule 12b-1 Plan. Shares of each class would receive their pro rata share of the net assets of a fund if the fund were liquidated. The Trustees approve separate dividends from net investment income on each class of shares. 2. Significant Accounting Policies. The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements. The Funds' financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. a. Security Valuation. Equity securities, including closed-end investment companies and exchange-traded funds, for which market quotations are readily available are valued at market value, as reported by pricing services recommended by the investment adviser and the subadvisers and approved by the Board of Trustees. Such pricing services generally use the security's last sale price on the exchange or market where primarily traded or, if there is no reported sale during the day, the closing bid price. Securities traded on the NASDAQ Global Select Market, NASDAQ Global Market and NASDAQ Capital Markets are valued at the NASDAQ Official Closing Price ("NOCP"), or if lacking a NOCP, at the most recent bid quotation on the applicable NASDAQ Market. Debt securities (other than short-term obligations purchased with an original or remaining maturity of sixty days or less) are generally valued on the basis of evaluated bids furnished to the Funds by a pricing service recommended by the investment adviser and the subadvisers and approved by the Board of Trustees, which service determines valuations for normal, institutional-size trading units of such securities using market information, transactions for comparable securities and various relationships between securities which are generally recognized by institutional traders. Broker-dealer bid quotations may also be used to value debt and equity securities where a pricing service does not price a security or where a pricing service does not provide a reliable price for the security. In instances where broker-dealer bid quotations are not available, certain securities held by the Funds may be valued on the basis of a price provided by a principal market maker. Short-term obligations purchased with an original or remaining maturity of sixty days or less are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Funds' adviser or subadvisers using consistently applied procedures under the general supervision of the Board of Trustees. As of December 31, 2007, approximately 77% of the market value of the investments for the Hansberger International Fund was fair valued pursuant to procedures approved by the Board of Trustees. Investments in other open-end investment companies are valued at their net asset value each day. 57 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 Certain Funds may hold securities traded in foreign markets. Foreign securities are valued at the market price in the foreign market. However, if events occurring after the close of the foreign market (but before the close of regular trading on the New York Stock Exchange) are believed to materially affect the value of those securities, such securities are fair valued pursuant to procedures approved by the Board of Trustees. When fair valuing securities, the Funds may, among other things, use modeling tools or other processes that may take into account factors such as securities market activity and/or significant events that occur after the close of the foreign market and before the Funds calculate their net asset values. b. Security Transactions and Related Investment Income. Security transactions are accounted for on trade date. Dividend income is recorded on ex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified, and interest income is recorded on an accrual basis. Interest income is increased by the accretion of discount and decreased by the amortization of premium. Investment income is recorded net of foreign taxes withheld when applicable. In determining net gain or loss on securities sold, the cost of securities has been determined on an identified cost basis. Investment income, non-class specific expenses and realized and unrealized gains and losses are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. c. Foreign Currency Translation. The books and records of the Funds are maintained in U.S. dollars. The value of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars are translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the period. Purchases and sales of investment securities, income and expenses are translated on the respective dates of such transactions. Since the values of investment securities are presented at the foreign exchange rates prevailing at the end of the period, it is not practical to isolate that portion of the results of operations arising from changes in exchange rates from fluctuations arising from changes in market prices of the investment securities. Such changes are included with the net realized and unrealized gain or loss on investments. Net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds' books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities, other than investment securities, at the end of the fiscal period, resulting from changes in exchange rates. Each Fund may use foreign currency exchange contracts to facilitate transactions in foreign-denominated investments. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. Each Fund may purchase investments of foreign issuers. Investing in securities of foreign issuers involves special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include revaluation of currencies and the risk of appropriation. Moreover, the markets for securities of many foreign issuers may be less liquid and the price of such securities may be more volatile than those of comparable U.S. companies and the U.S. government. d. Forward Foreign Currency Contracts. The International Fund and the U.S. Diversified Portfolio may enter into forward foreign currency contracts. Contracts to buy generally are used to acquire exposure to foreign currencies, while contracts to sell generally are used to hedge a Fund's investments against currency fluctuation. Also, a contract to buy or sell can offset a previous contract. These contracts involve market risk in excess of the unrealized gain or loss reflected in the Funds' Statements of Assets and Liabilities. The U.S. dollar value of the currencies a Fund has committed to buy or sell represents the aggregate exposure to each currency a Fund has acquired or hedged through currency contracts outstanding at period end. All contracts are "marked-to-market" daily at the applicable exchange rates and any gains or losses are recorded for financial statement purposes as unrealized until settlement date. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At December 31, 2007, there were no open forward currency contracts. e. Short Sales. The 130/30 Growth Fund may enter into short sales transactions, in which, the Fund sells a security it does not own at the current market price and delivers to the buyer a security that the Fund has borrowed in anticipation of a decline in the market value of the security. To complete, or close out, the short sale transaction, the Fund buys the same security in the market and returns it to the lender. Securities sold short represent a liability of the Fund to acquire securities at prevailing market prices in order to return the borrowed security to the lender. Liabilities for securities sold short are reported at market value in accordance with the Fund's security valuation policies. The Fund will realize a gain on a short position when the market price of the security goes down, after the date of the short sale, and it replaces the borrowed security at the lower market price. Conversely, if the market price of the security goes up after the date of the short sale, the Fund will realize a loss on the date on which it replaces the borrowed security at the higher market price. Because losses arise from an increase in the market price of the security sold short, the amount of loss realized by the Fund is theoretically unlimited. The Fund is also required to repay the lender of the security any dividends that accrue on the security during the period of the loan and will also bear other costs, such as charges for the prime brokerage account, in connection with short positions. These costs are reported as expenses in the Statement of Operations. Until the Fund replaces the borrowed security, the Fund is required to maintain, in a segregated account at the Fund's custodian bank, cash or securities at least equal to 300% of the value of the Fund's liabilities for securities sold short. The securities held as collateral are assets of the Fund and are part of the Portfolio of Investments. 58 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 The risks associated with short sale transactions include (but are not limited to) the Fund not always being able to borrow a security it wants to sell short and the Fund having to replace the borrowed security, at a time when the market value of the security has gone up, in order to cover a short position. f. Federal and Foreign Income Taxes. The Trusts treat each Fund as a separate entity for federal income tax purposes. Each Fund intends to meet the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement 109 ("FIN 48") was issued and became effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management has implemented FIN 48 and has performed an analysis of the Funds' tax positions taken or that will be taken on federal and state tax returns that remain subject to examinations (tax years ended December 31, 2004 - 2007) in connection with the adoption of FIN 48 and has concluded that no provision for income tax is required. Accordingly, there is no impact on the Funds' net assets at December 31, 2007 or results of operations for the year then ended. Additionally, Fund Management is not aware of any events that are reasonably possible to occur in the next twelve months that would result in the amounts of any unrecognized tax benefits significantly increasing or decreasing for the Funds. A Fund may be subject to foreign taxes on income and gains on investments that are accrued based upon the Funds' understanding of the tax rules and regulations that exist in the countries in which the Fund invests. Foreign governments may also impose taxes or other payments on investments with respect to foreign securities. Such taxes are accrued as applicable. g. Dividends and Distributions to Shareholders. Dividends and distributions are recorded on ex-dividend date. The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments for book and tax purposes of items such as net operating losses, foreign currency transactions and gains realized from passive foreign investment companies ("PFICs"). Permanent book and tax basis differences relating to shareholder distributions, net investment income, distributions from Real Estate Investment Trusts ("REITs") and net realized gains will result in reclassifications to capital accounts. Temporary differences between book and tax distributable earnings are primarily due to deferred Trustees' fees, capital loss carryforwards, post October losses, wash sales, distributions from REITs and gains realized from passive foreign investment companies. Distributions from net investment income and short-term capital gains are considered to be ordinary income for tax purposes. The tax characterization of distributions is determined on an annual basis. The tax character of distributions paid to shareholders during the year ended December 31, 2007 and December 31, 2006 was as follows:
2007 Distributions Paid From: - ------------------------------------- Ordinary Long-Term Fund Income Capital Gains Total ---- ------ ------------- ----- Targeted Equity Fund $52,469,601 $30,072,608 $82,542,209 International Fund 6,107,517 15,442,122 21,549,639 Focused Value Fund 2,372,807 22,419,133 24,791,940 Large Cap Value Fund 1,333,343 -- 1,333,343 U.S. Diversified Portfolio -- 7,373,567 7,373,567
2006 Distributions Paid From: - ------------------------------------ Ordinary Long-Term Fund Income Capital Gains Total ---- ------ ------------- ----- Targeted Equity Fund $5,318,245 $20,781,541 $26,099,786 International Fund 5,684,336 16,199,875 21,884,211 Focused Value Fund -- 37,532,762 37,532,762 Large Cap Value Fund 636,750 -- 636,750
Differences between these amounts and those reported in the Statements of Changes in Net Assets are primarily attributable to different book and tax treatment for short-term capital gains. 59 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 As of December 31, 2007, the components of distributable earnings on a tax basis were as follows:
Targeted International Focused Large Cap U.S. Diversified Equity Fund Fund Value Fund Value Fund Portfolio - ----------- - ---------- ---------- ---------------- Undistributed ordinary income $ 30,268,357 $ 1,226,625 $ 31,797 $ 16,774 $ -- Undistributed long-term capital gains 2,000,447 2,595,341 1,953,854 -- 9,268,523 ------------ ----------- ---------- ------------ ------------ Total undistributed earnings 32,268,804 3,821,966 1,985,651 16,774 9,268,523 Capital loss carryforward: Expires December 31, 2009 -- -- -- (28,235,961)* -- Expires December 31, 2010 -- -- -- (24,633,843)* -- Expires December 31, 2011 -- -- -- (9,965,466) -- ------------ ----------- ---------- ------------ ------------ Total capital loss carryforward -- -- -- (62,835,270) -- Deferred net capital losses (post October) -- -- -- -- -- Unrealized appreciation (depreciation) 204,418,481 42,311,207 (100,359) 24,953,201 103,646,577 ------------ ----------- ---------- ------------ ------------ Total accumulated earnings (losses) $236,687,285 $46,133,173 $1,885,292 $(37,865,295) $112,915,100 ------------ ----------- ---------- ------------ ------------ Capital loss carryforward utilized in the current year $ -- $ -- $ -- $ 22,685,043 $ 71,215,618 ============ =========== ========== ============ ============
Small Cap 130/30 Value Fund Growth Fund - ---------- ----------- Undistributed ordinary income $ -- $ -- Undistributed long-term capital gains 186,121 -- ----------- ------------ Total undistributed earnings 186,121 -- Capital loss carryforward: Expires December 31, 2009 -- (16,749,265) Expires December 31, 2010 -- (26,883,047) Expires December 31, 2011 -- (4,097,913) ----------- ------------ Total capital loss carryforward -- (47,730,225) Deferred net capital losses (post October) -- (1,745,104) Unrealized appreciation (depreciation) 12,070,704 2,263,808 ----------- ------------ Total accumulated earnings (losses) $12,256,825 $(47,211,521) ----------- ------------ Capital loss carryforward utilized in the current year $14,087,903 $ 3,740,514 =========== ============
*Some of the losses expiring in 2009 and 2010 were obtained in the Fund's merger with the Nvest Balanced Fund. These losses are subject to limitations. h. Repurchase Agreements. Each Fund, through its custodian, receives delivery of the underlying securities collateralizing repurchase agreements. It is each Fund's policy that the market value of the collateral be at least equal to 102% of the repurchase price, including interest. The repurchase agreements are tri-party arrangements whereby the collateral is held at the custodian bank in a segregated account for the benefit of the Fund and on behalf of the counterparty. Repurchase agreements could involve certain risks in the event of default or insolvency of the counterparty including possible delays or restrictions upon a Fund's ability to dispose of the underlying securities. i. Securities Lending. The Funds have entered into an agreement with State Street Bank and Trust Company ("State Street Bank"), as agent of the Funds, to lend securities to certain designated borrowers. The loans are collateralized with cash or securities in an amount equal to at least 105% or 102% of the market value of the loaned international or domestic securities, respectively, when the loan is initiated. Thereafter, the value of the collateral must remain at least 102% of the market value of loaned securities for U.S. equities and U.S. corporate debt; at least 105% of the market value of loaned securities for non-U.S. equities; and at least 100% of the market value of loaned securities for U.S. government securities, sovereign debt issued by non-U.S. governments and non-U.S. corporate debt. In the event that the market value of the collateral falls below the required percentages described above, the borrower will deliver additional collateral on the next business day. As with other extensions of credit, the Funds may bear the risk of loss with respect to the investment of the collateral. The Funds invest cash collateral in short-term investments, a portion of the income from which is remitted to the borrowers and the remainder allocated between the Funds and State Street Bank as lending agent. The value of securities on loan to borrowers and the value of collateral held by the Funds with respect to such loans at December 31, 2007 were as follows:
Value of Value of Fund Securities on Loan Collateral ---- ------------------ ---------- Targeted Equity Fund $ 20,856,845 $ 20,829,727 International Fund 30,183,464 31,403,828 Focused Value Fund 18,322,482 18,890,517 Large Cap Value Fund 15,469,371 16,389,229 U.S. Diversified Portfolio 131,450,548 135,549,039 Small Cap Value Fund 37,866,232 39,044,059
j. Indemnifications. Under the Trusts' organizational documents, their officers and Trustees are indemnified against certain liability arising out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote. k. Other. Harris Associates Focused Value Fund and Harris Associates Large Cap Value Fund received a litigation payment as a result of its participation in a class action lawsuit brought against an issuer of one of the Funds' holdings. These payments have been included in the realized gains in the Statement of Operations. 60 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 l. New Accounting Pronouncement. In September, 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact, if any, the adoption of FAS 157 will have on the Funds' financial statements. 3. Purchases and Sales of Securities. For the year ended December 31, 2007, purchases and sales of securities (excluding short-term investments) were as follows:
Fund Purchases Sales ---- --------- ----- Targeted Equity Fund $1,375,062,280 $1,481,786,695 International Fund 84,142,895 95,754,047 Focused Value Fund 95,213,665 177,998,912 Large Cap Value Fund 74,014,911 116,496,619 U.S. Diversified Portfolio 496,197,810 600,437,859 Small Cap Value Fund 114,833,998 109,830,572 130/30 Growth Fund 88,155,317 83,863,968
For 130/30 Growth Fund, short sales and purchases to cover were $25,333,565 and $12,869,364. 4. Management Fees and Other Transactions with Affiliates. a. Management Fees. Natixis Asset Management Advisors, L.P. ("Natixis Advisors") serves as investment adviser to each Fund except the Targeted Equity Fund. Capital Growth Management Limited Partnership ("CGM") is the investment adviser to the Targeted Equity Fund. Under the terms of the management agreements, each Fund pays a management fee at the following annual rates, calculated daily and payable monthly, based on each Fund's average daily net assets:
Percentage of Average Daily Net Assets - ------------------------------------------------------------ First Next Next Next Over Fund $200 million $300 million $500 million $1 billion $2 billion ---- ------------ ------------ ------------ ---------- ---------- Targeted Equity Fund 0.75% 0.70% 0.65% 0.65% 0.60% International Fund 0.80% 0.75% 0.75% 0.75% 0.75% Focused Value Fund 0.90% 0.90% 0.90% 0.90% 0.90% Large Cap Value Fund 0.70% 0.65% 0.60% 0.60% 0.60% U.S. Diversified Portfolio 0.90% 0.90% 0.90% 0.80% 0.80% Small Cap Value Fund 0.90% 0.90% 0.90% 0.90% 0.90% 130/30 Growth Fund 0.75% 0.70% 0.65% 0.65% 0.65%
Natixis Advisors has entered into subadvisory agreements for each Fund as listed below. International Fund Hansberger Global Investors, Inc. ("Hansberger") Focused Value Fund Harris Associates L.P. ("Harris") Large Cap Value Fund Harris U.S. Diversified Portfolio Harris Loomis, Sayles & Company, L.P. ("Loomis Sayles") BlackRock Investment Management LLC ("BlackRock") Small Cap Value Fund Vaughan Nelson Investment Management, L.P. ("Vaughan Nelson") 130/30 Growth Fund Westpeak Global Advisors, L.P. ("Westpeak")
Payments to Natixis Advisors are reduced in the amount of payments to the subadvisors. Natixis Advisors voluntarily agreed to waive a portion of the management fee it retains for Large Cap Value Fund after payments to subadvisors. 61 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 Natixis Advisors has given binding undertakings to the Funds to reduce its management fees and/or reimburse certain expenses associated with these Funds to limit their operating expenses. These undertakings are in effect until April 30, 2008 and will be reevaluated on an annual basis. For the period from August 1, 2007 to December 31, 2007, the expense limits as a percentage of average daily net assets under the expense limitation agreements were as follows:
Expense Limit as a Percentage of Average Daily Net Assets - ------------------------------- Fund Class A Class B Class C Class Y ---- ------- ------- ------- ------- Focused Value Fund 1.70% 2.45% 2.45% -- Large Cap Value Fund 1.30% 2.05% 2.05% 1.05% Small Cap Value Fund 1.45% 2.20% 2.20% 1.20% 130/30 Growth Fund 1.65% 2.40% 2.40% --
Expense limits for the 130/30 Growth Fund are exclusive of dividend expenses on securities sold short. Prior to August 1, 2007, the expense limits as a percentage of average daily net assets were as follows:
Expense Limit as a Percentage of Average Daily Net Assets - ------------------------------- Fund Class A Class B Class C Class Y ---- ------- ------- ------- ------- Focused Value Fund 1.70% 2.45% 2.45% -- Large Cap Value Fund 1.30% 2.05% 2.05% 1.05% Small Cap Value Fund 1.45% 2.20% 2.20% 1.20% 130/30 Growth Fund 1.50% 2.25% 2.25% --
Prior to July 1, 2007, the expense limits as a percentage of average daily net assets were as follows:
Expense Limit as a Percentage of Average Daily Net Assets - ------------------------------- Fund Class A Class B Class C Class Y ---- ------- ------- ------- ------- Focused Value Fund 1.70% 2.45% 2.45% -- Large Cap Value Fund 1.30% 2.05% 2.05% 1.05% Small Cap Value Fund 1.60% 2.35% 2.35% 1.35% 130/30 Growth Fund 1.50% 2.25% 2.25% --
For the year ended December 31, 2007, the management fees and reductions of management fees for each Fund were as follows:
Percentage of Voluntary Average Gross Reduction of Net Daily Net Assets Management Management Management ---------------- Fund Fee Fee Fee Gross Net ---- ---------- ------------ ---------- ----- --- Targeted Equity Fund $5,402,846 $ -- $5,402,846 0.70% 0.70% International Fund 1,441,589 -- 1,441,589 0.80% 0.80% Focused Value Fund 1,732,909 -- 1,732,909 0.90% 0.90% Large Cap Value Fund 1,774,740 5,501 1,769,239 0.69% 0.69% U.S. Diversified Portfolio 5,539,020 -- 5,539,020 0.90% 0.90% Small Cap Value Fund 1,324,569 -- 1,324,569 0.90% 0.90% 130/30 Growth Fund 402,851 -- 402,851 0.75% 0.75%
For the year ended December 31, 2007, class specific expenses have been reimbursed as follows:
Fund Reimbursement ---- ------------- Small Cap Value Fund $116,017 130/30 Growth Fund 76,560
62 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 Natixis Advisors shall be permitted to recover expenses it has borne under the expense limitation agreement (whether through a reduction of its management fee or otherwise) on a class by class basis in later periods to the extent the expenses of a class fall below a class' expense limits, provided, however, that a class is not obligated to pay such deferred fees/expenses more than one year after the end of the fiscal year in which the fee/expense was deferred. The amounts subject to possible reimbursement under the expense limitation agreements at December 31, 2007 were as follows:
Expenses Subject to Possible Reimbursement until December 31, 2008 - ------------------------------------------------ Class A Class B Class C Class Y Total Fund ------- ------- ------- ------- ----- Small Cap Value Fund $78,801 $20,907 $16,309 $-- $116,017 130/30 Growth Fund 65,588 10,024 948 -- 76,560
Certain officers and directors of Natixis Advisors and its affiliates are also officers or Trustees of the Funds. Natixis Advisors, CGM, Hansberger, Harris, Loomis Sayles, Vaughan Nelson and Westpeak are subsidiaries of Natixis Global Asset Management, L.P. ("Natixis US"), which is part of Natixis Global Asset Management, an international asset management group based in Paris, France. Loomis Sayles reimbursed the U.S. Diversified Portfolio $34,706 for losses incurred in connection with a trading error. b. Administrative Expense. Natixis Advisors provides certain administrative services for the Funds and subcontracts with State Street Bank to serve as sub-administrator. Natixis Advisors is a wholly-owned subsidiary of Natixis US. Pursuant to an agreement among Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds Trust III, Natixis Funds Trust IV, Natixis Cash Management Trust ("Natixis Funds Trusts"), Loomis Sayles Funds I, Loomis Sayles Funds II ("Loomis Sayles Funds Trusts") and Natixis Advisors (the "Administrative Service Agreement"), each Fund pays Natixis Advisors monthly its pro rata portion of fees equal to an annual rate of 0.0675% of the first $5 billion of the average daily net assets of the Natixis Funds Trusts and Loomis Sayles Funds Trusts, 0.0625% of the next $5 billion, 0.0500% of the next $20 billion and 0.045% of such assets in excess of $30 billion, subject to an annual aggregate minimum fee for the Natixis Funds Trusts and Loomis Sayles Funds Trusts of $5 million, which is reevaluated on an annual basis. New funds are subject to a prorated annual fee of $50,000 plus $12,500 per class and an additional $50,000 if managed by multiple subadvisers in their first calendar year of operations. Effective September 17, 2007, pursuant to an amendment to the Administrative Service Agreement, the Hansberger International Series was added to the Agreement and pays Natixis Advisors monthly its pro rata fees equal to its prorated portion of the above mentioned fees. New Funds are subject to an annual fee of $50,000 plus $12,500 per class on an additional $50,000 if managed by multiple subadvisers in their first calendar year of operations. Prior to July 1, 2007, each Fund paid Natixis Advisors, monthly, its pro rata portion of fees equal to an annual rate of 0.0675% of the first $5 billion of the average daily net assets of the Natixis Funds Trusts and Loomis Sayles Funds Trusts, 0.0625% of the next $5 billion, and 0.0500% of such assets in excess of $10 billion, subject to an annual aggregate minimum fee for the Natixis Funds Trusts and Loomis Sayles Funds Trusts of $5 million, which is reevaluated on an annual basis. Effective October 1, 2007, State Street Bank reduced the fees it receives from Natixis Advisors for serving as sub-administrator to the Funds. Also, effective October 1, 2007, Natixis Advisors has given a binding contractual undertaking to the Funds to waive the administrative fees paid by the Fund in an amount equal to the reduction in sub-administrative fees discussed above. The waiver is in effect through June 30, 2008. For the year ended December 31, 2007, amounts paid to Natixis Advisors for administrative fees were as follows:
Gross Waiver of Net Administrative Administrative Administrative Fund Fees Fees Fees ---- ---- ---- ---- Targeted Equity Fund $408,927 $5,490 $403,437 International Fund 100,153 1,190 98,963 Focused Value Fund 95,792 978 94,814 Large Cap Value Fund 136,965 1,501 135,464 U.S. Diversified Portfolio 327,564 3,833 323,731 Small Cap Value Fund 81,626 967 80,659 130/30 Growth Fund 28,554 314 28,240
c. Service and Distribution Fees. Natixis Distributors, L.P. ("Natixis Distributors"), a wholly-owned subsidiary of Natixis US. has entered into a distribution agreement with the Trusts. Pursuant to this agreement, Natixis Distributors serves as principal underwriter of the funds of the Trusts. 63 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 Pursuant to Rule 12b-1 under the 1940 Act, the Trusts have adopted a Service Plan relating to each Fund's Class A shares (the "Class A Plan") and Service and Distribution Plans relating to each Fund's Class B and Class C shares (the "Class B and Class C Plans"). Under the Class A Plan, each Fund pays Natixis Distributors a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund's Class A shares, as reimbursement for expenses incurred by Natixis Distributors in providing personal services to investors in Class A shares and/or the maintenance of shareholder accounts. Under the Class B and Class C Plans, each Fund pays Natixis Distributors a monthly service fee at an annual rate of 0.25% of the average daily net assets attributable to the Fund's Class B and Class C shares, as compensation for services provided and expenses incurred by Natixis Distributors in providing personal services to investors in Class B and Class C shares and/or the maintenance of shareholder accounts. Also under the Class B and Class C Plans, each Fund pays Natixis Distributors a monthly distribution fee at an annual rate of 0.75% of the average daily net assets attributable to the Fund's Class B and Class C shares, as compensation for services provided and expenses incurred by Natixis Distributors in connection with the marketing or sale of Class B and Class C shares. For the year ended December 31, 2007, the Funds paid the following service and distribution fees:
Service Fee Distribution Fee - ---------------------------- ------------------- Fund Class A Class B Class C Class B Class C ---- ------- ------- ------- ------- ------- Targeted Equity Fund $1,796,683 $ 88,392 $ 25,897 $ 265,178 $ 77,691 International Fund 305,801 80,853 63,843 242,560 191,531 Focused Value Fund 135,107 165,411 180,845 496,235 542,535 Large Cap Value Fund 481,059 84,907 43,657 254,722 130,970 U.S. Diversified Portfolio 1,023,056 345,040 118,281 1,035,122 354,843 Small Cap Value Fund 240,992 73,804 51,688 221,414 155,063 130/30 Growth Fund 151,561 19,789 1,825 59,369 5,475
d. Sub-Transfer Agent Fees and Expenses. Natixis Distributors has entered into agreements with financial intermediaries to provide certain recordkeeping, processing, shareholder communications and other services to customers of the intermediaries and have agreed to compensate the intermediaries for providing those services. Certain services would be provided by the Funds if the shares of those customers were registered directly with the Funds' transfer agent. Accordingly, the Funds agreed to pay a portion of the intermediary fees attributable to shares of the Fund held by the intermediary (which generally are a percentage of the value of shares held) not exceeding what the Funds would have paid its transfer agent had each customer's shares been registered directly with the transfer agent instead of held through the intermediary. Natixis Distributors pay the remainder of the fees. Listed below are the fees incurred by the Funds which are included in the transfer agent fees and expenses in the Statements of Operations.
Sub-Transfer Agent Fees - ------------------------------- Fund Class A Class B Class C Class Y ---- ------- ------- ------- ------- Targeted Equity Fund $56,091 $ 2,910 $ 765 $ 9,803 International Fund 30,761 8,337 6,440 -- Focused Value Fund 41,366 50,820 56,154 -- Large Cap Value Fund 40,824 7,463 3,749 7,512 U.S. Diversified Portfolio 91,025 26,708 10,660 17,003 Small Cap Value Fund 37,972 10,265 8,216 36 130/30 Growth Fund 4,692 605 71 --
e. Commissions. The Funds have been informed that commissions (including CDSCs) on Fund shares paid to Natixis Distributors by investors in shares of the Funds during the year ended December 31, 2007 were as follows:
Fund Commission ---- ---------- Targeted Equity Fund $292,725 International Fund 124,617 Focused Value Fund 209,988 Large Cap Value Fund 98,711 U.S. Diversified Portfolio 332,917 Small Cap Value Fund 77,382 130/30 Growth Fund 53,526
64 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 For the year ended December 31, 2007, brokerage commissions for portfolio transactions paid to affiliated broker/dealers by the U.S. Diversified Portfolio were $32,930. f. Trustees Fees and Expenses. The Funds do not pay any compensation directly to their officers or Trustees who are directors, officers or employees of Natixis Advisors, Natixis Distributors and Natixis US, or their affiliates. The Chairperson of the Board receives a retainer fee at the annual rate of $200,000. The Chairperson does not receive any meeting attendance fees for Board of Trustees meetings or committee meetings that she attends. Each Independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the annual rate of $55,000. Each Independent Trustee also receives a meeting attendance fee of $6,000 for each meeting of the Board of Trustees that he or she attends in person and $3,000 for each meeting of the Board of Trustees that he or she attends telephonically. In addition, each committee chairman receives an additional retainer fee at the annual rate of $10,000. Each Contract Review and Governance Committee member is compensated $4,000 for each Committee meeting that he or she attends in person and $2,000 for each meeting that he or she attends telephonically. Each Audit Committee member is compensated $5,000 for each Committee meeting that he or she attends in person and $2,500 for each meeting that he or she attends telephonically. These fees are allocated among the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts and the Hansberger International Series (effective September 12, 2007) based on a formula that takes into account, among other factors, the relative net assets of each fund. Trustees are reimbursed for travel expenses in connection with attendance at meetings. Effective January 1, 2008, each Independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the annual rate of $65,000. Each Independent Trustee also receives a meeting attendance fee of $7,500 for each meeting of the Board of Trustees that he or she attends in person and $3,750 for each meeting that he or she attends telephonically. In addition, each Contract Review and Governance Committee member receives $5,000 for each committee meeting that he or she attends in person and $2,500 for each committee meeting that he or she attends telephonically. Each Audit Committee member receives $6,250 for each committee meeting that he or she attends in person and $3,125 for each committee meeting that he or she attends telephonically. The retainer fees paid to the Chairperson and the Committee Chairmen remain unchanged. A deferred compensation plan (the "Plan") is available to the Trustees on a voluntary basis. Each participating Trustee will receive an amount equal to the value that such deferred compensation would have been had it been invested in a designated Fund or certain other funds of the Natixis Funds Trusts, the Loomis Sayles Funds Trusts and the Hansberger International Series on the normal payment date. Deferred amounts remain in the Funds until distributed in accordance with the Plan. g. Redemption Fees. Shareholders of Class A shares and Class Y shares of Targeted Equity Fund, International Fund, Focused Value Fund and Small Cap Value Fund are charged a 2% redemption fee if they redeem, including redeeming by exchange, such shares within 60 days of their acquisition (including acquisition by exchange). The redemption fee is intended to discourage frequent purchases and redemptions of Fund shares and to offset the costs to the Funds of short-term trading, such as portfolio transaction and market impact costs associated with redemption activity and administrative costs associated with processing redemptions. The redemption fee is deducted from the shareholder's redemption or exchange proceeds and is paid to the Fund. The "first-in, first-out" (FIFO) method is used to determine the holding period of redeemed or exchanged shares, which means that if a shareholder acquired shares on different days, the shares acquired first will be redeemed or exchanged first for purposes of determining whether the redemption fee applies. A new holding period begins with each purchase or exchange. These fees are accounted for as an addition to paid-in capital and are presented in the Statements of Changes in Net Assets. 5. Line of Credit. Each Fund, together with certain other funds of Natixis Funds Trusts and Loomis Sayles Funds Trusts, participates in a $75,000,000 committed line of credit provided by State Street Bank. Interest is charged to each participating fund based on its borrowing at a rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.09% per annum, payable at the end of each calendar quarter, is accrued and apportioned among the participating funds based on their average daily unused portion of the line of credit. For the year ended December 31, 2007, the Funds had no borrowings under this agreement. 6. Brokerage Commission Recapture. Each Fund has entered into agreements with certain brokers whereby the brokers will rebate a portion of brokerage commissions. All amounts rebated by the brokers are returned to the Funds under such agreements and are included in realized gains on investments in the Statements of Operations. For the year ended December 31, 2007, amounts rebated under these agreements were as follows:
Fund Rebates ---- ------- Targeted Equity Fund $280,848 International Fund 10,783 Focused Value Fund -- Large Cap Value Fund -- U.S. Diversified Portfolio 65,535 Small Cap Value Fund 9,737 130/30 Growth Fund 23,897
7. Concentration of Risk. Focused Value Fund is a non-diversified fund. Compared with diversified mutual funds, the Focused Value Fund may invest a greater percentage of its assets in a particular company. Therefore, the Focused Value Fund's returns could be significantly affected by the performance of any one of the small number of stocks in its portfolio. 65 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 8. Capital Shares. Each Fund may issue an unlimited number of shares of beneficial interest without par value. Transactions in capital shares were as follows: Year Ended December 31, 2007 ----------------------------------- CGM Advisor Targeted Equity Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 3,737,261 $ 45,862,629 Issued in connection with the reinvestment of distributions 5,862,904 72,878,709 ---------------- ----------------- 9,600,165 118,741,338 Redeemed (9,585,214) (111,765,850) ---------------- ----------------- Net change 14,951 $ 6,975,488 ---------------- ----------------- Class B Issued from the sale of shares 262,400 $ 2,812,834 Issued in connection with the reinvestment of distributions 283,544 3,180,585 ---------------- ----------------- 545,944 5,993,419 Redeemed (2,184,278) (22,947,868) ---------------- ----------------- Net change (1,638,334) $ (16,954,449) ---------------- ----------------- Class C Issued from the sale of shares 923,790 $ 10,699,501 Issued in connection with the reinvestment of distributions 88,327 1,012,586 ---------------- ----------------- 1,012,117 11,712,087 Redeemed (220,223) (2,325,399) ---------------- ----------------- Net change 791,894 $ 9,386,688 ---------------- ----------------- Class Y Issued from the sale of shares 262,592 $ 3,465,372 Issued in connection with the reinvestment of distributions 113,125 1,444,931 ---------------- ----------------- 375,717 4,910,303 Redeemed (132,427) (1,584,173) ---------------- ----------------- Net change 243,290 $ 3,326,130 ---------------- ----------------- Increase (decrease) from capital share transactions (588,199) $ 2,733,857 ================ ================= Year Ended December 31, 2007 ----------------------------------- Hansberger International Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 870,349 $ 20,307,759 Issued in connection with the reinvestment of distributions 615,505 13,642,851 ---------------- ----------------- 1,485,854 33,950,610 Redeemed (949,003) (22,012,908) ---------------- ----------------- Net change 536,851 $ 11,937,702 ---------------- ----------------- Class B Issued from the sale of shares 194,192 $ 4,062,447 Issued in connection with the reinvestment of distributions 172,664 3,443,715 ---------------- ----------------- 366,856 7,506,162 Redeemed (561,815) (11,811,328) ---------------- ----------------- Net change (194,959) $ (4,305,166) ---------------- ----------------- Class C Issued from the sale of shares 233,746 $ 4,957,792 Issued in connection with the reinvestment of distributions 121,350 2,409,103 ---------------- ----------------- 355,096 7,366,895 Redeemed (229,985) (4,843,805) ---------------- ----------------- Net change 125,111 $ 2,523,090 ---------------- ----------------- Increase (decrease) from capital share transactions 467,003 $ 10,155,626 ================ =================
Year Ended December 31, 2006 ----------------------------------- CGM Advisor Targeted Equity Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 3,021,026 $ 32,094,011 Issued in connection with the reinvestment of distributions 2,175,752 22,722,255 ---------------- ----------------- 5,196,778 54,816,266 Redeemed (9,606,296) (102,106,132) ---------------- ----------------- Net change (4,409,518) $ (47,289,866) ---------------- ----------------- Class B Issued from the sale of shares 527,280 $ 5,168,973 Issued in connection with the reinvestment of distributions 158,904 1,525,452 ---------------- ----------------- 686,184 6,694,425 Redeemed (1,901,868) (18,667,272) ---------------- ----------------- Net change (1,215,684) $ (11,972,847) ---------------- ----------------- Class C Issued from the sale of shares 491,071 $ 4,828,598 Issued in connection with the reinvestment of distributions 19,469 187,296 ---------------- ----------------- 510,540 5,015,894 Redeemed (168,586) (1,657,411) ---------------- ----------------- Net change 341,954 $ 3,358,483 ---------------- ----------------- Class Y Issued from the sale of shares 134,863 $ 1,446,830 Issued in connection with the reinvestment of distributions 40,781 435,176 ---------------- ----------------- 175,644 1,882,006 Redeemed (175,923) (1,904,637) ---------------- ----------------- Net change (279) $ (22,631) ---------------- ----------------- Increase (decrease) from capital share transactions (5,283,527) $ (55,926,861) ================ ================= Year Ended December 31, 2006 ----------------------------------- Hansberger International Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 882,514 $ 19,025,323 Issued in connection with the reinvestment of distributions 620,244 13,054,791 ---------------- ----------------- 1,502,758 32,080,114 Redeemed (765,037) (16,553,658) ---------------- ----------------- Net change 737,721 $ 15,526,456 ---------------- ----------------- Class B Issued from the sale of shares 281,932 $ 5,558,168 Issued in connection with the reinvestment of distributions 217,726 4,157,074 ---------------- ----------------- 499,658 9,715,242 Redeemed (634,271) (12,632,454) ---------------- ----------------- Net change (134,613) $ (2,917,212) ---------------- ----------------- Class C Issued from the sale of shares 191,194 $ 3,765,350 Issued in connection with the reinvestment of distributions 123,876 2,364,479 ---------------- ----------------- 315,070 6,129,829 Redeemed (167,643) (3,338,110) ---------------- ----------------- Net change 147,427 $ 2,791,719 ---------------- ----------------- Increase (decrease) from capital share transactions 750,535 $ 15,400,963 ================ =================
66 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 Year Ended December 31, 2007 ----------------------------------- Harris Associates Focused Value Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 631,847 $ 6,966,043 Issued in connection with the reinvestment of distributions 532,542 5,008,910 ---------------- ----------------- 1,164,389 11,974,953 Redeemed (2,070,078) (23,875,285) ---------------- ----------------- Net change (905,689) $ (11,900,332) ---------------- ----------------- Class B Issued from the sale of shares 310,935 $ 2,940,601 Issued in connection with the reinvestment of distributions 729,290 6,359,477 ---------------- ----------------- 1,040,225 9,300,078 Redeemed (2,645,145) (28,682,591) ---------------- ----------------- Net change (1,604,920) $ (19,382,513) ---------------- ----------------- Class C Issued from the sale of shares 625,545 $ 6,004,671 Issued in connection with the reinvestment of distributions 612,914 5,347,383 ---------------- ----------------- 1,238,459 11,352,054 Redeemed (3,352,102) (35,857,138) ---------------- ----------------- Net change (2,113,643) $ (24,505,084) ---------------- ----------------- Increase (decrease) from capital share transactions (4,624,252) $ (55,787,929) ================ ================= Year Ended December 31, 2007 ----------------------------------- Harris Associates Large Cap Value Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 1,098,477 $ 17,352,523 Issued in connection with the reinvestment of distributions 55,168 870,874 ---------------- ----------------- 1,153,645 18,223,397 Redeemed (2,264,640) (35,926,938) ---------------- ----------------- Net change (1,110,995) $ (17,703,541) ---------------- ----------------- Class B Issued from the sale of shares 133,358 $ 1,953,515 Issued in connection with the reinvestment of distributions 6,268 95,395 ---------------- ----------------- 139,626 2,048,910 Redeemed (1,392,098) (20,396,796) ---------------- ----------------- Net change (1,252,472) $ (18,347,886) ---------------- ----------------- Class C Issued from the sale of shares 131,012 $ 1,888,111 Issued in connection with the reinvestment of distributions 1,501 22,821 ---------------- ----------------- 132,513 1,910,932 Redeemed (261,095) (3,822,123) ---------------- ----------------- Net change (128,582) $ (1,911,191) ---------------- ----------------- Class Y Issued from the sale of shares 52,630 $ 864,679 Issued in connection with the reinvestment of distributions 7,191 115,598 ---------------- ----------------- 59,821 980,277 Redeemed (172,407) (2,824,845) ---------------- ----------------- Net change (112,586) $ (1,844,568) ---------------- ----------------- Increase (decrease) from capital share transactions (2,604,635) $ (39,807,186) ================ =================
Year Ended December 31, 2006 ----------------------------------- Harris Associates Focused Value Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 762,517 $ 9,168,276 Issued in connection with the reinvestment of distributions 594,724 6,857,113 ---------------- ----------------- 1,357,241 16,025,389 Redeemed (2,756,214) (33,719,620) ---------------- ----------------- Net change (1,398,973) $ (17,694,231) ---------------- ----------------- Class B Issued from the sale of shares 460,413 $ 5,172,828 Issued in connection with the reinvestment of distributions 850,572 9,284,689 ---------------- ----------------- 1,310,985 14,457,517 Redeemed (2,469,943) (28,816,298) ---------------- ----------------- Net change (1,158,958) $ (14,358,781) ---------------- ----------------- Class C Issued from the sale of shares 840,633 $ 9,434,145 Issued in connection with the reinvestment of distributions 760,727 8,305,493 ---------------- ----------------- 1,601,360 17,739,638 Redeemed (4,218,781) (49,192,443) ---------------- ----------------- Net change (2,617,421) $ (31,452,805) ---------------- ----------------- Increase (decrease) from capital share transactions (5,175,352) $ (63,505,817) ================ ================= Year Ended December 31, 2006 ----------------------------------- Harris Associates Large Cap Value Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 1,331,189 $ 18,612,209 Issued in connection with the reinvestment of distributions 27,510 358,457 ---------------- ----------------- 1,358,699 18,970,666 Redeemed (2,887,544) (40,026,448) ---------------- ----------------- Net change (1,528,845) $ (21,055,782) ---------------- ----------------- Class B Issued from the sale of shares 176,257 $ 2,291,417 Issued in connection with the reinvestment of distributions 9,192 111,770 ---------------- ----------------- 185,449 2,403,187 Redeemed (1,936,076) (25,010,219) ---------------- ----------------- Net change (1,750,627) $ (22,607,032) ---------------- ----------------- Class C Issued from the sale of shares 113,625 $ 1,446,870 Issued in connection with the reinvestment of distributions 1,654 20,078 ---------------- ----------------- 115,279 1,466,948 Redeemed (486,431) (6,230,411) ---------------- ----------------- Net change (371,152) $ (4,763,463) ---------------- ----------------- Class Y Issued from the sale of shares 76,363 $ 1,102,604 Issued in connection with the reinvestment of distributions 2,238 30,077 ---------------- ----------------- 78,601 1,132,681 Redeemed (237,315) (3,357,897) ---------------- ----------------- Net change (158,714) $ (2,225,216) ---------------- ----------------- Increase (decrease) from capital share transactions (3,809,338) $ (50,651,493) ================ =================
67 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 Year Ended December 31, 2007 ----------------------------------- U.S. Diversified Portfolio Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 1,493,221 $ 37,264,200 Issued in connection with the reinvestment of distributions 181,096 4,715,740 ---------------- ----------------- 1,674,317 41,979,940 Redeemed (3,017,079) (75,527,212) ---------------- ----------------- Net change (1,342,762) $ (33,547,272) ---------------- ----------------- Class B Issued from the sale of shares 339,734 $ 7,394,658 Issued in connection with the reinvestment of distributions 68,470 1,566,593 ---------------- ----------------- 408,204 8,961,251 Redeemed (2,418,196) (53,258,701) ---------------- ----------------- Net change (2,009,992) $ (44,297,450) ---------------- ----------------- Class C Issued from the sale of shares 134,395 $ 2,984,422 Issued in connection with the reinvestment of distributions 23,359 534,930 ---------------- ----------------- 157,754 3,519,352 Redeemed (335,383) (7,349,240) ---------------- ----------------- Net change (177,629) $ (3,829,888) ---------------- ----------------- Class Y Issued from the sale of shares 123,956 $ 3,273,376 Issued in connection with the reinvestment of distributions 7,783 216,982 ---------------- ----------------- 131,739 3,490,358 Redeemed (393,194) (10,570,451) ---------------- ----------------- Net change (261,455) $ (7,080,093) ---------------- ----------------- Increase (decrease) from capital share transactions (3,791,838) $ (88,754,703) ================ ================= Year Ended December 31, 2007 ----------------------------------- Vaughan Nelson Small Cap Value Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 1,451,447 $ 31,978,338 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 1,451,447 31,978,338 Redeemed (841,796) (18,480,247) ---------------- ----------------- Net change 609,651 $ 13,498,091 ---------------- ----------------- Class B Issued from the sale of shares 99,421 $ 1,989,981 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 99,421 1,989,981 Redeemed (554,258) (11,098,446) ---------------- ----------------- Net change (454,837) $ (9,108,465) ---------------- ----------------- Class C Issued from the sale of shares 332,854 $ 6,647,049 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 332,854 6,647,049 Redeemed (200,639) (4,038,911) ---------------- ----------------- Net change 132,215 $ 2,608,138 ---------------- ----------------- Class Y* Issued from the sale of shares 35,602 $ 788,793 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 35,602 788,793 Redeemed (109) (2,640) ---------------- ----------------- Net change 35,493 $ 786,153 ---------------- ----------------- Increase (decrease) from capital share transactions 322,522 $ 7,783,917 ================ =================
Year Ended December 31, 2006 ----------------------------------- U.S. Diversified Portfolio Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 1,699,970 $ 36,351,386 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 1,699,970 36,351,386 Redeemed (3,689,517) (78,838,491) ---------------- ----------------- Net change (1,989,547) $ (42,487,105) ---------------- ----------------- Class B Issued from the sale of shares 536,719 $ 10,239,866 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 536,719 10,239,866 Redeemed (2,967,752) (56,524,819) ---------------- ----------------- Net change (2,431,033) $ (46,284,953) ---------------- ----------------- Class C Issued from the sale of shares 77,624 $ 1,484,914 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 77,624 1,484,914 Redeemed (490,888) (9,387,689) ---------------- ----------------- Net change (413,264) $ (7,902,775) ---------------- ----------------- Class Y Issued from the sale of shares 123,141 $ 2,825,376 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 123,141 2,825,376 Redeemed (212,914) (4,817,903) ---------------- ----------------- Net change (89,773) $ (1,992,527) ---------------- ----------------- Increase (decrease) from capital share transactions (4,923,617) $ (98,667,360) ================ ================= Year Ended December 31, 2006 ----------------------------------- Vaughan Nelson Small Cap Value Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 1,565,095 $ 30,243,879 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 1,565,095 30,243,879 Redeemed (817,467) (15,859,750) ---------------- ----------------- Net change 747,628 $ 14,384,129 ---------------- ----------------- Class B Issued from the sale of shares 154,897 $ 2,772,776 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 154,897 2,772,776 Redeemed (822,694) (14,729,819) ---------------- ----------------- Net change (667,797) $ (11,957,043) ---------------- ----------------- Class C Issued from the sale of shares 364,171 $ 6,498,460 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 364,171 6,498,460 Redeemed (251,618) (4,488,816) ---------------- ----------------- Net change 112,553 $ 2,009,644 ---------------- ----------------- Class Y* Issued from the sale of shares 20,430 $ 424,039 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 20,430 424,039 Redeemed -- -- ---------------- ----------------- Net change 20,430 $ 424,039 ---------------- ----------------- Increase (decrease) from capital share transactions 212,814 $ 4,860,769 ================ =================
* From commencement of class operations August 31, 2006 through December 31, 2006. 68 NOTES TO FINANCIAL STATEMENTS (continued) December 31, 2007 Year Ended December 31, 2007 ----------------------------------- Westpeak 130/30 Growth Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 233,589 $ 3,116,297 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 233,589 3,116,297 Redeemed (626,717) (8,362,258) ---------------- ----------------- Net change (393,128) $ (5,245,961) ---------------- ----------------- Class B Issued from the sale of shares 57,724 $ 661,921 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 57,724 661,921 Redeemed (270,922) (3,088,283) ---------------- ----------------- Net change (213,198) $ (2,426,362) ---------------- ----------------- Class C Issued from the sale of shares 12,508 $ 144,889 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 12,508 144,889 Redeemed (26,379) (302,036) ---------------- ----------------- Net change (13,871) $ (157,147) ---------------- ----------------- Increase (decrease) from capital share transactions (620,197) $ (7,829,470) ================ =================
Year Ended December 31, 2006 ----------------------------------- Westpeak 130/30 Growth Fund Shares Amount -------------------------------------------------------------- ---------------- ----------------- Class A Issued from the sale of shares 209,910 $ 2,590,783 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 209,910 2,590,783 Redeemed (798,809) (9,769,562) ---------------- ----------------- Net change (588,899) $ (7,178,779) ---------------- ----------------- Class B Issued from the sale of shares 81,915 $ 870,627 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 81,915 870,627 Redeemed (282,316) (2,968,891) ---------------- ----------------- Net change (200,401) $ (2,098,264) ---------------- ----------------- Class C Issued from the sale of shares 12,274 $ 135,304 Issued in connection with the reinvestment of distributions -- -- ---------------- ----------------- 12,274 135,304 Redeemed (36,537) (386,794) ---------------- ----------------- Net change (24,263) $ (251,490) ---------------- ----------------- Increase (decrease) from capital share transactions (813,563) $ (9,528,533) ================ =================
69 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees of Natixis Funds Trust I, Natixis Funds Trust II, and Natixis Funds Trust III and Shareholders of CGM Advisor Targeted Equity Fund, Hansberger International Fund, Natixis U.S. Diversified Portfolio, Vaughan Nelson Small Cap Value Fund, Westpeak 130/30 Growth Fund, Harris Associates Large Cap Value Fund and Harris Associates Focused Value Fund: In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and statement of cash flows for the Westpeak 130/30 Growth Fund and the financial highlights present fairly, in all material respects, the financial position of the CGM Advisor Targeted Equity Fund, Hansberger International Fund, Natixis U.S. Diversified Portfolio, Vaughan Nelson Small Cap Value Fund and Westpeak 130/30 Growth Fund, (formerly, Westpeak Capital Growth Fund) each a series of Natixis Funds Trust I; the Harris Associates Large Cap Value Fund, a series of Natixis Funds Trust II; and the Harris Associates Focused Value Fund, a series of Natixis Funds Trust III (collectively, the "Funds"), at December 31, 2007, and the results of each of their operations, the changes in each of their net assets and the cash flows of Westpeak 130/30 Growth Fund and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts February 25, 2008 70 2007 U.S. TAX DISTRIBUTION INFORMATION TO SHAREHOLDERS (unaudited) Corporate Dividends Received Deduction. For the fiscal year ended December 31, 2007, a percentage of dividends distributed by the Funds listed below qualify for the dividends received deduction for corporate shareholders. These percentages are as follows:
Qualifying Fund Percentage ---- ---------- Targeted Equity Fund 21.68% Focused Value Fund 46.22% Large Cap Value Fund 100.00%
Capital Gains Distributions. Pursuant to Internal Revenue Section 852(b), the following Funds paid distributions, which have been designated as capital gains distributions for the fiscal year ended December 31, 2007.
Fund Amount ---- ----------- Targeted Equity Fund $30,072,608 International Fund 15,442,122 Focused Value Fund 22,419,133 U.S. Diversified Portfolio Fund 7,373,567
Qualified Dividend Income. A percentage of dividends distributed by the Funds during the fiscal year ended December 31, 2007 are considered qualified dividend income, and are eligible for reduced tax rates. These lower rates range from 5% to 15% depending on an individual's tax bracket. These percentages are noted below:
Fund Percentage ---- ---------- Targeted Equity Fund 19.76% International Fund 45.76% Large Cap Value Fund 100.00% Focused Value Fund 45.68%
Foreign Tax Credit. For the year ended December 31, 2007, the International Fund intends to pass through a foreign tax credit of $185,811 and has derived gross income from sources within foreign countries amounting to $4,142,462. 71 TRUSTEE AND OFFICER INFORMATION The tables below provide certain information regarding the Trustees and officers of Natixis Funds Trust I, Natixis Funds Trust II and Natixis Funds Trust III (the "Trusts"). Unless otherwise indicated, the address of all persons below is 399 Boylston Street, Boston, MA 02116. The Trusts' Statements of Additional Information include additional information about the Trustees of the Trusts and are available by calling Natixis Funds at 800-225-5478.
Position(s) Held with the Number of Portfolios in Trusts, Length of Time Principal Occupation(s) Fund Complex Overseen*** Name and Year of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held ---------------------- -------------------------- --------------------- ---------------------------- INDEPENDENT TRUSTEES/1/ Graham T. Allison, Jr. Trustee, since 1984 for Douglas Dillon Professor and 42; (1940) Natixis Funds Trust I Director of the Belfer Center Director, Taubman Centers, (including predecessors); for Science and International Inc. (real estate investment since 1995 for Natixis Affairs, John F. Kennedy trust) Funds Trust II and Natixis School of Government, Funds Trust III Harvard University Contract Review and Governance Committee Member Charles D. Baker Trustee, since 2005 for President and Chief Executive 42; (1956) Natixis Funds Trust I, Officer, Harvard Pilgrim None Natixis Funds Trust II and Health Care (health plan) Natixis Funds Trust III Contract Review and Governance Committee Member Edward A. Benjamin Trustee, since 2003 for Retired 42; (1938) Natixis Funds Trust I, None Natixis Funds Trust II and Natixis Funds Trust III Chairman of the Contract Review and Governance Committee Daniel M. Cain Trustee, since 1996 for President and Chief Executive 42; (1945) Natixis Funds Trust I, Officer, Cain Brothers & Director, Sheridan Natixis Funds Trust II and Company, Incorporated Healthcare Inc. (physician Natixis Funds Trust III (investment banking) practice management) Chairman of the Audit Committee Jonathan P. Mason Trustee, since 2007 for Chief Financial Officer, Cabot 42; (1958) Natixis Funds Trust I, Corp. (specialty chemicals); None Natixis Funds Trust II and formerly, Vice President and Natixis Funds Trust III Treasurer, International Paper Audit Committee Member Company; formerly, Chief Financial Officer, Carter Holt Harvey (forest products)
72 TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the Number of Portfolios in Trusts, Length of Time Principal Occupation(s) Fund Complex Overseen*** Name and Year of Birth Served and Term of Office* During Past 5 Years** and Other Directorships Held ---------------------- -------------------------- --------------------- ---------------------------- INDEPENDENT TRUSTEES continued Sandra O. Moose Chairperson of the Board President, Strategic Advisory 42; (1942) of Trustees since Services (management Director, Verizon November 2005 consulting); formerly, Senior Communications; Director, Trustee, since 1982 Natixis Vice President and Director, Rohm and Haas Company Funds Trust I (including The Boston Consulting Group, (specialty chemicals); predecessors); since 1993 Inc. (management consulting) Director, AES Corporation for Natixis Funds Trust II; (international power since 1995 for Natixis company) Funds Trust III Ex officio member of the Audit Committee and Contract Review and Governance Committee Cynthia L. Walker Trustee, since 2005 for Deputy Dean for Finance & 42; (1956) Natixis Funds Trust I, Administration, Yale None Natixis Funds Trust II and University School of Medicine; Natixis Funds Trust III formerly, Executive Dean for Audit Committee Member Administration, Harvard Medical School and formerly, Dean for Finance & CFO, Harvard Medical School INTERESTED TRUSTEES Robert J. Blanding/2/ Trustee, since 2003 for President, Chairman, Director 42; (1947) Natixis Funds Trust I, and Chief Executive Officer, None 555 California Street Natixis Funds Trust II and Loomis, Sayles & Company, San Francisco, CA 94104 Natixis Funds Trust III L.P. John T. Hailer/3/ Trustee, since 2000 for President and Chief Executive 42; (1960) Natixis Funds Trust I, Officer, Natixis Asset None Natixis Funds Trust II and Management Advisors, L.P., Natixis Funds Trust III Natixis Distributors, L.P. and President and Chief Natixis Global Associates, Executive Officer of Inc.; President and Chief Natixis Funds Trust I, Executive Officer, Natixis Natixis Funds Trust II and Global Asset Management, Natixis Funds Trust III L.P.-U.S. and Asia
* Each Trustee serves until retirement, resignation or removal from the Board of Trustees. The current retirement age is 72. The position of Chairperson of the Board is appointed for a two-year term. Ms. Moose was re-appointed to serve an additional two-year term as the Chairperson of the Board of Trustees on September 14, 2007. ** Each person listed above, except as noted, holds the same position(s) with the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series. Previous positions during the past five years with Natixis Distributors, L.P., Natixis Asset Management Advisors, L.P. or Loomis, Sayles & Company, L.P. are omitted if not materially different from a Trustee's or officer's current position with such entity. 73 TRUSTEE AND OFFICER INFORMATION ***The Trustees of the Trusts serve as Trustees of a fund complex that includes all series of Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds Trust III, Natixis Funds Trust IV, Natixis Cash Management Trust, Loomis Sayles Funds I, Loomis Sayles Funds II, Hansberger International Series and Gateway Trust (the "Funds' Trusts"). /1/ Mr. Richard Darman served as a Trustee until his death on January 25, 2008. /2/ Mr. Blanding is deemed an "interested person" of the Trusts because he holds the following positions with affiliated persons of the Trusts: President, Chairman, Director and Chief Executive Officer of Loomis, Sayles & Company, L.P. /3/ Mr. Hailer is deemed an "interested person" of the Trusts because he holds the following positions with affiliated persons of the Trusts: President and Chief Executive Officer of Natixis Distribution Corporation, Natixis Global Asset Management, L.P., Natixis Global Associates, Inc., Natixis Asset Management Advisors, L.P. and Natixis Distributors, L.P. 74 TRUSTEE AND OFFICER INFORMATION
Position(s) Held with the Trusts, Length of Time Name and Year of Birth Served and Term of Office* Principal Occupation(s) During Past 5 Years** ---------------------- -------------------------- --------------------------------------------- OFFICERS OF THE TRUSTS Coleen Downs Dinneen Secretary, Clerk and Chief Senior Vice President, General Counsel, Secretary and Clerk (1960) Legal Officer, since (formerly, Deputy General Counsel, Assistant Secretary and September 2004 Assistant Clerk), Natixis Distribution Corporation, Natixis Distributors, L.P. and Natixis Asset Management Advisors, L.P. Russell L. Kane Chief Compliance Officer, Chief Compliance Officer for Mutual Funds, Senior Vice (1969) since May 2006, Assistant President, Deputy General Counsel, Assistant Secretary and Secretary, since June 2004 Assistant Clerk, Natixis Distributors, L.P. and Natixis Asset and Anti-Money Management Advisors, L.P.; Vice President, Associate General Laundering Officer since Counsel, Assistant Secretary and Assistant Clerk, Natixis April 2007 Distribution Corporation; formerly, Senior Counsel, Columbia Management Group. Michael C. Kardok Treasurer, Principal Senior Vice President, Natixis Asset Management Advisors, (1959) Financial and Accounting L.P. and Natixis Distributors, L.P.; formerly, Senior Director, Officer, since October PFPC Inc. 2004 Robert Krantz Executive Vice President, Executive Vice President, Natixis Distributors, L.P. and (1964) since September 2007 Natixis Asset Management Advisors, L.P.
* Each officer of the Trusts serve for an indefinite term in accordance with the Trusts' current By-laws until the date his or her successor is elected and qualified, or until he or she sooner dies, retires, is removed or becomes disqualified. ** Each person listed above, except as noted, holds the same position(s) with the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Hansberger International Series. Previous positions during the past five years with the Distributor, Natixis Advisors or Loomis Sayles are omitted, if not materially different from a Trustee's or officer's current position with such entity. 75 ITEM 2. CODE OF ETHICS. The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer, principal financial officer and persons performing similar functions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Trustees of the Registrant has established an audit committee. Ms. Cynthia L. Walker, Mr. Daniel M. Cain and Mr. Jonathan P. Mason are members of the audit committee and have been designated as "audit committee financial experts" by the Board of Trustees. Each of these individuals is also an Independent Trustee of the Registrant. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Fees billed by the Principal Accountant for services rendered to the Registrant. The table below sets forth fees billed by the principal accountant, PricewaterhouseCoopers LLP, for the past two fiscal years for professional services rendered in connection with a) the audit of the Registrant's annual financial statements and services provided in connection with regulatory filings; b) audit-related services (including services that are reasonably related to the performance of the audit of the Registrant's financial statements but not reported under "Audit Fees"); c) tax compliance, tax advice and tax planning and d) all other fees billed for professional services rendered by the principal accountant to the Registrant, other than the services provided as reported as a part of (a) through (c) of this Item.
AUDIT-RELATED AUDIT FEES FEES/1/ TAX FEES/2/ ALL OTHER FEES/3/ --------------- ------------- ------------- ----------------- 2006 2007 2006 2007 2006 2007 2006 2007 ------- ------- ------ ---- ------ ------ ------ ---- Harris Associates Large Cap Value Fund......... $29,504 $33,767 $3,750 $297 $6,483 $7,728 $2,755 $--
1. The audit-related fees for 2006 consist of the performance of agreed upon procedures related to a change in the Trust's custodian. The audit-related fees for 2007 consist of the performance of agreed upon procedures related to the Registrant's deferred compensation plan. 2. The tax fees consist of a review of year-end shareholder reporting and a review of the Registrant's tax returns (2006 and 2007). 3. Other fees for 2006 consist of a review of income and expense allocation methods in conjunction with the annual review of the Trust's management contract. Aggregate fees billed to the Registrant for non-audit services during 2006 and 2007 were $12,988 and $8,025, respectively. Fees billed by the Principal Accountant for services rendered to the Adviser and Control Affiliates. The following table sets forth the non-audit services provided by the Trust's principal accountant to Natixis Asset Management Advisors, L.P. and entities controlling, controlled by or under common control with Natixis Asset Management Advisors, L.P. that provide ongoing services to the Trust ("Control Affiliates") for the last two fiscal years. AUDIT-RELATED FEES TAX FEES ALL OTHER FEES ------------------ --------- -------------- 2006 2007 2006 2007 2006 2007 ---- ------- ---- ---- ------- ---- Control Affiliates................. $-- $12,000 $-- $-- $15,800 $-- Aggregate fees billed to Control Affiliates for non-audit services during 2006 and 2007 were $15,800 and $12,000, respectively. None of the audit-related, tax and other services provided by the Registrant's principal accountant were approved by the Audit Committee pursuant to (c)(7)(i)(C) of Regulation S-X. Audit Committee Pre Approval Policies. Annually, the Registrant's Audit Committee reviews the audit, audit-related, tax and other non-audit services together with the projected fees, for services proposed to be rendered to the Trust and/or other entities for which pre-approval is required during the upcoming year. Any subsequent revisions to already pre-approved services or fees (including fee increases) and requests for pre-approval of new services would be presented for consideration quarterly as needed. If, in the opinion of management, a proposed engagement by the Registrant's independent accountants needs to commence before the next regularly scheduled Audit Committee meeting, any member of the Audit Committee who is an independent Board member is authorized to pre-approve the engagement, but only for engagements to provide audit, audit related and tax services. This approval is subject to review of the full Audit Committee at its next quarterly meeting. All other engagements require the approval of all the members of the Audit Committee. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Included as part of the Report to Shareholders filed as Item 1 herewith. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS. There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees. ITEM 11. CONTROLS AND PROCEDURES. The Registrant's principal executive officer and principal financial officer have concluded that the Registrant's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Registrant in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. There were no changes in the Registrant's internal control over financial reporting that occurred during the Registrant's last fiscal quarter of the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) Code of Ethics required by Item 2 hereof, filed herewith as exhibit (a)(1). (a) (2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 [17 CFR 270.30a-2(a)], filed herewith as exhibits (a)(2)(1)and (a)(2)(2), respectively. (a) (3) Not applicable. (b) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 filed herewith as exhibit (b). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Natixis Funds Trust II By: /s/ John T. Hailer ------------------------------ Name: John T. Hailer Title: President and Chief Executive Officer Date: February 21, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/ John T. Hailer ------------------------------ Name: John T. Hailer Title: President and Chief Executive Officer Date: February 21, 2008 By: /s/ Michael C. Kardok ------------------------------ Name: Michael C. Kardok Title: Treasurer Date: February 21, 2008