N-CSR 1 d872410dncsr.htm NATIXIS FUNDS TRUST II Natixis Funds Trust II
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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)

 

 

Coleen Downs Dinneen, Esq.

NGAM Distribution, 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, 2014

 

 

 

 

 


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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:


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ANNUAL REPORT

December 31, 2014

 

LOGO

 

CGM Advisor Targeted Equity Fund

Natixis Oakmark Fund

Natixis Oakmark International Fund

Vaughan Nelson Small Cap Value Fund

Vaughan Nelson Value Opportunity Fund

 

 

TABLE OF CONTENTS

Portfolio Review  page  1

Portfolio of Investments  page 24

Financial Statements  page  43

Notes to Financial Statements  page 72


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CGM ADVISOR TARGETED EQUITY FUND

 

Manager   Symbols
G. Kenneth Heebner, CFA®   Class A    NEFGX
Capital Growth Management Limited Partnership   Class B    NEBGX
  Class C    NEGCX
  Class Y    NEGYX

 

 

Objective

The Fund seeks long-term growth of capital through investments in equity securities of companies whose earnings are expected to grow at a faster rate than that of the overall U.S. economy.

 

 

Market Conditions

At the start of 2014, cold weather gripped most of the country, slowing retail and auto sales, and putting a damper on hiring. As the winter drew to a close, however, both the weather and the economy began to warm up. The economy gained momentum in the latter half of the year, growing by a 5% annual rate in the third quarter, recording the strongest growth in more than a decade according to the U.S. Commerce Department. Meanwhile, as labor market conditions improved based on solid job gains and a lower unemployment rate, consumer spending took off and the stock market continued to rise to new heights. While a major decline in oil prices late in the period raised questions about energy-related employment in the United States, falling gasoline and heating oil prices provided a significant boost to the domestic economy by increasing disposable consumer income, and therefore, consumer spending.

In contrast, foreign economic activity proved generally disappointing during the period. Chinese economic growth, in particular, slowed appreciably, due primarily to speculative investment in residential real estate development, which created overcapacity and negatively impacted construction activity. Elsewhere, Russia slipped into recession as a result of declining oil prices and sanctions. European economic activity, for the most part, was mixed, while developing countries were hard hit by weakening commodity prices.

Performance Results

For the 12 months ended December 31, 2014, Class A shares of CGM Advisor Targeted Equity Fund returned 8.27% at net asset value. The Fund underperformed its benchmark, the S&P 500® Index, which returned 13.69% for the year.

Explanation of Fund Performance

In anticipation of significant U.S. economic growth, the Fund remained fully invested throughout 2014. The U.S. economy did not disappoint, as growth remained brisk throughout the period, showing signs of even greater expansion at year-end. We believed the Fund was positioned to benefit from an improving business climate, yet lagged its benchmark because of a major concentration in underperforming homebuilding stocks, as well as disappointments in several individual securities.

 

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During the period, the homebuilding industry uncharacteristically lagged the economic recovery. Mortgage companies became increasingly conservative in their lending decisions based on past experience with the housing collapse as well as stricter U.S. government-mandated lending requirements. Despite strong corporate earnings growth, our homebuilding stocks underperformed broad market indices.

Individual detractors to fund performance included Itau Unibanco, Ford Motor Company, and Tenet Healthcare. Shares of Itau Unibanco, the leading bank in Latin America as well as one of the world’s largest, fell as the Brazilian Stock Market weakened. Brazilian equities tumbled as declining commodity prices had a negative impact on the Brazilian economy and currency. We continue to own this stock. Automobile giant Ford Motor Company was adversely affected when management announced that the introduction costs for the all new aluminum F-150 pick-up truck would run higher than anticipated. We continue to own Ford. Tenet Healthcare Corporation, one of the country’s leading and most comprehensive health care services companies, suffered a drop in stock price when the firm revealed that the company’s financial benefits from the Affordable Care Act were below investor expectations. We sold the issue at a loss.

The Fund realized a major gain in Atlanta-based Delta Airlines, as the industry benefited from consolidation and strong business travel. Gilead Sciences, a leading American biotechnology company, also appreciated significantly as sales of its new Hepatitis C drug, Sovaldi, exceeded expectations. Both Delta and Gilead Sciences were sold.

Meanwhile, shares of Micron Technology, one of the world’s top five semiconductor producers, rose substantially as healthy earnings reflected the benefits of industry consolidation and better-than-expected demand for DRAM chips. DRAM, or dynamic random-access memory, is the main memory used in desktops, laptops and workstation computers as well as some video game consoles. We continue to hold this issue.

Outlook

We are optimistic about the outlook for the U.S. economy in 2015, as it continues to gain strength and momentum. While the forecast for many foreign economies remains questionable, the future of the U.S. economy should continue to benefit from rising consumer confidence and spending, sharply lower energy prices, and re-liquefied consumer balance sheets. Although the Federal Reserve (Fed) concluded its quantitative easing program in October 2014, it has shown no sign of pulling back from its pledge of patience regarding interest rate hikes. Based on these factors, the U.S. economy should continue to expand as utilization of manufacturing capacity increases and corporations are motivated to make capital expenditures to provide for additional demand. With expectations for a favorable economic environment ahead, CGM Advisor Targeted Equity Fund will continue to focus on individual stocks with the potential to grow earnings at a faster rate than that of the overall U.S. economy.

 

 

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CGM ADVISOR TARGETED EQUITY FUND

 

Growth of $10,000 Investment in Class A Shares

December 31, 2004 through December 31, 2014

 

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Average Annual Total Returns — December 31, 2014

 

       
      1 Year      5 Years      10 Years  
   
Class A (Inception 11/27/68)           
NAV      8.27      9.84      7.37
With 5.75% Maximum Sales Charge      2.04         8.55         6.74   
   
Class B (Inception 2/28/97)           
NAV      7.47         9.02         6.59   
With CDSC1      2.94         8.73         6.59   
   
Class C (Inception 9/1/98)           
NAV      7.43         9.00         6.58   
With CDSC1      6.52         9.00         6.58   
   
Class Y (Inception 6/30/99)           
NAV      8.52         10.09         7.65   
   
Comparative Performance           
S&P 500® Index2      13.69         15.45         7.67   

Past performance does not guarantee future results. The table(s) does not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. Unlike a fund, an index is not managed and does not reflect fees and expenses.

 

1 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.

 

2

S&P 500® Index is a widely recognized measure of U.S. stock market performance. It is an unmanaged index of 500 common stocks chosen for market size, liquidity, and industry group representation, among other factors.

 

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NATIXIS OAKMARK FUND

 

Managers   Symbols
William C. Nygren, CFA®   Class A    NEFOX
Kevin G. Grant, CFA®   Class B    NEGBX
M. Colin Hudson, CFA®   Class C    NECOX
Michael J. Mangan, CFA®   Class Y    NEOYX
Harris Associates L.P.  

 

* Michael J. Mangan became a portfolio manager of the Fund effective August 1, 2014.

 

 

Objective

The Fund seeks long-term capital appreciation.

 

 

Market Conditions

As we head into 2015, we are faced with a varied and interesting investment landscape. Oil prices are down by more than half from their peak, commodity prices are off by more than one-third since June, the U.S. dollar is up double digits and emerging markets are down. And amidst all of this, the U.S. stock market recovered and ended the year within decimal points of its all-time high. Strong corporate fundamentals and reasonable market valuations continued to provide a sound argument and reward for focused investment portfolios with long-term orientations.

The unfolding story in energy and commodity markets is an important one. The sharp decline in oil prices creates serious fiscal challenges for some countries—Russia, Venezuela and Iran come immediately to mind. New, hopefully better geopolitical realities will undoubtedly emerge over the long run, although the near-term fallout in these countries is much less predictable. While energy producers now face a more hostile economic environment (this will also reverse at some point as consumption eventually rises), there are dramatic positive benefits for individuals and most businesses. Retail gas prices are headed toward less than $2 a gallon, a consumer benefit projected by some analysts to equal the effect of a $200 billion tax cut. And while reduced capital spending and employment by energy producers will offset some of the good news, the energy story is an unmistakable positive for consumer confidence/spending and fundamental business profitability.

Performance Results

For the 12 months ended December 31, 2014, Class A shares of the Natixis Oakmark Fund returned 10.43% at net asset value. The Fund underperformed its benchmark, the S&P 500® Index, which returned 13.69%.

Explanation of Fund Performance

On February 28, 2014, Bill Nygren, Kevin Grant and Colin Hudson assumed portfolio management responsibilities for the Fund. The Fund was renamed the “Natixis Oakmark Fund.” In addition, Michael Mangan became a manager of the Fund on August 1, 2014. Due to these changes in management, an explanation of performance before and after February 28, 2014, is provided below.

 

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As value investors with an emphasis on individual stock selection, our sector weights are a by-product of our bottom-up process. For the period from January 1, 2014 to February 28, 2014, holdings in the consumer discretionary sector contributed the most to the return, while holdings in the financials sector detracted the most from the return. For the period from March 1, 2014, to December 31, 2014, shares in the technology and financials sectors added the most value. Holdings in the energy and materials sectors detracted the most value during the period.

Apache was the largest detractor to fund performance from March 1, 2014 to December 31, 2014. Recent weakness in energy spot prices caused Apache’s share price to decline during the fourth quarter. However, the company recently entered into an agreement to sell its Kitimat and Wheatstone LNG projects for $3.7 billion, which will provide the company with cash for share repurchases. The deal shows Apache’s intent to follow through on a plan originally introduced in 2013 to divest its fully valued oil and gas assets and subsequently spinoff or sell all of its international assets. In a recent meeting with the company, we confirmed that Apache is on track to complete this process by mid-2015. Furthermore, newly appointed COO John Christmann recently changed the capital allocation process and implemented a system for ranking the internal rates of return on wells across North America to ensure a more efficient use of capital. Christmann also replaced the operating heads of each region, changing their compensation metrics to focus on returns, and put in place a new geoscience team, which he considers to be the “best in the business.” In our view, these improvements are strengthening Apache’s underlying value, and we believe the true quality of this company is currently under-appreciated by the market.

Google was also a detractor to the Fund’s performance during this period. Investors appear concerned over Google’s decelerating revenue growth and profit margins, which pressured its share price in the fourth quarter. In light of the fact that the company’s revenue has grown 20% year to date through the third quarter, we believe that some deceleration is expected. The possible implementation of new European Union regulations and the company’s announcement that it would retire its digital goods application Google Wallet (which gives competitor Apple an advantage in the mobile pay space and takes Google out of contention as a third-party payment processing solution for online merchants) also troubled investors. However, we believe that Google maintains very strong momentum to support continued growth and is well positioned to take advantage of the shift in advertising dollars to online outlets. Google’s third-quarter profit grew 10%, which to us is indicative of a healthy business. We continue to believe the valuation for this high-quality company with dominant market share remains attractive, offering a compelling reason to own.

The leading contributors to fund performance from March 1, 2014 to December 31, 2014, were Intel and Apple. Intel’s market dominance in many fast-growing areas such as cloud, storage, and high-performance computing continues to benefit its long-term growth prospects. The company recently announced that it would expand the adoption of Intel-based chips in mobile devices in China. We believe this move provides direct access to a large new market and demonstrates new Intel CEO Brian Krzanich’s creative, pragmatic approach to maximizing the value of the company. Management continues to return capital to shareholders by lowering cash balances and increasing the pace of buybacks. Apple’s

 

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fourth-quarter earnings results were solid, which included a 20% rise in earnings per share and a 12% increase in sales. The company generated $13.3 billion in cash during the quarter and returned $20 billion to shareholders via buybacks and dividends. Furthermore, holiday sales results showed new-device activations for Apple iPhones for the week prior to Christmas bested all others combined. We are enthusiastic about the direction the management team is taking given its ability to maintain and grow Apple’s devoted client base, which is evidenced most recently by the rollout of Apple Pay. Our investment thesis for this company is intact, as we believe Apple’s capital position is solid and its management team is working to enhance shareholder value.

Outlook

All things considered, we find that company valuations are still compelling; genuine reform in two of the larger emerging market economies, China and India, should help to rekindle the global economy; and the stronger U.S. dollar should help generate positive earnings in most foreign companies.

 

 

Growth of $10,000 Investment in Class A Shares4

December 31, 2004 through December 31, 2014

 

LOGO

See notes to chart on page 7.

 

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NATIXIS OAKMARK FUND

 

Average Annual Total Returns — December 31, 20144

 

       
      1 Year      5 Years      10 Years  
   
Class A (Inception 5/6/31)           
NAV      10.43      14.67      6.74
With 5.75% Maximum Sales Charge      4.06         13.32         6.10   
   
Class B (Inception 9/13/93)           
NAV      9.56         13.81         5.93   
With CDSC1      4.88         13.57         5.93   
   
Class C (Inception 5/1/95)           
NAV      9.55         13.82         5.93   
With CDSC1      8.62         13.82         5.93   
   
Class Y (Inception 11/18/98)           
NAV      10.70         14.97         7.05   
   
Comparative Performance           
S&P 500® Index2      13.69         15.45         7.67   
Russell 1000® Value Index3      13.45         15.42         7.30   

Past performance does not guarantee future results. The table(s) does not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. Unlike a fund, an index is not managed and does not reflect fees and expenses.

 

1 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.

 

2

S&P 500® Index is a widely recognized measure of U.S. stock market performance. It is an unmanaged index of 500 common stocks chosen for market size, liquidity, and industry group representation, among other factors. Effective at the close of business on February 28, 2014, the S&P 500® Index replaced the Russell 1000® Value Index as the Fund’s primary benchmark because Harris Associates believes the S&P 500® Index is a more appropriate representation of the universe of securities in which the Fund may invest.

 

3

Russell 1000® Value Index is an unmanaged index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000® companies with lower price-to-book ratios and lower expected growth values.

 

4 Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

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NATIXIS OAKMARK INTERNATIONAL FUND

 

Managers   Symbols
David G. Herro, CFA®   Class A    NOIAX
Robert A. Taylor, CFA®   Class C    NOICX
Harris Associates L.P.  

 

 

Objective

The Fund seeks long-term capital appreciation.

 

 

Market Conditions

Over the course of 2014, major global markets were affected by a variety of factors including currency movement, the rapid decline in oil prices, and continuing unrest in Ukraine. From December 31, 2013 to December 31, 2014, the value of the U.S. dollar increased over 9% compared to the Australian dollar; 14% compared to the euro; and close to 14% versus the yen. The immediate impact of a strong U.S. dollar on foreign share prices is lower U.S. dollar returns of share prices as the currency declines are absorbed. However, over the medium-term, the weak currency effect should begin to positively affect the earnings results and share prices of most foreign-based multinational companies.

The rapid decline of oil prices resulted in both the Brent and West Texas Intermediate (WTI) crude oil benchmarks plummeting around 50% in 2014. Overall, this drop has translated to measurable positives for global economic growth and corporate earnings, most especially for users of transportation fuels, petrochemicals, plastics and fertilizers. However, it has also proved challenging for energy companies and those countries that depend on oil exports.

Lastly, markets were challenged by the ongoing situation in Ukraine, as sanctions on imports from and exports to Russia saw businesses struggle to maintain normal operations and unload a surplus of stock that would have otherwise been dealt to Russia. This example demonstrates why a company’s nation of domicile is far less important than where it derives its revenues. We believe our analysis of the economics of a business, the company’s ownership structure, and the alignment of management with shareholders, are more important considerations. In 2014, it appears the U.S.-domiciled companies trumped all others, but the investing world has a history of restoring equilibrium to such imbalances. With that in mind, we continue to seek out value wherever we may find it.

Performance Results

For the 12 months ended December 31, 2014, Class A shares of Natixis Oakmark International Fund returned -6.05% at net asset value. The Fund underperformed its benchmark, the MSCI World ex USA Index (Net), which returned -4.32%.

Explanation of Fund Performance

Geographically we ended the year with 81% of our holdings in Europe, 11% in Japan and 4% in Australia. The remaining positions are in North America (Canada), South Korea,

 

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Hong Kong, and the Middle East (Israel). As value investors with an emphasis on individual stock selection, our country and sector weights are a byproduct of our bottom-up process.

On an absolute basis, shares in the technology sector produced the best collective return. Holdings in the consumer staples and industrials sectors declined the most during the year.

The largest detractors from return were Tesco and Honda Motor. Tesco was the largest detractor for the calendar year and was a major cause of the Fund’s underperformance for the year. The unexpected departure of the CEO, a large profit warning and an accounting discrepancy led us to sell our shares in the stock. Honda Motor’s second-quarter operating profit was below investors’ expectations, partially due to costs associated with a vehicle recall in Japan. During the fourth quarter, the National Highway Traffic Safety Administration opened a probe into whether Honda failed to report incidents involving air bag malfunctions that resulted in injuries or deaths. Subsequently, Honda launched its own independent audit of “potential inaccuracies” related to under-reporting. Because an outside company manufactured the airbags, we believe that company may be held partially responsible for any liability claims made against Honda. Based on similar circumstances involving vehicle manufacturers recalls, we assess that Honda’s liability will not materially affect its shareholders. Global auto demand remains strong, which we think will benefit Honda, and we expect the company’s performance will improve.

The top contributors to return were Intesa Sanpaolo and AMP. Intesa’s share price has rebounded as fears over Italy’s banking system and government have subsided. We have always believed these fears were overblown and that Italy was in much better long-term fiscal health than many of its periphery countries. The new CEO has committed to return EUR 10 billion to shareholders via dividends over the next four years. This constitutes a cumulative payout ratio in excess of 70%. Even with this return of capital to shareholders, Intesa should be over-capitalized compared with Basel III requirements, leaving the door open for additional capital returns. We believe management has a solid plan for the future and believe the investment will continue to provide value for our shareholders. AMP’s new CEO Craig Meller is committed to a continued focus on reducing expenses via a cost-out plan, reinforcing customer relationships, and boosting retention by way of better product targeting and omnichannel distribution. We believe AMP is well positioned in the market to benefit from expected increases in retirement savings and wage growth in Australia.

While the U.S. dollar appreciated versus many foreign currencies during the fourth quarter, we continue to believe some currencies are overvalued. Based on the increased strength of the U.S. dollar, we decreased our defensive currency hedges. As of year-end approximately 25% of the Swiss franc, 23% of the Australian dollar and 15% of the Swedish krona held by the Fund were hedged.

Outlook

All things considered, we find that company valuations are still compelling; genuine reform in two of the larger emerging market economies, China and India, should help to rekindle the global economy; and the stronger U.S. dollar should help generate positive earnings in most foreign companies.

 

 

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Growth of $10,000 Investment in Class A Shares3

December 15, 2010 (inception) through December 31, 2014

 

LOGO

Average Annual Total Returns — December 31, 20143

 

     
      1 Year      Life of Fund  
   
Class A (Inception 12/15/10)        
NAV      -6.05      7.63
With 5.75% Maximum Sales Charge      -11.46         6.06   
   
Class C (Inception 12/15/10)        
NAV      -6.67         6.85   
With CDSC1      -7.57         6.85   
   
Comparative Performance        
MSCI World ex USA Index (Net)2      -4.32         4.62   

Past performance does not guarantee future results. The table(s) does not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. Unlike a fund, an index is not managed and does not reflect fees and expenses.

 

1 Performance for Class C shares assumes a 1.00% contingent deferred sales charge (“CDSC”) applied when you sell shares within one year of purchase.

 

2 MSCI World ex USA Index (Net) is an unmanaged index that is designed to measure the equity market performance of developed markets, excluding the United States. The index calculates reinvested dividends net of withholding taxes using Luxembourg tax rates.

 

3 Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

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VAUGHAN NELSON SMALL CAP VALUE FUND

 

Managers    Symbols
Dennis G. Alff, CFA®    Class A    NEFJX
Chad D. Fargason    Class B    NEJBX
Chris D. Wallis, CFA®    Class C    NEJCX
Scott J. Weber, CFA®    Class Y    NEJYX
Vaughan Nelson Investment Management, L.P.

Effective July 31, 2009, the fund was closed to new investors.

 

 

Objective

The Fund seeks capital appreciation.

 

 

Market Conditions

The equity markets continued to advance even as the Federal Reserve (the Fed) ended the quantitative easing (QE) program that began in 2009. Current volatility and deteriorating market breadth may continue as capital markets adjust to global shifts in central bank policy and to escalating geopolitical tensions. The European Central Bank (ECB) has committed to easier monetary policy while the Fed is planning to raise interest rates in 2015. We believe the market is discounting continued modest improvement in earnings growth and an environment where deflationary risks are modestly higher than inflationary risks. We continue to expect U.S. companies to face margin pressures as the Fed raises interest rates, as capital expenditures accelerate, and as rising operating costs challenge modest revenue growth.

Performance Results

For the 12 months ended December 31, 2014, Class A shares of Vaughan Nelson Small Cap Value Fund returned 8.79% at net asset value. The Fund outperformed its benchmark, the Russell 2000® Value Index, which returned 4.22%.

Explanation of Fund Performance

Portfolio performance benefitted primarily from stock selection during the past year. However, a general rise in equity markets also helped returns. The best-performing stocks in the portfolio were those with the ability to grow their revenues and earnings despite the tepid economic recovery. These high-quality, well-managed businesses, many of which benefit from long-term secular tailwinds, are a natural fit with our returns-focused philosophy and were uncovered through our company-specific stock selection process. The portfolio continued to be materially underweight in REITs and utilities during the year in comparison to its benchmark, as both sectors were expensive and did not meet our return criteria. Information technology, consumer discretionary, healthcare and industrial stocks were the biggest contributors to fund performance, while energy stocks detracted.

Stock selection drove performance in the information technology sector with Skyworks Solutions, Verint Systems and SS&C Technologies making the most significant contributions to performance. Skyworks benefited from global growth in mobile devices

 

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and connected products, as well as improved capital allocation by management. The company continued to return cash to shareholders via share repurchases and also initiated a quarterly dividend. We exited our position in Skyworks during the year. Verint Systems completed an accretive acquisition of KANA Software during the first quarter of 2014, which helped supplement the company’s core enterprise software offering and accelerate revenue and earnings growth. Verint also won several large cyber security contracts during the year, which provided a new avenue of future growth not discounted by the market. SS&C Technologies continued to show strength in its core business, and benefited from the fund administration-outsourcing trend. Additionally an acquisition completed in the fourth quarter should expand its international presence and create new cross-selling opportunities.

Stock selection also drove performance in the consumer discretionary sector, with Jack in the Box, Inc. and Harman International making significant contributions to performance. Jack in the Box benefited from a continued turnaround in its Qdoba Mexican Grille restaurants, as well as market share gains at its Jack in the Box venues. The company also returned cash to shareholders via stock buybacks and initiated a quarterly dividend. Harman International showed improved margins and earnings growth by recognizing higher margin revenues from backlog built on a scalable platform. We exited our position in Harman during the year.

Performance in the healthcare sector was driven by allocation and stock selection. In comparison with its benchmark, the portfolio was materially overweight in the sector as companies with attractive fundamentals and valuations continued to emerge. The largest contributors to performance were Teleflex Inc. and AmSurg Corp. Teleflex showed improved top line growth during the year driven by geographic expansion and the acquisition of a complementary business. The company also continues to make progress on restructuring its cost base to improve margins. AmSurg acquired faster-growing Sheridan Healthcare during the year, and the stock benefited as investors began to recognize the attractiveness of the deal.

Industrial sector performance was driven by broad-based positive stock selection, with KAR Auction Services as the largest contributor to performance. KAR Auction Services started to benefit from the ramp-up in whole car auction volume that typically follows the cyclical rebound in new car sales. Also, management committed to returning more excess cash to shareholders via share repurchases and an increased dividend.

The energy sector detracted from performance as exploration and production companies Oasis Petroleum and Bonanza Creek Energy were hurt by the fall in oil prices during the second half of the year. Performance at Oasis was also hurt by higher than expected capital outlays at recently acquired acreage and overall poor cost control. We exited our positions in both Oasis and Bonanza Creek during the year.

Other notable performers during the year include Rite Aid Corp and Graphic Packaging Corp. Rite Aid continued to show progress on its turnaround strategy and demonstrated improving same-store sales metrics. In addition, an expanded drug distribution agreement with McKesson Corp should meaningfully reduce drug-related costs when fully

 

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VAUGHAN NELSON SMALL CAP VALUE FUND

 

implemented. We exited our position in Rite Aid during the year. Graphic Packaging Corp completed several small acquisitions and divestitures during the year, while also improving productivity in its core business. Strong cash generation allowed the company to reduce its debt levels, while also returning cash to shareholders via share repurchases.

The largest increases in sector weightings were in healthcare and consumer discretionary. The increase in healthcare is attributable to the additions of AmSurg Corp, Alere Inc., Haemonetics Corp, and Merit Medical Systems. In consumer discretionary, new holdings include Home Shopping Network, Steve Madden Ltd, ServiceMaster Global, and Tenneco Inc. as we selectively added exposure to this slowly recovering area of the economy.

The largest decreases in sector weightings were in energy, financials, industrials, and consumer staples. The reduction in energy holdings was due to exiting our positions in Atwood Oceanics and Oasis Petroleum, while reducing our position in Forum Energy. In financials, we reduced our exposure to the banking sector by exiting positions in Associated Bancorp, Fulton Financial, and Hancock Holding Co. In industrials, we exited all of our positions in distributors, selling DXP Enterprises, United Rentals, and WESCO International. We also exited positions in Rite Aid and Elizabeth Arden within the consumer staples sector, and remain underweight the sector.

Outlook

Despite the potential for a correction in equity markets, we expect the credit market to remain supportive of equity values over the medium term and will welcome any correction as an opportunity to make attractive investments. Even without a broader equity market correction, we expect market breadth to continue to narrow. Companies can no longer rely on a recovery in consumption, lower interest rates, share repurchases, and delayed capital expenditures to drive earnings growth. Going forward, companies will be required to increase capital expenditures, research and development, and other operating costs in order to sustain or grow earnings. Further, the strengthening U.S. dollar is likely to impact top line sales growth, especially for the multinationals that generate a significant portion of their revenues outside of the U.S. While the nature of the bull market is changing, there are still individual stocks that will perform well despite the increasing market headwinds. We continue to seek investments in companies that have better pricing power, lower earnings variability, higher profitability, and stronger balance sheets than the broader investment universe. We still do not favor any single industry or sector, and continue to look for companies with the characteristics noted above that trade at attractive valuations.

 

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Growth of $10,000 Investment in Class A Shares4

December 31, 2004 through December 31, 2014

 

LOGO

See notes to chart on page 15.

 

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VAUGHAN NELSON SMALL CAP VALUE FUND

 

Average Annual Total Returns — December 31, 20144

 

       
      1 Year      5 Years      10 Years  
   
Class A (Inception 12/31/96)           
NAV      8.79      15.65      11.16
With 5.75% Maximum Sales Charge      2.54         14.29         10.50   
   
Class B (Inception 12/31/96)           
NAV      7.87         14.78         10.33   
With CDSC1      3.51         14.60         10.33   
   
Class C (Inception 12/31/96)           
NAV      7.94         14.78         10.33   
With CDSC1      7.07         14.78         10.33   
   
Class Y (Inception 8/31/06)2           
NAV      9.04         15.94         11.41   
   
Comparative Performance           
Russell 2000® Value Index3      4.22         14.26         6.89   

Past performance does not guarantee future results. The table(s) does not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. Unlike a fund, an index is not managed and does not reflect fees and expenses.

 

1 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.

 

2 Prior to the inception of Class Y shares (8/31/06), performance is that of Class A shares and reflects the higher net expenses of that share class.

 

3

Russell 2000® Value Index is an unmanaged index that measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000® companies with lower price-to-book ratios and lower forecasted growth values.

 

4 Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

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VAUGHAN NELSON VALUE OPPORTUNITY FUND

 

Managers   Symbols
Dennis G. Alff, CFA®   Class A    VNVAX
Chad D. Fargason   Class C    VNVCX
Chris D. Wallis, CFA®   Class N    VNVNX
Scott J. Weber, CFA®   Class Y    VNVYX
Vaughan Nelson Investment Management, L.P.

 

 

Objective

The Fund seeks long-term capital appreciation.

 

 

Market Conditions

The equity markets continued to advance even as the Federal Reserve (the Fed) ended the quantitative easing (QE) program that began in 2009. Current volatility and deteriorating market breadth may continue as capital markets adjust to global shifts in central bank policy and to escalating geopolitical tensions. The European Central Bank (ECB) has committed to easier monetary policy while the Fed is planning to raise interest rates in 2015. We believe the market is discounting continued modest improvement in earnings growth and an environment where deflationary risks are modestly higher than inflationary risks. We continue to expect U.S. companies to face margin pressures as the Fed raises interest rates, as capital expenditures accelerate, and as rising operating costs challenge modest revenue growth.

Performance Results

For the 12 months ended December 31, 2014, Class A shares of Vaughan Nelson Value Opportunity Fund returned 10.92% at net asset value. The Fund underperformed its benchmark, the Russell Midcap® Value Index, which returned 14.75%.

Explanation of Fund Performance

Stock and sector selection contributed evenly to the Fund’s underperformance for the year. The majority of the Fund’s underperformance stems from the decision to underweight REITs and utilities coupled with the dramatic selloff in energy and commodity-related stocks. The portfolio remains significantly underweight REITs and Utilities relative to its benchmark, as both sectors are expensive and do not meet our return criteria. While this increases the portfolio’s cyclicality, we believe the positioning is warranted. We are confident that the portfolio’s individual companies have competitive positions or secular opportunities that will allow their stocks to materially outperform the market over time. We are also willing to accept the modestly higher level of cyclicality versus the risk of timing the market or maintaining exposures to less cyclical areas that appear overvalued. Technology, healthcare, industrials, consumer discretionary, and consumer staples stocks were the biggest contributors to absolute performance, while only energy and materials detracted. On a relative basis, technology, healthcare, and industrials contributed the most to returns while REITs, utilities, materials, and energy were the greatest detractors.

 

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VAUGHAN NELSON VALUE OPPORTUNITY FUND

 

Stock selection primarily drove the strong returns and relative performance in the technology sector. However, the portfolio also benefited from being overweight in semiconductors and IT services companies as compared to the benchmark. To that end, notable standouts for the year include Skyworks Solutions, Avago Technologies, and Micron Technology. Skyworks and Avago benefited from global growth in mobile devices and connected products, and from new design wins and content gains on mobile platforms. The companies are positioned to benefit from several secular trends, including increased penetration of smart phone handsets, increased complexity in handsets as we move to 4G/LTE, and stronger demand for technology and equipment within the industrial and auto markets. Micron benefited from better volume growth and from its acquisition of Elpida, which further consolidated the semiconductor manufacturing industry which is now behaving more rationally by limiting capacity growth.

Stock selection stood out as the driver in the healthcare sector with HCA Holdings and Community Health Systems contributing the most to the sector’s outperformance. HCA and Community Health are acute-care hospitals that benefited from the passage of the Affordable Care Act by realizing higher volumes and lower bad debt expense due to a larger insured population base. Further, both companies have been actively acquiring other hospital systems to layer on their networks. Community Health completed a large acquisition of Health Management Associates, an operator of 71 hospitals in 15 states, in 2014.

The industrials sector also benefited from strong stock selection during the year. Top-performing companies included United Rentals and Spectrum Brands. United Rentals was aided by strong demand for rental equipment and by continued synergies from the RSC Holdings acquisition that was completed in 2012. Spectrum Brands benefited from a recovering economic environment, market share gains, and its strong free cash flow generation, which was used for acquisitions and to pay down debt.

Financials, materials, utilities, and energy detracted from relative performance during the year. The majority of the underperformance in financials can be explained by the decision to underweight REITs, which performed very well in 2014. Similarly, the decision to underweight utilities in 2014 was costly since utilities performed well for the year. Materials and energy also detracted from performance, primarily due to the dramatic decline in commodities and commodity-related stocks during the fourth quarter. Specifically, exploration and production companies Gulfport Energy, Noble Energy, Whiting Petroleum, and contract driller Atwood Oceanics were weak performers as oil prices declined sharply. We reduced the portfolio’s exposure to the energy sector by trimming our positions and by exiting Atwood. Our holdings in the materials sector were also weak as the selloff in commodities spilled over to the steel and specialty aluminum manufacturers such as Reliance Steel and Constellium. While the performance of the materials holdings was disappointing, the portfolio did benefit greatly from being overweight in containers and packaging stocks such as Crown Holdings, Graphic Packaging, and Packaging Corporation of America.

Other notable performers during the year were Rite Aid in the consumer staples sector; Harman International, Signet, and Jarden in consumer discretionary; Actavis in healthcare; and NASDAQ and First American Financial in the financials sector. The greatest increases

 

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in weightings by sector were technology, healthcare, and consumer discretionary. The largest reductions in weightings by sector were in materials, energy, and industrials. The portfolio is underweight in financials, utilities, and energy. These underweights are offset by overweights in technology, consumer discretionary, industrials, healthcare, materials, and consumer staples. The underweight to financials is primarily driven by our decision to avoid REITs since valuations look expensive.

Outlook

Despite the potential for a correction in equity markets, we expect the credit market to remain supportive of equity values over the medium term and will welcome any correction as an opportunity to make attractive investments. Even without a broader equity market correction, we expect market breadth to continue to narrow. Companies can no longer rely on a recovery in consumption, lower interest rates, share repurchases, and delayed capital expenditures to drive earnings growth. Going forward, companies will be required to increase capital expenditures, research and development, and other operating costs in order to sustain or grow earnings. Further, the strengthening U.S. dollar is likely to impact top line sales growth, especially for the multinationals that generate a significant portion of their revenues outside of the U.S. While the nature of the bull market is changing, there are still individual stocks that will perform well despite the increasing market headwinds. We continue to seek investments in companies that have better pricing power, lower earnings variability, higher profitability, and stronger balance sheets than the broader investment universe. We still do not favor any single industry or sector, and continue to look for companies with the characteristics noted above that trade at attractive valuations.

 

 

Growth of $10,000 Investment in Class A Shares3

October 31, 2008 (inception) through December 31, 2014

 

LOGO

See notes to chart on page 19.

 

 

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Table of Contents

VAUGHAN NELSON VALUE OPPORTUNITY FUND

 

Average Annual Total Returns — December 31, 20143

 

       
      1 Year      5 Years      Life of Fund  
                    Class A/C/Y      Class N  
Class A (Inception 10/31/08)              
NAV      10.92      16.15      17.22        
With 5.75% Maximum Sales Charge      4.54         14.78         16.10        
   
Class C (Inception 10/31/08)              
NAV      10.12         15.30         16.36           
With CDSC1      9.12         15.30         16.36        
   
Class N (Inception 5/1/13)              
NAV      11.24                         21.67
   
Class Y (Inception 10/31/08)              
NAV      11.23         16.44         17.52           
   
Comparative Performance              
Russell Midcap® Value Index2      14.75         17.43         18.36         19.35   

Past performance does not guarantee future results. The table(s) does not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. Unlike a fund, an index is not managed and does not reflect fees and expenses.

 

1 Performance for Class C shares assumes a 1.00% contingent deferred sales charge (“CDSC”) applied when you sell shares within one year of purchase.

 

2

Russell Midcap® Value Index is an unmanaged index that measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap® Index companies with lower price-to-book ratios and lower forecasted growth values.

 

3 Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

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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.

ADDITIONAL INDEX INFORMATION

This document may contain references to third party copyrights, indexes, and trademarks, each of which is the property of its respective owner. Such owner is not affiliated with Natixis Global Asset Management or any of its related or affiliated companies (collectively “NGAM”) and does not sponsor, endorse or participate in the provision of any NGAM services, funds or other financial products.

The index information contained herein is derived from third parties and is provided on an “as is” basis. The user of this information assumes the entire risk of use of this information. Each of the third party entities involved in compiling, computing or creating index information disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to such information.

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 ngam.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-months ended June 30, 2014 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 800-SEC-0330.

 

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UNDERSTANDING FUND EXPENSES

As a mutual fund shareholder, you incur different costs: transaction costs, including sales charges (loads) on purchases and contingent deferred sales charges on redemptions, and ongoing costs, including management fees, distribution and/or service fees (12b-1 fees), and other fund expenses. Certain exemptions may apply. These costs are described in more detail in the Funds’ prospectus. The following examples 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, 2014 through December 31, 2014. 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 for your class.

The second line in the table for each class of fund shares provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid on your investment for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown reflect ongoing costs only, and do not include any transaction costs, such as sales charges. 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.

 

CGM ADVISOR TARGETED EQUITY FUND   BEGINNING
ACCOUNT VALUE
7/1/2014
    ENDING
ACCOUNT VALUE
12/31/2014
    EXPENSES PAID
DURING PERIOD*
7/1/2014 – 12/31/2014
 
Class A        
Actual     $1,000.00        $1,023.00        $5.91   
Hypothetical (5% return before expenses)     $1,000.00       
$1,019.36
  
   
$5.90
  
Class B        
Actual     $1,000.00        $1,019.80        $9.72   
Hypothetical (5% return before expenses)     $1,000.00        $1,015.58        $9.70   
Class C        
Actual     $1,000.00        $1,018.90        $9.72   
Hypothetical (5% return before expenses)     $1,000.00        $1,015.58        $9.70   
Class Y        
Actual     $1,000.00        $1,024.70        $4.64   
Hypothetical (5% return before expenses)     $1,000.00        $1,020.62        $4.63   

 

* Expenses are equal to the Fund’s annualized expense ratio: 1.16%, 1.91%, 1.91% and 0.91% 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 (184), divided by 365 (to reflect the half-year period).

 

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NATIXIS OAKMARK FUND   BEGINNING
ACCOUNT VALUE
7/1/2014
    ENDING
ACCOUNT VALUE
12/31/2014
    EXPENSES PAID
DURING PERIOD*
7/1/2014 – 12/31/2014
 
Class A        
Actual     $1,000.00        $1,036.50        $6.16   
Hypothetical (5% return before expenses)     $1,000.00        $1,019.16        $6.11   
Class B        
Actual     $1,000.00        $1,032.30        $9.94   
Hypothetical (5% return before expenses)     $1,000.00        $1,015.43        $9.86   
Class C        
Actual     $1,000.00        $1,032.50        $10.04   
Hypothetical (5% return before expenses)     $1,000.00        $1,015.32        $9.96   
Class Y        
Actual     $1,000.00        $1,038.10        $4.88   
Hypothetical (5% return before expenses)     $1,000.00        $1,020.42        $4.84   

 

* Expenses are equal to the Fund’s annualized expense ratio: 1.20%, 1.94%, 1.96% and 0.95% 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 (184), divided by 365 (to reflect the half-year period).

 

NATIXIS OAKMARK INTERNATIONAL FUND   BEGINNING
ACCOUNT VALUE
7/1/2014
    ENDING
ACCOUNT VALUE
12/31/2014
    EXPENSES PAID
DURING PERIOD*
7/1/2014 – 12/31/2014
 
Class A        
Actual     $1,000.00        $922.60        $6.35   
Hypothetical (5% return before expenses)     $1,000.00        $1,018.60        $6.67   
Class C        
Actual     $1,000.00        $919.60        $9.97   
Hypothetical (5% return before expenses)     $1,000.00        $1,014.82        $10.46   

 

* Expenses are equal to the Fund’s annualized expense ratio: 1.31% and 2.06% for Class A and C, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (184), divided by 365 (to reflect the half-year period).

 

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VAUGHAN NELSON SMALL CAP VALUE FUND   BEGINNING
ACCOUNT VALUE
7/1/2014
    ENDING
ACCOUNT VALUE
12/31/2014
    EXPENSES PAID
DURING PERIOD*
7/1/2014 – 12/31/2014
 
Class A        
Actual     $1,000.00        $1,021.90        $7.03   
Hypothetical (5% return before expenses)     $1,000.00        $1,018.25        $7.02   
Class B        
Actual     $1,000.00        $1,018.00        $10.78   
Hypothetical (5% return before expenses)     $1,000.00        $1,014.52        $10.76   
Class C        
Actual     $1,000.00        $1,018.10        $10.83   
Hypothetical (5% return before expenses)     $1,000.00        $1,014.47        $10.82   
Class Y        
Actual     $1,000.00        $1,023.20        $5.76   
Hypothetical (5% return before expenses)     $1,000.00        $1,019.51        $5.75   

 

* Expenses are equal to the Fund’s annualized expense ratio: 1.38%, 2.12%, 2.13% and 1.13% 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 (184), divided by 365 (to reflect the half-year period).

 

VAUGHAN NELSON VALUE OPPORTUNITY FUND   BEGINNING
ACCOUNT VALUE
7/1/2014
    ENDING
ACCOUNT VALUE
12/31/2014
    EXPENSES PAID
DURING PERIOD*
7/1/2014 –12/31/2014
 
Class A        
Actual     $1,000.00        $1,027.30        $6.29   
Hypothetical (5% return before expenses)     $1,000.00        $1,019.00        $6.26   
Class C        
Actual     $1,000.00        $1,023.50        $10.15   
Hypothetical (5% return before expenses)     $1,000.00        $1,015.17        $10.11   
Class N        
Actual     $1,000.00        $1,029.40        $4.60   
Hypothetical (5% return before expenses)     $1,000.00        $1,020.67        $4.58   
Class Y        
Actual     $1,000.00        $1,028.90        $5.06   
Hypothetical (5% return before expenses)     $1,000.00        $1,020.21        $5.04   

 

* Expenses are equal to the Fund’s annualized expense ratio: 1.23%, 1.99%, 0.90% and 0.99% for Class A, C, N 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 (184), divided by 365 (to reflect the half-year period).

 

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Portfolio of Investments – as of December 31, 2014

CGM Advisor Targeted Equity Fund

 

Shares

     Description    Value (†)  
  Common Stocks — 97.4% of Net Assets   
   Air Freight & Logistics — 3.2%   
  150,000       United Parcel Service, Inc., Class B    $ 16,675,500   
     

 

 

 
   Automobiles — 5.2%   
  1,750,000       Ford Motor Co.      27,125,000   
     

 

 

 
   Banks — 16.0%   
  1,550,000       Bank of America Corp.      27,729,500   
  620,000       Citigroup, Inc.      33,548,200   
  1,780,000       Itau Unibanco Holding S.A., Preference ADR      23,157,800   
     

 

 

 
        84,435,500   
     

 

 

 
   Capital Markets — 19.0%   
  230,000       Ameriprise Financial, Inc.      30,417,500   
  68,000       BlackRock, Inc.      24,314,080   
  1,170,000       Morgan Stanley      45,396,000   
     

 

 

 
        100,127,580   
     

 

 

 
   Hotels, Restaurants & Leisure — 3.2%   
  215,000       Marriott International, Inc., Class A      16,776,450   
     

 

 

 
   Household Durables — 24.5%   
  1,470,000       DR Horton, Inc.      37,176,300   
  810,000       Lennar Corp., Class A      36,296,100   
  920,000       Toll Brothers, Inc.(b)      31,528,400   
  125,000       Whirlpool Corp.      24,217,500   
     

 

 

 
        129,218,300   
     

 

 

 
   IT Services — 9.8%   
  280,000       MasterCard, Inc., Class A      24,124,800   
  105,000       Visa, Inc., Class A      27,531,000   
     

 

 

 
        51,655,800   
     

 

 

 
   Media — 6.4%   
  360,000       Walt Disney Co. (The)      33,908,400   
     

 

 

 
   Semiconductors & Semiconductor Equipment — 4.7%   
  700,000       Micron Technology, Inc.(b)      24,507,000   
     

 

 

 
   Textiles, Apparel & Luxury Goods — 5.4%   
  295,000       NIKE, Inc., Class B      28,364,250   
     

 

 

 
  

Total Common Stocks

(Identified Cost $442,524,544)

     512,793,780   
     

 

 

 
     
Principal
Amount
               
  Short-Term Investments — 2.9%   
$ 15,050,000       Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2014 at 0.010% to be repurchased at $15,050,008 on 1/02/2015 collateralized by $14,945,000 U.S. Treasury Note, 2.375% due 8/15/2024 valued at $15,355,988 including accrued interest (Note 2 of Notes to Financial Statements)
(Identified Cost $15,050,000)
     15,050,000   
     

 

 

 

 

See accompanying notes to financial statements.

 

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Portfolio of Investments – as of December 31, 2014

CGM Advisor Targeted Equity Fund – (continued)

 

        Description    Value (†)  
  

Total Investments — 100.3%

(Identified Cost $457,574,544)(a)

   $ 527,843,780   
   Other assets less liabilities — (0.3)%      (1,545,133
     

 

 

 
   Net Assets — 100.0%    $ 526,298,647   
     

 

 

 
     
  (†)       See Note 2 of Notes to Financial Statements.   
  (a)       Federal Tax Information:   
   At December 31, 2014, the net unrealized appreciation on investments based on a cost of $457,574,544 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    $ 76,729,626   
   Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value      (6,460,390
     

 

 

 
   Net unrealized appreciation    $ 70,269,236   
     

 

 

 
  (b)       Non-income producing security.   
     
  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 may be significantly influenced by trading on exchanges not located in the United States.     

Industry Summary at December 31, 2014

 

Household Durables

     24.5

Capital Markets

     19.0   

Banks

     16.0   

IT Services

     9.8   

Media

     6.4   

Textiles, Apparel & Luxury Goods

     5.4   

Automobiles

     5.2   

Semiconductors & Semiconductor Equipment

     4.7   

Hotels, Restaurants & Leisure

     3.2   

Air Freight & Logistics

     3.2   

Short-Term Investments

     2.9   
  

 

 

 

Total Investments

     100.3   

Other assets less liabilities

     (0.3
  

 

 

 

Net Assets

     100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

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Portfolio of Investments – as of December 31, 2014

Natixis Oakmark Fund

 

Shares

     Description    Value (†)  
  Common Stocks — 93.3% of Net Assets   
   Air Freight & Logistics — 2.0%   
  32,700       FedEx Corp.    $ 5,678,682   
     

 

 

 
   Automobiles — 1.9%   
  123,300       General Motors Co.      4,304,403   
  17,800       Harley-Davidson, Inc.      1,173,198   
     

 

 

 
        5,477,601   
     

 

 

 
   Banks — 9.1%   
  513,800       Bank of America Corp.      9,191,882   
  115,200       Citigroup, Inc.      6,233,472   
  94,700       JPMorgan Chase & Co.      5,926,326   
  84,300       Wells Fargo & Co.      4,621,326   
     

 

 

 
        25,973,006   
     

 

 

 
   Beverages — 1.4%   
  36,400       Diageo PLC, Sponsored ADR      4,152,876   
     

 

 

 
   Capital Markets — 8.2%   
  104,600       Bank of New York Mellon Corp. (The)      4,243,622   
  88,000       Franklin Resources, Inc.      4,872,560   
  28,100       Goldman Sachs Group, Inc. (The)      5,446,623   
  69,600       State Street Corp.      5,463,600   
  38,000       T. Rowe Price Group, Inc.      3,262,680   
     

 

 

 
        23,289,085   
     

 

 

 
   Chemicals — 1.6%   
  37,200       Monsanto Co.      4,444,284   
     

 

 

 
   Communications Equipment — 1.7%   
  67,300       QUALCOMM, Inc.      5,002,409   
     

 

 

 
   Consumer Finance — 1.9%   
  66,500       Capital One Financial Corp.      5,489,575   
     

 

 

 
   Electronic Equipment, Instruments & Components — 1.8%   
  79,900       TE Connectivity Ltd.      5,053,675   
     

 

 

 
   Energy Equipment & Services — 2.4%   
  81,000       Halliburton Co.      3,185,730   
  55,600       National Oilwell Varco, Inc.      3,643,468   
     

 

 

 
        6,829,198   
     

 

 

 
   Food & Staples Retailing — 1.5%   
  48,500       Wal-Mart Stores, Inc.      4,165,180   
     

 

 

 
   Food Products — 4.5%   
  91,900       General Mills, Inc.      4,901,027   
  57,000       Nestle S.A., Sponsored ADR      4,158,150   
  91,300       Unilever PLC, Sponsored ADR      3,695,824   
     

 

 

 
        12,755,001   
     

 

 

 
   Health Care Equipment & Supplies — 1.8%   
  72,900       Medtronic, Inc.      5,263,380   
     

 

 

 

 

See accompanying notes to financial statements.

 

|  26


Table of Contents

Portfolio of Investments – as of December 31, 2014

Natixis Oakmark Fund – (continued)

 

Shares

     Description    Value (†)  
   Health Care Providers & Services — 2.0%   
  55,800       UnitedHealth Group, Inc.    $ 5,640,822   
     

 

 

 
   Hotels, Restaurants & Leisure — 1.2%   
  60,900       Las Vegas Sands Corp.      3,541,944   
     

 

 

 
   Household Durables — 1.2%   
  17,850       Whirlpool Corp.      3,458,259   
     

 

 

 
   Industrial Conglomerates — 1.5%   
  166,800       General Electric Co.      4,215,036   
     

 

 

 
   Insurance — 6.9%   
  81,700       Aflac, Inc.      4,991,053   
  114,900       American International Group, Inc.      6,435,549   
  49,200       Aon PLC      4,665,636   
  72,000       Principal Financial Group, Inc.      3,739,680   
     

 

 

 
        19,831,918   
     

 

 

 
   Internet & Catalog Retail — 3.7%   
  19,660       Amazon.com, Inc.(b)      6,101,481   
  148,600       Liberty Interactive Corp., Class A(b)      4,371,812   
     

 

 

 
        10,473,293   
     

 

 

 
   Internet Software & Services — 2.2%   
  11,620       Google, Inc., Class A(b)      6,166,269   
     

 

 

 
   IT Services — 7.5%   
  33,200       Accenture PLC, Class A      2,965,092   
  66,000       Automatic Data Processing, Inc.      5,502,420   
  80,400       MasterCard, Inc., Class A      6,927,264   
  22,930       Visa, Inc., Class A      6,012,246   
     

 

 

 
        21,407,022   
     

 

 

 
   Machinery — 3.0%   
  48,800       Illinois Tool Works, Inc.      4,621,360   
  30,500       Parker Hannifin Corp.      3,932,975   
     

 

 

 
        8,554,335   
     

 

 

 
   Media — 4.6%   
  61,500       Comcast Corp., Special Class A      3,540,248   
  313,100       News Corp., Class A(b)      4,912,539   
  59,800       Omnicom Group, Inc.      4,632,706   
     

 

 

 
        13,085,493   
     

 

 

 
   Metals & Mining — 1.2%   
  740,200       Glencore PLC      3,447,185   
     

 

 

 
   Oil, Gas & Consumable Fuels — 3.3%   
  96,900       Apache Corp.      6,072,723   
  172,600       Chesapeake Energy Corp.      3,377,782   
     

 

 

 
        9,450,505   
     

 

 

 
   Pharmaceuticals — 1.4%   
  88,300       Sanofi, ADR      4,027,363   
     

 

 

 

 

See accompanying notes to financial statements.

 

27  |


Table of Contents

Portfolio of Investments – as of December 31, 2014

Natixis Oakmark Fund – (continued)

 

Shares

     Description    Value (†)  
   Road & Rail — 1.2%   
  27,800       Union Pacific Corp.    $ 3,311,814   
     

 

 

 
   Semiconductors & Semiconductor Equipment — 4.7%   
  112,800       Applied Materials, Inc.      2,810,976   
  168,000       Intel Corp.      6,096,720   
  86,700       Texas Instruments, Inc.      4,635,416   
     

 

 

 
        13,543,112   
     

 

 

 
   Software — 4.0%   
  97,700       Microsoft Corp.      4,538,165   
  152,200       Oracle Corp.      6,844,434   
     

 

 

 
        11,382,599   
     

 

 

 
   Specialty Retail — 2.1%   
  57,500       Home Depot, Inc. (The)      6,035,775   
     

 

 

 
   Technology Hardware, Storage & Peripherals — 1.8%   
  46,600       Apple, Inc.      5,143,708   
     

 

 

 
  

Total Common Stocks

(Identified Cost $225,810,769)

     266,290,404   
     

 

 

 
     
Principal
Amount
               
  Short-Term Investments — 5.8%   
$ 16,533,486       Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2014 at 0.010% to be repurchased at $16,533,495 on 1/02/2015 collateralized by $16,355,000 U.S. Treasury Note, 2.500% due 5/15/2024 valued at $16,865,888 including accrued interest (Note 2 of Notes to Financial Statements)
(Identified Cost $16,533,486)
     16,533,486   
     

 

 

 
  

Total Investments — 99.1%

(Identified Cost $242,344,255)(a)

     282,823,890   
   Other assets less liabilities — 0.9%      2,540,371   
     

 

 

 
   Net Assets — 100.0%    $ 285,364,261   
     

 

 

 
     
  (†)       See Note 2 of Notes to Financial Statements.   
  (a)       Federal Tax Information:   
   At December 31, 2014, the net unrealized appreciation on investments based on a cost of $242,805,431 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    $ 45,524,180   
   Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value      (5,505,721
     

 

 

 
   Net unrealized appreciation    $ 40,018,459   
     

 

 

 
  (b)       Non-income producing security.   
     
  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 may be significantly influenced by trading on exchanges not located in the United States.     

 

See accompanying notes to financial statements.

 

|  28


Table of Contents

Portfolio of Investments – as of December 31, 2014

Natixis Oakmark Fund – (continued)

 

Industry Summary at December 31, 2014

 

Banks

     9.1

Capital Markets

     8.2   

IT Services

     7.5   

Insurance

     6.9   

Semiconductors & Semiconductor Equipment

     4.7   

Media

     4.6   

Food Products

     4.5   

Software

     4.0   

Internet & Catalog Retail

     3.7   

Oil, Gas & Consumable Fuels

     3.3   

Machinery

     3.0   

Energy Equipment & Services

     2.4   

Internet Software & Services

     2.2   

Specialty Retail

     2.1   

Air Freight & Logistics

     2.0   

Health Care Providers & Services

     2.0   

Other Investments, less than 2% each

     23.1   

Short-Term Investments

     5.8   
  

 

 

 

Total Investments

     99.1   

Other assets less liabilities

     0.9   
  

 

 

 

Net Assets

     100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

29  |


Table of Contents

Portfolio of Investments – as of December 31, 2014

Natixis Oakmark International Fund

 

Shares

     Description    Value (†)  
  Common Stocks — 97.3% of Net Assets   
   Australia — 3.5%   
  3,395,268       AMP Ltd.    $ 15,121,712   
  1,194,862       Orica Ltd.      18,309,572   
     

 

 

 
        33,431,284   
     

 

 

 
   Canada — 0.1%   
  34,400       Thomson Reuters Corp.      1,387,784   
     

 

 

 
   France — 14.4%   
  598,700       BNP Paribas S.A.      35,343,697   
  32,600       Christian Dior S.A.      5,579,101   
  315,058       Danone      20,597,879   
  115,000       Kering      22,099,617   
  100,400       LVMH Moet Hennessy Louis Vuitton S.A.      15,903,525   
  125,200       Pernod-Ricard S.A.      13,914,432   
  114,076       Publicis Groupe S.A.      8,180,999   
  228,900       Safran S.A.      14,121,974   
     

 

 

 
        135,741,224   
     

 

 

 
   Germany — 11.2%   
  201,300       Allianz SE, (Registered)      33,340,548   
  277,200       Bayerische Motoren Werke AG      29,914,920   
  2,700       Continental AG      569,491   
  375,300       Daimler AG, (Registered)      31,170,190   
  157,500       SAP SE      10,997,967   
     

 

 

 
        105,993,116   
     

 

 

 
   Hong Kong — 1.4%   
  526,600       Melco Crown Entertainment Ltd., Sponsored ADR      13,375,640   
     

 

 

 
   Ireland — 2.9%   
  1,629,131       Experian PLC      27,462,185   
     

 

 

 
   Israel — 0.2%   
  27,900       Check Point Software Technologies Ltd.(b)      2,192,103   
     

 

 

 
   Italy — 5.6%   
  82,200       Exor SpA      3,372,812   
  10,201,800       Intesa Sanpaolo SpA      29,594,407   
  3,512,300       Prada SpA      19,835,131   
     

 

 

 
        52,802,350   
     

 

 

 
   Japan — 10.8%   
  191,400       Canon, Inc.      6,083,409   
  3,493,000       Daiwa Securities Group, Inc.      27,350,666   
  1,047,300       Honda Motor Co. Ltd.      30,725,975   
  73,200       Meitec Corp.      2,163,892   
  142,700       Olympus Corp.(b)      4,998,828   
  67,000       Secom Co. Ltd.      3,849,458   
  429,200       Toyota Motor Corp.      26,746,604   
     

 

 

 
        101,918,832   
     

 

 

 

 

See accompanying notes to financial statements.

 

|  30


Table of Contents

Portfolio of Investments – as of December 31, 2014

Natixis Oakmark International Fund – (continued)

 

Shares

     Description    Value (†)  
   Korea — 2.7%   
  21,140       Samsung Electronics Co. Ltd.    $ 25,415,438   
     

 

 

 
   Netherlands — 6.6%   
  66,731       Akzo Nobel NV      4,617,119   
  3,447,900       CNH Industrial NV      27,911,017   
  90,700       Heineken Holding NV      5,677,957   
  126,746       Koninklijke Ahold NV      2,252,639   
  753,924       Koninklijke Philips NV      21,853,247   
     

 

 

 
        62,311,979   
     

 

 

 
   Sweden — 4.2%   
  398,300       Atlas Copco AB, Series B      10,195,605   
  186,900       Hennes & Mauritz AB, Series B      7,764,762   
  876,500       SKF AB, Series B      18,463,928   
  106,911       Swedish Match AB      3,350,004   
     

 

 

 
        39,774,299   
     

 

 

 
   Switzerland — 18.3%   
  290,100       Adecco S.A., (Registered)      19,941,261   
  360,200       Cie Financiere Richemont S.A., (Registered)      31,934,831   
  1,925,858       Credit Suisse Group AG, (Registered)      48,379,949   
  342,900       Holcim Ltd., (Registered)      24,511,908   
  154,300       Kuehne & Nagel International AG, (Registered)      20,959,398   
  200,600       Nestle S.A., (Registered)      14,623,938   
  85,900       Schindler Holding AG      12,400,879   
     

 

 

 
        172,752,164   
     

 

 

 
   United Kingdom — 15.4%   
  892,500       Diageo PLC      25,567,506   
  574,600       G4S PLC      2,478,608   
  671,600       GlaxoSmithKline PLC      14,408,237   
  18,905,400       Lloyds Banking Group PLC(b)      22,237,648   
  1,470,804       Meggitt PLC      11,831,506   
  439,400       Schroders PLC      18,262,461   
  100       Schroders PLC, (Non Voting)      3,218   
  631,000       Smiths Group PLC      10,729,598   
  421,900       Willis Group Holdings PLC      18,905,339   
  119,896       Wolseley PLC      6,854,671   
  662,700       WPP PLC      13,778,635   
     

 

 

 
        145,057,427   
     

 

 

 
  

Total Common Stocks

(Identified Cost $979,923,073)

     919,615,825   
     

 

 

 

 

See accompanying notes to financial statements.

 

31  |


Table of Contents

Portfolio of Investments – as of December 31, 2014

Natixis Oakmark International Fund – (continued)

 

Principal
Amount
     Description    Value (†)  
  Short-Term Investments — 1.6%   
$ 14,806,514       Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2014 at 0.010% to be repurchased at $14,806,522 on 1/02/2015 collateralized by $12,720,000 U.S. Treasury Bond, 3.625% due 8/15/2043 valued at $15,105,000 including accrued interest (Note 2 of Notes to Financial Statements)
(Identified Cost $14,806,514)
   $ 14,806,514   
     

 

 

 
  

Total Investments — 98.9%

(Identified Cost $994,729,587)(a)

     934,422,339   
   Other assets less liabilities — 1.1%      10,279,400   
     

 

 

 
   Net Assets — 100.0%    $ 944,701,739   
     

 

 

 
     
  (†)       See Note 2 of Notes to Financial Statements.   
  (a)       Federal Tax Information:   
   At December 31, 2014, the net unrealized depreciation on investments based on a cost of $997,470,184 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    $ 11,417,325   
   Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value      (74,465,170
     

 

 

 
   Net unrealized depreciation    $ (63,047,845
     

 

 

 
  (b)       Non-income producing security.   
     
  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 may be significantly influenced by trading on exchanges not located in the United States.     

At December 31, 2014, the Fund had the following open forward foreign currency contracts:

 

Contract

to

Buy/Sell1

  

Delivery

Date

     Currency   

Units of

Currency

    

Notional

Value

    

Unrealized

Appreciation

(Depreciation)

 
Buy      6/17/2015       Australian Dollar      8,794,000       $ 7,098,206       $ (232,820
Sell      6/17/2015       Australian Dollar      18,264,000         14,742,056         1,583,403   
Buy      3/18/2015       Swedish Krona      46,890,000         6,016,558         (228,354
Sell      3/18/2015       Swedish Krona      92,571,000         11,877,987         1,910,098   
Sell      9/16/2015       Swiss Franc      43,799,000         44,318,373         1,088,013   
              

 

 

 
Total                $ 4,120,340   
              

 

 

 

1 Counterparty is State Street Bank and Trust Company.

 

See accompanying notes to financial statements.

 

|  32


Table of Contents

Portfolio of Investments – as of December 31, 2014

Natixis Oakmark International Fund – (continued)

 

Industry Summary at December 31, 2014

 

Automobiles

     12.6

Textiles, Apparel & Luxury Goods

     10.1   

Capital Markets

     9.9   

Banks

     9.2   

Machinery

     7.3   

Insurance

     7.1   

Professional Services

     5.2   

Beverages

     4.8   

Food Products

     3.8   

Industrial Conglomerates

     3.4   

Technology Hardware, Storage & Peripherals

     3.4   

Aerospace & Defense

     2.8   

Construction Materials

     2.6   

Media

     2.5   

Chemicals

     2.4   

Marine

     2.2   

Other Investments, less than 2% each

     8.0   

Short-Term Investments

     1.6   
  

 

 

 

Total Investments

     98.9   

Other assets less liabilities (including forward foreign currency contracts)

     1.1   
  

 

 

 

Net Assets

     100.0
  

 

 

 

Currency Exposure Summary at December 31, 2014

 

Euro

     35.7

Swiss Franc

     18.3   

British Pound

     16.3   

Japanese Yen

     10.8   

United States Dollar

     5.2   

Swedish Krona

     4.2   

Australian Dollar

     3.5   

South Korean Won

     2.7   

Hong Kong Dollar

     2.1   

Canadian Dollar

     0.1   
  

 

 

 

Total Investments

     98.9   

Other assets less liabilities (including forward foreign currency contracts)

     1.1   
  

 

 

 

Net Assets

     100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

33  |


Table of Contents

Portfolio of Investments – as of December 31, 2014

Vaughan Nelson Small Cap Value Fund

 

Shares

     Description    Value (†)  
  Common Stocks — 96.0% of Net Assets   
   Aerospace & Defense — 2.0%   
  61,075       Esterline Technologies Corp.(b)    $ 6,698,706   
     

 

 

 
   Auto Components — 1.2%   
  69,200       Tenneco, Inc.(b)      3,917,412   
     

 

 

 
   Banks — 8.5%   
  147,375       Capital Bank Financial Corp., Class A(b)      3,949,650   
  397,380       FirstMerit Corp.      7,506,508   
  58,125       Prosperity Bancshares, Inc.      3,217,800   
  202,250       Union Bankshares Corp.      4,870,180   
  262,600       Webster Financial Corp.      8,542,378   
     

 

 

 
        28,086,516   
     

 

 

 
   Biotechnology — 0.6%   
  47,725       AMAG Pharmaceuticals, Inc.(b)      2,034,040   
     

 

 

 
   Building Products — 1.5%   
  53,750       Lennox International, Inc.      5,110,013   
     

 

 

 
   Capital Markets — 2.6%   
  111,325       LPL Financial Holdings, Inc.      4,959,529   
  211,775       TCP Capital Corp.      3,553,584   
     

 

 

 
        8,513,113   
     

 

 

 
   Commercial Services & Supplies — 2.7%   
  258,650       KAR Auction Services, Inc.      8,962,223   
     

 

 

 
   Consumer Finance — 1.6%   
  96,500       First Cash Financial Services, Inc.(b)      5,372,155   
     

 

 

 
   Containers & Packaging — 4.4%   
  536,525       Graphic Packaging Holding Co.(b)      7,307,470   
  132,950       Silgan Holdings, Inc.      7,126,120   
     

 

 

 
        14,433,590   
     

 

 

 
   Diversified Consumer Services — 1.9%   
  232,000       ServiceMaster Global Holdings, Inc.(b)      6,210,640   
     

 

 

 
   Electrical Equipment — 0.9%   
  126,125       Thermon Group Holdings, Inc.(b)      3,050,964   
     

 

 

 
   Electronic Equipment, Instruments & Components — 1.8%   
  60,850       Littelfuse, Inc.      5,882,370   
     

 

 

 
   Energy Equipment & Services — 1.3%   
  205,350       Forum Energy Technologies, Inc.(b)      4,256,906   
     

 

 

 
   Health Care Equipment & Supplies — 7.9%   
  147,675       Alere, Inc.(b)      5,611,650   
  147,350       Haemonetics Corp.(b)      5,513,837   
  117,725       Integra LifeSciences Holdings Corp.(b)      6,384,227   
  174,650       Merit Medical Systems, Inc.(b)      3,026,685   
  49,875       Teleflex, Inc.      5,726,647   
     

 

 

 
        26,263,046   
     

 

 

 

 

See accompanying notes to financial statements.

 

|  34


Table of Contents

Portfolio of Investments – as of December 31, 2014

Vaughan Nelson Small Cap Value Fund – (continued)

 

Shares

     Description    Value (†)  
   Health Care Providers & Services — 4.8%   
  164,550       Amsurg Corp.(b)    $ 9,005,821   
  28,900       Civitas Solutions, Inc.(b)      492,167   
  88,600       LifePoint Hospitals, Inc.(b)      6,371,226   
     

 

 

 
        15,869,214   
     

 

 

 
   Hotels, Restaurants & Leisure — 2.7%   
  145,075       Bloomin’ Brands, Inc.(b)      3,592,057   
  65,175       Jack in the Box, Inc.      5,211,393   
     

 

 

 
        8,803,450   
     

 

 

 
   Household Durables — 1.1%   
  91,375       Ryland Group, Inc. (The)      3,523,420   
     

 

 

 
   Insurance — 8.3%   
  141,075       American Equity Investment Life Holding Co.      4,117,979   
  117,200       Aspen Insurance Holdings Ltd.      5,129,844   
  274,325       CNO Financial Group, Inc.      4,723,877   
  156,762       HCC Insurance Holdings, Inc.      8,389,902   
  68,975       Platinum Underwriters Holdings Ltd.      5,064,144   
     

 

 

 
        27,425,746   
     

 

 

 
   Internet & Catalog Retail — 1.9%   
  83,025       HSN, Inc.      6,309,900   
     

 

 

 
   IT Services — 6.4%   
  183,400       Broadridge Financial Solutions, Inc.      8,469,412   
  59,575       CACI International, Inc., Class A(b)      5,134,173   
  189,475       iGATE Corp.(b)      7,480,473   
     

 

 

 
        21,084,058   
     

 

 

 
   Life Sciences Tools & Services — 3.4%   
  112,525       Albany Molecular Research, Inc.(b)      1,831,907   
  164,625       PRA Health Sciences, Inc.(b)      3,987,218   
  214,550       VWR Corp.(b)      5,550,408   
     

 

 

 
        11,369,533   
     

 

 

 
   Machinery — 4.6%   
  26,650       Barnes Group, Inc.      986,317   
  178,500       Hillenbrand, Inc.      6,158,250   
  174,825       Rexnord Corp.(b)      4,931,813   
  38,675       Standex International Corp.      2,988,030   
     

 

 

 
        15,064,410   
     

 

 

 
   Metals & Mining — 2.0%   
  98,775       Globe Specialty Metals, Inc.      1,701,893   
  83,100       Reliance Steel & Aluminum Co.      5,091,537   
     

 

 

 
        6,793,430   
     

 

 

 
   Paper & Forest Products — 1.3%   
  142,375       KapStone Paper and Packaging Corp.      4,173,011   
     

 

 

 

 

See accompanying notes to financial statements.

 

35  |


Table of Contents

Portfolio of Investments – as of December 31, 2014

Vaughan Nelson Small Cap Value Fund – (continued)

 

Shares

     Description    Value (†)  
   Professional Services — 3.2%   
  52,200       Dun & Bradstreet Corp. (The)    $ 6,314,112   
  101,900       ICF International, Inc.(b)      4,175,862   
     

 

 

 
        10,489,974   
     

 

 

 
   REITs – Hotels — 1.4%   
  677,250       Hersha Hospitality Trust      4,761,068   
     

 

 

 
   Road & Rail — 0.5%   
  32,350       Con-way, Inc.      1,590,973   
     

 

 

 
   Software — 7.6%   
  67,425       BroadSoft, Inc.(b)      1,956,673   
  87,775       CommVault Systems, Inc.(b)      4,537,090   
  64,275       Ellie Mae, Inc.(b)      2,591,568   
  130,100       SS&C Technologies Holdings, Inc.      7,609,549   
  144,225       Verint Systems, Inc.(b)      8,405,433   
     

 

 

 
        25,100,313   
     

 

 

 
   Specialty Retail — 4.9%   
  148,675       GNC Holdings, Inc., Class A      6,981,778   
  43,875       Group 1 Automotive, Inc.      3,932,078   
  121,875       Men’s Wearhouse, Inc. (The)      5,380,781   
     

 

 

 
        16,294,637   
     

 

 

 
   Textiles, Apparel & Luxury Goods — 3.0%   
  154,175       Steven Madden Ltd.(b)      4,907,390   
  166,175       Wolverine World Wide, Inc.      4,897,177   
     

 

 

 
        9,804,567   
     

 

 

 
  

Total Common Stocks

(Identified Cost $247,924,369)

     317,249,398   
     

 

 

 
     
Principal
Amount
               
  Short-Term Investments — 1.8%   
$ 5,717,818       Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2014 at 0.010% to be repurchased at $5,717,821 on 1/02/2015 collateralized by $5,680,000 U.S. Treasury Note, 2.375% due 8/15/2024 valued at $5,836,200 including accrued interest (Note 2 of Notes to Financial Statements)
(Identified Cost $5,717,818)
     5,717,818   
     

 

 

 
  

Total Investments — 97.8%

(Identified Cost $253,642,187)(a)

     322,967,216   
   Other assets less liabilities — 2.2%      7,398,632   
     

 

 

 
   Net Assets — 100.0%    $ 330,365,848   
     

 

 

 

 

See accompanying notes to financial statements.

 

|  36


Table of Contents

Portfolio of Investments – as of December 31, 2014

Vaughan Nelson Small Cap Value Fund – (continued)

 

  (†)       See Note 2 of Notes to Financial Statements.   
  (a)       Federal Tax Information:   
   At December 31, 2014, the net unrealized appreciation on investments based on a cost of $254,525,600 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    $ 69,981,136   
   Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value      (1,539,520
     

 

 

 
   Net unrealized appreciation    $ 68,441,616   
     

 

 

 
  (b)       Non-income producing security.   
     
  REITs       Real Estate Investment Trusts   

Industry Summary at December 31, 2014

 

Banks

     8.5

Insurance

     8.3   

Health Care Equipment & Supplies

     7.9   

Software

     7.6   

IT Services

     6.4   

Specialty Retail

     4.9   

Health Care Providers & Services

     4.8   

Machinery

     4.6   

Containers & Packaging

     4.4   

Life Sciences Tools & Services

     3.4   

Professional Services

     3.2   

Textiles, Apparel & Luxury Goods

     3.0   

Commercial Services & Supplies

     2.7   

Hotels, Restaurants & Leisure

     2.7   

Capital Markets

     2.6   

Metals & Mining

     2.0   

Aerospace & Defense

     2.0   

Other Investments, less than 2% each

     17.0   

Short-Term Investments

     1.8   
  

 

 

 

Total Investments

     97.8   

Other assets less liabilities

     2.2   
  

 

 

 

Net Assets

     100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

37  |


Table of Contents

Portfolio of Investments – as of December 31, 2014

Vaughan Nelson Value Opportunity Fund

 

Shares

     Description    Value (†)  
  Common Stocks — 97.6% of Net Assets   
   Auto Components — 3.1%   
  175,075       Delphi Automotive PLC    $ 12,731,454   
  198,000       Tenneco, Inc.(b)      11,208,780   
     

 

 

 
        23,940,234   
     

 

 

 
   Banks — 5.7%   
  305,350       CIT Group, Inc.      14,604,891   
  1,247,450       Investors Bancorp, Inc.      14,002,626   
  344,950       PacWest Bancorp      15,681,427   
     

 

 

 
        44,288,944   
     

 

 

 
   Capital Markets — 3.1%   
  268,875       LPL Financial Holdings, Inc.      11,978,381   
  303,250       SEI Investments Co.      12,142,130   
     

 

 

 
        24,120,511   
     

 

 

 
   Commercial Services & Supplies — 1.1%   
  248,025       KAR Auction Services, Inc.      8,594,066   
     

 

 

 
   Communications Equipment — 1.7%   
  592,975       CommScope Holding Co., Inc.(b)      13,537,619   
     

 

 

 
   Consumer Finance — 1.8%   
  241,775       PRA Group, Inc.(b)      14,006,026   
     

 

 

 
   Containers & Packaging — 5.6%   
  231,350       Avery Dennison Corp.      12,002,438   
  353,275       Crown Holdings, Inc.(b)      17,981,698   
  170,900       Packaging Corp. of America      13,338,745   
     

 

 

 
        43,322,881   
     

 

 

 
   Diversified Consumer Services — 1.8%   
  509,600       ServiceMaster Global Holdings, Inc.(b)      13,641,992   
     

 

 

 
   Diversified Financial Services — 2.0%   
  324,100       NASDAQ OMX Group, Inc. (The)      15,543,836   
     

 

 

 
   Energy Equipment & Services — 0.3%   
  128,175       Superior Energy Services, Inc.      2,582,726   
     

 

 

 
   Food & Staples Retailing — 2.6%   
  2,640,775       Rite Aid Corp.(b)      19,858,628   
     

 

 

 
   Health Care Equipment & Supplies — 1.2%   
  256,375       Alere, Inc.(b)      9,742,250   
     

 

 

 
   Health Care Providers & Services — 6.7%   
  301,175       Amsurg Corp.(b)      16,483,308   
  288,675       Community Health Systems, Inc.(b)      15,565,356   
  268,875       HCA Holdings, Inc.(b)      19,732,736   
     

 

 

 
        51,781,400   
     

 

 

 

 

See accompanying notes to financial statements.

 

|  38


Table of Contents

Portfolio of Investments – as of December 31, 2014

Vaughan Nelson Value Opportunity Fund – (continued)

 

Shares

     Description    Value (†)  
   Household Durables — 4.5%   
  65,650       Harman International Industries, Inc.    $ 7,005,511   
  372,037       Jarden Corp.(b)      17,813,108   
  220,925       Lennar Corp., Class A      9,899,649   
     

 

 

 
        34,718,268   
     

 

 

 
   Household Products — 1.4%   
  117,750       Spectrum Brands Holdings, Inc.      11,266,320   
     

 

 

 
   Insurance — 3.5%   
  423,100       First American Financial Corp.      14,343,090   
  149,025       Reinsurance Group of America, Inc., Class A      13,057,571   
     

 

 

 
        27,400,661   
     

 

 

 
   Internet & Catalog Retail — 1.9%   
  198,000       HSN, Inc.      15,048,000   
     

 

 

 
   IT Services — 10.1%   
  218,850       Broadridge Financial Solutions, Inc.      10,106,493   
  177,175       CACI International, Inc., Class A(b)      15,268,941   
  198,000       Fiserv, Inc.(b)      14,052,060   
  149,025       Global Payments, Inc.      12,030,788   
  696,150       Sabre Corp.      14,110,961   
  383,500       Total System Services, Inc.      13,023,660   
     

 

 

 
        78,592,903   
     

 

 

 
   Machinery — 3.0%   
  69,825       Snap-on, Inc.      9,547,871   
  130,275       WABCO Holdings, Inc.(b)      13,650,214   
     

 

 

 
        23,198,085   
     

 

 

 
   Metals & Mining — 4.3%   
  260,525       Carpenter Technology Corp.      12,830,856   
  547,125       Constellium NV, Class A(b)      8,989,264   
  185,500       Reliance Steel & Aluminum Co.      11,365,585   
     

 

 

 
        33,185,705   
     

 

 

 
   Oil, Gas & Consumable Fuels — 1.9%   
  157,375       Gulfport Energy Corp.(b)      6,568,833   
  88,575       Noble Energy, Inc.      4,201,112   
  113,600       Whiting Petroleum Corp.(b)      3,748,800   
     

 

 

 
        14,518,745   
     

 

 

 
   Pharmaceuticals — 4.7%   
  534,625       Catalent, Inc.(b)      14,905,345   
  101,075       Mallinckrodt PLC(b)      10,009,457   
  82,411       Valeant Pharmaceuticals International, Inc.(b)      11,793,838   
     

 

 

 
        36,708,640   
     

 

 

 
   Professional Services — 1.4%   
  357,450       TriNet Group, Inc.(b)      11,181,036   
     

 

 

 

 

See accompanying notes to financial statements.

 

39  |


Table of Contents

Portfolio of Investments – as of December 31, 2014

Vaughan Nelson Value Opportunity Fund – (continued)

 

Shares

     Description    Value (†)  
   Road & Rail — 2.6%   
  216,775       Con-way, Inc.    $ 10,660,994   
  387,675       Hertz Global Holdings, Inc.(b)      9,668,615   
     

 

 

 
        20,329,609   
     

 

 

 
   Semiconductors & Semiconductor Equipment — 5.3%   
  128,175       Avago Technologies Ltd.      12,893,123   
  381,425       Micron Technology, Inc.(b)      13,353,689   
  208,425       Skyworks Solutions, Inc.      15,154,582   
     

 

 

 
        41,401,394   
     

 

 

 
   Software — 1.4%   
  138,600       Check Point Software Technologies Ltd.(b)      10,889,802   
     

 

 

 
   Specialty Retail — 6.2%   
  191,750       Cabela’s, Inc.(b)      10,107,143   
  270,950       GNC Holdings, Inc., Class A      12,723,812   
  314,075       Men’s Wearhouse, Inc. (The)      13,866,411   
  88,575       Signet Jewelers Ltd.      11,653,813   
     

 

 

 
        48,351,179   
     

 

 

 
   Technology Hardware, Storage & Peripherals — 2.0%   
  522,100       NCR Corp.(b)      15,213,994   
     

 

 

 
   Textiles, Apparel & Luxury Goods — 3.8%   
  256,375       Gildan Activewear, Inc.      14,498,006   
  115,675       PVH Corp.      14,826,065   
     

 

 

 
        29,324,071   
     

 

 

 
   Trading Companies & Distributors — 2.9%   
  473,125       HD Supply Holdings, Inc.(b)      13,952,457   
  82,325       United Rentals, Inc.(b)      8,397,973   
     

 

 

 
        22,350,430   
     

 

 

 
  

Total Common Stocks

(Identified Cost $650,778,624)

     758,639,955   
     

 

 

 
  Closed-End Investment Companies — 1.8%   
  889,975      

Ares Capital Corp.

(Identified Cost $14,908,810)

     13,888,060   
     

 

 

 
     
Principal
Amount
               
  Short-Term Investments — 0.7%   
$ 5,455,986       Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 12/31/2014 at 0.010% to be repurchased at $5,455,989 on 1/02/2015 collateralized by $5,450,000 Federal Home Loan Bank, 2.875% due 6/14/2024 valued at $5,565,813 including accrued interest (Note 2 of Notes to Financial Statements)
(Identified Cost $5,455,986)
     5,455,986   
     

 

 

 

 

See accompanying notes to financial statements.

 

|  40


Table of Contents

Portfolio of Investments – as of December 31, 2014

Vaughan Nelson Value Opportunity Fund – (continued)

 

        Description    Value (†)  
  

Total Investments — 100.1%

(Identified Cost $671,143,420)(a)

   $ 777,984,001   
   Other assets less liabilities — (0.1)%      (758,381
     

 

 

 
   Net Assets — 100.0%    $ 777,225,620   
     

 

 

 
     
  (†)       See Note 2 of Notes to Financial Statements.   
  (a)       Federal Tax Information:   
   At December 31, 2014, the net unrealized appreciation on investments based on a cost of $671,778,562 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    $ 128,311,600   
   Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value      (22,106,161
     

 

 

 
   Net unrealized appreciation    $ 106,205,439   
     

 

 

 
  (b)       Non-income producing security.   

Industry Summary at December 31, 2014

 

IT Services

     10.1

Health Care Providers & Services

     6.7   

Specialty Retail

     6.2   

Banks

     5.7   

Containers & Packaging

     5.6   

Semiconductors & Semiconductor Equipment

     5.3   

Pharmaceuticals

     4.7   

Household Durables

     4.5   

Metals & Mining

     4.3   

Textiles, Apparel & Luxury Goods

     3.8   

Insurance

     3.5   

Capital Markets

     3.1   

Auto Components

     3.1   

Machinery

     3.0   

Trading Companies & Distributors

     2.9   

Road & Rail

     2.6   

Food & Staples Retailing

     2.6   

Diversified Financial Services

     2.0   

Technology Hardware, Storage & Peripherals

     2.0   

Other Investments, less than 2% each

     17.7   

Short-Term Investments

     0.7   
  

 

 

 

Total Investments

     100.1   

Other assets less liabilities

     (0.1
  

 

 

 

Net Assets

     100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

41  |


Table of Contents

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|  42


Table of Contents

Statements of Assets and Liabilities

 

December 31, 2014

 

     CGM Advisor
Targeted Equity
Fund
    Natixis
Oakmark
Fund
    Natixis
Oakmark

International
Fund
 

ASSETS

      

Investments at cost

   $ 457,574,544      $ 242,344,255      $ 994,729,587   

Net unrealized appreciation (depreciation)

     70,269,236        40,479,635        (60,307,248
  

 

 

   

 

 

   

 

 

 

Investments at value

     527,843,780        282,823,890        934,422,339   

Cash

     1,282        6,498          

Foreign currency at value (identified cost $0, $0, and $90,640, respectively)

                   90,640   

Receivable for Fund shares sold

     46,708        2,768,208        15,679,107   

Receivable for securities sold

            1,146,461        1,676,291   

Dividends and interest receivable

     605,594        271,144        618,748   

Unrealized appreciation on forward foreign currency contracts (Note 2)

                   4,581,514   

Tax reclaims receivable

                   747,054   
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     528,497,364        287,016,201        957,815,693   
  

 

 

   

 

 

   

 

 

 

LIABILITIES

      

Payable for securities purchased

                   494,511   

Payable for Fund shares redeemed

     840,260        851,360        11,174,092   

Unrealized depreciation on forward foreign currency contracts (Note 2)

                   461,174   

Management fees payable (Note 6)

     317,706        162,774        707,765   

Deferred Trustees’ fees (Note 6)

     875,037        511,788        44,371   

Administrative fees payable (Note 6)

     18,941        10,143        35,580   

Payable to distributor (Note 6d)

     1,813        1,508        7,740   

Other accounts payable and accrued expenses

     144,960        114,367        188,721   
  

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

     2,198,717        1,651,940        13,113,954   
  

 

 

   

 

 

   

 

 

 

NET ASSETS

   $ 526,298,647      $ 285,364,261      $ 944,701,739   
  

 

 

   

 

 

   

 

 

 

NET ASSETS CONSIST OF:

      

Paid-in capital

   $ 449,975,018      $ 244,981,047      $ 1,001,387,724   

Distributions in excess of net investment income/Accumulated net investment loss

     (875,037     (490,709     (1,601,585

Accumulated net realized gain on investments and foreign currency transactions

     6,929,430        394,288        1,192,979   

Net unrealized appreciation (depreciation) on investments and foreign currency translations

     70,269,236        40,479,635        (56,277,379
  

 

 

   

 

 

   

 

 

 

NET ASSETS

   $ 526,298,647      $ 285,364,261      $ 944,701,739   
  

 

 

   

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

43  |


Table of Contents

Statements of Assets and Liabilities (continued)

 

December 31, 2014

 

     CGM Advisor
Targeted Equity
Fund
     Natixis
Oakmark
Fund
     Natixis
Oakmark

International
Fund
 

COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:

        

Class A shares:

        

Net assets

   $ 458,974,964       $ 195,060,718       $ 617,382,804   
  

 

 

    

 

 

    

 

 

 

Shares of beneficial interest

     42,783,090         9,548,955         49,622,011   
  

 

 

    

 

 

    

 

 

 

Net asset value and redemption price per share

   $ 10.73       $ 20.43       $ 12.44   
  

 

 

    

 

 

    

 

 

 

Offering price per share (100/94.25 of net asset value)
(Note 1)

   $ 11.38       $ 21.68       $ 13.20   
  

 

 

    

 

 

    

 

 

 

Class B shares: (redemption price per share is equal to
net asset value less any applicable contingent
deferred sales charge) (Note 1)

        

Net assets

   $ 931,658       $ 668,804       $   
  

 

 

    

 

 

    

 

 

 

Shares of beneficial interest

     102,997         36,518           
  

 

 

    

 

 

    

 

 

 

Net asset value and offering price per share

   $ 9.05       $ 18.31       $   
  

 

 

    

 

 

    

 

 

 

Class C shares: (redemption price per share is equal to
net asset value less any applicable contingent
deferred sales charge) (Note 1)

        

Net assets

   $ 31,461,526       $ 62,940,913       $ 327,318,935   
  

 

 

    

 

 

    

 

 

 

Shares of beneficial interest

     3,508,327         3,459,369         26,730,277   
  

 

 

    

 

 

    

 

 

 

Net asset value and offering price per share

   $ 8.97       $ 18.19       $ 12.25   
  

 

 

    

 

 

    

 

 

 

Class Y shares:

        

Net assets

   $ 34,930,499       $ 26,693,826       $   
  

 

 

    

 

 

    

 

 

 

Shares of beneficial interest

     3,129,647         1,254,504           
  

 

 

    

 

 

    

 

 

 

Net asset value, offering and redemption price
per share

   $ 11.16       $ 21.28       $   
  

 

 

    

 

 

    

 

 

 

 

See accompanying notes to financial statements.

 

|  44


Table of Contents

Statements of Assets and Liabilities (continued)

 

December 31, 2014

 

     Vaughan Nelson
Small Cap
Value
Fund
    Vaughan Nelson
Value
Opportunity
Fund
 

ASSETS

    

Investments at cost

   $ 253,642,187      $ 671,143,420   

Net unrealized appreciation

     69,325,029        106,840,581   
  

 

 

   

 

 

 

Investments at value

     322,967,216        777,984,001   

Receivable for Fund shares sold

     109,969        2,790,548   

Receivable for securities sold

     8,712,987          

Dividends and interest receivable

     274,338        338,661   
  

 

 

   

 

 

 

TOTAL ASSETS

     332,064,510        781,113,210   
  

 

 

   

 

 

 

LIABILITIES

    

Payable for securities purchased

     322,911          

Payable for Fund shares redeemed

     801,437        3,132,423   

Management fees payable (Note 6)

     252,866        526,400   

Deferred Trustees’ fees (Note 6)

     218,039        75,573   

Administrative fees payable (Note 6)

     12,008        28,121   

Payable to distributor (Note 6d)

     3,313        8,415   

Other accounts payable and accrued expenses

     88,088        116,658   
  

 

 

   

 

 

 

TOTAL LIABILITIES

     1,698,662        3,887,590   
  

 

 

   

 

 

 

NET ASSETS

   $ 330,365,848      $ 777,225,620   
  

 

 

   

 

 

 

NET ASSETS CONSIST OF:

    

Paid-in capital

   $ 257,283,799      $ 665,842,911   

Distributions in excess of net investment income/
Accumulated net investment loss

     (218,038     (75,573

Accumulated net realized gain on investments

     3,975,058        4,617,701   

Net unrealized appreciation on

     69,325,029        106,840,581   
  

 

 

   

 

 

 

NET ASSETS

   $ 330,365,848      $ 777,225,620   
  

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

45  |


Table of Contents

Statements of Assets and Liabilities (continued)

 

December 31, 2014

 

     Vaughan Nelson
Small Cap
Value
Fund
     Vaughan Nelson
Value
Opportunity
Fund
 

COMPUTATION OF NET ASSET VALUE AND
OFFERING PRICE:

     

Class A shares:

     

Net assets

   $ 125,200,967       $ 73,236,830   
  

 

 

    

 

 

 

Shares of beneficial interest

     6,064,450         3,439,845   
  

 

 

    

 

 

 

Net asset value and redemption price per share

   $ 20.65       $ 21.29   
  

 

 

    

 

 

 

Offering price per share (100/94.25 of net asset value)
(Note 1)

   $ 21.91       $ 22.59   
  

 

 

    

 

 

 

Class B shares: (redemption price per share is equal to
net asset value less any applicable contingent
deferred sales charge) (Note 1)

     

Net assets

   $ 967,478       $   
  

 

 

    

 

 

 

Shares of beneficial interest

     62,929           
  

 

 

    

 

 

 

Net asset value and offering price per share

   $ 15.37       $   
  

 

 

    

 

 

 

Class C shares: (redemption price per share is equal to
net asset value less any applicable contingent
deferred sales charge) (Note 1)

     

Net assets

   $ 27,292,407       $ 35,893,876   
  

 

 

    

 

 

 

Shares of beneficial interest

     1,777,162         1,750,339   
  

 

 

    

 

 

 

Net asset value and offering price per share

   $ 15.36       $ 20.51   
  

 

 

    

 

 

 

Class N shares:

     

Net assets

   $       $ 12,024,110   
  

 

 

    

 

 

 

Shares of beneficial interest

             559,344   
  

 

 

    

 

 

 

Net asset value, offering and redemption price
per share

   $       $ 21.50   
  

 

 

    

 

 

 

Class Y shares:

     

Net assets

   $ 176,904,996       $ 656,070,804   
  

 

 

    

 

 

 

Shares of beneficial interest

     8,373,892         30,490,683   
  

 

 

    

 

 

 

Net asset value, offering and redemption price
per share

   $ 21.13       $ 21.52   
  

 

 

    

 

 

 

 

See accompanying notes to financial statements.

 

|  46


Table of Contents

Statements of Operations

 

For the Year Ended December 31, 2014

 

     CGM Advisor
Targeted Equity
Fund
    Natixis
Oakmark
Fund
    Natixis
Oakmark
International
Fund
 

INVESTMENT INCOME

      

Dividends

   $ 5,170,842      $ 3,634,934      $ 26,512,627   

Interest

     187        389        519   

Less net foreign taxes withheld

     (4,490     (28,169     (2,406,735
  

 

 

   

 

 

   

 

 

 
     5,166,539        3,607,154        24,106,411   
  

 

 

   

 

 

   

 

 

 

Expenses

      

Management fees (Note 6)

     3,950,271        1,511,982        7,726,791   

Service and distribution fees (Note 6)

     1,538,621        718,374        4,689,805   

Administrative fees (Note 6)

     239,450        94,112        392,411   

Trustees’ fees and expenses (Note 6)

     85,335        53,577        34,449   

Transfer agent fees and expenses (Note 6)

     466,399        240,836        747,651   

Audit and tax services fees

     48,430        40,097        41,749   

Custodian fees and expenses

     25,297        24,205        379,432   

Legal fees

     4,474        1,722        8,007   

Registration fees

     79,985        92,669        134,034   

Shareholder reporting expenses

     45,482        30,931        86,648   

Miscellaneous expenses

     22,970        17,254        41,039   
  

 

 

   

 

 

   

 

 

 

Total expenses

     6,506,714        2,825,759        14,282,016   
  

 

 

   

 

 

   

 

 

 

Net investment income (loss)

     (1,340,175     781,395        9,824,395   
  

 

 

   

 

 

   

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS

      

Net realized gain on:

      

Investments

     65,609,793        33,601,811        17,864,400   

Foreign currency transactions

     161        5,418        4,030,315   

Net change in unrealized appreciation (depreciation) on:

      

Investments

     (21,344,530     (12,934,590     (104,404,133

Foreign currency translations

                   4,758,193   
  

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss) on investments and foreign currency transactions

     44,265,424        20,672,639        (77,751,225
  

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS

   $ 42,925,249      $ 21,454,034      $ (67,926,830
  

 

 

   

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

47  |


Table of Contents

Statements of Operations (continued)

 

For the Year Ended December 31, 2014

 

     Vaughan Nelson
Small Cap
Value
Fund
    Vaughan Nelson
Value
Opportunity
Fund
 

INVESTMENT INCOME

    

Dividends

   $ 3,741,949      $ 5,964,263   

Interest

     252        378   

Less net foreign taxes withheld

            (5,079
  

 

 

   

 

 

 
     3,742,201        5,959,562   
  

 

 

   

 

 

 

Expenses

    

Management fees (Note 6)

     3,045,023        5,277,503   

Service and distribution fees (Note 6)

     661,962        504,859   

Administrative fees (Note 6)

     146,250        284,742   

Trustees’ fees and expenses (Note 6)

     37,234        32,194   

Transfer agent fees and expenses (Notes 6 and 7)

     363,591        648,576   

Audit and tax services fees

     40,122        40,995   

Custodian fees and expenses

     29,010        34,753   

Legal fees

     2,774        5,514   

Registration fees

     79,332        199,073   

Shareholder reporting expenses

     34,042        60,230   

Miscellaneous expenses

     21,534        25,804   
  

 

 

   

 

 

 

Total expenses

     4,460,874        7,114,243   

Fee/expense recovery (Note 6)

            20   

Less waiver and/or expense reimbursement (Note 6)

            (153
  

 

 

   

 

 

 

Net expenses

     4,460,874        7,114,110   
  

 

 

   

 

 

 

Net investment loss

     (718,673     (1,154,548
  

 

 

   

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS

    

Net realized gain on:

    

Investments

     48,304,361        54,468,033   

Net change in unrealized appreciation (depreciation) on:

    

Investments

     (19,409,424     16,777,310   
  

 

 

   

 

 

 

Net realized and unrealized gain on investments

     28,894,937        71,245,343   
  

 

 

   

 

 

 

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS

   $ 28,176,264      $ 70,090,795   
  

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

|  48


Table of Contents

Statements of Changes in Net Assets

 

       CGM Advisor Targeted Equity Fund  
       Year Ended
December 31,
2014
     Year Ended
December 31,
2013
 

FROM OPERATIONS:

       

Net investment loss

     $ (1,340,175    $ (1,138,950

Net realized gain on investments and foreign
currency transactions

       65,609,954         98,423,883   

Net change in unrealized appreciation (depreciation)
on investments

       (21,344,530      46,132,544   
    

 

 

    

 

 

 

Net increase in net assets resulting from operations

       42,925,249         143,417,477   
    

 

 

    

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

       

Net investment income

       

Class A

               (4,304

Class B

               (97

Class C

               (360

Class Y

               (464

Net realized capital gains

       

Class A

       (63,610,439      (64,422,015

Class B

       (177,582      (319,115

Class C

       (5,241,159      (5,418,797

Class Y

       (5,034,635      (6,313,726
    

 

 

    

 

 

 

Total distributions

       (74,063,815      (76,478,878
    

 

 

    

 

 

 

NET DECREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 12)

       (24,383,469      (11,961,194
    

 

 

    

 

 

 

Net increase (decrease) in net assets

       (55,522,035      54,977,405   

NET ASSETS

       

Beginning of the year

       581,820,682         526,843,277   
    

 

 

    

 

 

 

End of the year

     $ 526,298,647       $ 581,820,682   
    

 

 

    

 

 

 

DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME/ACCUMULATED NET INVESTMENT LOSS

     $ (875,037    $ (899,985
    

 

 

    

 

 

 

 

See accompanying notes to financial statements.

 

49  |


Table of Contents

Statements of Changes in Net Assets (continued)

 

       Natixis Oakmark Fund  
       Year Ended
December 31,
2014
     Year Ended
December 31,
2013
 

FROM OPERATIONS:

       

Net investment income

     $ 781,395       $ 459,080   

Net realized gain on investments and foreign
currency transactions

       33,607,229         16,250,184   

Net change in unrealized appreciation (depreciation)
on investments

       (12,934,590      32,080,893   
    

 

 

    

 

 

 

Net increase in net assets resulting from operations

       21,454,034         48,790,157   
    

 

 

    

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

       

Net investment income

       

Class A

       (582,642      (432,563

Class C

       (61,330        

Class Y

       (130,544      (70,778

Net realized capital gains

       

Class A

       (25,448,063      (4,641,585

Class B

       (115,777      (53,345

Class C

       (7,987,538      (294,950

Class Y

       (3,299,099      (435,710
    

 

 

    

 

 

 

Total distributions

       (37,624,993      (5,928,931
    

 

 

    

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 12)

       132,132,840         (7,589,261
    

 

 

    

 

 

 

Net increase in net assets

       115,961,881         35,271,965   

NET ASSETS

       

Beginning of the year

       169,402,380         134,130,415   
    

 

 

    

 

 

 

End of the year

     $ 285,364,261       $ 169,402,380   
    

 

 

    

 

 

 

DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME

     $ (490,709    $ (472,053
    

 

 

    

 

 

 

 

See accompanying notes to financial statements.

 

|  50


Table of Contents

Statements of Changes in Net Assets (continued)

 

       Natixis Oakmark International Fund  
       Year Ended
December 31,
2014
     Year Ended
December 31,
2013
 

FROM OPERATIONS:

       

Net investment income

     $ 9,824,395       $ 415,827   

Net realized gain on investments and foreign
currency transactions

       21,894,715         11,401,208   

Net change in unrealized appreciation (depreciation)
on investments and foreign currency translations

       (99,645,940      36,596,500   
    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

       (67,926,830      48,413,535   
    

 

 

    

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

       

Net investment income

       

Class A

       (12,092,911      (1,179,127

Class C

       (4,207,529      (154,136

Net realized capital gains

       

Class A

       (10,563,438      (3,755,164

Class C

       (5,813,413      (2,995,185
    

 

 

    

 

 

 

Total distributions

       (32,677,291      (8,083,612
    

 

 

    

 

 

 

NET INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 12)

       493,477,560         441,801,535   
    

 

 

    

 

 

 

Net increase in net assets

       392,873,439         482,131,458   

NET ASSETS

       

Beginning of the year

       551,828,300         69,696,842   
    

 

 

    

 

 

 

End of the year

     $ 944,701,739       $ 551,828,300   
    

 

 

    

 

 

 

UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS OF)
NET INVESTMENT INCOME

     $ (1,601,585    $ 844,145   
    

 

 

    

 

 

 

 

See accompanying notes to financial statements.

 

51  |


Table of Contents

Statements of Changes in Net Assets (continued)

 

       Vaughan Nelson Small Cap
Value Fund
 
       Year Ended
December 31,
2014
     Year Ended
December 31,
2013
 

FROM OPERATIONS:

       

Net investment income (loss)

     $ (718,673    $ 1,290,060   

Net realized gain on investments

       48,304,361         58,527,986   

Net change in unrealized appreciation (depreciation)
on investments

       (19,409,424      50,817,080   
    

 

 

    

 

 

 

Net increase in net assets resulting from operations

       28,176,264         110,635,126   
    

 

 

    

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

       

Net investment income

       

Class A

               (368,339

Class B

               (812

Class C

               (8,031

Class Y

               (821,635

Net realized capital gains

       

Class A

       (20,240,252      (23,147,106

Class B

       (221,933      (433,209

Class C

       (5,709,846      (5,802,683

Class Y

       (26,912,401      (25,293,191
    

 

 

    

 

 

 

Total distributions

       (53,084,432      (55,875,006
    

 

 

    

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (NOTE 12)

       4,930,798         (27,872,472
    

 

 

    

 

 

 

Net increase (decrease) in net assets

       (19,977,370      26,887,648   

NET ASSETS

       

Beginning of the year

       350,343,218         323,455,570   
    

 

 

    

 

 

 

End of the year

     $ 330,365,848       $ 350,343,218   
    

 

 

    

 

 

 

DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME/ACC