As filed with the Securities and Exchange Commission on February 16, 1996
Registration Nos. 811-6241 and 33-39133
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 7 [X]
and
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 9 [X]
(Check appropriate box or boxes)
LOOMIS SAYLES FUNDS
(Exact name of registrant as specified in charter)
One Financial Center, Boston, MA 02111
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 482-2450
Name and address
of agent for service with a copy to:
Daniel J. Fuss Truman S. Casner, Esq.
Loomis, Sayles & Company, Incorporated Ropes & Gray
One Financial Center One International Place
Boston, MA 02111 Boston, MA 02110
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant [ ] on [date] pursuant to
to paragraph (b) paragraph (b)
[ ] 60 days after filing pursuant to [ ] on [date] pursuant to
paragraph (a)(2) paragraph (a)(1)
<PAGE>
[X] 75 days after filing pursuant to [ ] on [date] pursuant to
paragraph (a)(2) paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has registered an indefinite number or amount of its shares of
beneficial interest under the Securities Act of 1933. The Registrant expects to
file a Rule 24f-2 Notice with respect to the Registrant's fiscal year ended
December 31, 1995 on or before February 29, 1996.
<PAGE>
LOOMIS SAYLES FUNDS
Cross Reference Sheet
Items required by Form N-1A
PART A
Item Registration Statement
No. Caption Caption in Prospectus
- ---- --------------------- ---------------------------------------------
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Financial Highlights
Information
4. General Description Cover Page; The Trust; Investment Objectives
of Registrant and Policies; More Information About the
Funds' Investments
5. Management of Cover Page; The Trust; The Funds'
the Fund Investment Adviser; Fund Expenses; Portfolio
Transactions; Back Cover
6. Capital Stock and The Trust; Shareholder Services; Dividends,
Other Securities Capital Gain Distributions and Taxes
7. Purchase of Securities How to Purchase Shares; Shareholder Services
Being Offered
8. Redemption or How to Redeem Shares
Repurchase
9. Pending Legal Not Applicable
Proceedings
<PAGE>
PART B
Item Registration Statement
No. Caption Caption in Prospectus
- ---- --------------------- ---------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information Not Applicable
and History
13. Investment Objectives Investment Objectives, Policies and
and Policies Restrictions
14. Management of the Fund Management of the Trust
15. Control Persons and Management of the Trust
Principal Holders of
Securities
16. Investment Advisory Investment Advisory and Other Services
and Other Services
17. Brokerage Allocation Portfolio Transactions and Brokerage
and Other Practices
18. Capital Stock and How to Redeem Shares (Prospectus);
Other Securities Redemptions; Dividends, Capital Gain
Distributions and Taxes (Prospectus); Income
Dividends, Capital Gain Distributions and Tax
Status; Description of the Trust
19. Purchase, Redemption How to Purchase Shares (Prospectus);
and Pricing of Securities Shareholder Services; How to Redeem Shares
Being Offered (Prospectus); Redemptions; Net Asset Value
and Public Offering Price
20. Tax Status Dividends, Capital Gain Distributions and
Taxes (Prospectus); Income Dividends,
Capital Gain Distributions and Tax Status
21. Underwriters Not Applicable
22. Calculations of Not Applicable
Performance Data
<PAGE>
23. Financial Statements Financial Statements
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
LOOMIS SAYLES FUNDS
One Financial Center
Boston, Massachusetts 02111
(617) 482-2450
PROSPECTUS
May 1, 1996
The Loomis Sayles Funds are a group of ten no-load mutual funds (the "Funds"):
Loomis Sayles Growth Fund
Loomis Sayles Growth & Income Fund
Loomis Sayles Small Cap Fund
Loomis Sayles International Equity Fund
Loomis Sayles Worldwide Fund
Loomis Sayles Global Bond Fund
Loomis Sayles Bond Fund
Loomis Sayles Municipal Bond Fund
Loomis Sayles U.S. Government Securities Fund
Loomis Sayles Short-Term Bond Fund
Each Fund is separately managed and has its own investment objective
and policies. Loomis, Sayles & Company, L.P. ("Loomis Sayles") is the investment
adviser of each Fund.
This Prospectus concisely describes the information that you should
know before investing in any Fund. Please read it carefully and keep it for
future reference. A Statement of Additional Information dated May 1, 1996 is
available free of charge; write to Loomis Sayles Funds, One Financial Center,
Boston, Massachusetts 02111 or telephone 800-633-3330. The Statement of
Additional Information, which contains more detailed information about the
Funds, has been filed with the Securities and Exchange Commission (the "SEC")
and is incorporated by reference into this Prospectus.
For information about:
(bullet) Establishing an account
(bullet) Account procedures and status
(bullet) Exchanges
(bullet) Shareholder services
Call 800-626-9390
For all other information about the Funds:
Call 800-633-3330
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF EXPENSES ................................................. 3
FINANCIAL HIGHLIGHTS ................................................ 5
THE TRUST ........................................................... 10
INVESTMENT OBJECTIVES AND POLICIES .................................. 10
MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS ....................... 13
THE FUNDS' INVESTMENT ADVISER ....................................... 17
FUND EXPENSES ....................................................... 18
PORTFOLIO TRANSACTIONS .............................................. 18
HOW TO PURCHASE SHARES .............................................. 19
SHAREHOLDER SERVICES ................................................ 20
HOW TO REDEEM SHARES ................................................ 21
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES ..................... 22
2
<PAGE>
SUMMARY OF EXPENSES
The following information is provided to assist you in understanding
the various expenses that, as an investor in a Fund, you will bear indirectly.
Except in the case of the Worldwide Fund, the information is based on expenses
for the Funds' fiscal year ended December 31, 1995. The Worldwide Fund did not
commence operations until 1996; the information about it shown below is based on
annualized projected expenses for the period from the Fund's commencement of
operations through December 31, 1996. The information below should not be
considered a representation of past or future expenses, as actual expenses may
be greater or less than those shown. Also, the assumed 5% annual return in the
Example should not be considered a representation of investment performance as
actual performance will depend upon actual investment results of securities held
in the particular Fund's portfolio.
Inter-
Growth & Small national
Growth Income Cap Equity Worldwide
Fund Fund Fund Fund Fund
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as % of offering price) none none none none none
Maximum Sales Load Imposed on
Reinvested Dividends (as % of
(offering price) none none none none none
Deferred Sales Load
(as % of original
purchase price or redemption
proceeds as applicable) none none none none none
12b-1 Fees none none none none none
Redemption Fees(1) none none none none none
Exchange Fees none none none none none
Annual Operating Expenses
After Expense Reimbursements
(as a percentage of net assets):
Management Fees .75% .75% 1.00% 1.00% .75%
Other Operating Expenses .33% .45% .25% .45% .25%
Total Operating Expenses 1.08% 1.20% 1.25% 1.45% 1.00%(2)
Example:
You would pay the following
expenses on a $1,000 investment
assuming a 5% annual return
(with or without a redemption
at the end of each time period):
One Year $ 11 $ 12 $ 13 $ 15 $ 10
Three Years $ 34 $ 38 $ 40 $ 40 $ 32
Five Years $ 60 $ 66 $ 69 $ 69
Ten Years $132 $145 $151 $151
3
<PAGE>
Global Municipal U.S. Gov't Short-Term
Bond Bond Bond Securities Bond
Fund Fund Fund Fund Fund
Shareholder Transaction Expenses:
Maximum Sales Load Imposed
on Purchases (as % of offering
price) none none none none none
Maximum Sales Load Imposed on
Reinvested Dividends (as % of
(offering price) none none none none none
Deferred Sales Load (as % of
original purchase price or
redemption proceeds as applicable) none none none none none
12b-1 Fees none none none none none
Redemption Fees(1) none none none none none
Exchange Fees none none none none
Annual Operating Expenses
(as a percentage of net assets):
Management Fees .75% .60% .60% .60% .50%
Other Operating Expenses .75% .19% .40% .40% .50%
Total Operating Expenses 1.50%(2) .79% 1.00%(2) 1.00%(2) 1.00%(2)
Example:
You would pay the following
expenses on a $1,000 investment
assuming a 5% annual return
(with or without a redemption at
the end of each time period):
One Year $ 15 $ 8 $ 10 $ 10 $ 10
Three Years $ 47 $25 $ 32 $ 32 $ 32
Five Years $ 82 $44 $ 55 $ 55 $ 55
Ten Years $179 $98 $122 $122 $122
_______________
(1) A $5 charge applies to any wire transfer of redemption proceeds from any
Fund.
(2) Loomis Sayles has voluntarily agreed, for an indefinite period, to limit
this Fund's total operating expenses to the percentages of net assets shown
above. Without this agreement, Total Operating Expenses for the fiscal year
ended December 31, 1995 would have been 2.02% for the Municipal Bond Fund,
1.22% for the U.S. Government Securities Fund, 1.03% for the Short-Term
Bond Fund, and 1.69% for the Global Bond Fund and estimated annualized
Total Operating Expenses for the period through December 31, 1996 would be
__% for the Worldwide Fund.
4
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share of each Fund outstanding throughout the indicated periods)
The following information is included in financial statements of the
Funds that have been audited by Coopers & Lybrand L.L.P., independent
accountants. The following information should be read in conjunction with the
financial statements and the notes thereto contained in the Funds' 1995 Annual
Report, which is incorporated by reference in the Statement of Additional
Information.
<TABLE>
<CAPTION>
Growth & Income Fund Growth Fund
-------------------- -----------
Year Ended Dec. 31, May 16* to Year Ended Dec. 31, May 13* to
------------------- Dec. 31, ------------------- Dec. 31,
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $11.80 $12.49 $11.53 $10.54 $10.00 $12.50 $13.02 $12.46 $12.01 $10.00
Income from investment operations --
Net investment income.................... 0.15 0.13 0.13 0.12 (0.02) 0.00 (0.04) 0.00
Net realized and unrealized gain (loss)
on investments........................ (0.26) 1.24 1.36 0.59 (0.45) 1.16 0.49 2.45
----- ---- ---- ---- ----- ---- ---- ----
Total from investment operations.... (0.11) 1.37 1.49 0.71 (0.47) 1.16 0.45 2.45
----- ---- ---- ---- ----- ---- ---- ----
Less distributions --
Dividends from net investment income..... (0.15) (0.12) (0.13) (0.12) 0.00 0.00 0.00 0.00
Distributions from net realized
capital gains......................... (0.43) (0.29) (0.37) (0.05) (0.04) (0.60) 0.00 (0.44)
Distributions from capital............... 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00
---- ---- ---- ---- ---- ---- ---- ----
Total distributions...................... (0.58) (0.41) (0.50) (0.17) (0.05) (0.60) 0.00 (0.44)
----- ----- ----- ----- ----- ----- ---- -----
Net asset value, end of period............. $11.80 $12.49 $11.53 $10.54 $12.50 $13.02 $12.46 $12.01
====== ====== ====== ====== ====== ====== ====== ======
Total return (%)........................... 0.9 11.9 14.1 7.2 (3.7) 9.3 3.8 24.5
Net assets, end of period (000)............ $25,946 $20,657 $12,279 $ 7,689 $36,580 $32,385 $24,451 $16,105
Ratio of operating expenses to
average net assets (%)................... 1.33 1.50 1.50 1.50** 1.16 1.20 1.50 1.50**
Ratio of net investment income to
average net assets (%)................... 1.28 1.23 1.42 2.09** (0.14) (0.17) (0.45) 0.01**
Portfolio turnover rate (%)................ 48 53 67 27** 46 64 98 69**
Without giving effect to voluntary
expense limitations:
The ratios of operating expenses
to average net assets would
have been (%)......................... 1.33 1.56 2.19 2.59** 1.16 1.20 1.51 1.66**
Net investment income per share
would have been....................... $ 0.15 $ 0.12 $ 0.07 $ 0.06 $(0.02) $0.00 $ (0.04) $ (0.01)
</TABLE>
_______________
* Commencement of operations.
** Computed on an annualized basis.
5
<PAGE>
<TABLE>
<CAPTION>
Small Cap Fund International Equity Fund
-------------- -------------------------
Year Ended Dec. 31, May 13* to Year Ended Dec. 31, May 13* to
------------------- Dec. 31, ------------------- Dec. 31,
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $12.86 $14.13 $12.88 $12.49 $10.00 $11.61 $12.90 $ 9.64 $10.27 $10.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations --
Net investment income.................... (0.04) 0.00 (0.06) (0.01) 0.15 0.11 0.10 0.08
Net realized and unrealized gain (loss)
on investments........................ (1.12) 3.15 1.67 3.03 (0.38) 3.61 (0.62) 0.29
----- ---- ---- ---- ----- ---- ----- ----
Total from investment operations.... (1.16) 3.15 1.61 3.02 (0.23) 3.72 (0.52) 0.37
----- ---- ---- ---- ----- ---- ----- ----
Less distributions --
Dividends from net investment income..... 0.00 0.00 0.00 0.00 (0.14) (0.10) (0.10) (0.08)
Distributions from net realized
capital gains......................... (0.11) (1.90) (1.22) (0.53) (0.92) (0.36) (0.01) 0.00
Distributions from paid-in capital....... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.02)
---- ---- ---- ---- ---- ---- ---- -----
Total distributions................. (0.11) (1.90) (1.22) (0.53) (1.06) (0.46) (0.11) (0.10)
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period............. $12.86 $14.13 $12.88 $12.49 $11.61 $12.90 $ 9.64 $10.27
====== ====== ====== ====== ====== ====== ====== ======
Total return (%)........................... (8.2) 24.7 13.1 30.5 (1.8) 38.5 (5.1) 3.7
Net assets, end of period (000)............ $73,126 $67,553 $39,244 $14,581 $73,189 $56,560 $14,937 $ 6,916
Ratio of operating expenses to
average net assets (%)................... 1.27 1.35 1.50 1.50** 1.46 1.50 1.50 1.50**
Ratio of net investment income to
average net assets (%)................... (0.30) (0.38) (0.79) (0.19)** 1.30 1.20 1.64 1.55**
Portfolio turnover rate (%)................ 87 106 109 56** 116 128 101 109**
Without giving effect to
voluntary expense limitations:
The ratios of operating expenses
to average net assets would
have been (%)......................... 1.27 1.35 1.66 2.43** 1.46 1.72 2.77 3.66**
Net investment income per share
would have been....................... $(0.04) $ 0.00 $ (0.07) $ (0.06) $0.15 $ 0.09 $ 0.02 $ (0.03)
</TABLE>
_______________
6
* Commencement of operations.
** Computed on an annualized basis.
<PAGE>
<TABLE>
<CAPTION>
Global Bond Fund Bond Fund
---------------- ---------
Year Ended Dec. 31, May 16* to Year Ended Dec. 31, May 10* to
------------------- Dec. 31, ------------------- Dec. 31,
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $9.82 $11.06 $10.32 $11.38 $10.00 $10.05 $11.37 $10.36 $10.23 $10.00
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations --
Net investment income................... 0.67 0.54 0.70 0.37 0.83 0.84 0.76 0.52
Net realized and unrealized
gain (loss) on investments........... (1.63) 0.96 (0.60) 1.31 (1.29) 1.43 0.67 0.36
----- ---- ----- ---- ----- ---- ---- ----
Total from investment operations... (0.96) 1.50 0.10 1.68 (0.46) 2.27 1.43 0.88
----- ---- ---- ---- ----- ---- ---- ----
Less distributions --
Dividends from net investment income.... (0.4) (0.49) (0.77) (0.30) (0.84) (0.81) (0.76) (0.52)
Distributions in excess of net
investment income.................... 0.00 0.00 0.00 0.00 (0.02) 0.00 0.00 0.00
Distributions from net realized
capital gains........................ 0.00 (0.27) (0.39) 0.00 0.00 (0.45) (0.54) (0.13)
Distributions from capital.............. (0.24) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
----- ---- ---- ---- ---- ---- ---- ----
Total distributions........................ (0.28) (0.76) (1.16) (0.30) (0.86) (1.26) (1.30) (0.65)
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period............. $9.82 $11.06 $10.32 $11.38 $10.05 $11.37 $10.36 $10.23
===== ====== ====== ====== ====== ====== ====== ======
Total return (%)........................... (8.7) 14.6 0.8 16.9 (4.1) 22.2 14.3 8.9
Net assets, end of period (000)............ $25,584 $21,378 $9,968 $4,308 $82,985 $64,222 $18,472 $9,922
Ratio of operating expenses to
average net assets (%).................. 1.30 1.50 1.50 1.50** 0.84 0.94 1.00 1.00**
Ratio of net investment income to
average net assets (%).................. 7.02 5.54 6.99 6.81** 7.92 8.26 7.50 8.97**
Portfolio turnover rate (%)................ 153 150 72 137** 87 170 101 126**
Without giving effect to
voluntary expense limitations:
The ratios of expenses to average
net assets would have been (%)....... 1.30 1.51 2.58 3.99** 0.84 0.94 1.55 1.78**
Net investment income per share
would have been...................... $0.67 $0.54 $0.59 $0.23 $0.83 $0.84 $0.70 $0.47
</TABLE>
_______________
7
* Commencement of operations.
** Computed on an annualized basis.
<PAGE>
<TABLE>
<CAPTION>
Municipal Bond Fund Government Securities Fund
------------------- --------------------------
Year Ended Dec. 31, May 29* to Year Ended Dec. 31, May 21* to
------------------- Dec. 31, ------------------- Dec. 31,
1995 1994 1993 1992 1991 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...... $10.41 $11.54 $10.95 $10.55 $10.00 $9.22 $10.53 $10.45 $10.77 $10.00
------ ------ ------ ------ ------ ----- ------ ------ ------ ------
Income from investment operations --
Net investment income.................. 0.52 0.51 0.51 0.24 0.64 0.64 0.64 0.40
Net realized and unrealized
gain (loss) on investments.......... (1.13) 0.74 0.46 0.56 (1.30) 1.00 0.27 1.11
----- ---- ---- ---- ----- ---- ---- ----
Total from investment operations.. (0.61) 1.25 0.97 0.80 (0.66) 1.64 0.91 1.51
----- ---- ---- ---- ----- ---- ---- ----
Less distributions --
Dividends from net investment income... (0.52) (0.51) (0.51) (0.23) (0.65) (0.65) (0.59) (0.40)
Distributions from net realized
capital gains....................... 0.00 (0.15) (0.06) (0.02) 0.00 (0.91) (0.64) (0.34)
----- ----- ----- ----- ----- ----- ----- -----
Total distributions............... (0.52) (0.66) (0.57) (0.25) (0.65) (1.56) (1.23) (0.74)
----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period............ $10.41 $11.54 $10.95 $10.55 $9.22 $10.53 $10.45 $10.77
====== ====== ====== ====== ===== ====== ====== ======
Total return (%).......................... (5.4) 11.6 9.4 8.1 (6.3) 15.7 8.8 15.3
Net assets, end of period (000)........... $7,270 $5,160 $2,200 $706 $17,341 $18,317 $10,899 $6,248
Ratio of operating expenses to
average net assets (%)................. 1.00 1.00 1.00 1.00** 1.00 1.00 1.00 1.00**
Ratio of net investment income to
average net assets (%)................. 4.79 4.50 4.81 5.03** 6.60 5.95 6.54 7.01**
Portfolio turnover rate (%)............... 28 36 32 26** 242 277 344 273**
Without giving effect to
voluntary expense limitations:
The ratios of expenses to average
net assets would have been (%)...... 2.37 3.22 7.65 21.58** 1.22 1.29 2.01 2.39**
Net investment income per share
would have been..................... $0.37 $0.26 $(0.19) $(0.74) $0.62 $0.61 $0.54 $0.32
</TABLE>
_______________
* Commencement of operations.
** Computed on an annualized basis.
8
<PAGE>
<TABLE>
<CAPTION>
Short-Term Bond Fund
--------------------
Year Ended
December 31, August 3* to
------------------------------- December 31,
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period...................... $9.95 $9.87 $10.00
----- ----- ------
Income from investment operations --
Net investment income.................................. 0.66 0.59 0.22
Net realized and unrealized gain (loss)
on investments....................................... (0.49) 0.08 (0.13)
----- ---- -----
Total from investment operations.................... 0.17 0.67 0.09
---- ---- ----
Less distributions --
Dividends from net investment income................... (0.66) (0.59) (0.22)
Distributions from net realized capital gains.......... 0.00 0.00 0.00
---- ---- ----
Total distributions................................. (0.66) (0.59) (0.22)
----- ----- -----
Net asset value, end of period............................ $9.46 $9.95 $9.87
===== ===== =====
Total return (%).......................................... 1.8 7.0 0.9
Net assets, end of period (000)........................... $19,440 $15,226 $5,121
Ratio of operating expenses to average
net assets (%).......................................... 1.0 1.00 1.00**
Ratio of net investment income to
average net assets (%).................................. 6.88 5.97 5.49**
Portfolio turnover rate (%)............................... 34 81 31**
Without giving effect to voluntary expense
limitations:
The ratios of expenses to average net
assets would have been (%)........................... 1.33 1.55 3.74**
Net investment income per share would
have been............................................ $0.63 $0.54 $0.11
_______________
</TABLE>
* Commencement of operations.
** Computed on an annualized basis.
NOTE: Further information about each Fund's performance is contained in the
Funds' annual report to shareholders, which may be obtained without
charge.
9
<PAGE>
THE TRUST
Each Fund is a series of Loomis Sayles Funds (the "Trust"). The Trust
is a diversified open-end management investment company organized as a
Massachusetts business trust. The Trust is authorized to issue an unlimited
number of full and fractional shares of beneficial interest in multiple series.
Shares are freely transferable and entitle shareholders to receive dividends as
determined by the Trust's board of trustees and to cast a vote for each share
held at shareholder meetings. The Trust does not generally hold shareholder
meetings and will do so only when required by law. Shareholders may call
meetings to consider removal of the Trust's trustees.
INVESTMENT OBJECTIVES AND POLICIES
Loomis Sayles Growth Fund
The Fund's investment objective is long-term growth of capital.
The Fund seeks to attain its objective by investing substantially all
of its assets in common stocks or their equivalent. Investments are selected
based on their growth potential; current income is not a consideration. The Fund
may invest in companies with relatively small market capitalization, as well as
in larger companies. The Fund may invest a limited portion of its assets in
securities of foreign issuers.
Loomis Sayles Growth & Income Fund
The Fund's investment objective is long-term growth of capital and
income.
The Fund seeks to attain its objective by investing substantially all
of its assets in common stocks or their equivalent which Loomis Sayles considers
to be undervalued in relation to the issuer's earnings, dividends, assets and
growth prospects. The Fund may invest a limited portion of its assets in
securities of foreign issuers.
Loomis Sayles Small Cap Fund
The Fund's investment objective is long-term capital growth from
investments in common stocks or their equivalent.
The Fund seeks to attain its objective by investing primarily in stocks
of small cap companies with good earnings growth potential that Loomis Sayles
believes are undervalued by the market. The Fund will normally invest at least
65% of its total assets in companies with market capitalization of less than
$500 million and may invest up to 35% of its assets in larger companies. Loomis
Sayles seeks to build a core small cap portfolio of solid growth company stocks,
with a smaller emphasis on special situations and turnarounds (companies that
have experienced significant business problems but which Loomis Sayles believes
have favorable prospects for recovery), as well as unrecognized stocks. The Fund
may invest a limited portion of its assets in securities of foreign issuers.
Current income is not a consideration in selecting the Fund's investments.
10
<PAGE>
Loomis Sayles International Equity Fund
The Fund's investment objective is high total investment return through
a combination of capital appreciation and current income.
The Fund seeks to attain its objective by investing primarily in equity
securities of companies organized or headquartered outside the United States.
Under normal conditions the Fund will invest at least 65% of its total assets in
equity securities of issuers of at least three countries outside the United
States, and no more than 20% of its assets in issuers headquartered in any one
country. For temporary defensive purposes, the Fund may invest as much as 100%
of its assets in issuers from one or two countries, which may include the United
States.
Loomis Sayles Worldwide Fund
The Fund's investment objective is high total investment return through
a combination of capital appreciation and current income.
The Fund seeks to attain its objective by investing in U.S. and foreign
equity and debt securities. The allocation of the Fund's assets among the four
sectors of domestic equities, international equities, domestic bonds and
international bonds will be made by Loomis Sayles' Global Asset Allocation
Group. The Fund will normally invest its assets in securities of issuers from
at least three countries, one of which will be the United States. The Fund may
invest up to 35% of its assets in fixed income securities of below investment
grade quality. The Fund may also invest in collateralized mortgage obligations
(CMOs) and Rule 144A securities. (See "More Information about the Funds'
Investments" below.)
The Fund may engage in options and forward contract transactions to
hedge against changes in the value of securities and the currencies in which
they are denominated.
Loomis Sayles Global Bond Fund
The Fund's investment objective is high total investment return through
a combination of high current income and capital appreciation.
The Fund seeks to attain its objective by investing primarily in
investment grade fixed income obligations (including convertibles and CMOs)
denominated in various currencies including U.S. dollars or in multicurrency
units.
Under normal conditions, the Fund will invest at least 65% of its total
assets in bonds of issuers from at least three countries which may include the
United States, and no more than 40% of its assets in issuers headquartered in
any one country. However, up to 100% of the Fund's assets may be denominated in
U.S. dollars. For temporary defensive purposes, the Fund may invest as much as
100% of its assets in issuers from one or two countries, which may include the
United States.
The Fund may engage in options and forward contract transactions to
hedge against changes in the value of securities and the currencies in which
they are denominated.
Loomis Sayles Bond Fund
The Fund's investment objective is high total investment return through
a combination of current income and capital appreciation.
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The Fund seeks to attain its objective by normally investing
substantially all of its assets in debt securities (including convertibles),
although up to 20% of its assets may be invested in preferred stocks. At least
65% of the Fund's total assets will normally be invested in bonds. The Fund may
invest any portion of its assets in securities of Canadian issuers, and a
limited portion of its assets in securities of other foreign issuers. The Fund
will also invest up to 35% of its assets in securities of below investment grade
quality.
The Fund may invest in CMOs and Rule 144A securities.
The percentages of the Bond Fund's assets invested during the fiscal
year ended December 31, 1995 in securities assigned to the various rating
categories by Moody's and Standard & Poor's were as follows: "AAA"/"Aaa" 13.2%;
"AA"/"Aa" 9.2%; "A"/"A" 10.9%; "BBB"/"Baa" 32.3%; "BB"/"Ba" 12.0%; "B"/"B"
12.7%; "CCC"/"Caa" 9.7%.
Loomis Sayles Municipal Bond Fund
The Fund's investment objective is as high a level of current income
exempt from federal income tax as is consistent with the preservation of
capital.
The Fund seeks to attain its objective by normally investing
substantially all of its assets in securities the income from which is, in the
opinion of issuer's counsel at the time of issuance, exempt from federal income
tax ("tax exempt securities"). It is a fundamental policy of the Fund that,
during periods of normal market conditions, at least 80% of its net assets will
be invested in tax exempt securities. Normally at least 80% of its assets will
be invested in issues rated A or better, and at least 65% of its assets will be
invested in bonds. All issues will be rated at least BBB or Baa (or, if unrated,
be of equivalent credit quality as determined by Loomis Sayles) at the time of
purchase. Bonds of BBB or Baa quality have some speculative characteristics.
Changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher grade bonds.
Loomis Sayles U.S. Government Securities Fund
The Fund's investment objective is high total investment return through
a combination of current income and capital appreciation.
The Fund seeks to achieve its objective by investing substantially all
its assets in securities issued or guaranteed by the U.S. Government or its
authorities, agencies or instrumentalities ("U.S. Government Securities"),
including CMOs, and in certificates representing undivided interests in the
interest or principal of U.S. Treasury Securities. At least 65% of the Fund's
total assets will normally be invested in U.S. Government Securities.
Loomis Sayles Short-Term Bond Fund
The Fund's investment objective is high total investment return through
a combination of current income and capital appreciation with relatively low
fluctuation in net asset value.
The Fund seeks to achieve its objective by normally investing
substantially all of its assets in debt securities (including convertibles and
CMOs) although up to 20% of its assets may be invested in non-convertible
preferred stock. At least 65% of the Fund's total assets will normally be
invested in bonds with a remaining maturity of 5 years or less. The Fund may
invest a limited portion of its assets in securities of foreign issuers.
In an effort to minimize fluctuations in market value, the Fund is
expected to maintain an average weighted maturity of between one and three
years.
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All Funds
Except for each Fund's investment objective, and any investment
policies that are identified as "fundamental," all of the investment policies of
each Fund may be changed without a vote of Fund shareholders.
MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS
Common Stocks and Other Equity Securities
Common stocks and similar equity securities such as warrants and
convertibles are volatile and more risky than some other forms of investment.
Therefore, the value of your investment in a Fund that invests in equity
securities may sometimes decrease instead of increase. Equity securities of
companies with relatively small market capitalization may be more volatile than
the securities of larger, more established companies and than the broad equity
market indexes.
Debt and Other Fixed Income Securities
The Bond, Global Bond, Municipal Bond, U.S. Government Securities and
Worldwide Funds may all invest in fixed income securities of any maturity.
Although the Short-Term Bond Fund expects to maintain an average weighted
maturity of less than three years, individual portfolio holdings may have
maturities longer than three years. Fixed income securities pay a specified rate
of interest or dividends, or a rate that is adjusted periodically by reference
to some specified index or market rate. Fixed income securities include
securities issued by federal, state, local and foreign governments and related
agencies, and by a wide range of private issuers. Because interest rates vary,
it is impossible to predict the income of a Fund that invests in fixed income
securities for any particular period. The net asset value of such a Fund's
shares will vary as a result of changes in the value of the securities in the
Fund's portfolio.
Fixed income securities are subject to market and credit risk. Market
risk relates to changes in a security's value as a result of changes in interest
rates generally. In general, the values of fixed income securities increase when
prevailing interest rates fall and decrease when interest rates rise. Credit
risk relates to the ability of the issuer to make payments of principal and
interest.
U.S. Government Securities
U.S. Government Securities have different kinds of government support.
For example, some U.S. Government Securities, such as U.S. Treasury bonds, are
supported by the full faith and credit of the United States, whereas certain
other U.S. Government Securities issued or guaranteed by federal agencies or
government-sponsored enterprises are not supported by the full faith and credit
of the United States.
Although U.S. Government Securities generally do not involve the credit
risks associated with other types of fixed income securities, the market values
of U.S. Government Securities do go up and down as interest rates change. Thus,
for example, the value of an investment in a Fund that holds U.S. Government
Securities may fall during times of rising interest rates. Yields on U.S.
Government Securities tend to be lower than those of corporate securities of
comparable maturities.
Some U.S. Government Securities, such as Government National Mortgage
Association Certificates, are known as "mortgage-backed" securities. Interest
and principal payments on the mortgages underlying mortgage-backed U.S.
Government Securities are passed through to the holders of the security. If a
Fund purchases mortgage-backed securities at a discount or a premium, the Fund
will recognize a gain or loss when the payments of principal, through prepayment
or otherwise, are passed through to the Fund and, if the payment occurs in a
period of falling interest rates, the Fund may not be able to reinvest the
payment at as favorable an interest rate. As a result of these principal
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prepayment features, mortgage-backed securities are generally more volatile
investments than many other fixed income securities.
In addition to investing directly in U.S. Government Securities, the
Funds may purchase certificates of accrual or similar instruments ("strips")
evidencing undivided ownership interests in interest payments or principal
payments, or both, in U.S. Government Securities. These investment instruments
may be highly volatile. For purposes of its policy of normally investing at
least 65% of its total assets in U.S. Government Securities, the U.S. Government
Securities Fund will not treat a strip as a U.S. Government Security unless the
strip itself is directly issued or guaranteed by the U.S. Government or an
agency, authority or instrumentality thereof.
Tax Exempt Securities
Issuers of tax exempt securities may make interest and principal
payments from money raised through a variety of sources, including (1) the
issuer's general taxing power, (2) a specific type of tax such as a property
tax, or (3) a particular facility or project such as a highway. The ability of
an issuer of tax exempt bonds to make these payments could be affected by
litigation, legislation or other political events, or the bankruptcy of the
issuer. The interest on tax exempt securities issued after August 15, 1986 is
retroactively taxable from the date of issuance if the issuer does not comply
with certain requirements concerning the use of bond proceeds and the
application of earnings on bond proceeds.
Lower Rated Fixed Income Securities
The Bond, Global Bond, Short-Term Bond and Worldwide Funds may each
invest a portion of its assets in securities rated below investment grade (that
is, below BBB or Baa), including securities in the lowest rating categories, and
comparable unrated securities. The Bond and Worldwide Funds each may invest up
to 35%, and the Global Bond and Short-Term Bond Funds each may invest up to 20%,
of its assets in such securities. For purposes of the foregoing percentages, a
security will be treated as being of investment grade quality if at the time a
Fund acquires it at least one major rating agency has rated the security in its
top four rating categories (even if another such agency has issued a lower
rating), or if the security is unrated but Loomis Sayles determines it to be of
investment grade quality. Lower rated fixed income securities generally provide
higher yields, but are subject to greater credit and market risk, than higher
quality fixed income securities. Lower rated fixed income securities are
considered predominantly speculative with respect to the ability of the issuer
to meet principal and interest payments. Achievement of the investment objective
of a Fund investing in lower rated fixed income securities may be more dependent
on the investment adviser's own credit analysis than is the case with higher
quality bonds. The market for lower rated fixed income securities may be more
severely affected than some other financial markets by economic recession or
substantial interest rate increases, by changing public perceptions of this
market or by legislation that limits the ability of certain categories of
financial institutions to invest in these securities. In addition, the secondary
market may be less liquid for lower rated fixed income securities. This lack of
liquidity at certain times may affect the values of these securities and may
make the valuation and sale of these securities more difficult. Securities of
below investment grade quality are commonly referred to as "junk bonds."
Securities in the lowest rating categories may be in poor standing or in
default. Securities in the lowest investment grade category (BBB or Baa) have
some speculative characteristics.
Zero Coupon Securities
The Bond, Global Bond, Worldwide, Municipal Bond, U.S. Government
Securities and Short-Term Bond Funds may each invest in "zero coupon" fixed
income securities. These securities accrue interest at a specified rate, but do
not pay interest in cash on a current basis. A Fund investing in zero coupon
securities is required to distribute the income on these securities to Fund
shareholders as the income accrues, even though the Fund is not receiving the
income in cash on a current basis. Thus the Fund may have to sell other
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investments to obtain cash to make income distributions. The market value of
zero coupon securities is often more volatile than that of non-zero coupon fixed
income securities of comparable quality and maturity.
Collateralized Mortgage Obligations
The Bond, Short-Term Bond, Global Bond, U.S. Government Securities and
Worldwide Funds each may invest in collateralized mortgage obligations ("CMOs").
A CMO is a security backed by a portfolio of mortgages or mortgage-backed
securities held under an indenture. CMOs may be issued either by U.S. Government
instrumentalities or by non-governmental entities. The issuer's obligation to
make interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. CMOs are issued with a number of
classes or series which have different maturities and which may represent
interests in some or all of the interest or principal on the underlying
collateral or a combination thereof. CMOs of different classes are generally
retired in sequence as the underlying mortgage loans in the mortgage pool are
repaid. In the event of sufficient early prepayments on such mortgages, the
class or series of CMOs first to mature generally will be retired prior to its
maturity. As with other mortgage-backed securities, the early retirement of a
particular class or series of CMOs held by a Fund could involve the loss of any
premium the Fund paid when it acquired the investment and could result in the
Fund's reinvesting the proceeds at a lower interest rate than the retired CMO
paid. Because of the early retirement feature, CMOs may be more volatile than
many other fixed-income investments.
When-Issued Securities
Each Fund may purchase securities on a "when-issued" basis. This means
that the Fund will enter into a commitment to buy the security before the
security has been issued. The Fund's payment obligation and the interest rate on
the security are determined when the Fund enters into the commitment. The
security is typically delivered to the Fund 15 to 120 days later. No interest
accrues on the security between the time the Fund enters into the commitment and
the time the security is delivered. If the value of the security being purchased
falls between the time a Fund commits to buy it and the payment date, the Fund
may sustain a loss. The risk of this loss is in addition to the Fund's risk of
loss on the securities actually in its portfolio at the time. In addition, when
the Fund buys a security on a when-issued basis, it is subject to the risk that
market rates of interest will increase before the time the security is
delivered, with the result that the yield on the security delivered to the Fund
may be lower than the yield available on other, comparable securities at the
time of delivery. If a Fund has outstanding obligations to buy when-issued
securities, it will maintain liquid high-grade assets in a segregated account at
its custodian bank in an amount sufficient to satisfy these obligations.
Rule 144A securities are privately offered securities that can be
resold only to certain qualified institutional buyers. Rule 144A securities are
treated as illiquid, unless Loomis Sayles has determined, under guidelines
established by the Trust's trustees, that the particular issue of Rule 144A
securities is liquid.
Foreign Securities
Each Fund (except the Municipal Bond and U.S. Government Securities
Funds) may invest in securities of issuers organized or headquartered outside
the United States ("foreign securities"). The Growth, Growth & Income, Small Cap
and Short-Term Bond Funds will not purchase a foreign security if, as a result,
the Fund's holdings of foreign securities would exceed 20% of the Fund's total
assets. The Bond Fund may invest any portion of its assets in securities of
Canadian issuers, but will not purchase other foreign securities if, as a
result, the Fund's holding of non-U.S. and non-Canadian securities would exceed
20% of the Fund's total assets.
Although investing in foreign securities may increase a Fund's
diversification and reduce portfolio volatility, foreign securities may present
risks not associated with investments in comparable securities of U.S. issuers.
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There may be less information publicly available about a foreign corporate or
government issuer than about a U.S. issuer, and foreign corporate issuers are
not generally subject to accounting, auditing and financial reporting standards
and practices comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. Foreign brokerage commissions and securities custody
costs are often higher than in the United States. With respect to certain
foreign countries, there is a possibility of governmental expropriation of
assets, confiscatory taxation, political or financial instability and diplomatic
developments that could affect the value of investments in those countries. A
Fund's receipt of interest on foreign government securities may depend on the
availability of tax or other revenues to satisfy the issuer's obligations.
A Fund's investments in foreign securities may include investments in
countries whose economies or securities markets are not yet highly developed.
Special considerations associated with these investments (in addition to the
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential buyers for
such securities and delays and disruptions in securities settlement procedures.
Since most foreign securities are denominated in foreign currencies or
traded primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for distribution to shareholders of a Fund investing in these
securities may be affected favorably or unfavorably by changes in currency
exchange rates or exchange control regulations. Changes in the value relative to
the U.S. dollar of a foreign currency in which a Fund's holdings are denominated
will result in a change in the U.S. dollar value of the Fund's assets and the
Fund's income available for distribution.
In addition, although part of a Fund's income may be received or
realized in foreign currencies, the Fund will be required to compute and
distribute its income in U.S. dollars. Therefore, if the value of a currency
relative to the U.S. dollar declines after the Fund's income has been earned in
that currency, translated into U.S. dollars and declared as a dividend, but
before payment of the dividend, the Fund could be required to liquidate
portfolio securities to pay the dividend. Similarly, if the value of a currency
relative to the U.S. dollar declines between the time the Fund accrues expenses
in U.S. dollars and the time such expenses are paid, the amount of such currency
required to be converted into U.S. dollars will be greater than the equivalent
amount in such currency of such expenses at the time they were incurred.
In determining whether to invest assets of the Growth & Income, Bond,
Global Bond and Worldwide Funds in securities of a particular foreign issuer,
Loomis Sayles will consider the likely effects of foreign taxes on the net yield
available to the Fund and its shareholders. Compliance with foreign tax law may
reduce a Fund's net income available for distribution to shareholders.
Foreign Currency Hedging Transactions
Each Fund that invests in foreign securities may engage in foreign
currency exchange transactions, in connection with the purchase and sale of
foreign securities, to protect the value of specific portfolio positions or in
anticipation of changes in relative values of currencies in which current or
future Fund portfolio holdings are denominated or quoted. For example, to
protect against a change in the foreign currency exchange rate between the date
on which a Fund contracts to purchase or sell a security and the settlement date
for the purchase or sale, or to "lock in" the equivalent of a dividend or
interest payment in another currency, a Fund might purchase or sell a foreign
currency on a spot (that is, cash) basis at the prevailing spot rate. If
conditions warrant, the Funds may also enter into private contracts to purchase
or sell foreign currencies at a future date ("forward contracts"). The Funds
might also purchase exchange-listed and over-the-counter call and put options on
foreign currencies. Over-the-counter currency options are generally less liquid
than exchange-listed options, and will be treated as illiquid assets. The Funds
may not be able to dispose of over-the-counter options readily.
Foreign currency transactions involve costs and may result in losses.
In addition, each Fund's ability to engage in currency hedging transactions may
be limited by tax considerations.
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Options
For hedging purposes, the Global Bond Fund, the International Equity
Fund and the Worldwide Fund each may buy put or call options on securities that
it holds or intends to buy. A put option gives a Fund the right to sell a
specified security at a specified price on or before the expiration date of the
option. A call option gives the Fund a similar right to buy a security at a
specified price.
For example, if a Fund held a security but wished to protect against
the risk that the security's value would fall below a specified level, the Fund
could buy a put option, giving it the right to sell the security at that level
regardless of whether the market price of the security falls below that level.
Similarly, if the Fund intends to acquire a security with the proceeds of the
scheduled maturity of an investment it already holds, it might buy a call option
to protect itself against a rise in the price of the security it wishes to
acquire. In many cases, the value of an option held by the Fund will vary
inversely with changes in the value of the related security, and the Fund may
"close out" its option position at a gain or loss by entering into an offsetting
transaction in the options market, without exercising the option. Changes in the
value of an option do not always exactly match changes in the value of the
related security, however, nor is the Fund assured that a liquid market in which
to close out an options position will exist at all times. The Fund pays a price,
called a "premium," to acquire an option, and also may incur costs in closing
out an options position. If the Fund does not exercise or close out an option
prior to the expiration date, the option will expire worthless, and the Fund
will realize a loss equal to the premium it paid to acquire the option.
The options and futures markets of foreign countries are small compared
to those of the United States and consequently are characterized in most cases
by less liquidity than are the U.S. markets. In addition, foreign markets may be
subject to less detailed reporting requirements and regulatory controls than
U.S. markets. Furthermore, investments in options in foreign markets are subject
to many of the same risks as other foreign investments. See "Foreign Securities"
above.
THE FUNDS' INVESTMENT ADVISER
The Funds' investment adviser is Loomis Sayles & Company, L.P. ("Loomis
Sayles"), One Financial Center, Boston, Massachusetts. Founded in 1926, Loomis
Sayles is one of the country's oldest and largest investment firms. Loomis
Sayles' general partner is owned by New England Investment Companies, L.P., a
publicly-traded partnership whose general partner is a wholly-owned subsidiary
of New England Mutual Life Insurance Company ("The New England"). The New
England has entered into an agreement to merge into Metropolitan Life Insurance
Company.
In addition to selecting and reviewing the Fund's investments, Loomis
Sayles provides executive and other personnel for the management of the Funds.
The Funds' board of trustees supervises Loomis Sayles' conduct of the affairs of
the Funds.
As of April 1, 1996, the Loomis Sayles Profit Sharing Plan owned more
than __% of the Growth Fund.
Jerome A. Castellini, Vice President of the Trust and of Loomis Sayles,
has served as the portfolio manager of the Growth Fund since its inception in
1991. Jeffrey W. Wardlow, Vice President of the Trust and of Loomis Sayles, has
served as the portfolio manager of the Growth & Income Fund since its inception
in 1991. Jeffrey C. Petherick, Vice President of the Trust and of Loomis Sayles,
has served as a portfolio manager of the Small Cap Fund since its inception in
1991, and Mary C. Champagne, Vice President of the Trust and of Loomis Sayles,
has served as a portfolio manager of the Small Cap Fund since 1995. Before
joining Loomis Sayles in 1993, Ms. Champagne was a portfolio manager at NBD
Bank. Frank E. Jedlicka, Vice President of the Trust and of Loomis Sayles, has
served as the portfolio manager of the International Equity Fund since its
inception in 1991. Daniel J. Fuss, President of the Trust and Executive Vice
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President of Loomis Sayles, has served as the portfolio manager of the Bond Fund
since its inception in 1991 and as the portfolio manager of the domestic bonds
sector of the Worldwide Fund since that Fund's inception in 1996. Kent P.
Newmark, Vice President of the Trust and of Loomis Sayles, has served as the
portfolio manager of the U.S. Government Securities Fund since its inception in
1991. Martha F. Hodgman, Vice President of the Trust and of Loomis Sayles, has
served as the portfolio manager of the Municipal Bond Fund since May 1993. E.
John deBeer, Vice President of the Trust and of Loomis Sayles, has served as the
portfolio manager of the Global Bond Fund since its inception in 1991 and as
portfolio manager of the international bonds sector of the Worldwide Fund since
that Fund's inception in 1996. John Hyll, Vice President of the Trust and of
Loomis Sayles, has served as the portfolio manager of the Short-Term Bond Fund
since its inception in 1992. Quentin P. Faulkner, Vice President of the Trust
and of Loomis Sayles, has served as the portfolio manager of the domestic
equities sector of the Worldwide Fund since that Fund's inception in 1996. Paul
H. Drexler, Vice President of the Trust and of Loomis Sayles, has served as the
portfolio manager of the international equities sector of the Worldwide Fund
since that Fund's inception in 1996. Before joining Loomis Sayles in 1993, Mr.
Drexler was an economist and portfolio manager at Brown Brothers Harriman & Co.
FUND EXPENSES
Each Fund pays Loomis Sayles a monthly investment advisory fee. This
fee is at the following annual percentage rate of the Fund's average daily net
assets:
Fund Fee Rate
---- --------
Growth .75%*
Growth & Income .75*
Small Cap 1.00*
International Equity 1.00*
Worldwide .75*
Global Bond .75*
Bond .60
Municipal Bond .60
U.S. Government Securities .60
Short-Term Bond .50
* Although this fee rate is higher than the advisory fee rate of most mutual
funds in general, some other funds with similar investment objectives have
the same or higher fee rates.
In addition to the investment advisory fee, each Fund pays all expenses
not expressly assumed by Loomis Sayles, including taxes, brokerage commissions,
fees and expenses of registering or qualifying the Fund's shares under federal
and state securities laws, fees of the Fund's custodian, transfer agent,
independent accountants and legal counsel, expenses of shareholders' and
trustees' meetings, expenses of preparing, printing and mailing prospectuses to
existing shareholders and fees of trustees who are not directors, officers or
employees of Loomis Sayles or its affiliated companies.
Loomis Sayles has voluntarily agreed, for an indefinite period, to
reduce its advisory fees and/or bear other Fund expenses to the extent necessary
to limit Fund total operating expenses to 1.00% of average annual net assets for
the Bond, Municipal Bond, U.S. Government Securities, Short-Term Bond and
Worldwide Funds and to 1.50% of average annual net assets for each other Fund.
Loomis Sayles may change or terminate these voluntary arrangements at any time,
but the Funds' prospectus would be supplemented to describe the change and such
prospectus supplement would be mailed to shareholders 30 days before termination
of the arrangements.
PORTFOLIO TRANSACTIONS
Portfolio turnover considerations will not limit Loomis Sayles'
investment discretion in managing the Funds' assets. The Funds anticipate that
their portfolio turnover rates will vary significantly from time to time
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depending on the volatility of economic and market conditions. High portfolio
turnover may involve higher costs and higher levels of taxable gains.
Loomis Sayles selects brokers and dealers to execute portfolio
transactions for the Funds. Subject to seeking best price and execution, Loomis
Sayles may allocate these transactions to brokers or dealers whose customers
have invested in the Trust.
HOW TO PURCHASE SHARES
You may make an initial purchase of shares of any Fund by submitting a
completed application form and payment to:
Boston Financial Data Services
P.O. Box 8314
Boston, Massachusetts 02266-8314
Attn: Loomis Sayles Funds
The minimum initial investment in any Fund is $2,500 for regular
accounts and $250 for IRAs and tax qualified retirement plans. Subsequent
investments must be at least $50. See "Shareholder Services" below for further
information about minimum investments in certain other circumstances.
Shares of the Worldwide Fund only may be purchased by (i) cash, (ii)
exchanging securities on deposit with a custodian acceptable to Loomis Sayles or
(iii) a combination of such securities and cash. Purchase of shares of the Fund
in exchange for securities is subject in each case to the determination by
Loomis Sayles that the securities to be exchanged are acceptable for purchase by
the Fund. In all cases Loomis Sayles reserves the right to reject any securities
that are proposed for exchange. Securities accepted by Loomis Sayles in exchange
for Fund shares will be valued in the same manner as the Fund's assets as
described below as of the time of the Fund's next determination of net asset
value after such acceptance. All dividends and subscription or other rights
which are reflected in the market price of accepted securities at the time of
valuation become the property of the Fund and must be delivered to the Fund upon
receipt by the investor from the issuer. A gain or loss for federal income tax
purposes would be realized upon the exchange by an investor that is subject to
federal income taxation, depending upon the investor's basis in the securities
tendered. A shareholder who wishes to purchase shares by exchanging securities
should obtain instructions by calling (617) 482-2450 and asking for the Loomis
Sayles Funds Shareholder Services Group.
Loomis Sayles will not approve the acceptance of securities in exchange
for shares of the Worldwide Fund unless (1) Loomis Sayles, in its sole
discretion, believes the securities are appropriate investments for the Fund;
(2) the investor represents and agrees that all securities offered to the Fund
can be resold by the Fund without restriction under the Securities Act of 1933,
as amended (the "Securities Act") or otherwise; and (3) the securities are
eligible to be acquired under the Fund's investment policies and restrictions.
No investor owning 5% or more of the Fund's shares may purchase additional Fund
shares by exchange of securities.
Upon acceptance of your order, Boston Financial Data Services, Inc.
("BFDS"), the shareholder servicing agent for State Street Bank and Trust
Company ("State Street Bank"), opens an account for you, applies the payment to
the purchase of full and fractional Fund shares and mails a statement of the
account confirming the transaction.
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After an account has been established, you may send subsequent
investments at any time directly to BFDS at the above address. The remittance
must be accompanied by either the account identification slip detached from a
statement of account or a note containing sufficient information to identify the
account, i.e., the Fund name and your account number or your name and social
security number.
Subsequent investments can also be made by federal funds wire. Instruct
your bank to wire federal funds to State Street Bank and Trust Company, ABA
#011000028. The text of the wire should read as follows: "$ amount, STATE STREET
BOS ATTN Mutual Funds. Credit Fund Name, DDA #9904-622-9, Shareholder Name,
Shareholder Account Number." Your bank may charge you a fee for transmitting
funds by wire.
Each Fund reserves the right to reject any purchase order, including
orders in connection with exchanges, for any reason which the Fund in its sole
discretion deems appropriate. Although the Funds do not anticipate that they
will do so, each Fund reserves the right to suspend or change the terms of the
offering of its shares.
The price you pay will be the per share net asset value next calculated
after a proper investment order is received by BFDS. Shares of each Fund are
sold with no sales charge. The net asset value of each Fund's shares is
calculated once daily as of the close of regular trading on the New York Stock
Exchange on each day the Exchange is open for trading, by dividing the Fund's
net assets by the number of shares outstanding. Portfolio securities are valued
at their market value as more fully described in the Statement of Additional
Information.
Each Fund may accept telephone orders from broker-dealers who have been
previously approved by the Fund. It is the responsibility of such broker-dealers
to promptly forward purchase or redemption orders to the Fund. Although there is
no sales charge levied directly by the Fund, broker-dealers may charge the
investor a transaction-based fee or other fee for their services at either the
time of purchase or the time of redemption. Such charges may vary among
broker-dealers but in all cases will be retained by the broker-dealer and not
remitted to the Fund or Loomis Sayles.
Loomis Sayles may pay certain broker-dealers whose customers own shares
of the Funds a continuing fee in an amount of up to .25% annually of the value
of Fund shares held for those customers' accounts. These fees are paid by Loomis
Sayles out of its own assets and are not assessed against the customers'
accounts with the Funds.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services, which are more
fully described in the Statement of Additional Information. Explanations and
forms are available from BFDS.
Free Exchange Privilege. Shares of any Fund may be exchanged
for shares of any other Fund or for shares of money market funds
sponsored by The New England. Exchanges may be made by written
instructions or, if a written authorization for telephone exchanges is
on file with BFDS, by telephone. You should not view the exchange
privilege as a means for taking advantage of short-term swings in the
market, and the Funds reserve the right to terminate or limit the
privilege of any shareholder who makes more than 4 exchanges in any
calendar year. The Funds may terminate or change the terms of the
exchange privilege at any time, upon 60 days' notice to shareholders.
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Systematic Withdrawal Plan. If the value of your account is at
least $10,000 you may have periodic cash withdrawals automatically paid
to you or any person you designate.
Automatic Investment Plan. The minimum initial investment for
shareholders establishing an automatic investment plan is $1,000.
Voluntary monthly investments of at least $50 may be made automatically
by pre-authorized withdrawals from your checking account.
Retirement Plans. The Fund's shares may be purchased by all
types of tax-deferred retirement plans. Loomis Sayles makes available
retirement plan forms for IRAs.
HOW TO REDEEM SHARES
You can redeem your shares by sending a written request to Boston
Financial Data Services, Inc., P.O. Box 8314, Boston, Massachusetts 02266.
Proceeds from a written request may be sent to you in the form of a check. As
described below, if you have selected the telephone redemption service, you may
also redeem your shares by calling BFDS at 800-629-9390. Proceeds resulting from
a telephone redemption request can only be wired to your bank account.
The written request must include the name of the Fund, your account
number, the exact name(s) in which your shares are registered, and the number of
shares or the dollar amount to be redeemed. All owners of the shares must sign
the request in the exact names in which the shares are registered (this appears
on your confirmation statement) and should indicate any special capacity in
which they are signing (such as trustee or custodian or on behalf of a
partnership, corporation or other entity).
If you are redeeming shares worth more than $10,000, or requesting that
the proceeds check be made out to someone other than the registered owner(s), or
be sent to an address other than your record address, you must have your
signature guaranteed by an eligible guarantor. Eligible guarantors include
commercial banks, trust companies, savings associations, credit unions and
brokerage firms that are members of domestic securities exchanges. Before
submitting your redemption request, you should verify with the guarantor
institution that it is an eligible guarantor. Signature guarantees by notaries
public are not acceptable.
If you have requested certificates for your investment, you must
enclose the certificates and a properly completed redemption form or stock
power. The Funds recommend that certificates be sent by registered mail.
When you telephone a redemption request, the proceeds are wired to the
bank account previously chosen by you. A wire fee (currently $5.00) will be
deducted from the proceeds. A telephonic redemption request must be received by
BFDS prior to the close of regular trading on the New York Stock Exchange. If
you telephone your request to BFDS after the Exchange closes or on a day when
the Exchange is not open for business, BFDS cannot accept your request and a new
one will be necessary.
You may select the telephone redemption service when you fill out your
initial application or you may select it later by completing the Service Options
Form (with a signature guarantee), available from BFDS. If you decide to change
the bank account to which proceeds are to be wired, you must send in this change
on the Service Options Form with a signature guarantee. Telephonic redemptions
may only be made if your bank is a member of the Federal Reserve System or has a
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correspondent bank that is a member of the System. If your account is with a
savings bank, it must have only one correspondent bank that is a member of the
System. In times of heavy market activity, a shareholder who encounters
difficulty in placing a redemption or exchange order by telephone may wish to
place the order by mail as described above.
The redemption price will be the net asset value per share next
determined after the redemption request and any necessary special documentation
are received by BFDS in proper form.
Proceeds resulting from a written redemption request will normally be
mailed to you within seven days after receipt of your request in good order.
Telephonic redemption proceeds will normally be wired to your bank on the first
business day following receipt of a proper redemption request. If you purchased
your shares by check and your check was deposited less than fifteen days prior
to the redemption request, the Fund may withhold redemption proceeds until your
check has cleared.
The Fund may suspend the right of redemption and may postpone payment
for more than seven days when the New York Stock Exchange is closed for other
than weekends or holidays, or if permitted by the rules of the SEC when trading
on the Exchange is restricted or during an emergency which makes it
impracticable for the Fund to dispose of its securities or to determine fairly
the value of its net assets, or during any other period permitted by the SEC for
the protection of investors.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
The Growth, Growth & Income, Small Cap, International Equity and
Worldwide Funds declare and pay their net investment income to shareholders as
dividends annually; the Bond, Global Bond and U.S. Government Securities Funds
declare and pay dividends quarterly; the Municipal Bond and Short-Term Bond
Funds declare dividends daily and make payments monthly. Each Fund also
distributes all of its net capital gains realized from the sale of portfolio
securities. Any capital gain distributions are normally made annually in
December, but may, to the extent permitted by law, be made more frequently as
deemed advisable by the trustees of the Trust. The Trust's trustees may change
the frequency with which the Funds declare or pay dividends.
Your dividends and capital gain distributions will automatically be
reinvested in additional shares of the same Fund on the record date unless you
have elected to receive cash.
So long as a Fund distributes all its net investment income and net
capital gains to its shareholders, the Fund itself does not pay any federal
income tax.
Except in the case of income dividends from tax exempt bond interest
paid by the Municipal Bond Fund (see below), your income dividends and short
term capital gain distributions are taxable to you as ordinary income whether
distributed to you in cash or additional shares. Long-term capital gain
distributions from all Funds are taxable as long-term capital gains whether
distributed to you in cash or additional shares and regardless of how long you
have owned shares of the Fund.
Each Fund (except the Municipal Bond Fund in the case of designated
exempt-interest dividends, as described below) is required to withhold 31% of
any redemption proceeds (including the value of shares exchanged) and all income
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dividends and capital gain distributions it pays to you (1) if you do not
provide a correct, certified taxpayer identification number, (2) if the Fund is
notified that you have underreported income in the past, or (3) if you fail to
certify to the Fund that you are not subject to such withholding.
Dividends derived from interest on U.S. Government Securities may be
exempt from state and local taxes. Certain designated dividends from the Growth,
Growth & Income, Worldwide and Small Cap Funds are expected to be eligible for
the dividends-received deduction for corporate shareholders.
State Street Bank will send you and the IRS an annual statement
detailing federal tax information, including information about dividends and
distributions paid to you during the preceding year. Be sure to keep this
statement as a permanent record. A fee may be charged for any duplicate
information that you request.
Municipal Bond Fund
Certain designated dividends paid by the Municipal Bond Fund that are
derived from interest on tax exempt bonds ("exempt-interest dividends") may be
excluded from gross income on your federal tax return. However, if you receive
social security or railroad retirement benefits, you may be taxed on a portion
of those benefits as a result of receiving tax exempt income. Also, tax exempt
income may be taken into account for the federal alternative minimum tax.
Other dividends and short term capital gains, if any, are taxable to
you as ordinary income whether received in cash or additional shares.
Distributions of long-term capital gains are taxable to you as long-term capital
gains whether distributed in cash or additional shares, regardless of how long
you have held your shares.
If at least 95% of the Fund's dividends are designated as
exempt-interest dividends, federal back-up withholding rules do not apply with
respect to such dividends.
The federal exemption for exempt-interest dividends does not result in
exemption from state and local taxes. Distributions of exempt-interest dividends
may be exempt from local and state taxation to the extent they are derived from
the state or locality in which you reside. The Fund will report annually on a
state-by-state basis the source of income the Fund received on tax exempt bonds
that was paid out as dividends during the preceding year.
NOTE: The foregoing summarizes certain tax consequences of investing in the
Funds. Before investing, you should consult your own tax adviser for
more information concerning the federal, state and local tax
consequences of investing in, redeeming or exchanging Fund shares.
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INVESTMENT ADVISER
Loomis, Sayles & Company, L.P.
One Financial Center LOOMIS SAYLES
Boston, Massachusetts 02111 FUNDS
TRANSFER AND DIVIDEND PAYING AGENT A Family of
AND CUSTODIAN OF ASSETS No Load Funds
State Street Bank and Trust Company
Boston, Massachusetts 02102 PROSPECTUS
SHAREHOLDER SERVICING AGENT FOR AND
STATE STREET BANK AND TRUST COMPANY
Boston Financial Data Services, Inc. APPLICATION
P.O. Box 8314
Boston, Massachusetts 02266
May 1, 1996
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110 One Financial Center
Boston, Massachusetts 02111
AUDITORS (617) 482-2450
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
LOOMIS SAYLES FUNDS
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Loomis Sayles Funds
Prospectus dated May 1, 1996, and should be read in conjunction therewith. A
copy of the Prospectus may be obtained from Loomis Sayles Funds, One Financial
Center, Boston, Massachusetts 02111.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS ...................... 1
MANAGEMENT OF THE TRUST ............................................... 11
INVESTMENT ADVISORY AND OTHER SERVICES ................................ 17
PORTFOLIO TRANSACTIONS AND BROKERAGE .................................. 21
DESCRIPTION OF THE TRUST .............................................. 24
HOW TO BUY SHARES ..................................................... 27
NET ASSET VALUE ....................................................... 27
SHAREHOLDER SERVICES .................................................. 28
Open Accounts ................................................... 28
Systematic Withdrawal Plan ...................................... 29
Exchange Privilege .............................................. 29
IRAs ............................................................ 30
REDEMPTIONS ........................................................... 30
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS ........... 32
FINANCIAL STATEMENTS .................................................. 35
APPENDIX A
DESCRIPTION OF BOND RATINGS ..................................... A-1
(i)
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objective and policies of each series ("Fund") of Loomis
Sayles Funds (the "Trust"), are summarized in the Prospectus under "Investment
Objectives and Policies" and "More Information About the Funds' Investments."
The investment policies of each Fund set forth in the Prospectus and in this
Statement of Additional Information may be changed by the Funds' adviser,
subject to review and approval by the Trust's board of trustees, without
shareholder approval except that the investment objective of each Fund as set
forth in the Prospectus and any Fund policy explicitly identified as
"fundamental" may not be changed without the approval of the holders of a
majority of the outstanding shares of the relevant Fund (which in the Prospectus
and this Statement of Additional Information means the lesser of (i) 67% of the
shares of that Fund represented at a meeting at which 50% of the outstanding
shares are represented or (ii) more than 50% of the outstanding shares).
In addition to its investment objective and policies set forth in the
Prospectus, the following investment restrictions are policies of each Fund (and
those marked with an asterisk are fundamental policies of each Fund):
Each Fund will not:
(1) Invest in companies for the purpose of exercising control or management.
*(2) Act as underwriter, except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
*(3) Invest in oil, gas or other mineral leases, rights or royalty contracts
or in real estate, commodities or commodity contracts. (This restriction
does not prevent any Fund from investing in issuers that invest or deal
in the foregoing types of assets or from purchasing securities that are
secured by real estate.)
*(4) Make loans. (For purposes of this investment restriction, neither (i)
entering into repurchase agreements nor (ii) purchasing bonds,
debentures, commercial paper, corporate notes and similar evidences of
indebtedness, which are a part of an issue to the public, is considered
the making of a loan.)
(5) Purchase any security (other than a U.S. Government Security) if, as a
result, more than 5% of the Fund's total assets (taken at current value)
would then be invested in securities of a single issuer. (For purposes of
this restriction, the Municipal Bond Fund treats each state and each
separate political subdivision, agency, authority or instrumentality of
such state, each multistate agency or authority, and each guarantor, if
any, of obligations of any such issuer, as a separate issuer, provided
that the assets and revenues of the issuer are separate from those of the
government(s) that created the subdivision, agency, authority or
instrumentality.)
(6) Invest more than 5% of its assets (taken at current value) in securities
of companies which (with predecessor companies) have a record of less
than three years of continuous operations or, in the case of the
Municipal Bond Fund, invest more than 5% of its assets in securities
based directly or indirectly on the credit of a private entity that
(including predecessor businesses or entities) has a record of less than
three years of continuous operations.
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(7) Acquire more than 10% of any class of securities of an issuer (taking all
preferred stock issues as a single class and all debt issues as a single
class) or acquire more than 10% of the outstanding voting securities of
an issuer.
(8) Invest in the securities of other investment companies, except by
purchases in the open market involving only customary brokers'
commissions or in connection with a merger, consolidation or similar
transaction, and only if such investment would not subject shareholders
to duplicate fees and expenses. (Under the 1940 Act each Fund generally
may not: (a) invest more than 10% of its total assets (taken at current
value) in such securities; (b) own securities of any one investment
company having a value in excess of 5% of the Fund's total assets (taken
at current value); or (c) own more than 3% of the outstanding voting
stock of any one investment company.)
(9) Pledge, mortgage, hypothecate or otherwise encumber any of its assets,
except that each Fund may pledge assets having a value not exceeding 10%
of its total assets to secure borrowings permitted by restriction (12)
below. (For the purpose of this restriction, collateral arrangements with
respect to options, futures contracts and options on futures contracts
and with respect to initial and variation margin are not deemed to be a
pledge or other encumbrance of assets.)
(10) Purchase or retain securities of an issuer if officers and trustees of
the Trust and officers and directors of its investment adviser who
individually own more than 1/2 of 1% of the shares or securities of such
issuer together own more than 5% of such shares or securities.
*(11) Purchase any security (other than U.S. Government Securities) if, as a
result, more than 25% of the Fund's total assets (taken at current value)
would be invested in any one industry (in the utilities category, gas,
electric, water and telephone companies will be considered as being in
separate industries.) Tax-exempt securities issued by governments or
political subdivisions of governments and purchased by the Municipal Bond
Fund are not subject to this restriction, since such issuers are not
members of any industry.
*(12) Borrow money in excess of 10% of its total assets (taken at cost) or 5%
of its total assets (taken at current value), whichever is lower, nor
borrow any money except as a temporary measure for extraordinary or
emergency purposes.
(13) Purchase securities on margin (except such short term credits as are
necessary for clearance of transactions); or make short sales (except
where, by virtue of ownership of other securities, it has the right to
obtain, without payment of additional consideration, securities
equivalent in kind and amount to those sold).
(14) Participate on a joint or joint and several basis in any trading account
in securities. (The "bunching" of orders for the purchase or sale of
portfolio securities with Loomis Sayles or accounts under its management
to reduce brokerage commissions, to average prices among them or to
facilitate such transactions is not considered a trading account in
securities for purposes of this restriction.)
(15) Purchase any illiquid security, including any security that is not
readily marketable, if, as a result, more than 15% of the Fund's net
assets (based on current value) would then be invested in such
securities.
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(16) Write or purchase puts, calls or combinations of both except that (1)
each Fund may acquire warrants or rights to subscribe to securities of
companies issuing such warrants or rights, or of parents or subsidiaries
of such companies, (2) the Global Bond Fund and the International Equity
Fund each may purchase and sell put and call options on securities and
(3) each Fund may write, purchase and sell put and call options on
currencies and may enter into currency forward contracts.
*(17) Issue senior securities. (For the purpose of this restriction none of the
following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restriction (9) above; any borrowing
permitted by restriction (12) above; any collateral arrangements with
respect to options, futures contracts and options on futures contracts
and with respect to initial and variation margin; and the purchase or
sale of options, forward contracts, futures contracts or options on
futures contracts.)
Although the Funds have no current intention of investing in repurchase
agreements, they intend, based on the views of the staff of the Securities and
Exchange Commission (the "SEC"), to restrict their investments in repurchase
agreements maturing in more than seven days, together with other investments in
illiquid securities, to the percentage permitted by restriction (15) above.
Although authorized to invest in restricted securities, each Fund, as a
matter of non-fundamental operating policy, currently does not intend to invest
in such securities, except that the Bond Fund may invest in Rule 144A securities
(see "Rule 144A Securities" below). Also, although authorized to make short
sales subject to the condition specified in restriction (13) above, each Fund as
a matter of non-fundamental operating policy currently does not intend to make
such short sales. Each Fund has given undertakings to a state regulatory
authority in connection with the qualification of Fund shares for sale in such
state that its investments in warrants will not exceed 5% of the value of its
net assets and that not more than 2% of its net assets will be invested in
warrants which are not listed on the New York or American Stock Exchanges. Each
Fund as a matter of non-fundamental operating policy has undertaken to a state
regulatory authority in connection with the qualification of Fund shares for
sale in such state that it will not invest any part of its total assets in real
estate limited partnership interests. If any of the policies and undertakings
described in this paragraph are changed, the Trust will revise its Statement of
Additional Information to reflect any such changes.
U.S. Government Securities
U.S. Government Securities include direct obligations of the U.S.
Treasury, as well as securities issued or guaranteed by U.S. Government
agencies, authorities and instrumentalities, including, among others, the
Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the Federal Housing
Administration, the Resolution Funding Corporation, the Federal Farm Credit
Banks, the Federal Home Loan Bank, the Tennessee Valley Authority, the Student
Loan Marketing Association and the Small Business Administration. More detailed
information about some of these categories of U.S. Government Securities
follows.
(bullet) U.S. Treasury Bills - Direct obligations of the United States Treasury
which are issued in maturities of one year or less. No interest is paid
on Treasury bills; instead, they are issued at a discount and repaid at
full face value when they mature. They are backed by the full faith and
credit of the United States Government.
3
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(bullet) U.S. Treasury Notes and Bonds - Direct obligations of the United States
Treasury issued in maturities that vary between one and forty years,
with interest normally payable every six months. They are backed by the
full faith and credit of the United States Government.
(bullet) "Ginnie Maes" - Debt securities issued by a mortgage banker or other
mortgagee which represent an interest in a pool of mortgages insured by
the Federal Housing Administration or the Farmer's Home Administration
or guaranteed by the Veterans Administration. The Government National
Mortgage Association ("GNMA") guarantees the timely payment of
principal and interest when such payments are due, whether or not these
amounts are collected by the issuer of these certificates on the
underlying mortgages. An assistant attorney general of the United
States has rendered an opinion that the guarantee by GNMA is a general
obligation of the United States backed by its full faith and credit.
Mortgages included in single family or multi-family residential
mortgage pools backing an issue of Ginnie Maes have a maximum maturity
of up to 30 years. Scheduled payments of principal and interest are
made to the registered holders of Ginnie Maes (such as the Fund) each
month. Unscheduled prepayments may be made by homeowners, or as a
result of a default. Prepayments are passed through to the registered
holder of Ginnie Maes along with regular monthly payments of principal
and interest.
(bullet) "Fannie Maes" - The Federal National Mortgage Association ("FNMA") is a
government- sponsored corporation owned entirely by private
stockholders that purchases residential mortgages from a list of
approved seller/servicers. Fannie Maes are pass-through securities
issued by FNMA that are guaranteed as to timely payment of principal
and interest by FNMA but are not backed by the full faith and credit of
the United States Government.
(bullet) "Freddie Macs" - The Federal Home Loan Mortgage Corporation ("FHLMC")
is a corporate instrumentality of the United States Government. Freddie
Macs are participation certificates issued by FHLMC that represent an
interest in residential mortgages from FHLMC's National Portfolio.
FHLMC guarantees the timely payment of interest and ultimate collection
of principal, but Freddie Macs are not backed by the full faith and
credit of the United States Government.
As described in the Prospectus, U.S. Government Securities do not
involve the same credit risks associated with investments in other types of
fixed-income securities, although, as a result, the yields available from U.S.
Government Securities are generally lower than the yields available from
corporate fixed-income securities. Like other fixed-income securities, however,
the values of U.S. Government Securities change as interest rates fluctuate.
Fluctuations in the value of portfolio securities will not affect interest
income on existing portfolio securities but will be reflected in the Fund's net
asset value.
When-Issued Securities
As described in the Prospectus, each Fund may enter into agreements
with banks or broker-dealers for the purchase or sale of securities at an
agreed-upon price on a specified future date. Such agreements might be entered
into, for example, when a Fund that invests in fixed income securities
anticipates a decline in interest rates and is able to obtain a more
advantageous yield by committing currently to purchase securities to be issued
later. When a Fund purchases securities in this manner (i.e. on a when-issued or
delayed-delivery basis), it is required to create a segregated account with the
Trust's custodian and to maintain in that account cash or U.S. Government
Securities in an amount equal to or greater than, on a daily basis, the amount
of the Fund's when-issued or delayed-delivery commitments. Each Fund will make
commitments to purchase on a when-issued or delayed-delivery basis only
4
<PAGE>
securities meeting that Fund's investment criteria. The Fund may take delivery
of these securities or, if it is deemed advisable as a matter of investment
strategy, the Fund may sell these securities before the settlement date. When
the time comes to pay for when-issued or delayed-delivery securities, the Fund
will meet its obligations from then available cash flow or the sale of
securities, or from the sale of the when-issued or delayed-delivery securities
themselves (which may have a value greater or less than the Fund's payment
obligation).
Convertible Securities
Convertible securities include corporate bonds, notes or preferred
stocks of U.S. or foreign issuers that can be converted into (that is, exchanged
for) common stocks or other equity securities. Convertible securities also
include other securities, such as warrants, that provide an opportunity for
equity participation. Because convertible securities can be converted into
equity securities, their values will normally vary in some proportion with those
of the underlying equity securities. Convertible securities usually provide a
higher yield than the underlying equity, however, so that the price decline of a
convertible security may sometimes be less substantial than that of the
underlying equity security.
Zero Coupon Bonds
Zero coupon bonds are debt obligations that do not entitle the holder
to any periodic payments of interest either for the entire life of the
obligation or for an initial period after the issuance of the obligations. Such
bonds are issued and traded at a discount from their face amounts. The amount of
the discount varies depending on such factors as the time remaining until
maturity of the bonds, prevailing interest rates, the liquidity of the security
and the perceived credit quality of the issuer. The market prices of zero coupon
bonds generally are more volatile than the market prices of securities that pay
interest periodically and are likely to respond to changes in interest rates to
a greater degree than do non-zero coupon bonds having similar maturities and
credit quality. In order to satisfy a requirement for qualification as a
"regulated investment company" under the Internal Revenue Code (the "Code"),
each Fund must distribute each year at least 90% of its net investment income,
including the original issue discount accrued on zero coupon bonds. Because a
Fund investing in zero coupon bonds will not on a current basis receive cash
payments from the issuer in respect of accrued original issue discount, the Fund
may have to distribute cash obtained from other sources in order to satisfy the
90% distribution requirement under the Code. Such cash might be obtained from
selling other portfolio holdings of the Fund. In some circumstances, such sales
might be necessary in order to satisfy cash distribution requirements even
though investment considerations might otherwise make it undesirable for the
Fund to sell such securities at such time.
Repurchase Agreements
Each Fund may enter into repurchase agreements, by which the Fund
purchases a security and obtains a simultaneous commitment from the seller (a
bank or, to the extent permitted by the Investment Company Act of 1940 (the
"1940 Act"), a recognized securities dealer) to repurchase the security at an
agreed upon price and date (usually seven days or less from the date of original
purchase). The resale price is in excess of the purchase price and reflects an
agreed upon market rate unrelated to the coupon rate on the purchased security.
Such transactions afford the Funds the opportunity to earn a return on
temporarily available cash at minimal market risk. While the underlying security
may be a bill, certificate of indebtedness, note or bond issued by an agency,
authority or instrumentality of the United States Government, the obligation of
the seller is not guaranteed by the U.S. Government and there is a risk that the
5
<PAGE>
seller may fail to repurchase the underlying security. In such event, the Fund
would attempt to exercise rights with respect to the underlying security,
including possible disposition in the market. However, the Fund may be subject
to various delays and risks of loss, including (a) possible declines in the
value of the underlying security during the period while the Fund seeks to
enforce its rights thereto, (b) possible reduced levels of income and lack of
income during this period and (c) inability to enforce rights and the expenses
involved in attempted enforcement.
Rule 144A Securities
The Bond and Worldwide Funds may purchase Rule 144A securities. These
are privately offered securities that can be resold only to certain qualified
institutional buyers. Rule 144A securities are treated as illiquid, unless
Loomis Sayles has determined, under guidelines established by the Trust's
trustees, that the particular issue of Rule 144A securities is liquid. Under the
guidelines, Loomis Sayles considers such factors as: (1) the frequency of trades
and quotes for a security; (2) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades therefor.
Tax Exempt Bonds
Tax exempt bonds include debt obligations issued to obtain funds for
various public purposes, including the construction of a wide range of public
facilities such as bridges, highways, hospitals, housing, mass transportation,
schools, streets, and water and sewer works. Other public purposes for which tax
exempt bonds may be issued include the refunding of outstanding obligations,
obtaining funds for general operating expenses, and obtaining funds to lend to
other public institutions and facilities. In addition, prior to the Tax Reform
Act of 1986, certain debt obligations known as industrial development bonds
could be issued by or on behalf of public authorities to obtain funds to provide
privately operated housing facilities, sports facilities, convention or trade
show facilities, airport, mass transit, port or parking facilities, air or water
pollution control facilities and certain local facilities for water supply, gas,
electricity, or sewage or solid waste disposal. Such obligations are included
within the term tax exempt bonds if the interest paid thereon is, in the opinion
of bond counsel, exempt from federal income tax. Interest on certain industrial
development bonds used to fund the construction, equipment, repair or
improvement of privately operated industrial or commercial facilities may also
be exempt from federal income tax. The Tax Reform Act of 1986 eliminated some
types of tax exempt industrial revenue bonds but retained others under the
general category of "private activity bonds." The interest on so-called "private
activity bonds" is exempt from ordinary federal income taxation but is treated
as a tax preference item in computing a shareholder's alternative minimum tax
liability. The Municipal Bond Fund currently does not intend to invest in
private activity bonds.
The Municipal Bond Fund may not be a desirable investment for
"substantial users" of facilities financed by industrial development bonds or
for "related persons" of substantial users. See "Income Dividends, Capital Gain
Distributions and Tax Status."
The two principal classifications of tax exempt bonds are general
obligation bonds and limited obligation (or revenue) bonds. General obligation
bonds are obligations involving the credit of an issuer possessing taxing power
and are payable from the issuer's general unrestricted revenues and not from any
particular fund or source. The characteristics and method of enforcement of
general obligation bonds vary according to the law applicable to the particular
issuer, and payment may be dependent upon an appropriation by the issuer's
legislative body. Limited obligation bonds are payable only from the revenues
6
<PAGE>
derived from a particular facility or class of facilities, or in some cases from
the proceeds of a special excise or other specific revenue source such as the
user of the facility. Tax exempt industrial development bonds and private
activity bonds are in most cases revenue bonds and generally are not payable
from the unrestricted revenues of the issuer. The credit and quality of such
bonds are usually directly related to the credit standing of the corporate user
of the facilities. Principal and interest on such bonds is the responsibility of
the corporate user (and any guarantor).
Prices and yields on tax exempt bonds are dependent on a variety of
factors, including general money market conditions, the financial condition of
the issuer, general conditions of the tax exempt bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
A number of these factors, including the ratings of particular issues, are
subject to change from time to time. Information about the financial condition
of an issuer of tax exempt bonds may not be as extensive as that made available
by corporations whose securities are publicly traded.
As noted in the Prospectus, obligations of issuers of tax exempt bonds
are subject to the provisions of bankruptcy, insolvency and other laws, such as
the Federal Bankruptcy Reform Act of 1978, affecting the rights and remedies of
creditors. Congress or state legislatures may seek to extend the time for
payment of principal or interest, or both, or to impose other constraints upon
enforcement of such obligations. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of issuers to meet their
obligations for the payment of interest and principal on their tax exempt bonds
may be materially affected, or their obligations may be found to be invalid or
unenforceable. Such litigation or conditions may from time to time have the
effect of introducing uncertainties in the market for tax exempt bonds or
certain segments thereof, or materially affecting the credit risk with respect
to particular bonds. Adverse economic, business, legal or political developments
might affect all or a substantial portion of the Fund's tax exempt bonds in the
same manner.
From time to time the Municipal Bond Fund may have less than 80% of its
net assets invested in tax exempt bonds (1) for defensive purposes when deemed
prudent in the judgment of Loomis Sayles to protect shareholders' capital or (2)
on a temporary basis for liquidity purposes or pending the investment of
proceeds from sales of Fund shares. The ability of the Fund to invest in
securities other than tax exempt bonds is limited by a requirement of the Code
that at least 50% of the Fund's total assets be invested in tax exempt
securities at the end of each calendar quarter. See "Income Dividends, Capital
Gain Distributions and Tax Status."
The Municipal Bond Fund may purchase and sell portfolio investments to
take advantage of changes or anticipated changes in yield relationships, markets
or economic conditions. The Fund may also sell tax exempt bonds due to changes
in the adviser's evaluation of the issuer or cash needs resulting from
redemption requests for Fund shares. The secondary market for tax exempt bonds
typically has been less liquid than that for taxable debt securities, and this
may affect the Fund's ability to sell particular tax exempt bonds, especially in
periods when other investors are attempting to sell the same securities.
Foreign Currency Transactions
The Growth, Growth & Income, Small Cap, International Equity,
Worldwide, Global Bond and Bond Funds each may invest in securities of foreign
issuers and may enter into forward foreign currency exchange contracts, or buy
or sell options on foreign currencies, in order to protect against uncertainty
in the level of future foreign exchange rates. Since investment in securities of
7
<PAGE>
foreign issuers will usually involve currencies of foreign countries, and since
a Fund may temporarily hold funds in bank deposits in foreign currencies during
the course of investment programs, the value of the assets of a Fund as measured
in United States dollars may be affected by changes in currency exchange rates
and exchange control regulations, and a Fund may incur costs in connection with
conversion between various currencies.
A Fund may enter into forward contracts under two circumstances. First,
when a Fund enters into a contract for the purchase or sale of a security
denominated or traded in a market in which settlement is made in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale, for a fixed amount of
dollars, of the amount of foreign currency involved in the underlying
transactions, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar and
the subject foreign currency during the period between the date on which the
investment is purchased or sold and the date on which payment is made or
received.
Second, when Loomis Sayles believes that the currency of a particular
country may suffer a substantial decline against another currency, it may enter
into a forward contract to sell, for a fixed amount of another currency, the
amount of the first currency approximating the value of some or all of the
Fund's portfolio investments denominated in the first currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in a currency will change as a consequence of market movements in the
value of those investments between the date the forward contract is entered into
and the date it matures.
The Funds generally will not enter into forward contracts with a term
of greater than one year.
Options on foreign currencies are similar to forward contracts, except
that one party to the option (the holder) is not contractually bound to buy or
sell the specified currency. Instead, the holder has discretion whether to
"exercise" the option and thereby require the other party to buy or sell the
currency on the terms specified in the option. Options transactions involve
transaction costs and, like forward contract transactions, involve the risk that
the other party may default on its obligations (if the options are not traded on
an established exchange) and the risk that expected movements in the relative
value of currencies may not occur, resulting in an imperfect hedge or a loss to
the Fund.
The Funds' ability to engage in transactions in currency forward
contracts and options may be limited by tax considerations.
Each Fund, in conjunction with its transactions in forward contracts,
options and futures (including the Global Bond, International Equity and
Worldwide Funds' transactions in options on securities described below), will
maintain in a segregated account with its custodian cash or high grade liquid
assets with a value, marked to market on a daily basis, sufficient to satisfy
the Fund's outstanding obligations under such contracts, options and futures.
8
<PAGE>
Options
As described in the Prospectus, the Global Bond Fund, the Worldwide
Fund and the International Equity Fund for hedging purposes each may purchase
and sell call and put options on securities it owns or intends to purchase.
An option entitles the holder to receive (in the case of a call option)
or to sell (in the case of a put option) a particular security at a specified
exercise price. An "American style" option allows exercise of the option at any
time during the term of the option. A "European style" option allows an option
to be exercised only at the end of its term. Options may be traded on or off an
established securities exchange.
If the holder of an option wishes to terminate its position, it may
seek to effect a closing sale transaction by selling an option identical to the
option previously purchased. The effect of the purchase is that the previous
option position will be cancelled. A Fund will realize a profit from closing out
an option if the price received for selling the offsetting position is more than
the premium paid to purchase the option; the Fund will realize a loss from
closing out an option transaction if the price received for selling the
offsetting option is less than the premium paid to purchase the option.
The use of options involves risks. One risk arises because of the
imperfect correlation between movements in the price of options and movements in
the price of the securities that are the subject of the hedge. The Fund's
hedging strategies will not be fully effective if such imperfect correlation
occurs.
Price movement correlation may be distorted by illiquidity in the
options markets and the participation of speculators in such markets. If an
insufficient number of contracts are traded, commercial users may not deal in
options because they do not want to assume the risk that they may not be able to
close out their positions within a reasonable amount of time. In such instances,
options market prices may be driven by different forces than those driving the
market in the underlying securities, and price spreads between these markets may
widen. The participation of speculators in the market enhances its liquidity.
Nonetheless, the trading activities of speculators in the options markets may
create temporary price distortions unrelated to the market in the underlying
securities.
An exchange-traded option may be closed out only on an exchange which
generally provides a liquid secondary market for an option of the same series.
If a liquid secondary market for an exchange-traded option does not exist, it
might not be possible to effect a closing transaction with respect to a
particular option with the result that the Fund would have to exercise the
option in order to accomplish the desired hedge. Reasons for the absence of a
liquid secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or the Options Clearing Corporation
or other clearing organization may not at all times be adequate to handle
current trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options on that exchange that had
been issued by the Options Clearing Corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
9
<PAGE>
The successful use of options depends in part on the ability of Loomis
Sayles to forecast correctly the direction and extent of interest rate, stock
price or currency value movements within a given time frame. To the extent
interest rates, stock prices or currency values move in a direction opposite to
that anticipated, the Fund may realize a loss on the hedging transaction that is
not fully or partially offset by an increase in the value of portfolio
securities. In addition, whether or not interest rates or the relevant stock
price or relevant currency values move during the period that the Fund holds
options positions, the Fund will pay the cost of taking those positions (i.e.,
brokerage costs). As a result of these factors, the Fund's total return for such
period may be less than if it had not engaged in the hedging transaction.
An over-the-counter option (an option not traded on an established
exchange) may be closed out only with the other party to the original option
transaction. While the Fund will seek to enter into over-the-counter options
only with dealers who agree to or are expected to be capable of entering into
closing transactions with the Fund, there can be no assurance that the Fund will
be able to liquidate an over-the-counter option at a favorable price at any time
prior to its expiration. Accordingly, the Fund might have to exercise an
over-the-counter option it holds in order to achieve the intended hedge.
Over-the-counter options are not subject to the protections afforded purchasers
of listed options by the Options Clearing Corporation or other clearing
organization.
The staff of the SEC has taken the position that over-the-counter
options should be treated as illiquid securities for purposes of each Fund's
investment restriction prohibiting it from investing more than 15% of its net
assets in illiquid securities. The Funds intend to comply with this position.
Income earned by a Fund from its hedging activities will be treated as
capital gain and, if not offset by net recognized capital losses incurred by the
Fund, will be distributed to shareholders in taxable distributions. Although
gain from options transactions may hedge against a decline in the value of a
Fund's portfolio securities, that gain, to the extent not offset by losses, will
be distributed in light of certain tax considerations and will constitute a
distribution of that portion of the value preserved against decline.
10
<PAGE>
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
EARL W. FOELL -- Trustee. 43 Black Horse Lane, Cohasset, Massachusetts. Retired;
formerly Editor in-Chief, World Monitor Magazine and Editor-in-Chief, The
Christian Science Monitor.
RICHARD S. HOLWAY -- Trustee. 1314 Seaspray Lane, Sanibel, Florida. Retired;
formerly, Vice President, Loomis Sayles.
TERRY R. LAUTENBACH -- Trustee. Shennamere Road, Darien, Connecticut. Retired;
formerly Senior Vice President, International Business Machines Corporation.
Director, Air Products and Chemicals, Inc.
MICHAEL T. MURRAY -- Trustee. 404 N. Western Ave., Lake Forest, Illinois.
Retired; formerly, Vice President, Loomis Sayles.
DANIEL J. FUSS -- President and Trustee. Executive Vice President and Director,
Loomis Sayles.
ROBERT J. BLANDING -- Vice President. 465 First Street West, Sonoma, California.
President, Director and Chief Executive Officer, Loomis Sayles.
JEROME A. CASTELLINI -- Vice President. Three 1st National Plaza, Chicago,
Illinois. Vice President and Director, Loomis Sayles.
MARY C. CHAMPAGNE -- Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles; formerly, portfolio manager, NBD Bank.
E. JOHN deBEER -- Vice President. Vice President, Loomis Sayles.
PAUL H. DREXLER -- Vice President. Vice President, Loomis Sayles; formerly, Vice
President, Brown Brothers Harriman & Co.
QUENTIN P. FAULKNER -- Vice President. Vice President, Loomis Sayles.
MARTHA F. HODGMAN -- Vice President. Vice President, Loomis Sayles.
JOHN HYLL -- Vice President. 35 North Lake Avenue, Pasadena, California. Vice
President, Loomis Sayles.
FRANK E. JEDLICKA -- Vice President. Vice President, Loomis Sayles.
11
<PAGE>
KENT P. NEWMARK -- Vice President. Two Embarcadero Ctr., San Francisco,
California. Vice President, Loomis Sayles.
JEFFREY C. PETHERICK. -- Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles.
JEFFREY W. WARDLOW -- Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles.
MARK W. HOLLAND -- Secretary, Treasurer. Vice President -- Finance and
Administration and Director, Loomis Sayles.
Previous positions during the past five years with Loomis Sayles are
omitted, if not materially different.
Except as indicated above, the address of each trustee and officer of
the Trust affiliated with Loomis Sayles is One Financial Center, Boston,
Massachusetts. The Trust pays no compensation to its officers or to the trustees
listed above who are directors, officers or employees of Loomis Sayles. Each
trustee who is not a director, officer or employee of Loomis Sayles is
compensated at the rate of $12,500 per annum.
<TABLE>
<CAPTION>
Compensation Table
for the year ended December 31, 1995
(1) (2) (3) (4) (5)
Total
Pension or Estimated Compensation
Aggregate Retirement Benefits Annual From Trust and
Name of Person, Compensation Accrued as Part of Benefits Upon Fund Complex*
Position from Trust Fund Expenses Retirement Paid to Trustee
<S> <C> <C> <C> <C>
Earl W. Foell, $12,500 N/A N/A $12,500
Trustee
Richard S. Holoway, $12,500 N/A N/A $12,500
Trustee
Terry R. Lautenbach, $12,500 N/A N/A $12,500
Trustee
Michael T. Murray, $12,500 N/A N/A $12,500
Trustee
</TABLE>
* No Trustee receives any compensation from any material funds affiliated with
Loomis Sayles, other than the Trust.
12
<PAGE>
As of April 15, 1996 the officers and trustees of the Trust owned
beneficially shares of each Fund as follows: __________ shares of the Growth
Fund, __________ shares of the Growth & Income Fund, __________ shares of the
Small Cap Fund, __________ shares of the International Equity Fund, __________
shares of the Worldwide Fund, __________ shares of the Bond Fund, __________
shares of the Municipal Bond Fund, __________ shares of the Global Bond Fund,
33,380.041 shares of the U.S. Government Securities Fund and __________ shares
of the Short-Term Bond Fund. These amounts include shares held by the Loomis
Sayles Profit Sharing Plan (the "Profit Sharing Plan") for the accounts of
officers and trustees of the Trust, but exclude all other holdings of the Profit
Sharing Plan and the Loomis Sayles Pension Plan (the "Pension Plan"). As of
April __, 1996, the Pension Plan and the Profit Sharing Plan, respectively,
owned the following percentages of the outstanding shares of the indicated
Funds: ___% and ___% of the Bond Fund, ___% and ___% of the Global Bond Fund,
___% and ___% of the Growth Fund, ___% and ___% of the Growth & Income Fund,
___% and ___% of the Small Cap Fund, ___% and ___% of the International Equity
Fund, ___% and ___% of the U.S. Government Securities Fund and ___% and ___% of
the Short-Term Bond Fund. These amounts include shares of the Profit Sharing
Plan held for the accounts of employees and former employees of Loomis Sayles
who are trustees or officers of the Trust. The trustee of the Pension Plan is
Shawmut Bank of Boston, NA. The Pension Plan's Advisory Committee, which is
composed of the same individuals listed below as trustees of the Profit Sharing
Plan, has the sole voting and investment power with respect to the Pension
Plan's shares. The trustees of the Profit Sharing Plan are E. John deBeer,
Quentin P. Faulkner, Sandra P. Tichenor, Larry K. Shaw, Kathleen C. Gaffney,
Mark W. Holland, Patrick P. Hurley and Jeffrey L. Meade, all of whom are
officers and employees of Loomis Sayles and (except for Messrs. Hurley, Shaw and
Meade and Mss. Gaffney and Tichenor) trustees or officers of the Trust. Plan
participants are entitled to exercise investment and voting power over shares
owned of record by the Profit Sharing Plan. Shares not voted by participants are
voted in the same proportion as the shares voted by the voting participants. The
address for the Profit Sharing Plan and the Pension Plan is One Financial
Center, Boston, Massachusetts. At the date of this Statement of Additional
Information, no officer or trustee owns more than 5% of the outstanding shares
of any Fund.
13
<PAGE>
Percentage
of Shares
Shareholder Address Held
- ----------- ------- -----------
Short-Term Bond Fund
United Methodist P.O. Box 68 ___%
Children's Home General Fund Worthington, OH 43085-0068
Children's Medical Center of Dayton P.O. Box 1809 ___%
Employee Pension Trust Dayton, OH 45401-1809
Olsen & Co. P.O. Box 4044 ___%
Boston, MA 02101-4044
Employees Profit Sharing Plan c/o Loomis Sayles ___%
One Financial Center
Boston, MA 02111-2621
Curtis A. Cutler Trust 2315 Oakwood N.E. ___%
Grand Rapids, MI 49503-4121
Asbestos Workers Local #84 c/o Loomis Sayles & Co. ___%
Pension Fund 1533 N.Woodward
Bloomfield Hills, MI 48304-2864
Plumbers & Pipefitters Reg. c/o Loomis Sayles & Co. ___%
Wel. Fund 1533 N. Woodward
Bloomfield Hills, MI 48304-2864
Growth Fund
Olsen & Co. P. O. Box 4044 ___%
Boston, MA 02101-4044
Employees Profit Sharing Plan c/o Loomis Sayles ___%
One Financial Center
Boston, MA 02111-2621
Childrens Medical Center of P. O. Box 18-8 ___%
Dayton Employee Pension Trust Dayton, OH 45401-1809
International Association of 30700 Telegraph ___%
Machinsts & Aerospace Workers Suite 4061 Box 3039
Local Lodge #2848 Defined Birmingham, MI 48012-3039
Benefit Pension Fund
Global Bond Fund
Livonia Empl. Retirement System 33000 Civic Center Drive ___%
Livonia, MI 48154-3060
Employees Profit Sharing Plan c/o Loomis Sayles ___%
One Financial Center
Boston, MA 02111-2621
Olsen & Co. P. O. Box 4044 ___%
Boston, MA 02101-4044
Small Cap Fund
Employees Profit Sharing Plan c/o Loomis Sayles Trustee ___%
One Financial Center
Boston, MA 02111-2621
14
<PAGE>
Great West Life Annuity 8505 E. Orchard Road ___%
Englewood, CO 80111-5004
I.A.T.S.E. Local 33 Pension Plan P.O. Box 94627 ___%
Pasadena, CA 91109-4627
International Equity Fund
Employees Profit Sharing Plan c/o Loomis Sayles Trustee ___%
One Financial Center
Boston, MA 02111-2621
I.A.T.S.E. Local 33 Pension Plan P.O. Box 94627 ___%
Pasadena, CA 91109-4627
Livonia Empl. Retirement System 33000 Civic Center Drive ___%
Livonia, MI 48154-3060
Olsen & Co. P. O. Box 4044 ___%
Boston, MA 02101-4044
The Security Mutual 200 Centennial Mall North ___%
Life Insurance Co. P.O. Box 82248
of Lincoln Nebraska Lincoln, NE 68501-2248
U.S. Government Securities Fund
Olsen & Co. P. O. Box 4044 ___%
Boston, MA 02101-4044
Children's Medical Center of Dayton P.O. Box 1809 ___%
Employee Pension Trust Dayton, OH 45401-1809
Asbestos Workers Local #84 c/o Loomis, Sayles & Company ___%
Pension Fund 1533 N. Woodward
Bloomfield Hills, MI 48304-2864
United Methodist Children's Home P.O. Box 68 ___%
General Fund Worthington, OH 43085-0068
Plumbers & Pipefitters 1230 Kinnear Road ___%
Local #189 Retirement Savings Columbus, OH 43212-1154
15
<PAGE>
Plumbers & Pipefitters c/o Loomis, Sayles & Company ___%
Reg. Wel. Fund 1533 N. Woodward
Bloomfield Hills, MI 48304-2864
Employees Profit Sharing Plan c/o Loomis Sayles Trustee ___%
One Financial Center
Boston, MA 02111-2621
Olsen & Co. P. O. Box 4044 ___%
Boston, MA 02101-4044
Bond Fund
Employees Profit Sharing Plan c/o Loomis Sayles Trustee ___%
One Financial Center
Boston, MA 02111-2621
Charles Schwab & Co. 101 Montgomery Street ___%
San Francisco, CA 94104-4122
Growth & Income Fund
Olsen & Co. P. O. Box 4044 ___%
Boston, MA 02101-4044
United Methodist P.O. Box 68 ___%
Children's Home General Fund Worthington, OH 43085-0068
Employees Profit Sharing Plan c/o Loomis Sayles Trustee ___%
One Financial Center
Boston, MA 02111-2621
Municipal Bond Fund
Sally B. Searle c/o Kinship Capital ___%
400 Skokie Boulevard
Northbrook, IL 60062-7906
Elinor J. Rousseau Trust 1071 North Renaud ___%
Grosse Point Woods, MI 48236-1727
16
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
Advisory Agreements. Loomis Sayles serves as investment adviser under a
separate advisory agreement relating to each of the Growth, Growth & Income,
Small Cap, Global Bond, Bond, Municipal Bond and U.S. Government Securities
Funds, each dated April 23, 1991, the Short-Term Bond Fund, dated July 31, 1992,
the International Equity Fund, dated September 14, 1992, and the Worldwide Fund,
dated May 1, 1996. Under each advisory agreement, Loomis Sayles manages the
investment and reinvestment of the assets of the relevant Fund and generally
administers its affairs, subject to supervision by the board of trustees of the
Trust. Loomis Sayles furnishes, at its own expense, all necessary office space,
facilities and equipment, services of executive and other personnel of the Fund
and certain administrative services. For these services, the advisory agreements
provide that each Fund shall pay Loomis Sayles a monthly investment advisory fee
at the following annual percentage rates of the particular Fund's average daily
net assets:
Fund Fee Rate
---- --------
Growth .75%
Growth & Income .75
Small Cap 1.00
International Equity 1.00
Worldwide .75
Global Bond .75
Short-Term Bond .50
Bond .60
Municipal Bond .60
U.S. Government Securities .60
17
<PAGE>
During the periods shown below, Loomis Sayles received the following
amount of investment advisory fees from each Fund (before voluntary fee
reductions and expense assumptions) and bore the following amounts of fee
reductions and expense assumptions for each Fund:
<TABLE>
<CAPTION>
Fiscal Year
Fiscal Year Ended 12/31/93 Fiscal Year Ended 12/31/94 Ended 12/31/95
-------------------------- -------------------------- ----------------
Fee Waivers and Fee Waivers and Fee Waivers
Advisory Expense Advisory Expense Advisory and Expense
Fund Fees Assumptions Fees Assumptions Fees Assumptions
- ---- ---- ----------- ---- ----------- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
Growth $219,374 $ -0- $248,311 0
Growth & Income 126,150 9,278 188,066 0
Small Cap 510,844 -0- 790,607 0
International 342,180 74,582 670,041 0
Equity
Worldwide* N/A N/A N/A N/A N/A N/A
Global Bond 124,151 923 196,543 0
Municipal Bond 23,685 87,687 36,708 $83,642
Bond 258,919 -0- 511,925 0
U.S. Government 92,507 44,697 106,524 39,088
Securities
Short-Term Bond 61,066 67,014 81,344 53,010
</TABLE>
*The Worldwide Fund did not commence operations until 1996.
The Trust pays the compensation of its trustees who are not directors,
officers or employees of Loomis Sayles or its affiliates (other than registered
investment companies); registration, filing and other fees in connection with
requirements of regulatory authorities; all charges and expenses of its
custodian and transfer agent; the charges and expenses of its independent
accountants; all brokerage commissions and transfer taxes in connection with
portfolio transactions; all taxes and fees payable to governmental agencies; the
cost of any certificates representing shares of the Funds; the expenses of
meetings of the shareholders and trustees of the Trust; the charges and expenses
of the Trust's legal counsel; interest on any borrowings by the Funds; the cost
of services, including services of counsel, required in connection with the
preparation of, and the cost of printing, the Trust's registration statements
and prospectuses, including amendments and revisions thereto, annual, semiannual
and other periodic reports of the Trust, and notices and proxy solicitation
material furnished to shareholders or regulatory authorities, to the extent that
18
<PAGE>
any such materials relate to the Trust or its shareholders; and the Trust's
expenses of bookkeeping, accounting, auditing and financial reporting, including
related clerical expenses.
Under each advisory agreement, if the total ordinary business expenses
of a Fund or the Trust as a whole for any fiscal year exceed the lowest
applicable limitation (based on percentage of average net assets or income)
prescribed by any state in which the shares of the Fund or the Trust are
qualified for sale, Loomis Sayles shall pay such excess. At present, the most
restrictive state annual expense limitation is 2 1/2% of a Fund's average annual
net assets up to $30,000,000, 2% of the next $70,000,000 of such assets and 1/2%
of such assets in excess of $100,000,000. Loomis Sayles will not be required to
reduce its fee or pay such expenses to an extent or under circumstances which
would result in any Fund's inability to qualify as a regulated investment
company under the Code. The term "expenses" is defined in the advisory
agreements or in relevant state regulations and excludes brokerage commissions,
taxes, interest, distribution-related expenses and extraordinary expenses.
As described in the Prospectus, Loomis Sayles has agreed to certain
additional, voluntary arrangements to limit Fund expenses. These arrangements
may be modified or terminated by Loomis Sayles at any time.
Each advisory agreement provides that it will continue in effect for
two years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
relevant Fund and (ii) by vote of a majority of the Trustees who are not
"interested persons" of the Trust, as that term is defined in the 1940 Act, cast
in person at a meeting called for the purpose of voting on such approval. Any
amendment to an advisory agreement must be approved by vote of a majority of the
outstanding voting securities of the relevant Fund and by vote of a majority of
the Trustees who are not such interested persons, cast in person at a meeting
called for the purpose of voting on such approval. Each agreement may be
terminated without penalty by vote of the Board of Trustees or by vote of a
majority of the outstanding voting securities of the relevant Fund, upon sixty
days' written notice, or by Loomis Sayles upon ninety days' written notice, and
each terminates automatically in the event of its assignment. In addition, each
agreement will automatically terminate if the Trust or the Fund shall at any
time be required by Loomis Sayles to eliminate all reference to the words
"Loomis" and "Sayles" in the name of the Trust or the Fund, unless the
continuance of the agreement after such change of name is approved by a majority
of the outstanding voting securities of the relevant Fund and by a majority of
the Trustees who are not interested persons of the Trust or Loomis Sayles.
19
<PAGE>
Each advisory agreement provides that Loomis Sayles shall not be
subject to any liability in connection with the performance of its services
thereunder in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
Loomis Sayles acts as investment adviser or subadviser to New England
Value Fund, New England Capital Growth Fund, New England Strategic Income Fund,
New England Star Advisers Fund and New England Balanced Fund, which are series
of New England Funds Trust I, a registered open-end management investment
company, one series of New England Fund Trust III, a registered open-end
management investment company, and to the Balanced Series, the Avanti Growth
Series and the Small Cap Series of New England Zenith Fund, which is also a
registered open-end management investment company. Loomis Sayles also provides
investment advice to numerous other corporate and fiduciary clients.
Certain officers and trustees of the Trust also serve as officers,
directors and trustees of other investment companies and clients advised by
Loomis Sayles. The other investment companies and clients sometimes invest in
securities in which the Funds also invest. If a Fund and such other investment
companies or clients desire to buy or sell the same portfolio securities at the
same time, purchases and sales may be allocated, to the extent practicable, on a
pro rata basis in proportion to the amounts desired to be purchased or sold for
each. It is recognized that in some cases the practices described in this
paragraph could have a detrimental effect on the price or amount of the
securities which a Fund purchases or sells. In other cases, however, it is
believed that these practices may benefit the Funds. It is the opinion of the
trustees that the desirability of retaining Loomis Sayles as adviser for the
Funds outweighs the disadvantages, if any, which might result from these
practices.
Custodial Arrangements. State Street Bank and Trust Company ("State
Street Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such,
State Street Bank holds in safekeeping certificated securities and cash
belonging to the Funds and, in such capacity, is the registered owner of
securities held in book entry form belonging to the Funds. Upon instruction,
State Street Bank receives and delivers cash and securities of the Funds in
connection with Fund transactions and collects all dividends and other
distributions made with respect to Fund portfolio securities. State Street Bank
also maintains certain accounts and records of the Funds and calculates the
total net asset value, total net income and net asset value per share of each
Fund on a daily basis.
Independent Accountants. The Fund's independent accountants are Coopers
& Lybrand L.L.P., One Post Office Square, Boston, Massachusetts. Coopers &
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Lybrand conducts an annual audit of the Trust's financial statements, assists in
the preparation of the Funds' federal and state income tax returns and consults
with the Funds as to matters of accounting and federal and state income
taxation. The information under the caption "Financial Highlights" included in
the Prospectus has been so included, and the financial statements incorporated
by reference herein from the Fund's 1995 Annual Report have been so
incorporated, in reliance on the reports of Coopers & Lybrand, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Funds Other Than the International Equity and Worldwide Funds. In
placing orders for the purchase and sale of portfolio securities for each Fund
other than the International Equity and Worldwide Funds, Loomis Sayles always
seeks the best price and execution. Transactions in unlisted securities are
carried out through broker-dealers who make the primary market for such
securities unless, in the judgment of Loomis Sayles, a more favorable price can
be obtained by carrying out such transactions through other brokers or dealers.
Loomis Sayles selects only brokers or dealers which it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates
which, when combined with the quality of the foregoing services, will produce
best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing rates.
Loomis Sayles will use its best efforts to obtain information as to the general
level of commission rates being charged by the brokerage community from time to
time and will evaluate the overall reasonableness of brokerage commissions paid
on transactions by reference to such data. In making such evaluation, all
factors affecting liquidity and execution of the order, as well as the amount of
the capital commitment by the broker in connection with the order, are taken
into account. The Funds will not pay a broker a commission at a higher rate than
otherwise available for the same transaction in recognition of the value of
research services provided by the broker or in recognition of the value of any
other services provided by the broker which do not contribute to the best price
and execution of the transaction.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Loomis Sayles believes will provide best price and
execution for a transaction. These research services include not only a wide
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variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although it
is not possible to assign an exact dollar value to these services, they may, to
the extent used, tend to reduce Loomis Sayles's expenses. Such services may be
used by Loomis Sayles in servicing other client accounts and in some cases may
not be used with respect to the Funds. Receipt of services or products other
than research from brokers is not a factor in the selection of brokers.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution,
Loomis Sayles may, however, consider purchases of shares of the Trust by
customers of broker-dealers as a factor in the selection of broker-dealers to
execute the Trust's securities transactions.
International Equity and Worldwide Funds. In placing orders for the
purchase and sale of securities for the International Equity and Worldwide
Funds, Loomis Sayles follows the same policies as for the other Funds, except
that Loomis Sayles may cause the International Equity and Worldwide Funds to pay
a broker-dealer that provides brokerage and research services to Loomis Sayles
an amount of commission for effecting a securities transaction for those Funds
in excess of the amount another broker-dealer would have charged for effecting
that transaction. Loomis Sayles must determine in good faith that such greater
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker-dealer viewed in terms of that
particular transaction or Loomis Sayles's overall responsibilities to the Trust
and its other clients. Loomis Sayles's authority to cause the International
Equity and Worldwide Funds to pay such greater commissions is also subject to
such policies as the Trustees of the Trust may adopt from time to time.
The following three tables set forth, for the fiscal years ended
December 31, 1993, December 31, 1994 and December 31, 1995, respectively, (1)
the aggregate dollar amount of brokerage commissions paid on portfolio
transactions during such period, (2) the dollar amount of transactions on which
brokerage commissions were paid during such period that were directed to brokers
providing research services ("directed transactions") and (3) the dollar amount
of commissions paid on directed transactions during such period. Funds not
listed in a table did not pay brokerage commissions during the relevant period.
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Fiscal Year Ended December 31, 1993
(1) (2) (3)
Aggregate Directed Commissions
Brokerage Trans- on Directed
Fund Commissions actions Transactions
---- ----------- ------- ------------
Growth $ 55,531 $ 42,446,050 $ 55,531
Growth & Income $ 37,310 $ 23,193,564 $ 37,310
Small Cap. $144,907 $110,080,231 $144,907
International Equity $469,853 $111,972,892 $469,853
Fiscal Year Ended December 31, 1994
(1) (2) (3)
Aggregate Directed Commissions
Brokerage Trans- on Directed
Fund Commissions actions Transactions
---- ----------- ------- ------------
Growth $ 44,867 $ 35,606,334 $ 44,867
Growth & Income $ 50,131 $ 28,909,781 $ 50,131
Small Cap. $179,677 $130,509,692 $179,677
International Equity $712,614 $158,862,963 $712,614
Fiscal Year Ended December 31, 1995
(1) (2) (3)
Aggregate Directed Commissions
Brokerage Trans- on Directed
Fund Commissions actions Transactions
---- ----------- ------- ------------
Growth $ _____ $ _____ $ _____
Growth & Income $ _____ $ _____ $ _____
Small Cap. $ _____ $ _____ $ _____
International Equity $ _____ $ _____ $ _____
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DESCRIPTION OF THE TRUST
The Trust, registered with the SEC as a diversified open-end management
investment company, is organized as a Massachusetts business trust under the
laws of Massachusetts by an Agreement and Declaration of Trust (the "Declaration
of Trust") dated February 20, 1991.
The Declaration of Trust currently permits the trustees to issue an
unlimited number of full and fractional shares of each series. Each share of
each Fund represents an equal proportionate interest in such Fund with each
other share of that Fund and is entitled to a proportionate interest in the
dividends and distributions from that Fund. The shares of each Fund do not have
any preemptive rights. Upon termination of any Fund, whether pursuant to
liquidation of the Trust or otherwise, shareholders of that Fund are entitled to
share pro rata in the net assets of that Fund available for distribution to
shareholders. The Declaration of Trust also permits the trustees to charge
shareholders directly for custodial, transfer agency and servicing expenses.
The assets received by each Fund for the issue or sale of its shares
and all income, earnings, profits, losses and proceeds therefrom, subject only
to the rights of creditors, are allocated to, and constitute the underlying
assets of, that Fund. The underlying assets are segregated and are charged with
the expenses with respect to that Fund and with a share of the general expenses
of the Trust. Any general expenses of the Trust that are not readily
identifiable as belonging to a particular Fund are allocated by or under the
direction of the trustees in such manner as the trustees determine to be fair
and equitable. While the expenses of the Trust are allocated to the separate
books of account of each Fund, certain expenses may be legally chargeable
against the assets of all Funds.
The Declaration of Trust also permits the trustees, without shareholder
approval, to subdivide any series of shares or Fund into various sub-series of
shares with such dividend preferences and other rights as the trustees may
designate. While the trustees have no current intention to exercise this power,
it is intended to allow them to provide for an equitable allocation of the
impact of any future regulatory requirements which might affect various classes
of shareholders differently, or to permit shares of a series to be distributed
through more than one distribution channel, with the costs of the particular
means of distribution (or costs of related services) to be borne by the
shareholders who purchase through that means of distribution. The trustees may
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also, without shareholder approval, establish one or more additional separate
portfolios for investments in the Trust or merge two or more existing
portfolios. Shareholders' investments in such an additional or merged portfolio
would be evidenced by a separate series of shares (i.e., a new "Fund").
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust or any Fund, however, may be terminated at any time by vote of
at least two-thirds of the outstanding shares of each Fund affected. The
Declaration of Trust further provides that the trustees may also terminate the
Trust or any Fund upon written notice to the shareholders. As a matter of
policy, however, the trustees will not terminate the Trust or any Fund without
submitting the matter to a vote of the shareholders of the Trust or the relevant
Fund.
Voting Rights
As summarized in the Prospectus, shareholders are entitled to one vote
for each full share held (with fractional votes for each fractional share held)
and may vote (to the extent provided in the Declaration of Trust) on the
election of trustees and the termination of the Trust and on other matters
submitted to the vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a
vote of all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a particular
series or sub-series would be adversely affected by the vote, in which case a
separate vote of that series or sub-series shall also be required to decide the
question. Also, a separate vote shall be held whenever required by the 1940 Act
or any rule thereunder. Rule 18f-2 under the 1940 Act provides in effect that a
class shall be deemed to be affected by a matter unless it is clear that the
interests of each class in the matter are substantially identical or that the
matter does not affect any interest of such class. On matters affecting an
individual series, only shareholders of that series are entitled to vote.
Consistent with the current position of the SEC, shareholders of all series vote
together, irrespective of series, on the election of trustees and the selection
of the Trust's independent accountants, but shareholders of each series vote
separately on other matters requiring shareholder approval, such as certain
changes in investment policies of that series or the approval of the investment
advisory agreement relating to that series.
There will normally be no meetings of shareholders for the purpose of
electing trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of trustees at such time as
less than a majority of the trustees holding office have been elected by
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shareholders, and (ii) if, as a result of a vacancy on the board of trustees,
less than two-thirds of the trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the trustees shall continue to hold office
and may appoint successor trustees. Voting rights are not cumulative.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the Declaration
of Trust and (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value).
Shareholder and Trustee Liability
Under Massachusetts law shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund of
which they are shareholders. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of each Fund and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the trustees. The Declaration of Trust
provides for indemnification out of Fund property for all loss and expense of
any shareholder held personally liable for the obligations of the Fund. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is considered remote since it is limited to circumstances in which the
disclaimer is inoperative and the Fund itself would be unable to meet its
obligations.
The Declaration of Trust further provides that the trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a trustee against any liability to which the
trustee would otherwise be subject by reason of willful misfeasance, bad faith,
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gross negligence or reckless disregard of the duties involved in the conduct of
his office. The By-Laws of the Trust provide for indemnification by the Trust of
the trustees and officers of the Trust except with respect to any matter as to
which any such person did not act in good faith in the reasonable belief that
such action was in or not opposed to the best interests of the Trust. No officer
or trustee may be indemnified against any liability to the Trust or the Trust's
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
HOW TO BUY SHARES
The procedures for purchasing shares of the Funds are summarized in the
Prospectus under "How to Purchase Shares."
NET ASSET VALUE
The net asset value of the shares of each Fund is determined by
dividing that Fund's total net assets (the excess of its assets over its
liabilities) by the total number of shares of the Fund outstanding and rounding
to the nearest cent. Such determination is made as of the close of regular
trading on the New York Stock Exchange on each day on which that Exchange is
open for unrestricted trading, and no less frequently than once daily on each
day during which there is sufficient trading in a Fund's portfolio securities
that the value of that Fund's shares might be materially affected. During the 12
months following the date of this Statement of Additional Information, the New
York Stock Exchange is expected to be closed on the following weekdays: Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day, New Year's
Day, Presidents' Day and Good Friday. Equity securities listed on an established
securities exchange or on the Nasdaq National Market System are normally valued
at their last sale price on the exchange where primarily traded or, if there is
no reported sale during the day, and in the case of over-the-counter securities
not so listed, at the last bid price. Long-term debt securities are valued by a
pricing service, which determines valuations of normal institutional-size
trading units of long-term debt securities. Such valuations are determined using
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methods based on market transactions for comparable securities and on various
relationships between securities which are generally recognized by institutional
traders. Other securities for which current market quotations are not readily
available (including restricted securities, if any) and all other assets are
taken at fair value as determined in good faith by the board of trustees,
although the actual calculations may be made by persons acting pursuant to the
direction of the board.
Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of regular trading on the
New York Stock Exchange. Occasionally, events affecting the value of foreign
fixed income securities and of equity securities of non-U.S. issuers not traded
on a U.S. exchange may occur between the completion of substantial trading of
such securities for the day and the close of regular trading on the New York
Stock Exchange, which events will not be reflected in the computation of the
Fund's net asset value. If events materially affecting the value of any Fund's
portfolio securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or in accordance with
procedures approved by the trustees.
SHAREHOLDER SERVICES
Open Accounts
A shareholder's investment in any Fund is automatically credited to an
open account maintained for the shareholder by Boston Financial Data Services,
Inc. ("BFDS"), the shareholder servicing agent for State Street Bank.
Certificates representing shares are issued only upon written request to BFDS
but are not issued for fractional shares. Following each transaction in the
account, a shareholder will receive an account statement disclosing the current
balance of shares owned and the details of recent transactions in the account.
After the close of each fiscal year State Street Bank will send each shareholder
a statement providing federal tax information on dividends and distributions
paid to the shareholder during the year. This should be retained as a permanent
record. Shareholders will be charged a fee for duplicate information.
The open account system permits the purchase of full and fractional
shares and, by making the issuance and delivery of certificates representing
shares unnecessary, eliminates the problems of handling and safekeeping
certificates, and the cost and inconvenience of replacing lost, stolen,
mutilated or destroyed certificates.
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The costs of maintaining the open account system are borne by the
Trust, and no direct charges are made to shareholders. Although the Trust has no
present intention of making such direct charges to shareholders, it reserves the
right to do so. Shareholders will receive prior notice before any such charges
are made.
Systematic Withdrawal Plan
A Systematic Withdrawal Plan, referred to in the Prospectus under
"Shareholder Services--Systematic Withdrawal Plan," provides for monthly,
quarterly, semiannual or annual withdrawal payments of $50 or more from the
account of a shareholder provided that the account has a value of at least
$10,000 at the time the plan is established.
Payments will be made either to the shareholder or to any other person
designated by the shareholder. If payments are issued to an individual other
than the registered owner(s), a signature guarantee will be required on the Plan
application. All shares in an account that is subject to a Systematic Withdrawal
Plan must be held in an open account rather than in certificated form. Income
dividends and capital gain distributions will be reinvested at the net asset
value determined as of the close of regular trading on the New York Stock
Exchange on the record date for the dividend or distribution.
Since withdrawal payments represent proceeds from liquidation of
shares, the shareholder should recognize that withdrawals may reduce and
possibly exhaust the value of the account, particularly in the event of a
decline in net asset value. Accordingly, the shareholder should consider whether
a Systematic Withdrawal Plan and the specified amounts to be withdrawn are
appropriate in the circumstances. The Fund makes no recommendations or
representations in this regard. It may be appropriate for the shareholder to
consult a tax adviser before establishing such a plan. See "Redemptions" and
"Income Dividends, Capital Gain Distributions and Tax Status" below for certain
information as to federal income taxes.
Exchange Privilege
Shareholders may redeem their shares of any Fund and have the proceeds
applied on the same day to purchase shares of any other Fund or of New England
Cash Management Trust or New England Tax Exempt Money Market Trust. The value of
shares exchanged must be at least $1,000 and all exchanges are subject to the
minimum investment requirement of the fund into which the exchange is being
made. This option is summarized in the Prospectus under "Shareholder
Services--Free Exchange Privilege."
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Exchanges may be effected by (1) making a telephone request by calling
800-633-3330, provided that a special authorization form is on file with BFDS,
or (2) sending a written exchange request to BFDS accompanied by an account
application for the appropriate fund. The Trust reserves the right to modify
this exchange privilege without prior notice.
An exchange constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a capital gain or loss.
IRAs
Under "Shareholder Services--Retirement Plans" the Prospectus refers to
IRAs established under a prototype plan made available by Loomis Sayles. These
plans may be funded with shares of any Fund, although it is expected that shares
of the Municipal Bond Fund would ordinarily not be an appropriate investment for
these plans.
All income dividends and capital gain distributions of plan
participants must be reinvested. Plan documents and further information can be
obtained from Loomis Sayles.
Check with your financial or tax adviser as to the suitability of Fund
shares for your retirement plan.
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in the
Prospectus under "How to Redeem Shares."
Except as noted below, signatures on redemption requests must be
guaranteed by commercial banks, trust companies, savings associations, credit
unions or brokerage firms that are members of domestic securities exchanges.
Signature guarantees by notaries public are not acceptable. However, as noted in
the Prospectus, a signature guarantee will not be required if the proceeds of
the redemption do not exceed $10,000 and the proceeds check is made payable to
the registered owner(s) and mailed to the record address.
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If a shareholder selects the telephone redemption service in the manner
described in the next paragraph, Fund shares may be redeemed by making a
telephone call directly to BFDS at 800-626-9390. When a telephonic redemption
request is received, the proceeds are wired to the bank account previously
chosen by the shareholder and a nominal wire fee (currently $5.00) is deducted.
Telephonic redemption requests must be received by BFDS prior to the close of
regular trading on the New York Stock Exchange on a day when the Exchange is
open for business. Requests made after that time or on a day when the New York
Stock Exchange is not open for business cannot be accepted by BFDS and a new
request will be necessary.
In order to redeem shares by telephone, a shareholder must either
select this service when completing the Fund application or must do so
subsequently on the Service Options Form available from BFDS. When selecting the
service, a shareholder must designate a bank account to which the redemption
proceeds should be wired. Any change in the bank account so designated must be
made by furnishing to BFDS a completed Service Options Form with a signature
guarantee. Whenever the Service Options Form is used, the shareholder's
signature must be guaranteed as described above. Telephone redemptions may only
be made if an investor's bank is a member of the Federal Reserve System or has a
correspondent bank that is a member of the System. If the account is with a
savings bank, it must have only one correspondent bank that is a member of the
System. The Trust, BFDS and State Street Bank are not responsible for the
authenticity of withdrawal instructions received by telephone.
The redemption price will be the net asset value per share next
determined after the redemption request and any necessary special documentation
are received by BFDS in proper form. Proceeds resulting from a written
redemption request will normally be mailed to you within seven days after
receipt of your request in good order. Telephonic redemption proceeds will
normally be wired on the first business day following receipt of a proper
redemption request. In those cases where you have recently purchased your shares
by check and your check was received less than fifteen days prior to the
redemption request, the Fund may withhold redemption proceeds until your check
has cleared.
Each Fund will normally redeem shares for cash; however, each Fund
reserves the right to pay the redemption price wholly or partly in kind if the
board of trustees of the Trust determines it to be advisable in the interest of
the remaining shareholders. If portfolio securities are distributed in lieu of
cash, the shareholder will normally incur brokerage commissions upon subsequent
disposition of any such securities. However, the Trust has elected to be
governed by Rule 18f-1 under the 1940 Act pursuant to which the Trust is
obligated to redeem shares solely in cash for any shareholder during any 90-day
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period up to the lesser of $250,000 or 1% of the total net asset value of the
Trust at the beginning of such period.
A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long- or short-term capital gain or
loss. See "Income Dividends, Capital Gain Distributions and Tax Status."
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
As described in the Prospectus under "Dividends, Capital Gain
Distributions and Taxes" it is the policy of each Fund to pay its shareholders,
as dividends, substantially all net investment income and to distribute annually
all net realized capital gains, if any, after offsetting any capital loss
carryovers.
Income dividends and capital gain distributions are payable in full and
fractional shares of the particular Fund based upon the net asset value
determined as of the close of regular trading on the New York Stock Exchange on
the record date for each dividend or distribution. Shareholders, however, may
elect to receive their income dividends or capital gain distributions, or both,
in cash. The election may be made at any time by submitting a written request
directly to BFDS. In order for a change to be in effect for any dividend or
distribution, it must be received by BFDS on or before the record date for such
dividend or distribution.
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31 of
the succeeding year.
Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Code. In order so to qualify, the Fund must,
among other things, (i) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale
of securities or foreign currencies, or other income (including but not limited
to gains from options, futures or forward contracts) derived with respect to its
business of investing in such stock, securities or currencies; (ii) derive less
than 30% of its gross income from gains from the sale or other disposition of
securities held for less than three months; (iii) distribute at least 90% of its
dividend, interest and certain other taxable income each year; and (iv) at the
end of each fiscal quarter maintain at least 50% of the value of its total
assets in cash, government securities, securities of other regulated investment
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companies, and other securities of issuers which represent, with respect to each
issuer, no more than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and with no more than 25% of its
assets invested in the securities (other than those of the U.S. government or
other regulated investment companies) of any one issuer or of two or more
issuers which the Fund controls and which are engaged in the same, similar or
related trades and businesses. To the extent it qualifies for treatment as a
regulated investment company, the Fund will not be subject to federal income tax
on income paid to its shareholders in the form of dividends or capital gain
distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any,
of each Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund so elects) plus undistributed amounts from prior years. Each Fund
intends to make distributions sufficient to avoid imposition of the excise tax.
Distributions declared by a Fund during October, November or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which declared.
Shareholders of each Fund will be subject to federal income taxes on
distributions made by the Fund (other than "exempt-interest dividends" paid by
the Municipal Bond Fund, as described in the Prospectus) whether received in
cash or additional shares of the Fund. Distributions by each Fund of net income
and short-term capital gains, if any, will be taxable to shareholders as
ordinary income. Distributions of long-term capital gains, if any, will be
taxable to shareholders as long-term capital gains, without regard to how long a
shareholder has held shares of the Fund. A loss on the sale of shares held for
12 months or less will be treated as a long-term capital loss to the extent of
any long-term capital gain dividend paid to the shareholder with respect to such
shares.
Dividends and distributions on Fund shares received shortly after their
purchase, although in effect a return of capital, are subject to federal income
taxes.
The International Equity, Worldwide and Global Bond Funds each may be
eligible to make an election under Section 853 of the Code so that its
shareholders will be able to claim a credit or deduction on their income tax
returns for, and will be required to treat as part of the amounts distributed to
them, their pro rata portion of qualified taxes paid by the relevant Fund to
foreign countries. The ability of shareholders of the Fund to claim a foreign
tax credit is subject to certain limitations imposed by Section 904 of the Code,
which in general limit the amount of foreign tax that may be used to reduce a
shareholder's U.S. tax liability to that amount of U.S. tax which would be
imposed on the amount and type of income in respect of which the foreign tax was
paid. A shareholder who for U.S. income tax purposes claims a foreign tax credit
in respect of Fund distributions may not claim a deduction for foreign taxes
paid by the Fund, regardless of whether the shareholder itemizes deductions.
Also, under Section 63 of the Code, no deduction for foreign taxes may be
claimed by shareholders who do not itemize deductions on their federal income
tax returns. It should also be noted that a tax-exempt shareholder, like other
shareholders, will be required to treat as part of the amounts distributed to it
a pro rata portion of the income taxes paid by the Fund to foreign countries.
However, that income will generally be exempt from United States taxation by
virtue of such shareholder's tax-exempt status and such a shareholder will not
be entitled to either a tax credit or a deduction with respect to such income.
The International Equity, Worldwide and Global Bond Funds will notify
shareholders each year of the amount of dividends and distributions and the
shareholder's pro rata share of qualified taxes paid by each such Fund to
foreign countries.
Each Fund's transactions, if any, in foreign currencies are likely to
result in a difference between the Fund's book income and taxable income. This
difference may cause a portion of the Fund's income distributions to constitute
a return of capital for tax purposes or require the Fund to make distributions
exceeding book income to avoid excise tax liability and to qualify as a
regulated investment company.
Each Fund may limit its investments in certain "passive foreign
investment companies" in order to avoid certain taxes that arise as a result of
such investments.
Redemptions and exchanges of each Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions. If
shares have been held for more than one year, gain or loss realized will be
long-term capital gain or loss, provided the shareholder holds the shares as a
capital asset. However, if a shareholder sells Fund shares at a loss within six
months after purchasing the shares, the loss will be treated as a long-term
capital loss to the extent of any long-term capital gain distributions received
by the shareholder. Furthermore, no loss will be allowed on the sale of Fund
shares to the extent the shareholder acquired other shares of the same Fund
within 30 days prior to the sale of the loss shares or 30 days after such sale.
33
<PAGE>
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action.
Dividends and distributions also may be subject to state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state or local taxes.
The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).
FINANCIAL STATEMENTS
The financial statements of each Fund included in the Trust's 1995
Annual Report are incorporated herein by reference to such Annual Report.
34
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS ASSIGNED BY
STANDARD & POOR'S CORPORATION AND
MOODY'S INVESTORS SERVICE, INC.
STANDARD & POOR'S CORPORATION
AAA
This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
principal.
AA
Bonds rated AA also qualify as high quality debt obligations. Capacity
to pay interest and repay principal is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC
Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
A-1
<PAGE>
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
C
The rating C is reserved for income bonds on which no interest is being
paid.
D
Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa
Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or by an exceptionally
stable, margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa
Bonds that are rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risks appear somewhat larger than in Aaa securities.
A
Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
that suggest a susceptibility to impairment sometime in the future.
A-2
<PAGE>
Baa
Bonds that are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often, the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
A-3
<PAGE>
Should no rating be assigned by Moody's, the reason may be one of the
following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not
rated as a matter of policy.
3. There is lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances
arise, the effects of which preclude satisfactory analysis; if there is no
longer available reasonable up-to-date data to permit a judgment to be formed;
if a bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are
designated by the symbols Aa1, A1, Baa1, Ba1 and B1.
A-4
<PAGE>
Part C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements: See "Financial Highlights" contained in the
Prospectus.
(b) Exhibits:
1. Agreement and Declaration of Trust.(1)
2. By-Laws.(1)
3. Not Applicable.
4. Form of Share Certificate.(2)
5. Form of Investment Advisory Agreement.(1)
5(a). Form of Investment Advisory Agreement for the International
Equity Fund.(3)
5(b). Form of Investment Advisory Agreement for the Worldwide
Fund.*
6. Not Applicable.
7. Not Applicable.
8. Form of Custodian Agreement.(2)
9. Form of Shareholder's Servicing and Transfer Agent
Agreement.(2)
10. Opinion and Consent of Counsel.(2)
11. Consent of Independent Accountants.*
12. Not Applicable.
13(a). Investment Representation Regarding Initial Shares.(2)
13(b). Form of Organizational Expense Reimbursement Agreement.(2)
14. Form of IRA prototype documents.(2)
15. Not Applicable.
_________________
* To be filed by amendment
(1) Incorporated by reference to the similarly numbered Exhibit to this
Registration Statement as originally filed with the Commission on
February 22, 1991.
(2) Incorporated by reference to the similarly numbered Exhibit to Pre-Effective
Amendment No. 2 to this Registration Statement filed with the Commission on
May 6, 1991.
(3) Incorporated by reference to the similarly numbered Exhibit to
Post-Effective Amendment No. 6 to this Registration Statement filed with the
Commission on May 1, 1995.
1
<PAGE>
16. Not Applicable.
17. Powers of Attorney.
18. Financial Statements and Report of Independent
Accountants.*
Item 25. Persons Controlled by or under Common Control with Registrant
Not Applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record Holders
Title of Class (as of February 6, 1996)
-------------- ------------------------
Growth Fund 499
Growth & Income Fund 539
Small Cap Fund 1,447
International Equity Fund 856
Worldwide Fund 0
Global Bond Fund 159
Bond Fund 5,092
Municipal Bond Fund 112
U.S. Government Securities Fund 152
Short-Term Bond Fund 208
Item 27. Indemnification
Incorporated by reference to Item 27 of Post-Effective Amendment No. 1
to this Registration Statement filed on November 7, 1991.
Item 28. Business and Other Connections of Investment Adviser
(a) Loomis, Sayles & Company, L.P. ("Loomis Sayles"), the adviser of
the Registrant, provides investment advice to the seven series of
Loomis Sayles Investment Trust, five series of New England Funds
Trust I, one series of New England Fund Trust III, three series of
New England Zenith Funds, Calvert Social Investment Fund, Calvert
Responsibly Invested Equity Fund, Maxim Corporate Bond Fund, Maxim
Small Cap Fund and The Managers Bond Fund, all of which are
registered investment companies or series thereof, and to other
organizations and individuals.
The sole general partner of Loomis Sayles is Loomis, Sayles &
Company, Incorporated, One Financial Center, Boston, Massachusetts
02111.
2
<PAGE>
Item 29. Principal Underwriters
Not Applicable.
3
<PAGE>
Item 30. Location of Accounts and Records
The following companies maintain possession of the documents required
by the specified rules:
(a) Registrant
Rule 31a-1(b)(4), (9), (10), (11)
Rule 31a-2(a)
(b) State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Rule 31a-1(a)
Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
Rule 31a-2(a)
(c) Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
Rule 31a-1(f)
Rule 31a-2(e)
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(i) The Registrant undertakes to comply with Section 16(c) of the Investment
Company Act of 1940 as though such provisions of the Act were applicable
to the Registrant.
(ii) The Registrant undertakes to furnish each person to whom a prospectus is
delivered a copy of Registrant's most recent annual report upon request
and without charge.
(iii) The Registrant undertakes to file a post-effective amendment in order to
furnish financial statements of the Worldwide Fund, which need not be
certified, within four to six months of the effective date of this Post-
Effective Amendment No. 7.
********************
NOTICE
A copy of the Agreement and Declaration of Trust of Loomis Sayles Funds
(the "Trust") is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Trust by an officer of the Trust as an officer
and by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Trust.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, in The Commonwealth of
Massachusetts on the 16th day of February, 1996.
LOOMIS SAYLES FUNDS
By: /s/ DANIEL J. FUSS
Daniel J. Fuss, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this amendment to the Registration Statement
of Loomis Sayles Funds has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title
- --------- -----
/s/ DANIEL J. FUSS President and Trustee
Daniel J. Fuss
/s/ MARK W. HOLLAND* Treasurer, Principal
Mark W. Holland Financial Officer and
Principal Accounting Officer
/s/ EARL W. FOELL* Trustee
Earl W. Foell
/s/ RICHARD S. HOLWAY* Trustee
Richard S. Holway
/s/ MICHAEL T. MURRAY* Trustee
Michael T. Murray
/s/ TERRY R. LAUTENBACH* Trustee
Terry R. Lautenbach
*By /s/ DANIEL J. FUSS
Daniel J. Fuss
Attorney-in-fact
February 16, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
5(b) Form of Investment Advisory Agreement for the Worldwide Fund*
11 Consent of Independent Accountants*
17 Powers of Attorney
18 Financial Statements and Report of Independent Accountants*
_________________________
* To be filed by amendment.
EXHIBIT 17
POWER OF ATTORNEY
The undersigned hereby constitutes Daniel J. Fuss and Mark W. Holland,
and each of them singly, his true and lawful attorneys, with full power to them
and each of them to sign for him, in his name and in the capacity indicated
below, any and all registration statements of Loomis Sayles Funds, a
Massachusetts business trust, under the Securities Act of 1933 or the Investment
Company Act of 1940, and generally to do all such things in his name and in his
behalf to enable Loomis Sayles Funds to comply with the provisions of the
Securities Act of 1933, the Investment Company Act of 1940, and all requirements
and regulations of the Securities and Exchange Commission, hereby ratifying and
confirming his signature as it may be signed by his said attorneys to any and
all registration statements and amendments thereto.
Witness my hand this 22nd day of January, 1996.
/s/ Daniel J. Fuss
Daniel J. Fuss
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes Daniel J. Fuss and Mark W. Holland,
and each of them singly, his true and lawful attorneys, with full power to them
and each of them to sign for him, in his name and in the capacity indicated
below, any and all registration statements of Loomis Sayles Funds, a
Massachusetts business trust, under the Securities Act of 1933 or the Investment
Company Act of 1940, and generally to do all such things in his name and in his
behalf to enable Loomis Sayles Funds to comply with the provisions of the
Securities Act of 1933, the Investment Company Act of 1940, and all requirements
and regulations of the Securities and Exchange Commission, hereby ratifying and
confirming his signature as it may be signed by his said attorneys to any and
all registration statements and amendments thereto.
Witness my hand this 22nd day of January, 1996.
/s/ Mark W. Holland
Mark W. Holland
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes Daniel J. Fuss and Mark W. Holland,
and each of them singly, his true and lawful attorneys, with full power to them
and each of them to sign for him, in his name and in the capacity indicated
below, any and all registration statements of Loomis Sayles Funds, a
Massachusetts business trust, under the Securities Act of 1933 or the Investment
Company Act of 1940, and generally to do all such things in his name and in his
behalf to enable Loomis Sayles Funds to comply with the provisions of the
Securities Act of 1933, the Investment Company Act of 1940, and all requirements
and regulations of the Securities and Exchange Commission, hereby ratifying and
confirming his signature as it may be signed by his said attorneys to any and
all registration statements and amendments thereto.
Witness my hand this 22nd day of January, 1996.
/s/ Michael T. Murray
Michael T. Murray
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes Daniel J. Fuss and Mark W. Holland,
and each of them singly, his true and lawful attorneys, with full power to them
and each of them to sign for him, in his name and in the capacity indicated
below, any and all registration statements of Loomis Sayles Funds, a
Massachusetts business trust, under the Securities Act of 1933 or the Investment
Company Act of 1940, and generally to do all such things in his name and in his
behalf to enable Loomis Sayles Funds to comply with the provisions of the
Securities Act of 1933, the Investment Company Act of 1940, and all requirements
and regulations of the Securities and Exchange Commission, hereby ratifying and
confirming his signature as it may be signed by his said attorneys to any and
all registration statements and amendments thereto.
Witness my hand this 22nd day of January, 1996.
/s/ Terry R. Lautenbach
Terry R. Lautenbach
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes Daniel J. Fuss and Mark W. Holland,
and each of them singly, his true and lawful attorneys, with full power to them
and each of them to sign for him, in his name and in the capacity indicated
below, any and all registration statements of Loomis Sayles Funds, a
Massachusetts business trust, under the Securities Act of 1933 or the Investment
Company Act of 1940, and generally to do all such things in his name and in his
behalf to enable Loomis Sayles Funds to comply with the provisions of the
Securities Act of 1933, the Investment Company Act of 1940, and all requirements
and regulations of the Securities and Exchange Commission, hereby ratifying and
confirming his signature as it may be signed by his said attorneys to any and
all registration statements and amendments thereto.
Witness my hand this 22nd day of January, 1996.
/s/ Earl W. Foell
Earl W. Foell
<PAGE>
POWER OF ATTORNEY
The undersigned hereby constitutes Daniel J. Fuss and Mark W. Holland,
and each of them singly, his true and lawful attorneys, with full power to them
and each of them to sign for him, in his name and in the capacity indicated
below, any and all registration statements of Loomis Sayles Funds, a
Massachusetts business trust, under the Securities Act of 1933 or the Investment
Company Act of 1940, and generally to do all such things in his name and in his
behalf to enable Loomis Sayles Funds to comply with the provisions of the
Securities Act of 1933, the Investment Company Act of 1940, and all requirements
and regulations of the Securities and Exchange Commission, hereby ratifying and
confirming his signature as it may be signed by his said attorneys to any and
all registration statements and amendments thereto.
Witness my hand this 22nd day of January, 1996.
/s/ Richard S. Holway
Richard S. Holway
3108415.01
