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[Photo of Daniel J. Fuss]
LOOMIS SAYLES FIXED INCOME FUNDS
SEMI-ANNUAL REPORT
JUNE 30, 1997
A FAMILY OF NO-LOAD FUNDS
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111
(617) 482-2450
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LOOMIS SAYLES FUNDS
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[Photo of Daniel J. Fuss]
DANIEL J. FUSS
DEAR SHAREHOLDERS:
Let's talk about peace, oceans, teenagers, hockey players and crocodiles.
THE WORLD IS AT PEACE
The world is a peaceful place and that is good for investing money. While there
are many local wars, there is no large-scale war, hot or cold, on the horizon.
Because of that, it is a little easier for the national governments to balance
their budgets. Also, there are some significant changes occurring in worldwide
population distribution, as we collectively age. Out of this, a new political
order is evolving that is fundamentally good for investing money.
THERE'S AN OCEAN OF LIQUIDITY
The global economy is chugging along, but not at a pace that can use up the
ocean of liquidity that exists in the world today. Normally, at this phase of
the economic cycle, signs of inflation start to occur. None of those signs are
evident now, so it doesn't look like this ocean will dry up anytime soon.
THE ECONOMY IS ABOUT TO BECOME A TEENAGER
This phenomenon has placed the Federal Reserve and other central banks in a
position similar to parents with a child about to become a teenager. Those
parents know what is to come; the central banks know too what's coming. However,
the economic evidence isn't apparent to all. It's only the point in the cycle
that tells the central banks to prepare for the worst. But the banks really
don't have the political and popular support to raise interest rates to help dry
up some of this excess liquidity. Therefore, they wait.
AND THE HOCKEY PLAYERS ARE CAUSING MISCHIEF
Meanwhile in the markets, the hockey players are going full tilt. Environments
like this, with ample liquidity and few serious worries, lead to all sorts of
mischief. The hockey players are finding many ways to add incremental return.
Many are borrowing a lot of money and putting it into the market. The most
prominent example of this is the so-called "yen/dollar carry trade", where
people borrow short term funds in yen and invest in longer term dollar
denominated assets. Another variation is extending the "collateralized bond
obligation" format to high yield bonds. Another risk is the possible outcome
from the so-called "virtual hedging" techniques, where plans are made to sell
stocks when the market declines past a certain point. None of these strategies
are intrinsically bad, but they do introduce more risk into the market.
All of this push for yield and return has narrowed the valuation differences in
most markets. That is, there isn't that much to choose between one type of
investment and another. This has caused certain areas of the market to get quite
pricey relative to where they used to be. Nevertheless, it is a peaceful time
and perhaps some of these valuations aren't so extreme after all.
MEANWHILE, THE CROCODILES LAY IN WAIT
A really powerful "market message" statement would be nice for this letter. I
don't have one. However, I am reminded of an old Malaysian saying, "just because
the river is quiet does not mean the crocodiles have left." There are definitely
crocodiles out there. Whether or not they will surface remains to be seen. We're
keeping a sharp eye out for them. Until they do, it remains a good time to
invest.
Thanks for investing with us.
Sincerely,
/s/ Daniel J. Fuss
Daniel J. Fuss
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[Photo of John F. Yeager]
JOHN F. YEAGER, III
DEAR SHAREHOLDERS:
Some years are just more eventful than others. For Loomis Sayles Funds, the past
six months have seen growth, innovations in product and distribution, as well as
some important service enhancements. We're excited about what we've been doing
and believe the months to come hold great promise. I'd like to take the
opportunity of this semi-annual report to share with you some of our recent
achievements.
If you've been with us for some time, you will probably notice that we have
varied the look of this report. We have changed the layout of the financials and
redesigned the Fund commentary, with the intent of making the report more
readable and allowing you to get to know us better. We invite your comments
about this change.
PRODUCT AND GROWTH
This year, we brought six new Funds into our Family - Investment Grade Bond,
Small Cap Growth, Mid-Cap Value, Mid-Cap Growth, Strategic Value and
Intermediate Maturity Bond Funds. If you are not already familiar with these
Funds, I invite you to read about them and meet their managers through our
semi-annual reports.
Not only has our Fund family expanded, but our assets under management have
grown. Within the past six months, assets under management of the Loomis Sayles
Funds have increased over 40%. Our Funds have all performed well over the past
several years. Year to date (June 30, 1997), eleven of our Funds are ranked in
the top half of their Lipper category and seven of those are also ranked in the
top quartile.
DISTRIBUTION
Loomis Sayles is committed to one business: investment counsel. We focus our
efforts on bringing to our Funds highly trained investment professionals, the
best proprietary research and consistency of style. We feel that we can be most
effective by concentrating on investment management and delivering our Funds to
you by working in partnership with various financial intermediaries. We find,
too, that more and more of the investing public likes the service and
convenience of using intermediaries, such as financial advisors, discount
brokers and retirement plans. This allows us to concentrate on what we do best,
investment management, and let others do what they do best. We leverage this to
your advantage, with improved service and lower costs.
This year, we made two important structural changes. We've added a Retail Class
and lowered the management fees on most of our existing Funds. Our Retail Class
is available through various non transaction fee and wrap programs. The
Institutional Class is available direct to investors investing at least
$1,000,000, as well as through many investment professional programs, which
require a small transaction charge. Should you not find our Funds listed with
your preferred intermediary, please call us, so that we may work to add them to
our list of partners. So far this year, we have added several new relationships
with intermediaries, including Merrill Lynch, NationsBanc, Oppenheimer and Paine
Webber.
SERVICE
We have several important goals for the year, including providing you with
superior service and enhanced communications. We want you to have the ability to
easily obtain the information you need about our Funds quickly and accurately.
We recently installed a new voice response system so you can request literature
and a prospectus, review Net Asset Values (NAVs), or ask questions of a
marketing representative. Directions for using the system are included on the
back cover of this report.
We plan to increase our level of communications with you and other shareholders
of the Loomis Sayles Funds. To this end, we are expanding the variety of avenues
of communications over the next year, including the addition of newsletters,
expanded fund analysis, economic and market commentaries, and a website. We will
keep you posted.
PROMISE
We see the next six months and the years ahead to be filled with promise for the
Loomis Sayles Funds. We are excited about our current Funds, while we constantly
look to add new fund offerings. With the resources of an investment management
organization with $56 billion in assets under management, we are confident of
our ability to continue to provide you with the superior investment management
and service you have come to expect.
Most importantly, we are glad to have you with us. Thank you for your
confidence.
Sincerely,
/s/ John F. Yeager, III
John F. Yeager, III
President
Loomis Sayles Distributors, L. P.
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LOOMIS SAYLES FIXED INCOME FUNDS
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TOTAL RETURN(1) vs. LIPPER CATEGORY(2) -- (Unaudited)
<TABLE>
Global High
Bond Bond Yield
-------------- -------------- --------------
<S> <C> <C> <C>
YEAR TO DATE/6 MONTHS
Loomis Sayles .................................. 5.59 3.56 5.74
Lipper ......................................... 3.16 0.89 5.92
Rank ........................................... 4 of 129 18 of 145 167 of 182
Percentile ..................................... 3 12 92
ONE YEAR
Loomis Sayles .................................. 15.74 12.69 NA
Lipper ......................................... 8.85 9.34
Rank ........................................... 4 of 129 24 of 138
Percentile ..................................... 3 17
THREE YEARS
Loomis Sayles .................................. 15.50 14.29 NA
Lipper ......................................... 9.03 9.40
Rank ........................................... 1 of 68 9 of 85
Percentile ..................................... 1 11
FIVE YEARS
Loomis Sayles .................................. 13.71 8.61 NA
Lipper ......................................... 8.09 6.43
Rank ........................................... 1 of 34 5 of 44
Percentile ..................................... 1 11
MODIFIED INCEPTION(3)
Loomis Sayles .................................. 14.27 10.34 7.56
Lipper ......................................... 9.28 7.51 9.70
Rank ........................................... 1 of 29 2 of 30 150 of 171
Percentile ..................................... 1 7 88
ACTUAL INCEPTION(4)
Loomis Sayles .................................. 14.07 10.24 8.96
</TABLE>
Note: Past performance is not indicative of future performance.
(1) Total return assumes reinvestment of dividends and capital gains
distributions. Total return shown for periods of one year or less
represents cumulative total return. Total return for periods greater than
one year represents average annual total return. Total return shown (other
than 1 and 3 year periods for the Growth, Core Value, Small Cap Value and
Bond Funds, and the 1 year period for the International Equity Fund)
reflect the effect of fee waivers and/or expense reimbursements. Absent
such fee waivers and/or expense reimbursements, total return would have
been lower.
(2) Lipper category total return represents the average total return for all
funds in each Fund's corresponding investment category, as determined by
Lipper Analytical Services. Rankings are based on the total return of each
fund for the period from its modified inception relative to the total
return of all funds in that Fund's corresponding investment category.*
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LOOMIS SAYLES FIXED INCOME FUNDS
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Intermediate Investment
Maturity Grade Municipal Short-Term U.S. Gov't
Bond Bond Bond Bond Securities
- ------------------- ------------- ------------ ------------- -------------
3.40 5.99 3.06 2.89 2.65
2.74 3.16 2.95 2.73 2.47
21 of 195 1 of 129 84 of 238 28 of 107 74 of 187
11 1 35 26 40
NA NA 8.11 6.71 9.10
7.81 6.28 7.01
83 of 226 22 of 99 5 of 177
37 22 3
NA NA 7.07 6.70 9.18
7.10 6.19 7.07
90 of 176 13 of 70 4 of 130
51 19 3
NA NA 6.56 NA 8.41
6.51 5.98
45 of 107 2 of 77
42 3
3.40 5.99 7.40 5.62 9.48
2.74 3.16 7.32 5.18 6.99
21 of 195 1 of 129 41 of 98 8 of 36 1 of 66
11 1 42 22 1
3.40 5.99 7.40 5.63 9.48
(3) Periods over one year are annualized. Modified inception reflects the
nearest Lipper reporting period following actual inception. Lipper
performance is reported as of month end.
(4) Actual Inception Dates:
Bond Fund .......................................... May 16, 1991
Global Bond Fund ................................... May 10, 1991
High Yield Fund .............................. September 11, 1996
Intermediate Maturity Bond Fund ................. January 2, 1997
Investment Grade Bond Fund ...................... January 2, 1997
Municipal Bond Fund ................................ May 29, 1991
Short-Term Bond Fund ............................. August 3, 1992
U.S. Government Securities Fund .................... May 21, 1991
*Source: Lipper Analytical Services
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LOOMIS SAYLES BOND FUND
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[Photo of Daniel J. Fuss]
DANIEL J. FUSS
PERFORMANCE SUMMARY
The Loomis Sayles Bond Fund performed well for the six month period ending June
30, 1997. The Fund's 5.59% return comfortably exceeded the return of most broad
domestic fixed income benchmarks, including the 2.74% return of the Lehman
Brothers Government/Corporate Bond Index. The Fund benefited from investments in
the period's strongest performing areas: high yield bonds, convertible issues
and emerging market and Yankee issues. Duration was a neutral factor on
performance, as yields climbed through the first quarter on very robust economic
news and descended towards the end of the period as inflation remained tame and
economic growth began to show signs of slowing.
PERIOD ENDED LOOMIS LIPPER LEHMAN
- ------------ ------ ------ -------
5/31/91 10.00 10.00 10.00
6/30/91 9.85 9.97 9.99
9/30/91 10.52 10.55 10.56
12/31/91 10.93 11.14 11.13
3/31/92 11.29 11.03 10.96
6/30/92 11.84 11.47 11.40
9/30/92 12.40 12.04 11.96
12/31/92 12.49 12.04 11.97
3/31/93 13.45 12.67 12.53
6/30/93 14.16 13.08 12.90
9/30/93 14.79 13.55 13.33
12/31/93 15.27 13.58 13.29
3/31/94 15.04 13.13 12.88
6/30/94 14.61 12.88 12.72
9/30/94 14.87 12.98 12.78
12/31/94 14.65 12.96 12.83
3/31/95 15.73 13.58 13.46
6/30/95 17.41 14.53 14.34
9/30/95 18.16 14.88 14.61
12/31/95 19.33 15.58 15.29
3/31/96 19.14 15.26 14.94
6/30/96 19.45 15.33 15.01
9/30/96 20.21 15.66 15.27
12/31/96 21.32 16.22 15.74
3/31/97 21.27 16.10 15.60
6/30/97 22.51 16.75 16.17
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles Bond Fund is May 16, 1991. Since Lipper
performance data is not available coincident with this date, comparative
performance is presented from May 31, 1991.
(b): Source: Lipper Analytical Services
(c): Lehman Brothers Goverment/Corporate Bond Index is a composite of
approximately 5,300 corporate and government issues with at least $100
million outstanding for government issues and $25 million for corporates,
and greater than 1 year maturity. The index returns have not been lowered
for ongoing management and operating expenses applicable to mutual fund
investments.
<PAGE>
MARKET ENVIRONMENT
The U.S. bond market experienced a weak first quarter, but recovered in the
second quarter. The strong growth that had prompted the Federal Reserve to raise
the Federal Funds Rate from 5.25% to 5.50% in March seemed to cool during the
second quarter and inflation remained benign.
Both bonds and stocks are posting strong gains as we head into the second half
of the year. The main driver of the markets continues to be positive liquidity
flows. Most of the liquidity is finding its way into equities, however, demand
for higher yielding fixed income securities is strong and high yield, emerging
market and convertible bonds continue to outperform the broader market. Most
investors are willing to assume credit risk, which is reflected in narrow
spreads relative to Treasuries. The risk for corporates is that spreads will
widen from these rich levels. Issue selection is extremely important in an
environment where stronger credit issues outperform.
PORTFOLIO CHARACTERISTICS
Throughout the first half of the year, there has been little in the way of major
portfolio shifts but rather a "management of inventory" for the Fund. We have
focused our efforts on analyzing both new and existing issues to identify
opportunities and assess the relative value of individual bonds. The portfolio
remains biased toward longer corporate issues, which have performed particularly
well in the second quarter. The Fund ended the quarter with less than 30% in
high yield bonds, down slightly from the limit of 35% due to the overall
richness of this sector.
There is a fair degree of foreign diversification in the Fund, with 15.8% of the
Fund invested in Canada and 3.6% invested in New Zealand. We have also taken a
relatively small position in the South African Rand. We have maintained
positions in several U.S. dollar denominated securities of emerging market
countries, such as Argentina, Brazil, and Thailand.
PORTFOLIO POSITION
We believe the portfolio is well-positioned for total return with good yield
advantage, call protection, and a modest amount of foreign diversification. Our
emphasis continues to be on the credit fundamentals for both new and existing
individual bonds. On balance, we continue to try to exploit pricing
inefficiencies at the security level rather than attempting to anticipate the
direction of interest rates.
/s/ Daniel J. Fuss
Daniel J. Fuss
<PAGE>
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LOOMIS SAYLES GLOBAL BOND FUND
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[Photo of E. John deBeer]
E. JOHN DEBEER
PERFORMANCE SUMMARY
The Loomis Sayles Global Bond Fund produced healthy investment results for the
first six months of the year. The Fund's 3.56% return outdistanced the Salomon
Brothers World Government Bond Index's -1.23% return and the Lipper World Income
Fund average of 0.89%.
MARKET ENVIRONMENT
The market for global bonds was basically neutral for the first half of the
year, with most bond markets performing fairly well. While the yen rallied
against the U.S. dollar, the Deutsche Mark continued to decline to new lows.
PERIOD ENDED LOOMIS LIPPER SB WORLD
- ------------ ------ ------ --------
5/31/91 10.00 10.00 10.00
6/30/91 9.56 9.83 9.90
9/30/91 10.53 10.45 10.71
12/31/91 11.69 10.94 11.56
3/31/92 11.11 10.75 11.17
6/30/92 12.04 11.22 11.92
9/30/92 11.85 11.36 12.66
12/31/92 11.79 11.33 12.20
3/31/93 12.36 11.86 12.85
6/30/93 12.39 12.29 13.22
9/30/93 13.19 12.72 13.95
12/31/93 13.51 13.09 13.82
3/31/94 13.01 12.41 13.82
6/30/94 12.19 12.12 13.91
9/30/94 12.16 12.25 14.07
12/31/94 12.33 12.15 14.14
3/31/95 11.97 12.66 15.69
6/30/95 13.11 13.38 16.52
9/30/95 14.18 13.66 16.35
12/31/95 15.28 14.31 16.83
3/31/96 15.40 14.23 16.52
6/30/96 16.15 14.54 16.58
9/30/96 16.79 15.10 17.04
12/31/96 17.57 15.77 17.44
3/31/97 17.49 15.45 16.72
6/30/97 18.20 15.91 17.23
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles Global Bond Fund is May 10, 1991.
Since Lipper and Salomon Brothers World Government Bond Index performance
data is not available coincident with this date, comparative performance is
presented from May 31, 1991.
(b): Source: Lipper Analytical Services
(c): Salomon Brothers World Government Bond Index is a capitalization-weighted
index which tracks the performance of 14 government bond markets. The index
returns have not been reduced for ongoing management and operating expenses
applicable to mutual fund investments.
Much of the activity during the period came from European Monetary Union (EMU)
related events. The Socialists' election victory in France was a big
surprise--and the market's reaction was equally unexpected. Instead of causing
increased volatility in various European bond markets, the steadfast
pronouncements of "everything's on track" by German Chancellor Helmut Kohl and
French Prime Minister Lionel Jospin had a calming effect. Although most
investors agree that the new Euro will be less of a hard currency than the
Deutsche Mark, the U.S. dollar/Deutsche Mark exchange rate has changed very
little. The market tone is one of resigned confusion, possibly due to the U.S.
dollar's topping out after a long upswing.
PORTFOLIO CHARACTERISTICS
Performance during the first half of the year was aided by commitments to
European countries, such as Italy, where weak bond markets improved due to the
upcoming European Monetary Union. However, we believe this trend is almost over
and have nearly eliminated these types of positions from the Fund. Our emerging
market commitments, which include countries such as Argentina, also helped
performance and we continue to maintain approximately 20% of the Fund's assets
invested in these countries. Finally, the strong U.S. dollar hurt the Fund's
performance in Europe and Japan, which together comprise 60% of the world
market. However, our hedging strategy kept the Fund's actual exposure to Europe
and Japan to a much smaller 15-20% of the portfolio.
PORTFOLIO POSITIONING
The Global Bond Fund remains well diversified in an effort to minimize overall
volatility. About one-third of the portfolio is invested in Europe. The Fund's
largest commitment, 23.5% of total assets, is in Germany for two reasons. First,
it appears that the currency markets have already discounted a soft Euro, which
would absorb the harder Deutsche Mark. Second, if the strain of meeting the
Maastricht criteria, which calls for debt levels of less than 3% of Gross
Domestic Product, causes the shaky EMU coalition to disintegrate, the Deutsche
Mark should become very strong.
Another third of the portfolio is invested in Asia, where we expect currencies
to strengthen in Australia and New Zealand. We believe U.S. dollar denominated
convertibles may offer opportunities and have taken action to benefit should
they develop. The remainder of the portfolio is invested in the U.S., South
Africa and Canada.
/s/ E. John deBeer
E. John deBeer
<PAGE>
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LOOMIS SAYLES HIGH YIELD FUND
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[Photo of Daniel J. Fuss] [Photo of Kathleen C. Gaffney]
DANIEL J. FUSS KATHLEEN C. GAFFNEY
PERFORMANCE SUMMARY
The Loomis Sayles High Yield Fund kept pace with the market for the six-month
period ending June 30, 1997, earning a 5.74% return versus the Merrill Lynch
High Yield Master Index return of 5.84%. After a slow start, some of the
securities within the portfolio experienced good price movement in the second
quarter. For the first six months of 1997, the high yield sector enjoyed some of
the best returns, with emerging market debt and convertible bonds also
positively contributing to the Fund's performance.
PERIOD ENDED LOOMIS LIPPER ML
- ------------ ------ ------ --------
9/30/96 10.00 10.00 10.00
12/31/96 10.17 10.33 10.39
3/31/97 10.15 10.37 10.50
6/30/97 10.76 10.92 11.00
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles High Yield Fund is September 11, 1996.
Since Lipper performance data is not available coincident with this date,
comparative performance is presented from September 30, 1996.
(b): Source: Lipper Analytical Services
(c): Merrill Lynch High Yield Master Index consists of fixed-rate,
coupon-bearing bonds with an outstanding par which is greater than or equal
to $50 million, a maturity range greater than or equal to one year and must
be less than BBB/Baa3 rated but not in default.
MARKET ENVIRONMENT
The U.S. bond market experienced a weak first quarter, but recovered in the
second quarter. The strong growth that had prompted the Federal Reserve to raise
the Fed Funds Rate from 5.25% to 5.50% in March seemed to cool during the second
quarter and inflation remained benign.
Both bonds and stocks are posting strong gains as we head into the second half
of the year. The main driver of the markets continues to be positive liquidity
flows. Most of the liquidity is finding its way into equities, however, demand
for higher yielding fixed income securities is strong and high yield, emerging
market and convertible bonds continue to outperform the broader market. Most
investors are willing to assume some credit risk, which is reflected in narrow
spreads relative to Treasuries. The risk for corporate bonds is that spreads
will widen from these rich levels. Issue selection is extremely important in an
environment where stronger credit issues outperform.
PORTFOLIO CHARACTERISTICS
The bond market reacted favorably to the Federal Reserve's decision to keep
interest rates level. We continue to seek attractive corporate securities, and
have identified considerable value in the Yankee sector. In fact, Yankees now
represent approximately 25% of the Fund. Latin America continues to benefit from
sound economic policies and increased accessibility to foreign investors, while
Asian economies seem likely to overcome their current growing pains. The Fund
also has positions in the cable and telecom sectors, which lagged the market
earlier this year, but still offer long-term value. We believe Microsoft's
investment in Comcast was a clear sign of the value and potential returns in
information technology. Prices in this sector snapped back quite nicely in the
second quarter.
PORTFOLIO POSITION
While the Fund has been open a relatively short time, we believe it is
well-positioned for the current environment, offering good yield advantage, call
protection and issue diversification. The majority of the Fund's holdings are
now evenly distributed between issues rated B and BB. Opportunities for
enhancing returns will come from using our research expertise to identify
improving credit trends. The Fund's holdings will react more to the market's
perception of their underlying credit as opposed to changes in interest rates.
/s/ Daniel J. Fuss] /s/ Kathleen C. Gaffney]
Daniel J. Fuss Kathleen C. Gaffney
<PAGE>
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LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
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[Photo of Anthony J. Wilkins]
ANTHONY J. WILKINS
PERFORMANCE SUMMARY
The U.S. bond market had a weak first quarter, but bounced back in the second
quarter. The strong growth that had prompted the Federal Reserve to raise the
Fed Funds Rate by 0.25% in March seemed to cool during the second quarter and
inflation remained benign. The Loomis Sayles Intermediate Maturity Bond Fund
performed well in this environment, returning 3.50% in the second quarter and
3.40% for the first six months versus the Lehman Brothers Intermediate Aggregate
Bond Index's 3.25% and 3.23%, respectively.
MARKET SUMMARY
The bond market has been volatile this year. Mildly negative returns in the
first quarter were offset by strong returns in the second. In general, bond
yields mirrored the pace of business activity and the resulting expectations for
Federal Reserve activity. In early 1997, the economy experienced a strong
upswing, resulting in a drop in bond prices due to fears of inflation. The Fed
tamed a seemingly overheating economy by raising the Federal Funds Rate from
5.25% to 5.50% in late March, and Treasury prices dropped across all maturities.
The Fed's action had the greatest impact on the intermediate maturities. The
three year Treasury yield fared the worst, climbing 0.55% during March, to end
the first quarter at 6.56%. During the second quarter, the economy slowed.
Accordingly, bond prices reversed course and recovered much of the value lost
during the first quarter. A drop in interest rates and a weaker economy produced
strong performance numbers across the board for the second quarter.
FUND CHARACTERISTICS
The Intermediate Maturity Bond Fund has been in operation since January 2, 1997.
Although the dynamics of building a portfolio typically put a damper on
performance, the Fund has managed to outperform its benchmark since inception.
Issue selection has been a key driver for the Fund's strong performance. Lower
quality, higher yielding instruments have displayed strong performance
year-to-date. The Fund was well-positioned to benefit from the prevailing market
conditions, finishing the quarter with 57.1% of its assets invested in BBB
securities. Sector allocation was also a catalyst for performance on a
year-to-date basis. Mortgages, Yankees and cable/telecom securities all
outperformed the market. Although cable and telecom lagged the market in early
1997, this sector came roaring back in the second quarter. We believe
Microsoft's investment in Comcast Cable during June was a clear signal of the
value and potential returns in information technology. Not only did this
announcement greatly enhance Comcast's financial flexibility, but it also sent a
positive tremor through the entire sector and boosted prices on all of the
portfolio's cable and telecom holdings. With 14.5% invested in this sector as of
June 30, the Fund was positioned nicely to ride the recovery.
PORTFOLIO POSITION
Our investment goal is to maximize total return within the confines of the
intermediate maturity spectrum. The portfolio continues to offer good yield
advantage, call protection and diversification. There is a degree of foreign
exposure and a continuing focus on credit and issue specific factors, which
lowers the sensitivity of the portfolio to general market movements.
/s/ Anthony J. Wilkins
Anthony J. Wilkins
<PAGE>
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LOOMIS SAYLES INVESTMENT GRADE BOND FUND
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[Photo of Daniel J. Fuss]
DANIEL J. FUSS
PERFORMANCE SUMMARY
The U.S. bond market rebounded from a weak first quarter, as a small drop in
interest rates and a weaker than expected economy produced strong performance
numbers across the board during the second quarter. The Loomis Sayles Investment
Grade Bond Fund posted a 5.99% return for the first six months of the year,
significantly outperforming the 2.74% return of the Lehman Brothers
Government/Corporate Bond Index.
MARKET SUMMARY
The bond market has had a volatile year thus far. Mildly negative returns in the
first quarter were more than offset by strong gains in the second. In general,
bond yields mirrored the pace of business activity. In early 1997, the economy
experienced a strong upswing, resulting in a drop in bond prices due to fears of
inflation. The Federal Reserve tamed a seemingly overheating economy by raising
the Federal Funds Rate from 5.25% to 5.50% in late March, and Treasury prices
dropped across all maturities. A faltering stock market and fears of further
tightening spilled into the second quarter. However, May brought news of a
softer economy. Fears of inflation subsided and the stock market roared toward
record breaking highs. Accordingly, bond yields reversed course and recovered
much of the value lost during the first three months of the year. A drop in
interest rates and a weaker than expected economy produced strong performance
numbers across the board for the second quarter.
CHARACTERISTICS
Although both stocks and bonds sold off considerably during March, the
subsequent recovery of the markets drove performance for the Investment Grade
Bond Fund. The non-market related features of the Fund have proven beneficial in
an uncertain interest rate environment. As of June 30, the Fund held
approximately 30% in international issues including 17% in Canada. To further
diversify our assets we increased our exposure in Japan and initiated a new
position in Brazil in late June. We view Brazil as an upgrade candidate and hope
to reap incremental yield advantage and long-term price appreciation as the
Brazilian economy continues to improve. The Fund's international investments are
focused primarily in Australia, Brazil, Japan, New Zealand, South Korea, South
Africa, Poland, Thailand and Canada.
A strong stock market, buoyed by positive first quarter earnings and mixed
economic news, drove prices on convertible securities during the first half of
the year, especially during the second quarter. Our allocation to the
convertible market has positively affected performance, and as of June 30, the
Fund held approximately 11.9% in convertible securities.
PORTFOLIO POSITION
The economic backdrop has not changed significantly since late March. We
continue to invest in securities whose performance is not significantly affected
by interest rate changes. There is a degree of foreign exposure and a focus on
credit and issue specific factors that serve as a buffer to general market
movements. Maintaining this diversity is essential as we continue to search for
discounted, longer maturity issues.
/s/ Daniel J. Fuss
Daniel J. Fuss
<PAGE>
- --------------------------------------------------------------------------------
LOOMIS SAYLES MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
[Photo of Martha F. Hodgman]
MARTHA F. HODGMAN
PERFORMANCE SUMMARY
The Loomis Sayles Municipal Bond Fund posted strong returns for the first half
of 1997. The Fund's 3.06% return through June 30, 1997 compared favorably to the
Lipper Analytical Services General Municipal Bond Fund average return of 2.95%.
MARKET ENVIRONMENT
Activity in the fixed income markets during the first half of 1997 see-sawed as
investors' opinions on the strength of the economy shifted. During the first
quarter, momentum from 1996 appeared to be continuing to such an extent that the
Federal Reserve raised the Federal Funds Rate from 5.25% to 5.50% when it met in
late March. As April, May and June progressed, the economy appeared to be losing
some steam, inflation fears subsided and the fixed income markets rallied.
PERIOD ENDED LOOMIS LIPPER LEHMAN
- ------------ ------ ------ -------
5/31/91 10.00 10.00 10.00
6/30/91 10.01 9.97 9.99
9/30/91 10.42 10.37 10.38
12/31/91 10.78 10.73 10.73
3/31/92 10.78 10.74 10.76
6/30/92 11.24 11.20 11.17
9/30/92 11.54 11.45 11.46
12/31/92 11.79 11.68 11.67
3/31/93 12.18 12.15 12.11
6/30/93 12.63 12.56 12.50
9/30/93 13.07 12.99 12.92
12/31/93 13.15 13.13 13.11
3/31/94 12.42 12.41 12.39
6/30/94 12.58 12.48 12.52
9/30/94 12.61 12.54 12.61
12/31/94 12.44 12.34 12.43
3/31/95 13.26 13.22 13.31
6/30/95 13.50 13.49 13.63
9/30/95 13.83 13.82 14.02
12/31/95 14.50 14.48 14.60
3/31/96 14.23 14.22 14.42
6/30/96 14.28 14.30 14.53
9/30/96 14.60 14.62 14.87
12/31/96 14.98 14.96 15.24
3/31/97 14.90 14.89 15.21
6/30/97 15.44 15.40 15.73
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles Municipal Bond Fund is May 29, 1991.
Since Lipper and Lehman Brothers Municipal Bond Index performance data is
not available coincident with this date, comparative performance is
presented from May 31, 1991.
(b): Source: Lipper Analytical Services
(c): Lehman Brothers Municipal Bond Index is computed from prices on
approximately 21,000 bonds consisting of roughly 30% revenue bonds, 30%
government obligations bonds, 27% insured and 13% prerefunded bonds. The
index returns have not been reduced for ongoing management and operating
expenses applicable to mutual fund investments.
Municipal bond returns, which are influenced by the general trends in interest
rates, were largely unchanged for the first quarter and rallied smartly during
the second. During May and early June, there was additional pressure from strong
demand driven by the anticipation of large coupon and redemption proceeds to be
received in June and July. Through the end of May, the supply of new issues had
been somewhat low, so strong demand met limited supply and helped fuel the
rally. As interest rates declined, however, supply increased as more issuers
came to market to take advantage of the lower rates.
PORTFOLIO CHARACTERISTICS
Our positions in California bonds positively affected performance. There has
been strong demand for California securities this year because new issuance has
been restrained due to uncertainties raised by Proposition 218, which addresses
voter approval for new bond issues. Our discount holdings contributed positively
to the Fund's performance during the second quarter rally.
PORTFOLIO POSITIONING
As the first half of the year closes, the Fund is well-structured, with good
current income and call protection. Finding extraordinary values in the
municipal market has been a bit of a challenge this year, as over 50% of new
issues come to market with insurance. We continue to scour the secondary market
looking for out-of-favor bonds, such as student loan bonds, which may offer
opportunities to add value to the portfolio.
/s/ Martha F. Hodgman
Martha F. Hodgman
<PAGE>
- -------------------------------------------------------------------------------
LOOMIS SAYLES SHORT-TERM BOND FUND
- -------------------------------------------------------------------------------
[Photo of John Hyll]
JOHN HYLL
PERFORMANCE SUMMARY
For the first six months of 1997, the Loomis Sayles Short-Term Bond Fund
provided a total return of 2.89%, while the Lehman Brothers 1-3 year Government
Bond Index returned 2.90%.
MARKET ENVIRONMENT
The first half of 1997 was not a very positive environment for bond holders. The
bond market deteriorated during the first quarter, as investors expected the
Federal Reserve to begin a new tightening program. On March 25th the Fed raised
the Federal Funds Rate from 5.25% to 5.50%. The bond market braced for another
round of tightening. However, during the second quarter the economy slowed,
inflation pressures subsided and the market rallied.
PERIOD ENDED LOOMIS LIPPER LEHMAN
- ------------ ------ ------ -------
8/31/92 10.00 10.00 10.00
10/31/92 9.92 9.94 9.94
11/30/92 9.98 9.96 9.93
12/31/92 9.95 10.03 10.02
3/31/93 10.26 10.31 10.24
6/30/93 10.40 10.47 10.35
9/30/93 10.55 10.66 10.49
12/31/93 10.63 10.79 10.56
3/31/94 10.59 10.72 10.51
6/30/94 10.61 10.70 10.51
9/30/94 10.77 10.80 10.61
12/31/94 10.82 10.78 10.61
3/31/95 11.18 11.07 10.97
6/30/95 11.52 11.44 11.31
9/30/95 11.68 11.61 11.48
12/31/95 11.97 11.90 11.77
3/31/96 11.99 11.94 11.81
6/30/96 12.08 12.06 11.93
9/30/96 12.23 12.26 12.13
12/31/96 12.53 12.49 12.36
3/31/97 12.58 12.57 12.44
6/30/97 12.89 12.84 12.72
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles Short-Term Bond Fund is August 3, 1992.
Since Lipper performance data is not available coincident with this date,
comparative performance is presented from August 31, 1992.
(b): Source: Lipper Analytical Services
(c): The Lehman Brothers 1-3 Year Gov't Bond Index consists of fixed rate debt
issues rated investment grade or higher. All issues have at least one year
to three years to maturity and an outstanding par value of at least $100
million for U.S. Gov't issues. The Government Bond Index includes issues of
the U.S. Gov't or any agency thereof. The index returns have not been
reduced for ongoing management and operating expenses applicable to mutual
fund investments.
PORTFOLIO CHARACTERISTICS
Throughout the first half of the year, with the exception of March, corporate
yield spreads narrowed significantly. The narrowing of yield spreads,
particularly within the lower rated credit issues, positively affected
performance due to the Fund's 80% investment in corporate bonds. For the first
half of the year, the Fund's average asset weighted maturity was approximately
0.75 years longer than its benchmark, the Lehman Brothers 1-3 year Government
Bond Index. This longer average asset weighted maturity did not enhance
performance versus the benchmark over the first six months of the year.
PORTFOLIO POSITION
As of June 30, 1997, the Fund is positioned with 80.0% in corporates, 10.6% in
mortgages and 9.4% in U.S. Treasuries. The asset weighted average maturity is
2.8 years, which is towards the longer end of its maturity range of one to three
years. Economic fundamentals continue to favor moderate economic growth with low
inflationary pressures. This environment tends to favor the higher yielding
sectors, such as corporate bonds and mortgages, and we have positioned the Fund
accordingly. We have maintained a longer overall average maturity due to low
inflation expectations and increased opportunities for generating capital gains.
/s/ John Hyll
John Hyll
<PAGE>
- --------------------------------------------------------------------------------
LOOMIS SAYLES U.S. GOVERNMENT
SECURITIES FUND
- --------------------------------------------------------------------------------
[Photo of Kent P. Newmark]
KENT P. NEWMARK
PERFORMANCE
The Loomis Sayles U.S. Government Securities Fund fared well relative to similar
funds in the first half of 1997, returning 2.65% versus the Lipper Average
General U.S. Government Bond Fund's 2.47% return and the Lehman Brothers
Government A Bond Index's 2.63% return.
MARKET ENVIRONMENT
Interest rates were quite volatile during the first six months of the year with
the 30-year Treasury yield beginning the year at 6.7%, rising to 7.2% in early
April and closing the second quarter at 6.8%. The first quarter was a poor one
for most bond
PERIOD ENDED LOOMIS LIPPER LEHMAN
- ------------ ------ ------ -------
5/31/91 10.00 10.00 10.00
6/30/91 9.97 9.97 9.99
9/30/91 10.69 10.54 10.56
12/31/91 11.49 11.07 11.12
3/31/92 11.11 10.88 10.93
6/30/92 11.59 11.27 11.36
9/30/92 12.40 11.72 11.92
12/31/92 12.50 11.75 11.92
3/31/93 13.22 12.16 12.46
6/30/93 13.83 12.47 12.82
9/30/93 14.60 12.77 13.24
12/31/93 14.47 12.73 13.20
3/31/94 13.71 12.33 12.80
6/30/94 13.33 12.09 12.65
9/30/94 13.32 12.11 12.71
12/31/94 13.56 12.12 12.75
3/31/95 14.33 12.67 13.35
6/30/95 15.37 13.37 14.18
9/30/95 15.84 13.61 14.43
12/31/95 16.68 14.18 15.09
3/31/96 15.90 13.84 14.75
6/30/96 15.91 13.85 14.82
9/30/96 16.19 14.07 15.07
12/31/96 16.90 14.46 15.51
3/31/97 16.49 14.34 15.38
6/30/97 17.35 14.84 15.91
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles U.S. Government Securities Fund is May
21, 1991.
Since Lipper and Lehman Brothers Government A Bond Index performance data
is not available coincident with this date, comparative performance is
presented from May 31, 1991.
(b): Source: Lipper Analytical Services
(c): Lehman Brothers Government A Bond Index is composed of all publicly issued,
nonconvertible, domestic debt of the U.S. government or any of its
agencies, quasi-federal corporations, or corporate debt guaranteed by the
U.S. government. The index returns have not been reduced for ongoing
management and operating expenses applicable to mutual fund investments.
investors, as strong economic indicators suggested tight monetary policy. While
not reflected in the inflation numbers, Gross Domestic Product growth caused the
Federal Reserve to raise the Federal Funds Rate from 5.25% to 5.50% on March
25th. Further tightening was expected, however second quarter economic releases
showed a less ebullient economy and interest rates began falling. By June 30,
optimism was widespread as yields on Treasuries were about to drop below year
end 1996 levels.
PORTFOLIO CHARACTERISTICS
The Fund maintained a duration of seven to ten years and was at its outer
boundary when long term rates approached 7.25%, resulting in positive
performance as yields fell in the second quarter. The portfolio invests
exclusively in government securities and held five issues on June 30, resembling
more of a bar bell than a laddered approach. Emphasis was on call protection,
with 78% of the portfolio's assets invested in non-callable issues. We shortened
duration somewhat in the second quarter, selling into market strength, and ended
the period with an effective duration of 8.4 years.
PORTFOLIO POSITIONING
The portfolio expects to continue its long duration bias in the second half of
the year. We expect inflation to finish the year at about 2.6%, with a possible
tobacco settlement adding a few tenths of a percent to the Consumer Price Index
in 1998. During the June rally, the mortgage sector lagged the market as
interest rates sharply declined. Should a stable interest rate environment
develop, which is more favorable for mortgages, we would consider adding them to
the portfolio. We expect long-term Treasury yields to range between 6.38% and
6.88% over the next six months.
/s Kent P. Newmark
Kent P. Newmark
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES BOND FUND
Investments -- as of June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------
Bonds And Notes -- 90.6% of Total Net Assets
<S> <C> <C>
NON-CONVERTIBLE BONDS -- 78.5 %
Aerospace -- 0.3 %
Rohr Industries, Inc., 9.250%, 3/01/17 ................... $ 2,450,000 $ 2,370,375
------------
Airlines -- 0.3 %
NWA Trust, 9.360%, 3/10/06 ............................... 795,600 856,623
United Airlines Pass Thru, 7.870%, 1/30/19 ............... 2,350,000 2,302,741
------------
3,159,364
------------
Banking & Finance -- 0.8 %
First Union Institutional Trust, 7.850%, 1/01/27 ......... 2,000,000 1,954,540
First Union Institutional Trust, 8.040%, 12/01/26 ........ 5,000,000 4,971,510
------------
6,926,050
------------
Broadcasting -- 0.1 %
CBS, Inc., 7.125%, 11/01/23 .............................. 1,000,000 862,620
------------
Canadian -- 15.6 %
Canadian Government, Zero Coupon Bond, 6/01/21 (b) ....... 115,650,000 16,030,278
Canadian Government, Zero Coupon Bond, 6/01/22 (b) ....... 11,050,000 1,421,052
Canadian Government, 8.000%, 6/01/23 (b) ................. 29,600,000 24,329,942
International Semi-Tech Corp., Zero Coupon Bond,
8/15/03 (c) ............................................ 1,500,000 892,500
Ontario Hydro, 8.900%, 8/18/22 (b) ....................... 19,440,000 17,086,801
Province of British Columbia, Zero Coupon Bond,
8/23/13 (b) ............................................ 33,000,000 7,604,447
Province of British Columbia, Zero Coupon Bond,
6/09/14 (b) ............................................ 10,000,000 2,171,126
Province of British Columbia, Zero Coupon Bond,
9/05/20 (b) ............................................ 43,228,000 5,991,845
Province of British Columbia, Zero Coupon Bond,
6/09/22 (b) ............................................ 37,807,000 4,649,041
Province of British Columbia, Zero Coupon Bond,
8/19/22 (b) ............................................ 19,500,000 2,373,864
Province of British Columbia, Zero Coupon Bond,
8/23/24 (b) ............................................ 99,500,000 10,505,920
Province of British Columbia, 7.875%, 11/30/23 (b) ....... 1,250,000 981,619
Province of British Columbia, 8.000%, 9/08/23 (b) ........ 7,000,000 5,636,297
Province of Manitoba, Zero Coupon Bond, 7/22/13 (b) ...... 2,500,000 571,206
Province of Manitoba, Zero Coupon Bond, 3/05/31 (b) ...... 34,600,000 2,322,536
Province of Manitoba, 7.750%, 12/22/25 (b) ............... 29,320,000 23,190,350
Province of Ontario, Zero Coupon Bond, 7/13/22 (b) ....... 13,000,000 1,590,108
Province of Saskatchewan, Zero Coupon Bond, 5/30/25 (b) 7,055,000 706,598
Province of Saskatchewan, 8.750%, 5/30/25 (b) ............ 6,435,000 5,610,844
Rogers Cablesystems Ltd., 9.650%, 1/15/14 (b) ............ 6,150,000 4,498,316
------------
138,164,690
------------
Communications -- 3.0 %
Arch Communications Group, Inc., Zero Coupon Bond,
3/15/08 (c) ............................................ 12,210,000 6,471,300
Comcast Cable Communications, 8.875%, 5/01/17 (d) ........ 10,000,000 10,900,100
US West Capital Funding, Inc., 7.900%, 2/01/27 ........... 9,035,000 9,127,157
------------
26,498,557
------------
Computer -- 2.9 %
Apple Computer, Inc., 6.500%, 2/15/04 .................... 12,075,000 10,143,000
Digital Equipment Corp., 7.750%, 4/01/23 ................. 4,250,000 3,833,330
Seagate Technology, Inc., 7.875%, 3/01/17 ................ 10,000,000 9,994,500
Unisys Corp., 9.750%, 9/15/16 ............................ 2,200,000 2,167,000
------------
26,137,830
------------
Electronics -- 2.5 %
Pioneer Standard Electronics, Inc., 8.500%, 8/01/06 ...... 3,000,000 3,108,750
Westinghouse Electric Corp., 7.875%, 9/01/23 ............. 20,350,000 18,859,566
------------
21,968,316
------------
Entertainment -- 3.5 %
Time Warner Entertainment Co., 8.050%, 1/15/16 ........... 7,825,000 7,930,090
Time Warner Entertainment Co., 8.375%, 3/15/23 ........... 21,200,000 21,772,188
Time Warner Entertainment Co., 9.150%, 2/01/23 ........... 1,000,000 1,104,490
------------
30,806,768
------------
Environmental Services -- 0.4 %
Envirotest Systems Corp., 9.625%, 4/01/03 ................ 4,000,000 3,520,000
------------
Food & Beverage -- 0.6 %
Borden, Inc., 7.875%, 2/15/23 ............................ 5,500,000 4,995,595
------------
Foreign Government/Agency -- 11.4 %
BCO Central Costa Rica, 6.250%, 5/21/10 .................. 3,200,000 2,720,000
Escom, 11.000%, 6/01/08 (e) .............................. 26,500,000 4,712,863
Government of New Zealand, 8.000%, 11/15/06 (f) .......... 16,220,000 11,816,735
Government of Poland, 4.000%, 10/27/14 (c) ............... 8,500,000 7,256,875
Government of Poland, 4.000%, 10/27/14 (c) ............... 500,000 426,875
Petroleos Mexicanos, Medium Term, 8.625%, 12/01/23 (d) 1,550,000 1,356,250
Republic of Argentina, 5.500%, 3/31/23 (c) ............... 26,375,000 18,264,688
Republic of Argentina, 6.750%, 3/31/05 (l) ............... 1,139,985 1,070,879
Republic of Argentina, 11.375%, 1/30/17 .................. 860,000 965,780
Republic of Brazil, 10.125%, 5/15/27 ..................... 38,781,000 37,326,712
Republic of Ireland, 8.250%, 8/18/15 (g) ................. 2,100,000 3,646,032
Republic of South Africa, 12.000%, 2/28/05 (e) ........... 19,000,000 3,735,492
Republic of South Africa, 12.500%, 12/21/06 (e) .......... 16,500,000 3,272,778
Republic of South Africa, 13.500%, 9/15/15 (e) ........... 14,850,000 3,071,013
United Mexican States, 6.250%, 12/31/19 .................. 1,000,000 772,500
------------
100,415,472
------------
Foreign Issuer -- 2.9 %
Acindar Industria Arg de Acero, 11.250%, 2/15/04 ......... 825,000 870,375
Bangkok Bank Public Co. Ltd., 8.375%, 1/15/27 (d) ........ 18,075,000 17,282,953
Geberit International SA, 10.125%, 4/16/07 (d) (h) ....... 1,750,000 1,083,871
PTC International Finance, Zero Coupon Bond,
7/01/07 (c) (d) ........................................ 1,125,000 683,438
SKF, Zero Coupon Bond, 7/26/02 (m) ....................... 2,000,000 1,472,768
TFM SA de CV, Zero Coupon Bond, 6/15/09 (c) (d) .......... 7,000,000 4,025,000
------------
25,418,405
------------
Government Agencies -- 2.7 %
Federal National Mortgage Association, 5.000%, 9/25/22 ... 1,000,000 888,750
Federal National Mortgage Association, 6.000%, 11/25/08 .. 3,624,855 3,221,590
Federal National Mortgage Association, 7.250%, 6/20/02 (f) 29,350,000 20,193,854
------------
24,304,194
------------
Home Builders -- 0.4 %
Hovnanian Enterprises, 9.750%, 6/01/05 ................... 2,350,000 2,303,000
Pulte Corp., 7.300%, 10/24/05 ............................ 1,000,000 975,110
------------
3,278,110
------------
Hotels & Restaurants -- 0.7 %
Flagstar Corp., 11.250%, 11/01/04 (i) .................... 14,370,000 5,891,700
------------
Insurance -- 0.1 %
Sun Life Canada US Capital Trust I, 8.526%, 5/29/49 (d) .. 800,000 829,904
------------
Metals -- 0.1 %
Midland Ross Corp., 6.000%, 2/15/07 ...................... 1,400,000 1,008,000
------------
Oil & Gas -- 0.8 %
Maxus Energy Corp., 8.500%, 4/01/08 ...................... 600,000 606,000
NGC Corporation Capital Trust I, 8.316%, 6/01/27 (d) ..... 3,000,000 3,102,300
USX Marathon Group, 8.125%, 7/15/23 ...................... 2,825,000 2,894,551
USX Marathon Group, 8.500%, 3/01/23 ...................... 550,000 581,620
------------
7,184,471
------------
Paper Products -- 1.3 %
Champion International, 7.350%, 11/01/25 ................. 3,500,000 3,305,400
Georgia Pacific Corp., 7.375%, 12/01/25 .................. 8,300,000 7,877,779
------------
11,183,179
------------
Real Estate - Investment Trusts -- 0.2 %
Security Capital Trust, 8.650%, 5/15/16 .................. 2,000,000 2,140,080
------------
Retail -- 4.5 %
Bradlees, Inc., 9.250%, 3/01/03 (i) ...................... 250,000 15,000
Bradlees, Inc., 11.000%, 8/01/02 (i) ..................... 250,000 17,500
Dillon Read Structured Finance Corp., 6.660%, 8/15/10 .... 2,659,094 2,340,003
Dillon Read Structured Finance Corp., 7.600%, 8/15/07 .... 239,071 225,025
Dillon Read Structured Finance Corp., 8.550%, 8/15/19 .... 500,000 462,500
Dillon Read Structured Finance Corp., 8.375%, 8/15/15 .... 2,425,000 2,243,125
K Mart Corp., 7.950%, 2/01/23 ............................ 12,365,000 11,190,325
K Mart Funding Corp., 8.800%, 7/01/10 .................... 2,905,000 2,788,800
K Mart Pass Thru, 8.540%, 1/02/15 ........................ 6,109,327 5,742,767
K Mart Pass Thru, 9.350%, 1/02/20 ........................ 2,500,000 2,375,000
K Mart Pass Thru, 9.780%, 1/05/20 ........................ 1,000,000 1,000,000
Penn Traffic Co., 9.625%, 4/15/05 ........................ 15,133,000 8,020,490
Woolworth Corp., 8.500%, 1/15/22 ......................... 3,000,000 3,149,070
------------
39,569,605
------------
Steel -- 0.7 %
Geneva Steel Co., 9.500%, 1/15/04 ........................ 3,250,000 2,600,000
Geneva Steel Co., 11.125%, 3/15/01 ....................... 4,250,000 3,825,000
------------
6,425,000
------------
Taxable Municipal -- 0.1 %
Orange County, California Pension Obligation, Zero Coupon
Bond, 9/01/16 .......................................... 5,000,000 1,190,100
------------
Telecommunications -- 5.4 %
Intercel, Inc., Zero Coupon Bond, 2/01/06 (c) ............ 1,000,000 641,250
Intercel, Inc., Zero Coupon Bond, 5/01/06 (c) ............ 2,500,000 1,568,750
Nextel Communications, Inc., Zero Coupon Bond,
8/15/04 (c) ............................................ 2,500,000 1,912,500
Sprint Spectrum L.P., Zero Coupon Bond, 8/15/06 (c) ...... 1,000,000 730,000
TCI Communications, Inc., 7.875%, 8/01/13 ................ 6,250,000 6,102,188
TCI Communications, Inc., 7.875%, 2/15/26 ................ 37,905,000 36,426,705
------------
47,381,393
------------
Textiles -- 0.4 %
Fruit of the Loom, Inc., 7.375%, 11/15/23 ................ 3,000,000 2,770,200
Phillips Van Heusen Corp., 7.750%, 11/15/23 .............. 600,000 544,962
------------
3,315,162
------------
Tobacco -- 9.0 %
Loews Corp., 7.000%, 10/15/23 ............................ 3,500,000 3,142,055
Philip Morris Cos., Inc., 7.750%, 1/15/27 ................ 37,600,000 36,872,064
RJR Nabisco, Inc., 7.625%, 9/15/03 ....................... 15,900,000 15,660,864
RJR Nabisco, Inc., 8.500%, 7/01/07 ....................... 4,050,000 4,028,495
RJR Nabisco, Inc., 8.750%, 8/15/05 ....................... 5,500,000 5,582,225
RJR Nabisco, Inc., 9.250%, 8/15/13 ....................... 14,143,000 14,523,022
------------
79,808,725
------------
Transportation -- 0.0 %
American President Companies Ltd., 8.000%, 1/15/24 ....... 275,000 254,367
------------
U.S. Government -- 6.0 %
U.S. Treasury Bonds, 6.250%, 8/15/23 ..................... 43,700,000 40,456,586
U.S. Treasury Bonds, 6.500%, 11/15/26 .................... 7,000,000 6,713,420
U.S. Treasury Strips, Zero Coupon Bond, 8/15/20 .......... 14,000,000 2,833,040
U.S. Treasury Strips, Zero Coupon Bond, 8/15/23 .......... 19,000,000 3,204,920
------------
53,207,966
------------
Utilities -- 1.8 %
Boston Edison Co., 7.800%, 3/15/23 ....................... 1,000,000 970,829
Comed Financing II, 8.500%, 1/15/27 (d) .................. 5,000,000 4,982,200
Commonwealth Edison Co., 4.750%, 12/01/11 ................ 952,000 715,761
GGIB Funding Corp., 7.430%, 1/15/11 ...................... 6,978,879 6,764,837
Niagara Mohawk Power Corp., 5.875%, 9/01/02 .............. 500,000 463,675
Niagara Mohawk Power Corp., 6.625%, 7/01/05 .............. 550,000 508,744
Niagara Mohawk Power Corp., 7.750%, 5/15/06 .............. 250,000 247,158
Niagara Mohawk Power Corp., 7.875%, 4/01/24 .............. 1,500,000 1,427,175
------------
16,080,379
------------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $664,668,912).......................... 694,296,377
------------
CONVERTIBLE BONDS -- 12.1 %
Aerospace -- 0.2 %
Rohr Industries, Inc., 7.000%, 10/01/12 .................. 1,600,000 1,472,000
------------
Auto and Related -- 0.1 %
Exide Corp., 2.900%, 12/15/05 (d) ........................ 1,500,000 924,375
------------
Broadcasting -- 0.3 %
Comcast Corp., 1.125%, 4/15/07 ........................... 4,750,000 2,755,000
------------
Canadian -- 0.2 %
Rogers Communications, Inc., 2.000%, 11/26/05 ............ 3,000,000 1,695,000
------------
Chemicals - Major -- 0.2 %
FMC Corp., 6.750%, 1/16/05 ............................... 1,175,000 1,128,000
Hexcel Corp., 7.000%, 8/01/11 ............................ 675,000 654,750
------------
1,782,750
------------
Commercial Services -- 0.3 %
Molten Metal Technology, Inc., 5.500%, 5/01/06 ........... 3,000,000 1,110,000
Molten Metal Technology, Inc., 5.500%, 5/01/06 (d) ....... 4,600,000 1,702,000
------------
2,812,000
------------
Computer -- 1.5 %
Apple Computer, Inc., 6.000%, 6/01/01 .................... 5,700,000 4,816,500
Cray Research, Inc., 6.125%, 2/01/11 ..................... 550,000 424,875
Maxtor Corp., 5.750%, 3/01/12 ............................ 3,100,000 2,139,000
Softkey International, Inc., 5.500%, 11/01/00 ............ 6,950,000 5,681,625
Streamlogic Corp., 14.000%, 10/07/98 (i) ................. 139,169 139,169
Telxon Corp., 5.750%, 1/01/03 ............................ 500,000 450,000
------------
13,651,169
------------
Electronics -- 0.6 %
Cirrus Logic, Inc., 6.000%, 12/15/03 (d) ................. 1,175,000 850,406
Cyrix Corp., 5.500%, 6/01/01 (d) ......................... 2,500,000 2,050,000
EDO Corp., 7.000%, 12/15/11 .............................. 434,000 360,220
Integrated Device Technology, Inc., 5.500%, 6/01/02 ...... 450,000 375,750
Park Electrochemical Corp., 5.500%, 3/01/06 .............. 250,000 227,500
Richardson Electronics Ltd., 7.250%, 12/15/06 ............ 450,000 349,875
Zenith Corp., 6.250%, 4/01/11 ............................ 1,615,000 1,348,525
------------
5,562,276
------------
Entertainment -- 1.1 %
Metromedia International Group, Inc., 6.500%, 8/04/02 .... 1,860,000 1,590,300
Time Warner, Inc., Zero Coupon Bond, 12/17/12 ............ 19,900,000 7,810,750
------------
9,401,050
------------
Environmental Services -- 0.4 %
Air & Water Technologies Corp., 8.000%, 5/15/15 .......... 1,000,000 820,000
Ogden Corp., 5.750%, 10/20/02 ............................ 1,750,000 1,623,125
Ogden Corp., 6.000%, 6/01/02 ............................. 500,000 467,500
Thermo TerraTech, Inc., 4.625%, 5/01/03 .................. 400,000 376,000
------------
3,286,625
------------
Food -- 0.0 %
Chiquita Brands International, Inc., 7.000%, 3/28/01 ..... 450,000 423,000
------------
Foreign Issuer -- 4.1 %
Advanced Agro Public Co., 3.500%, 6/17/01 ................ 1,625,000 1,616,875
Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 ............ 6,700,000 5,175,750
Banpu Public Co., 2.750%, 4/10/03 ........................ 5,030,000 4,690,475
Burns Philp, 5.500%, 4/30/04 ............................. 4,050,000 3,483,000
Empresas ICA Sociedad, 5.000%, 3/15/04 ................... 3,000,000 2,370,000
Finance One, 2.000%, 8/31/01 ............................. 4,625,000 2,220,000
Kia Motors Corp., 0.250%, 12/31/06 ....................... 150,000 142,500
Loxley Public Co., 2.500%, 4/04/01 ....................... 7,500,000 6,525,000
Samsung Co., 0.250%, 6/26/06 ............................. 2,725,000 2,738,625
Sappi BVI Finance, 7.500%, 8/01/02 ....................... 3,450,000 3,273,187
Siam Commercial Bank Public Co., 3.250%, 1/24/04 ......... 1,160,000 736,600
Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 ....... 1,580,000 1,076,375
Total Access Communication Ltd., 2.000%, 5/31/06 ......... 1,750,000 1,826,563
Yasuda Trust & Banking, 2.875%, 9/30/03 .................. 200,000 161,750
------------
36,036,700
------------
Health Care & Related -- 0.2 %
Chiron Corp., 1.900%, 11/17/00 (d) ....................... 1,000,000 908,750
Glycomed, Inc., 7.500%, 1/01/03 .......................... 1,148,100 987,366
------------
1,896,116
------------
Home Builders -- 0.1 %
Schuler Homes, Inc., 6.500%, 1/15/03 ..................... 750,000 590,625
------------
Hotels & Restaurants -- 0.4 %
Shoney's, Inc., Zero Coupon Bond, 4/11/04 ................ 7,610,000 3,272,300
------------
Oil & Gas -- 0.0 %
Noram Energy Corp., 6.000%, 3/15/12 ...................... 447,500 393,800
------------
Pharmaceutical -- 0.1 %
NABI, Inc., 6.500%, 2/01/03 .............................. 600,000 489,750
------------
Real Estate - Investment Trusts -- 1.0 %
Federal Realty Investors Trust, 5.250%, 10/28/03 ......... 2,250,000 2,008,125
Meditrust Corp., 7.500%, 3/01/01 ......................... 750,000 820,313
Rockefeller Properties, Zero Coupon Bond, 12/31/00 ....... 7,000,000 4,777,500
Sizeler Property Investors, Inc., 8.000%, 7/15/03 ........ 1,000,000 962,500
------------
8,568,438
------------
Retail - Specialty -- 0.4 %
Bell Sports Corp., 4.250%, 11/15/00 ...................... 500,000 426,250
CML Group, Inc., 5.500%, 1/15/03 ......................... 1,224,000 872,100
General Host Corp., 8.000%, 2/15/02 ...................... 1,130,000 920,950
Jacobson Stores, Inc., 6.750%, 12/15/11 .................. 540,000 465,750
Sunglass Hut International, Inc., 5.250%, 6/15/03 (d) .... 1,320,000 925,650
------------
3,610,700
------------
Telecommunications -- 0.5 %
Broadband Technologies, Inc., 5.000%, 5/15/01 ............ 6,125,000 4,410,000
------------
Textiles -- 0.2 %
Dixie Yarns, Inc., 7.000%, 5/15/12 ....................... 300,000 249,000
Fieldcrest Cannon, Inc., 6.000%, 3/15/12 ................. 1,620,000 1,287,900
------------
1,536,900
------------
Trucking & Leasing -- 0.2 %
Builders Transportation, Inc., 8.000%, 8/15/05 ........... 1,000,000 510,000
Preston Corp., 7.000%, 5/01/11 ........................... 750,000 525,000
Worldway Corp., 6.250%, 4/15/11 .......................... 1,463,000 877,800
------------
1,912,800
------------
TOTAL CONVERTIBLE BONDS
(Identified Cost $110,645,975).......................... 106,483,374
------------
TOTAL BONDS AND NOTES
(Identified Cost $775,314,887).......................... 800,779,751
------------
Shares
- -----------------------------------------------------------------------------------------------------
Common Stocks -- 0.0% of Total Net Assets
Computer -- 0.0 %
Streamlogic Corp. (i) .................................... 266,066 8,314
Streamlogic Corp. (warrants) (i) ......................... 1,228 10,561
------------
18,875
------------
TOTAL COMMON STOCKS (Identified Cost $415,728)............ 18,875
------------
- -----------------------------------------------------------------------------------------------------
Preferred Stocks -- 3.7% of Total Net Assets
Banking & Finance -- 0.7 %
Bankamerica Corp., 6.00 % ................................ 19,300 1,864,862
BankBoston Corp., 5.50% .................................. 11,700 1,012,050
Citicorp, 6.00% .......................................... 25,000 2,418,750
First Chicago NBD Corp., 6.00% ........................... 7,500 723,750
------------
6,019,412
------------
Cable -- 0.7 %
Cablevision Systems Corp., 11.125% (k) ................... 64,582 6,506,609
------------
Computer -- 0.1 %
Unisys Corp., $3.75 ...................................... 27,300 1,061,287
------------
Entertainment -- 0.0 %
Time Warner, Inc., 10.25% (k) ............................ 283 312,008
------------
Foreign Issuer -- 0.5 %
Sakura Finance, 0.75% (j) ................................ 450,000,000 3,968,739
------------
Hotels & Restaurants -- 0.0 %
Flagstar Corp., $2.25 (i) ................................ 432,100 405,094
------------
Metals -- 0.5 %
Aluminum Company of America, $3.75 ....................... 10,000 640,000
Bethlehem Steel Corp., $3.50 (d) ......................... 99,050 4,011,525
------------
4,651,525
------------
Oil & Gas -- 0.1 %
Kaneb Services, Inc., 9.00% .............................. 500 5,063
McDermott, Inc., $2.20 ................................... 25,000 790,625
Western Gas Resources, Inc., $2.625 ...................... 5,000 198,125
------------
993,813
------------
Paper Products -- 0.0 %
Stone Container Corp., $1.75 ............................. 5,000 85,625
------------
Retail -- 0.1 %
K Mart Financing Corp., 7.75% ............................ 10,000 548,750
------------
Trucking & Freight -- 0.3 %
Arkansas Best Corp., $2.875 .............................. 67,500 2,227,500
------------
Utilities -- 0.7 %
Central Louisiana Electric, Inc., 4.75% .................. 1,500 111,000
Commonwealth Energy Systems, $4.80 ....................... 3,358 250,171
Connecticut Light & Power Co., $1.90 ..................... 2,925 57,403
Entergy Louisiana, Inc., 4.16% ........................... 2,600 148,200
Illinois Power Co., 6.00% ................................ 200 9,750
Indianapolis Power & Light Co., 4.00% .................... 576 34,632
Jersey Central Power & Light Co., 4.00% .................. 570 33,630
Long Island Lighting Co., 6.875% ......................... 15,000 368,437
MDU Resources Group, Inc., 5.10% ......................... 4,480 374,640
Minnesota Power & Light Co., 5.00% ....................... 200 14,300
Nevada Power Co., 4.10% .................................. 17,811 309,466
Niagara Mohawk Power Corp., 4.85% ........................ 5,000 275,000
Niagara Mohawk Power Corp., 6.50% ........................ 10,500 207,375
Niagara Mohawk Power Corp., 7.30% ........................ 10,100 225,987
Niagara Mohawk Power Corp., 7.525% ....................... 162,300 3,580,744
Niagara Mohawk Power Corp., 7.85% ........................ 10,000 252,500
Niagara Mohawk Power Corp., 9.75% ........................ 1,500 37,313
Northern States Power Co., $3.60 ......................... 700 36,400
Public Service Co., 4.00% ................................ 360 20,700
------------
6,347,648
------------
TOTAL PREFERRED STOCKS
(Identified Cost $29,354,707)........................... 33,128,010
------------
FACE
AMOUNT
- -----------------------------------------------------------------------------------------------------
Short-Term Investment -- 3.7 % of Total Net Assets
Repurchase Agreement with State Street Bank and Trust Co.,
dated 6/30/97 at 5.00% to be repurchased at $32,806,556
on 7/01/97 collateralized by $31,695,000 U.S. Treasury
Bond 7.25%, due 5/15/16 with a value of $33,462,979 .... $32,802,000 $ 32,802,000
------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $32,802,000)........................... 32,802,000
------------
TOTAL INVESTMENTS -- 98.0%
(IDENTIFIED COST $837,887,322) (n) ....................... $866,728,636
Cash, Receivables and Other Assets.......................... 25,367,045
Liabilities................................................. (7,926,458)
------------
TOTAL NET ASSETS -- 100% ................................... $884,169,223
============
(a) See Note 1.
(b) Denominated in Canadian Dollars.
(c) Step Bond: Coupon rate is zero or below market rate for an initial period and then
increases to a higher coupon rate at a specified date and rate.
(d) Securities exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers.
(e) Denominated in South African Rand.
(f) Denominated in New Zealand Dollars.
(g) Denominated in Irish Punt.
(h) Denominated in Deutsche Marks.
(i) Company filed for Chapter 11 Bankruptcy.
(j) Denominated in Japanese Yen.
(k) Income may be received as additional securities.
(l) Floating Rate Bond: 6 month LIBOR + .8125% rate at end of period.
(m) Denominated in European Currency Units.
(n) At June 30, 1997, the net unrealized appreciation on investments based on cost of
$837,887,322 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which
there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an
excess of tax cost over value were $44,732,067 and $15,890,753,
respectively, resulting in net unrealized appreciation of
$28,841,314.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES GLOBAL BOND FUND
Investments -- as of June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Face
Currency Amount Value (a)
- -------------------------------------------------------------------------------------------------
Bonds And Notes -- 93.3% of Total Net Assets
<S> <C> <C> <C>
Argentina -- 4.1 %
Republic of Argentina, 5.500%, 3/31/23 (b) ...... USD 1,750,000 $ 1,211,875
-----------
Australia -- 4.3 %
QTC Global Aud Bon, 8.000%, 9/14/07 ............. AUD 1,600,000 1,276,133
-----------
Canada -- 6.6 %
Government of Canada, 8.750%, 12/01/05 .......... CAD 700,000 589,149
Province of British Columbia, Zero Coupon Bond,
9/05/20 ....................................... CAD 5,025,000 696,517
Province of Ontario, 8.100%, 9/08/23 ............ CAD 200,000 162,421
Province of Saskatchewan, 9.600%, 2/04/22 ....... CAD 525,000 492,892
-----------
1,940,979
-----------
Denmark -- 2.7 %
Kingdom of Denmark, 7.000%, 11/15/07 ............ DKK 5,000,000 790,712
-----------
Germany -- 23.5 %
Bayerische Vereinsbank, 6.000%, 1/23/06 ......... DEM 2,000,000 1,173,792
Federal Republic of Germany, 6.000%, 2/16/06 DEM 2,050,000 1,211,719
Federal Republic of Germany, 6.500%, 3/15/00 DEM 2,000,000 1,224,487
Geberit International SA, 10.125%, 4/16/07 (c) DEM 1,000,000 619,355
Germany Unity, 8.000%, 1/21/02 .................. DEM 1,500,000 980,559
Kreditanstalt Wierdarauf, 6.000%, 2/09/06 ....... DEM 1,100,000 646,469
Treuhandanstalt, 6.750%, 5/13/04 ................ DEM 1,700,000 1,060,605
-----------
6,916,986
-----------
Ireland -- 8.8 %
Irish Permanent Plc, 8.500%, 7/15/04 ............ IP 600,000 1,007,136
Republic of Ireland, 8.000%, 8/18/06 ............ IP 250,000 415,848
Republic of Ireland, 8.250%, 8/18/15 ............ IP 400,000 694,482
Ulysses Securitization Plc, 7.625%, 8/18/06 ..... IP 300,000 480,494
-----------
2,597,960
-----------
Japan -- 5.4 %
Mitsubishi Trust & Banking Corp.,
1.750%, 9/30/02 ............................... USD 500,000 468,750
Mitsubishi Trust & Banking Corp.,
3.250%, 9/30/03 ............................... USD 850,000 826,625
Sumitomo Bank International, 0.750%, 5/31/01 JPY 26,000,000 289,469
-----------
1,584,844
-----------
Korea -- 4.3 %
Samsung Co., 0.250%, 6/26/06 .................... USD 1,250,000 1,256,250
-----------
New Zealand -- 3.0 %
Government of New Zealand, 8.000%, 11/15/06 NZD 1,200,000 874,234
-----------
Philippines -- 2.9 %
Filinvest Land, Inc., 3.750%, 2/01/02 ........... USD 900,000 851,946
-----------
Poland -- 2.9 %
Government of Poland, 4.000%, 10/27/14 (b) ...... USD 1,000,000 853,750
-----------
South Africa -- 8.0 %
Escom, 11.000%, 6/01/08 ......................... ZAR 6,000,000 1,067,063
Republic of South Africa, 12.000%, 2/28/05 ...... ZAR 5,000,000 983,024
Sappi BVI Finance, 7.500%, 8/01/02 .............. USD 325,000 308,344
-----------
2,358,431
-----------
Thailand -- 3.7 %
Advanced Agro Public Co., 3.500%, 6/17/01 ....... USD 475,000 472,625
Loxley Public Co., 2.500%, 4/04/01 .............. USD 700,000 609,000
-----------
1,081,625
-----------
United Kingdom -- 3.5 %
New South Wales Trust, 6.500%, 5/01/06 .......... AUD 1,400,000 1,017,295
-----------
United States -- 9.6 %
Federal National Mortgage Association,
2.000%, 12/20/99 .............................. JPY 60,000,000 534,077
K Mart Pass Thru, 8.990%, 7/05/10 ............... USD 250,000 241,563
K Mart Pass Thru, 9.350%, 1/02/20 ............... USD 350,000 332,500
K Mart Pass Thru, 9.780%, 1/05/20 ............... USD 150,000 150,000
RJR Nabisco, Inc., 9.250%, 8/15/13 .............. USD 500,000 513,435
TCI Communications, Inc., 7.875%, 2/15/26 ....... USD 1,100,000 1,057,100
-----------
2,828,675
-----------
TOTAL BONDS AND NOTES
(Identified Cost $26,800,983) ................. 27,441,695
-----------
Shares
- -------------------------------------------------------------------------------------------------
Preferred Stocks -- 4.1% of Total Net Assets
Japan -- 4.1 %
Sakura Finance, 0.75% ........................... JPY 138,000,000 1,217,080
-----------
TOTAL PREFERRED STOCKS
(Identified Cost $1,048,041) .................. 1,217,080
-----------
TOTAL INVESTMENTS -- 97.4%
(IDENTIFIED COST $27,849,024) (d) ............... $28,658,775
Cash, Receivables and Other Assets (e) ............ 928,539
Liabilities ....................................... (158,063)
-----------
TOTAL NET ASSETS -- 100% .......................... $29,429,251
===========
(a) See Note 1.
(b) Step Bond: Coupon rate is zero or below market rate for an initial period and then increases to
a higher coupon rate at a specified date and rate.
(c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
(d) At June 30, 1997, the net unrealized appreciation on investments based on cost of $27,849,024
for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost over value were
$1,512,097 and $702,346, respectively, resulting in net unrealized
appreciation of $809,751.
(e) Including deposits in foreign denominated currencies with a value of $193 and a cost of $208.
</TABLE>
Currency Terms:
AUD = Australian Dollar JPY = Japanese Yen
CAD = Canadian Dollar NZD = New Zealand Dollar
DEM = Deutsche Mark USD = U.S. Dollar
DKK = Danish Krone ZAR = South African Rand
IP = Irish Punt
Ten largest industry holdings at June 30, 1997 (unaudited)
Foreign Government/Agency 50.3%
Foreign Issuer 16.8%
Banking & Finance 7.8%
Canadian 6.6%
Telecommunications 3.6%
Financial 3.4%
Real Estate 2.9%
Retail 2.5%
Government Agencies 1.8%
Tobacco 1.7%
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND
Investments -- as of June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------
Bonds And Notes -- 85.1% of Total Net Assets
<S> <C> <C>
NON-CONVERTIBLE BONDS -- 51.2 %
Aerospace -- 0.9 %
Rohr Industries, Inc., 9.250%, 3/01/17 ..................... $ 50,000 $ 48,375
-----------
Canadian -- 3.3 %
International Semi-Tech Corp., Zero Coupon Bond,
8/15/03 (c) .............................................. 50,000 29,750
Rogers Cablesystems Ltd., 9.650%, 1/15/14 (b) .............. 70,000 51,201
Rogers Communications, Inc., 10.500%, 2/14/06 (b) .......... 125,000 98,354
-----------
179,305
-----------
Communications -- 7.4 %
Arch Communications Group, Inc., Zero Coupon Bond,
3/15/08 (c) .............................................. 415,000 219,950
Century Communications Corp., Zero Coupon Bond, 3/15/03 250,000 148,750
Paging Network, Inc., 8.875%, 2/01/06 ...................... 25,000 22,750
-----------
391,450
-----------
Computer -- 3.5 %
Apple Computer, Inc., 6.500%, 2/15/04 ...................... 105,000 88,200
Digital Equipment Corp., 7.750%, 4/01/23 ................... 50,000 45,098
Unisys Corp., 9.750%, 9/15/16 .............................. 50,000 49,250
-----------
182,548
-----------
Electronics -- 1.8 %
Westinghouse Electric Corp., 7.875%, 9/01/23 ............... 100,000 92,676
-----------
Environmental Services -- 2.5 %
Envirotest Systems Corp., 9.625%, 4/01/03 .................. 150,000 132,000
-----------
Food & Beverage -- 1.0 %
Borden, Inc., 9.200%, 3/15/21 .............................. 50,000 51,040
-----------
Foreign Government/Agency -- 12.2 %
Escom, 11.000%, 6/01/08 (d) ................................ 275,000 48,907
Kingdom of Jordan, 4.000%, 12/23/23 ........................ 250,000 161,875
Petroleos Mexicanos, Medium Term, 8.625%, 12/01/23 (e) ..... 70,000 61,250
Republic of Argentina, 6.750%, 3/31/05 (i) ................. 48,510 45,569
Republic of Argentina, 11.375%, 1/30/17 .................... 75,000 84,225
Republic of Brazil, 10.125%, 5/15/27 ....................... 255,000 245,438
-----------
647,264
-----------
Foreign Issuer -- 3.3 %
Grupo Televisa SA de CV, Zero Coupon Bond, 5/15/08 (c) ..... 20,000 13,800
PTC International Finance, Zero Coupon Bond, 7/01/07 (c) (e) 50,000 30,375
TFM SA de CV, Zero Coupon Bond, 6/15/09 (c) (e) ............ 50,000 28,750
Transportacion Maritima Mexicana SA de CV,
10.000%, 11/15/06 ........................................ 100,000 101,250
-----------
174,175
-----------
Hotels & Restaurants -- 1.2 %
Flagstar Corp., 11.250%, 11/01/04 (h) ...................... 160,000 65,600
-----------
Metals -- 1.4 %
Midland Ross Corp., 6.000%, 2/15/07 ........................ 103,000 74,160
-----------
Retail -- 2.9 %
Dillon Read Structured Finance Corp., 8.375%, 8/15/15 ...... 65,000 60,125
Penn Traffic Co., 9.625%, 4/15/05 .......................... 175,000 92,750
-----------
152,875
-----------
Steel -- 1.8 %
Geneva Steel Co., 9.500%, 1/15/04 .......................... 65,000 52,000
Geneva Steel Co., 11.125%, 3/15/01 ......................... 50,000 45,000
-----------
97,000
-----------
Telecommunications -- 3.1 %
Intercel, Inc., Zero Coupon Bond, 2/01/06 (c) .............. 25,000 16,031
Intercel, Inc., Zero Coupon Bond, 5/01/06 (c) .............. 50,000 31,375
Nextel Communications, Inc., Zero Coupon Bond, 8/15/04 (c) 80,000 61,200
Sprint Spectrum L.P., Zero Coupon Bond, 8/15/06 (c) ........ 75,000 54,750
-----------
163,356
-----------
Textiles -- 1.7 %
Phillips Van Heusen Corp., 7.750%, 11/15/23 ................ 100,000 90,827
-----------
Tobacco -- 3.2 %
RJR Nabisco, Inc., 9.250%, 8/15/13 ......................... 165,000 169,434
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $2,658,492).............................. 2,712,085
-----------
CONVERTIBLE BONDS -- 33.9 %
Aerospace -- 0.2 %
Rohr Industries, Inc., 7.000%, 10/01/12 .................... 10,000 9,200
-----------
Auto and Related -- 0.6 %
Exide Corp., 2.900%, 12/15/05 (e) .......................... 50,000 30,813
-----------
Broadcasting -- 1.1 %
Comcast Corp., 1.125%, 4/15/07 ............................. 100,000 58,000
-----------
Canadian -- 2.0 %
Rogers Communications, Inc., 2.000%, 11/26/05 .............. 190,000 107,350
-----------
Commercial Services -- 0.5 %
Molten Metal Technology, Inc., 5.500%, 5/01/06 ............. 75,000 27,750
-----------
Computer -- 6.8 %
Apple Computer, Inc., 6.000%, 6/01/01 ...................... 160,000 135,200
Cray Research, Inc., 6.125%, 2/01/11 ....................... 50,000 38,625
Softkey International, Inc., 5.500%, 11/01/00 .............. 225,000 183,937
-----------
357,762
Electronics -- 1.9 %
Cirrus Logic, Inc., 6.000%, 12/15/03 (e) ................... 100,000 72,375
Cyrix Corp., 5.500%, 6/01/01 (e) ........................... 10,000 8,200
EDO Corp., 7.000%, 12/15/11 ................................ 25,000 20,750
-----------
101,325
-----------
Foreign Issuer -- 6.8 %
Advanced Agro Public Co., 3.500%, 6/17/01 .................. 100,000 99,500
Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 .............. 100,000 77,250
Banpu Public Co., 2.750%, 4/10/03 .......................... 25,000 23,313
Empresas ICA Sociedad, 5.000%, 3/15/04 ..................... 75,000 59,250
MBI Finance, Zero Coupon Bond, 12/18/01 .................... 50,000 35,812
Sappi BVI Finance, 7.500%, 8/01/02 ......................... 50,000 47,437
Siam Commercial Bank Public Co., 3.250%, 1/24/04 ........... 25,000 15,875
-----------
358,437
-----------
Home Builders -- 0.3 %
Schuler Homes, Inc., 6.500%, 1/15/03 ....................... 20,000 15,750
-----------
Hotels & Restaurants -- 3.2 %
Shoney's, Inc., Zero Coupon Bond, 4/11/04 .................. 350,000 150,500
TPI Enterprises, Inc., 8.250%, 7/15/02 ..................... 25,000 21,719
-----------
172,219
-----------
Metals -- 0.8 %
Battle Mountain Gold Co., 6.000%, 1/04/05 .................. 50,000 40,375
Miscellaneous -- 0.9 %
Veterinary Centers of America, Inc., 5.250%, 5/01/06 ....... 70,000 49,700
-----------
Pharmaceutical -- 1.5 %
NABI, Inc., 6.500%, 2/01/03 ................................ 100,000 81,625
-----------
Retail - Specialty -- 3.0 %
Bell Sports Corp., 4.250%, 11/15/00 ........................ 50,000 42,625
CML Group, Inc., 5.500%, 1/15/03 ........................... 100,000 71,250
Jacobson Stores, Inc., 6.750%, 12/15/11 .................... 50,000 43,125
-----------
157,000
-----------
Telecommunications -- 1.4 %
Broadband Technologies, Inc., 5.000%, 5/15/01 .............. 100,000 72,000
-----------
Textiles -- 1.5 %
Fieldcrest Cannon, Inc., 6.000%, 3/15/12 ................... 100,000 79,500
-----------
Trucking & Leasing -- 1.4 %
Builders Transportation, Inc., 8.000%, 8/15/05 ............. 75,000 38,250
Worldway Corp., 6.250%, 4/15/11 ............................ 62,000 37,200
-----------
75,450
-----------
TOTAL CONVERTIBLE BONDS
(Identified Cost $1,824,115).............................. 1,794,256
-----------
TOTAL BONDS AND NOTES
(Identified Cost $4,482,607).............................. 4,506,341
-----------
Shares Value (a)
- ------------------------------------------------------------------------------------------------------
Common Stocks -- 3.9% of Total Net Assets
Computer -- 0.4 %
The Learning Company, Inc. (f) ............................. 2,240 21,000
-----------
Utilities -- 3.5 %
Eastern Utilities Associates ............................... 10,000 182,500
-----------
TOTAL COMMON STOCKS (Identified Cost $210,189).............. 203,500
-----------
- -----------------------------------------------------------------------------------------------------
Preferred Stocks -- 6.7% of Total Net Assets
Cable -- 2.0 %
Cablevision Systems Corp., 11.125% (g) ..................... 1,056 106,432
-----------
Computer -- 0.7 %
Unisys Corp., $3.75 ........................................ 1,000 38,875
Hotels & Restaurants -- 0.1 %
Flagstar Corp., $2.25 (h) .................................. 3,100 2,906
Metals -- 1.5 %
Bethlehem Steel Corp., $3.50 (e) ........................... 2,000 81,000
-----------
Trucking & Freight -- 1.6 %
Arkansas Best Corp., $2.875 ................................ 2,500 82,500
Utilities -- 0.8 %
Central Maine Power Company, 3.50% ......................... 160 6,400
Cleveland Electric Illuminating Co., 7.00% ................. 100 8,875
Niagara Mohawk Power Corp., 6.50% .......................... 400 7,900
Niagara Mohawk Power Corp., 7.525% ......................... 1,000 22,063
-----------
45,238
-----------
TOTAL PREFERRED STOCKS (Identified Cost $321,409)........... 356,951
-----------
<CAPTION>
Face
Amount Value (a)
- ------------------------------------------------------------------------------------------------------
Short-Term Investment -- 2.9 % of Total Net Assets
<S> <C> <C>
Repurchase Agreement with State Street Bank and Trust Co.,
dated 6/30/97 at 5.00% to be repurchaed at $153,021 on
7/01/97 collateralized by $150,000 U.S. Treasury Bond
7.25%, due 5/15/16 with a value of $158,367 .............. $153,000 153,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $153,000)................................ 153,000
-----------
TOTAL INVESTMENTS -- 98.6% (IDENTIFIED COST $5,167,205) (j) .. $ 5,219,792
Cash, Receivables and Other Assets............................ 184,044
Liabilities................................................... (111,192)
-----------
TOTAL NET ASSETS -- 100% ..................................... $ 5,292,644
===========
(a) See Note 1.
(b) Denominated in Canadian Dollars.
(c) Step Bond: Coupon rate is zero or below market rate for an initial period and then increases to
a higher coupon rate at a specified date and rate.
(d) Denominated in South African Rand.
(e) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
(f) Non-income producing security.
(g) Income may be received as additional securities.
(h) Company filed for Chapter 11 Bankruptcy.
(i) Floating Rate Bond: 6 month LIBOR + .8125% rate at end of period.
(j) At June 30, 1997, the net unrealized appreciation on investments based on cost of $5,167,205 for
federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost over value were $143,672
and $91,085, respectively, resulting in net unrealized appreciation of $52,587.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND Investments -- as of June 30, 1997
(unaudited)
<TABLE>
<CAPTION>
Face
Amount Value (a)
- --------------------------------------------------------------------------------------------------------------
Bonds And Notes -- 96.8% of Total Net Assets
<S> <C> <C>
Banking & Finance -- 5.8 %
Capital One Bank, 5.950%, 2/15/01 ........................... $ 160,000 $ 154,702
Capital One Bank, 6.830%, 5/17/99 ........................... 70,000 70,230
NationsBank Corp., 7.000%, 9/15/01 .......................... 55,000 55,522
-----------
280,454
-----------
Communications -- 6.5 %
Comcast Cable Communications, 8.125%, 5/01/04 (c) ........... 150,000 156,148
US West Capital Funding, Inc., 6.850%, 1/15/02 .............. 160,000 159,829
-----------
315,977
-----------
Entertainment -- 3.3 %
Time Warner Entertainment, Inc., 7.750%, 6/15/05 ............ 155,000 157,519
-----------
Financial -- 13.9 %
Ford Credit Auto Owner Trust, 6.300%, 1/15/01 ............... 54,000 53,898
Ford Motor Credit Co., 7.000%, 9/25/01 ...................... 155,000 156,308
General Motors Acceptance Corp., 6.875%, 7/15/01 ............ 170,000 170,682
Green Tree Financial Corp., 6.950%, 3/15/27 ................. 200,000 196,874
Olympic Automobile Receivables Trust, 5.950%, 6/15/01 ....... 55,000 54,872
Salton Sea Funding Corp., 7.020%, 5/30/00 ................... 40,768 40,947
-----------
673,581
-----------
Foreign Government/Agency -- 1.2 %
Government of Poland, 4.000%, 10/27/14 (b) .................. 70,000 59,763
-----------
Foreign Issuer -- 9.4 %
Southern Peru Ltd., 7.900%, 5/30/07 (c) ..................... 220,000 223,445
Total Access Communication Public Co. Ltd.,
8.375%, 11/04/06 (c) ...................................... 200,000 196,380
YPF Sociedad Anonima, 7.000%, 10/26/02 ...................... 33,707 33,784
-----------
453,609
-----------
Government Agencies -- 13.6 %
Federal Home Loan Mortgage Guaranteed, 6.000%, 4/15/06 ...... 54,725 54,024
Federal Home Loan Mortgage Guaranteed, 6.250%, 10/15/07 54,714 53,277
Federal National Mortgage Association, 6.000%, 2/01/12 ...... 112,301 108,264
Federal National Mortgage Association, 6.500%, 4/01/11 ...... 104,378 102,453
Federal National Mortgage Association, 6.500%, 1/18/16 ...... 180,000 176,400
Federal National Mortgage Association, 6.500%, 8/15/16 ...... 165,000 161,700
-----------
656,118
-----------
Oil & Gas -- 4.8 %
USX Marathon Group, 6.375%, 7/15/98 ......................... 230,000 230,313
-----------
Real Estate - Investment Trusts -- 2.5 %
American Health Properties, Inc., 7.050%, 1/15/02 ........... 65,000 64,774
Trinet Corporate Realty Trust, 7.300%, 5/15/01 .............. 55,000 55,440
-----------
120,214
-----------
Retail -- 1.4 %
Woolworth Corp., 7.000%, 6/01/00 ............................ 65,000 65,198
-----------
Securities -- 9.9 %
Bear Stearns Company, Inc., 5.750%, 2/15/01 ................. 60,000 58,146
Lehman Brothers Holdings, Inc., 5.750%, 11/15/98 ............ 140,000 138,938
Lehman Brothers Holdings, Inc., 6.125%, 2/01/01 ............. 60,000 58,849
Salomon, Inc., 6.700%, 12/01/98 ............................. 55,000 55,206
Salomon, Inc., 7.250%, 5/01/01 .............................. 165,000 166,914
-----------
478,053
-----------
Telecommunications -- 8.0 %
Cox Communications, Inc., 6.500%, 11/15/02 .................. 165,000 162,233
TCI Communications, Inc., 6.875%, 2/15/06 ................... 240,000 226,999
-----------
389,232
-----------
Tobacco -- 5.2 %
Philip Morris Cos., Inc., 7.250%, 9/15/01 ................... 65,000 65,495
RJR Nabisco, Inc., 7.625%, 9/15/03 .......................... 25,000 24,624
RJR Nabisco, Inc., 8.750%, 8/15/05 .......................... 160,000 162,392
-----------
252,511
-----------
Trucking & Leasing -- 4.2 %
Amerco, 7.490%, 9/18/01 ..................................... 200,000 202,128
-----------
U.S. Government -- 6.1 %
U.S. Treasury Note, 5.875%, 6/30/00 ......................... 300,000 297,093
-----------
Utilities - Electric -- 1.0 %
System Energy Resources, Inc., 7.380%, 10/01/00 ............. 50,000 49,642
-----------
TOTAL BONDS AND NOTES (Identified Cost $4,649,826)........... 4,681,405
-----------
TOTAL INVESTMENTS -- 96.8% (IDENTIFIED COST $4,649,826) }D{ ... 4,681,405
Cash, Receivables and Other Assets............................. 209,131
Liabilities.................................................... (53,189)
-----------
TOTAL NET ASSETS -- 100 % ..................................... $ 4,837,347
===========
(a) See Note 1.
(b) Step Bond: Coupon rate is zero or below market rate for an initial period and then increases to
a higher coupon rate at a specified date and rate.
(c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
(d) At June 30, 1997, the net unrealized appreciation on investments based on cost of $4,649,826 for
federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in there is an excess of tax cost over value were $34,237 and
$2,658, respectively, resulting in net unrealized appreciation of $31,579.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -------------------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
Investments -- as of June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Face
Amount Value (a)
- ------------------------------------------------------------------------------------------------------
Bonds and Notes -- 89.2% of Total Net Assets
<S> <C> <C>
NON-CONVERTIBLE BONDS -- 77.7 %
Airlines -- 3.0 %
United Airlines Pass Thru, 7.870%, 1/30/19 .................. $ 60,000 $ 58,793
-----------
Canadian -- 16.3 %
Canadian Government, Zero Coupon Bond, 6/01/21 (b) .......... 150,000 20,791
Canadian Government, 8.000%, 6/01/23 (b) .................... 77,000 63,291
Ontario Hydro, 8.900%, 8/18/22 (b) .......................... 55,000 48,342
Province of British Columbia, Zero Coupon Bond, 8/19/22 (b) 605,000 73,651
Province of British Columbia, Zero Coupon Bond, 8/23/24 (b) 200,000 21,117
Province of Manitoba, Zero Coupon Bond, 3/05/31 (b) ......... 1,100,000 73,838
Province of Saskatchewan, Zero Coupon Bond, 5/30/25 (b) ..... 215,000 21,534
-----------
322,564
-----------
Communications -- 5.3 %
Arch Communications Group, Inc., Zero Coupon Bond,
3/15/08 (c) ............................................... 25,000 13,250
Comcast Cable Communications, 8.875%, 5/01/17 (d) ........... 25,000 27,250
US West Capital Funding, Inc., 7.900%, 2/01/27 .............. 65,000 65,663
-----------
106,163
-----------
Computer -- 3.8 %
Seagate Technology, Inc., 7.875%, 3/01/17 ................... 75,000 74,959
-----------
Electronics -- 1.4 %
Westinghouse Electric Corp., 7.875%, 9/01/23 ................ 30,000 27,803
-----------
Foreign Government/Agency -- 4.8 %
Government of New Zealand, 8.000%, 11/15/06 (e) ............. 45,000 32,784
Government of Poland, 4.000%, 10/27/14 (c) .................. 25,000 21,344
Republic of Brazil, 10.125%, 5/15/27 ........................ 10,000 9,625
Republic of South Africa, 13.500%, 9/15/15 (f) .............. 150,000 31,020
-----------
94,773
-----------
Foreign Issuer -- 2.4%
Bangkok Bank Public Co. Ltd., 8.375%, 1/15/27 (d) ........... 50,000 47,809
-----------
Government Agencies -- 1.7 %
Federal National Mortgage Association, 7.250%, 6/20/02 (e) .. 50,000 34,402
-----------
Oil & Gas -- 2.4 %
Mitchell Energy and Development Corp., 6.750%, 2/15/04 ...... 50,000 47,506
-----------
Paper Products -- 14.8 %
Champion International, 7.350%, 11/01/25 .................... 65,000 61,386
Georgia Pacific Corp., 7.375%, 12/01/25 ..................... 100,000 94,913
Mead Corp., 7.125%, 8/01/25 ................................. 50,000 46,119
Westvaco Corp., 7.000%, 8/15/23 ............................. 100,000 91,327
-----------
293,745
-----------
Retail -- 0.7 %
Penn Traffic Co., 9.625%, 4/15/05 ........................... 25,000 13,250
-----------
Telecommunications -- 4.4 %
TCI Communications, Inc., 7.875%, 2/15/26 ................... 90,000 86,490
-----------
Tobacco -- 10.2 %
Loews Corp., 7.000%, 10/15/23 ............................... 70,000 62,841
Philip Morris Cos., Inc., 7.750%, 1/15/27 ................... 80,000 78,451
RJR Nabisco, Inc., 9.250%, 8/15/13 .......................... 60,000 61,612
-----------
202,904
-----------
Utilities -- 6.5 %
Comed Financing II, 8.500%, 1/15/27 (d) ..................... 60,000 59,787
GGIB Funding Corp., 7.430%, 1/15/11 ......................... 71,750 69,549
-----------
129,336
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $1,497,967)............................... 1,540,497
-----------
CONVERTIBLE BONDS -- 11.5 %
Computer -- 1.7 %
Apple Computer, Inc., 6.000%, 6/01/01 ....................... 20,000 16,900
Softkey International, Inc., 5.500%, 11/01/00 ............... 20,000 16,350
-----------
33,250
-----------
Foreign Issuer -- 4.1 %
Banpu Public Co., 2.750%, 4/10/03 ........................... 20,000 18,650
Burns Philp, 5.500%, 4/30/04 ................................ 20,000 17,200
Samsung Co., 0.250%, 6/26/06 ................................ 20,000 20,100
Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 .......... 15,000 10,219
Yasuda Trust & Banking, 2.875%, 9/30/03 ..................... 20,000 16,000
-----------
82,169
-----------
Hotels & Restaurants -- 1.0 %
Shoney's, Inc., Zero Coupon Bond, 4/11/04 ................... 45,000 19,350
-----------
Oil & Gas -- 2.7 %
Noram Energy Corp., 6.000%, 3/15/12 ......................... 60,000 52,800
-----------
Retail - Specialty -- 1.0 %
General Host Corp., 8.000%, 2/15/02 ......................... 25,000 20,375
-----------
Textiles -- 1.0 %
Fieldcrest Cannon, Inc., 6.000%, 3/15/12 .................... 25,000 19,875
-----------
TOTAL CONVERTIBLE BONDS (Identified Cost $226,599)........... 227,819
-----------
TOTAL BONDS AND NOTES (Identified Cost $1,724,566)........... 1,768,316
-----------
Shares
- ------------------------------------------------------------------------------------------------------
Preferred Stocks -- 4.9% of Total Net Assets
Chemicals - Major -- 2.9 %
E.I. DuPont DeNemours & Co., $3.50 .......................... 500 29,000
E.I. DuPont DeNemours & Co., $4.50 .......................... 400 28,900
-----------
57,900
-----------
Utilities -- 2.0 %
Entergy New Orleans, Inc., 4.75% ............................ 175 10,430
Duquesne Light Co., 4.00% ................................... 500 14,250
Houston Lighting & Power Co., $4.00 ......................... 79 4,385
New York State Electric & Gas Corp., 3.75% .................. 200 9,500
-----------
38,565
-----------
TOTAL PREFERRED STOCKS (Identified Cost $92,857)............. 96,465
-----------
TOTAL INVESTMENTS -- 94.1% (IDENTIFIED COST $1,817,423) (g) ... $ 1,864,781
Cash, Receivables and Other Assets............................. 166,306
Liabilities.................................................... (49,826)
-----------
TOTAL NET ASSETS -- 100% ...................................... $ 1,981,261
===========
(a) See Note 1.
(b) Denominated in Canadian Dollars.
(c) Step Bond: Coupon rate is zero or below market rate for an initial period and then increases to
a higher coupon rate at a specified date and rate.
(d) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
(e) Denominated in New Zealand Dollars.
(f) Denominated in South African Rand.
(g) At June 30, 1997, the net unrealized appreciation on investments based on cost of $1,817,423 for
federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost over value were $55,408
and $8,050, respectively, resulting in net unrealized appreciation of $47,358.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES MUNICIPAL BOND FUND
Investments -- as of June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------
Bonds And Notes -- 96.9% of Total Net Assets
<S> <C> <C>
Alaska -- 1.2 %
Alaska State Housing Finance Corp., 6.600%, 12/01/15 ........ $ 95,000 $ 98,954
-----------
Arizona -- 1.9 %
Phoenix Street & Highway User, 6.250%, 7/01/11 .............. 150,000 159,797
-----------
California -- 12.4 %
California State Department Water Resources,
5.625%, 12/01/12 .......................................... 100,000 102,152
California State Public Works Lease, 5.500%, 6/01/14 ........ 300,000 299,658
Foothill Eastern Transportation Corridor, Zero Coupon Bond,
1/01/23 ................................................... 500,000 103,920
Foothill Eastern Transportation Corridor, 6.000%, 1/01/16 ... 250,000 254,625
Fresno Sewer Revenue, (AMBAC Insured), 6.250%, 9/01/14 ...... 250,000 277,735
-----------
1,038,090
-----------
Colorado -- 1.3 %
El Paso County, Zero Coupon Bond, 9/01/15 ................... 300,000 107,100
-----------
Connecticut -- 5.1 %
Connecticut State Resources Recovery Authority,
7.625%, 1/01/09 ........................................... 200,000 206,622
Connecticut State Special Tax Obligation, 6.125%, 9/01/12 ... 200,000 217,034
-----------
423,656
-----------
District of Columbia -- 2.7 %
District of Columbia, G.O., (MBIA Insured), 5.200%, 6/01/04 . 225,000 228,647
-----------
Hawaii -- 2.3 %
Honolulu Hawaii, G.O., 5.000%, 10/01/13 ..................... 200,000 192,028
-----------
Illinois -- 11.3 %
Chicago Illinois, G.O., (AMBAC Insured), 5.250%, 1/01/15 .... 250,000 242,212
Chicago Metropolitan Water Reclamation, 5.950%, 12/01/07 .... 300,000 325,707
Chicago O'Hare International Airport, 5.000%, 1/01/16 ....... 150,000 139,061
Illinois Development Finance Authority Pollution Control,
7.250%, 6/01/11 ........................................... 25,000 27,107
Illinois Health Facilities Authority, 6.750%, 12/01/08 ...... 45,000 49,109
Illinois State Sales Tax Revenue, 6.375%, 6/15/14 ........... 150,000 160,551
-----------
943,747
-----------
Louisiana -- 2.6 %
Regional Transportation Authority, (FGIC Insured),
8.000%, 12/01/08 .......................................... 200,000 214,184
-----------
Massachusetts -- 9.5 %
Commonwealth of Massachusetts Water Pollution Control,
5.000%, 8/01/14 ........................................... 300,000 286,383
Commonwealth of Massachusetts, G.O., (FGIC Insured),
5.125%, 11/01/11 .......................................... 300,000 295,314
Plymouth County Certificates of Participation,
6.500%, 4/01/01 ........................................... 200,000 210,970
-----------
792,667
-----------
Michigan -- 2.5 %
Michigan State Hospital Finance Authority, 9.000%, 5/01/08 .. 160,000 205,894
-----------
New Jersey -- 3.6 %
New Jersey State Turnpike Authority, 6.500%, 1/01/08 ........ 200,000 222,208
New Jersey State Turnpike Authority, 6.500%, 1/01/16 ........ 75,000 82,807
-----------
305,015
-----------
New York -- 15.2 %
New York City Housing Development Corporation,
5.625%, 5/01/12 ........................................... 150,000 149,168
New York City, G.O., 7.000%, 8/01/98 ........................ 5,000 5,087
New York State Certificates of Participation, 5.650%, 8/01/02 160,000 165,118
New York State Dormitory Authority, 6.375%, 7/01/08 ......... 200,000 210,650
New York State Environmental Pollution Control,
5.150%, 6/15/13 ........................................... 125,000 122,704
New York State Environmental Pollution Control,
5.750%, 6/15/10 ........................................... 250,000 263,080
New York State, G.O., 5.250%, 7/15/10 ....................... 200,000 198,690
New York Urban Development Corp., 5.625%, 1/01/07 ........... 150,000 153,358
-----------
1,267,855
-----------
North Carolina -- 1.3 %
North Carolina Eastern Municipal Power Agency,
7.250%, 1/01/07 ........................................... 100,000 112,644
-----------
Pennsylvania -- 1.6 %
Pennsylvania Finance Authority Revenue Bond,
6.600%, 11/01/09 .......................................... 125,000 134,801
-----------
Puerto Rico -- 2.9 %
Puerto Rico Electric Power Authority, 6.125%, 7/01/09 ....... 225,000 242,264
-----------
Rhode Island -- 2.9 %
Rhode Island Convention Center Authority, (MBIA Insured),
5.000%, 5/15/10 ........................................... 250,000 244,875
-----------
Tennessee -- 3.5 %
Metropolitan Nashville Airport, (FGIC Insured),
6.600%, 7/01/15 ........................................... 30,000 32,590
Shelby County, G.O., 5.900%, 3/01/13 ........................ 250,000 257,735
-----------
290,325
-----------
Vermont -- 2.4 %
Vermont State, G.O., 5.125%, 1/15/12 ........................ 200,000 198,276
-----------
Washington -- 2.9 %
Washington State, G.O., 6.375%, 2/01/14 ..................... 225,000 238,563
-----------
Wisconsin -- 1.9 %
Milwaukee County, G.O., 5.900%, 12/01/12 .................... 150,000 155,102
-----------
Wyoming -- 3.0 %
Platte County Pollution Control, (MBIA Insured),
5.100%, 1/01/08 ........................................... 250,000 250,443
-----------
U.S. Government -- 2.9 %
U.S. Treasury Note, 5.875%, 11/30/01 ........................ 250,000 245,195
-----------
TOTAL BONDS AND NOTES (Identified Cost $7,829,606)........... 8,090,122
-----------
Short-Term Investment -- 2.9 % of Total Net Assets
Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/97 at
5.00% to be repurchased at $245,068 on 7/01/97 collateralized by $250,000
Federal Home Loan Bank
5.94%, due 2/14/01 with a value of $250,807 ............... 245,000 245,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $245,000)................................. 245,000
-----------
TOTAL INVESTMENTS -- 99.8% (IDENTIFIED COST $8,074,606) (b) ... $ 8,335,122
Cash, Receivables and Other Assets............................. 178,131
Liabilities.................................................... (159,997)
-----------
TOTAL NET ASSETS -- 100% ...................................... $ 8,353,256
===========
(a) See Note 1.
(b) At June 30, 1997, the net unrealized appreciation on investments based on cost of $8,074,606 for
federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost over value were $283,402
and $22,886, respectively, resulting in net unrealized appreciation of $260,516.
Insurance Abbreviations:
AMBAC - American Municipal Bond Assurance Corporation
FGIC - Federal Guaranty Insurance Corporation
MBIA - Municipal Bond Insurance Association
Security Abbreviations:
G.O. - General Obligation
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES SHORT-TERM BOND FUND
Investments -- as of June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------
Bonds And Notes -- 97.9% of Total Net Assets
<S> <C> <C>
Aerospace -- 4.8 %
Lockheed Corp., 5.875%, 3/15/98 ............................ $ 200,000 $ 199,874
Lockheed Martin Corp., 6.550%, 5/15/99 ..................... 570,000 572,611
-----------
772,485
-----------
Airlines -- 7.5 %
Delta Air Lines, Inc., 7.790%, 12/01/98 .................... 800,000 815,656
Northwest Airlines Corp., 8.375%, 3/15/04 .................. 400,000 403,440
-----------
1,219,096
Banking & Finance -- 7.3 %
Capital One Bank, 6.830%, 5/17/99 .......................... 560,000 561,002
Household Bank FSB, 6.250%, 4/01/99 ........................ 625,000 624,413
-----------
1,185,415
-----------
Computer Equipment -- 4.1 %
Comdisco, Inc., 5.760%, 1/19/99 ............................ 670,000 664,788
-----------
Consumer Services -- 3.5 %
Loewen Group International, Inc., 7.750%, 10/15/01 ......... 560,000 568,400
-----------
Financial -- 14.5 %
Chrysler Financial Corp., 6.500%, 6/15/98 .................. 200,000 200,820
Fleetwood Credit Grantor Trust, 6.900%, 3/15/12 ............ 504,530 507,285
Great Western Financial Corp., 6.125%, 6/15/98 ............. 605,000 605,236
Sears Roebuck Acceptance Corp., 6.950%, 5/15/02 ............ 340,000 341,673
Van Kampen Merritt Companies, Inc., 9.750%, 2/15/03 ........ 310,000 327,338
World Omni Automobile Lease, 6.550%, 6/25/02 ............... 369,729 372,362
-----------
2,354,714
-----------
Government Agencies -- 9.7 %
Federal Home Loan Mortgage Corp., 6.500%, 5/15/08 .......... 520,000 502,128
Federal Home Loan Mortgage Corp., 6.500%, 4/01/12 .......... 595,979 584,428
Federal National Mortgage Association, 7.000%, 12/01/11 .... 276,487 275,881
Federal National Mortgage Association, 7.000%, 12/01/11 .... 213,366 212,899
-----------
1,575,336
-----------
Media & Entertainment -- 7.3 %
News America Holdings, Inc., 9.125%, 10/15/99 .............. 400,000 421,696
Time Warner, Inc., 7.450%, 2/01/98 ......................... 545,000 548,248
Time Warner, Inc., 7.950%, 2/01/00 ......................... 200,000 205,618
-----------
1,175,562
-----------
Oil & Gas -- 3.1 %
Occidental Petroleum Corp., 5.850%, 11/09/98 ............... 500,000 497,030
-----------
Real Estate-Investment Trusts -- 1.2 %
Oasis Residential, Inc., 7.000%, 11/15/03 .................. 200,000 196,564
-----------
Securities -- 10.6 %
Lehman Brothers Holdings, Inc., 6.375%, 6/01/98 ............ 625,000 626,213
Salomon Brothers, Inc., 7.125%, 8/01/99 .................... 450,000 453,339
Smith Barney Holdings, Inc., 5.500%, 1/15/99 ............... 640,000 632,819
-----------
1,712,371
-----------
Technology -- 1.6 %
Tektronix, Inc., 7.625%, 8/15/02 ........................... 250,000 254,130
-----------
Telecommunications -- 6.0 %
Sprint Spectrum L.P., Zero Coupon Bond, 8/15/06 (b) ........ 560,000 408,800
TCI Communications, 7.250%, 6/15/99 ........................ 550,000 554,202
-----------
963,002
-----------
U.S. Government -- 9.4 %
U.S. Treasury Notes, 5.125%, 3/31/98 ....................... 530,000 527,928
U.S. Treasury Notes, 5.875%, 2/15/04 ....................... 565,000 547,434
U.S. Treasury Notes, 6.250%, 2/15/03 ....................... 450,000 446,485
-----------
1,521,847
-----------
Utilities -- 7.3 %
Detroit Edison Co., 6.340%, 3/15/00 ........................ 670,000 663,132
El Paso Electric Co., 7.250%, 2/01/99 ...................... 520,000 520,952
-----------
1,184,084
-----------
TOTAL BONDS AND NOTES
(Identified Cost $15,775,799)............................. 15,844,824
----------
- -----------------------------------------------------------------------------------------------------
Short-Term Investment -- 0.8 % of Total Net Assets
Repurchase Agreement with State Street Bank and Trust Co.,
dated 6/30/97 at 5.00% to be repurchased at $129,018 on
7/01/97 collateralized by $125,000 U.S. Treasury Bond
7.25%, due 5/15/16 with a value of $131,973 .............. 129,000 129,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $129,000)................................ 129,000
-----------
TOTAL INVESTMENTS -- 98.7% (IDENTIFIED COST $15,904,799) (c) . $15,973,824
Cash, Receivables and Other Assets............................ 299,462
Liabilities................................................... (85,355)
-----------
TOTAL NET ASSETS -- 100% ..................................... $16,187,931
===========
(a) See Note 1.
(b) Step Bond: Coupon rate is zero or below market rate for an initial period and then increases to
a higher coupon rate at a specified date and rate.
(c) At June 30, 1997, the net unrealized appreciation on investments based on cost of $15,904,799
for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost over value were $92,218
and $23,193, respectively, resulting in net unrealized appreciation of $69,025.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND
Investments -- as of June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Face
Amount Value (a)
- ------------------------------------------------------------------------------------------------------
Bonds And Notes -- 98.8% of Total Net Assets
<S> <C> <C>
Government Agencies -- 20.8 %
Tennessee Valley Authority, 8.625%, 11/15/29 ............... $ 2,572,000 $ 2,756,155
-----------
U.S. Government -- 78.0 %
U.S. Treasury Bonds, 7.250%, 5/15/16 ....................... 3,125,000 3,258,781
U.S. Treasury Bonds, 7.500%, 11/15/24 ...................... 3,985,000 4,299,456
U.S. Treasury Bonds, 8.750%, 11/15/08 ...................... 2,030,000 2,250,763
U.S. Treasury Strips, Zero Coupon Bond, 11/15/07 ........... 1,100,000 554,466
-----------
10,363,466
-----------
TOTAL BONDS AND NOTES
(Identified Cost $13,061,354)............................. 13,119,621
-----------
TOTAL INVESTMENTS -- 98.8% (IDENTIFIED COST $13,061,354) (b) . $13,119,621
Cash, Receivables and Other Assets............................ 207,846
Liabilities................................................... (46,701)
-----------
TOTAL NET ASSETS -- 100% ..................................... $13,280,766
===========
(a) See Note 1.
(b) At June 30, 1997, the net unrealized appreciation on investments based on cost of $13,061,354
for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost over value were $99,675
and $41,408, respectively, resulting in net unrealized appreciation of $58,267.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Bond Global
Fund Bond Fund
------------ ------------
<S> <C> <C>
ASSETS
Investments at value:
Securities .......................................... $833,926,636 $ 28,658,775
Repurchase agreements ............................... 32,802,000 0
------------ ------------
Total investments ..................................... 866,728,636 28,658,775
Cash .................................................. 667 0
Foreign currency at value ............................. 0 193
Receivable for:
Shares of the Fund sold ............................. 6,564,888 82,836
Securities sold ..................................... 2,373,865 147,278
Forward currency contracts -- net ................... 0 57,446
Dividend and interest -- net ........................ 16,225,149 577,744
Due from the adviser (Note 3) ......................... 192,846 55,599
Other assets .......................................... 9,630 7,443
Unamortized organization expenses (Note 1I) ........... 0 0
------------ ------------
892,095,681 29,587,314
------------ ------------
LIABILITIES
Payable for:
Securities purchased ................................ 6,722,512 0
Shares of the Fund redeemed ......................... 525,662 28,793
Foreign taxes ....................................... 0 0
Dividends declared .................................. 0 0
Accrued expenses:
Management fees (Note 3) ............................ 418,781 14,372
Trustees' fees (Note 3B) ............................ 1,250 1,250
Accounting and administration (Note 3A) ............. 76,996 2,857
Other expenses ...................................... 181,257 110,791
Organization costs .................................. 0 0
------------ ------------
7,926,458 158,063
------------
NET ASSETS .............................................. $884,169,223 $ 29,429,251
============ ============
Net Assets consist of:
Capital paid in ..................................... $835,834,329 $ 28,166,499
Undistributed net investment income ................. 13,998,161 758,656
Accumulated net realized gain (loss) ................ 5,501,584 (355,448)
Unrealized appreciation (depreciation) on:
Investments ....................................... 28,841,314 809,751
Foreign currency transactions ..................... (6,165) 49,793
------------ ------------
NET ASSETS .............................................. $884,169,223 $ 29,429,251
============ ============
INSTITUTIONAL CLASS:
Net assets ............................................ $867,281,975 $ 26,567,506
Shares of beneficial interest outstanding, no par value 67,620,961 2,077,176
Net asset value and redemption price per Institutional
share ............................................... $ 12.83 $ 12.79
RETAIL CLASS:
Net assets ............................................ $ 16,887,248 $ 2,861,745
Shares of beneficial interest outstanding, no par value 1,317,748 223,905
Net asset value and redemption price per Retail share . $ 12.82 $ 12.78
Identified cost of investments .......................... $837,887,322 $ 27,849,024
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Intermediate U.S.
High Maturity Investment Municipal Short-Term Government
Yield Bond Grade Bond Bond Bond Securities
Fund Fund Fund Fund Fund Fund
- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 5,066,792 $ 4,681,405 $ 1,864,781 $ 8,090,122 $ 15,844,824 $ 13,119,621
153,000 0 0 245,000 129,000 0
- ------------ ------------ ------------ ------------ ------------ ------------
5,219,792 4,681,405 1,864,781 8,335,122 15,973,824 13,119,621
434 63,149 8,244 142 706 51,207
0 0 0 0 0 0
0 0 12,530 0 3,072 108
0 0 23,387 0 0 0
0 0 0 0 0 0
84,706 68,207 36,576 134,200 229,203 118,139
82,429 57,323 70,652 43,789 58,585 38,392
6,727 20,452 14,917 0 7,554 0
9,748 0 0 0 342 0
- ------------ ------------ ------------ ------------ ------------ ------------
5,403,836 4,890,536 2,031,087 8,513,253 16,273,286 13,327,467
- ------------ ------------ ------------ ------------ ------------ ------------
63,536 0 0 111,121 0 0
0 0 0 0 20,422 0
0 0 0 0 0 0
0 0 0 12,654 7,138 0
2,501 1,586 642 2,724 3,354 4,371
1,250 1,250 1,250 1,250 1,250 1,250
463 364 189 811 1,621 1,302
43,442 23,431 21,187 31,437 51,570 39,778
0 26,558 26,558 0 0 0
- ------------ ------------ ------------ ------------ ------------ ------------
111,192 53,189 49,826 159,997 85,355 46,701
- ------------ ------------ ------------ ------------ ------------ ------------
$ 5,292,644 $ 4,837,347 $ 1,981,261 $ 8,353,256 $ 16,187,931 $ 13,280,766
============ ============ ============ ============ ============ ============
$ 5,114,167 $ 4,748,104 $ 1,902,265 $ 8,049,225 $ 16,584,821 $ 14,256,452
97,858 52,230 33,578 3,779 10,736 216,553
28,030 5,434 (1,915) 39,736 (476,651) (1,250,506)
52,587 31,579 47,358 260,516 69,025 58,267
2 0 (25) 0 0 0
- ------------ ------------ ------------ ------------ ------------ ------------
$ 5,292,644 $ 4,837,347 $ 1,981,261 $ 8,353,256 $ 16,187,931 $ 13,280,766
============ ============ ============ ============ ============ ============
$ 3,944,961 $ 4,786,410 $ 1,718,692 $ 8,353,256 $ 16,009,787 $ 13,280,766
376,692 469,355 164,385 736,256 1,655,051 1,304,084
$ 10.47 $ 10.20 $ 10.46 $ 11.35 $ 9.67 $ 10.18
$ 1,347,683 $ 50,937 $ 262,569 -- $ 178,144 --
128,834 4,996 25,131 -- 18,418 --
$ 10.46 $ 10.20 $ 10.45 -- $ 9.67 --
$ 5,167,205 $ 4,649,826 $ 1,817,423 $ 8,074,606 $ 15,904,799 $ 13,061,354
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Global
Bond Bond
Fund Fund
------------ ------------
<S> <C> <C>
INVESTMENT INCOME
Dividends ............................................. $ 1,018,788 $ 0
Interest .............................................. 28,032,580 918,880
------------ ------------
29,051,368 918,880
------------ ------------
Expenses
Management fees (Note 3) ............................ 2,084,823 82,165
12b-1 fees (Retail Class) ........................... 11,336 2,026
Trustees' fees and expenses (Note 3B) ............... 2,985 2,985
Accounting and administrative fees (Note 3A) ........ 185,950 5,056
Custodian ........................................... 146,079 37,247
Transfer Agent (Institutional Class) ................ 192,110 13,319
Transfer Agent (Retail Class) ....................... 16,705 10,465
Audit and tax services .............................. 11,650 8,650
Legal ............................................... 11,507 1,269
Printing ............................................ 45,578 1,991
Registration fees ................................... 94,959 10,321
Amortization of organization expenses (Note 1I) ..... 0 0
Amortization of deferred registration costs (Note 1I) 6,239 5,356
Miscellaneous expenses .............................. 304 0
------------ ------------
2,810,225 180,850
------------ ------------
Less expenses assumed by the investment adviser (Note 3) . (192,846) (55,576)
------------ ------------
Net investment income ................................. 26,433,989 793,606
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments -- net .................................. 4,566,911 155,894
Foreign currency transactions -- net ................ (27,130) 159,317
------------ ------------
Total realized gain (loss) on investments and foreign
currency transactions ............................. 4,539,781 315,211
------------ ------------
Unrealized appreciation (depreciation) on:
Investments -- net .................................. 9,969,995 (151,361)
Foreign currency transactions -- net ................ 3,182 57,131
------------ ------------
Total unrealized appreciation (depreciation) on
investments and foreign currency transactions ..... 9,973,177 (94,230)
------------ ------------
Net gain (loss) on investments and foreign currency
transactions ........................................ 14,512,958 220,981
------------ ------------
NET INCREASE IN NET ASSETS FROM OPERATIONS .............. $ 40,946,947 $ 1,014,587
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Intermediate U.S.
High Maturity Investment Municipal Short-Term Government
Yield Bond Grade Bond Bond Bond Securities
Fund Fund Fund Fund Fund Fund
- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 17,215 $ 0 $ 1,770 $ 0 $ 0 $ 0
180,780 79,414 59,952 235,668 545,696 464,948
- ------------ ------------ ------------ ------------ ------------ ------------
197,995 79,414 61,722 235,668 545,696 464,948
- ------------ ------------ ------------ ------------ ------------ ------------
12,071 4,798 3,302 16,759 19,862 25,904
1,146 11 171 0 187 0
2,985 2,709 2,709 2,985 2,985 2,985
1,112 611 460 1,811 3,470 2,816
28,805 21,416 26,745 23,076 27,407 19,399
10,485 7,988 9,520 10,838 11,851 11,520
9,679 7,988 9,520 0 9,696 0
8,850 5,175 5,175 6,650 7,650 6,650
991 1,003 965 1,045 1,145 1,107
1,894 1,742 1,742 1,151 2,391 2,176
6,316 2,847 2,847 4,612 5,449 4,400
8,914 0 0 0 758 0
5,348 7,645 12,206 0 5,355 0
0 0 0 0 288 289
- ------------ ------------ ------------ ------------ ------------ ------------
98,596 63,933 75,362 68,927 98,494 77,246
- ------------ ------------ ------------ ------------ ------------ ------------
(82,360) (57,323) (70,652) (43,789) (58,585) (38,392)
- ------------ ------------ ------------ ------------ ------------ ------------
181,759 72,804 57,012 210,530 505,787 426,094
- ------------ ------------ ------------ ------------ ------------ ------------
28,056 5,434 (1,869) 17,151 (52,124) 43,635
(26) 0 (46) 0 0 0
- ------------ ------------ ------------ ------------ ------------ ------------
28,030 5,434 (1,915) 17,151 (52,124) 43,635
- ------------ ------------ ------------ ------------ ------------ ------------
48,183 31,579 47,358 16,684 (5,580) (139,961)
19 0 (25) 0 0 0
- ------------ ------------ ------------ ------------ ------------ ------------
48,202 31,579 47,333 16,684 (5,580) (139,961)
- ------------ ------------ ------------ ------------ ------------ ------------
76,232 37,013 45,418 33,835 (57,704) (96,326)
- ------------ ------------ ------------ ------------ ------------ ------------
$ 257,991 $ 109,817 $ 102,430 $ 244,365 $ 448,083 $ 329,768
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bond
----------------------------------------
Six Months Ended Year Ended
----------------- ------------------
June 30, 1997 December 31, 1996
------------ -----------------
(Unaudited)
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) .......................... $ 26,433,989 $ 29,104,161
Net realized gain (loss) on:
Investments ......................................... 4,566,911 9,916,047
Foreign currency transactions ....................... (27,130) 14,349
Unrealized appreciation (depreciation) on:
Investments ......................................... 9,969,995 1,541,729
Foreign currency transactions ....................... 3,182 (4,455)
------------ ------------
Increase (decrease) in net assets from
operations ........................................ 40,946,947 40,571,831
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............................... (12,779,633) (28,834,672)
Net realized gain on investments .................... 0 (10,362,123)
RETAIL CLASS
Net investment income ............................... (194,168) 0
Net realized gain on investments .................... 0 0
------------ ------------
(12,973,801) (39,196,795)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 6)
INSTITUTIONAL CLASS
Increase (decrease) in net assets derived from
capital share transactions ........................ 298,514,838 284,158,620
RETAIL CLASS
Increase (decrease) in net assets
derived from capital share
transactions ...................................... 16,437,426 0
------------ ------------
Total increase (decrease) in net assets ............... 342,925,410 285,533,656
NET ASSETS
Beginning of the period ............................... 541,243,813 255,710,157
------------ ------------
End of the period ..................................... $884,169,223 $541,243,813
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............................... $ 537,972 $ 34,589
============ ============
End of the period ..................................... $ 13,998,161 $ 537,972
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Global Bond
----------------------------------------
Six Months Ended Year Ended
----------------- ------------------
June 30, 1997 December 31, 1996
------------ -----------------
(Unaudited)
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) .......................... $ 793,606 $ 1,015,932
Net realized gain (loss) on:
Investments ......................................... 155,894 592,117
Foreign currency transactions ....................... 159,317 256,616
Unrealized appreciation (depreciation) on:
Investments ......................................... (151,361) 478,651
Foreign currency transactions ....................... 57,131 25,112
------------ ------------
Increase (decrease) in net assets from
operations ........................................ 1,014,587 2,368,428
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............................... 0 (1,502,252)
Net realized gain on investments .................... 0 0
RETAIL CLASS
Net investment income ............................... 0 0
Net realized gain on investments .................... 0 0
------------ ------------
0 (1,502,252)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 6)
INSTITUTIONAL CLASS
Increase (decrease) in net assets derived from
capital share transactions ........................ (862,081) 15,342,391
RETAIL CLASS
Increase (decrease) in net assets derived
from capital share transactions ................... 2,763,873 0
------------ ------------
Total increase (decrease) in net assets ............... 2,916,379 16,208,567
NET ASSETS
Beginning of the period ............................... 26,512,872 10,304,305
------------ ------------
End of the period ..................................... $ 29,429,251 $ 26,512,872
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............................... $ (34,950) $ 130,782
============ ============
End of the period ..................................... $ 758,656 $ (34,950)
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES FIXED INCOME FUNDS
- ------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
High Yield
----------------------------------------
Six Months Ended Year Ended
----------------- ------------------
June 30, 1997 December 31, 1996
------------ -----------------
(Unaudited)
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) .......................... $ 181,759 $ 37,520
Net realized gain (loss) on:
Investments ......................................... 28,056 0
Foreign currency transactions ....................... (26) (36)
Unrealized appreciation (depreciation) on:
Investments ......................................... 48,183 4,404
Foreign currency transactions ....................... 19 (17)
------------ ------------
Increase (decrease) in net assets from
operations ........................................ 257,991 41,871
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............................... (72,671) (36,708)
Net realized gain on investments .................... 0 0
RETAIL CLASS
Net investment income ............................... (20,190) 0
Net realized gain on investments .................... 0 0
------------ ------------
(92,861) (36,708)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 6)
INSTITUTIONAL CLASS
Increase (decrease) in net assets derived from
capital share transactions ........................ 1,881,517 1,933,717
RETAIL CLASS
Increase (decrease) in net assets
derived from capital share
transactions ...................................... 1,307,107 0
------------ ------------
Total increase (decrease) in net assets ............... 3,353,754 1,938,880
NET ASSETS
Beginning of the period ............................... 1,938,890 10
------------ ------------
End of the period ..................................... $ 5,292,644 $ 1,938,890
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............................... $ 8,960 $ 0
============ ============
End of the period ..................................... $ 97,858 $ 8,960
============ ============
* Commencement of operations, September 11, 1996.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Intermediate
Maturity Bond Investment Grade Bond
---------------- ---------------------
Six Months Ended Six Months Ended
---------------- ---------------------
June 30, 1997* June 30, 1997*
---------------- ---------------------
(Unaudited) (Unaudited)
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) .......................... $ 72,804 $ 57,012
Net realized gain (loss) on:
Investments ......................................... 5,434 (1,869)
Foreign currency transactions ....................... 0 (46)
Unrealized appreciation (depreciation) on:
Investments ......................................... 31,579 47,358
Foreign currency transactions ....................... 0 (25)
------------ ------------
Increase (decrease) in net assets
from operations ................................... 109,817 102,430
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............................... (20,574) (21,072)
Net realized gain on investments .................... 0 0
RETAIL CLASS
Net investment income ............................... 0 (2,362)
Net realized gain on investments .................... 0 0
------------ ------------
(20,574) (23,434)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 6)
INSTITUTIONAL CLASS
Increase (decrease) in net assets derived from
capital share transactions ........................ 4,697,992 1,647,078
RETAIL CLASS
Increase (decrease) in net assets
derived from capital share
transactions ...................................... 50,092 255,167
------------ ------------
Total increase (decrease) in net
assets .............................................. 4,837,327 1,981,241
NET ASSETS
Beginning of the period ............................... 20 20
------------ ------------
End of the period ..................................... $ 4,837,347 $ 1,981,261
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............................... $ 0 $ 0
============ ============
End of the period ..................................... $ 52,230 $ 33,578
============ ============
</TABLE>
* Commencement of operations, January 2, 1997.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Municipal Bond
---------------------------------------
Six Months Ended Year Ended
---------------- -----------------
June 30, 1997 December 31, 1996
---------------- -----------------
(Unaudited)
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) .......................... $ 210,530 $ 372,837
Net realized gain (loss) on:
Investments ......................................... 17,151 54,589
Foreign currency transactions ....................... 0 0
Unrealized appreciation (depreciation) on:
Investments ......................................... 16,684 (147,252)
Foreign currency transactions ....................... 0 0
------------ ------------
Increase (decrease) in net assets from
operations ........................................ 244,365 280,174
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............................... (210,530) (372,889)
Net realized gain on investments .................... 0 (65,728)
RETAIL CLASS
Net investment income ............................... 0 0
Net realized gain on investments .................... 0 0
(210,530) (438,617)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 6)
INSTITUTIONAL CLASS
Increase (decrease) in net assets derived from
capital share transactions ........................ (381,727) 898,750
RETAIL CLASS
Increase (decrease) in net assets derived
from capital share transactions ................... -- --
------------ ------------
Total increase (decrease) in net assets ............... (347,892) 740,307
NET ASSETS
Beginning of the period ............................... 8,701,148 7,960,841
------------ ------------
End of the period ..................................... $ 8,353,256 $ 8,701,148
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............................... $ 3,777 $ 3,829
============ ============
End of the period ..................................... $ 3,779 $ 3,777
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Short-Term Bond
---------------------------------------
Six Months Ended Year Ended
---------------- -----------------
June 30, 1997 December 31, 1996
---------------- -----------------
(Unaudited)
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) .......................... $ 505,787 $ 1,145,418
Net realized gain (loss) on:
Investments ......................................... (52,124) (48,327)
Foreign currency transactions ....................... 0 0
Unrealized appreciation (depreciation) on:
Investments ......................................... (5,580) (248,733)
Foreign currency transactions ....................... 0 0
------------ ------------
Increase (decrease) in net assets from
operations ........................................ 448,083 848,358
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............................... (501,239) (1,145,361)
Net realized gain on investments .................... 0 0
RETAIL CLASS
Net investment income ............................... (4,548) 0
Net realized gain on investments .................... 0 0
------------ ------------
(505,787) (1,145,361)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 6)
INSTITUTIONAL CLASS
Increase (decrease) in net assets derived from
capital share transactions ........................ (2,161,947) (7,513,762)
RETAIL CLASS
Increase (decrease) in net assets derived
from capital share transactions ................... 178,915 0
------------ ------------
Total increase (decrease) in net assets ............... (2,040,736) (7,810,765)
NET ASSETS
Beginning of the period ............................... 18,228,667 26,039,432
------------ ------------
End of the period ..................................... $ 16,187,931 $ 18,228,667
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............................... $ 10,736 $ 8,066
============ ============
End of the period ..................................... $ 10,736 $ 10,736
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. Government Securities
---------------------------------------
Six Months Ended Year Ended
---------------- -----------------
June 30, 1997 December 31, 1996
---------------- -----------------
(Unaudited)
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) .......................... $ 426,094 $ 1,351,371
Net realized gain (loss) on:
Investments ......................................... 43,635 (716,728)
Foreign currency transactions ....................... 0 0
Unrealized appreciation (depreciation) on:
Investments ......................................... (139,961) (437,793)
Foreign currency transactions ....................... 0 0
------------ ------------
Increase (decrease) in net assets from
operations ........................................ 329,768 196,850
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............................... (204,599) (1,334,711)
Net realized gain on investments .................... 0 0
RETAIL CLASS
Net investment income ............................... 0 0
Net realized gain on investments .................... 0 0
------------ ------------
(204,599) (1,334,711)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 6)
INSTITUTIONAL CLASS
Increase (decrease) in net assets derived from
capital share transactions ........................ (1,036,520) (4,169,172)
RETAIL CLASS
Increase (decrease) in net assets derived
from capital share transactions ................... -- --
------------ ------------
Total increase (decrease) in net assets ............... (911,351) (5,307,033)
NET ASSETS
Beginning of the period ............................... 14,192,117 19,499,150
------------ ------------
End of the period ..................................... $ 13,280,766 $ 14,192,117
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............................... $ (4,942) $ (1,533)
============ ============
End of the period ..................................... $ 216,553 $ (4,942)
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Year Ended December 31,
<TABLE>
<CAPTION>
Bond Fund
--------------------------------------
Institutional Class
--------------------------------------
1997* 1996
---- ----
<S> <C> <C>
Net asset value, beginning of period ............................. $ 12.38 $ 12.29
-------- --------
Income from investment operations -
Net investment income (loss) ................................ 0.42 0.86
Net realized and unrealized gain (loss) on investments ...... 0.26 0.35
-------- --------
Total from investment operations ............................. 0.68 1.21
-------- --------
Less distributions -
Dividends from net investment income ........................ (0.23) (0.86)
Distributions in excess of net investment income ............ 0.00 0.00
Distributions from net realized capital gains ............... 0.00 (0.26)
-------- --------
Total distributions .......................................... (0.23) (1.12)
-------- --------
Net asset value, end of period ................................... $ 12.83 $ 12.38
======== ========
Total return (%)(a) .............................................. 5.6 10.3
Net assets, end of period (000) .................................. $867,282 $541,244
Ratio of operating expenses to average net assets (%)(b) ......... 0.75 0.75
Ratio of net investment income to average net assets (%)(b) ...... 7.61 7.93
Portfolio turnover rate (%) ...................................... 14 42
The ratios of expenses to average net assets without giving
effect to the voluntary expense limitations described in
Note 3 to the Financial Statements would have been (%)(b) ...... 0.80 0.75
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net investment
income per share would have been: .............................. $ 0.38 $ 0.86
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
*For the six months ended June 30, 1997. (unaudited)
**From commencement of class operations on January 2, 1997, through June 30, 1997.
(unaudited)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Bond Fund
- --------------------------------------------------------------------------------
Institutional Class Retail Class
- ------------------------------------------------------------- ------------
1995 1994 1993 1992 1997**
- -------- -------- -------- -------- --------
$ 10.05 $ 11.37 $ 10.36 $ 10.23 $ 12.38
- -------- -------- -------- -------- --------
0.82 0.83 0.84 0.76 0.33
2.32 (1.29) 1.43 0.67 0.33
- -------- -------- -------- -------- --------
3.14 (0.46) 2.27 1.43 0.66
- -------- -------- -------- -------- --------
(0.82) (0.84) (0.81) (0.76) (0.22)
0.00 (0.02) 0.00 0.00 0.00
(0.08) 0.00 (0.45) (0.54) 0.00
- -------- -------- -------- -------- --------
(0.90) (0.86) (1.26) (1.30) (0.22)
- -------- -------- -------- -------- --------
$ 12.29 $ 10.05 $ 11.37 $ 10.36 $ 12.82
======== ======== ======== ======== ========
32.0 (4.1) 22.0 14.3 5.5
$255,710 $ 82,985 $ 64,222 $ 18,472 $ 16,887
0.79 0.84 0.94 1.00 1.00
8.34 7.92 8.26 7.50 7.43
35 87 170 101 14
0.79 0.84 0.94 1.55 1.33
$ 0.82 $ 0.83 $ 0.84 $ 0.70 $ 0.24
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Global Bond Fund
----------------------------------
Institutional Class
----------------------------------
<S> <C> <C>
Net asset value, beginning of period ............................. $ 12.35 $ 11.39
-------- --------
Income from investment operations -
Net investment income (loss) ................................ 0.36 0.44
Net realized and unrealized gain (loss) on investments ...... 0.08 1.27
-------- --------
Total from investment operations ............................. 0.44 1.71
-------- --------
Less distributions -
Dividends from net investment income ........................ 0.00 (0.75)
Distributions in excess of net investment income ............ 0.00 0.00
Distributions from net realized capital gains ............... 0.00 0.00
-------- --------
Total distributions .......................................... 0.00 (0.75)
-------- --------
Net asset value, end of period ................................... $ 12.79 $ 12.35
======== ========
Total return (%)(a) .............................................. 3.6 15.0
Net assets, end of period (000) .................................. $ 26,568 $ 26,513
Ratio of operating expenses to average net assets (%)(b) ......... 0.90 1.50
Ratio of net investment income to average net assets (%)(b) ...... 5.81 6.37
Portfolio turnover rate (%) ...................................... 47 131
The ratios of expenses to average net assets without giving
effect to the voluntary expense limitations described in
Note 3 to the Financial Statements would have been (%)(b) ...... 1.24 1.77
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net investment
income per share would have been: .............................. $ 0.34 $ 0.42
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
* For the six months ended June 30, 1997. (unaudited)
** From commencement of class operations on January 2, 1997, through June 30, 1997.
(unaudited)
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Global Bond Fund
- --------------------------------------------------------------------------------
Institutional Class Retail Class
- ------------------------------------------------------------- ------------
1995 1994 1993 1992 1997**
- -------- -------- -------- -------- --------
$ 9.82 $ 11.06 $ 10.32 $ 11.38 $ 12.35
- -------- -------- -------- -------- --------
1.04 0.67 0.54 0.70 0.20
1.31 (1.63) 0.96 (0.60) 0.23
- -------- -------- -------- -------- --------
2.35 (0.96) 1.50 0.10 0.43
- -------- -------- -------- -------- --------
(0.78) (0.04) (0.49) (0.77) 0.00
0.00 (0.24) 0.00 0.00 0.00
0.00 0.00 (0.27) (0.39) 0.00
- -------- -------- -------- -------- --------
(0.78) (0.28) (0.76) (1.16) 0.00
- -------- -------- -------- -------- --------
$ 11.39 $ 9.82 $ 11.06 $ 10.32 $ 12.78
======== ======== ======== ======== ========
23.9 (8.7) 14.6 0.8 3.5
$ 10,304 $ 25,584 $ 21,378 $ 9,968 $ 2,862
1.50 1.30 1.50 1.50 1.15
8.17 7.02 5.54 6.99 5.53
148 153 150 72 47
1.69 1.30 1.51 2.58 2.63
$ 1.02 $ 0.67 $ 0.54 $ 0.59 $ 0.15
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
High Yield Fund
--------------------------------------
Institutional Class Retail Class
---------------------- -------------
1997* 1996+ 1997*+
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period ..................... $ 10.11 $ 10.00 $ 10.11
-------- -------- --------
Income from investment operations -
Net investment income (loss) ............................. 0.36 0.20 0.37
Net realized and unrealized gain (loss) on investments ... 0.21 0.11 0.18
-------- -------- --------
Total from investment operations ......................... 0.57 0.31 0.55
-------- -------- --------
Less distributions -
Dividends from net investment income ..................... (0.21) (0.20) (0.20)
Distributions in excess of net investment income ......... 0.00 0.00 0.00
Distributions from net realized capital gains ............ 0.00 0.00 0.00
-------- -------- --------
Total distributions ...................................... (0.21) (0.20) (0.20)
-------- -------- --------
Net asset value, end of period ........................... $ 10.47 $ 10.11 $ 10.46
======== ======== ========
Total return (%)(a) ...................................... 5.7 3.1 5.6
Net assets, end of period (000) .......................... $ 3,945 $ 1,939 $ 1,348
Ratio of operating expenses to average net assets (%)(b) . 0.75 0.75 1.00
Ratio of net investment income to average net
assets (%)(b) ........................................... 9.06 8.85 8.94
Portfolio turnover rate (%) .............................. 34 0 34
The ratios of expenses to average net assets without
giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements
would have been (%)(b) .................................. 4.81 12.06 5.23
Without giving effect to the voluntary expense
limitations described in Note 3 to the Financial
Statements net investment income per share would have
been: ................................................... $ 0.21 $ (0.05) $ 0.18
</TABLE>
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
*For the six months ended June 30, 1997. (unaudited)
+Commencement of operations on September 11, 1996 and January 2,
1997, for the Institutional and Retail Classes, respectively.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
<TABLE>
<CAPTION>
Intermediate Maturity Bond Fund
--------------------------------------
Institutional Retail
Class Class
--------------------------------------
1997* 1997*
---- ----
<S> <C> <C>
Net asset value, beginning of period ............................. $ 10.00 $ 10.00
-------- --------
Income from investment operations -
Net investment income (loss) ................................ 0.25 0.20
Net realized and unrealized gain (loss) on investments ...... 0.09 0.14
-------- --------
Total from investment operations ............................. 0.34 0.34
-------- --------
Less distributions -
Dividends from net investment income ........................ (0.14) (0.14)
Distributions from net realized capital gains ............... 0.00 0.00
-------- --------
Total distributions .......................................... (0.14) (0.14)
-------- --------
Net asset value, end of period ................................... $ 10.20 $ 10.20
======== ========
Total return (%)(a) .............................................. 3.4 3.4
Net assets, end of period (000) .................................. $ 4,786 $ 51
Ratio of operating expenses to average net assets (%)(b) ......... 0.55 0.80
Ratio of net investment income to average net assets (%)(b) ...... 6.07 6.13
Portfolio turnover rate (%) ...................................... 98 98
The ratios of expenses to average net assets without giving
effect to the voluntary expense limitations described in
Note 3 to the Financial Statements would have been (%)(b) ...... 4.68 141.73
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net investment
income per share would have been: .............................. $ 0.05 $ (1.55)
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
*Commencement of operations on January 2, 1997.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
<TABLE>
<CAPTION>
Investment Grade Bond Fund
--------------------------------------
Institutional Retail
Class Class
--------------------------------------
1997* 1997*
---- ----
<S> <C> <C>
Net asset value, beginning of period ............................. $ 10.00 $ 10.00
-------- --------
Income from investment operations -
Net investment income (loss) ................................ 0.32 0.22
Net realized and unrealized gain (loss) on investments ...... 0.27 0.36
-------- --------
Total from investment operations ............................. 0.59 0.58
-------- --------
Less distributions -
Dividends from net investment income ........................ (0.13) (0.13)
Distributions from net realized capital gains ............... 0.00 0.00
-------- --------
Total distributions .......................................... (0.13) (0.13)
-------- --------
Net asset value, end of period ................................... $ 10.46 $ 10.45
======== ========
Total return (%)(a) .............................................. 6.0 5.9
Net assets, end of period (000) .................................. $ 1,719 $ 263
Ratio of operating expenses to average net assets (%)(b) ......... 0.55 0.80
Ratio of net investment income to average net assets (%)(b) ...... 6.91 6.91
Portfolio turnover rate (%) ...................................... 81 81
The ratios of expenses to average net assets without giving
effect to the voluntary expense limitations described in
Note 3 to the Financial Statements would have been (%)(b) ...... 8.11 20.45
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net investment
income per share would have been: .............................. $ (0.03) $ (0.35)
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
*Commencement of operations on January 2, 1997.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Municipal
Bond Fund
-------------
Institutional
Class
------------
1997*
------------
Net asset value, beginning of period .......................... $ 11.29
--------
Income from investment operations -
Net investment income (loss) .................................. 0.28
Net realized and unrealized gain (loss) on investments ........ 0.06
--------
Total from investment operations .............................. 0.34
--------
Less distributions -
Dividends from net investment income .......................... (0.28)
Distributions from net realized capital gains ................. 0.00
--------
Total distributions ........................................... (0.28)
--------
Net asset value, end of period ................................ $ 11.35
========
Total return (%)(a) ........................................... 3.1
Net assets, end of period (000) ............................... $ 8,353
Ratio of operating expenses to average net assets (%)(b) ...... 0.60
Ratio of net investment income to average net assets (%)(b) ... 5.03
Portfolio turnover rate (%) ................................... 23
The ratios of expenses to average net assets without giving
effect to the voluntary expense limitations described in
Note 3 to the Financial Statements would have been (%)(b) .... 1.65
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net
investment income per share would have been: ................. $ 0.23
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
* For the six months ended June 30, 1997. (unaudited)
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Municipal Bond Fund
- --------------------------------------------------------------------------------
Institutional Class
- --------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- --------
$ 11.53 $ 10.41 $ 11.54 $ 10.95 $ 10.55
- -------- -------- -------- -------- --------
0.52 0.52 0.52 0.51 0.51
(0.15) 1.16 (1.13) 0.74 0.46
- -------- -------- -------- -------- --------
0.37 1.68 (0.61) 1.25 0.97
- -------- -------- -------- -------- --------
(0.52) (0.52) (0.52) (0.51) (0.51)
(0.09) (0.04) 0.00 (0.15) (0.06)
- -------- -------- -------- -------- --------
(0.61) (0.56) (0.52) (0.66) (0.57)
- -------- -------- -------- -------- --------
$ 11.29 $ 11.53 $ 10.41 $ 11.54 $ 10.95
======== ======== ======== ======== ========
3.3 16.5 (5.4) 11.6 9.4
$ 8,701 $ 7,961 $ 7,270 $ 5,160 $ 2,200
1.00 1.00 1.00 1.00 1.00
4.61 4.72 4.79 4.50 4.81
38 41 28 36 32
2.31 2.02 2.37 3.22 7.65
$ 0.37 $ 0.41 $ 0.37 $ 0.26 $ (0.19)
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
<TABLE>
<CAPTION>
Short-Term Bond Fund
--------------------------------------
Institutional Class
--------------------------------------
1997* 1996
---- ----
<S> <C> <C>
Net asset value, beginning of period ............................. $ 9.70 $ 9.81
-------- --------
Income from investment operations -
Net investment income (loss) ................................ 0.31 0.55
Net realized and unrealized gain (loss) on investments ...... (0.03) (0.11)
-------- --------
Total from investment operations ............................. 0.28 0.44
-------- --------
Less distributions -
Dividends from net investment income ........................ (0.31) (0.55)
Distributions from net realized capital gains ............... 0.00 0.00
-------- --------
Total distributions .......................................... (0.31) (0.55)
-------- --------
Net asset value, end of period ................................... $ 9.67 $ 9.70
======== ========
Total return (%)(a) .............................................. 2.9 4.7
Net assets, end of period (000) .................................. $ 16,010 $ 18,229
Ratio of operating expenses to average net assets (%)(b) ......... 0.50 1.00
Ratio of net investment income to average net assets (%)(b) ...... 6.33 5.69
Portfolio turnover rate (%) ...................................... 44 120
The ratios of expenses to average net assets without giving
effect to the voluntary expense limitations described in
Note 3 to the Financial Statements would have been (%)(b) ...... 1.12 1.17
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net investment
income per share would have been: .............................. $ 0.27 $ 0.53
</TABLE>
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
*For the six months ended June 30, 1997. (unaudited)
**Commencement of operations August 3, 1997.
***From commencement of class opertions on January 2, 1997, through
June 30, 1997. (unaudited)
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Short Term Bond Fund
- -------------------------------------------------------------------------------
Retail
Institutional Class Class
- --------------------------------------------------------------- ---------
1995 1994 1993 1992** 1997***
- -------- -------- -------- -------- --------
$ 9.46 $ 9.95 $ 9.87 $ 10.00 $ 9.70
- -------- -------- -------- -------- --------
0.63 0.66 0.59 0.22 0.30
0.35 (0.49) 0.08 (0.13) (0.03)
- -------- -------- -------- -------- --------
0.98 0.17 0.67 0.09 0.27
- -------- -------- -------- -------- --------
(0.63) (0.66) (0.59) (0.22) (0.30)
0.00 0.00 0.00 0.00 0.00
- -------- -------- -------- -------- --------
(0.63) (0.66) (0.59) (0.22) (0.30)
- -------- -------- -------- -------- --------
$ 9.81 $ 9.46 $ 9.95 $ 9.87 $ 9.67
======== ======== ======== ======== ========
10.6 1.8 7.0 0.9 2.8
$ 26,039 $ 19,440 $ 15,226 $ 5,121 $ 178
1.00 1.00 1.00 1.00 0.75
6.46 6.88 5.97 5.49 6.02
214 34 81 31 44
1.03 1.33 1.55 3.74 14.07
$ 0.62 $ 0.63 $ 0.54 $ 0.11 $ (0.30)
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
U.S.
Government
Securities
Fund
-------------
Institutional
Class
------------
1997*
------------
Net asset value, beginning of period .......................... $ 10.08
--------
Income from investment operations -
Net investment income (loss) .................................. 0.33
Net realized and unrealized gain (loss) on investments ........ (0.07)
--------
Total from investment operations .............................. 0.26
--------
Less distributions -
Dividends from net investment income .......................... (0.16)
Distributions from net realized capital gains ................. 0.00
--------
Total distributions ........................................... (0.16)
--------
Net asset value, end of period ................................ $ 10.18
========
Total return (%)(a) ........................................... 2.7
Net assets, end of period (000) ............................... $ 13,281
Ratio of operating expenses to average net assets (%)(b) ...... 0.60
Ratio of net investment income to average net assets (%)(b) ... 6.58
Portfolio turnover rate (%) ................................... 55
The ratios of expenses to average net assets without giving
effect to the voluntary expense limitations described in
Note 3 to the Financial Statements would have been (%)(b) ..... 1.19
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net
investment income per share would have been: .................. $ 0.30
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
*For the six months ended June 30, 1997. (unaudited)
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
U.S. Government Securities Fund
- --------------------------------------------------------------------------------
Institutional Class
- --------------------------------------------------------------------------------
1996 1995 1994 1993 1992
- -------- -------- -------- -------- --------
$ 10.64 $ 9.22 $ 10.53 $ 10.45 $ 10.77
- -------- -------- -------- -------- --------
0.68 0.66 0.64 0.64 0.64
(0.57) 1.42 (1.30) 1.00 0.27
- -------- -------- -------- -------- --------
0.11 2.08 (0.66) 1.64 0.91
- -------- -------- -------- -------- --------
(0.67) (0.66) (0.65) (0.65) (0.59)
0.00 0.00 0.00 (0.91) (0.64)
- -------- -------- -------- -------- --------
(0.67) (0.66) (0.65) (1.56) (1.23)
- -------- -------- -------- -------- --------
$ 10.08 $ 10.64 $ 9.22 $ 10.53 $ 10.45
======== ======== ======== ======== ========
1.3 23.0 (6.3) 15.7 8.8
$ 14,192 $ 19,499 $ 17,341 $ 18,317 $ 10,899
1.00 1.00 1.00 1.00 1.00
6.23 6.47 6.60 5.95 6.54
137 169 242 277 344
1.19 1.22 1.22 1.29 2.01
$ 0.66 $ 0.64 $ 0.62 $ 0.61 $ 0.54
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
June 30, 1997
1. The Loomis Sayles Funds is comprised of seventeen no-load mutual funds
(the "Funds").
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.
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.
The Trust consists of the following Funds:
<TABLE>
<CAPTION>
Fixed Income Funds Equity Funds
- ------------------- -------------
<S> <C>
Loomis Sayles Bond Fund Loomis Sayles Core Value Fund
Loomis Sayles Global Bond Fund Loomis Sayles Growth Fund
Loomis Sayles High Yield Fund Loomis Sayles International Equity Fund
Loomis Sayles Intermediate Maturity Bond Fund Loomis Sayles Mid-Cap Growth Fund
Loomis Sayles Investment Grade Bond Fund Loomis Sayles Mid-Cap Value Fund
Loomis Sayles Municipal Bond Fund Loomis Sayles Small Cap Growth Fund
Loomis Sayles Short-Term Bond Fund Loomis Sayles Small Cap Value Fund
Loomis Sayles U.S. Government Securities Fund Loomis Sayles Strategic Value Fund
Loomis Sayles Worldwide Fund
</TABLE>
On September 12, 1996, the Trustees of the Trust approved the issuance of
Institutional and Retail Class shares of each Fund (other than the U.S.
Government Securities Fund and Municipal Bond Fund which will issue only
Institutional Class shares). Except for certain categories of investors (as set
forth in the relevant prospectus), the purchase of Institutional Class shares,
which are not subject to any distribution fees, requires a minimum investment of
$1 million. Except for certain categories of investors (as set forth in the
relevant prospectus) the purchase of Retail Class shares, which are subject to
distribution fees at the annual rate of 0.25% of the average net assets pursuant
to a distribution plan adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, requires a minimum investment of $250,000. On January 2,
1997, Retail Class shares were first publicly offered for sale. Shares of each
class represent an equal pro rata interest in the assets of the relevant fund,
and, generally, have identical voting, dividend, liquidation and other rights.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. These financial statements only cover
the Fixed Income Funds.
The following is a summary of significant accounting policies consistently
followed by each Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
A. SECURITY VALUATION -- 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 methods
based on market transactions for comparable securities and on various
relationships between securities which are generally recognized by institutional
traders. Short-term securities and debt securities with a remaining maturity of
60 days or less are valued at their amortized cost, which approximates market
value. Other securities for which current market quotations are not readily
available (including restricted securities, if any) are carried 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 of Trustees.
B. REPURCHASE AGREEMENTS -- The Funds engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Funds take
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Funds to resell, the obligation at an agreed-upon
price and time. This arrangement results in a fixed rate of return that is not
subject to market fluctuations during the Funds' holding period. The Funds,
through their custodian, receive delivery of the underlying securities
collateralizing repurchase agreements. It is the Funds' policy that the market
value of the collateral be at least equal to 100% of the repurchase price.
Loomis Sayles is responsible for determining that the value of the collateral is
at all times at least equal to the repurchase price. In connection with
transactions in repurchase agreements, if the seller defaults and the value of
the collateral declines or if the seller enters into insolvency proceedings,
realization of the collateral by the Funds may be delayed or limited.
C. FOREIGN CURRENCY TRANSLATION -- The books and records of each of the Funds
(including those Funds that invest in foreign securities) are maintained in
U.S. dollars. The value of securities, currencies and other assets and
liabilities denominated in currencies other than U.S. dollars is translated
into U.S. dollars based upon foreign exchange rates prevailing at the end of
the period. Purchases and sales of investment securities, income and expenses
are translated on the respective dates of such transactions.
The results of operations resulting from changes in foreign exchange rates on
investments are not isolated from fluctuations arising from changes in market
prices of securities held. All such fluctuations are included with net realized
and unrealized gain or loss from investments.
Net realized and unrealized gains and losses on foreign currency transactions
represent foreign exchange gains and losses from the sale of short-term
securities and holdings of foreign currencies, foreign currency gains and losses
between trade dates and settlement dates on investment securities transactions,
and the difference between the amounts of daily interest accruals on the books
of the Funds and the amounts actually received resulting from changes in
exchange rates on the payable date.
D. FORWARD FOREIGN CURRENCY CONTRACTS -- Each Fund that may invest in foreign
securities, may, upon the purchase or sale of a security denominated in a
foreign currency, enter into forward foreign currency contracts for the purchase
or sale, for a fixed amount of U.S. dollars, of the amount of foreign currency
involved in the underlying security transaction. In such cases, the Funds have
not realized currency gains or losses between the trade and settlement dates on
these security transactions.
In addition, a Fund may enter into a forward foreign currency contract to sell,
for a fixed amount, a foreign currency in which securities held are denominated
to hedge against anticipated declines in the value of the currency Loomis Sayles
believes may adversely affect the value of the Fund's portfolio securities.
Forward foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as unrealized
gain or loss. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying price of the Fund's investment securities, but does establish a
rate of exchange that can be achieved in the future. Although forward foreign
currency exchange contracts limit the risk of loss due to a decline in the value
of hedged currency, they also limit any potential gain that might result should
the value of the currency increase. In addition, the Funds could be exposed to
additional risks if the counterparties to the contracts are unable to meet the
terms of their contracts. At June 30, 1997, the Global Bond Fund had the
following open forward foreign currency contracts:
Local Aggregate Unrealized
Delivery Currency Face Total Appreciation
Date Amount Amount Value (Depreciation)
-------- -------- --------- ----- --------------
Deutsche Mark
(sell) 9/30/97 6,078,000 $3,542,784 $3,508,833 $33,951
Japanese Yen
(sell) 9/30/97 212,400,000 1,903,567 1,879,355 24,212
Japanese Yen
(sell) 9/30/97 5,400,000 47,063 47,780 (717)
-------
$57,446
-------
E. SECURITY TRANSACTIONS, RELATED INVESTMENT INCOME AND EXPENSES -- Security
transactions are accounted for on the trade date (the date the buy or sell is
executed). Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Interest income is increased by the
accretion of discount. Discounts on zero coupon bonds, original issues, step
bonds and payment in kind bonds are accreted according to the effective interest
method. In determining net gain or loss on securities sold, the cost of
securities has been determined on the identified cost basis.
Investment income, realized and unrealized gains and losses, and Fund level
expenses will be allocated daily on a pro rata basis to each class, based on
relative net assets. Retail Class shares will pay a monthly 12b-1 distribution
fee at an annual rate of 0.25% of the Fund's average net assets attributable to
Retail Class shares. Institutional Class shares pay no distribution fees.
F. WHEN-ISSUED SECURITIES -- Delivery and payment for securities purchased on a
when-issued or delayed delivery basis can take place one month or more after the
date of the transactions. The securities so purchased are subject to market
fluctuation during this period. Each Fund instructs the custodian to segregate
assets in a separate account with a current value at least equal to the amount
of its when-issued purchase commitments. At June 30, 1997, the Funds held no
such commitments.
G. FEDERAL INCOME TAXES -- Each Fund is a separate entity for federal income tax
purposes. Each Fund intends to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies, and to distribute to its
shareholders all of its net investment income and any net realized capital
gains. Accordingly, no provision for federal income tax or excise tax has been
made.
H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Municipal Bond Fund and
Short-Term Bond Fund declare dividends daily to shareholders of record at the
time and pay dividends monthly. The Bond, High Yield, Intermediate Maturity
Bond, Investment Grade Bond and U.S. Government Securities Funds declare and pay
their net investment income quarterly. The Global Bond Fund declares and pays
its net investment income to shareholders annually. Distributions from net
realized capital gains are declared and paid on an annual basis by all of the
funds. Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences relate primarily to differing
treatments of income and gains on various investment securities held by the
Funds, timing differences and differing characterizations of distributions made
by the Funds. Net investment income dividends are determined on a class level
and capital gains are determined on a Fund level.
I. ORGANIZATION EXPENSE AND DEFERRED REGISTRATION COSTS -- In 1992, costs
approximating $7,800 were incurred in connection with the organization of the
Short-Term Bond Fund. These costs were paid by the Fund and are being amortized
by the Fund over 60 months.
In 1996, costs approximating $24,600 were incurred in connection with the
organization of the High Yield Fund. These costs were paid by the Fund and are
being amortized as follows: $16,100 over 12 months and $8,500 over 60 months.
In 1997, costs were incurred in connection with the organization of the
Intermediate Maturity and the Investment Grade Bond Funds. These costs were paid
by the Funds and are being amortized by each Fund as follows: $26,557
representing $12,329 and $14,228 for the Institutional and Retail Classes,
respectively, over 12 months.
In addition, in 1997, costs were incurred in connection with the issuance of the
Retail Class shares which were offered for sale beginning on January 2, 1997.
These costs are being amortized by the respective Fund's Institutional Class
over 12 months:
Bond Fund .................................................... $13,718
Global Bond Fund ............................................. 11,779
High Yield Fund .............................................. 11,757
Short-Term Bond Fund ......................................... 11,774
2. PURCHASES AND SALES OF SECURITIES -- (excluding short-term investments) for
each Fund for the period ended June 30, 1997, were as follows:
<TABLE>
<CAPTION>
Purchases
----------------------------------------
U.S. Government Other
--------------- -----
<S> <C> <C>
Bond Fund .................................................. $16,869,993 $363,634,376
Global Bond Fund ........................................... 0 14,562,107
High Yield Fund ............................................ 474,531 3,860,069
Intermediate Maturity Bond Fund ............................ 3,127,713 3,707,768
Investment Grade Bond Fund ................................. 997,039 1,505,099
Municipal Bond Fund ........................................ 688,871 1,186,535
Short-Term Bond Fund ....................................... 3,321,022 3,522,703
U.S. Government Securities Fund ............................ 7,103,820 0
Sales
----------------------------------------
U.S. Government Other
--------------- -----
Bond Fund .................................................. $42,901,272 $49,509,866
Global Bond Fund ........................................... 3,745,000 8,769,555
High Yield Fund ............................................ 461,488 803,187
Intermediate Maturity Bond Fund ............................ 2,171,383 10,525
Investment Grade Bond Fund ................................. 984,916 174,449
Municipal Bond Fund ........................................ 444,461 1,671,570
Short-Term Bond Fund ....................................... 7,106,652 1,776,735
U.S. Government Securities Fund ............................ 7,993,473 0
</TABLE>
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES -- During the period
ended June 30, 1997, the Funds incurred management fees payable to Loomis
Sayles. Certain officers and employees of Loomis Sayles are also officers or
trustees of the Trust. Loomis Sayles' general partner is indirectly owned by New
England Investment Companies, L.P., a publicly-traded limited partnership whose
general partner is indirectly owned by Metropolitan Life Insurance Company.
Separate management agreements for each Fund in effect during the period ended
June 30, 1997 provided for fees at the following annual percentage rate of each
Fund's average daily assets:
Fees Earned
During the
Period Ended Annual
June 30, Percentage
Fund 1997(a) Rate
---- ------------ ----------
Bond Fund ....................................... $2,084,823 0.60%
Global Bond Fund ................................ 82,165 0.60%
High Yield Fund ................................. 12,071 0.60%
Intermediate Maturity Bond Fund ................. 4,798 0.40%
Investment Grade Bond Fund ...................... 3,302 0.40%
Municipal Bond Fund ............................. 16,759 0.40%
Short-Term Bond Fund ............................ 19,862 0.25%
U.S. Government Securities Fund ................. 25,904 0.40%
(a) Prior to voluntary expense limitations.
Loomis Sayles voluntarily agreed, for an indefinite period, to reduce its
advisory fees and/or bear other expenses, to the extent necessary to limit the
total operating expenses of the Institutional Class shares of each Fund to the
following percentage rate of the Fund's average daily net assets:
Annual
Percentage
Fund Rate
---- ----------
Bond Fund ...................................................... 0.75%
Global Bond Fund ............................................... 0.90%
High Yield Fund ................................................ 0.75%
Intermediate Maturity Bond Fund ................................ 0.55%
Investment Grade Bond Fund ..................................... 0.55%
Municipal Bond Fund ............................................ 0.60%
Short-Term Bond Fund ........................................... 0.50%
U.S. Government Securities Fund ................................ 0.60%
Loomis Sayles also voluntarily agreed, for an indefinite period, to reduce its
advisory fees and/or bear other expenses, to the extent necessary to limit the
total operating expenses of the Retail Class shares of each Fund to the
following percentage rate of the Fund's average daily net assets:
Annual
Percentage
Fund Rate
---- ----------
Bond Fund ...................................................... 1.00%
Global Bond Fund ............................................... 1.15%
High Yield Fund ................................................ 1.00%
Intermediate Maturity Bond Fund ................................ 0.80%
Investment Grade Bond Fund ..................................... 0.80%
Short-Term Bond Fund ........................................... 0.75%
Loomis Sayles may change or terminate these voluntary agreements at any time,
but the relevant prospectus would be supplemented at the time to describe the
change.
A. OTHER EXPENSES -- Through May 31, 1997, New England Funds, L.P. (a subsidiary
of New England Investment Companies) performed certain administrative,
accounting and other services for the Trust. The expenses of those services,
which were paid by the Trust, include the following: (i) expenses for personnel
performing bookkeeping, accounting, internal auditing, financial reporting
functions and clerical functions relating to the Funds, and (ii) expenses for
services required in connection with the preparation of registration statements
and prospectuses, shareholder reports and reports and questionnaires for SEC
compliance. For the period ended May 31, 1997 these expenses amounted to $66,997
for the eight Loomis Sayles Funds presented herein and are shown separately in
the financial statements as Accounting and Administrative fees. Effective June
1, 1997, Loomis Sayles, at its own expense, voluntarily assumed certain of these
functions previously performed by New England Funds, L.P., and has contracted
with State Street Bank and Trust Company ("State Street") as Administrator to
perform certain other of these services. The amounts paid to State Street for
performing such functions totaled $134,289 for the eight Loomis Sayles Funds
presented herein and are also shown in the financial statements as Accounting
and Administrative fees.
B. TRUSTEES FEES AND EXPENSES -- The Trust does not pay any compensation
directly to its officers or trustees who are directors, officers or employees of
Loomis Sayles, The New England or their affiliates. Each independent trustee is
compensated by the Trust on behalf of each Fund at the rate of $1,250 per Fund
per year, plus travel expenses for each meeting attended.
C. SHAREHOLDERS -- At June 30, 1997, Loomis Sayles held 13,643 shares of
beneficial interest in the Municipal Bond Fund, 52,035 shares of beneficial
interest in the High Yield Fund and 101,328 shares of the Investment Grade Bond
Fund. In addition, Loomis Sayles Funded Pension Plan and the Loomis Sayles &
Company, Employees Profit Sharing Retirement Plan held shares of beneficial
interest in the Funds as follows:
Profit
Pension Sharing
Plan Plan
------- --------
Bond Fund ....................................... 471,324 948,332
Global Bond Fund ................................ 600,448 191,549
Intermediate Maturity Bond Fund ................. 99,602 129,669
Investment Grade Bond Fund ...................... 0 21,314
Short-Term Bond Fund ............................ 55,854 198,464
U.S. Government Securities Fund ................. 515,273 92,148
High Yield Fund ................................. 0 98,698
4. CREDIT RISK -- The Bond Fund may invest up to 35%, the Global Bond and
Short-Term Bond Funds each may invest up to 20%, the Intermediate Maturity Bond
and the Investment Grade Bond Funds each may invest up to 10%, and the High
Yield Fund will normally invest at least 65% of its assets in securities
offering high current income, which generally will be in the lower rating
categories of recognized rating agencies. These securities are regarded as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligations and will generally
involve more credit risk than securities in the higher rating categories. In
addition, the trading market for high yield securities may be relatively less
liquid than the market for higher-rated securities.
5. FOREIGN SECURITIES -- Each Fund (except the Municipal Bond and U.S.
Government Securities Funds) may purchase securities of foreign issuers.
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
U.S. companies and securities of the U.S. government. These risks include
revaluation of currencies and the risk of appropriation. Moreover, the markets
for securities of many foreign companies and foreign governments may be less
liquid and the prices of such securities may be more volatile than those
securities of comparable U.S. companies and the U.S. government.
6. CAPITAL STOCK TRANSACTIONS -- The tables below summarize the transactions in
Fund shares for the periods indicated:
<TABLE>
<CAPTION>
Loomis Sayles Bond Fund
-----------------------------------------------------------------------
Period Ended Year Ended
June 30, 1997 December 31, 1996
---------------------------------- -----------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ..... 29,645,056 $369,859,080 30,770,089 $380,541,907
Issued in connection with the
reinvestment of:
Dividends from investment income ... 866,718 10,452,603 1,888,855 23,025,701
Distributions from net realized
gains on investment .............. 0 0 704,026 8,749,675
Redeemed ........................... (6,598,371) (81,796,845) (10,467,220) (128,158,663)
--------- ----------- --------- -----------
Net change ......................... 23,913,403 $298,514,838 22,895,750 $284,158,620
========== ============ ========== ============
</TABLE>
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ..... 1,436,517 $ 17,930,053
Issued in connection with the
reinvestment of:
Dividends from investment income ... 12,876 155,153
Distributions from net realized
gains on investments ............. 0 0
Redeemed ........................... (131,645) (1,647,780)
--------- -----------
Net change ......................... 1,317,748 $ 16,437,426
========= ============
<TABLE>
<CAPTION>
Loomis Sayles Global Bond Fund
----------------------------------------------------------------
Period Ended Year Ended
June 30, 1997 December 31, 1996
------------------------------- -------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ........... 160,423 $1,977,818 1,525,167 $18,653,771
Issued in connection with the reinvestment
of:
Dividends from investment income ......... 0 0 92,817 1,145,834
Distributions from net realized gains on
investments ............................ 0 0 0 0
Redeemed ................................. (230,373) (2,839,899) (375,310) (4,457,214)
------- --------- -------- ----------
Net change ............................... (69,950) $(862,081) 1,242,674 $15,342,391
======= ========= ========= ===========
</TABLE>
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ........... 249,980 $3,089,662
Issued in connection with the reinvestment
of:
Dividends from investment income ......... 0 0
Distributions from net realized gains on
investments ............................ 0 0
Redeemed ................................. (26,075) (325,789)
------ ---------
Net change ............................... 223,905 $2,763,873
======= ==========
<TABLE>
<CAPTION>
Loomis Sayles High Yield Fund
--------------------------------------------------------------
Period Ended Year Ended
June 30, 1997 December 31, 1996*
------------------------------ ------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ............. 218,562 $2,220,687 189,979 $1,915,483
Issued in connection with the reinvestment
of:
Dividends from investment income ........... 6,406 63,094 3,048 30,815
Distributions from net realized gains on
investment ............................... 0 0 0 0
Redeemed ................................... (40,070) (402,264) (1,234) (12,581)
------- ---------- ------- ----------
Net change ................................. 184,898 $1,881,517 191,793 $1,933,717
======= ========== ======= ==========
</TABLE>
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ............. 156,031 $1,582,924
Issued in connection with the reinvestment
of:
Dividends from investment income ........... 1,930 18,994
Distributions from net realized gains on
investment ............................... 0 0
Redeemed ................................... (29,127) (294,811)
------- ----------
Net change ................................. 128,834 $1,307,107
======= ==========
*From September 11, 1996 (commencement of operations).
Loomis Sayles
Intermediate Maturity Bond Fund
-------------------------------
Period Ended
June 30, 1997*
-------------------------------
Institutional Class Shares Shares Amount
- -------------------------- ------ ------
Issued from the sale of shares ............. 467,874 $4,683,474
Issued in connection with the reinvestment
of:
Dividends from investment income ........... 1,978 19,519
Distributions from net realized gains on
investment ............................... 0 0
Redeemed ................................... (497) (5,001)
------- ----------
Net change ................................. 469,355 $4,697,992
======= ==========
Retail Class Shares Shares Amount
------ ------
Issued from the sale of shares ............. 4,996 $ 50,092
Issued in connection with the reinvestment
of:
Dividends from investment income ........... 0 0
Distributions from net realized gains on
investment ............................... 0 0
Redeemed ................................... 0 0
------ ---------
Net change ................................. 4,996 $ 50,092
===== =========
*From January 2, 1997 (commencement of operations).
Loomis Sayles Investment
Grade Bond Fund
------------------------------
Period Ended
June 30, 1997*
------------------------------
Institutional Class Shares Shares Amount
- -------------------------- ------ ------
Issued from the sale of shares ............. 162,840 $1,632,020
Issued in connection with the reinvestment
of:
Dividends from investment income ........... 2,047 20,058
Distributions from net realized gains on
investment ............................... 0 0
Redeemed ................................... (502) (5,000)
------- ----------
Net change ................................. 164,385 $1,647,078
======= ==========
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ............. 26,201 $266,208
Issued in connection with the reinvestment
of:
Dividends from investment income ........... 234 2,297
Distributions from net realized gains on
investment ............................... 0 0
Redeemed ................................... (1,304) (13,338)
--------- -----------
Net change ................................. 25,131 $255,167
====== ========
*From January 2, 1997 (commencement of operations).
<TABLE>
<CAPTION>
Loomis Sayles Municipal Bond Fund
----------------------------------------------------------------
Period Ended Year Ended
June 30, 1997 December 31, 1996
------------------------------- -------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ............ 31,782 $ 358,648 130,141 $ 1,455,513
Issued in connection with the reinvestment
of:
Dividends from investment income .......... 11,710 131,561 23,403 263,016
Distributions from net realized gains on
investment .............................. 0 0 4,717 52,895
Redeemed .................................. (78,069) (871,936) (77,656) (872,674)
------ ---------- ------ ----------
Net change ................................ (34,577) $(381,727) 80,605 $898,750
======= ========= ====== ========
</TABLE>
<TABLE>
<CAPTION>
Loomis Sayles Short-Term Bond Fund
------------------------------------------------------------------
Period Ended Year Ended
June 30, 1997 December 31, 1996
------------------------------- ---------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares .......... 532,505 $5,146,849 1,283,882 $12,426,078
Issued in connection with the
reinvestment of:
Dividends from investment income ........ 46,492 448,465 106,059 1,027,017
Distributions from net realized gains on
investment ............................ 0 0 0 0
Redeemed ................................ (803,736) (7,757,261) (2,163,540) (20,966,857)
-------- ----------- --------- -----------
Net change .............................. (224,739) $(2,161,947) (773,599) $(7,513,762)
======== =========== ========= ===========
</TABLE>
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares .......... 30,315 $ 293,305
Issued in connection with the
reinvestment of:
Dividends from investment income ........ 464 4,467
Distributions from net realized gains on
investment ............................ 0 0
Redeemed ................................ (12,361) (118,857)
------ ----------
Net change .............................. 18,418 $ 178,915
====== ==========
<TABLE>
<CAPTION>
Loomis Sayles U.S. Government Securities Fund
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Period Ended Year Ended
June 30, 1997 December 31, 1996
------------------------------- ---------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares .......... 91,000 $ 908,399 864,647 $ 8,983,613
Issued in connection with the
reinvestment of:
Dividends from investment income ........ 20,045 194,838 129,259 1,274,113
Distributions from net realized gains on
investment ............................ 0 0 0 0
Redeemed ................................ (214,541) (2,139,757) (1,418,646) (14,426,898)
------ ---------- -------- ----------
Net change .............................. (103,496) $(1,036,520) (424,740) $ (4,169,172)
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</TABLE>
<PAGE>
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BOARD OF TRUSTEES
EARL W. FOELL
DANIEL J. FUSS
RICHARD S. HOLWAY
TERRY R. LAUTENBACH
MICHAEL T. MURRAY
OFFICERS
PRESIDENT
DANIEL J. FUSS
EXECUTIVE VICE PRESIDENT TREASURER
ROBERT J. BLANDING MARK W. HOLLAND
VICE PRESIDENTS ASSISTANT TREASURER
JEROME A. CASTELLINI NICHOLAS H. PALMERINO
MARY C. CHAMPAGNE
E. JOHN DEBEER SECRETARY
PAUL H. DREXLER SHEILA M. BARRY
WILLIAM H. EIGEN, JR.
CHRISTOPER R. ELY ASSISTANT SECRETARY
QUENTIN P. FAULKNER MEGAN W. CHAMBERS
PHILIP C. FINE LAURIE M. GALLAGHER
MARTHA F. HODGMAN
JOHN HYLL
JEFFREY L. MEADE
KENT P. NEWMARK
SCOTT A. PAPE
JEFFREY C. PETHERICK
PHILIP J. SCHETTEWI
DAVID L. SMITH
JEFFREY W. WARDLOW
GREGG D. WATKINS
ANTHONY J. WILKINS
JOHN F. YEAGER III
<PAGE>
For Information about:
o Establishing an account
o Account procedures and status
o Exchanges
o Shareholder services
PHONE 800-626-9390
For all other information about the Funds:
PHONE 800-633-3330
TO REQUEST ANY OF THE FOLLOWING, PRESS OR SAY THE NUMBER
[1] LITERATURE AND INFORMATION
[2] NET ASSET VALUES AND YIELDS
[3] SPEAK TO A MARKETING REPRESENTATIVE
[4] ADVISORY, INSTITUTIONAL AND HIGH NET WORTH SERVICES
As always, we are interested in your comments about the job we are doing and
in answering any questions you may have. Please do not hesitate to give us a
call at the phone number listed above, Monday through Friday, 8:45 to 4:45
p.m. EST.
INVESTMENT ADVISER
Loomis Sayles & Company, L.P. o One Financial Center o Boston, MA 02111
TRANSFER AND DIVIDEND PAYING AGENT AND CUSTODIAN OF ASSETS
State Street Bank and Trust Company o Boston, MA 02102
SHAREHOLDER SERVICING AGENT FOR STATE STREET BANK AND TRUST COMPANY
Boston Financial Data Services, Inc. o P.O. Box 8314 o Boston, MA 02266
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. o 1 Post Office Square o Boston, MA 02109
This report has been prepared for the shareholders of the Funds and is not
authorized for distribution to prospective investors in the Funds unless it
is accompanied or preceded by an effective prospectus.
LSF140PR097
