<PAGE>
LOOMIS
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SAYLES
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FUNDS
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EQUITY FUNDS
ANNUAL REPORT
DECEMBER 31, 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]
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Daniel J. Fuss
DEAR SHAREHOLDERS:
You may recall our mid-year discussion; it's time for an update.
We spoke in June about the world being a peaceful place, providing a friendly
environment for investors of capital. We reviewed our global economy,
surrounded by an ocean of liquidity. We commented on central banks
contemplating their next monetary tactics, without the necessary political and
popular support to carry them through. And we gave a play-by-play on the
antics of mischievous hockey players, who add risk to the market by trying to
wrest incremental return. At the time, I was struck by the truth behind an old
Malaysian saying, "just because the river is quiet does not mean the
crocodiles have left."
In fact, the river turned out to be full of crocodiles. Not only have many of
them surfaced, they chased the hockey players and have been rather hard on
some of the slower moving ones.
The upset in Asia and the brief, but powerful, upset in Latin America forced
many of the hockey players off of the rink. The "yen/dollar carry trade"
effect moderated, but this basic arbitrage between very low interest rates in
Japan and higher rates in the dollar block countries, the United States,
Canada, New Zealand and Australia, continues to attract many investors. While
speculative in nature, this carry trade does lend considerable support to both
the stock and bond markets in North America. "Virtual hedging", where plans
are made to sell stocks when the market declines past a certain point,
apparently continues unabated. This could lead to trouble at some point; so
far, it has not.
Valuations are still relatively tight in the developed world, with not much
return premium being paid for uncertainty. The collapse of the Asian
currencies and markets has created tremendous undervaluation in emerging
markets and Yankee bonds, which are bonds issued by foreign governments, but
sold in the U.S. and denominated in dollars. Risks have escalated, along with
potential returns.
World economic growth prospects are not as encouraging as they were. The
currency and market turmoil is taking its toll. "Disinflation" is now the
optimistic word for product price trends. Thus, the inflationary pressure from
tighter labor markets in North America is being offset by lower product prices
worldwide. Except for Canada and a few minor adjustments in anticipation of
the European Monetary Union, we should not see any meaningful tightening by
central banks as long as the current uncertainty continues.
There is still ample liquidity to meet investment demands. Valuation levels on
U.S. equities seem high, particularly as earnings growth is likely to slow.
Yet lower bond yields provide powerful support and there are some good values
now available in some parts of the world.
Other than not getting too close to the river, as the crocodiles still lurk,
the current environment is still a good one for investing. However, a
heightened sense of caution is in order.
Thanks again for investing with us.
Sincerely,
/s/ Daniel J. Fuss
Daniel J. Fuss
President, Loomis Sayles Funds
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[Photo of
John F. Yeager, III]
John F. Yeager, III
DEAR SHAREHOLDERS:
WHAT DOES IT TAKE FOR AN INVESTMENT MANAGEMENT FIRM TO CONTINUE TO BUILD ON
PAST SUCCESS?
IT TAKES EXPERIENCE
Loomis Sayles Funds builds upon the experience of its adviser, Loomis Sayles &
Company, L.P., which has been investing for demanding institutional and high
net worth clients for over seventy years. Loomis Sayles has been around long
enough to see all the ups and the downs of the market - the crash of '29, the
recession of '73-74, the crash of '87 - and we know how to respond in those
markets. We invest for the long-term and employ methodologies which are time-
tested. We don't go for the quick and easy return but take calculated risks,
which we feel should generate favorable returns. We've learned that investing
with an eye to the future, without fad techniques or "swinging for the fence",
helps generate more consistent performance. Our Fund portfolio managers have
an average of 20 years experience in the investment industry and over 8 years
tenure with Loomis Sayles. Manager tenure on all but three of our Funds is
"since inception."
IT TAKES A DISCIPLINED TEAM
Loomis Sayles is structured to take advantage of our institutional heritage.
Our Fund portfolio managers also manage money for large, institutional clients
who appreciate and demand the style consistency that follows from the
disciplined investment approach we employ.
Our Fund portfolio managers rely on our Research Group, which is one of the
largest in the business. We endeavor to provide superior investment
performance by taking advantage of inefficiencies in the market uncovered
through solid, unbiased fundamental research on companies and industries. Our
firm commits approximately over $13 million annually to our Research Group and
our analysts are directly compensated for their long-term effectiveness. This
is a place to build a career within Loomis Sayles, not a starting point on the
way to becoming a portfolio manager.
IT TAKES GOOD MANAGEMENT
We offer our Funds with lower expense ratios and lower management fees than
many other fund companies and that helps you maximize your investment dollar.
Our portfolio managers look to keep expenses down by executing trades
efficiently and seeking to keep our turnover rate low.
IT TAKES A WILLINGNESS TO LISTEN AND DELIVER MORE TO BUSINESS PARTNERS AND
SHAREHOLDERS
At Loomis Sayles Funds, we listen to client and shareholder needs and respond
to them with focused products, timely information and quality service. We
believe this flexibility and responsiveness is paramount in providing viable
solutions to client demands.
Loomis Sayles Funds can't guarantee returns based on past performance, but we
can assure you that we've seen just about every kind of market that may come
our way, we're structured to invest for the long term, we're committed to
bottom up research and we won't be straying from our stated investment style.
We'll be working harder for you - investing based on tried and true methods,
offering additional fund choices, providing current information and business
tools and improving our service delivery.
WHAT DOES IT TAKE FOR AN INVESTMENT MANAGEMENT FIRM TO REPLICATE PAST SUCCESS?
IT TAKES LOOMIS SAYLES FUNDS.
Thanks for investing with us.
Sincerely,
/s/ John F. Yeager, III
John F. Yeager, III
Vice President, Loomis Sayles Distributors, L.P.
<PAGE>
THE LOOMIS SAYLES FUNDS ANNUAL REPORT
ECONOMIC AND MARKET OVERVIEW - 1997
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STOCK MARKET OVERVIEW
1997 was an exciting year for stock markets around the world, including in the
U.S. For the first time in its history, the Standard & Poor's 500 Composite
Stock Price Index (S&P 500 Index) posted three consecutive years of returns
greater than 20%. After a strong January, weakness in the technology sector
and small cap stocks left the equity market with lackluster results leading
into the second quarter. This changed quickly as investors abandoned their
concern that continued economic strength would lead the Federal Reserve Board
(the Fed) to increase interest rates. The bulk of the market's yearly gain
occurred from mid April to early August, fueled by strong economic growth and
subdued inflation. After lagging for most of the year, small and mid-cap
stocks briefly outperformed large cap stocks during the summer. However, the
unfolding crisis in Asia put a damper on enthusiasm for small and mid-cap
stocks during the fourth quarter. Due to the Asian crisis, the U.S. stock
market experienced a high level of volatility from October 27th right through
to the close of the year.
Investors became increasingly defensive as the Asian turmoil intensified.
Large-cap stocks, perceived as being safer and more liquid, performed well
relative to small and mid-cap stocks. For the year, the S&P 500 Index's 33.35%
return outpaced the Russell 2000 Index, which gained 22.36%. The utility,
financial, consumer cyclical and healthcare sectors performed well for the
year. Basic industries, capital goods, technology, transportation, and energy
underperformed the market. Large-cap growth stocks outperformed large-cap
value stocks with returns of 36.38% vs. 29.99% respectively, as measured by
the S&P Barra Growth and S&P Barra Value Indexes.
While several international markets posted excellent gains during the year,
the freefall in the Asian markets in the second half of the year took center
stage. Thailand, Malaysia, Indonesia, South Korea and the Philippines were
among the markets hit hardest. Time will tell whether the markets overreacted
or were justified in their response to the Asian crisis.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
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INSTITUTIONAL CLASS TOTAL RETURN(1) vs. LIPPER CATEGORY(2)
Core International
Value Growth Equity
----------- ---------- -----------
ONE YEAR
Loomis Sayles .... 29.21 24.51 -0.98
Lipper ........... 27.14 25.30 5.44
Rank ............. 210 of 624 497 of 834 357 of 426
Percentile ....... 34 60 84
THREE YEARS
Loomis Sayles .... 28.40 25.01 8.40
Lipper ........... 26.49 25.11 8.57
Rank ............. 113 of 402 294 of 516 127 of 257
Percentile ....... 28 57 49
FIVE YEARS
Loomis Sayles .... 18.61 15.52 11.63
Lipper ........... 17.53 16.47 11.73
Rank ............. 85 of 241 217 of 314 57 of 112
Percentile ....... 35 69 51
MODIFIED INCEPTION(3)
Loomis Sayles .... 16.42 14.89 8.53
Lipper ........... 15.98 15.53 9.05
Rank ............. 83 of 188 152 of 237 35 of 63
Percentile ....... 44 64 56
ACTUAL INCEPTION(4)
Loomis Sayles .... 17.21 15.90 8.36
Note: Past performance is not predictive 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 reflects, if any,
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 Service, Inc. 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.*
*Source: Lipper Analytical Services.
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LOOMIS SAYLES EQUITY FUNDS
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Mid-Cap Mid-Cap Small Cap Small Cap Strategic
Growth Value Growth Value Value Worldwide
- -------------- ---------- ----------- ----------- ----------- -----------
22.65 26.32 19.43 25.99 19.70 3.51
19.63 19.63 20.75 20.75 25.30 11.55
133 of 249 66 of 249 272 of 466 148 of 466 638 of 820 82 of 87
53 27 58 32 78 94
NA NA NA 29.48 NA NA
22.91
31 of 281
11
NA NA NA 19.94 NA NA
16.55
22 of 138
16
22.65 26.32 19.43 21.40 19.70 7.46
19.63 19.63 20.75 16.95 25.30 11.82
133 of 249 66 of 249 272 of 466 8 of 86 638 of 820 65 of 75
53 27 58 9 78 87
22.65 26.32 19.43 21.59 19.70 7.63
(3) Modified inception reflects the nearest Lipper reporting period following
actual inception. Lipper performance is reported as of month end.
(4) Actual Inception Dates:
Core Value Fund May 13, 1991
Growth Fund May 16, 1991
International Equity Fund May 10, 1991
Mid-Cap Growth Fund December 31, 1996
Mid-Cap Value Fund December 31, 1996
Small Cap Growth Fund December 31, 1996
Small Cap Value Fund May 13, 1991
Strategic Value Fund December 31, 1996
Worldwide Fund May 1, 1996
<PAGE>
LOOMIS SAYLES CORE VALUE FUND
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[Photo of [Photo of [Photo of
James L. Carroll] Isaac H. Green] Jeffrey W. Wardlow]
- ------------------ ------------------ ------------------
James L. Carroll Isaac H. Green Jeffrey W. Wardlow
PERFORMANCE
For 1997, the Loomis Sayles Core Value Fund produced a total return of 29.21%,
lagging the S&P 500 Index's 33.35% return and outperforming the 27.14% return
for the Lipper Average Growth & Income Fund category.
PORTFOLIO REVIEW
The Fund invests in companies that appear undervalued based on projected
earnings, cash flow, or asset value. Holdings are well diversified and include
both large- and medium-sized companies. While our stock selections positively
affected Fund performance, overweightings in the oil & gas exploration and
production and semiconductor areas dampened performance as did the Fund's
underweighting in banks. Performance was also weakened by the Fund's smaller
average capitalization versus that of the S&P 500 Index. We continue to avoid
most of the largest capitalization stocks due to their high valuation levels.
Among individual holdings, Bristol Myers and Dayton Hudson were the best
performing, each rising in excess of 70%. Bristol Myers posted strong earnings
for all four quarters of 1997, exceeding analysts' estimates each time. The
company showed balanced strength in most business areas, continued gains from
productivity improvement programs, and good research and development efforts.
Dayton Hudson's explosive returns were driven by strong performance in its
Target Stores division combined with cost reductions, faster inventory
turnover, effective market positioning, and a revitalized management team. The
worst performing holdings, Cypress Semiconductor and Reebok, fell by over 30%
for the year. Cypress Semiconductor was hurt by investors' concerns over the
Asian turmoil, and Reebok suffered poor returns due to a weakness in the
sneaker industry and low sales numbers.
Cumulative Performance May 1991 to December 31, 1997
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Average Annual Returns (%)-Periods Ended December 31, 1997
Since
1 Year 3 Years 5 Years Inception(a)
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Loomis Sayles Core Value Fund
(Institutional) 29.21 28.40 18.61 16.42
Loomis Sayles Core Value Fund
(Retail) 28.88 NA NA 28.88
Lipper Average Growth & Income
Fund(b) 27.14 26.49 17.53 15.98
S&P 500 Index(c) 33.35 31.13 20.25 17.84
Loomis Lipper S&P
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As of 5/31/91 10,000 10,000 10,000
Period Ended
6/30/91 9,430 9,540 9,540
9/30/91 9,720 10,100 10,050
12/31/91 10,160 10,700 10,890
3/31/92 10,460 10,690 10,620
6/30/92 10,480 10,820 10,820
9/30/92 10,670 11,120 11,160
12/31/92 11,590 11,730 11,720
3/31/93 12,180 12,430 12,230
6/30/93 12,110 12,590 12,290
9/30/93 12,430 13,150 12,610
12/31/93 12,970 13,450 12,900
3/31/94 12,780 13,010 12,410
6/30/94 12,780 13,080 12,460
9/30/94 13,330 13,620 13,070
12/31/94 12,850 13,390 13,070
3/31/95 14,210 14,440 14,340
6/30/95 15,490 15,630 15,710
9/30/95 16,680 16,800 16,960
12/31/95 17,380 17,560 17,980
3/31/96 18,240 18,570 18,940
6/30/96 18,620 19,050 19,790
9/30/96 19,280 19,670 20,400
12/31/96 21,060 21,210 22,100
3/31/97 21,560 21,560 22,690
6/30/97 24,820 24,580 26,650
9/30/97 27,470 26,630 28,650
12/31/97 27,210 26,910 29,470
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional Class of shares is May 13, 1991. Since
Lipper and S&P 500 Index performance data is not available coincident with
this date, comparative performance is presented from May 31, 1991.
Inception date of the Retail Class of shares is December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): S&P 500 Index is a capitalization-weighted, total return index comprised of
500 widely held common stocks, representing industrial, utility,
transportation, and financial companies traded on the New York Stock
Exchange, the American Stock Exchange and in the Over- the-Counter market.
The index returns have not been reduced for ongoing management and
operating expenses applicable to mutual fund investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
PORTFOLIO POSITIONING
As of year end 1997, the Fund remains well diversified with some emphasis on
capital goods and consumer cyclicals. The Fund is underweighted in the
consumer staples sector as we believe high valuations are limiting the
opportunities to capture good value. The portfolio, on average, sells at a
10-20% discount to the S&P 500 Index price/earnings ratio, in keeping with our
value investment philosophy.
/s/ James L. Carroll /s/ Isaac H. Green
James L. Carroll Isaac H. Green
/s/ Jeffrey W. Wardlow
Jeffrey W. Wardlow
<PAGE>
LOOMIS SAYLES GROWTH FUND
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[Photo of
Jerome A. Castellini]
- ---------------------
Jerome A. Castellini
PERFORMANCE SUMMARY
The Loomis Sayles Growth Fund's total return for 1997 was 24.51%, compared to
the 25.30% return for the Lipper Average Growth Fund category.
PORTFOLIO REVIEW
While major market indicators like the S&P 500 Index and the Dow Jones
Industrial Average surged ahead again this year, gaining 33.35% and 22.64%
respectively, the bulk of their gains came from a small number of very large-
capitalization companies. Within this blue chip category, growth stocks
performed admirably compared to value stocks. The Fund's holdings in healthcare
companies Eli Lilly, Guidant, Medtronic and Pfizer; energy stocks Halliburton
and Schlumberger; and technology companies Dell Computer and Tellabs
participated very well in this environment. The broader markets, however,
including the smaller and mid-cap companies to which we have committed a portion
of the Fund's portfolio, produced more modest gains. For example, the Russell
2000 Index, a small-capitalization index, rose 22.36% for the year, while the
NASDAQ Industrial Index, which represents the non-financial stocks in the
broad-based NASDAQ Index, returned just 10.04%.
Cumulative Performance May 1991 to December 31, 1997
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Average Annual Returns (%)-Periods Ended December 31, 1997
Since
1 Year 3 Years 5 Years Inception(a)
------ ------- ------- ------------
Loomis Sayles Growth Fund
(Institutional) 24.51 25.01 15.52 14.89
Loomis Sayles Growth Fund
(Retail) 24.21 NA NA 24.21
Lipper Average Growth Fund(b) 25.30 25.11 16.47 15.53
S&P 500 Index(c) 33.35 31.13 20.25 17.84
Loomis Lipper S&P
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As of 5/31/91 10,000 10,000 10,000
Period Ended
6/30/91 9,290 9,410 9,540
9/30/91 10,750 10,200 10,050
12/31/91 11,690 11,100 10,900
3/31/92 10,790 10,930 10,620
6/30/92 10,290 10,710 10,820
9/30/92 10,640 10,990 11,160
12/31/92 12,140 11,950 11,720
3/31/93 12,450 12,310 12,230
6/30/93 12,780 12,490 12,290
9/30/93 13,490 13,090 12,610
12/31/93 13,260 13,380 12,900
3/31/94 12,740 12,980 12,410
6/30/94 12,250 12,700 12,460
9/30/94 12,770 13,320 13,070
12/31/94 12,780 13,170 13,070
3/31/95 13,630 14,130 14,340
6/30/95 15,180 15,640 15,710
9/30/95 16,670 17,060 16,960
12/31/95 16,720 17,470 17,980
3/31/96 17,260 18,260 18,940
6/30/96 18,760 18,870 19,790
9/30/96 19,000 19,400 20,400
12/31/96 20,050 20,530 22,100
3/31/97 19,390 20,460 22,690
6/30/97 21,800 23,690 26,650
9/30/97 25,560 26,120 28,650
12/31/97 24,880 26,290 29,470
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional Class of shares is May 16, 1991. Since
Lipper and S&P 500 Index performance data is not available coincident with
this date, comparative performance is presented from May 31, 1991.
Inception date of the Retail Class of shares is December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): S&P 500 Index is a capitalization-weighted, total return index comprised of
500 widely held common stocks, representing industrial, utility,
transportation, and financial companies traded on the New York Stock
Exchange, the American Stock Exchange and in the Over- the-Counter market.
The index returns have not been reduced for ongoing management and
operating expenses applicable to mutual fund investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
PORTFOLIO POSITIONING
Throughout 1997, we pursued the strategy that we have followed for the last 18
months, overweighting smaller and mid-sized companies. We believe that these
companies represent the area of greatest earnings growth potential combined
with attractive valuations. Recent turbulence in international markets
reinforces our conviction, since these small- and mid-cap firms are generally
focused on growing their businesses in the United States. While America's
economic fundamentals remain strong, we believe that overextended valuations
of multi-national enterprises represent the primary threat to the market.
In an attempt to avoid difficulties caused by market volatility, we sold a
portion of our technology and medical technology stocks late in the year. We
also sold approximately half of our energy stock position, which had performed
very well during the year. As the Asian economic problems persisted, fears
over a worldwide slowdown in petroleum demand affected the valuations on many
of these stocks. We took profits in this group in the hopes of re-establishing
positions at lower prices.
Towards the end of the year, we increased our holdings in financial services
and more defensive consumer companies. It is our view that interest rates will
fall in 1998 as the central bankers around the world add liquidity to the
financial markets to ease the Far East tension. This, combined with signs of
deflation from Asian exports, should eliminate any lingering inflation fears.
/s/ Jerome A. Castellini
Jerome A. Castellini
<PAGE>
LOOMIS SAYLES INTERNATIONAL EQUITY FUND
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[Photo of
Paul H. Drexler]
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Paul H. Drexler
PERFORMANCE SUMMARY
The Loomis Sayles International Equity Fund returned -0.98% in 1997 as
compared to the 1.78% return of the Morgan Stanley Capital International EAFE
Index, a broad market index representing 21 international markets in Europe,
Australia and the Far East. Over the past three years, the Fund's annualized
return of 8.40% outperformed the 6.27% rise in the MSCI-EAFE Index.
PORTFOLIO REVIEW
In 1997, the Fund's performance was held back by two factors: weak European
currencies and volatility in the emerging markets. Although the Fund delivered
strong returns in a number of European markets in local currency terms, returns
were substantially reduced when translated into U.S. dollars. We generally do
not try to hedge against currency risk because we believe that currency moves
are difficult to predict and tend to balance out over time.
Cumulative Performance May 1991 to December 31, 1997
- --------------------------------------------------------------------------------
Average Annual Returns (%)-Periods Ended December 31, 1997
Since
1 Year 3 Years 5 Years Inception(a)
------ ------- ------- ------------
Loomis Sayles International Equity
Fund (Institutional) -0.98 8.40 11.63 8.53
Loomis Sayles International Equity
Fund (Retail) -1.27 NA NA -1.27
Lipper Average International Equity
Fund(b) 5.44 8.57 11.73 9.05
MSCI-EAFE Index(c) 1.78 6.27 11.39 6.78
Loomis Lipper MSCI
------ ------ ----
As of 5/31/91 10,000 10,000 10,000
Period Ended
6/30/91 9,510 9,480 9,270
9/30/91 10,410 10,090 10,060
12/31/91 10,420 10,230 10,230
3/31/92 10,890 10,020 9,010
6/30/92 11,270 10,470 9,020
9/30/92 10,580 9,910 9,340
12/31/92 9,890 9,790 8,980
3/31/93 10,820 10,630 10,060
6/30/93 11,050 11,210 11,070
9/30/93 12,200 12,290 11,810
12/31/93 13,700 13,620 11,910
3/31/94 13,710 13,480 12,320
6/30/94 13,490 13,600 12,950
9/30/94 13,710 14,120 12,970
12/31/94 13,460 13,520 12,830
3/31/95 13,750 13,190 13,070
6/30/95 14,840 13,860 13,170
9/30/95 14,850 14,610 13,720
12/31/95 14,630 14,880 14,270
3/31/96 15,300 15,530 14,690
6/30/96 15,800 16,170 14,920
9/30/96 16,010 16,180 14,900
12/31/96 17,310 17,020 15,140
3/31/97 17,360 17,450 14,900
6/30/97 18,970 19,410 16,830
9/30/97 19,080 19,770 16,710
12/31/97 17,140 18,260 15,410
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional Class of shares is May 10, 1991. Since
Lipper and MSCI-EAFE Index performance data is not available coincident
with this date, comparative performance is presented from May 31, 1991.
Inception date of the Retail Class of shares is December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): MSCI-EAFE Index is a capitalization-weighted average of the performance of
over 1,000 securities listed on the stock exchanges of 20 countries in
Europe, Australia and the Far East. The index returns have not been reduced
for ongoing management and operating expenses applicable to mutual fund
investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
While our exposure to emerging markets was not a large part of the portfolio,
the enormous volatility in these markets in the second half of the year did
hurt performance. We had limited exposure to the Southeast Asian markets when
they fell sharply during the fourth quarter, but the Fund did suffer from the
spillover into Latin America. At year end, approximately 5% of the Fund was
invested in the emerging markets.
The Fund achieved strong gains in U.S. dollar terms in Portugal, Italy, Spain
and Germany. Our best performing stock was Porsche, the German sports car
manufacturer. This company, which came close to bankruptcy four years ago, has
cut costs by about 50% and introduced the extremely successful new
"Boxter" model, which helped the stock triple in 1997.
The Fund's strategy is to invest in a well diversified portfolio of the best
value opportunities that we can find outside the United States.
PORTFOLIO POSITIONING
We see considerable opportunity in international equity markets. Many European
corporations are cutting costs aggressively and focusing much more intently on
delivering returns to shareholders. We believe this process, similar to that
which the United States has experienced over the past decade, offers
attractive opportunities for international investors. The Fund has over half
of its assets in Europe, where our primary focus is on European corporate
restructuring.
Although we have a fairly modest exposure of approximately 11% to Asia, mostly
in Japan, we will be closely monitoring those markets for investment
opportunities. Although Asian economic growth is forecasted to fall sharply in
1998, we are sensing some positive changes. All across Asia, corporations are
beginning to shift their focus from market share to earning per share - a very
healthy change for investors over the medium-term.
/s/ Paul H. Drexler
Paul H. Drexler
<PAGE>
LOOMIS SAYLES MID-CAP GROWTH FUND
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- -------------------- --------------
[Photo of [Photo of
Jerome A. Castellini] Scott S. Pape]
- -------------------- --------------
Jerome A. Castellini Scott S. Pape
PERFORMANCE
In 1997, the Loomis Sayles Mid-Cap Growth Fund's 22.65% return lagged the 32.25%
return of the S&P Mid-Cap 400 Index and outpaced the 19.63% return posted by the
Lipper Average Mid-Cap Fund.
In general, mid-cap stock returns for 1997 lagged the major market indicators
such as the S&P 500 Index and the Dow Jones Industrial Average. It was also a
difficult period for growth stocks in the mid-cap category. Within this
difficult environment, the Loomis Sayles Mid-Cap Growth Fund produced solid
returns.
Cumulative Performance May 1996 to December 31, 1997
- --------------------------------------------------------------------------------
Average Annual Returns (%)-Periods Ended December 31, 1997
Since
Inception(a)
------------
Loomis Sayles Mid-Cap Growth Fund (Institutional) 22.65
Loomis Sayles Mid-Cap Growth Fund (Retail) 22.35
Lipper Average Mid-Cap Fund(b) 19.63
S&P Mid-Cap 400 Index(c) 32.25
Loomis Lipper S&P
------ ------ ---
As of 12/31/96 10,000 10,000 10,000
Period Ended
3/31/97 9,630 9,340 9,850
6/30/97 10,720 10,820 11,300
9/30/97 12,570 12,350 13,120
12/31/97 12,270 11,960 13,230
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional and Retail Classes of shares is
December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): S&P Mid-Cap 400 Index consists of 400 domestic stocks chosen for market
size liquidity and industry group representation. It is a market-weighted
index (stock price times shares outstanding) with each stock affecting the
index in proportion to its value. The index is comprised of industrials,
utilities, financials and transportations, in size order. The index returns
have not been lowered for ongoing management and operating expenses
applicable to mutual fund investments.
(d): Cummulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
PORTFOLIO REVIEW
The Fund's 1997 performance benefited from its overweighted positions in the
healthcare, financial and energy sectors. In the healthcare sector, holdings
in Guidant, Pfizer and Allegiance performed well. Financial stocks were
positive across the board with particularly strong showings from Charles
Schwab, MGIC Investment Corp. and SunAmerica. A heavy weighting in energy
stocks aided results, with strong performance from Halliburton, Schlumberger
and Cross Timbers Oil, offset somewhat with poor returns from Anadarko
Petroleum and Abacan Resources.
PORTFOLIO POSITIONING
In an attempt to avoid the difficulties caused by market volatility, we sold a
portion of our technology and medical technology stocks late in the year. We
also sold approximately half of our energy stock position, which had performed
extremely well during the year. As the Asian economic problems persisted,
fears over a worldwide slowdown in petroleum demand affected the valuations on
many of these stocks. We took profits in this group in the hopes of re-
establishing positions at lower prices.
Towards the end of the year, we increased our holdings in financial services
and more defensive consumer companies. It is our view that interest rates will
fall in 1998, as the central bankers around the world add liquidity to the
financial markets to ease the Far East tension. This, combined with signs of
deflation from Asian exports, should eliminate any lingering fears concerning
inflation.
/s/ Jerome A. Castellini /s/ Scott S. Pape
Jerome A. Castellini Scott S. Pape
<PAGE>
LOOMIS SAYLES MID-CAP VALUE FUND
- --------------------------------------------------------------------------------
- -------------- -------------------- ----------------
[Photo of [Photo of [Photo of
Dean A. Gulis] Jeffrey C. Petherick] Gregg D. Watkins
- -------------- -------------------- ----------------
Dean A. Gulis Jeffrey C. Petherick Gregg D. Watkins
PERFORMANCE SUMMARY
The Loomis Sayles Mid-Cap Value Fund achieved a 26.32% total return in 1997.
While the Fund lagged the 32.25% gain of the S&P Mid-Cap 400 Index for the year,
it significantly outdistanced the 19.63% return for the average fund in the
Lipper Average Mid-Cap Funds category.
Cumulative Performance May 1996 to December 31, 1997
- --------------------------------------------------------------------------------
Average Annual Returns (%)-Periods Ended December 31, 1997
Since
Inception(a)
------------
Loomis Sayles Mid-Cap Value Fund (Institutional) 26.32
Loomis Sayles Mid-Cap Value Fund (Retail) 26.00
Lipper Average Mid-Cap Fund(b) 19.63
S&P Mid-Cap 400 Index(c) 32.25
Loomis Lipper S&P
------ ------ ---
As of 12/31/96 10,000 10,000 10,000
Period Ended
3/31/97 10,100 9,340 9,850
6/30/97 11,370 10,820 11,300
9/30/97 12,710 12,350 13,120
12/31/97 12,630 11,960 13,230
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional and Retail Classes of shares is
December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): S&P Mid-Cap 400 Index consists of 400 domestic stocks chosen for market
size, liquidity and industry group representation. It is a market-weighted
index (stock price times shares outstanding) with each stock affecting the
index in proportion to its value. The index is comprised of industrials,
utilities, financials and transportations, in size order. The index returns
have not been lowered for ongoing management and operating expenses
applicable to mutual fund investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
PORTFOLIO REVIEW
Throughout much of the year's second half, the Fund was underweighted in banks
and slightly over-weighted in the technology and energy sectors as compared to
the S&P Mid-Cap 400 Index. As a result, we did not fully participate in the
positive performance of the banking industry and were hurt by the downturn in
the energy and technology sectors. The Fund enjoyed strong performance in the
consumer staples, transportation, healthcare and utilities sectors. During the
fourth quarter, we increased our exposure to the utility and consumer staples
sectors; two of the more defensive sectors of the market.
PORTFOLIO POSITIONING
We believe that investors' growing concerns about the strength of corporate
earnings will prove justified as the Asian crisis lowers top line growth and
increases price pressures on import-sensitive economic sectors. This may
exacerbate an environment that has been characterized by limited pricing power
and where a significant portion of recent earnings growth has come from
several years of cost cutting and efficiency gains. We expect to retain our
generally defensive posture with a focus on companies whose valuation
parameters are at or below the market averages and that offer a relatively
high degree of earnings predictability.
/s/ Dean A. Gulis /s/ Jeffrey C. Petherick
Dean A. Gulis Jeffrey C. Petherick
/s/ Gregg D. Watkins
Gregg D. Watkins
<PAGE>
STOCK
LOOMIS SAYLES SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
[Photo of [Photo of [Photo of
Christopher R. Ely] Philip C. Fine] David L. Smith]
Christopher R. Ely Philip C. Fine David L. Smith
PERFORMANCE
Given our investment style, the Loomis Sayles Small Cap Growth Fund posted good
results for 1997. The Fund returned 19.43% for the year versus the 22.36% return
of the Russell 2000 Index and 20.75% for the average fund in the Lipper Average
Small Cap Funds category. However, small cap growth stocks, as measured by the
Russell 2000 Growth Index, gained only 12.95%.
Cumulative Performance May 1996 to December 31, 1997
- --------------------------------------------------------------------------------
Average Annual Returns (%)-Periods Ended December 31, 1997
Since
Inception(a)
------------
Loomis Sayles Small Cap Growth Fund (Institutional) 19.43
Loomis Sayles Small Cap Growth Fund (Retail) 19.16
Lipper Average Small Cap Fund(b) 20.75
Russell 2000 Index(c) 22.30
Loomis Lipper Russell
------ ------ -------
As of 12/31/96 10,000 10,000 10,000
Period Ended
3/31/97 8,510 9,340 9,480
6/30/97 10,280 10,930 11,020
9/30/97 12,550 12,730 12,660
12/31/97 11,940 12,080 12,240
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional and Retail Classes of shares is
December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): Russell 2000 Index is comprised of the 2,000 smallest securities in the
Russell 3000 Index (a broad market index), representing approximately 7% of
the Russell 3000 Index total market capitalization. The index returns have
not been reduced for ongoing management and operating expenses applicable
to mutual fund investments.
(d): Cummulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
PORTFOLIO REVIEW
The Fund's strong performance was due primarily to its above average exposure
to technology and financial stocks. During the late spring, we began
overweighting our position in technology stocks in response to accelerated
market demand for semi-conductor capital equipment. While these issues had
experienced a downturn in 1996, our research indicated that they were poised
for a rebound. From April through October our technology positions posted
excellent returns, contributing substantially to the Fund's positive
performance for the year.
While we seek to identify growth opportunities in all sectors, we believe the
technology sector is a particularly fertile area for entrepreneurs. One need
only to look at the Internet to see the explosive growth potential inherent in
new technologies. The Fund's financial services stocks also performed well,
buoyed by stable interest rates and industry consolidations.
PORTFOLIO POSITIONING
As 1997 drew to a close, the growing Asian financial crisis and its potential
impact on the United States began to weigh on investors' minds. As a result,
we significantly reduced the Fund's technology exposure towards year end.
Proceeds from those sales were directed to issues whose growth is domestically
driven and unlikely to be hurt by weakness in the Asian economies.
We also scaled back our exposure to the energy sector. After strong
performance in the first nine months of the year, energy stocks began to
decline as a result of weak oil prices due, at least in part, to concerns
about Asian economies.
While we view the Asian crisis with concern, we do not believe that the long
term opportunities available in small cap growth stocks have deteriorated. In
fact, we believe that, relative to large, multinational companies, small
growth companies should demonstrate strong earnings growth in the coming
quarters. This favorable fundamental position is enhanced by what we believe
are attractive valuations. Consequently, we plan no changes to our basic
strategy of keeping the Fund fully invested in small companies with strong
growth prospects for 1998 and the years to come.
/s/ Christopher R. Ely /s/ Philip C. Fine /s/ David L. Smith
Christopher R. Ely Philip C. Fine David L. Smith
<PAGE>
LOOMIS SAYLES SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
- ------------------ --------------------
[Photo of [Photo of
Mary C. Champagne] Jeffrey C. Petherick]
- ------------------ --------------------
Mary C. Champagne Jeffrey C. Petherick
PERFORMANCE
The Loomis Sayles Small Cap Value Fund posted excellent returns in 1997,
finishing the year with a return of 25.99% versus 22.36% for the Russell 2000
Index and 20.75% for the Lipper Average Small Cap Funds category. The Fund's
value bias positively affected performance as value stocks had a stellar year
led by financial stocks, which were the Russell 2000 Index's best performing
sector.
Cumulative Performance May 1991 to December 31, 1997
- --------------------------------------------------------------------------------
Average Annual Returns (%)-Periods Ended December 31, 1997
Since
1 Year 3 Years 5 Years Inception(a)
------ ------- ------- ------------
Loomis Sayles Small Cap Value
Fund (Institutional) 25.99 29.48 19.94 21.40
Loomis Sayles Small Cap Value
Fund (Retail) 25.62 NA NA 25.62
Lipper Average Small Cap Fund(b) 20.75 22.91 16.55 16.95
Russell 2000 Index(c) 22.36 22.34 16.40 16.45
Loomis Lipper MSCI
------ ------ ----
As of 5/31/91 10,000 10,000 10,000
Period Ended
6/30/91 9,650 9,510 9,410
9/30/91 11,210 10,480 10,190
12/31/91 12,770 11,560 10,770
3/31/92 14,050 11,680 11,580
6/30/92 12,190 10,700 10,790
9/30/92 12,260 11,060 11,100
12/31/92 14,440 12,850 12,760
3/31/93 15,370 12,990 13,300
6/30/93 15,700 13,400 13,590
9/30/93 17,720 14,630 14,780
12/31/93 18,010 15,020 15,160
3/31/94 17,060 14,480 14,760
6/30/94 16,220 13,700 14,180
9/30/94 17,060 14,970 15,170
12/31/94 16,510 14,950 14,890
3/31/95 17,610 15,790 15,570
6/30/95 18,510 17,260 17,030
9/30/95 21,080 19,410 18,720
12/31/95 21,820 19,680 19,120
3/31/96 23,470 20,790 20,100
6/30/96 25,280 22,440 21,100
9/30/96 25,900 22,720 21,170
12/31/96 28,440 22,510 22,280
3/31/97 27,950 20,390 21,120
6/30/97 32,140 23,870 24,550
9/30/97 36,760 29,950 28,200
12/31/97 35,840 28,540 27,260
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional Class of shares is May 13, 1991. Since
Lipper and Russell 2000 Index performance data is not available coincident
with this date, comparative performance is presented from May 31, 1991.
Inception date of the Retail Class of shares is December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): Russell 2000 Index is comprised of the 2,000 smallest securities in the
Russell 3000 Index (a broad market index), representing approximately 7% of
the Russell 3000 total market capitalization. The index returns have not
been reduced for ongoing management and operating expenses applicable to
mutual fund investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
PORTFOLIO REVIEW
Stock selection was the primary driver for the Fund's positive investment
performance. Our sector weights had a slightly negative effect on the
portfolio, but this was overcome by purchasing top performing stocks within
those sectors. The Fund's investment approach is security-driven, which means
that our focus is on identifying attractive stocks rather than attempting to
determine the direction of the market. While sector weightings may vary from
the benchmark index, they are established based on the number of attractive
stocks we find within each sector. For example, in 1997, health care was the
second worst performing sector in the Russell 2000 Index, yet the Fund's
health care holdings were up, on average over 25%. While the technology sector
posted the weakest returns for the year, our stock selections in that sector
returned over 15%.
PORTFOLIO POSITIONING
We expect that earnings fears will plague the market in the near term due to
the Asian crisis and the potential for a slowing U.S. economy. We continue to
look for companies that are reasonably valued and that are well positioned to
experience steady earnings growth. Over the past six months, utility stocks
have shown promise due to solid, if unspectacular earnings growth coupled with
consolidation and deregulation. We have been increasing our holdings in this
area since the summer of 1997. Health care stocks also appear attractive and
valuations with noncyclical earnings should lead to increased investor
attention. We have decreased our exposure to financial service stocks as we
believe valuations have become unattractive and fundamental outlooks have
begun to deteriorate. Energy stocks were very weak in the fourth quarter
following good performance earlier in the year, and while we sold some
holdings in October, we are still slightly overweighted and continue to
believe that energy stocks, particularly the exploration companies, are very
attractively priced.
We anticipate that 1998 will provide a challenging investment environment.
With three years of returns in excess of 20% for the U.S. stock market,
investors have come to expect an idyllic environment. Many of the factors that
caused this optimism remain: low interest rates, low inflation and a slow-
growing economy. However, we believe we are beginning to see the potential
problems of deflation. The effect of the Asian crisis on the world and the
U.S. economy is still unknown. While uncertainty brings volatility it also
results in opportunities. In 1998, we will continue to search for stocks that
can add value to the Fund.
/s/ Mary C. Champagne /s/ Jeffrey C. Petherick
Mary C. Champagne Jeffrey C. Petherick
<PAGE>
LOOMIS SAYLES STRATEGIC VALUE FUND
- --------------------------------------------------------------------------------
- --------------------
[Photo of
Philip J. Schettewi]
- --------------------
Philip J. Schettewi
PERFORMANCE
The Loomis Sayles Strategic Value Fund's 1997 performance lagged that of its
benchmark, the S&P 500 Index, due to a weak fourth quarter, which dragged down
its strong performance for the first nine months of the year. The Fund had a
respectable lead over the S&P 500 Index at the end of the third quarter, with
a return of 30.6% versus 29.6% for the Index as of 9/30/97. Performance was
severely impacted over the next three months by the "Asian Contagion" that
spread throughout markets around the world. By the end of December, the Fund
had returned -8.34% for the quarter versus 2.87% for the S&P 500 Index,
leaving year-end performance for the Fund at 19.70% versus 33.35% for the S&P
500 Index.
Cumulative Performance December 1996 to December 31, 1997
- --------------------------------------------------------------------------------
Average Annual Returns (%)-Periods Ended December 31, 1997
Since
Inception(a)
------------
Loomis Sayles Strategic Value Fund (Institutional) 19.70
Loomis Sayles Strategic Value Fund (Retail) 19.41
Lipper Average Growth Fund(b) 25.30
S&P 500 Index(c) 33.35
Loomis Lipper Russell
------ ------ -------
As of 12/31/96 10,000 10,000 10,000
Period Ended
3/31/97 9,980 9,970 10,270
6/30/97 11,630 11,540 12,060
9/30/97 13,060 12,720 12,960
12/31/97 11,970 12,530 13,340
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional and Retail Classes of shares is
December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): S&P 500 Index is a capitalization-weighted, total return index comprised of
500 widely held common stocks, representing industrial, utility,
transportation, and financial companies traded on the New York Stock
Exchange, the American Stock Exchange and in the Over- the-Counter market.
The index returns have not been reduced for ongoing management and
operating expenses applicable to mutual fund investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
PORTFOLIO REVIEW
As market participants tried to assess the actual impact of slower Asian
growth and weaker currencies on profits of multi-national corporations, they
rotated out of sectors perceived as being most exposed to the region and into
more domestically orientated issues. For example, the best performing sectors
during the fourth quarter of 1997 were telecommunications, utilities and
financial services. Telecom and utility stocks have minimal exposure to Asia
and are viewed as defensive in nature due to their high yields and low
correlation to economic cycles. Although some financial services companies
have exposure to Asia, this sector was able to rally along with utility and
telecom stocks as a result of the fourth quarter drop in interest rates. In
addition, many have assumed the risk associated with Asia for U.S. banks is
manageable. The Fund was underexposed to these sectors, as well as drug
stocks, because they did not appear attractive based on their current
valuations and projected earnings growth. The worst performing sectors for the
fourth quarter were basic materials, technology and capital goods.
PORTFOLIO POSITIONING
We have assessed the economic impact of the Asian turmoil on our holdings and
concluded that, in many instances, the market overreacted. Few changes have
been made to the Fund because we expect our holdings to rebound sharply. While
the Fund remains overweighted in the technology and basic materials sectors,
we reduced our exposure to technology somewhat at the beginning of the fourth
quarter.
We believe the stocks of many companies with exposure to Asia already reflect
worst case scenarios and therefore the potential for further declines is
limited. We expect relative performance of the Fund to improve as the region
stabilizes and companies are able to demonstrate their ability to generate
earnings growth despite weakness in Asia. We believe our holdings will
outperform the market as valuations, which have been driven by recent
emotions, return to levels which better represent underlying fundamentals.
/s/ Philip J. Schettewi
Philip J. Schettewi
<PAGE>
LOOMIS SAYLES WORLDWIDE FUND
- ------------------------------------------------------------------------------
- --------------- --------------------
[Photo of [Photo of
Daniel J. Fuss] E. John Debeer]
- --------------- --------------------
Daniel J. Fuss E. John Debeer
- --------------- --------------------
[Photo of [Photo of
Paul H. Drexler] Quentin P. Faulkner]
- --------------- --------------------
Paul H. Drexler Quentin P. Faulkner
PERFORMANCE SUMMARY
In 1997, the Loomis Sayles Worldwide Fund posted a 3.51% return, under
performing the 11.55% return of the Lipper Average Global Flexible Fund
category. Since its inception in May of 1996, the Fund has returned 7.46% on an
annualized basis with the Lipper Average Global Flexible Fund category posting
11.82% for the same period.
PORTFOLIO CHARACTERISTICS
The Fund's weaker performance for the year was due primarily to security
selection. While our U.S. bond selection positively affected performance, late
in the year our international bonds were concentrated in Asia, where markets
experienced a significant downturn during the fourth quarter. Our U.S. and
international equity holdings did not include many large capitalization growth
stocks, and suffered as a result.
For most of 1997, the Worldwide Fund's assets were allocated approximately 40%
to U.S. equities, 20% to international equities, 25% to U.S. bonds and 15% to
international bonds. Since the S&P 500 Index performed so well in 1997, the
Fund would have benefited if we had allocated a heavier portion of assets to
large-capitalization U.S. equities.
PORTFOLIO POSITIONING
We believe the inflation outlook will remain subdued, not only in the U.S. but
around the world. This, in turn, suggests that the outlook for bonds is quite
good. Equities may encounter some difficulties with corporate profits, but we
do not forecast an overall economic recession. In Asia, we believe that
economic growth will eventually recover, and consequently today's depressed
Asian stock and bond prices appear to represent good value.
Cumulative Performance May 1996 to December 31, 1997
Average Annual Returns (%) - Periods Ended December 31, 1997
Since
1 Year Inception(a)
------ ------------
Loomis Sayles Worldwide Fund (Institutional) 3.51 7.46
Loomis Sayles Worldwide Fund (Retail) 3.33 3.33
Lipper Average Global Flexible Fund(b) 11.55 11.82
S&P 500 Index(c) 33.35 28.92
Loomis Lipper S&P
------ ------ ---
As of 5/31/96 10,000 10,000 10,000
Period Ended
6/30/96 10,030 10,040 10,040
9/30/96 10,250 10,220 10,350
12/31/96 10,830 10,800 11,210
3/31/97 10,830 10,890 11,510
6/30/97 11,380 11,780 13,520
9/30/97 12,160 12,420 14,530
12/31/97 11,210 12,120 14,950
Note: Past performance is not predictive of future performance.
(a): Inception date of the Institutional Class of shares is May 1, 1996. Since
Lipper and S&P 500 Index performance data is not available coincident with
this date, comparative performance is presented from May 31, 1996.
Inception date of the Retail Class of shares is December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): S&P 500 Index is a capitalization-weighted, total return index comprised of
500 widely held common stocks, representing industrial, utility,
transportation, and financial companies traded on the New York Stock
Exchange, the American Stock Exchange and in the Over- the-Counter market.
The index returns have not been reduced for ongoing management and
operating expenses applicable to mutual fund investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
At the beginning of 1998, we made some significant changes in the Worldwide
Fund's asset allocation. U.S. equities were reduced from 40% of the portfolio
to 20%, U.S. bonds were increased from 25% to 40%, international equities were
increased from 20% to 25% and international bonds remained the same at 15%.
/s/ Daniel J. Fuss /s/ Paul H. Drexler
Daniel J. Fuss Paul H. Drexler
/s/ E. John deBeer /s/ Quentin Faulkner
E. John deBeer Quentin Faulkner
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES CORE VALUE FUND
Portfolio of Investments -- as of December 31, 1997
Shares Value(a)
- ------------------------------------------------------------------------------
Common Stocks -- 95.2% of Total Net Assets
Aerospace -- 1.7%
Northrop Grumman Corp. ....................... 9,600 $ 1,104,000
-----------
Auto & Related -- 1.4%
TRW, Inc. .................................... 17,000 907,375
-----------
Banks/Savings & Loans -- 5.7%
Chase Manhattan Corp. ........................ 13,812 1,512,414
Fleet Financial Group, Inc. .................. 13,600 1,019,150
PNC Bank Corp. ............................... 20,000 1,141,250
-----------
3,672,814
-----------
Chemicals - Major -- 2.2%
E.I. du Pont DeNemours & Co. ................. 12,000 720,750
Praxair, Inc. ................................ 15,000 675,000
-----------
1,395,750
-----------
Commercial Services -- 1.6%
Viad Corp. ................................... 55,000 1,062,188
-----------
Communications Equipment -- 1.0%
Harris Corp. ................................. 14,400 660,600
-----------
Computer Hardware -- 1.9%
International Business Machines Corp. ........ 11,500 1,202,469
-----------
Data Processing Services -- 0.8%
First Data Corp. ............................. 17,500 511,875
-----------
Electronic Components -- 7.8%
Lam Research Corp. (b) ....................... 21,000 614,250
Litton Industries, Inc. (b) .................. 20,000 1,150,000
National Semiconductor Corp. (b) ............. 37,400 970,062
Philips Electronics NV ....................... 21,000 1,270,500
Raytheon Co. ................................. 20,000 1,010,000
-----------
5,014,812
-----------
Financial Services -- 4.1%
Beneficial Corp. ............................. 11,800 980,875
Finova Group, Inc. ........................... 33,124 1,645,849
-----------
2,626,724
-----------
Food - Packaged & Miscellaneous -- 3.2%
ConAgra, Inc. ................................ 44,000 1,443,750
Sara Lee Corp. ............................... 11,000 619,438
-----------
2,063,188
-----------
Forest Products -- 1.5%
Georgia Pacific Corp. ........................ 11,200 680,400
Georgia Pacific Timber Group (b) ............. 14,000 317,625
-----------
998,025
-----------
Freight Transportation -- 1.6%
Ryder System, Inc. ........................... 31,200 1,021,800
-----------
Health Care - Drugs -- 6.2%
Abbott Laboratories .......................... 18,000 1,180,125
American Home Products Corp. ................. 8,900 680,850
Bristol Myers Squibb Co. ..................... 9,000 851,625
Pharmacia & Upjohn, Inc. ..................... 18,700 684,887
Schering-Plough Corp. ........................ 10,100 627,463
-----------
4,024,950
-----------
Health Care - Medical Technology -- 1.3%
C.R. Bard, Inc. .............................. 27,750 868,922
-----------
Health Care - Services -- 3.2%
Tenet Healthcare Corp. (b) ................... 62,500 2,070,312
-----------
Home Products -- 1.5%
Premark International, Inc. .................. 32,500 942,500
-----------
Housing & Building Materials -- 3.4%
Armstrong World Industries, Inc. ............. 18,100 1,352,975
Black & Decker Corp. ......................... 22,000 859,375
-----------
2,212,350
-----------
Insurance -- 3.5%
Ace Ltd. ..................................... 13,150 1,268,975
Allstate Corp. ............................... 11,298 1,026,706
-----------
2,295,681
-----------
Leisure -- 1.8%
Hasbro, Inc. ................................. 38,000 1,197,000
-----------
Machinery -- 3.7%
Cooper Industries, Inc. ...................... 18,900 926,100
Deere & Co. .................................. 25,000 1,457,812
-----------
2,383,912
-----------
Manufacturing -- 3.0%
Eaton Corp. .................................. 15,000 1,338,750
York International Corp. ..................... 14,500 573,656
-----------
1,912,406
-----------
Natural Gas -- 1.4%
Columbia Gas Systems, Inc. ................... 11,500 903,469
-----------
Oil & Gas Exploration -- 1.0%
Oryx Energy Co. (b) .......................... 25,000 637,500
-----------
Oil - Drilling Equipment -- 2.1%
Baker Hughes, Inc. ........................... 14,500 632,563
Weatherford Enterra, Inc. (b) ................ 17,300 756,875
-----------
1,389,438
-----------
Oil - Major Integrated -- 4.8%
British Petroleum Plc, ADR (c) ............... 15,395 1,226,789
Mobil Corp. .................................. 10,000 721,875
USX Marathon Group ........................... 35,000 1,181,250
-----------
3,129,914
-----------
Paper Products -- 1.0%
Mead Corp. ................................... 22,000 616,000
-----------
Real Estate Investment Trusts -- 2.7%
Health Care Property Investments, Inc. ....... 30,200 1,141,938
Meditrust Corp. .............................. 16,525 605,228
-----------
1,747,166
-----------
Retail - Food -- 1.5%
Kroger Co. (b) ............................... 26,100 964,069
-----------
Retail - General -- 4.1%
Dayton Hudson Corp. .......................... 18,300 1,235,250
Federated Department Stores, Inc. (b) ........ 33,000 1,421,062
-----------
2,656,312
-----------
Telecommunications -- 6.8%
BellSouth Corp. .............................. 34,000 1,914,625
Century Telephone Enterprises, Inc. .......... 21,000 1,046,062
SBC Communications, Inc. ..................... 19,896 1,457,382
-----------
4,418,069
-----------
Textile & Apparel -- 0.8%
Reebok International Ltd. (b) ................ 17,300 498,456
-----------
Tobacco -- 3.2%
Philip Morris Cos., Inc. ..................... 46,000 2,084,375
-----------
Utilities - Electric -- 3.7%
Pacificorp ................................... 45,000 1,229,062
Pinnacle West Capital Corp. .................. 27,000 1,144,125
-----------
2,373,187
-----------
TOTAL COMMON STOCKS (Identified Cost
$47,587,104) ............................... 61,567,608
-----------
Face
Amount
- ------------------------------------------------------------------------------
Short-Term Investments -- 5.6% of Total Net Assets
Chevron Chevron USA Inc., 6.600%, 1/02/98 ... $ 600,000 600,000
General Electric Capital Corp., 5.650%, 1/02/98 3,000,000 3,000,000
-----------
3,600,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $3,600,000)................ 3,600,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$51,187,104) (d) ............................ $65,167,608
===========
(a) See Note 1.
(b) Non-income producing security.
(c) An American Depository Receipt (ADR) is a certificate issued by a U.S. bank
representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada.
(d) At December 31, 1997, the net unrealized appreciation on investments based
on cost of $51,189,878 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
$14,553,917 and $576,187, respectively, resulting in net unrealized
appreciation of $13,977,730.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES GROWTH FUND
Portfolio of Investments -- as of December 31, 1997
Shares Value(a)
- ------------------------------------------------------------------------------
Common Stocks -- 95.1% of Total Net Assets
Chemicals - Specialty -- 1.5%
Monsanto Co. ................................. 11,300 $ 474,600
-----------
Commercial Services -- 4.3%
Cendant Corp. (b) ............................ 40,225 1,382,734
-----------
Communications Equipment -- 3.6%
Ciena Corp. (b) .............................. 13,600 831,300
Tellabs, Inc. (b) ............................ 6,100 322,538
-----------
1,153,838
-----------
Computer Hardware -- 3.1%
Cisco Systems, Inc. (b) ...................... 16,900 942,175
EMC Corp. (b) ................................ 1,900 52,131
-----------
994,306
-----------
Computer Software & Services -- 8.2%
America Online, Inc. (b) ..................... 6,200 552,962
Compuware Corp. (b) .......................... 12,700 406,400
HBO & Co. .................................... 35,200 1,689,600
-----------
2,648,962
-----------
Data Processing Services -- 4.6%
Automatic Data Processing, Inc. .............. 8,800 540,100
First Data Corp. ............................. 17,400 508,950
Paychex, Inc. ................................ 8,600 435,375
-----------
1,484,425
-----------
Electronic Components -- 2.5%
Texas Instruments, Inc. ...................... 18,300 823,500
-----------
Entertainment -- 2.3%
Walt Disney Co. .............................. 7,600 752,875
-----------
Financial Services -- 12.4%
Charles Schwab Corp. ......................... 22,500 943,594
Federal National Mortgage Association ........ 22,100 1,261,081
MGIC Investment Corp. ........................ 18,300 1,216,950
SunAmerica, Inc. ............................. 14,100 602,775
-----------
4,024,400
-----------
Health Care - Drugs -- 9.3%
Eli Lilly & Co. .............................. 22,100 1,538,712
Pfizer, Inc. ................................. 11,400 850,013
Warner Lambert Co. ........................... 4,900 607,600
-----------
2,996,325
-----------
Health Care - Medical Technology -- 8.8%
Allegiance Corp. ............................. 18,100 641,419
Guidant Corp. ................................ 12,600 784,350
Medtronic, Inc. .............................. 8,100 423,731
Oncor, Inc. (b) .............................. 200,000 925,000
Somatogen, Inc. (b) .......................... 16,500 73,219
-----------
2,847,719
-----------
Health Care - Services -- 1.8%
Healthsouth Corp. (b) ........................ 21,600 599,400
-----------
Insurance -- 4.9%
American International Group, Inc. ........... 6,825 742,219
EXEL Ltd. .................................... 13,300 842,887
-----------
1,585,106
-----------
Oil & Gas Exploration -- 3.4%
Anadarko Petroleum Corp. ..................... 12,400 752,525
Ocean Energy, Inc. (b) ....................... 7,300 359,981
-----------
1,112,506
-----------
Oil - Drilling Equipment -- 14.4%
Baker Hughes, Inc. ........................... 21,100 920,488
Halliburton Co. .............................. 16,500 856,969
Schlumberger Ltd. ............................ 11,800 949,900
Unit Corp. (b) ............................... 199,300 1,918,262
-----------
4,645,619
-----------
Restaurants -- 3.2%
Starbucks Corp. (b) .......................... 27,300 1,047,638
-----------
Retail - General -- 1.9%
Kohls Corp. (b) .............................. 8,900 606,313
-----------
Retail - Specialty -- 4.9%
Borders Group, Inc. (b) ...................... 16,500 516,656
Circuit City Stores, Inc. .................... 7,800 277,388
Home Depot, Inc. ............................. 13,500 794,812
-----------
1,588,856
-----------
TOTAL COMMON STOCKS (Identified Cost
$24,591,913) ............................... 30,769,122
-----------
Face
Amount
- ------------------------------------------------------------------------------
Short-Term Investment -- 7.6% of Total Net Assets
Repurchase Agreement with State Street
Bank and Trust Co., dated 12/31/97 at
5.000% to be repurchased at $2,470,686 on
1/02/98 collateralized by $2,450,000 U.S.
Treasury Note, 6.000%, due 8/15/00 with
a value of $2,519,673 ...................... $2,470,000 2,470,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $2,470,000)................ 2,470,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$27,061,913) (c) ............................. $33,239,122
===========
(a) See Note 1.
(b) Non-income producing security.
(c) At December 31, 1997, the net unrealized appreciation on investments based
on cost of $27,177,943 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
$6,873,645 and $812,466, respectively, resulting in net unrealized
appreciation of $6,061,179.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES INTERNATIONAL EQUITY FUND
Portfolio of Investments -- as of December 31, 1997
Shares(a) Value(b)
- ------------------------------------------------------------------------------
Common Stocks -- 87.3% of Total Net Assets
Australia -- 6.4%
Brambles Industries Ltd. ..................... 63,000 $ 1,250,284
Foodland Associates .......................... 125,000 936,157
Leighton Holdings Ltd. ....................... 344,296 1,202,757
QBE Insurance Group Ltd. ..................... 250,000 1,125,409
West Australian News Holdings Ltd. ........... 175,775 739,264
-----------
5,253,871
-----------
Brazil -- 0.8%
SABESP ....................................... 2,848,000 676,242
-----------
Canada -- 9.3%
Bombardier, Inc. ............................. 43,000 884,644
Canadian National Railway Co. ................ 19,500 914,244
Donohue, Inc. ................................ 40,500 736,853
Northern Telecom Ltd. ........................ 9,700 862,041
Petro-Canada ................................. 58,300 1,066,824
Potash Corp. of Saskatchewan ................. 13,000 1,082,537
Royal Bank of Canada ......................... 20,000 1,060,145
Torstar Corp. ................................ 30,000 1,039,152
-----------
7,646,440
-----------
Finland -- 3.2%
Neste Oy ..................................... 45,000 1,089,718
Rauma Oy ..................................... 48,000 748,493
UPM Kymmene Oy ............................... 42,000 839,854
-----------
2,678,065
-----------
France -- 9.7%
Axa-UAP Re SA ................................ 15,500 1,199,360
Bank Nationale de Paris ...................... 25,500 1,355,396
Comptoirs Modernes ........................... 576 294,771
Elf Aquitaine SA ............................. 9,000 1,046,773
L' Air Liquide ............................... 5,700 892,149
Michelin ..................................... 17,000 855,861
St. Gobain ................................... 9,900 1,406,414
Valeo ........................................ 14,500 983,451
-----------
8,034,175
-----------
Germany -- 4.7%
Daimler Benz AG .............................. 14,000 982,128
Duerr AG ..................................... 20,000 658,718
Preussag AG .................................. 3,600 1,098,641
Volkswagen AG ................................ 2,000 1,125,101
-----------
3,864,588
-----------
Hong Kong -- 0.7%
CDL Hotels International Ltd. ................ 1,800,000 545,877
-----------
Italy -- 9.1%
Istituto Bancario San Paolo .................. 75,000 716,506
Cartiere Burgo Spa ........................... 140,700 841,098
Credito Italiano ............................. 438,000 1,350,644
Edison Spa ................................... 140,000 846,806
Snia BPD Spa ................................. 1,000,000 1,028,830
Telecom Italia Spa ........................... 409,000 1,803,392
Unipol Spa ................................... 300,000 913,228
-----------
7,500,504
-----------
Japan -- 8.4%
Bank of Tokyo-Mitsubishi Ltd. ................ 65,000 896,071
Credit Saison Co. ............................ 250 6,165
Daiwa House Industries Co. Ltd. .............. 125,000 660,565
Familymart Co. ............................... 30,000 1,075,285
Fuji Photo Film Co. .......................... 30,000 1,148,809
Nichii Gakkan Co. ............................ 20,000 689,286
Nomura Securities Co. Ltd. ................... 75,000 999,464
Sony Corp. ................................... 12,000 1,066,095
Yamada Denki Co. ............................. 50,000 379,107
-----------
6,920,847
-----------
Mexico -- 1.1%
Cementos Chihuahua ........................... 398,900 487,350
Cifra ........................................ 200,000 448,547
-----------
935,897
-----------
New Zealand -- 5.7%
Air New Zealand Ltd. ......................... 269,000 538,872
Corporate Investments Ltd. ................... 2,000,000 1,056,783
Nuplex Industries Ltd. ....................... 440,000 894,201
PDL Holdings Ltd. ............................ 120,641 560,401
St. Luke's Group Ltd. ........................ 650,000 603,876
Telecom Corp. of New Zealand ................. 220,000 1,066,654
-----------
4,720,787
-----------
Norway -- 3.2%
Norske Skog .................................. 30,000 869,235
Schibsted .................................... 47,000 804,991
Storli ....................................... 57,000 964,689
-----------
2,638,915
-----------
Portugal -- 6.4%
Banco Espirito Santo ......................... 36,400 1,083,199
BPI .......................................... 45,000 1,094,132
Cimpor ....................................... 29,000 760,098
Portugal Telecom SA .......................... 30,000 1,392,013
Telecel-Comunicacaoes Pessoais SA (c) ........ 9,000 958,924
-----------
5,288,366
-----------
Singapore -- 0.6%
Parkway Holdings Ltd. ........................ 213,000 480,214
-----------
Thailand -- 0.9%
Electricity Generating Public Co. Ltd. ....... 239,000 446,729
Thai Farmers Bank Public Co. Ltd. ............ 150,000 272,586
-----------
719,315
-----------
United Kingdom -- 17.1%
Anglian Water ................................ 75,000 1,022,456
Bank Of Scotland ............................. 250,000 2,270,756
Commercial Union ............................. 70,000 976,138
General Electric Co. ......................... 150,000 971,950
Lloyds TSB Group ............................. 115,000 1,496,102
Marks & Spencer .............................. 150,000 1,483,399
Safeway, Inc. ................................ 180,000 1,014,080
Scottish & Newcastle ......................... 133,000 1,628,564
Scottish Hydro ............................... 97,000 799,799
Siebe Public ................................. 70,000 1,373,951
SmithKline Beecham ........................... 103,500 1,066,742
-----------
14,103,937
-----------
TOTAL COMMON STOCKS (Identified Cost
$73,108,273) ............................... 72,008,040
-----------
- --------------------------------------------------------------------------------
Preferred Stocks -- 4.3% of Total Net Assets
Brazil -- 1.2%
Brahma ....................................... 630,000 423,368
Pao de Acucar ................................ 30,000,000 548,363
Telemig SA ................................... 60,776 7,678
-----------
979,409
-----------
Germany -- 3.1%
Henkel KGAA .................................. 22,000 1,388,032
Jungheinrich AG .............................. 3,215 482,531
Porsche AG ................................... 400 667,056
-----------
2,537,619
-----------
TOTAL PREFERRED STOCKS (Identified Cost
$2,810,211) ................................ 3,517,028
-----------
Face
Amount
- ------------------------------------------------------------------------------
Short-Term Investment -- 5.7% of Total Net Assets
Repurchase Agreement with State Street
Bank and Trust Co., dated 12/31/97 at
5.000% to be repurchased at $4,704,306 on
1/02/98 collateralized by $4,675,000 U.S.
Treasury Note, 5.875%, due 1/31/99 with a
value of $4,797,228 ........................ $4,703,000 4,703,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $4,703,000) ............... 4,703,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$80,621,484) (d) ............................. $80,228,068
===========
(a) Ordinary shares unless noted otherwise.
(b) See Note 1.
(c) Non-income producing security.
(d) At December 31, 1997, the net unrealized depreciation on investments based
on cost of $80,657,256 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
$6,278,751 and $6,707,939, respectively, resulting in net unrealized
depreciation of $429,188.
Ten Largest Sector Holdings at December 31, 1997
as a Percentage of Total Net Assets
Banks 12.7%
Telecommunications 7.4%
Retail - General 5.9%
Industrial Equipment 5.3%
Insurance 5.1%
Building Materials 4.3%
Auto & Related 4.2%
Oil & Gas 3.6%
Pulp & Paper 3.0%
Beverages 2.5%
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES MID-CAP GROWTH FUND
Portfolio of Investments -- as of December 31, 1997
Shares Value(a)
- --------------------------------------------------------------------------------
Common Stocks -- 94.1% of Total Net Assets
Commercial Services -- 4.7%
Cendant Corp. (b) ......................... 2,650 $ 91,094
-----------
Communications Equipment -- 2.2%
Ciena Corp. (b) ........................... 700 42,788
-----------
Computer Hardware -- 0.1%
EMC Corp. (b) ............................. 100 2,744
-----------
Computer Software & Services -- 19.6%
America Online, Inc. (b) .................. 800 71,350
Compuware Corp. (b) ....................... 1,100 35,200
Electronic Arts (b) ....................... 1,200 45,375
HBO & Co. ................................. 3,200 153,600
Peritus Software Services, Inc. (b) ....... 1,400 28,525
Symantec Corp. (b) ........................ 1,900 41,681
-----------
375,731
-----------
Data Processing Services -- 2.6%
Paychex, Inc. ................................. 1,000 50,625
-----------
Financial Services -- 12.5%
Charles Schwab Corp. .......................... 2,400 100,650
Federal National Mortgage Association ......... 800 45,650
MGIC Investment Corp. ......................... 600 39,900
SunAmerica, Inc. .............................. 1,250 53,437
-----------
239,637
-----------
Health Care - Drugs -- 7.5%
Eli Lilly & Co. ............................... 1,200 83,550
Pfizer, Inc. .................................. 800 59,650
-----------
143,200
-----------
Health Care - Medical Technology -- 9.9%
Allegiance Corp. .............................. 1,200 42,525
Guidant Corp. ................................. 800 49,800
Oncor, Inc. (b) ............................... 9,900 45,787
Somatogen, Inc. (b) ........................... 2,000 8,875
Steris Corp. (b) .............................. 900 43,425
-----------
190,412
-----------
Insurance -- 5.8%
EXEL Ltd. ..................................... 900 57,038
Unum Corp. .................................... 1,000 54,375
-----------
111,413
-----------
Oil & Gas Exploration -- 6.3%
Abacan Resources Corp. (New) (b) .............. 6,100 9,531
Anadarko Petroleum Corp. ...................... 600 36,413
Cross Timbers Oil Co. ......................... 1,200 29,925
Ocean Energy, Inc. (b) ........................ 900 44,381
-----------
120,250
-----------
Oil - Drilling Equipment -- 14.6%
Baker Hughes, Inc. ............................ 1,000 43,625
Halliburton Co. ............................... 700 36,356
Nabors Industries, Inc. (b) ................... 1,200 37,725
Schlumberger Ltd. ............................. 700 56,350
Unit Corp. (b) ................................ 11,100 106,838
-----------
280,894
-----------
Restaurants -- 2.3%
Starbucks Corp. (b) ........................... 1,150 44,131
-----------
Retail - General -- 2.8%
Kohls Corp. (b) ............................... 800 54,500
-----------
Retail - Specialty -- 3.2%
Borders Group, Inc. (b) ....................... 1,000 31,312
Home Depot, Inc. .............................. 500 29,438
-----------
60,750
-----------
TOTAL COMMON STOCKS (Identified Cost $1,636,393) 1,808,169
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$1,636,393) (c) .............................. $ 1,808,169
===========
(a) See Note 1.
(b) Non-income producing security.
(c) At December 31, 1997, the net unrealized appreciation on investments based
on cost of $1,636,393 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
$264,875 and $93,099, respectively, resulting in net unrealized appreciation
of $171,776.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES MID-CAP VALUE FUND
Portfolio of Investments -- as of December 31, 1997
Shares Value(a)
- --------------------------------------------------------------------------------
Common Stocks -- 89.8% of Total Net Assets
Aerospace -- 2.9%
Gencorp, Inc. ................................. 2,100 $ 52,500
Sundstrand Corp. .............................. 1,200 60,450
-----------
112,950
-----------
Airlines -- 0.9%
Southwest Airlines Co. ........................ 1,500 36,938
-----------
Auto & Related -- 1.4%
Echlin, Inc. .................................. 1,500 54,281
-----------
Banks/Savings & Loans -- 9.3%
Associated BancCorp ........................... 988 54,463
Charter One Financial, Inc. ................... 630 39,769
City National Corp. ........................... 1,500 55,406
Commercial Federal Corp. ...................... 600 21,338
Downey Financial Corp. ........................ 1,300 36,969
Provident Financial Group, Inc. ............... 1,000 48,500
TCF Financial Corp. ........................... 1,600 54,300
Westamerica Bancorporation .................... 500 51,125
-----------
361,870
-----------
Beverages -- 1.4%
Whitman Corp. ................................. 2,100 54,731
-----------
Business Services -- 1.2%
CDI Corp. (b) ................................. 1,000 45,750
-----------
Chemicals - Major -- 1.7%
Solutia, Inc. ................................. 2,500 66,719
-----------
Chemicals - Specialty -- 1.0%
M.A. Hanna Co. ................................ 1,600 40,400
-----------
Commercial Services -- 2.4%
Apac Teleservices, Inc. (b) ................... 3,500 47,250
Viad Corp. .................................... 2,500 48,281
-----------
95,531
-----------
Communications Equipment -- 1.1%
Harris Corp. .................................. 900 41,288
-----------
Computer Hardware -- 0.7%
Komag, Inc. (b) ............................... 1,800 26,775
-----------
Computer Software & Services -- 3.5%
American Management Systems, Inc. (b) ......... 2,100 40,950
Sterling Software, Inc. (b) ................... 900 36,900
Symantec Corp. (b) ............................ 2,600 57,037
-----------
134,887
-----------
Electronic Components -- 6.4%
BMC Industries, Inc. .......................... 2,100 33,862
CHS Electronics, Inc. (b) ..................... 2,000 34,250
Integrated Device Technology, Inc. (b) ........ 3,500 33,031
International Rectifier Corp. (b) ............. 2,400 28,350
Lam Research Corp. (b) ........................ 1,300 38,025
Litton Industries, Inc. (b) ................... 1,000 57,500
National Semiconductor Corp. (b) .............. 1,000 25,938
-----------
250,956
-----------
Financial Services -- 2.8%
A.G. Edwards, Inc. ............................ 1,500 59,625
Finova Group, Inc. ............................ 1,000 49,687
-----------
109,312
-----------
Food - Packaged & Miscellaneous -- 3.9%
Dean Foods Co. ................................ 1,100 65,450
International Home Foods, Inc. (b) ............ 1,800 50,400
Lance, Inc. ................................... 1,350 35,522
-----------
151,372
-----------
Health Care - Medical Technology -- 1.8%
Invacare Corp. ................................ 800 17,400
Steris Corp. (b) .............................. 1,100 53,075
-----------
70,475
-----------
Health Care - Services -- 3.0%
Integrated Health Services, Inc. (b) .......... 1,400 43,662
Sierra Health Services, Inc. (b) .............. 1,000 33,625
Trigon Healthcare, Inc. (b) ................... 1,500 39,188
-----------
116,475
-----------
Home Builders -- 1.4%
Champion Enterprises, Inc. (b) ................ 2,600 53,463
-----------
Home Products -- 2.3%
Dial Corp. (New) .............................. 2,400 49,950
Furniture Brands International, Inc. (b) ...... 2,000 41,000
-----------
90,950
-----------
Housing & Building Materials -- 0.8%
Armstrong World Industries, Inc. .............. 400 29,900
-----------
Insurance -- 2.8%
Everest Reinsurance Holdings, Inc. ............ 1,000 41,250
Protective Life Corp. ......................... 600 35,850
Reinsurance Group of America .................. 800 34,050
-----------
111,150
-----------
Manufacturing -- 3.9%
Apogee Enterprises, Inc. ...................... 3,000 35,625
Regal-Beloit Corp. ............................ 2,000 59,125
TriMas Corp. .................................. 1,700 58,437
-----------
153,187
-----------
Natural Gas -- 3.1%
Columbia Gas Systems, Inc. .................... 725 56,958
Eastern Enterprises ........................... 1,400 63,000
-----------
119,958
-----------
Office Equipment -- 1.0%
Kimball International, Inc. ................... 2,100 38,719
-----------
Oil & Gas Exploration -- 2.6%
Forcenergy, Inc. (b) .......................... 1,900 49,756
Oryx Energy Co. (b) ........................... 2,000 51,000
-----------
100,756
-----------
Oil - Drilling Equipment -- 1.7%
Offshore Logistics, Inc. (b) .................. 1,400 29,925
Weatherford Enterra, Inc. (b) ................. 800 35,000
-----------
64,925
-----------
Paper Products -- 0.7%
Mead Corp. .................................... 1,000 28,000
-----------
Printing -- 0.7%
Banta Corp. ................................... 1,000 27,000
-----------
Publishing -- 0.9%
Houghton Mifflin Co. .......................... 900 34,538
-----------
Real Estate Investment Trusts -- 4.1%
Health Care Property Investments, Inc. ........ 1,000 37,812
Imperial Credit Commercial Mortgage Investment
Corp. (b) ................................... 6,400 93,600
Mack California Realty Corp. .................. 750 30,750
-----------
162,162
-----------
Restaurants -- 0.9%
Darden Restaurants, Inc. ...................... 2,700 33,750
-----------
Retail - Food -- 1.4%
Hannaford Brothers Co. ........................ 1,300 56,469
-----------
Retail - Specialty -- 2.0%
Macfrugals Bargains Close-Outs, Inc. (b) ...... 800 32,900
Zale Corp. (b) ................................ 2,000 46,000
-----------
78,900
-----------
Security Systems -- 1.3%
Sensormatic Electronics Corp. ................. 3,200 52,600
-----------
Telecommunications -- 1.9%
Aliant Communications, Inc. ................... 1,000 31,375
Century Telephone Enterprises, Inc. ........... 900 44,831
-----------
76,206
-----------
Textile & Apparel -- 1.6%
WestPoint Stevens, Inc. (b) ................... 1,300 61,425
-----------
Tobacco -- 1.7%
Universal Corp. ............................... 1,600 65,800
-----------
Utilities - Electric -- 7.6%
Cinergy Corp. ................................. 1,400 53,638
CMS Energy Corp. .............................. 1,300 57,281
Florida Progress Corp. ........................ 1,500 58,875
Pinnacle West Capital Corp. ................... 1,600 67,800
Scana Corp. ................................... 2,000 59,875
-----------
297,469
-----------
TOTAL COMMON STOCKS (Identified Cost $3,240,008) 3,508,037
-----------
Face
Amount
- --------------------------------------------------------------------------------
Short-Term Investment -- 11.4% of Total Net Assets
Agreement with State Street Bank and Trust
Co., dated 12/31/97 at 5.000% to be
repurchased at $444,123 on 1/02/98
collateralized by $445,000 U.S. Treasury
Note, 6.000%, due 8/15/00 with a value of
$457,655 ................................... $444,000 444,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $444,000) ................. 444,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$3,684,008) (c) .............................. $ 3,952,037
===========
(a) See Note 1.
(b) Non-income producing security.
(c) At December 31, 1997, the net unrealized appreciation on investments based
on cost of $3,684,008 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
$390,631 and $122,602, respectively, resulting in net unrealized
appreciation of $268,029.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES SMALL CAP GROWTH FUND
Portfolio of Investments -- as of December 31, 1997
Shares Value(a)
- --------------------------------------------------------------------------------
Common Stocks -- 95.1% of Total Net Assets
Advertising -- 5.1%
Lamar Advertising Co. (b) ..................... 3,500 $ 139,125
Universal Outdoor Holdings, Inc. (b) .......... 2,300 119,600
-----------
258,725
-----------
Agricultural Operations -- 1.9%
Delta & Pine Land Co. ......................... 3,177 96,899
-----------
Banks/Savings & Loans -- 13.0%
Astoria Financial Corp. ....................... 2,400 133,800
Bay View Capital Corp. ........................ 2,800 101,500
FirstFed Financial Corp. (b) .................. 3,600 139,500
Peoples Heritage Financial Group, Inc. ........ 2,400 110,400
Reliance Bancorp, Inc. ........................ 3,000 109,875
Roslyn Bancorp, Inc. (b) ...................... 2,600 60,450
-----------
655,525
-----------
Broadcasting -- 4.6%
Heftel Broadcasting Corp. (b) ................. 1,500 70,125
Metro Networks, Inc. (b) ...................... 1,700 55,675
Westwood One, Inc. (b) ........................ 2,900 107,662
-----------
233,462
-----------
Business Services -- 10.3%
Abacus Direct Corp. (b) ....................... 2,000 82,000
Applied Graphics Technologies, Inc. (b) ....... 2,000 106,500
Checkfree Corp. (b) ........................... 3,900 105,300
CSG Systems International, Inc. (b) ........... 2,300 92,000
Saville Systems Ireland Plc, ADR (b) (c) ...... 3,200 132,800
-----------
518,600
-----------
Communications Equipment -- 3.7%
Natural Microsystems Corp. (b) ................ 1,700 79,050
Uniphase Corp. (b) ............................ 2,600 107,575
-----------
186,625
-----------
Computer Hardware -- 3.0%
Network Appliance, Inc. (b) ................... 4,200 149,100
-----------
Computer Software & Services -- 12.3%
Concord Communications, Inc. (b) .............. 2,600 53,950
Industri-Matematik International Corp. (b) .... 3,500 103,250
Lycos, Inc. (b) ............................... 2,100 86,887
ONTRACK Data International, Inc. (b) .......... 2,300 57,356
Peritus Software Services, Inc. (b) ........... 2,100 42,788
Smallworldwide Plc, ADR (b) (c) ............... 2,300 50,313
Veritas Software Co. (b) ...................... 2,300 117,300
Wind River Systems, Inc. (b) .................. 2,650 105,172
-----------
617,016
-----------
Education -- 2.1%
Computer Learning Centers, Inc. (b) ........... 1,700 104,125
-----------
Electronic Components -- 5.2%
ATMI, Inc. (b) ................................ 4,400 106,700
Sipex Corp. (b) ............................... 5,150 155,787
-----------
262,487
-----------
Food - Packaged & Miscellaneous -- 0.8%
Broughton Foods Co. (b) ....................... 2,500 41,875
-----------
Health Care - Biotechnology -- 7.6%
Gilead Sciences, Inc. (b) ..................... 1,400 53,550
Incyte Pharmaceuticals, Inc. (b) .............. 1,400 63,000
MedImmune, Inc. (b) ........................... 2,300 98,612
Pharmacyclics, Inc. (b) ....................... 2,000 51,250
Sepracor, Inc. (b) ............................ 1,500 60,094
Vertex Pharmaceuticals, Inc. (b) .............. 1,700 56,100
-----------
382,606
-----------
Health Care - Medical Technology -- 2.2%
Cytyc Corp. (b) ............................... 2,000 49,750
Novoste Corp. (b) ............................. 2,600 58,500
-----------
108,250
-----------
Health Care - Services -- 6.0%
DAOU Systems, Inc. (b) ........................ 1,700 53,125
MedQuist, Inc. (b) ............................ 3,000 104,250
Sunrise Assisted Living, Inc. (b) ............. 3,300 142,312
-----------
299,687
-----------
Home Builders -- 3.2%
D.R. Horton, Inc. ............................. 3,900 67,762
Lennar Corp. .................................. 4,400 94,875
-----------
162,637
-----------
Hotels -- 2.3%
Capstar Hotel Co. (b) ......................... 3,300 113,231
-----------
Insurance -- 1.5%
Penn Treaty American Corp. (b) ................ 2,400 76,200
-----------
Leisure -- 1.9%
Regal Cinemas, Inc. (b) ....................... 3,500 97,563
-----------
Oil & Gas Exploration -- 1.8%
St. Mary Land & Exploration Co. ............... 2,600 91,000
-----------
Oil - Drilling Equipment -- 2.1%
Atwood Oceanics, Inc. (b) ..................... 1,500 71,063
IRI International Corp. (b) ................... 2,400 33,600
-----------
104,663
-----------
Retail - Food & Drug -- 2.7%
Whole Foods Market, Inc. (b) .................. 2,700 138,038
-----------
Telecommunications -- 1.8%
Metromedia Fiber Network, Inc. (b) ............ 2,700 44,887
WinStar Communications, Inc. (b) .............. 1,800 44,888
-----------
89,775
-----------
TOTAL COMMON STOCKS (Identified Cost $3,958,519) 4,788,089
-----------
Face
Amount
- --------------------------------------------------------------------------------
Short-Term Investment -- 7.5% of Total Net Assets
Repurchase Agreement with State Street Bank and
Trust Co., dated 12/31/97 at 5.000% to be
repurchased at $375,104 on 1/02/98
collateralized by $375,000 U.S. Treasury
Note, 5.875% due 1/31/99 with a value
of $384,804 ................................ $ 375,000 375,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $375,000).................. 375,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$4,333,519) (d) .............................. $ 5,163,089
===========
(a) See Note 1.
(b) Non-income producing security.
(c) An American Depository Receipt (ADR) is a certificate issued by a U.S. bank
representing the right to receive securities of the foreign issuer
described. The values of ADRs are significantly influenced by trading on
exchanges not located in the United States or Canada.
(d) At December 31, 1997, the net unrealized appreciation on investments based
on cost of $4,351,328 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
$879,314 and $67,553, respectively, resulting in net unrealized appreciation
of $811,761.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES SMALL CAP VALUE FUND
Portfolio of Investments -- as of December 31, 1997
Shares Value(a)
- --------------------------------------------------------------------------------
Common Stocks -- 87.4% of Total Net Assets
Aerospace -- 2.1%
Alliant Techsystems, Inc. (b) ................. 45,300 $ 2,525,475
Gencorp, Inc. ................................. 81,700 2,042,500
Nichols Research Corp. (b) .................... 48,150 1,203,750
-----------
5,771,725
-----------
Auto & Related -- 2.4%
Aftermarket Technology Corp. (b) .............. 106,300 1,926,688
Borg Warner Automotive, Inc. .................. 27,100 1,409,200
Echlin, Inc. .................................. 57,400 2,077,162
Intermet Corp. ................................ 81,000 1,417,500
-----------
6,830,550
-----------
Banks/Savings & Loans -- 4.8%
Associated BancCorp ........................... 46,521 2,564,470
Bank United Corp. ............................. 39,400 1,928,138
City National Corp. ........................... 42,400 1,566,150
CNB Bancshares, Inc. .......................... 14,600 703,538
Commercial Federal Corp. ...................... 69,750 2,480,484
Downey Financial Corp. ........................ 68,700 1,953,656
UST Corp. ..................................... 39,600 1,098,900
Westamerica Bancorporation .................... 12,000 1,227,000
-----------
13,522,336
-----------
Business Services -- 1.6%
Alternative Resources Corp. (b) ............... 40,300 929,419
CDI Corp. (b) ................................. 33,800 1,546,350
Cort Business Services Corp. (b) .............. 44,100 1,755,731
Team America Corp. (b) ........................ 13,800 144,900
-----------
4,376,400
-----------
Chemicals - Specialty -- 3.1%
AMCOL International Corp. ..................... 63,900 1,014,413
Cuno, Inc. (b) ................................ 84,100 1,282,525
Dexter Corp. .................................. 27,500 1,187,656
Fuller (H.B.) Co. ............................. 33,100 1,638,450
General Chemical Group, Inc. .................. 45,000 1,203,750
M.A. Hanna Co. ................................ 62,100 1,568,025
Mississippi Chemical Corp. .................... 34,900 636,925
-----------
8,531,744
-----------
Commercial Services -- 1.7%
Apac Teleservices, Inc. (b) ................... 141,200 1,906,200
Viad Corp. .................................... 151,700 2,929,706
-----------
4,835,906
-----------
Communications Equipment -- 0.3%
California Microwave, Inc. (b) ................ 49,600 961,000
-----------
Computer Hardware -- 1.4%
Digi International, Inc. (b) .................. 90,600 1,540,200
Komag, Inc. (b) ............................... 69,400 1,032,325
Telxon Corp. .................................. 54,400 1,298,800
-----------
3,871,325
-----------
Computer Software & Services -- 3.8%
American Management Systems, Inc. (b) ......... 55,000 1,072,500
Filenet Corp. (b) ............................. 62,800 1,891,850
Platinum Technology, Inc. (b) ................. 94,900 2,680,925
Sterling Software, Inc. (b) ................... 51,100 2,095,100
Structural Dynamics Research Corp. (b) ........ 75,700 1,703,250
WMS Industries, Inc. (b) ...................... 30,500 644,312
Wonderware Corp. (b) .......................... 35,800 505,675
-----------
10,593,612
-----------
Containers -- 0.6%
US Can Corp. (b) .............................. 93,500 1,577,813
-----------
Electronic Components -- 2.3%
Alpha Industries, Inc. (b) .................... 51,600 832,050
BMC Industries, Inc. .......................... 90,400 1,457,700
Cypress Semiconductor Corp. (b) ............... 61,100 519,350
Exar Corp. (b) ................................ 48,400 798,600
Integrated Device Technology, Inc. (b) ........ 152,800 1,442,050
International Rectifier Corp. (b) ............. 94,900 1,121,006
Xicor, Inc. (b) ............................... 71,800 215,400
-----------
6,386,156
-----------
Environmental Services -- 1.2%
IMCO Recycling, Inc. .......................... 75,000 1,204,688
World Fuel Services Corp. ..................... 103,575 2,175,075
-----------
3,379,763
-----------
Financial Services -- 2.8%
Capmac Holdings, Inc. ......................... 33,200 1,153,700
DVI, Inc. (b) ................................. 80,500 1,489,250
Financial Federal Corp. (b) ................... 89,700 2,119,162
Franchise Mortgage Acceptance Co. (b) ......... 128,700 2,364,862
WFS Financial, Inc. (b) ....................... 65,790 740,138
-----------
7,867,112
-----------
Food - Packaged & Miscellaneous -- 1.7%
International Home Foods, Inc. (b) ............ 18,900 529,200
International Multifoods Corp. ................ 53,500 1,514,719
Lance, Inc. ................................... 75,200 1,978,700
Michael Foods, Inc. ........................... 34,000 828,750
-----------
4,851,369
-----------
Freight Transportation -- 2.1%
Circle International Group, Inc. .............. 63,000 1,445,062
Pittston Burlington Group (b) ................. 89,100 2,338,875
US Freightways Corp. .......................... 68,500 2,226,250
-----------
6,010,187
-----------
Health Care - Drugs -- 0.4%
Weider Nutrition International, Inc. .......... 88,700 1,103,206
-----------
Health Care - Medical Technology -- 3.5%
C.R. Bard, Inc. ............................... 77,000 2,411,062
Conmed Corp. (b) .............................. 94,475 2,479,969
Gulf South Medical Supply, Inc. (b) ........... 33,800 1,259,050
Hologic, Inc. (b) ............................. 77,600 1,605,350
Invacare Corp. ................................ 47,500 1,033,125
Sola International, Inc. (b) .................. 33,300 1,082,250
-----------
9,870,806
-----------
Health Care - Services -- 5.6%
Compdent Corp. (b) ............................ 65,000 1,318,281
Genesis Health Ventures, Inc. (b) ............. 57,700 1,521,838
HealthPlan Services Corp. (b) ................. 100,700 2,114,700
Integrated Health Services, Inc. (b) .......... 106,381 3,317,757
Pharmerica, Inc. (b) .......................... 60,700 629,763
PhyMatrix Corp. (b) ........................... 45,900 722,925
Sierra Health Services, Inc. (b) .............. 78,900 2,653,012
Trigon Healthcare, Inc. (b) ................... 66,600 1,739,925
Vitalink Pharmacy Services, Inc. (b) .......... 63,645 1,535,436
-----------
15,553,637
-----------
Home Builders -- 1.1%
Champion Enterprises, Inc. (b) ................ 72,000 1,480,500
Crossman Communities, Inc. (b) ................ 53,300 1,472,413
-----------
2,952,913
-----------
Home Products -- 2.9%
Dial Corp. (New) .............................. 136,900 2,849,231
Furniture Brands International, Inc. (b) ...... 139,800 2,865,900
Premark International, Inc. ................... 81,900 2,375,100
-----------
8,090,231
-----------
Housing & Building Materials -- 1.4%
Giant Cement Holding, Inc. (b) ................ 64,600 1,493,875
Shaw Industries, Inc. ......................... 202,700 2,356,388
-----------
3,850,263
-----------
Insurance -- 5.7%
Allied Group, Inc. ............................ 87,300 2,498,963
Capital Reinsurance Corp. ..................... 50,600 3,140,362
Everest Reinsurance Holdings, Inc. ............ 74,900 3,089,625
Protective Life Corp. ......................... 65,600 3,919,600
Reinsurance Group of America .................. 79,500 3,383,719
-----------
16,032,269
-----------
Machinery -- 0.6%
Chart Industries, Inc. ........................ 73,100 1,667,594
-----------
Manufacturing -- 3.5%
Apogee Enterprises, Inc. ...................... 138,100 1,639,937
Federal Signal Corp. .......................... 57,900 1,252,088
Griffon Corp. (b) ............................. 117,350 1,716,244
Regal-Beloit Corp. ............................ 90,000 2,660,625
TriMas Corp. .................................. 75,600 2,598,750
-----------
9,867,644
-----------
Metals -- 1.0%
Agnico-Eagle Mines Ltd. ....................... 96,000 522,000
Oregon Steel Mills, Inc. ...................... 107,400 2,288,963
-----------
2,810,963
-----------
Natural Gas -- 1.6%
Eastern Enterprises ........................... 73,500 3,307,500
Public Service Company of North Carolina, Inc. 44,900 1,027,087
-----------
4,334,587
-----------
Office Equipment -- 1.1%
Kimball International, Inc. ................... 106,400 1,961,750
National Computer Systems, Inc. ............... 34,400 1,212,600
-----------
3,174,350
-----------
Oil & Gas Exploration -- 2.5%
Forcenergy, Inc. (b) .......................... 90,600 2,372,587
Lomak Petroleum, Inc. ......................... 94,100 1,529,125
Plains Resources, Inc. (b) .................... 39,400 677,188
Vintage Petroleum, Inc. ....................... 120,600 2,291,400
-----------
6,870,300
-----------
Oil - Drilling Equipment -- 3.0%
Atwood Oceanics, Inc. (b) ..................... 28,600 1,354,925
Offshore Logistics, Inc. (b) .................. 46,300 989,662
Pride International, Inc. (b) ................. 90,400 2,282,600
Seitel, Inc. (b) .............................. 59,400 1,017,225
Weatherford Enterra, Inc. (b) ................. 61,300 2,681,875
-----------
8,326,287
-----------
Paper Products -- 0.8%
Boise Cascade Corp. ........................... 72,800 2,202,200
Wausau Paper Mills Corp. ...................... 8,200 165,025
-----------
2,367,225
-----------
Printing -- 1.2%
Banta Corp. ................................... 76,974 2,078,298
Cadmus Communications Corp. ................... 66,800 1,369,400
-----------
3,447,698
-----------
Publishing -- 0.5%
Houghton Mifflin Co. .......................... 33,800 1,297,075
-----------
Real Estate Investment Trusts -- 8.7%
American General Hospitality Corp. ............ 90,300 2,415,525
Brandywine Realty Corp. ....................... 81,000 2,035,125
Capstone Capital Corp. ........................ 76,700 1,960,644
Health Care Property Investments, Inc. ........ 71,500 2,703,593
Imperial Credit Commercial Mortgage
Investment Corp. (b) .......................... 228,400 3,340,350
Koger Equity, Inc. .............................. 124,000 2,720,250
Liberty Property ................................ 81,100 2,316,419
Mack California Realty Corp. .................... 68,300 2,800,300
Sun Communities, Inc. ........................... 51,100 1,836,406
Sunstone Hotel Investors, Inc. .................. 126,300 2,178,675
-----------
24,307,287
-----------
Restaurants -- 1.4%
Buffets, Inc. (b) ............................. 113,300 1,062,187
Cooker Restaurant Corp. ....................... 35,700 341,381
Cracker Barrel Old Country Store, Inc. ........ 25,700 857,738
Darden Restaurants, Inc. ...................... 127,500 1,593,750
-----------
3,855,056
-----------
Retail - Food -- 0.9%
Hannaford Brothers Co. ........................ 55,900 2,428,156
-----------
Retail - General -- 0.5%
Saks Holdings, Inc. (b) ....................... 60,900 1,259,869
-----------
Retail - Specialty -- 3.1%
Family Dollar Stores, Inc. .................... 46,000 1,348,375
Gibson Greetings, Inc. ........................ 28,300 619,063
Heilig-Meyers Co. ............................. 141,800 1,701,600
OfficeMax, Inc. (b) ........................... 30,400 433,200
Tandycrafts, Inc. (b) ......................... 70,900 323,481
The Wet Seal, Inc. (b) ........................ 39,300 1,159,350
United Auto Group, Inc. (b) ................... 98,900 1,792,562
Zale Corp. (b) ................................ 57,400 1,320,200
-----------
8,697,831
-----------
Security Systems -- 0.9%
Sensormatic Electronics Corp. ................. 151,600 2,491,925
-----------
Telecommunications -- 0.8%
Antec Corp. (b) ............................... 92,200 1,440,625
Vanguard Cellular Systems, Inc. (b) ........... 73,100 932,025
-----------
2,372,650
-----------
Telecommunications Equipment -- 0.2%
Rohn Industries, Inc. ......................... 112,900 582,141
-----------
Textile & Apparel -- 1.3%
Stride Rite Corp. ............................. 134,900 1,618,800
Timberland Co. (b) ............................ 9,400 545,788
WestPoint Stevens, Inc. (b) ................... 31,700 1,497,825
-----------
3,662,413
-----------
Utilities - Electric -- 1.3%
Calpine Corp. (b) ............................. 60,800 904,400
Commonwealth Energy System .................... 12,700 422,275
Rochester Gas & Electric Corp. ................ 47,900 1,628,600
WPS Resources Corp. ........................... 24,100 814,881
-----------
3,770,156
-----------
TOTAL COMMON STOCKS
(Identified Cost $217,670,746).............. 244,411,530
-----------
Face
Amount
- --------------------------------------------------------------------------------
Short-Term Investments -- 13.3% of Total Net Assets
Chevron Chevron USA Inc., 6.600%, 1/02/98 ... $13,500,000 13,500,000
Exxon Asset Management Co., 5.650%, 1/02/98 .. 10,100,000 10,100,000
General Electric Capital Corp.,
5.650%, 1/02/98 ............................ 13,500,000 13,500,000
-----------
37,100,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $37,100,000)............... 37,100,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$254,770,746) (d) ............................ $281,511,530
============
(a) See Note 1.
(b) Non-income producing security.
(c) At December 31, 1997, the net unrealized appreciation on investments based
on cost of $254,687,064 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
$39,025,225 and $12,200,759, respectively, resulting in net unrealized
appreciation of $26,824,466.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES STRATEGIC VALUE FUND
Portfolio of Investments -- as of December 31, 1997
Shares Value(a)
- --------------------------------------------------------------------------------
Common Stocks -- 84.4% of Total Net Assets
Aerospace -- 2.4%
Sundstrand Corp. .............................. 600 $ 30,225
-----------
Banks/Savings & Loans -- 2.4%
Fleet Financial Group, Inc. ................... 400 29,975
-----------
Broadcasting -- 4.3%
CBS Corp. ..................................... 1,800 52,988
-----------
Chemicals - Major -- 8.8%
E.I. du Pont DeNemours & Co. .................. 600 36,037
Georgia Gulf Corp. ............................ 800 24,500
IMC Global, Inc. .............................. 500 16,375
Praxair, Inc. ................................. 500 22,500
Solutia, Inc. ................................. 400 10,675
-----------
110,087
-----------
Chemicals - Specialty -- 2.6%
Crompton & Knowles Corp. ...................... 1,200 31,800
-----------
Commercial Services -- 2.3%
Viad Corp. .................................... 1,500 28,969
-----------
Computer Hardware -- 13.9%
3Com Corp. (b) ................................ 700 24,456
Cabletron Systems, Inc. (b) ................... 600 9,000
EMC Corp. (b) ................................. 1,700 46,644
Gateway 2000, Inc. (b) ........................ 700 22,838
International Business Machines Corp. ......... 400 41,825
Sun Microsystems, Inc. (b) .................... 700 27,912
-----------
172,675
-----------
Computer Software & Services -- 4.8%
Computer Associates International, Inc. ....... 900 47,587
Unisys Corp. (b) .............................. 900 12,488
-----------
60,075
-----------
Electronic Components -- 7.5%
Applied Materials, Inc. (b) ................... 900 27,112
Intel Corp. ................................... 500 35,125
Texas Instruments, Inc. ....................... 700 31,500
-----------
93,737
-----------
Forest Products -- 2.7%
Georgia Pacific Corp. ......................... 400 24,300
Georgia Pacific Timber Group (b) .............. 400 9,075
-----------
33,375
-----------
Freight Transportation -- 9.0%
Burlington Northern Santa Fe Corp. ............ 300 27,881
CNF Transportation, Inc. ...................... 800 30,700
Federal Express Corp. (b) ..................... 500 30,531
Ryder System, Inc. ............................ 700 22,925
-----------
112,037
-----------
Gaming -- 1.5%
Harrah's Entertainment, Inc. (b) .............. 1,000 18,875
-----------
Housing & Building Materials -- 5.4%
Black & Decker Corp. .......................... 800 31,250
Masco Corp. ................................... 700 35,612
-----------
66,862
-----------
Insurance -- 2.3%
USF&G Corp. ................................... 1,300 28,681
-----------
Metals -- 3.7%
LTV Corp. ..................................... 1,000 9,750
UCAR International, Inc. (b) .................. 600 23,963
USX-US Steel Group, Inc. ...................... 400 12,500
-----------
46,213
-----------
Oil - Major Integrated -- 1.9%
Unocal Corp. .................................. 600 23,288
-----------
Retail - Food -- 3.6%
Kroger Co. (b) ................................ 1,200 44,325
-----------
Retail - General -- 2.4%
Federated Department Stores, Inc. (b) ......... 700 30,144
-----------
Textile & Apparel -- 2.9%
Reebok International Ltd. (b) ................. 500 14,406
Warnaco Group, Inc. ........................... 700 21,963
-----------
36,369
-----------
TOTAL COMMON STOCKS (Identified Cost $936,343) 1,050,700
-----------
Face
Amount
- --------------------------------------------------------------------------------
Short-Term Investment -- 14.2% of Total Net Assets
Repurchase Agreement with State Street Bank
and Trust Co., dated 12/31/97 at 5.000%
to be repurchased at $177,049 on 1/02/98
collateralized by $170,000 U.S. Treasury
Note, 7.500%, due 11/15/01 with a value
of $181,581 ................................ $177,000 $ 177,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $177,000).................. 177,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$1,113,343) (c) ........................... $ 1,227,700
===========
(a) See Note 1.
(b) Non-income producing security.
(c) At December 31, 1997, the net unrealized appreciation on investments based
on cost of $1,113,542 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
$161,226 and $47,068, respectively, resulting in net unrealized appreciation
of $114,158.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
LOOMIS SAYLES WORLDWIDE FUND
Portfolio of Investments -- as of December 31, 1997
Face
Amount Value (a)
- --------------------------------------------------------------------------------
Bonds and Notes -- 31.7% of Total Net Assets
Australia -- 1.3%
QTC Global Aud Bon, 8.000%, 9/14/07 ...... AUD 100,000 $ 72,968
-----------
New Zealand -- 1.6%
Government of New Zealand, 8.000%, 11/15/06 NZD 150,000 92,343
-----------
Philippines -- 2.9%
FLI Capital Cayman, 3.750%, 2/01/02
(step to 6.250% on 8/01/99) (b) (c) .... USD 150,000 108,000
MBIA, Inc., Zero Coupon Bond, 12/18/01 (b) USD 100,000 54,750
-----------
162,750
-----------
South Korea -- 0.9%
Samsung Electronics Co. Ltd., Zero Coupon
Bond, 12/31/07 (b) ..................... USD 75,000 52,250
-----------
Thailand -- 2.5%
Bangkok Bank Public Co. Ltd.,
3.250%, 3/03/04 (b) ..................... USD 200,000 65,000
Loxley Public Co., 2.500%, 4/04/01 (b) ... USD 150,000 75,000
-----------
140,000
-----------
United States -- 22.5%
Apple Computer, Inc., 6.500%, 2/15/04 .... USD 250,000 207,500
Arch Communications Group, Inc., Zero
Coupon Bond, 3/15/08 (step to 10.875%
on 3/15/01) (c) ........................ USD 300,000 184,500
Boston Chicken, Inc., 4.500%, 2/01/04 (b) USD 125,000 61,250
Builders Transportation, Inc.,
8.000%, 8/15/05 (b) (d) ................ USD 95,000 49,400
CML Group, Inc., 5.500%, 1/15/03 (b) ..... USD 150,000 112,500
Dillon Read Structured Finance Corp.,
6.660%, 8/15/10 ........................ USD 173,147 158,783
Envirotest Systems Corp., 9.625%, 4/01/03 USD 50,000 48,000
Exide Corp., 2.900%, 12/15/05 (b) (e) .... USD 125,000 79,844
Fieldcrest Cannon, Inc.,
6.000%, 3/15/12 (b) .................... USD 200,000 162,000
Shoney's, Inc., Zero Coupon Bond,
4/11/04 (b) ............................ USD 50,000 20,500
Softkey International, Inc.,
5.500%, 11/01/00 ....................... USD 200,000 176,500
-----------
1,260,777
-----------
TOTAL BONDS AND NOTES
(Identified Cost $1,932,616) ........... 1,781,088
-----------
Shares
- --------------------------------------------------------------------------------
Common Stocks -- 65.5% of Total Net Assets
Canada -- 4.3%
Abacan Resources Corp. (New) (f) .............. 9,700 15,156
Potash Corp. of Saskatchewan .................. 2,500 208,180
Ranger Oil Ltd. ............................... 2,700 18,563
-----------
241,899
-----------
France -- 3.3%
Bank Nationale de Paris ....................... 3,500 186,097
-----------
Germany -- 3.9%
Duerr AG ...................................... 6,700 220,732
-----------
Hong Kong -- 2.2%
CDL Hotels International Ltd. ................. 400,000 121,322
-----------
Japan -- 3.2%
Bank of Tokyo-Mitsubishi Ltd. ................. 13,000 179,427
-----------
New Zealand -- 5.7%
Air New Zealand Ltd. .......................... 68,000 136,185
PDL Holdings Ltd. ............................. 40,000 185,760
-----------
321,945
-----------
Portugal -- 3.1%
Portugal Telecom SA ........................... 3,750 174,096
-----------
Sweden -- 2.7%
SKF AB ........................................ 7,000 149,103
-----------
United States -- 37.1%
American International Group, Inc. ............ 600 65,250
Analog Devices, Inc. (f) ...................... 2,800 77,525
AT&T Corp. .................................... 1,500 91,875
BankBoston Corp. .............................. 900 84,544
BellSouth Corp. ............................... 1,600 90,100
Boeing Co. .................................... 1,350 66,066
Burlington Northern Santa Fe Corp. ............ 900 83,644
Burlington Resources, Inc. .................... 1,200 53,775
CBS Corp. ..................................... 2,800 82,425
Chrysler Corp. ................................ 2,500 87,969
Circuit City Stores, Inc. ..................... 1,600 56,900
CVS Corp. ..................................... 1,300 83,281
EMC Corp. (f) ................................. 2,200 60,363
Federal National Mortgage Association ......... 1,400 79,887
Heinz (H.J.) Co. .............................. 1,300 66,056
Household International, Inc. ................. 600 76,537
International Business Machines Corp. ......... 900 94,106
Manpower, Inc. ................................ 1,900 66,975
Medtronic, Inc. ............................... 1,400 73,237
Meritor Automotive, Inc. ...................... 1 21
Minnesota Mining & Manufacturing Co. .......... 700 57,444
Monsanto Co. .................................. 2,000 84,000
Pfizer, Inc. .................................. 1,000 74,562
Rockwell International Corp. (New) ............ 1,300 67,925
Schering-Plough Corp. ......................... 1,100 68,338
Schlumberger Ltd. ............................. 500 40,250
Star Banc Corp. ............................... 500 28,688
Time Warner, Inc. ............................. 1,500 93,000
Warner Lambert Co. ............................ 500 62,000
Worldcom, Inc. (f) ............................ 2,300 69,575
-----------
2,086,318
-----------
TOTAL COMMON STOCKS
(Identified Cost $3,753,348) ................ 3,680,939
-----------
- ------------------------------------------------------------------------------
Preferred Stocks -- 2.4% of Total Net Assets
Japan -- 2.4%
Sakura Finance, 0.750% ........................ 24,000,000 132,500
-----------
TOTAL PREFERRED STOCKS
(Identified Cost $186,152) .................. 132,500
-----------
Face
Amount
- --------------------------------------------------------------------------------
Short-Term Investment -- 11.0% of Total Net Assets
Repurchase Agreement with State Street
Bank and Trust Co., dated 12/31/97 at
5.000% to be repurchased at $616,171 on
1/02/98 collateralized by $615,000 U.S.
Treasury Note, 5.875%, due 1/31/99 with a
value of $631,079 ........................... $616,000 616,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $616,000) .................. 616,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST
$6,488,116) (g) ............................... $ 6,210,527
===========
(a) See Note 1.
(b) Convertible bond.
(c) Step Bond: Coupon is zero or below market rate for an initial period and
increases at a specified date and rate.
(d) Security in default.
(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) At December 31, 1997, the net unrealized depreciation on investments based
on cost of $6,488,488 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
$321,721 and $599,682, respectively, resulting in net unrealized
depreciation of $277,961.
Key to Abbreviations:
AUD = Australian Dollar
NZD = New Zealand Dollar
USD = United States Dollar
Ten Largest Sector Holdings at December 31, 1997
as a Percentage of Total Net Assets
Banks 8.5%
Telecommunications 7.6%
Financial Services 7.0%
Computers 6.8%
Foreign Issuer 5.8%
Electrical Equipment 4.5%
Industrial Equipment 3.9%
Mining 3.7%
Manufacturing 3.7%
Health Care - Drugs 3.6%
See accompanying notes to financial statements.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997
<CAPTION>
Core Growth International
Value Fund Fund Equity Fund
---------- ------ -------------
<S> <C> <C> <C>
ASSETS
Investments at value:
Securities ................................... $65,167,608 $30,769,122 $75,525,068
Repurchase agreements ........................ 0 2,470,000 4,703,000
----------- ----------- -----------
Total investments .............................. 65,167,608 33,239,122 80,228,068
Cash ........................................... 6,605 341 261
Foreign currency at value ...................... 0 0 9,689
Receivable for:
Shares of the Fund sold ...................... 32,215 0 417
Securities sold .............................. 0 0 2,218,699
Dividends and interest -- net ................ 74,361 8,064 48,508
Foreign tax reclaim .......................... 1,578 0 5,070
Due from the adviser (Note 3) .................. 15,272 120,696 59,193
Other assets (Note 1I) ......................... 652 481 488
----------- ----------- -----------
65,298,291 33,368,704 82,570,393
----------- ----------- -----------
LIABILITIES
Payable for:
Securities purchased ......................... 583,248 961,531 0
Shares of the Fund redeemed .................. 17,961 12,555 13,760
Foreign taxes ................................ 0 0 5,902
Accrued expenses:
Management fees (Note 3) ..................... 26,813 13,391 52,178
Trustees' fees (Note 3B) ..................... 1,377 1,377 1,377
Accounting and administration
(Note 3A) .................................. 5,123 2,840 7,644
Other expenses ............................... 36,521 33,468 68,400
----------- ----------- -----------
671,043 1,025,162 149,261
----------- ----------- -----------
NET ASSETS ....................................... $64,627,248 $32,343,542 $82,421,132
=========== =========== ===========
Assets consist of:
Capital paid in .............................. $49,985,809 $24,934,921 $82,684,032
Undistributed (or Distribution in excess of)
net investment income ...................... 15,148 0 (213)
Accumulated net realized gain (loss) ......... 645,787 1,231,412 131,863
Unrealized appreciation (depreciation) on:
Investments ................................ 13,980,504 6,177,209 (393,416)
Foreign currency transactions .............. 0 0 (1,134)
----------- ----------- -----------
NET ASSETS ....................................... $64,627,248 $32,343,542 $82,421,132
=========== =========== ===========
INSTITUTIONAL CLASS:
Net assets ..................................... $63,303,224 $32,149,481 $82,187,887
Shares of beneficial interest outstanding, no
par value .................................... 3,589,219 2,545,929 7,270,912
Net asset value and redemption price per
Institutional share .......................... $ 17.64 $ 12.63 $ 11.30
RETAIL CLASS:
Net assets ..................................... $ 1,324,024 $ 194,061 $ 233,245
Shares of beneficial interest outstanding, no
par value .................................... 75,155 15,410 20,675
Net asset value and redemption price per Retail
share ........................................ $ 17.62 $ 12.59 $ 11.28
IDENTIFIED COST OF INVESTMENTS ................... $51,187,104 $27,061,913 $80,621,484
=========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Mid-Cap Mid-Cap Small Cap Small Cap Strategic
Growth Value Growth Value Value Worldwide
Fund Fund Fund Fund Fund Fund
------------ ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 1,808,169 $ 3,508,037 $ 4,788,089 $ 281,511,530 $ 1,050,700 $ 5,594,527
0 444,000 375,000 0 177,000 616,000
------------ ------------ ------------ -------------- ------------ ------------
1,808,169 3,952,037 5,163,089 281,511,530 1,227,700 6,210,527
81,305 744 251 4,419 462 89
0 0 0 0 0 189,051
0 4,961 60,948 1,889,629 0 0
0 93,724 0 1,289,747 0 447,235
382 3,726 937 386,107 643 39,804
0 0 0 0 0 716
56,992 51,987 59,114 12,741 52,714 45,305
979 941 1,131 521 5,805 3,933
------------ ------------ ------------ -------------- ------------ ------------
1,947,827 4,108,120 5,285,470 285,094,694 1,287,324 6,936,660
------------ ------------ ------------ -------------- ------------ ------------
0 172,585 214,780 5,039,742 19,024 254,646
0 0 2,500 248,510 0 1,021,676
0 0 0 0 0 0
3,783 6,602 9,064 172,520 1,428 14,407
1,377 1,377 1,377 1,377 1,377 1,377
178 294 424 21,104 108 676
20,937 22,758 24,824 81,151 20,606 27,274
------------ ------------ ------------ -------------- ------------ ------------
26,275 203,616 252,969 5,564,404 42,543 1,320,056
------------ ------------ ------------ -------------- ------------ ------------
$ 1,921,552 $ 3,904,504 $ 5,032,501 $ 279,530,290 $ 1,244,781 $ 5,616,604
============ ============ ============ ============== ============ ============
$ 1,689,412 $ 3,651,301 $ 4,470,280 $ 249,515,261 $ 1,118,311 $ 5,765,691
0 854 0 241,190 0 (8,240)
60,364 (15,680) (267,349) 3,033,055 12,113 137,007
171,776 268,029 829,570 26,740,784 114,357 (277,589)
0 0 0 0 0 (265)
------------ ------------ ------------ -------------- ------------ ------------
$ 1,921,552 $ 3,904,504 $ 5,032,501 $ 279,530,290 $ 1,244,781 $ 5,616,604
============ ============ ============ ============== ============ ============
$ 1,847,976 $ 3,736,439 $ 3,893,169 $ 245,177,316 $ 965,332 $ 5,596,913
160,822 324,197 344,010 13,168,956 82,099 567,805
$ $ 11.49 $ 11.53 $ 11.32 $ 18.62 $ 11.76 $ 9.86
$ 73,576 $ 168,065 $ 1,139,332 $ 34,352,974 $ 279,449 $ 19,691
6,403 14,582 100,817 1,845,131 23,771 1,998
$ 11.49 $ 11.53 $ 11.30 $ 18.62 $ 11.76 $ 9.86
$ 1,636,393 $ 3,684,008 $ 4,333,519 $ 254,770,746 $ 1,113,343 $ 6,488,116
============ ============ ============ ============== ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
LOOMIS SAYLES EQUITY FUNDS
- ---------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1997
<CAPTION>
Core International
Value Growth Equity
Fund Fund Fund
----------- ---------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends* ...................................... $ 925,872 $ 177,794 $ 1,710,007
Interest ........................................ 127,001 27,615 290,807
----------- ---------- ------------
1,052,873 205,409 2,000,814
----------- ---------- ------------
Expenses
Management fees (Note 3) ...................... 269,200 174,976 705,111
12b-1 fees (Retail Class) ..................... 1,450 627 499
Trustees' fees and expenses (Note 3B) ......... 5,816 5,816 5,816
Accounting and administrative fees (Note 3A) 24,734 15,915 43,862
Custodian ..................................... 65,808 58,957 241,055
Transfer Agent (Institutional Class) .......... 27,392 27,014 30,244
Transfer Agent (Retail Class) ................. 18,873 18,618 18,446
Audit and tax services ........................ 23,121 23,121 26,121
Legal ......................................... 3,992 3,853 4,341
Printing ...................................... 5,709 5,196 5,635
Registration fees ............................. 25,983 24,366 25,752
Amortization of organization expenses
(Note 1I):
Institutional Class ......................... 0 0 0
Amortization of deferred registration costs
(Note 1I):
Institutional Class ......................... 0 0 0
Retail Class ................................ 11,237 11,242 11,402
Miscellaneous expenses ........................ 606 3,039 2,373
----------- ---------- ------------
483,921 372,740 1,120,657
---------- ---------- ------------
Less expenses waived and reimbursed by the
investment adviser (Note 3) ................. (29,404) (74,929) (178,102)
----------- ---------- ------------
Net investment income (loss) .................... 598,356 (92,402) 1,058,259
----------- ---------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on:
Investments -- net ............................ 6,931,274 8,211,774 9,491,460
Foreign currency transactions -- net .......... 0 0 (248,780)
----------- ---------- ------------
Total realized gain (loss) on investments and
foreign currency transactions ............... 6,931,274 8,211,774 9,242,680
----------- ---------- ------------
Unrealized appreciation (depreciation) on:
Investments -- net ............................ 5,392,568 (649,029) (10,489,664)
Foreign currency transactions -- net .......... 0 0 (799)
----------- ---------- ------------
Total unrealized appreciation (depreciation)
on investments and foreign currency
transactions ................................ 5,392,568 (649,029) (10,490,463)
----------- ---------- ------------
Net gain (loss) on investments and foreign
currency transactions ......................... 12,323,842 7,562,745 (1,247,783)
----------- ---------- ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS ...................................... $12,922,198 $7,470,343 $ (189,524)
=========== ========== ============
*Net of foreign withholding taxes of $1,141, $199,346, $342, and $7,934 for
the Core Value, International Equity, Small Cap Value and the Worldwide
Funds, respectively.
**Commencement of Fund operations on January 2, 1997.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Mid-Cap Mid-Cap Small Cap Small Cap Strategic
Growth Value Growth Value Value Worldwide
Fund** Fund** Fund** Fund Fund** Fund
- -------------- --------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
$ 5,636 $ 32,648 $ 4,655 $ 2,508,627 $ 7,523 $ 88,870
4,266 10,588 6,550 1,546,170 528 273,029
-------- --------- -------- ------------ -------- ---------
9,902 43,236 11,205 4,054,797 8,051 361,899
-------- --------- -------- ------------ -------- ---------
11,993 18,691 24,894 1,581,667 4,385 55,489
159 203 1,441 31,541 410 33
5,540 5,540 5,540 5,816 5,540 5,816
825 1,268 1,716 96,314 466 3,545
50,140 58,469 68,040 122,758 47,100 58,079
19,358 19,901 19,759 58,327 17,775 18,168
18,054 18,126 18,410 20,935 16,490 16,511
10,175 10,175 14,175 27,621 14,175 21,091
4,512 4,517 4,520 4,965 4,505 4,552
1,806 1,923 1,841 28,173 1,785 1,913
17,462 17,576 17,780 52,210 19,073 22,666
0 0 0 0 0 958
24,084 24,355 21,110 0 16,896 2,597
998 765 3,820 12,170 3,060 10,992
2,148 1,980 2,093 0 1,755 0
-------- --------- -------- ------------ -------- ---------
167,254 183,489 205,139 2,042,497 153,415 222,410
-------- --------- -------- ------------ -------- ---------
(151,104) (158,363) (170,503) (12,741) (144,233) (148,392)
-------- --------- -------- ------------ -------- ---------
(6,248) 18,110 (23,431) 2,025,041 (1,131) 287,881
-------- --------- -------- ------------ -------- ---------
156,302 261,370 (38,055) 39,443,172 12,191 536,460
0 0 0 0 0 (3,851)
-------- --------- -------- ------------ -------- ---------
156,302 261,370 (38,055) 39,443,172 12,191 532,609
-------- --------- -------- ------------ -------- ---------
171,776 268,029 829,570 4,289,783 114,357 (570,300)
0 0 0 0 0 (105)
-------- --------- -------- ------------ -------- ---------
171,776 268,029 829,570 4,289,783 114,357 (570,405)
-------- --------- -------- ------------ -------- ---------
328,078 529,399 791,515 43,732,955 126,548 (37,796)
-------- --------- -------- ------------ -------- ---------
$321,830 $ 547,509 $768,084 $ 45,757,996 $125,417 $ 250,085
======== ========= ======== ============ ======== =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Core Value
--------------------------------------
Year Ended Year Ended
----------------- -------------------
December 31, 1997 December 31, 1996
----------------- -----------------
FROM OPERATIONS
Net investment income (loss) ............. $ 598,356 $ 569,067
Net realized gain (loss) on:
Investments ............................ 6,931,274 4,564,278
Foreign currency transactions .......... 0 0
Unrealized appreciation (depreciation) on:
Investments ............................ 5,392,568 2,599,063
Foreign currency transactions .......... 0 0
----------- -----------
Increase (decrease) in net assets from
operations ........................... 12,922,198 7,732,408
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income .................. (590,731) (559,278)
Net realized gain on investments ....... (7,124,536) (4,547,630)
RETAIL CLASS
Net investment income .................. (10,346) 0
Net realized gain on investments ....... (138,784) 0
----------- -----------
(7,864,397) (5,106,908)
----------- -----------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 5)
Increase (decrease) in net assets
derived from capital share
transactions ......................... 15,853,992 4,624,659
----------- -----------
Total increase (decrease) in net assets .. 20,911,793 7,250,159
NET ASSETS
Beginning of the period .................. 43,715,455 36,465,296
------------
End of the period ........................ $64,627,248 $43,715,455
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period .................. $ 17,869 $ 8,080
=========== ===========
End of the period ........................ $ 15,148 $ 17,869
=========== ===========
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Growth
-------------------------------------
Year Ended Year Ended
----------------- -----------------
December 31, 1997 December 31, 1996
----------------- -----------------
FROM OPERATIONS
Net investment income (loss) ............. $ (92,402) $ (200,707)
Net realized gain (loss) on:
Investments ............................ 8,211,774 10,636,248
Foreign currency transactions .......... 0 0
Unrealized appreciation (depreciation) on:
Investments ............................ (649,029) (2,736,567)
Foreign currency transactions .......... 0 0
------------- ------------
Increase (decrease) in net assets from
operations ........................... 7,470,343 7,698,974
------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income .................. 0 0
Net realized gain on investments ....... (7,950,061) (10,947,610)
RETAIL CLASS
Net investment income .................. 0 0
Net realized gain on investments ....... (47,193) 0
------------- ------------
(7,997,254) (10,947,610)
------------- ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 5)
Increase (decrease) in net assets
derived from capital share
transactions ......................... (6,626,458) (2,265,225)
------------- ------------
Total increase (decrease) in net assets .. (7,153,369) (5,513,861)
NET ASSETS
Beginning of the period .................. 39,496,911 45,010,772
------------- ------------
End of the period ........................ $ 32,343,542 $ 39,496,911
============= ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period .................. $ 11,723 $ 0
============= ============
End of the period ........................ $ 0 $ 11,723
============= ============
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
International Equity
------------------------------------
Year Ended Year Ended
----------------- -----------------
December 31, 1997 December 31, 1996
----------------- -----------------
FROM OPERATIONS
Net investment income (loss) ............. $ 1,058,259 $ 816,303
Net realized gain (loss) on:
Investments ............................ 9,491,460 7,196,095
Foreign currency transactions .......... (248,780) (2,186,541)
Unrealized appreciation (depreciation) on:
Investments ............................ (10,489,664) 8,437,464
Foreign currency transactions .......... (799) (5,261)
------------- ------------
Increase (decrease) in net assets from
operations ........................... (189,524) 14,258,060
------------- ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income .................. (834,647) (566,307)
Net realized gain on investments ....... (10,657,570) (3,500,683)
RETAIL CLASS
Net investment income .................. (2,582) 0
Net realized gain on investments ....... (28,988) 0
------------- ------------
(11,523,787) (4,066,990)
------------- ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 5)
Increase (decrease) in net assets derived from
capital share transactions ........... 3,472,008 983,155
------------- ------------
Total increase (decrease) in net assets .. (8,241,303) 11,174,225
NET ASSETS
Beginning of the period .................. 90,662,435 79,488,210
------------- ------------
End of the period ........................ $ 82,421,132 $ 90,662,435
============= ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period .................. $ 25,444 $ 26,969
============= ============
End of the period ........................ $ (213) $ 25,444
============= ============
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Mid-Cap Growth Mid-Cap Value
------------------ ------------------
Year Ended Year Ended
------------------ ------------------
December 31, 1997* December 31, 1997*
------------------ ------------------
FROM OPERATIONS
Net investment income (loss) ........... $ (6,248) $ 18,110
Net realized gain (loss) on:
Investments .......................... 156,302 261,370
Foreign currency transactions ........ 0 0
Unrealized appreciation (depreciation) on:
Investments .......................... 171,776 268,029
Foreign currency transactions ........ 0 0
------------ ------------
Increase (decrease) in net assets from
operations ......................... 321,830 547,509
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ................ 0 (17,197)
In excess of net investment income ... (18,310) (23,118)
Net realized gain on investments ..... (92,139) (264,726)
RETAIL CLASS
Net investment income ................ 0 (913)
In excess of net investment income ... (571) (620)
Net realized gain on investments ..... (3,752) (12,852)
------------ ------------
(114,772) (319,426)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 5)
Increase (decrease) in net assets derived from
capital share transactions ......... 1,714,474 3,676,401
------------ ------------
Total increase (decrease) in net assets 1,921,532 3,904,484
NET ASSETS
Beginning of the period ................ 20 20
------------ ------------
End of the period ...................... $ 1,921,552 $ 3,904,504
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ................ $ 0 $ 0
============ ============
End of the period ...................... $ 0 $ 854
============ ============
*Commencement of operations, January 2, 1997.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Small Cap Growth
------------------
Year Ended
------------------
December 31, 1997*
------------------
FROM OPERATIONS
Net investment income (loss) ....................... $ (23,431)
Net realized gain (loss) on:
Investments ...................................... (38,055)
Foreign currency transactions .................... 0
Unrealized appreciation (depreciation) on:
Investments ...................................... 829,570
Foreign currency transactions .................... 0
----------
Increase (decrease) in net assets from operations. 768,084
----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............................ 0
In excess of net investment income ............... (1,797)
Net realized gain on investments ................. 0
In excess of net realized gain on investments .... (176,105)
RETAIL CLASS
Net investment income ............................ 0
Net realized gain on investments ................. 0
In excess of net realized gain on investments .... (53,076)
----------
(230,978)
----------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 5)
Increase (decrease) in net assets derived from
capital share transactions ..................... 4,495,375
----------
Total increase (decrease) in net assets ............ 5,032,481
NET ASSETS
Beginning of the period ............................ 20
----------
End of the period .................................. $5,032,501
==========
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............................ $ 0
==========
End of the period .................................. $ 0
==========
*Commencement of operations, January 2, 1997.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Small Cap Value
-------------------------------------
Year Ended Year Ended
----------------- -----------------
December 31, 1997 December 31, 1996
----------------- -----------------
FROM OPERATIONS
Net investment income (loss) .......... $ 2,025,041 $ 899,050
Net realized gain (loss) on:
Investments ......................... 39,443,172 17,761,764
Foreign currency transactions ....... 0 0
Unrealized appreciation (depreciation) on:
Investments ......................... 4,289,783 12,441,612
Foreign currency transactions ....... 0 0
------------ ------------
Increase (decrease) in net assets from
operations ........................ 45,757,996 31,102,426
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income ............... (1,647,014) (847,132)
Net realized gain on investments .... (34,182,555) (18,423,872)
RETAIL CLASS
Net investment income ............... (125,063) 0
Net realized gain on investments .... (4,383,758) 0
------------ ------------
(40,338,390) (19,271,004)
------------ ------------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 5)
Increase (decrease) in net assets
derived from capital share
transactions ...................... 110,485,816 61,338,511
------------ ------------
Total increase (decrease) in net assets 115,905,422 73,169,933
NET ASSETS
Beginning of the period ............... 163,624,868 90,454,935
------------ ------------
End of the period ..................... $279,530,290 $163,624,868
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period ............... $ 67,474 $ 15,556
============ ============
End of the period ..................... $ 241,190 $ 67,474
============ ============
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Strategic Value
----------------------
Year Ended
----------------------
December 31, 1997*
----------------------
FROM OPERATIONS
Net investment income (loss) ......................... $ (1,131)
Net realized gain (loss) on:
Investments ........................................ 12,191
Foreign currency transactions ...................... 0
Unrealized appreciation (depreciation) on:
Investments ........................................ 114,357
Foreign currency transactions ...................... 0
----------
Increase (decrease) in net assets from operations .. 125,417
----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income .............................. 0
In excess of net investment income ................. (14,759)
Net realized gain on investments ................... 0
RETAIL CLASS
Net investment income .............................. 0
In excess of net investment income ................. (4,144)
Net realized gain on investments ................... 0
----------
(18,903)
----------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 5)
Increase (decrease) in net assets derived from
capital share transactions ....................... 1,138,247
----------
Total increase (decrease) in net assets .............. 1,244,761
NET ASSETS
Beginning of the period .............................. 20
----------
End of the period .................................... $1,244,781
==========
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period .............................. $ 0
==========
End of the period .................................... $ 0
==========
*Commencement of operations, January 2, 1997.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ---------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Worldwide
---------------------------------------------------
Year Ended Year Ended
--------------------- ----------------------
December 31, 1997 December 31, 1996*
--------------------- ----------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income (loss) ............. $ 287,881 $ 143,724
Net realized gain (loss) on:
Investments ............................ 536,460 (11,121)
Foreign currency transactions .......... (3,851) 4,393
Unrealized appreciation (depreciation) on:
Investments ............................ (570,300) 292,711
Foreign currency transactions .......... (105) (160)
---------- ----------
Increase (decrease) in net assets from
operations ........................... 250,085 429,547
---------- ----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income .................. (284,030) (140,138)
Net realized gain on investments ....... (410,676) 0
RETAIL CLASS
Net investment income .................. (811) 0
Net realized gain on investments ....... (1,202) 0
---------- ----------
(696,719) (140,138)
---------- ----------
FROM CAPITAL SHARES TRANSACTIONS (NOTE 5)
Increase (decrease) in net assets
derived from capital share
transactions ......................... 873,745 4,900,074
---------- ----------
Total increase (decrease) in net assets .. 427,111 5,189,483
NET ASSETS
Beginning of the period .................. 5,189,493 10
---------- ----------
End of the period ........................ $5,616,604 $5,189,493
========== ==========
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of the period .................. $ 12,271 $ 0
========== ==========
End of the period ........................ $ (8,240) $ 12,271
========== =========
</TABLE>
*Commencement of operations, May 1, 1996.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Year Ended December 31,
Core Value Fund
-------------------
Institutional Class
-------------------
1997
-------------------
<S> <C>
Net asset value, beginning of period .......................... $ 15.60
--------
Income from investment operations -
Net investment income (loss) ................................ 0.18
Net realized and unrealized gain (loss) on investments ...... 4.32
--------
Total from investment operations .......................... 4.50
---------
Less distributions -
Dividends from net investment income ........................ (0.19)
Distributions from net realized capital gains ............... (2.27)
--------
Total distributions ....................................... (2.46)
--------
Net asset value, end of period ................................ $ 17.64
=========
Total return (%)(c) ........................................... 29.2
Net assets, end of period (000) ............................... $ 63,303
Ratio of operating expenses to average net assets (%)(b)(d) ... 0.84
Ratio of net investment income to average net assets (%)(b) ... 1.12
Portfolio turnover rate (%)(a) ................................ 64
Average commission rate (e) ................................... $ 0.0541
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) ........ 0.84
Without giving effect to the voluntary expense limitations
described in
Note 3 to the Financial Statements net investment income per
share would have been: ...................................... $ 0.18
</TABLE>
*From commencement of class operations on January 2, 1997.
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
(c)Total returns would have been lower had the adviser not reduced its advisory
fees and/or borne other operating expenses.
(d)The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating expenses
would have been higher.
(e)For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades upon which
commissions are charged. This rate generally does not reflect mark-ups, mark
downs or spreads on shares traded on a principal basis.
(f)Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Core Value Fund
- ------------------------------------------------------------------------------------------------------------------
Institutional Class Retail Class
- ------------------------------------------------------------------------------------------ ------------
1996 1995 1994 1993 1997*
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 14.57 $ 11.80 $ 12.49 $ 11.53 $ 15.60
-------- -------- -------- -------- --------
0.22 0.23 0.15 0.13 0.15(f)
2.83 3.93 (0.26) 1.24 4.30
-------- -------- -------- -------- --------
3.05 4.16 (0.11) 1.37 4.45
-------- -------- -------- -------- --------
(0.22) (0.23) (0.15) (0.12) (0.16)
(1.80) (1.16) (0.43) (0.29) (2.27)
-------- -------- -------- -------- --------
(2.02) (1.39) (0.58) (0.41) (2.43)
-------- -------- -------- -------- --------
$ 15.60 $ 14.57 $ 11.80 $ 12.49 $ 17.62
======== ======== ======== ======== ========
21.2 35.2 (0.9) 11.9 28.9
$ 43,715 $ 36,465 $ 25,946 $ 20,657 $ 1,324
1.13 1.20 1.33 1.50 1.10
1.44 1.61 1.28 1.23 0.84
58 60 48 53 64
$ 0.0583 -- -- -- 0.0541
1.13 1.20 1.33 1.56 6.17
$ 0.22 $ 0.23 $ 0.15 $ 0.12 $ (0.73)(f)
</TABLE>
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Growth Fund
--------------------
Institutional Class
--------------------
1997
--------------------
Net asset value, beginning of period ........................ $ 13.44
--------
Income from investment operations -
Net investment income (loss) .............................. (0.04)
Net realized and unrealized gain (loss) on investments .... 3.17
--------
Total from investment operations ........................ 3.13
--------
Less distributions -
Dividends from net investment income ...................... 0.00
Distributions from capital ................................ 0.00
Distributions from net realized capital gains ............. (3.94)
--------
Total distributions ..................................... (3.94)
--------
Net asset value, end of period .............................. $ 12.63
========
Total return (%)(c) ......................................... 24.5
Net assets, end of period (000) ............................. $ 32,149
Ratio of operating expenses to average net assets (%)(b)(d) . 0.85
Ratio of net investment income to average net assets (%)(b) . (0.26)
Portfolio turnover rate (%)(a) .............................. 116
Average commission rate (e) ................................. $ 0.0600
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) . 0.98
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)
*From commencement of class operations on January 2, 1997.
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
(c)Total returns would have been lower had the adviser not reduced its advisory
fees and/or borne other operating expenses.
(d)The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating expenses
would have been higher.
(e)For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades upon which
commissions are charged. This rate generally does not reflect mark-ups, mark
downs or spreads on shares traded on a principal basis.
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Growth Fund
---------------------------------------------------------------------------------------------------------------
Institutional Class Retail Class
--------------------------------------------------------------------------------- ------------
1996 1995 1994 1993 1997*
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 15.27 $ 12.50 $ 13.02 $ 12.46 $ 13.44
-------- -------- -------- -------- --------
(0.07) 0.00 (0.02) 0.00 (0.07)
3.08 3.86 (0.45) 1.16 3.16
-------- -------- -------- -------- --------
3.01 3.86 (0.47) 1.16 3.09
-------- -------- -------- -------- --------
0.00 0.00 0.00 0.00 0.00
0.00 0.00 (0.01) 0.00 0.00
(4.84) (1.09) (0.04) (0.60) (3.94)
-------- -------- -------- -------- --------
(4.84) (1.09) (0.05) (0.60) (3.94)
-------- -------- -------- -------- --------
$ 13.44 $ 15.27 $ 12.50 $ 13.02 $ 12.59
======== ======== ======== ======== ========
19.9 30.9 (3.7) 9.3 24.2
$ 39,497 $ 45,011 $ 36,580 $ 32,385 $ 194
1.10 1.08 1.16 1.20 1.10
(0.47) (0.29) (0.14) (0.17) (0.42)
99 48 46 64 116
$ 0.0600 -- -- -- $ 0.0600
1.10 1.08 1.16 1.20 12.96
$ (0.07) $ 0.00 $ (0.02) $ 0.00 $ (2.00)
</TABLE>
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
International Equity Fund
-----------------------------
Institutional Class
-----------------------------
1997
-----------------------------
Net asset value, beginning of period ......... $ 13.16
--------
Income from investment operations -
Net investment income (loss) ............... 0.15(f)
Net realized and unrealized gain (loss)
on investments ........................... (0.27)
-------
Total from investment operations ......... (0.12)
-------
Less distributions -
Dividends from net investment income ....... (0.19)
Distributions from net realized
capital gains ............................ (1.55)
-------
Total distributions ...................... (1.74)
-------
Net asset value, end of period ............... $ 11.30
========
Total return (%)(c) .......................... (1.0)
Net assets, end of period (000) .............. $ 82,188
Ratio of operating expenses to average
net assets(%)(b)(d) ........................ 1.00
Ratio of net investment income to
average net assets (%)(b) .................. 1.12
Portfolio turnover rate (%)(a) ............... 119
Average commission rate (e) .................. $ 0.0022
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) ........................... 1.16
Without giving effect to the voluntary
expense limitations described in Note 3
to the Financial Statements net investment
income per share would have been: .......... $ 0.13(f)
*From commencement of class operations on January 2, 1997.
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
(c)Total returns would have been lower had the adviser not reduced its advisory
fees and/or borne other operating expenses.
(d)The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating expenses
would have been higher.
(e)For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades upon which
commissions are charged. This rate generally does not reflect mark-ups, mark
downs or spreads on shares traded on a principal basis.
(f)Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Growth Fund
---------------------------------------------------------------------------------------------------------------
Institutional Class Retail Class
--------------------------------------------------------------------------------- ------------
1996 1995 1994 1993 1997*
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 11.65 $ 11.61 $ 12.90 $ 9.64 $ 13.16
-------- -------- -------- ------- --------
0.12 0.14 0.15 0.11 0.10(f)
2.01 0.87 (0.38) 3.61 (0.26)
-------- -------- -------- ------- --------
2.13 1.01 (0.23) 3.72 (0.16)
-------- -------- -------- ------- --------
(0.09) (0.14) (0.14) (0.10) (0.17)
(0.53) (0.83) (0.92) (0.36) (1.55)
-------- -------- -------- ------- --------
(0.62) (0.97) (1.06) (0.46) (1.72)
-------- -------- -------- ------- --------
$ 13.16 $ 11.65 $ 11.61 $ 12.90 $ 11.28
======== ======== ======== ======= ========
18.3 8.7 (1.8) 38.5 (1.3)
$ 90,662 $ 79,488 $ 73,189 $56,560 $ 233
1.42 1.45 1.46 1.50 1.25
0.96 1.16 1.30 1.20 0.73
151 133 116 128 119
$ 0.0013 -- -- -- $0.0022
1.42 1.45 1.46 1.72 16.24
$ 0.12 $ 0.14 $ 0.15 $ 0.09 $ (1.93)(f)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ---------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Mid-Cap Growth Fund
---------------------------------------
Institutional Class Retail Class
------------------- ----------------
1997* 1997*
------------------- ----------------
<S> <C> <C>
Net asset value, beginning of period ............ $ 10.00 $ 10.00
-------- --------
Income from investment operations -
Net investment income (loss) .................. (0.03) (0.06)
Net realized and unrealized gain (loss)
on investments .............................. 2.26 2.27
-------- --------
Total from investment operations ............ 2.23 2.21
-------- --------
Less distributions -
Dividends from net investment income .......... 0.00 0.00
Distributions in excess of net
investment income ........................... (0.12) (0.10)
Distributions from net realized capital gains . (0.62) (0.62)
-------- --------
Total distributions ......................... (0.74) (0.72)
-------- --------
Net asset value, end of period .................. $ 11.49 $ 11.49
======== ========
Total return (%)(c) ............................. 22.7 22.4
Net assets, end of period (000) ................. 1,848 $ 74
Ratio of operating expenses to average net
assets (%)(b)(d) .............................. 1.00 1.25
Ratio of net investment income to
average net assets (%)(b) ..................... (0.38) (0.67)
Portfolio turnover rate (%)(a) .................. 174 174
Average commission rate ......................... $ 0.0600 $ 0.0600
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) ... 9.35 36.58
Without giving effect to the voluntary
expense limitations described in Note 3 to the
Financial Statements net investment income per
share would have been: ........................ $ (0.60) $ (3.29)
*Commencement of fund operations on January 2, 1997.
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
(c)Total returns would have been lower had the adviser not reduced its advisory
fees and/or borne other operating expenses.
(d)The adviser has agreed to reimburse a portion of the Fund's expenses during the
period. Without this reimbursement the Fund's ratio of operating expenses would have
been higher.
(e)For fiscal years beginning on or after September 1, 1995, a fund is required to
disclose its average commission rate per share for trades upon which commissions are
charged. This rate generally does not reflect mark-ups, mark downs or spreads on
shares traded on a principal basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ----------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Mid-Cap Value Fund
---------------------------------------
Institutional Class Retail Class
------------------- ----------------
1997* 1997*
------------------- ----------------
<S> <C> <C>
Net asset value, beginning of period ............ $ 10.00 $ 10.00
-------- --------
Income from investment operations -
Net investment income (loss) .................. 0.07 0.03
Net realized and unrealized gain (loss)
on investments .............................. 2.54 2.55
-------- --------
Total from investment operations ............ 2.61 2.58
-------- --------
Less distributions -
Dividends from net investment income .......... (0.14) (0.11)
Distributions from net realized
capital gains ............................... (0.94) (0.94)
-------- --------
Total distributions ......................... (1.08) (1.05)
-------- --------
Net asset value, end of period .................. $ 11.53 $ 11.53
======== ========
Total return (%)(c) ............................. 26.3 26.0
Net assets, end of period (000) ................. $ 3,736 $ 168
Ratio of operating expenses to average net
assets (%)(b)(d) .............................. 1.00 1.25
Ratio of net investment income to average
net assets (%)(b) ............................. 0.74 0.42
Portfolio turnover rate (%)(a) .................. 130 130
Average commission rate (e) ..................... $ 0.0271 $ 0.0271
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) ... 6.65 27.99
Without giving effect to the voluntary
expense limitations described in Note 3 to the
Financial Statements net investment income per
share would have been: ........................ $ (0.49) $ (1.90)
*Commencement of fund operations on January 2, 1997.
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
(c)Total returns would have been lower had the adviser not reduced its advisory fees
and/or borne other operating expenses.
(d)The adviser has agreed to reimburse a portion of the Fund's expenses during the
period. Without this reimbursement the Fund's ratio of operating expenses would have
been higher.
(e)For fiscal years beginning on or after September 1, 1995, a fund is required to
disclose its average commission rate per share for trades upon which commissions are
charged. This rate generally does not reflect mark-ups, mark downs or spreads on
shares traded on a principal basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ----------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Small-Cap Growth Fund
---------------------------------------
Institutional Class Retail Class
------------------- ----------------
1997* 1997*
------------------- ----------------
<S> <C> <C>
Net asset value, beginning of period ............ $ 10.00 $ 10.00
-------- --------
Income from investment operations -
Net investment income ........................ (0.07) (0.10)
Net realized and unrealized gain (loss)
on investments .............................. 1.99 1.99
-------- --------
Total from investment operations ............ 1.92 1.89
-------- -------
Less distributions -
Dividends from net investment income .......... 0.00 0.00
Distributions in excess of net
investment income ........................... (0.01) 0.00
Distributions from net realized capital gains . 0.00 0.00
Distributions in excess of net realized
capital gains ............................... (0.59) (0.59)
-------- --------
Total distributions ......................... (0.60) (0.59)
-------- --------
Net asset value, end of period .................. $ 11.32 $ 11.30
======== ========
Total return (%)(c) ............................. 19.4 19.2
Net assets, end of period (000) ................. $ 3.893 $ 1,139
Ratio of operating expenses to average net
assets (%)(b)(d) .............................. 1.00 1.25
Ratio of net investment income to average
net assets (%)(b) ............................. (0.65) (0.94)
Portfolio turnover rate ........................ 211 211
Average commission rate(e) ...................... $ 0.0539 $ 0.0539
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) .. 5.81 7.82
Without giving effect to the voluntary
expense limitations described in Note 3 to the
Financial Statements net investment income per
share would have been: (f) .................... $ (0.56) $ (0.77)
</TABLE>
*Commencement of fund operations on January 2, 1997.
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
(c)Total returns would have been lower had the adviser not reduced its advisory
fees and/or borne other operating expenses.
(d)The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating expenses
would have been higher.
(e)For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades upon which
commissions are charged. This rate generally does not reflect mark-ups, mark
downs or spreads on shares traded on a principal basis.
(f)Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Small Cap Value Fund
----------------------
Institutional Class
----------------------
1997
----------------------
Net asset value, beginning of period ........................ $ 17.39
--------
Income from investment operations -
Net investment income (loss) .............................. 0.17
Net realized and unrealized gain (loss) on investments .... 4.26
--------
Total from investment operations ........................ 4.43
--------
Less distributions -
Dividends from net investment income ...................... (0.15)
Distributions from net realized capital gains ............. (3.05)
--------
Total distributions ..................................... (3.20)
--------
Net asset value, end of period .............................. $ 18.62
========
Total return (%)(c) ......................................... 26.0
Net assets, end of period (000) ............................. $245,177
Ratio of operating expenses to average net assets (%)(b)(d) . 0.94
Ratio of net investment income to average net assets (%)(b) . 0.97
Portfolio turnover rate (%)(a) .............................. 94
Average commission rate (e) ................................. $ 0.0535
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) . 0.94
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net
investment income per share would have been: .............. $ 0.17
* Commencement of fund operations on January 2, 1997.
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
(c) Total returns would have been lower had the adviser not reduced its advisory
fees and/or borne other operating expenses.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating expenses
would have been higher.
(e) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for trades upon which
commissions are charged. This rate generally does not reflect mark-ups, mark
downs or spreads on shares traded on a principal basis.
(f) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Growth Fund
---------------------------------------------------------------------------------------------------------------
Institutional Class Retail Class
--------------------------------------------------------------------------------- ------------
1996 1995 1994 1993 1997*
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 15.33 $ 12.86 $ 14.13 $ 12.88 $ 17.39
-------- -------- -------- -------- --------
0.11 0.04 (0.04) 0.00 0.15(f)
4.47 4.06 (1.12) 3.15 4.21
-------- -------- -------- -------- --------
4.58 4.10 (1.16) 3.15 4.36
-------- -------- -------- -------- --------
(0.11) (0.04) 0.00 0.00 (0.08)
(2.41) (1.59) (0.11) (1.90) (3.05)
-------- -------- -------- -------- --------
(2.52) (1.63) (0.11) (1.90) (3.13)
-------- -------- -------- -------- --------
$ 17.39 $ 15.33 $ 12.86 $ 14.13 $ 18.62
======== ======== ======== ======== ========
30.4 32.1 (8.2) 24.7 25.6
$163,625 $ 90,455 $ 73,126 $ 67,553 $ 34,353
1.19 1.25 1.27 1.35 1.25
0.80 0.29 (0.30) (0.38) 0.79
73 155 87 106 94
$ 0.0567 -- -- -- $ 0.0535
1.19 1.25 1.27 1.35 1.35
$ 0.11 $ 0.04 $ (0.04) $ 0.00 $ 0.13(f)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- -------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Strategic Value Fund
------------------------------------------------
Institutional Class Retail Class
----------------------- ----------------
1997* 1997*
----------------------- ----------------
<S> <C> <C>
Net asset value, beginning of period ........... $ 10.00 $ 10.00
-------- --------
Income from investment operations -
Net investment income (loss)(f)............... (0.01) (0.06)
Net realized and unrealized gain (loss)
on investments ............................. 1.98 2.00
-------- --------
Total from investment operations ........... 1.97 1.94
-------- --------
Less distributions -
Dividends from net investment income ......... 0.00 0.00
Distributions in excess of net
investment income .......................... (0.21) (0.18)
Distributions from net realized
capital gains .............................. 0.00 0.00
-------- --------
Total distributions ........................ (0.21) (0.18)
-------- --------
Net asset value, end of period ................. $ 11.76 $ 11.76
======== ========
Total return (%)(c) ............................ 19.7 19.4
Net assets, end of period (000) ................ $ 965 $ 279
Ratio of operating expenses to average net
assets (%)(b)(d) ............................. 1.00 1.25
Ratio of net investment income to
average net assets (%)(b) .................... (0.05) (0.49)
Portfolio turnover rate (%)(a) ................. 34 34
Average commission rate (e) .................... $ 0.0589 $ 0.0589
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)... 16.55 21.33
Without giving effect to the voluntary
expense limitations described in Note 3 to the
Financial Statements net investment income per
share would have been: (f) ................... $ (1.76) $ (2.50)
* Commencement of fund operations on January 2, 1997.
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
(c) Total returns would have been lower had the adviser not reduced its advisory fees
and/or borne other operating expenses.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during the
period. Without this reimbursement the Fund's ratio of operating expenses would have
been higher.
(e) For fiscal years beginning on or after September 1, 1995, a fund is required to
disclose its average commission rate per share for trades upon which commissions are
charged. This rate generally does not reflect mark-ups, mark downs or spreads on
shares traded on a principal basis.
(f) Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOOMIS SAYLES EQUITY FUNDS
- ---------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
Year Ended December 31,
Worldwide Fund
------------------------------------------------
Institutional Class Retail Class
--------------------------- ------------
1997 1996* 1997*
---- ---- ----
<S> <C> <C> <C>
Net asset value, beginning of period .................... $ 10.63 $ 10.00 $ 10.63
-------- -------- --------
Income from investment operations -
Net investment income (loss) .......................... 0.47 0.30 0.38(f)
Net realized and unrealized gain (loss)
on investments ...................................... (0.10) 0.63 (0.03)
-------- -------- --------
Total from investment operations .................... 0.37 0.93 0.35
-------- -------- --------
Less distributions -
Dividends from net investment income .................. (0.47) (0.30) (0.45)
Distributions from net realized capital gains ......... (0.67) 0.00 (0.67)
-------- -------- --------
Total distributions ................................. (1.14) (0.30) (1.12)
-------- -------- --------
Net asset value, end of period .......................... $ 9.86 $ 10.63 $ 9.86
======== ======== =======
Total return (%)(a)(c)................................... 3.5 9.2 3.3
Net assets, end of period (000) ......................... $ 5,597 $ 5,189 $ 20
Ratio of operating expenses to average
net assets (%)(b)(d) ................................. 1.00 1.00 1.25
Ratio of net investment income to average
net assets (%)(b) ..................................... 3.89 4.62 3.58
Portfolio turnover rate (%)(a) .......................... 134 76 134
Average commission rate (e) ............................. $ 0.0230 $ 0.0278 $ 0.0230
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) ..................... 2.62 3.72 214.91
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 $ 0.13 $ (23.33)(f)
*Commencement of operations on May 1, 1996 and January 2, 1997, for the Institutional
and Retail Classes, respectively.
(a)Periods less than one year are not annualized.
(b)Annualized for periods less than one year.
(c)Total returns would have been lower had the adviser not reduced its advisory fees
and/or borne other operating expenses.
(d)The adviser has agreed to reimburse a portion of the Fund's expenses during the
period. Without this reimbursement the Fund's ratio of operating expenses would have
been higher.
(e)For fiscal years beginning on or after September 1, 1995, a fund is required to
disclose its average commission rate per share for trades upon which commissions are
charged. This rate generally does not reflect mark-ups, mark downs or spreads on
shares traded on a principal basis.
(f)Per share net investment income has been determined on the basis of the weighted
average number of shares outstanding during the period.
</TABLE>
<PAGE>
LOOMIS SAYLES EQUITY FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. Loomis Sayles Funds is comprised of seventeen no-load mutual funds (the
"Funds").
Each Fund is a series of the 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>
The Equity Funds offer Institutional and Retail Class shares. Each class has
equal pro rata interest in the assets of the relevant fund and general voting
privileges. The Equity Funds commenced sale of the Retail Class shares on
January 2, 1997. On this date, the original class of shares was renamed the
Institutional Class. Retail and Institutional Classes differ with respect to
distribution and certain other class-specific expenses and expense reductions.
Retail Class shares are subject to distribution fees at an annual rate of
0.25% of the relevant fund's average net assets, pursuant to a distribution
plan adopted in accordance with Rule 12b-1 under the Investment Company Act of
1940. Retail Class shares have exclusive voting rights with respect to its
distribution plan.
On October 27, 1997, the Board of Trustees approved the creation of an
additional class of shares ("Admin Class") for the Small Cap Value Fund. These
shares are subject to distribution fees at an annual rate of 0.25% of the
Fund's average net assets, pursuant to a distribution plan adopted in
accordance with Rule 12b-1 under the Investment Act of 1940, and to
administrative fees at an annual rate of 0.25% of the Fund's average daily net
assets attributable to the Admin Class. Beginning January 2, 1998, the Admin
Class shares can be purchased through certain broker dealers and financial
intermediaries, who were record owners of the shares.
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. The following summarizes the
significant accounting policies of the Equity Funds:
A. SECURITY VALUATION -- Equity securities for which quotations are readily
available are valued at their last sale price on the exchange where primarily
traded or, if there is no reported sale during the day, at the closing bid
price. Long term debt securities for which quotations are readily available
are valued by a pricing service, approved by the Board of Trustees, which
generally uses the most recent bid prices in the principal market in which
such securities are normally traded. Short-term securities with a remaining
maturity of 60 days or less are valued at amortized cost, which approximates
market value. Other securities for which quotations are not readily available
(including restricted securities, if any) are valued primarily using dealer
supplied quotations or at their fair values as determined in good faith under
the general supervision 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 102% of the repurchase
price. These securities are marked-to-market daily. Loomis Sayles is
responsible for determining that the value of the collateral is at all times
at least equal to 102% of 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 are translated at
contractual currency exchange rates established at the time of the trade.
Income and expenses are translated at prevailing exchange rates 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, sales and maturities of forward foreign currency contracts, 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.
Certain funds use foreign currency contracts to facilitate transactions in
foreign-denominated securities. Losses may arise from changes in the value of
the foreign currency or if the counterparties do not perform under the
contracts' terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at the time
of each trade. The cost of the foreign currency contracts is included in the
cost basis of the associated investment.
D. FORWARD FOREIGN CURRENCY CONTRACTS -- Each Fund that may invest in foreign
securities may enter into forward foreign currency contracts, which are
agreements between two parties to buy and sell currencies at a set price on a
future date, to protect the value of specific portfolio positions or in
anticipation of changes in relative values of currencies in which current or
future fund portfolio holdings will be denominated.
Forward currency contracts are valued at the forward currency exchange rate
and marked-to-market daily. The change in market value is recorded as
unrealized appreciation (depreciation) on foreign currency transactions in the
Funds' Statements of Assets and Liabilities. Realized gains (losses) at the
close of a contract are recorded as realized gain (loss) on foreign currency
transactions in the Funds' Statements of Operations.
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 December 31,
1997, there were no open forward foreign exchange contracts.
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 are determined on the identified cost basis.
Most expenses of the Trust are directly attributed to a particular fund.
Expenses which cannot be directly attributed are apportioned between funds in
the Trust.
Investment income, realized and unrealized gains and losses, and the common
expenses of a fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the fund.
Each class of shares differs in its respective distribution and certain other
class specific fees and expense reductions.
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 price of the underlying securities and the
date when the securities will be delivered and paid for are fixed at the time
the transaction is negotiated. Losses may arise due to changes in the market
value of the underlying securities or if the counterparty does not perform
under the contract. 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 December 31, 1997, the Funds had 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 -- Each Fund 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 and capital gain distributions, if any, are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences, which may result in
reclassifications to the Fund's capital accounts to reflect income and gains
available for distribution, are primarily due to differing treatments for
litigation proceeds, foreign currency transactions, non-deductible
organization costs, deferred losses due to wash sales and excise tax
regulations and net operating losses. Some of these classifications may
include temporary book and tax basis differences that will reverse in
subsequent periods. Dividends from net investment income are determined on a
class level. Capital gains dividends are determined on a Fund level.
For the period(s) ended (date), (name of fund)'s distributions exceeded the
aggregate amount of taxable income and net realized gains resulting in a
return of capital. This was due to (explain: i.e., foreign currency losses
which decreased taxable income available for distribution after certain
distributions had been made).
I. ORGANIZATION EXPENSE AND DEFERRED REGISTRATION COSTS -- In 1996, costs
approximating $12,400 were incurred in connection with the initial
registration and organization of the Worldwide Fund. These costs were paid by
the Fund and have been amortized by the Fund to its Institutional Class as
follows: $7,900 in initial registration costs over 12 months and $4,500 in
organization costs over 60 months.
In 1997, the following costs were incurred in connection with the respective
Fund's initial registration of its Retail Class shares which were offered for
sale beginning on January 2, 1997. These costs are being amortized to the
respective Fund's Retail Class over 12 months:
Core Value Fund .............................................. $11,889
Growth Fund .................................................. 11,723
International Equity Fund .................................... 11,890
Small Cap Value Fund ......................................... 12,691
Worldwide Fund ............................................... 11,907
In addition, in 1997 the following costs were incurred in connection with the
respective Fund's initial registration of its Institutional and Retail Class
shares. These costs are amortized over 12 months and allocated to each class
of shares on a pro rata basis:
Mid-Cap Growth Fund .......................................... $26,061
Mid-Cap Value Fund ........................................... 26,061
Small Cap Growth Fund ........................................ 26,061
Strategic Value Fund ......................................... 25,761
2. PURCHASES AND SALES OF SECURITIES -- (excluding short-term investments)
for each Fund for the period ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
Purchases
----------------------------------------
U.S. Government Other
--------------- -----
<S> <C> <C>
Core Value Fund ............................................ $0 $ 37,148,605
Growth Fund ................................................ 0 39,364,722
International Equity Fund .................................. 0 104,078,811
Mid-Cap Growth Fund ........................................ 0 3,922,057
Mid-Cap Value Fund ......................................... 0 5,865,022
Small Cap Growth Fund ...................................... 0 10,433,671
Small Cap Value Fund ....................................... 0 232,923,943
Strategic Value Fund ....................................... 0 1,189,765
Worldwide Fund ............................................. 0 9,530,543
<CAPTION>
Sales
----------------------------------------
U.S. Government Other
--------------- -----
<S> <C> <C>
Core Value Fund ............................................ $0 $ 30,188,060
Growth Fund ................................................ 0 53,802,044
International Equity Fund .................................. 0 116,144,763
Mid-Cap Growth Fund ........................................ 0 2,435,051
Mid-Cap Value Fund ......................................... 0 2,886,384
Small Cap Growth Fund ...................................... 0 6,437,097
Small Cap Value Fund ....................................... 0 172,596,535
Strategic Value Fund ....................................... 0 265,613
Worldwide Fund ............................................. 0 8,970,995
</TABLE>
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES -- During the
period ended December 31, 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 December 31, 1997 provided for fees at the following
annual percentage rate of each Fund's average daily net assets:
Annual
Percentage
Fund Rate
---- ----------
Core Value Fund ............................................... 0.50%
Growth Fund ................................................... 0.50%
International Equity Fund ..................................... 0.75%
Mid-Cap Growth Fund ........................................... 0.75%
Mid-Cap Value Fund ............................................ 0.75%
Small Cap Growth Fund ......................................... 0.75%
Small Cap Value Fund .......................................... 0.75%
Strategic Value Fund .......................................... 0.50%
Worldwide Fund ................................................ 0.75%
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
---- ----------
Core Value Fund ............................................... 0.85%
Growth Fund ................................................... 0.85%
International Equity Fund ..................................... 1.00%
Mid-Cap Growth Fund ........................................... 1.00%
Mid-Cap Value Fund ............................................ 1.00%
Small Cap Growth Fund ......................................... 1.00%
Small Cap Value Fund .......................................... 1.00%
Strategic Value Fund .......................................... 1.00%
Worldwide Fund ................................................ 1.00%
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
---- ----------
Core Value Fund ............................................... 1.10%
Growth Fund ................................................... 1.10%
International Equity Fund ..................................... 1.25%
Mid-Cap Growth Fund ........................................... 1.25%
Mid-Cap Value Fund ............................................ 1.25%
Small Cap Growth Fund ......................................... 1.25%
Small Cap Value Fund .......................................... 1.25%
Strategic Value Fund .......................................... 1.25%
Worldwide Fund ................................................ 1.25%
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 $33,003 for the nine Loomis Sayles Funds presented herein
and are shown separately in the financial statements as Accounting and
Administrative fees. Effective June 1, 1997, Loomis Sayles contracted with
State Street Bank and Trust Company ("State Street") as Administrator to
perform these services.
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 December 31, 1997, 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
------- --------
Core Value Fund ............................ 372,468 577,979
Growth Fund ................................ 236,417 817,522
International Equity Fund .................. 924,882 468,368
Mid-Cap Growth Fund ........................ 0 141,876
Mid-Cap Value Fund ......................... 0 140,937
Small Cap Growth Fund ...................... 0 185,722
Small Cap Value Fund ....................... 186,539 1,004,369
Strategic Value Fund ....................... 0 69,835
Worldwide Fund ............................. 458,728 80,212
4. FOREIGN SECURITIES -- Each Fund 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 and
their markets may be less liquid and the prices of such securities may be more
volatile than those of securities of comparable U.S. companies and the U.S.
government.
5. CAPITAL STOCK TRANSACTIONS -- The tables below summarize the transactions
in Fund shares for the period indicated:
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles Core Value Fund
--------------------------------------------------------------
Period Ended Period Ended
December 31, 1997 December 31, 1996
----------------------------- -------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ....... 921,281 $16,764,969 529,829 $ 8,135,687
Issued in connection with the
reinvestment of:
Dividends from investment income ..... 31,287 542,617 34,377 539,962
Distributions from net realized gains
on investment ...................... 379,789 6,636,687 282,963 4,435,655
Redeemed ............................. (544,799) (9,494,995) (548,491) (8,486,645)
-------- ---------- -------- ------------
Net change ........................... 787,558 $14,449,278 298,678 $ 4,624,659
======== =========== ======== ============
Retail Class Shares* Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ....... 107,737 $ 1,958,564
Issued in connection with the
reinvestment of:
Dividends from investment income ..... 585 10,108
Distributions from net realized gains
on investment ...................... 7,805 135,567
Redeemed ............................. (40,972) (699,525)
-------- ------------
Net change ........................... 75,155 $ 1,404,714
======== ============
</TABLE>
*From January 2, 1997 (commencement of class operations).
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles Growth Fund
--------------------------------------------------------------
Period Ended Period Ended
December 31, 1997 December 31, 1996
----------------------------- -------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ....... 253,404 $ 3,601,402 544,697 $ 8,655,405
Issued in connection with the
reinvestment of:
Dividends from investment income ..... 0 0 0 0
Distributions from net realized gains
on investment ...................... 616,053 7,726,539 781,186 10,831,597
Redeemed ............................. (1,261,701) (18,196,471) (1,336,333) (21,752,227)
---------- ------------ --------- ------------
Net change ........................... (392,244) $ (6,868,530) (10,450) $ (2,265,225)
========== ============ ========== ============
Retail Class Shares* Shares Amount
- -------------------- ------ ------
Issued from the sale of shares ....... 76,184 $ 1,122,980
Issued in connection with the
reinvestment of:
Dividends from investment income ..... 0 0
Distributions from net realized gains
on investment ...................... 3,662 45,392
Redeemed ............................. (64,436) (926,300)
---------- ------------
Net change ........................... 15,410 $ 242,072
========== ============
</TABLE>
*From January 2, 1997 (commencement of class operations).
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles International Equity Fund
---------------------------------------------------------------
Period Ended Period Ended
December 31, 1997 December 31, 1996
---------------------------- ---------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ....... 784,236 $ 10,550,546 960,299 $ 11,920,606
Issued in connection with the
reinvestment of:
Dividends from investment income ..... 73,564 831,364 29,706 386,808
Distributions from net realized gains
on investment ...................... 747,653 8,671,415 223,502 2,918,686
Redeemed ............................. (1,224,562) (16,864,605) (1,149,339) (14,242,945)
---------- ------------ --------- ------------
Net change ........................... 380,891 $ 3,188,720 64,168 $ 983,155
========== ============ ========= ============
Retail Class Shares* Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ....... 61,345 $ 821,531
Issued in connection with the
reinvestment of:
Dividends from investment income ..... 279 3,133
Distributions from net realized gains
on investment ...................... 2,433 28,082
Redeemed ............................. (43,382) (569,458)
-------- ------------
Net change ........................... 20,675 $ 283,288
======== ============
</TABLE>
*From January 2, 1997 (commencement of class operations).
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles Mid-Cap Growth Fund
-----------------------------------
Period Ended December 31, 1997*
-----------------------------------
Institutional Class Shares Shares Amount
- -------------------------- ------ ------
<S> <C> <C>
Issued from the sale of shares ...................................... 177,686 $1,840,192
Issued in connection with the
reinvestment of:
Dividends from investment income .................................... 1,585 17,579
Distributions from net realized gains on investment ................. 7,977 88,461
Redeemed ............................................................ (26,426) (302,973)
------- ----------
Net change .......................................................... 160,822 $1,643,259
======= ==========
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ...................................... 7,906 $ 88,646
Issued in connection with the
reinvestment of:
Dividends from investment income .................................... 52 571
Distributions from net realized gains on investment ................. 338 3,749
Redeemed ............................................................ (1,893) (21,751)
------- ----------
Net change .......................................................... 6,403 $ 71,215
========= ==========
</TABLE>
*From January 2, 1997 (commencement of operations).
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles Mid-Cap Value Fund
-----------------------------------
Period Ended December 31, 1997*
-----------------------------------
Institutional Class Shares Shares Amount
- -------------------------- ------ ------
<S> <C> <C>
Issued from the sale of shares ...................................... 309,654 $ 3,352,605
Issued in connection with the reinvestment of:
Dividends from investment income .................................... 3,456 39,124
Distributions from net realized gains on investment ................. 22,694 256,901
Redeemed ............................................................ (11,607) (141,399)
------- -----------
Net change .......................................................... 324,197 $ 3,507,231
======= ==========
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ...................................... 13,686 $ 159,030
Issued in connection with the reinvestment of:
Dividends from investment income .................................... 96 1,089
Distributions from net realized gains on investment ................. 806 9,130
Redeemed ............................................................ (6) (79)
------ -----------
Net change .......................................................... 14,582 $ 169,170
====== ===========
</TABLE>
*From January 2, 1997 (commencement of operations).
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles Small Cap Growth Fund
--------------------------------------
Period Ended December 31, 1997*
--------------------------------------
Institutional Class Shares Shares Amount
- -------------------------- ------ ------
<S> <C> <C>
Issued from the sale of shares ...................................... 365,308 $3,697,821
Issued in connection with the reinvestment of:
Dividends from investment income .................................... 152 1,640
Distributions from net realized gains on investment ................. 15,970 172,472
Redeemed ............................................................ (37,420) (420,264)
------- ----------
Net change .......................................................... 344,010 $3,451,669
======= ==========
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ...................................... 108,337 $1,114,195
Issued in connection with the reinvestment of:
Dividends from investment income .................................... 0 0
Distributions from net realized gains on investment ................. 4,792 51,662
Redeemed ............................................................ (12,312) (122,151)
------- ----------
Net change .......................................................... 100,817 $1,043,706
======= ==========
</TABLE>
*From January 2, 1997 (commencement of operations).
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles Small Cap Value Fund
---------------------------------------------------------------
Period Ended Period Ended
December 31, 1997 December 31, 1996
------------------------------- ------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ........ 3,738,215 $74,208,026 4,541,136 $79,316,546
Issued in connection with the
reinvestment of:
Dividends from investment income 79,037 1,439,048 42,007 724,414
Distributions from net realized
gains on investment ................. 1,822,913 33,306,823 1,015,703 17,546,781
Redeemed .............................. (1,877,683) (35,245,314) (2,093,985) (36,249,230)
---------- ----------- ---------- -----------
Net change ............................ 3,762,482 $73,708,583 3,504,861 $ 61,338,511
========= =========== ========= ============
Retail Class Shares* Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ........ 1,876,793 $37,883,528
Issued in connection with the
reinvestment of:
Dividends from investment income 6,200 112,840
Distributions from net realized
gains on investment ................. 219,001 3,991,586
Redeemed .............................. (256,863) (5,210,721)
--------- -----------
Net change ............................ 1,845,131 $36,777,233
========= ===========
</TABLE>
*From January 2, 1997 (commencement of class operations).
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles Strategic Value Fund
-----------------------------------
Period Ended
December 31, 1997*
------------------------
Institutional Class Shares Shares Amount
- -------------------------- ------ -------
<S> <C> <C>
Issued from the sale of shares ............................... 83,725 $ 892,822
Issued in connection with the reinvestment of:
Dividends from investment income ............................. 1,198 13,783
Distributions from net realized gains on investment .......... 0 0
Redeemed ..................................................... (2,824) (34,372)
------ ------------
Net change ................................................... 82,099 $ 872,233
====== ============
Retail Class Shares Shares Amount
- ------------------- ------ ------
Issued from the sale of shares ............................... 24,027 $ 269,111
Issued in connection with the reinvestment of:
Dividends from investment income ............................. 360 4,143
Distributions from net realized gains on investment .......... 0 0
Redeemed ..................................................... (616) (7,240)
------ ------------
Net change ................................................... 23,771 $ 266,014
====== ============
*From January 2, 1997 (commencement of operations).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Loomis Sayles Worldwide Fund
---------------------------------------------------------------
Period Ended Period Ended
December 31, 1997 December 31, 1996
------------------------------- ------------------------------
Institutional Class Shares Shares Amount Shares Amount
- -------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale of shares ........ 220,662 $ 2,356,777 475,045 $ 4,759,937
Issued in connection with the
reinvestment of:
Dividends from investment income 28,868 284,012 13,134 140,137
Distributions from net realized
gains on investment ................. 41,146 410,591 0 0
Redeemed .............................. (211,051) $ (2,199,192) 0 0
-------- ------------ ------- ------------
Net change ............................ 79,625 $ 852,188 488,179 $ 4,900,074
======== ============ ======= ============
Retail Class Shares** Shares Amount
- --------------------- ------ ------
Issued from the sale of shares ........ 1,794 $ 19,549
Issued in connection with the
reinvestment of:
Dividends from investment income 83 809
Distributions from net realized
gains on investment ................. 121 1,199
Redeemed .............................. 0 0
------- ------------
Net change ............................ 1,998 $ 21,557
======= ============
</TABLE>
*From May 1, 1996 (commencement of operations).
**From January 2, 1997 (commencement of class operations).
<PAGE>
1997 U.S. TAX AND DISTRIBUTION INFORMATION TO SHAREHOLDERS (UNAUDITED)
A. CAPITAL GAINS DISTRIBUTIONS -- Pursuant to Internal Revenue Section
852(b), the distributions set forth below have been designated as capital
gains distributions for the fiscal year ended December 31, 1997:
<TABLE>
<CAPTION>
28% Rate Gain 20% Rate Gain
Amount Amount
------------- --------------
<S> <C> <C>
Core Value Fund .......................................... $3,751,747 $1,437,762
Growth Fund .............................................. 4,445,993 1,581,254
International Equity Fund ................................ 4,154,469 3,346,082
Mid-Cap Growth Fund ...................................... 0 0
Mid-Cap Value Fund ....................................... 0 0
Small Cap Growth Fund .................................... 0 0
Small Cap Value Fund ..................................... 10,149,976 6,246,533
Strategic Value Fund ..................................... 0 0
Worldwide Fund ........................................... 227,864 0
</TABLE>
On August 5, 1997, the Taxpayer Relief Act (the "Act") of 1997 was enacted.
Under the Act, the maximum capital gain rate for individuals on net gains from
investment activities was reduced from 28% to 20% (10% for persons taxed at a
15% rate) depending on both the holding period of the investment and the date
the investment was sold. Capital gains realized from transactions that do not
meet the prescribed transition and holding period rules of the Act will
continue to be taxed at a maximum rate of 28%.
B. CORPORATE DIVIDENDS RECEIVED DEDUCTION -- For the fiscal year ended
December 31, 1997, a percentage of dividends distributed by the Funds listed
below qualify for the dividends received deduction for corporate shareholders.
These percentages are as follows:
Qualifying
Percentage
----------------
Core Value Fund ............................................. 100.00%
Growth Fund ................................................. 0.00%
International Equity Fund ................................... 0.00%
Mid-Cap Growth Fund ......................................... 4.21%
Mid-Cap Value Fund .......................................... 8.21%
Small Cap Growth Fund ....................................... 1.89%
Small Cap Value Fund ........................................ 6.50%
Strategic Value Fund ........................................ 39.80%
Worldwide Fund .............................................. 9.00%
C. FOREIGN TAX CREDITS -- The International Equity Fund has made an election
under Internal Revenue Code Section 853 to pass through foreign taxes paid by
the Fund to its shareholders. During the period ended December 31, 1997, the
total amount of foreign source income was $1,909,353 (or $0.25 per share). The
total amount of foreign taxes passed through to shareholders was $199,346 (or
$0.03 per share).
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of the Loomis Sayles Equity Funds:
We have audited the accompanying statements of assets and liabilities of
the Loomis Sayles Equity Funds (consisting of the Loomis Sayles Core Value
Fund, Growth Fund, International Equity Fund, Mid-Cap Growth Fund, Mid-Cap
Value Fund, Small Cap Growth Fund, Small Cap Value Fund, Strategic Value Fund
and Worldwide Fund) (collectively, the "Funds"), including the schedules of
portfolio investments, as of December 31, 1997 and the related statements of
operations, statements of changes in net assets and financial highlights for
each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the Loomis Sayles Equity Funds as of December 31, 1997, the results of their
operations, the changes in their net assets and the financial highlights for
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 23, 1998
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- --------------------------------------------------------------------------------
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 AND
PAUL H. DREXLER COMPLIANCE OFFICER
WILLIAM H. EIGEN, JR. SHEILA M. BARRY
CHRISTOPER R. ELY
QUENTIN P. FAULKNER ASSISTANT SECRETARIES
PHILIP C. FINE MARGARET W. CHAMBERS
MARTHA F. HODGMAN LAURIE M. GALLAGHER
JOHN HYLL BONNIE S. THOMPSON
JEFFREY L. MEADE
KENT P. NEWMARK
SCOTT S. PAPE
JEFFREY C. PETHERICK
PHILIP J. SCHETTEWI
DAVID L. SMITH
SANDRA P. TICHENOR
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 One 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.
LSF802107