LOOMIS SAYLES FUNDS, 485APOS, 1999-11-19

LOOMIS SAYLES FUNDS
485APOS, 1999-11-19

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<PAGE>

As Filed with the Securities and Exchange Commission on November 19, 1999
Registration Nos. 33-39133 and 811-6241

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

---------------------------

FORM N-1A

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 23 |X|
(Check appropriate box or boxes)

---------------------------

LOOMIS SAYLES FUNDS
(Exact name of registrant as specified in charter)

One Financial Center, Boston, MA 02111
(Address of principal executive offices)

Registrant's Telephone Number, Including Area Code: (617) 482-2450

Name and address
of agent for service Copy to
- -------------------- -------

Sheila M. Barry, Esq. Truman S. Casner, Esq.
Loomis, Sayles & Company, L.P. Ropes & Gray
One Financial Center One International Place
Boston, MA 02111 Boston, MA 02110

It is proposed that this filing will become effective (check appropriate box):

| | Immediately upon filing pursuant to paragraph (b) of Rule 485
| | On _____________ pursuant to paragraph (b)
|X| 60 days after filing pursuant to paragraph (a)(1)
| | On _____________ pursuant to paragraph (a)(1)
| | 75 days after filing pursuant to paragraph (a)(2)
| | On _____________ pursuant to paragraph (a)(2)

If appropriate, check the following box:

| | This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.

---------------------------

<PAGE>

LOGO

LOOMIS SAYLES FUNDS -- FIXED INCOME FUNDS PROSPECTUS
JANUARY __, 2000

LOOMIS SAYLES BOND FUND
LOOMIS SAYLES GLOBAL BOND FUND
LOOMIS SAYLES HIGH YIELD FUND
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
LOOMIS SAYLES MUNICIPAL BOND FUND
LOOMIS SAYLES SHORT-TERM BOND FUND
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND

Loomis Sayles & Company, L.P., which has managed mutual funds since 1926,
is the investment adviser of the Funds.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIME.

<PAGE>

TABLE OF CONTENTS

<S> <C>
RISK/RETURN SUMMARY............................................................1
Loomis Sayles Bond Fund...................................................2
Loomis Sayles Global Bond Fund............................................5
Loomis Sayles High Yield Fund.............................................8
Loomis Sayles Intermediate Maturity Bond Fund............................11
Loomis Sayles Investment Grade Bond Fund.................................14
Loomis Sayles Municipal Bond Fund........................................17
Loomis Sayles Short-Term Bond Fund.......................................20
Loomis Sayles U.S. Government Securities Fund............................23

EXPENSES OF THE FUNDS.........................................................29

MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS
AND RISK CONSIDERATIONS......................................................32

MANAGEMENT....................................................................41
Investment Adviser.......................................................41
Distribution Plans and Administrative Fees...............................41
Portfolio Managers.......................................................42

GENERAL INFORMATION...........................................................44
Pricing..................................................................44
How to Purchase Shares...................................................44
How to Redeem Shares.....................................................46
How to Exchange Shares...................................................48
Dividends and Distributions..............................................49
Tax Consequences.........................................................50

FINANCIAL HIGHLIGHTS..........................................................52

APPENDIX A....................................................................67
</TABLE>

<PAGE>

RISK/RETURN SUMMARY

The following is a summary of certain key information about the Loomis
Sayles Fixed Income Funds. You will find additional information about each Fund,
including a detailed description of the risks of an investment in each Fund,
after this summary.

This Risk/Return summary describes the Funds' objectives, principal
investment strategies, principal risks, and performance. The summary for each
Fund includes a short discussion of some of the principal risks of investing in
each Fund. A further discussion of these and other principal risks begins after
this summary.

More detailed descriptions of the Funds, including some of the
additional risks associated with investing in the Funds, can be found further
back in this Prospectus after the Summary of Principal Risks. Please be sure to
read this additional information before you invest.

The Risk/Return summary includes bar charts showing each Fund's annual
returns and tables showing each Fund's average annual returns. The bar charts
and tables provide an indication of the historical risk of an investment in each
Fund by showing:

- how the Fund's performance varied from year to year over the
life of the Fund; and
- how the Fund's average annual returns for one year, five
years, and over the life of the Fund compared to those of a
broad-based securities market index.

A Fund's past performance, of course, does not necessarily indicate how
it will perform in the future.

You can lose money by investing in a Fund. A Fund may not achieve its
objective and is not intended to be a complete investment program. An investment
in a Fund is not a deposit of a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.

-1-

<PAGE>

LOOMIS SAYLES BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in investment grade
fixed income securities, although it may invest up to 35% of its assets in lower
rated fixed income securities ("junk bonds") and up to 20% of its assets in
preferred stocks. The Fund may invest in fixed income securities of any
maturity.

In deciding which securities to buy and sell, Loomis Sayles will
consider, among other things, the financial strength of the issuer of the
security, current interest rates, Loomis Sayles' expectations regarding general
trends in interest rates, and comparisons of the level of risk associated with
particular investments with Loomis Sayles' expectations concerning the potential
return of those investments.

Three themes typically drive the Fund's investment approach. First,
Loomis Sayles generally seeks fixed income securities of issuers whose credit
profiles Loomis Sayles believes are improving. Second, the Fund makes
significant use of non-market related securities, which are securities that may
not have a direct correlation with changes in interest rates. Loomis Sayles
believes that the Fund may generate positive returns by having a portion of the
Fund's assets invested in non-market related securities, rather than by relying
primarily on changes in interest rates to produce returns for the Fund. Third,
Loomis Sayles analyzes different sectors of the economy and differences in the
yields ("spreads") of various fixed income securities in an effort to find
securities that Loomis Sayles believes may produce attractive returns for the
Fund in comparison to their risk.

Loomis Sayles generally prefers securities that are protected against
calls (early redemption by the issuer).

The Fund may invest any portion of its assets in securities of
Canadian issuers and up to 20% of its assets in other foreign securities.

The fixed income securities in which the Fund may invest include
corporate securities, U.S. Government securities, commercial paper, zero coupon
securities, mortgage-backed securities, stripped mortgage-backed securities,
collateralized mortgage obligations, asset- backed securities, when-issued
securities, real estate investment trusts, Rule 144A securities, repurchase
agreements, and convertible securities. The Fund may engage in options and
futures transactions, foreign currency hedging transactions, and swap
transactions.

-2-

<PAGE>

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - interest rate risk (the risk that the value of the Fund's investments
will fall if interest rates rise);
- - credit risk (the risk that companies in which the Fund invests, or with
which it does business, will fail financially, and be unwilling or
unable to meet their obligations to the Fund);
- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally); and
- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURN 14.3% 22.2% -4.1% 32.0% 10.3% 12.7% 4.7% --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 10.7% (second quarter, 1995), and
the Fund's worst quarter was down 5.0% (third quarter, 1998).

-3-

<PAGE>

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Lehman Brothers Government/Corporate Bond Index, an index that tracks the
performance of a broad range of government and corporate fixed income
securities. The index is unmanaged, has no operating costs, and is included in
the table to facilitate your comparison of the Fund's performance to a
broad-based market index.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Average Annual Total Return as of 1 year 5 years Since Inception
December 31, 1999 (5/16/91)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles Bond Fund
Institutional Class
Retail Class
Admin Class
- ---------------------------------------------------------------------------------------------------
Lehman Brothers Government/Corporate
Bond Index
- ---------------------------------------------------------------------------------------------------
</TABLE>

For periods before the inception of Retail Class shares (December 31,
1996) and Admin Class shares (January 2, 1998), performance shown for those
classes is based on the performance of the Fund's Institutional Class shares,
adjusted to reflect the higher fees paid by Retail Class and Admin Class shares.
The Fund's performance through December 31, 1999 benefited from Loomis Sayles'
agreement to limit the Fund's expenses.

-4-

<PAGE>

LOOMIS SAYLES GLOBAL BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of high current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in investment grade
fixed income securities worldwide, although it may invest up to 20% of its
assets in lower rated fixed income securities ("junk bonds"). Securities held by
the Fund may be denominated in any currency. The Fund may invest in fixed income
securities of any maturity.

In deciding which securities to buy and sell, Loomis Sayles will
consider, among other things, the stability and volatility of a country's bond
markets, the financial strength of the issuer, current interest rates, and
Loomis Sayles' expectations regarding general trends in interest rates.

Three themes typically drive the Fund's investment approach. First,
Loomis Sayles generally seeks fixed income securities of issuers whose credit
profiles Loomis Sayles believes are improving. Second, Loomis Sayles analyzes
political, economic, and other fundamental factors and combines this analysis
with a comparison of the yield spreads of various fixed income securities in an
effort to find securities that Loomis Sayles believes may produce attractive
returns for the Fund in comparison to their risk. Third, if a security that is
believed to be attractive is denominated in a foreign currency, Loomis Sayles
analyzes whether to accept or to hedge the currency risk.

The fixed income securities in which the Fund may invest include
corporate securities, U.S. Government securities, commercial paper, zero coupon
securities, mortgage-backed securities, collateralized mortgage obligations,
asset-backed securities, when-issued securities, Rule 144A securities,
repurchase agreements, and convertible securities. The Fund may engage in
options and futures transactions, foreign currency hedging transactions, and
swap transactions.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);
- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);
- - interest rate risk (the risk that the value of the Fund's investments
will fall if interest rates rise);
- - credit risk (the risk that companies in which the Fund invests, or with
which it does business, will fail financially, and be unwilling or
unable to meet their obligations to the Fund);

-5-

<PAGE>

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally); and
- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

Because the Fund may invest in emerging markets and developing
countries, the Fund's returns may be significantly more volatile and may differ
substantially from returns in U.S. fixed income securities markets. Your
investment in the Fund also faces the risk that market changes or other factors
affecting emerging markets and developing countries, including political
instability and unpredictable economic conditions, may have a significant effect
on the Fund's net asset value.

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURN .8% 14.6% -8.7% 23.9% 15.0% 2.3% 10.6% --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up ___% (______ quarter, 19__), and
the Fund's worst quarter was down 6.3% (second quarter, 1994).

-6-

<PAGE>

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Saloman Brothers World Government Bond Index, an index that tracks the
performance of a broad range of fixed income securities issued by national
governments of various countries. The index is unmanaged, has no operating
costs, and is included in the table to facilitate your comparison of the Fund's
performance to a broad-based market index.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Average Annual Total Return 1 year 5 years Since
as of December 31, 1999 Inception
(5/10/91)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles Global Bond Fund
Institutional Class
Retail Class
- --------------------------------------------------------------------------------------------
Saloman Brothers World Government
Bond Index
- --------------------------------------------------------------------------------------------
</TABLE>

For periods before the inception of Retail Class shares (December 31,
1996), performance shown for the Retail Class is based on the performance of the
Fund's Institutional Class shares, adjusted to reflect the higher fees paid by
Retail Class shares. The Fund's performance through December 31, 1999 benefited
from Loomis Sayles' agreement to limit the Fund's expenses.

-7-

<PAGE>

LOOMIS SAYLES HIGH YIELD FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in lower rated fixed
income securities ("junk bonds"), although it may invest up to 20% of its assets
in preferred stocks and up to 10% of its assets in common stocks. The Fund may
invest in fixed income securities of any maturity.

In deciding which securities to buy and sell, Loomis Sayles will
consider, among other things, the financial strength of the issuer, current
interest rates, Loomis Sayles' expectations regarding general trends in interest
rates, and comparisons of the level of risk associated with particular
investments with Loomis Sayles' expectations concerning the potential return of
those investments.

Loomis Sayles generally prefers securities that are protected against
calls (early redemption by the issuer).

The Fund may invest any portion of its assets in Canadian securities
and up to 50% of its assets in other foreign securities.

The fixed income securities in which the Fund may invest include
corporate securities, U.S. Government securities, commercial paper, zero coupon
securities, mortgage-backed securities, collateralized mortgage obligations,
asset-backed securities, when-issued securities, real estate investment trusts,
Rule 144A securities, repurchase agreements, and convertible securities. The
Fund may engage in options and futures transactions, foreign currency hedging
transactions, and swap transactions.

-8-

<PAGE>

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - credit risk (the risk that companies in which the Fund invests, or with
which it does business, will fail financially, and be unwilling or
unable to meet their obligations to the Fund);
- - interest rate risk (the risk that the value of the Fund's investments
will fall if interest rates rise);
- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);
- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);
- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);
- - leveraging risk (the risk that the Fund will incur losses on
investments effectively purchased with borrowed money);
- - derivatives risk (the risk that the value of the Fund's derivative
investments will fall as a result of pricing difficulties or lack of
correlation with the underlying investment);
- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and
- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

Because the Fund invests in lower rated fixed income securities, your
investment faces significantly more risk than other types of fixed income funds.
For example, the Fund's returns may be more volatile than a fund that invests
primarily in investment grade fixed income securities, such as the Loomis Sayles
Investment Grade Bond Fund.

-9-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
RETURN 11.4% -9.2% --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 8.4% (third quarter, 1997), and
the Fund's worst quarter was down 16.9% (third quarter, 1998).

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Merrill Lynch High Yield Master Index, an index that tracks the performance
of lower-rated fixed income securities. The index is unmanaged, has no operating
costs, and is included in the table to facilitate your comparison of the Fund's
performance to a broad-based market index.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return as of 1 year Since
December 31, 1999 Inception
(9/11/96)
- --------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles High Yield Fund
Institutional Class
- --------------------------------------------------------------------------------
Merrill Lynch High Yield Master Index
- --------------------------------------------------------------------------------
</TABLE>

The Fund's performance through December 31, 1999 benefited from Loomis
Sayles' agreement to limit the Fund's expenses.

-10-

<PAGE>

LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES. The Fund generally invests at least 90% of its
assets in investment grade fixed income securities that have an average maturity
of between three and ten years, although it may invest up to 10% of its assets
in lower rated fixed income securities ("junk bonds").

In deciding which securities to buy and sell, Loomis Sayles will
consider, among other things, the financial strength of the issuer, current
interest rates, and comparisons of the level of risk associated with particular
investments with Loomis Sayles' expectations concerning the potential return of
those investments.

Loomis Sayles generally prefers securities that are protected against
calls (early redemption by the issuer).

The Fund may invest any portion of its assets in Canadian securities
and up to 20% of its assets in other foreign securities.

The fixed income securities in which the Fund may invest include
corporate securities, U.S. Government securities, commercial paper, zero coupon
securities, mortgage-backed securities, collateralized mortgage obligations,
asset-backed securities, when-issued securities, real estate investment trusts,
Rule 144A securities, repurchase agreements, and convertible securities. The
Fund may engage in options and futures transactions, foreign currency hedging
transactions, swap transactions, and securities lending.

-11-

<PAGE>

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are in the
following:

Interest rate risk generally is greater for funds that invest in fixed
income securities with relatively long maturities, such as this Fund, than for
funds that invest in fixed income securities with shorter maturities, such as
the Loomis Sayles Short-Term Bond Fund.

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
RETURN 6.4% 4.0% --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 3.5% (second quarter, 1997), and
the Fund's worst quarter was down .2% (third quarter, 1998).

-12-

<PAGE>

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Lehman Brothers Government/Corporate Intermediate Bond Index, an index that
tracks the performance of government and corporate fixed income securities with
an average maturity of one to ten years. The index is unmanaged, has no
operating costs, and is included in the table to facilitate your comparison of
the Fund's performance to a broad-based market index.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return as of 1 year Since
December 31, 1999 Inception
(12/31/96)
- --------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles Intermediate Maturity Bond Fund
Institutional Class
Retail Class
- --------------------------------------------------------------------------------
Lehman Brothers Government/Corporate
Intermediate Bond Index
- --------------------------------------------------------------------------------
</TABLE>

-13-

<PAGE>

LOOMIS SAYLES INVESTMENT GRADE BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in investment grade
fixed income securities, although it may invest up to 10% of its assets in lower
rated fixed income securities ("junk bonds") and up to 20% of its assets in
preferred stocks. The Fund may invest in fixed income securities of any
maturity.

In deciding which securities to buy and sell, the Fund will consider,
among other things, the financial strength of the issuer, current interest
rates, Loomis Sayles' expectations regarding future changes in interest rates,
and comparisons of the level of risk associated with particular investments with
Loomis Sayles' expectations concerning the potential return of those
investments.

Loomis Sayles generally prefers securities that are protected against
calls (early redemption by the issuer).

The Fund may invest any portion of its assets in securities of Canadian
issuers and up to 20% of its assets in securities of other foreign issuers.

-14-

<PAGE>

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - interest rate risk (the risk that the value of the Fund's investments
will fall if interest rates rise);
- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally); and
- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

Interest rate risk generally is greater for funds, such as this Fund,
that invest in fixed income securities with relatively long maturities than for
funds that invest in fixed income securities with shorter maturities, such as
the Loomis Sayles Short-Term Bond Fund.

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
RETURN 14.5% 3.3% --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 6.6% (second quarter, 1997), and
the Fund's worst quarter was down 3.3% (third quarter, 1998).

-15-

<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Return as of 1 year Since
December 31, 1999 Inception
(12/31/96)
- --------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles Investment Grade Bond Fund
Institutional Class
Retail Class
- --------------------------------------------------------------------------------
Lehman Brothers Government/Corporate
Bond Index
- --------------------------------------------------------------------------------
</TABLE>

-16-

<PAGE>

LOOMIS SAYLES MUNICIPAL BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is as high a level of
current income exempt from federal income tax as is consistent with the
preservation of capital.

PRINCIPAL INVESTMENT STRATEGIES. The Fund generally invests substantially all of
its assets in investment grade fixed income securities the income from which, in
the opinion of issuer's counsel at the time of issuance, is exempt from federal
income tax ("tax-exempt securities"). It is a fundamental policy of the Fund
that, during periods of normal market conditions, at least 80% of its assets
will be invested in tax-exempt securities. The Fund also may invest up to 25% of
its assets in lower rated fixed income securities ("junk bonds"). The Fund may
invest in fixed income securities of any maturity.

Loomis Sayles generally prefers securities that are protected against
calls (early redemption by the issuer).

The Fund may engage in options and futures transactions. The Fund also
may invest in private activity bonds, which pay interest that, although exempt
from ordinary federal income taxes, may be subject to federal or state
alternative minimum taxes. The Fund's investments in private activity bonds
normally will not exceed 20% of its net assets.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - interest rate risk (the risk that the value of the Fund's investments
will fall if interest rates rise);
- - credit risk (the risk that companies in which the Fund invests, or with
which it does business, will fail financially, and be unwilling or
unable to meet their obligations to the Fund);
- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);
- - tax risk (the risk that some or all of the interest the Fund receives
might be or become taxable); and
- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

-17-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURN 9.4% 11.6% -5.4% 16.5% 3.3% 9.8% 6.2% --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 6.6% (first quarter, 1995), and
the Fund's worst quarter was down 5.5% first quarter, 1994).

-18-

<PAGE>

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Lehman Brothers Municipal Bond Index, an index that tracks the performance
of a broad range of municipal fixed income securities. The index is unmanaged,
has no operating costs, and is included in the table to facilitate your
comparison of the Fund's performance to a broad-based market index.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Average Annual Total Return as of 1 year 5 years Since
December 31, 1999 Inception
(5/29/91)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles Municipal Bond Fund
Institutional Class
- ---------------------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index
- ---------------------------------------------------------------------------------------------
</TABLE>

The Fund's performance through December 31, 1999 benefited from Loomis
Sayles' agreement to limit the Fund's expenses.

-19-

<PAGE>

LOOMIS SAYLES SHORT-TERM BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of current income and capital appreciation with
relatively low fluctuation in net asset value.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in investment grade
fixed income securities, although it may invest up to 20% of its assets in lower
rated fixed income securities ("junk bonds") and up to 20% of its assets in
non-convertible preferred stock. The Fund generally maintains an average
dollar-weighted maturity of between one and three years.

Loomis Sayles generally prefers securities that are protected against
calls (early redemption by the issuer).

The Fund may invest up to 20% of its assets in securities of foreign
issuers.

The fixed income securities in which the Fund may invest include
corporate securities, U.S. Government securities, commercial paper, zero coupon
securities, mortgage-backed securities, collateralized mortgage obligations,
asset-backed securities, when-issued securities, real estate investment trusts,
Rule 144A securities, repurchase agreements, and convertible securities. The
Fund may engage in options and futures transactions, foreign currency hedging
transactions, and swap transactions.

-20-

<PAGE>

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

The Fund also faces the risk that fixed income securities with shorter
durations, such as those typically held by the Fund, often produce lower returns
than fixed income securities with longer durations.

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C>
RETURN 7.0% 1.8% 10.6% 4.7% 7.1% 6.7% --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 3.5% (third quarter, 1998), and
the Fund's worst quarter was down __% (____ quarter, 19__).

-21-

<PAGE>

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Lehman Brothers 1-3 Year Government/Corporate Bond Index, an index that
tracks the performance of government and corporate fixed income securities with
maturities of between one and three years. The index is unmanaged, has no
operating costs, and is included in the table to facilitate your comparison of
the Fund's performance to a broad-based market index.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Average Annual Total Return as of 1 year 5 years Since
December 31, 1999 Inception
(8/3/92)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles Short-Term Bond Fund
Institutional Class
Retail Class
- ------------------------------------------------------------------------------------------------
Lehman Brothers 1-3 Year
Government/Corporate
Bond Index
- ------------------------------------------------------------------------------------------------
</TABLE>

-22-

<PAGE>

LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of current income and capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES. The Fund generally invests substantially all of
its assets in U.S. Government securities and in certificates representing
undivided interests in the interest or principal of U.S. Treasury securities.
The Fund may invest in fixed income securities of any maturity.

In deciding which securities to buy and sell, Loomis Sayles will
consider, among other things, Loomis Sayles' expectations regarding general
trends in interest rates and comparisons of the level of risk associated with
particular investments with Loomis Sayles' expectations concerning the potential
return on those investments.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

In addition, the Fund's portfolio is not as diversified as some of the
other Funds' portfolios, which means that the Fund generally invests more of its
assets in a smaller number of issuers. As a result, changes in the value of a
single security may have a more significant effect on the Fund's net asset
value.

-23-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURN 8.8% 15.7% -6.3% 23.0% 1.3% 12.7% 9.3% --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up __% (____ quarter, 19__), and the
Fund's worst quarter was down 5.2% (first quarter, 1994).

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Lehman Brothers Government Bond Index, an index that tracks the performance
of a broad range of fixed income securities issued by the U.S. Government and
its agencies or instrumentalities. The index is unmanaged, has no operating
costs, and is included in the table to facilitate your comparison of the Fund's
performance to a broad-based market index.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Average Annual Total Return as of 1 year 5 years Since
December 31, 1999 Inception
(5/21/91)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles U.S. Government Securities
Fund
Institutional Class
- ------------------------------------------------------------------------------------------------
Lehman Brothers Government Bond Index
- ------------------------------------------------------------------------------------------------
</TABLE>

The Fund's performance through December 31, 1999 benefited from Loomis
Sayles' agreement to limit the Fund's expenses.

-24-

<PAGE>

SUMMARY OF PRINCIPAL RISKS

The value of your investment in a Fund will fluctuate with changes in
the values of the Fund's investments. Many factors can affect those values. This
section describes the principal risks that may affect a Fund's portfolio as a
whole. Each Fund could be subject to additional principal risks because the
types of investments made by each Fund can change over time.

INTEREST RATE RISK

This is the risk that changes in interest rates will affect the value
of a Fund's investments in fixed income securities, such as bonds, notes,
asset-backed securities, and other income producing securities. Fixed income
securities are obligations of the issuer to make payments of principal and/or
interest on future dates. Interest rate risk affects each of the Funds.
Increases in interest rates may cause the value of a Fund's investments to
decline.

Even funds that generally invest a significant portion of their assets
in high quality fixed income securities, such as the Loomis Sayles Bond Fund,
the Loomis Sayles Investment Grade Bond Fund, and the Loomis Sayles U.S.
Government Securities Fund, are subject to interest rate risk. Interest rate
risk is greater for funds that generally invest a significant portion of their
assets in lower rated fixed income securities ("junk bonds") or comparable
unrated securities, such as the Loomis Sayles High Yield Fund.

Interest rate risk also is greater for funds that generally invest in
fixed income securities with longer maturities, such as the Loomis Sayles
Intermediate Maturity Bond Fund and the Loomis Sayles Investment Grade Bond
Fund, than for funds that invest in fixed income securities with shorter
maturities, such as the Loomis Sayles Short-Term Bond Fund.

Interest rate risk is compounded for funds that invest a significant
portion of their assets in mortgage-related or other asset-backed securities.
Except for the Loomis Sayles Municipal Bond Fund, each Fund may invest in
mortgage-related securities. Except for the Loomis Sayles Municipal Bond Fund
and the Loomis Sayles U.S. Government Securities Fund, each Fund may invest in
asset-backed securities. The value of mortgage-related securities and asset-
backed securities generally is more sensitive to changes in interest rates than
other types of fixed income securities. When interest rates rise, the maturities
of mortgage-related and asset- backed securities tend to lengthen, and the value
of the securities decreases more significantly. In addition, these types of
securities are subject to prepayment when interest rates fall, which generally
results in lower returns because funds that hold these types of securities must
reinvest assets previously invested in these types of securities in fixed income
securities with lower interest rates.

-25-

<PAGE>

The Funds also face increased interest rate risk when they invest in
fixed income securities paying no current interest, such as zero coupon
securities, principal-only securities, interest-only securities, and fixed
income securities paying non-cash interest in the form of other fixed income
securities.

CREDIT RISK

This is the risk that the issuer or the guarantor of a fixed income
security, or the counterparty to an over-the-counter transaction, will be unable
or unwilling to make timely payments of interest or principal or to otherwise
honor its obligations. The degree of risk for a particular security may be
reflected in its credit rating. Credit risk is greater for funds that typically
invest a significant portion of their assets in lower rated fixed income
securities ("junk bonds"), such as the Loomis Sayles High Yield Fund. Lower
rated fixed income securities generally have speculative elements or are
predominately speculative credit risks.

Funds, such as the Loomis Sayles High Yield Fund, that invest in fixed
income securities issued in connection with corporate restructurings by highly
leveraged issuers or in fixed income securities that are not current in the
payment of interest or principal (i.e., in default) may be subject to greater
credit risk because of these investments.

Funds that invest a significant portion of their assets in foreign
securities, such as the Loomis Sayles Global Bond Fund, also are subject to
increased credit risk because of the difficulties of requiring foreign entities
to honor their contractual commitments and because a number of foreign
governments and other issuers are already in default.

MARKET RISK

This is the risk that the value of a Fund's investments will change as
the markets for fixed income securities fluctuate and that prices overall may
decline.

FOREIGN RISK

This is the risk associated with investments in issuers located in
foreign countries. A Fund's investments in foreign securities may experience
more rapid and extreme changes in value than investments in U.S. securities.

-26-

<PAGE>

or diplomatic developments can cause the value of a Fund's investments in a
foreign country to decline. In the event of nationalization, expropriation, or
other confiscation, a Fund that invests in foreign securities could lose its
entire investment.

Each of the Funds, except the Loomis Sayles Municipal Bond Fund and the
Loomis Sayles U.S. Government Securities Fund, is subject to foreign risk. Funds
that invest in emerging markets, such as the Loomis Sayles Global Bond Fund, may
face greater foreign risk since emerging markets countries may be more likely to
experience political and economic instability.

CURRENCY RISK

This is the risk that fluctuations in exchange rates between the U.S.
dollar and foreign currencies may cause the value of a Fund's investments to
decline. Each of the Funds, except for the Loomis Sayles Municipal Bond Fund and
the Loomis Sayles U.S. Government Securities Fund, is subject to currency risk
because it may invest in securities denominated in, or receiving revenues in,
foreign currencies.

LEVERAGING RISK

When a Fund borrows money or otherwise leverages its portfolio, the
value of an investment in the Fund will be more volatile, and all other risks
generally are compounded. Since each of the Funds, except for the Loomis Sayles
U.S. Government Securities Fund, may create leverage by using investments such
as repurchase agreements, inverse floating rate instruments or derivatives, or
by borrowing money, each Fund may face this risk.

DERIVATIVES RISK

Each Fund, except for the Loomis Sayles U.S. Government Securities
Fund, may use derivatives, which are financial contracts whose value depends
upon or is derived from the value of an underlying asset, reference rate, or
index. Examples of derivatives include options, futures, and swap transactions.
The Funds may use derivatives as part of a strategy designed to reduce other
risks ("hedging"). The Funds also may use derivatives to earn income, enhance
yield, and broaden Fund diversification. This use of derivatives entails greater
risk than using derivatives solely for hedging purposes. Funds that use
derivatives also face additional risks, such as the credit risk of the other
party to a derivative contract, the risk of difficulties in pricing and
valuation, and the risk that changes in the value of a derivative may not
correlate perfectly with relevant assets, rates, or indices.

-27-

<PAGE>

LIQUIDITY RISK

Liquidity risk exists when particular investments are difficult to
purchase or sell, possibly preventing a Fund from selling out of these illiquid
securities at an advantageous price. Derivatives and securities that involve
substantial interest rate and credit risk tend to involve greater liquidity
risk. In addition, liquidity risk tends to increase to the extent a Fund invests
in securities whose sale may be restricted by law or by contract, such as Rule
144A securities.

MANAGEMENT RISK

Management risk is the risk that Loomis Sayles' investment techniques
could fail to achieve a Fund's objective and could cause your investment in a
Fund to lose value. Each Fund is subject to management risk because each Fund is
actively managed by Loomis Sayles. Loomis Sayles will apply its investment
techniques and risk analyses in making investment decisions for each Fund, but
there can be no guarantee that Loomis Sayles' decisions will produce the desired
results. For example, in some cases derivative and other investment techniques
may be unavailable or Loomis Sayles may determine not to use them, even under
market conditions where their use could have benefited a Fund.

TAX RISK

The Loomis Sayles Municipal Bond Fund is subject to the risk that some
or all of the interest it receives might become taxable by law or be determined
by the Internal Revenue Service (or the relevant state tax authority) to be
taxable. In this event, the value of the Fund's investments would likely fall,
and some or all of the income distributions paid by the Fund might become
taxable. In addition, some or all of the income distributions paid by the Fund
may be subject to Federal alternative minimum income tax.

-28-

<PAGE>

EXPENSES OF THE FUNDS

The following tables present the expenses that you would pay if you buy
and hold shares of a Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

The following redemption fees apply to the Funds.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Redemption Fee Imposed on
Shares of the Fund Redeemed
Fund within One Year of Purchase
- ----------------------------------------------------------------------------------------
<S> <C>
Loomis Sayles Bond Fund none
- ----------------------------------------------------------------------------------------
Loomis Sayles Global Bond Fund none
- ----------------------------------------------------------------------------------------
Loomis Sayles High Yield Fund 2.00%
- ----------------------------------------------------------------------------------------
Loomis Sayles Intermediate Maturity Bond Fund none
- ----------------------------------------------------------------------------------------
Loomis Sayles Investment Grade Bond Fund none
- ----------------------------------------------------------------------------------------
Loomis Sayles Municipal Bond Fund none
- ----------------------------------------------------------------------------------------
Loomis Sayles Short-Term Bond Fund none
- ----------------------------------------------------------------------------------------
Loomis Sayles U.S. Government Securities Fund none
- ----------------------------------------------------------------------------------------
</TABLE>

The redemption fee described in the above table for the Loomis Sayles
High Yield Fund applies only to shares of the Fund that are redeemed within one
year of purchase. Loomis Sayles may, in its discretion, waive this redemption
fee if Loomis Sayles determines that minimal brokerage and transaction costs are
incurred in connection with the redemption.

-29-

<PAGE>

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

[to be updated]

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Fund/Class Management Distribution Other Total Annual Fee Net
Fees (12b-1) Fees Expenses*** Fund Operating Waiver/ Expenses*
Expenses Reimbursement*
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles Bond
Fund
Institutional Class .60% none .16% .76% .01% .75%
Retail Class .60% .25% .46% 1.06% .06% 1.00%
Admin Class .60% .25% 5.72%** 6.32% 5.07% 1.25%
- --------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Global
Bond Fund
Institutional Class .60% none .58% 1.18% .28% .90%
Retail Class .60% .25% 1.18% 1.78% .63% 1.15%
- --------------------------------------------------------------------------------------------------------------------------
Loomis Sayles High
Yield Fund
Institutional Class .60% none 1.82% 2.42% 1.67% .75%
- --------------------------------------------------------------------------------------------------------------------------
Loomis Sayles
Intermediate Maturity
Bond Fund
Institutional Class .40% none 1.87% 2.27% 1.72% .55%
Retail Class .40% .25% 5.24% 5.64% 4.84% .80%
- --------------------------------------------------------------------------------------------------------------------------
Loomis Sayles
Investment Grade
Bond Fund
Institutional Class .40% none 3.79% 4.19% 3.64% .55%
Retail Class .40% .25% 4.85% 5.25% 4.45% .80%
- --------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Municipal
Bond Fund
Institutional Class .30% none 1.40% 1.70% 1.20% .50%
- --------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Short-
Term Bond Fund
Institutional Class .25% none .58% .83% [.33%] [.50%]
Retail Class .25% .25% 5.75% 6.00% [5.25%] [.75%]
- --------------------------------------------------------------------------------------------------------------------------
Loomis Sayles U.S.
Government
Securities Fund
Institutional Class .30% none .67% .97% .47% .50%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Reflects Loomis Sayles' contractual obligation to limit the Funds' expenses
through February 1, 2001.
** Includes administrative fees of .25% and other expenses of .15%, after
expense reimbursement and fee waiver.
*** Includes distribution (12b-1) fees.

-30-

<PAGE>

EXAMPLE

The following example translates the "Total Annual Fund Operating
Expenses" column shown in the preceding table into dollar amounts. This example
is intended to help you compare the cost of investing in a Fund with the cost of
investing in other mutual funds.

This example makes certain assumptions. It assumes that you invest
$10,000 in a Fund for the time periods shown and then redeem all your shares at
the end of those periods. For the Loomis Sayles High Yield Fund, which has a
redemption fee of 2.00% for shares that are redeemed within one year of
purchase, the example assumes that you either (1) redeem all your shares or (2)
do not redeem any of your shares at the end of those periods. This example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. Please remember that this example is
hypothetical, so that your actual costs and returns may be higher or lower.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FUND/CLASS 1 year 3 years 5 years 10 years
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loomis Sayles Bond Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
Admin Class $ $
- -----------------------------------------------------------------------------------------------------------------------
Loomis Sayles Global Bond Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Loomis Sayles High Yield Fund
Institutional Class (with redemption) $ $ $ $

Loomis Sayles High Yield Fund
Institutional Class (without redemption) $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Loomis Sayles Intermediate Maturity
Bond Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Loomis Sayles Investment Grade Bond
Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Loomis Sayles Municipal Bond Fund
Institutional Class $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Loomis Sayles Short-Term Bond Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Loomis Sayles U.S. Government
Securities Fund $ $ $ $
Institutional Class
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

-31-

<PAGE>

MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS
AND RISK CONSIDERATIONS

This section provides more information on each Fund's investments and
risk considerations. Except for each Fund's investment objective, and any
investment policies that are identified as "fundamental," all of the investment
policies and strategies of each Fund may be changed without a vote of the Fund's
shareholders.

Except where specifically noted elsewhere in this Prospectus, each of
the Funds may use any of the investment strategies described in this section.
Some of these investment strategies are principal investment strategies for the
Funds, while others are secondary investment strategies for the Funds.

TEMPORARY DEFENSIVE STRATEGIES. For temporary defensive purposes, each of the
Funds may invest any portion of its assets in cash or in any securities Loomis
Sayles deems appropriate. Although Loomis Sayles has the option to use these
defensive strategies, Loomis Sayles may choose not to use them for a variety of
reasons, even in very volatile market conditions. A Fund may miss certain
investment opportunities if it uses defensive strategies and thus may not
achieve its investment objective.

PORTFOLIO TURNOVER. Portfolio turnover considerations will not limit Loomis
Sayles' investment discretion in managing the assets of each Fund. Each Fund
anticipates that its portfolio turnover rate will vary significantly from time
to time depending on the volatility of economic and market conditions. High
portfolio turnover may generate higher costs and higher levels of taxable gains,
both of which may hurt the performance of your investment.

FIXED INCOME SECURITIES. Fixed income securities pay a specified rate of
interest or dividends, or a rate that is adjusted periodically by reference to
some specified index or market rate. Fixed income securities include securities
issued by federal, state, local, and foreign governments and related agencies,
and by a wide range of private or corporate issuers. Fixed income securities
include, among others, bonds, debentures, notes, bills, and commercial paper.
Because interest rates vary, it is impossible to predict the income of a Fund
for any particular period. The net asset value of a Fund's shares will vary as a
result of changes in the value of the securities in the Fund's portfolio.

INVESTMENT GRADE FIXED INCOME SECURITIES. To be considered investment
grade quality, at least one major rating agency must have rated the
security in one of its top four rating categories at the time a Fund
acquires the security or, if the security is unrated, Loomis Sayles
must have determined it to be of comparable quality.

-32-

<PAGE>

must have rated the security in one of its top four rating categories
at the time a Fund acquires the security or, if the security is
unrated, Loomis Sayles must have determined it to be of comparable
quality. Therefore, lower rated fixed income securities are securities
that, at the time a Fund acquires the security, none of the major
rating agencies has rated in one of its top four rating categories, or
unrated securities that Loomis Sayles has determined to be of
comparable quality.

Lower rated fixed income securities are subject to greater
credit risk and market risk than higher quality fixed income
securities. Lower rated fixed income securities are considered
predominantly speculative with respect to the ability of the issuer to
make timely principal and interest payments. Achievement of the
investment objective of a Fund investing in lower rated fixed income
securities may be more dependent on Loomis Sayles' own credit analysis
than is the case with Funds that invest in higher quality fixed income
securities, such as the Loomis Sayles Investment Grade Bond Fund. The
market for lower rated fixed income securities may be more severely
affected than some other financial markets by economic recession or
substantial interest rate increases, by changing public perceptions of
this market, or by legislation that limits the ability of certain
categories of financial institutions to invest in these securities. In
addition, the secondary market may be less liquid for lower rated fixed
income securities. This lack of liquidity at certain times may affect
the values of these securities and may make the evaluation and sale of
these securities more difficult. Securities in the lowest rating
categories may be in poor standing or in default. Securities in the
lowest investment rating categories (BBB or Baa or below) have
speculative characteristics.

For more information about the ratings services' descriptions of the
various rating categories, see Appendix A. A Fund may continue to hold fixed
income securities that are downgraded in quality subsequent to their purchase if
Loomis Sayles believes it would be advantageous to do so.

U.S. GOVERNMENT SECURITIES. U.S. Government securities have different kinds of
government support. For example, some U.S. Government securities, such as U.S.
Treasury bonds, are supported by the full faith and credit of the United States,
whereas certain other U.S. Government securities issued or guaranteed by federal
agencies or government-sponsored enterprises are not supported by the full faith
and credit of the United States.

Although U.S. Government securities generally do not involve the credit
risks associated with other types of fixed income securities, the market values
of U.S. Government securities fluctuate as interest rates change. Yields on U.S.
Government securities tend to be lower than those on corporate securities of
comparable maturities.

Some U.S. Government securities, such as Government National Mortgage
Association ("GNMA") certificates, are known as "mortgage-backed" securities.
Interest and principal

-33-

<PAGE>

payments on the mortgages underlying mortgage-backed U.S. Government securities
are passed through to the holders of the security. If a Fund purchases
mortgage-backed securities at a discount or a premium, the Fund will recognize a
gain or loss when the payments of principal, through prepayment or otherwise,
are passed through to the Fund and, if the payment occurs in a period of falling
interest rates, the Fund may not be able to reinvest the payment at as favorable
an interest rate. As a result of these principal prepayment features,
mortgage-backed securities are generally more volatile investments than many
other fixed income securities.

In addition to investing directly in U.S. Government securities, the
Funds may purchase certificates of accrual or similar instruments ("strips")
evidencing undivided ownership interests in interest payments or principal
payments, or both, in U.S. Government securities.
These investment instruments may be highly volatile.

COMMON STOCKS AND OTHER EQUITY SECURITIES. Common stocks and their equivalents,
together called "equity securities," are generally volatile and more risky than
some other forms of investment. Equity securities of companies with relatively
small market capitalization may be more volatile than the securities of larger,
more established companies and than the broad equity market indices.

ZERO COUPON SECURITIES. Zero coupon securities accrue interest at a specified
rate, but do not pay interest in cash on a current basis. A Fund that invests in
zero coupon securities is required to distribute the income on these securities
to Fund shareholders as the income accrues, even though the Fund is not
receiving the income in cash on a current basis. The Fund thus may have to sell
other investments to obtain cash to make income distributions at times when
Loomis Sayles would not otherwise deem it advisable to do so. The market value
of zero coupon securities often is more volatile than that of other fixed income
securities of comparable quality and maturity.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities, such as GNMA
certificates or securities issued by the Federal National Mortgage Association
("Fannie Mae"), differ from traditional fixed income securities. Among the major
differences are that interest and principal payments are made more frequently,
usually monthly, and that principal may be prepaid at any time because the
underlying mortgage loans generally may be prepaid at any time. As a result, if
a Fund purchases these assets at a premium, a faster-than-expected prepayment
rate will reduce yield to maturity, and a slower-than-expected prepayment rate
will increase yield to maturity. If a Fund purchases mortgage-backed securities
at a discount, faster-than-expected prepayments will increase, and
slower-than-expected prepayments will reduce, yield to maturity. Prepayments,
and resulting amounts available for reinvestment by the Fund, are likely to be
greater during a period of declining interest rates and, as a result, are likely
to be reinvested at lower interest rates. Accelerated prepayments on securities
purchased at a premium may result in a loss of principal if the premium has not
been fully amortized at the time of prepayment. These securities will decrease
in value as a result of increases in interest

-34-

<PAGE>

rates generally, and they are likely to appreciate less than other fixed-income
securities when interest rates decline because of the risk of prepayments.

STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed securities include
interest-only and principal-only classes of mortgage-backed securities ("IOs"
and "POs"). The yield to maturity on an IO or PO is extremely sensitive not only
to changes in prevailing interest rates but also to the rate of principal
payments (including prepayments) on the underlying assets. A rapid rate of
principal prepayments may have a measurably adverse effect on a Fund's yield to
maturity to the extent it invests in IOs. If the assets underlying the IOs
experience greater than anticipated prepayments of principal, the Fund may fail
to recoup fully its initial investment in these securities. Conversely, POs tend
to decline in value if prepayments are slower than anticipated.

The secondary market for stripped mortgage-backed securities may be
more volatile and less liquid than that for other mortgage-backed securities,
potentially limiting a Fund's ability to buy or sell those securities at any
particular time.

COLLATERALIZED MORTGAGE OBLIGATIONS. A collateralized mortgage obligation (CMO)
is a security backed by a portfolio of mortgages or mortgage-backed securities
held under an indenture. CMOs may be issued either by U.S. Government
instrumentalities or by non-governmental entities. The issuer's obligation to
make interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. CMOs are issued with a number of
classes or series which have different maturities and which may represent
interests in some or all of the interest or principal on the underlying
collateral or a combination thereof. CMOs of different classes are generally
retired in sequence as the underlying mortgage loans in the mortgage pool are
repaid. In the event of sufficient early prepayments on such mortgages, the
class or series of CMOs first to mature generally will be retired prior to its
maturity. As with other mortgage-backed securities, if a particular class or
series of CMOs held by a Fund is retired early, the Fund could lose any premium
it paid when it acquired the investment, and the Fund may have to reinvest the
proceeds at a lower interest rate than the retired CMO paid. Because of the
early retirement feature, CMOs may be more volatile than many other fixed-income
investments.

ASSET-BACKED SECURITIES. Through the use of trusts and special purpose
corporations, automobile or credit card receivables may be securitized in
pass-through structures similar to mortgage pass-through structures or in a
pass-through structure similar to the CMO structure. Generally, the issuers of
asset-backed bonds, notes, or pass-through certificates are special purpose
entities and do not have any significant assets other than the receivables
securing such obligations. In general, the collateral supporting asset-backed
securities is of shorter maturity than mortgage loans. Instruments backed by
pools of receivables are similar to mortgage-backed securities in that they are
subject to unscheduled prepayments of principal prior to maturity. When the
obligations are prepaid, the Fund ordinarily will reinvest the prepaid amounts
in securities the yields of which reflect interest rates prevailing at the time.

-35-

<PAGE>

Therefore, a Fund's ability to maintain a portfolio that includes high-yielding
asset-backed securities will be adversely affected to the extent that
prepayments of principal must be reinvested in securities that have lower yields
than the prepaid obligations. Moreover, prepayments of securities purchased at a
premium could result in a realized loss.

WHEN-ISSUED SECURITIES. A when-issued security involves a Fund entering into a
commitment to buy a security before the security has been issued. The Fund's
payment obligation and the interest rate on the security are determined when the
Fund enters into the commitment. The security is typically delivered to the Fund
15 to 120 days later. No interest accrues on the security between the time the
Fund enters into the commitment and the time the security is delivered. If the
value of the security being purchased falls between the time a Fund commits to
buy it and the payment date, the Fund may sustain a loss. The risk of this loss
is in addition to the Fund's risk of loss on the securities actually in its
portfolio at the time. In addition, when the Fund buys a security on a
when-issued basis, it is subject to the risk that market rates of interest will
increase before the time the security is delivered, with the result that the
yield on the security delivered to the Fund may be lower than the yield
available on other, comparable securities at the time of delivery. If a Fund has
outstanding obligations to buy when-issued securities, it will segregate liquid
assets at its custodian bank in an amount sufficient to satisfy these
obligations.

CONVERTIBLE SECURITIES. Convertible securities include corporate bonds, notes,
or preferred stocks of U.S. or foreign issuers that can be converted into (that
is, exchanged for) common stocks or other equity securities at a stated price or
rate. Convertible securities also include other securities, such as warrants,
that provide an opportunity for equity participation. Because convertible
securities can be converted into equity securities, their value will normally
vary in some proportion with those of the underlying equity securities. Due to
the conversion feature, convertible securities generally yield less than
nonconvertible fixed income securities of similar credit quality and maturity. A
Fund's investment in convertible securities may at times include securities that
have a mandatory conversion feature, pursuant to which the securities convert
automatically into common stock at a specified date and conversion ratio, or
that are convertible at the option of the issuer. When conversion is not at the
option of the holder, the Fund may be required to convert the security into the
underlying common stock even at times when the value of the underlying common
stock has declined substantially.

REAL ESTATE INVESTMENT TRUSTS. Real estate investment trusts (REITs) involve
certain unique risks in addition to those risks associated with investing in the
real estate industry in general (such as possible declines in the value of real
estate, lack of availability of mortgage funds, or extended vacancies of
property). Equity REITs may be affected by changes in the value of the
underlying property owned by the REITs, while mortgage REITs may be affected by
the quality of any credit extended. REITs are dependent upon management skills,
are not diversified, and are subject to heavy cash flow dependency, risks of
default by borrowers, and self-liquidation. REITs are also subject to the
possibilities of failing to qualify for tax-free

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<PAGE>

pass-through of income under the Internal Revenue Code of 1986, as amended, and
failing to maintain their exemptions from registration under the Investment
Company Act of 1940.

REITs may have limited financial resources, may trade less frequently
and in a limited volume, and may be subject to more abrupt or erratic price
movements than larger securities. A Fund's investment in a REIT may require the
Fund to accrue and distribute income not yet received or may result in the Fund
making distributions that constitute a return of capital to Fund shareholders
for federal income tax purposes. In addition, distributions by a Fund from REITs
will not qualify for the corporate dividends-received deduction.

RULE 144A SECURITIES. Rule 144A securities are privately offered securities that
can be resold only to certain qualified institutional buyers. Rule 144A
securities are treated as illiquid, unless Loomis Sayles has determined, under
guidelines established by Loomis Sayles Funds' trustees, that a particular issue
of Rule 144A securities is liquid.

FOREIGN SECURITIES. Securities of issuers organized or headquartered outside the
United States are known as foreign securities. Foreign securities may present
risks not associated with investments in comparable securities of U.S. issuers.
There may be less information publicly available about a foreign corporate or
government issuer than about a U.S. issuer, and foreign corporate issuers are
generally not subject to accounting, auditing, and financial reporting standards
and practices comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. Foreign brokerage commissions and securities custody
costs are often higher than in the United States. With respect to certain
foreign countries, there is a possibility of governmental expropriation of
assets, confiscatory taxation, political or financial instability and diplomatic
developments that could affect the value of investments in those countries. A
Fund's receipt of interest on foreign government securities may depend on the
availability of tax or other revenues to satisfy the issuer's obligations.

A Fund's investments in foreign securities may include investments in
countries whose economies or securities markets are not yet highly developed.
Special considerations associated with these investments (in addition to the
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential buyers for
such securities, and delays and disruptions in securities settlement procedures.

Since most foreign securities are denominated in foreign currencies or
traded primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for distribution to shareholders of a Fund investing in these
securities may be affected by changes in currency exchange rates, exchange
control regulations, or foreign withholding taxes. Changes in the value relative
to the U.S.

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<PAGE>

dollar of a foreign currency in which a Fund's holdings are denominated will
result in a change in the U.S. dollar value of a Fund's assets and the Fund's
income available for distribution.

In addition, although part of a Fund's income may be received or
realized in foreign currencies, the Fund will be required to compute and
distribute its income in U.S. dollars. Therefore, if the value of a currency
relative to the U.S. dollar declines after the Fund's income has been earned in
that currency, translated into U.S. dollars, and declared as a dividend, but
before payment of the dividend, the Fund could be required to liquidate
portfolio securities to pay the dividend. Similarly, if the value of a currency
relative to the U.S. dollar declines between the time the Fund accrues expenses
in U.S. dollars and the time such expenses are paid, the amount of foreign
currency required to be converted into U.S. dollars will be greater than the
equivalent amount in foreign currency of the expenses at the time they were
incurred.

In determining whether to invest assets of the Funds in securities of a
particular foreign issuer, Loomis Sayles will consider the likely effects of
foreign taxes on the net yield available to the Fund and its shareholders.
Compliance with foreign tax law may reduce a Fund's net income available for
distribution to shareholders.

FOREIGN CURRENCY HEDGING TRANSACTIONS. Foreign currency exchange transactions
may allow a Fund to protect the value of specific portfolio positions or in
anticipation of changes in relative values of currencies in which current or
future Fund portfolio holdings are denominated or quoted. For example, to
protect against a change in the foreign currency exchange rate between the date
on which a Fund contracts to purchase or sell a security and the settlement date
for the purchase or sale, or to "lock in" the equivalent of a dividend or
interest payment in another currency, a Fund might purchase or sell a foreign
currency on a spot (that is, cash) basis at the prevailing spot rate. If
conditions warrant, the Funds may also enter into private contracts to purchase
or sell foreign currencies at a future date ("forward contracts"). The Funds
might also purchase exchange-listed and over-the-counter call and put options on
foreign currencies. Over-the-counter currency options are generally less liquid
than exchange-listed options and will be treated as illiquid assets. The Funds
may not be able to dispose of over-the-counter options readily.

Foreign currency transactions involve costs and may result in losses.

SWAP TRANSACTIONS. Interest rate or currency swaps involve a Fund entering into
these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, to manage duration, or to protect against any increase in the
price of securities a Fund anticipates purchasing at a later date. Interest rate
swaps involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest (for example, an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal). A currency swap is an agreement to exchange cash flows on a notional
amount based on changes in the relative values of the

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<PAGE>

specified currencies. The Fund will segregate liquid assets at its custodian
bank in an amount sufficient to cover its current obligations under swap
agreements. Because swap agreements are not exchange-traded, but are private
contracts into which the Fund and a swap counterparty enter as principals, the
Fund may experience a loss or delay in recovering assets if the counterparty
were to default on its obligations.

OPTIONS AND FUTURES TRANSACTIONS. Options and futures transactions involve a
Fund buying, selling, or writing (or buying or selling futures contracts) on
securities, securities indices, or currencies. Funds may engage in these
transactions either to enhance investment return or to hedge against changes in
the value of other assets that the Funds own or intend to acquire. Options and
futures fall into the broad category of financial instruments known as
derivatives and involve special risks. Use of options or futures for other than
hedging purposes may be considered a speculative activity, involving greater
risks than are involved in hedging.

Options can generally be classified as either "call" or "put" options.
There are two parties to a typical options transaction: the "writer" and the
"buyer." A call option gives the buyer the right to buy a security or other
asset (such as an amount of currency or a futures contract) from, and a put
option gives the buyer the right to sell a security or other asset to, the
option writer at a specified price, on or before a specified date. The buyer of
an option pays a premium when purchasing the option, which reduces the return on
the underlying security or other asset if the option is exercised, and results
in a loss if the option expires unexercised. The writer of an option receives a
premium from writing an option, which may increase its return if the option
expires or is closed out at a profit. If a Fund as the writer of an option is
unable to close out an unexpired option, it must continue to hold the underlying
security or other asset until the option expires, to "cover" its obligation
under the option.

A futures contract creates an obligation by the seller to deliver and
the buyer to take delivery of the type of instrument or cash at the time and in
the amount specified in the contract. Although many futures contracts call for
the delivery (or acceptance) of the specified instrument, futures are usually
closed out before the settlement date through the purchase (or sale) of a
comparable contract. If the price of the sale of the futures contract by a Fund
is less than the price of the offsetting purchase, the Fund will realize a loss.

The value of options purchased by a Fund and futures contracts held by
a Fund may fluctuate based on a variety of market and economic factors. In some
cases, the fluctuations may offset (or be offset by) changes in the value of
securities held in a Fund's portfolio. All transactions in options and futures
involve the possible risk of loss to the Fund of all or a significant part of
the value of its investment. In some cases, the risk of loss may exceed the
amount of the Fund's investment. When a Fund writes a call option or sells a
futures contract without holding the underlying securities, currencies, or
futures contracts, its potential loss is unlimited. The Fund will be required,
however, to set aside with its custodian bank liquid assets in amounts
sufficient at all times to satisfy its obligations under options and futures
contracts.

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<PAGE>

The successful use of options and futures will usually depend on Loomis
Sayles' ability to forecast stock market, currency, or other financial market
movements correctly. The Fund's ability to hedge against adverse changes in the
value of securities held in its portfolio through options and futures also
depends on the degree of correlation between changes in the value of futures or
options positions and changes in the values of the portfolio securities. The
successful use of futures and exchange-traded options also depends on the
availability of a liquid secondary market to enable a Fund to close its
positions on a timely basis. There can be no assurance that such a market will
exist at any particular time. In the case of options that are not traded on an
exchange ("over-the-counter" options), a Fund is at risk that the other party to
the transaction will default on its obligations, or will not permit a Fund to
terminate the transaction before its scheduled maturity.

The options and futures markets of foreign countries are small compared
to those of the United States and consequently are characterized in most cases
by less liquidity than U.S. markets. In addition, foreign markets may be subject
to less detailed reporting requirements and regulatory controls than U.S.
markets. Furthermore, investments in options in foreign markets are subject to
many of the same risks as other foreign investments. See "Foreign Securities"
above.

REPURCHASE AGREEMENTS. In a repurchase agreement, a Fund buys securities from a
seller, usually a bank or brokerage firm, with the understanding that the seller
will repurchase the securities at a higher price at a later date. Such
transactions afford an opportunity for a Fund to earn a return on available cash
at minimal market risk, although the Fund may be subject to various delays and
risks of loss if the seller is unable to meet its obligations to repurchase.

SECURITIES LENDING. Securities lending involves a Fund lending its portfolio
securities to broker-dealers or other parties under contracts calling for the
deposit by the borrower with the Fund's custodian of cash collateral equal to at
least the market value of the securities loaned, marked to market on a daily
basis. The Fund will continue to benefit from interest or dividends on the
securities loaned and will also receive interest through investment of the cash
collateral in short-term liquid investments. No loans will be made if, as a
result, the aggregate amount of such loans outstanding at any time would exceed
33 1/3% of the Fund's assets (taken at current value). Any voting rights, or
rights to consent, relating to securities loaned pass to the borrower. However,
if a material event affecting the investment occurs, such loans will be called
so that the securities may be voted by the Fund. The Fund pays various fees in
connection with such loans, including shipping fees and reasonable custodial or
placement fees.

Securities loans must be fully collateralized at all times, but involve
some credit risk to the Fund if the borrower defaults on its obligation and the
Fund is delayed or prevented from recovering the collateral.

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<PAGE>

MANAGEMENT

INVESTMENT ADVISER

The Board of Trustees of Loomis Sayles Funds oversees each of the Funds
and supervises the Funds' investment adviser, Loomis Sayles & Co., L.P. ("Loomis
Sayles"), which is located at One Financial Center, Boston, Massachusetts 02111.

Loomis Sayles was founded in 1926 and is one of the country's oldest
and largest investment firms. Loomis Sayles is responsible for making investment
decisions for each Fund and for managing each Fund's other affairs and business,
including providing executive and other personnel for the management of each
Fund.

As previously described in the "Expenses of the Funds" section, each
Fund pays Loomis Sayles a monthly investment advisory fee, also known as a
management fee, for these services. During the past fiscal year, the Funds paid
the fees shown in the following table to Loomis Sayles. These fees are expressed
as a percentage of the Fund's average net assets:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FUND MANAGEMENT FEE
- --------------------------------------------------------------------------------
<S> <C>
Loomis Sayles Bond Fund .60%
- --------------------------------------------------------------------------------
Loomis Sayles Global Bond Fund .60%
- --------------------------------------------------------------------------------
Loomis Sayles High Yield Fund .60%
- --------------------------------------------------------------------------------
Loomis Sayles Intermediate Maturity Bond Fund .40%
- --------------------------------------------------------------------------------
Loomis Sayles Investment Grade Bond Fund .40%
- --------------------------------------------------------------------------------
Loomis Sayles Municipal Bond Fund .30%
- --------------------------------------------------------------------------------
Loomis Sayles Short-Term Bond Fund .25%
- --------------------------------------------------------------------------------
Loomis Sayles U.S. Government Securities Fund .30%
- --------------------------------------------------------------------------------
</TABLE>

Certain expenses incurred by each Fund would have been higher if not
for Loomis Sayles' contractual obligation to limit the Funds' expenses through
February 1, 2001.

DISTRIBUTION PLANS AND ADMINISTRATIVE FEES

For the Retail and Admin Classes of the Funds, the Funds have adopted
distribution plans under Rule 12b-1 of the Investment Company Act of 1940 that
allow the Funds to pay distribution fees for the sale and distribution of Retail
and Admin Class shares. This 12b-1 fee currently is .25% of a Fund's average
daily net assets attributable to the shares of a particular Class. Because these
12b-1 fees are paid on an ongoing basis, over time these fees will

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<PAGE>

increase the cost of your investment and may cost you more than paying other
types of sales charges.

Admin Class shares of the Loomis Sayles Bond Fund are offered
exclusively through intermediaries, who will be the record owner of the shares.

Admin Class shares of the Loomis Sayles Bond Fund may pay an
administrative fee at an annual rate of up to .25% of the average daily net
assets attributable to Admin Class shares to securities dealers or financial
intermediaries for providing personal service and account maintenance for their
customers who are shareholders of the Fund. Loomis Sayles also may pay these
parties a continuing fee at an annual rate of up to .25% of the value of Fund
shares held for those customers' accounts, although this continuing fee is paid
by Loomis Sayles out of its own assets and is not assessed against the Fund.

PORTFOLIO MANAGERS

The following persons have had primary responsibility for the
day-to-day management of each indicated Fund's portfolio since the date stated
below. Except as noted, each of these portfolio managers has been employed by
Loomis Sayles for at least five years.

LOOMIS SAYLES BOND FUND. Daniel J. Fuss, President of Loomis Sayles Funds and
Vice Chairman of Loomis Sayles, has served as portfolio manager of the Fund
since its inception in 1991. Kathleen C. Gaffney, Vice President of Loomis
Sayles Funds and of Loomis Sayles, has served as portfolio manager of the Fund
since October 1997.

LOOMIS SAYLES GLOBAL BOND FUND. E. John deBeer, Vice President of Loomis Sayles
Funds and of Loomis Sayles, has served as portfolio manager of the Fund since
its inception in 1991.

LOOMIS SAYLES HIGH YIELD FUND. Daniel J. Fuss and Kathleen C. Gaffney have
served as portfolio managers of the Fund since its inception in 1996.

LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND. Anthony J. Wilkins, Vice
President of Loomis Sayles Funds and Executive Vice President and Director of
Loomis Sayles, has served as portfolio manager of the Fund since its inception
in 1997.

LOOMIS SAYLES INVESTMENT GRADE BOND FUND. Daniel J. Fuss has served as portfolio
manager of the Fund since its inception in 1997.

LOOMIS SAYLES MUNICIPAL BOND FUND. Martha F. Hodgman, Vice President of Loomis
Sayles Funds and of Loomis Sayles, has served as portfolio manager of the Fund
since May 1993.

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<PAGE>

LOOMIS SAYLES SHORT-TERM BOND FUND. John Hyll, Vice President of Loomis Sayles
Funds and of Loomis Sayles, has served as portfolio manager of the Fund since
its inception in 1992.

LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND. Kent Newmark, Vice President of
Loomis Sayles Funds and of Loomis Sayles, has served as portfolio manager of the
Fund since its inception in 1991.

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<PAGE>

GENERAL INFORMATION

PRICING

The price of each Fund's shares is based on its net asset value
("NAV"). The NAV per share of each Class equals the total value of its assets,
less its liabilities, divided by the number of outstanding shares. Shares are
valued as of the close of regular trading on the New York Stock Exchange on each
day the Exchange is open for trading.

Each Fund values its investments for which market quotations are
readily available at market value. Each Fund values short-term investments that
will mature within 60 days at amortized cost, which approximates market value.
Each Fund values all other investments and assets at fair value.

Each Fund translates prices for its investments quoted in foreign
currencies into U.S. dollars at current exchange rates. As a result, changes in
the value of those currencies in relation to the U.S. dollar may affect a Fund's
NAV. Because foreign markets may be open at different times than the New York
Stock Exchange, the value of a Fund's shares may change on days when
shareholders are not able to buy or sell shares. If events materially affecting
the values of a Fund's foreign investments occur between the close of foreign
markets and the close of regular trading on the New York Stock Exchange, these
foreign investments may be valued at their fair value.

HOW TO PURCHASE SHARES

You can buy shares of each Fund in several ways:

- - BY MAIL. You can mail a completed application form, which is available
by calling Loomis Sayles at 800-633-3330, for the desired Fund or
Funds, along with a check payable to State Street Bank and Trust
Company for the amount of your purchase to:

Boston Financial Data Services
P.O. Box 8314
Boston, MA 02266-8314
Attention: Loomis Sayles Funds

- - THROUGH A FINANCIAL ADVISER. Your financial adviser will be
responsible for furnishing all necessary documents to Loomis Sayles or
Boston Financial Data Services. Your financial adviser may charge you
for his or her services.

- - THROUGH SYSTEMATIC INVESTING. You can make regular investments of $50
or more per month through automatic deductions from your bank checking
or savings account.

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<PAGE>

Application forms are available through your financial adviser or by
calling Loomis Sayles at 800-626-9390.

- - THROUGH A BROKER-DEALER. You may purchase shares of the Funds through a
broker-dealer that has been approved by Loomis Sayles Distributors,
L.P., which can be contacted at One Financial Center, Boston, MA 02111
(800-633-3330).

Each Fund sells its shares at the NAV next calculated after Boston
Financial Data Services receives a properly completed investment order. Boston
Financial Data Services generally must receive your properly completed order
before the close of regular trading on the New York Stock Exchange for your
shares to be bought or sold at the Fund's NAV on that day.

Shares of each Fund may be purchased by (1) cash, (2) exchanging shares
of the same Class of any other Fund, provided the value of the shares exchanged
meets the investment minimum of the Fund, (3) exchanging securities acceptable
to Loomis Sayles, or (4) a combination of such methods. The exchange of
securities for shares of the Fund is subject to various restrictions, as
described in the Statement of Additional Information.

All purchases made by check should be in U.S. dollars and made payable
to State Street Bank and Trust Company. The Funds will not accept checks made
payable to anyone other than State Street Bank and Trust Company (including
checks made payable to you) or starter checks. When you make an investment by
check or by periodic account investment, to ensure that your investment has
cleared, you will not be permitted to redeem that investment until it has been
in your account for 15 days.

After your account has been established, you may send subsequent
investments directly to Boston Financial Data Services at the above address.
Please include either the account identification slip detached from your account
statement or a note containing the Fund's name, your account number and your
name, address, telephone number, and social security number.

You also may wire subsequent investments to the Funds by using the
following wire instructions:

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ABA No. 011000028
DDA 9904-622-9
(Your account number)
Attn: Custody and Shareholder Services
(Name of Fund)

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<PAGE>

Your bank may charge a fee for transmitting funds by wire.

A Fund may periodically close to new purchases of shares or refuse any
order to buy shares if the Fund determines that doing so would be in the best
interests of the Fund and its shareholders.

Each Fund's shares may be purchased by all types of tax-deferred
retirement plans. If you wish to open an individual retirement account (IRA)
with a Fund, Loomis Sayles has retirement plan forms available.

The minimum initial investment for each Fund generally is $1,000,000
for Institutional Class shares (except for the Loomis Sayles Bond Fund) and
$25,000 for Retail Class shares. The minimum initial investment for
Institutional Class shares of the Loomis Sayles Bond Fund is $25,000. Loomis
Sayles Funds may waive these minimums in its sole discretion.

Each subsequent investment must be at least $50.

Admin Class shares of the Loomis Sayles Bond Fund are offered
exclusively through intermediaries, who will be the record owner of the shares.

HOW TO REDEEM SHARES

You can redeem shares of each Fund any day the New York Stock Exchange
is open, either through your financial adviser or directly from the Fund. If you
are redeeming shares that you purchased within the past 15 days by check or by
periodic account investment, your redemption will be delayed until your payment
for the shares clears.

Your redemptions generally will be sent to you via first class mail on
the business day after your request is received. Under unusual circumstances,
the Funds may suspend redemptions or postpone payment for more than seven days.
Although most redemptions are made in cash, as described in the Statement of
Additional Information, the Funds reserve the right to redeem shares in kind.

REDEMPTIONS THROUGH YOUR FINANCIAL ADVISER. Your adviser must receive your
request in proper form before the close of regular trading on the New York Stock
Exchange for you to receive that day's NAV. Your adviser will be responsible for
furnishing all necessary documents to Loomis Sayles on a timely basis and may
charge you for his or her services.

REDEMPTIONS DIRECTLY FROM THE FUNDS. Boston Financial Data Services must receive
your redemption request in proper form before the close of regular trading on
the New York Stock Exchange in order for you to receive that day's NAV.

You may make redemptions directly from each Fund either by mail or by
telephone.

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<PAGE>

- - BY MAIL. Send a signed letter of instruction that includes the name of
the Fund, the exact name(s) in which the shares are registered, any
special capacity in which you are signing (such as trustee or custodian
or on behalf of a partnership, corporation, or other entity), your
address, telephone number, account number, social security number, and
the number of shares or dollar amount to be redeemed to the following
address:

Boston Financial Data Services, Inc.
P.O. Box 8314
Boston, MA 02266
Attention: Loomis Sayles Funds

If you have certificates for the shares you want to sell, you must
include them along with completed stock power forms.

- - BY TELEPHONE. You may redeem shares by calling Boston Financial Data
Services at 800-626-9390. Proceeds from telephone redemption requests
can be wired to your bank account or sent by check in the name of the
registered owner(s) to the record address.

Before Boston Financial Data Services can wire redemption proceeds to
your bank account, you must provide specific wire instructions to
Boston Financial Data Services at the time you open your account or
make any subsequent investments. A wire fee (currently $5) will be
deducted from the proceeds of each wire.

A telephone redemption request must be received by Boston Financial
Data Services prior to the close of regular trading on the New York
Stock Exchange. If you telephone a redemption request after the
Exchange closes or on a day when the Exchange is not open for business,
Boston Financial Data Services cannot accept the request, and you must
make a new redemption request during regular trading on the Exchange.

The maximum value of shares that you may redeem by telephone is
$50,000. For your protection, telephone redemption requests will not be
permitted if Boston Financial Data Services or the Fund has been
notified of an address change for your account within the preceding 30
days. Unless you indicate otherwise on your account application, Boston
Financial Data Services will be authorized to accept redemption and
transfer instructions by telephone. If you prefer, you can decline
telephone redemption and transfer privileges.

The telephone redemption privilege may be modified or terminated by the
Funds without notice. Certain of the telephone redemption procedures
may be waived for holders of Institutional Class shares.

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<PAGE>

- - SYSTEMATIC WITHDRAWAL PLAN. If the value of your account is $25,000 or
more, you can have periodic redemptions automatically paid to you or to
someone you designate. Please call 800-626-9390 for more information or
to set up a systematic withdrawal plan.

SIGNATURE GUARANTEE. You must have your signature guaranteed by a bank,
broker-dealer, or other financial institution that can issue a signature
guarantee for the following types of redemptions:

- - If you are redeeming shares worth more than $50,000.

- - If you are requesting that the proceeds check be made out to someone
other than the registered owner(s) or sent to an address other than the
record address.

- - If the account registration has changed within the past 30 days.

- - If you are instructing us to wire the proceeds to a bank account not
designated on the application.

Please note that a notary public cannot provide a signature guarantee.
This guaranteed signature requirement may be waived by Loomis Sayles in certain
cases.

Please remember that a 2.00% redemption fee applies to shares of the
Loomis Sayles High Yield Fund that are redeemed or exchanged within one year of
purchase. Loomis Sayles may, in its discretion, waive this redemption fee if
Loomis Sayles determines that minimal brokerage and transaction costs are
incurred in connection with the redemption.

REDEMPTION BY THE FUNDS. If you own fewer shares than the minimum set by the
Trustees, each Fund may redeem your shares and send you the proceeds. Each Fund
also may redeem shares if you own more than a maximum amount set by the
Trustees. There is presently no maximum, but the Trustees could set a maximum
that would apply to both present and future shareholders.

HOW TO EXCHANGE SHARES

You may exchange shares of a Fund for shares of the same Class of any
other Fund in the Loomis Sayles Funds series that offers that Class of shares or
for shares of certain money market funds advised by New England Funds
Management, L.P., an affiliate of Loomis Sayles.

The value of Fund shares that you wish to exchange must meet the
investment minimum of the new fund. Exchanges into the Loomis Sayles High Yield
Fund, the Loomis Sayles Municipal Bond Fund, and the Loomis Sayles U.S.
Government Securities Fund must

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<PAGE>

be specially approved by Loomis Sayles. Please call 800-633-3330 prior to
requesting this transaction.

You may make an exchange by sending a signed letter of instruction or
by telephone, unless you have elected on your account application to decline
telephone exchange privileges.

Since excessive exchange activity may interfere with portfolio
management and may have an adverse effect on other shareholders of a Fund, the
exchange privilege should not be viewed as a means for taking advantage of
short-term swings in the market. The Funds reserve the right to terminate or
limit your exchange privilege if you make more than four exchanges in a calendar
year. The Funds may terminate the exchange privilege upon 60 days' notice to
shareholders.

Please remember that an exchange may be a taxable event for federal
and/or state income tax purposes, so that you may realize a gain or loss that is
subject to income tax.

DIVIDENDS AND DISTRIBUTIONS

The table below provides information on each Fund's dividend policy.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
FUND DIVIDEND POLICY
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Loomis Sayles Bond Fund Declare and pay dividends quarterly
Loomis Sayles High Yield Fund
Loomis Sayles Intermediate Maturity Bond Fund
Loomis Sayles U.S. Government Securities Fund
- ----------------------------------------------------------------------------------------------------------------
Loomis Sayles Global Bond Fund Declares and pays dividends annually
- ----------------------------------------------------------------------------------------------------------------
Loomis Sayles Municipal Bond Fund Declare dividends daily and pay dividends
Loomis Sayles Short-Term Bond Fund monthly
- ----------------------------------------------------------------------------------------------------------------
Loomis Sayles Investment Grade Bond Fund Declares and pays dividends monthly
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

Each Fund also distributes all of its net capital gains realized from
the sale of portfolio securities. The Funds typically will make capital gain
distributions annually, but the Funds may make more frequent capital gain
distributions.

You may choose to:

-49-

<PAGE>

- - Reinvest all distributions in additional shares.

- - Receive all distributions in cash.

If you do not select an option when you open your account, all
distributions will be reinvested.

TAX CONSEQUENCES

For federal income tax purposes, distributions of investment income
from each of the Funds, except exempt-interest dividends distributed by the
Loomis Sayles Municipal Bond Fund (as described below), are taxable as ordinary
income. Taxes on distributions of capital gains are determined by how long a
Fund owned the investments that generated the capital gains, rather than by how
long you have owned your shares of the Fund. Distributions of short-term capital
gains, which result from the sale of securities that a Fund had held for one
year or less, are taxable as ordinary income. Properly designated distributions
of long-term capital gains, which result from the sale of securities that a Fund
had held for more than one year, are taxable as long-term capital gains
(generally at a 20% federal income tax rate for non-corporate shareholders).

Distributions of income and capital gains are taxable whether you
received them in cash or reinvested them in additional shares. If a dividend or
distribution is made shortly after you purchase shares of a Fund, while in
effect a return of capital to you, the dividend or distribution is taxable, as
described above. This is called "buying a dividend" and should be avoided, if
possible.

A Fund's investment in foreign securities may be subject to foreign
withholding taxes, which would decrease a Fund's yield on those securities.
Shareholders may be entitled to claim a credit or deduction with respect to
foreign taxes. In addition, a Fund's investment in foreign securities may
increase or accelerate a Fund's recognition of income and may affect the timing
or amount of a Fund's distributions.

In addition to income tax on a Fund's distributions, any gain that
results if you sell or exchange your shares generally is subject to income tax.
You should consult your tax adviser for more information on how an investment in
a Fund affects your own tax situation.

MUNICIPAL BOND FUND. Dividends paid by the Loomis Sayles Municipal Bond Fund
that are derived from interest on tax exempt fixed income securities
(exempt-interest dividends) may be excluded from your gross income on your
federal tax return. If you receive social security or railroad retirement
benefits, however, you may be taxed on a portion of those benefits as a result
of receiving tax exempt income. Tax exempt income also may be taken into account
for the federal alternative minimum tax.

-50-

<PAGE>

If at least 95% of the Loomis Sayles Municipal Bond Fund's dividends
are designated as exempt-interest dividends, federal backup withholding rules do
not apply with respect to such dividends. See the Statement of Additional
Information for more information on backup withholding rules.

The federal exemption for exempt-interest dividends does not result in
an exemption from state and local taxes. Distributions of exempt-interest
dividends may be exempt from local and state taxation to the extent they are
derived from the state or locality in which you resided. The Loomis Sayles
Municipal Bond Fund will report annually on a state-by-state basis the source of
income the Fund received on tax exempt fixed income securities that was paid out
as dividends during the preceding year.

-51-

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables below are intended to help you
understand each Fund's financial performance. Certain information reflects
financial results for a single Fund share. The total returns represent the rate
that you would have earned or lost on an investment in each Fund, assuming
reinvestment of all dividends and distributions.

This information has been audited by ____________________. The report
of _____________________ and each Fund's financial statements are included in
the Funds' annual reports to shareholders, which are available free of charge by
calling 800-626-9390.

-52-

<PAGE>

LOOMIS SAYLES BOND FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995
-------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.83 $12.38 $12.29 $10.05
Income from investment operations --
Net investment income (loss) .69 0.86 0.86 0.82
Net realized and unrealized gains (.78) 0.67 0.35 2.32
(losses) on securities ------ ---- ---- ----

Total from investment operations (.09) 1.53 1.21 3.14
Less distributions --
Dividends (from net investment (.44) (0.86) (0.86) (0.82)
income)
Distributions in excess of net 0.00 0.00 0.00 0.00
investment income
Distributions (from capital gains) 0.00 (0.22) (0.26) (0.08)
Total distributions (.44) (1.08) (1.12) (0.90)
----- ------ ------ ------
Net asset value, end of period $12.30 $12.83 $12.38 $12.29
------ ------ ------ ------
Total return (%)** (0.9)+ 12.7 10.3 32.0
Net assets, end of period (000) $1,455,312 $1,261,910 $541,244 $255,710

Ratio of expenses to average net assets 0.75++ 0.75 0.75 0.79
(%)***
Ratio of net income to average net 7.34++ 7.36 7.93 8.34
assets (%)
Portfolio turnover rate (%) 24+ 41 42 35
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-53-

<PAGE>

LOOMIS SAYLES BOND FUND (RETAIL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $12.82 $ 12.38
Income from investment operations --
Net investment income (loss) 0.66 0.84****
Net realized and unrealized gains (0.77) 0.65
(losses) on securities ------ ----

Total from investment operations (0.11) 1.49
------ ----
Less distributions --
Dividends (from net investment (0.42) (0.83)
income)
Distributions (from capital gains) 0.00 (0.22)
---- ------
Total distributions (0.42) (1.05)
------ ------
Net asset value, end of period $ 12.29 $ 12.82
======= =======
Total return (%)** (1.1)+ 12.4+
Net assets, end of period (000) $53,908 $33,240
Ratio of expenses to average net assets 1.00++ 1.00++
(%)***
Ratio of net income to average net 7.13++ 7.09++
assets (%)
Portfolio turnover rate (%) 24+ 41+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

**** Per share net investment income has been determined on the basis of the
weighed average number of shares outstanding during that period.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-54-

<PAGE>

LOOMIS SAYLES BOND FUND (ADMIN CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998*
-------------- ---------------
<S> <C> <C>
Net asset value, beginning of period $12.83
------
Income from investment operations --
Net investment income (loss) 0.47
Net realized and unrealized gains
(losses) on securities (0.62)
------
Total from investment operations (0.15)
------
Less distributions --
Dividends (from net investment
income) (0.40)
------
Total distributions (0.40)
------
Net asset value, end of period $12.28
======
Total return (%)** (1.3)+
Net assets, end of period (000) $630
Ratio of expenses to average net assets
(%)*** 1.25++
Ratio of net income to average net
assets (%) 7.45++
Portfolio turnover rate (%) 24+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-55-

<PAGE>

LOOMIS SAYLES GLOBAL BOND FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Income from investment operations --

Net investment income (loss) 0.53 0.71 0.44 1.04

Net realized and unrealized gains
(losses) on securities (0.43) (0.42) 1.27 1.31

Total from investment operations 0.10 0.29 1.71 2.35
Less distributions --

Dividends (from net investment 0.00 (0.69) (0.75) (0.78)
income)

Distributions in excess of net
investment income 0.00 (0.12) 0.00 0.00

Distributions (from capital gains) 0.00 0.00 0.00 0.00

Distributing from Capital 0.00 0.00 0.00 0.00

Total distributions 0.00 (0.81) (0.75) (0.78)

Net asset value, end of period 11.93 11.83 12.35 11.39

Total return (%)** 0.9+ 2.3 15.0 23.9

Net assets, end of period (000) $29,860 $28,401 $26,513 $10,304

Ratio of expenses to average net assets 0.90++ 0.90 1.50 1.50
(%)***

Ratio of net income to average net 6.00++ 5.88 6.37 8.17
assets (%)

Portfolio turnover rate (%) 28+ 75 131 148
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-56-

<PAGE>

LOOMIS SAYLES GLOBAL BOND FUND (RETAIL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
------------- -------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.83 $12.35
Income from investment operations --
Net investment income (loss) 0.44 0.63****
Net realized and unrealized gains (0.36) (0.37)
(losses) on securities ------ ------

Total from investment operations 0.08 0.26
---- ----
Less distributions --
Dividends (from net investment 0.00 (0.69)
income)
Distributions in excess of net 0.00 (0.09)
investment income ---- ------

Total distributions 0.00 (0.78)
---- ------
Net asset value, end of period $11.91 $11.83
====== ======
Total return (%)** 0.7+ 2.0+
Net assets, end of period (000) $6,376 $4,694
Ratio of expenses to average net assets 1.15++ 1.15++
(%)***
Ratio of net income to average net 5.77++ 5.60++
assets (%)
Portfolio turnover rate (%) 28+ 75+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

**** Per share net investment income has been determined on the basis of the
weighed average number of shares outstanding during that period.

+ Periods less than one year not annualized.

++ Computed on an annualized basis.

-57-

<PAGE>

LOOMIS SAYLES HIGH YIELD FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997 Dec. 31, 1996****
-------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.12 $10.11 $10.00
Income from investment operations --

Net investment income (loss) 0.78 0.83 0.20
Net realized and unrealized gains
(losses) on securities (2.28) 0.27 0.11
------ ---- ----
Total from investment operations (1.50) 1.10 0.31
Less distributions --

Dividends (from net investment (0.46) (0.86) (0.20)
income)
Distributions (from capital gains) 0.00 (0.26) 0.00
---- ------ ----
Total distributions (0.46) (1.12) (0.20)
------ ------ ------
Redemption Fees 0.01 0.03 0.00
Net asset value, end of period $8.17 $10.12 $10.11
======= ====== ======
Total return (%)** (15.6)+ 11.4 3.1+
Net assets, end of period (000) $6,624 $5,266 $1,939
Ratio of expenses to average net
assets (%)*** 0.75++ 0.75 0.75++
Ratio of net income to average net
assets (%) 10.54++ 8.96 8.85++
Portfolio turnover rate (%) 33+ 68 0+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

**** Since the Loomis Sayles High Yield Fund commenced operations on
September 11, 1996, figures in this column cover the period from
September 11 through December 31, 1996.

+ Periods less than one year not annualized.

++ Computed on an annualized basis.

-58-

<PAGE>

LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.03 $10.00
Income from investment operations --
Net investment income (loss)*** 0.51 0.64
Net realized and unrealized gains (0.16) 0.00
(losses) on securities ------ ----
Total from investment operations 0.35 0.64
Less distributions --

Dividends (from net investment (0.32) (0.56)
income)
Distributions in excess of net
investment income 0.00 (0.03)
Distributions (from capital gains) 0.00 (0.02)
---- ------
Total distributions (0.32) (0.61)
------ ------
Net asset value, end of period $10.06 $10.03
====== ======
Total return (%)** 3.5+ 6.4+
Net assets, end of period (000) $8,601 $6,305
Ratio of expenses to average net
assets (%)*** 0.55++ 0.55++
Ratio of net income to average net
assets (%) 6.71++ 6.38++
Portfolio turnover rate (%) 32+ 119+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year not annualized.

++ Computed on an annualized basis.

-59-

<PAGE>

LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (RETAIL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.03 $10.00
Income from investment operations --
Net investment income (loss)*** 0.49**** 0.64****
Net realized and unrealized gains (0.15) (0.02)
(losses) on securities ------ ------
Total from investment operations 0.34 0.62
----
Less distributions --

Dividends (from net investment income) (0.31) (0.54)
Distributions in excess of net investment 0.00 (0.03)
income
Distributions (from capital gains) 0.00 (0.02)
---- ------
Total distributions (0.31) (0.59)
------ ------
Net asset value, end of period $10.06 $10.03
====== ======
Total return (%)** 3.4+ 6.2+
Net assets, end of period (000) $ 663 $ 423
Ratio of expenses to average net assets 0.80++ 0.80++
(%)***
Ratio of net income to average net assets 6.47++ 6.13++
(%)
Portfolio turnover rate (%) 32+ 119+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

**** Total returns would have been lower had the adviser not reduced its
advisory fee and/or borne other operating expenses.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-60-

<PAGE>

LOOMIS SAYLES INVESTMENT GRADE BOND FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Dividends (from net investment income) (0.33) (0.63)
Distributions in excess of net investment
income 0.00 (0.08)
Distributions (from capital gains) 0.00 (0.12)
---- ------
Total distributions (0.33) (0.83)
------ ------
Net asset value, end of period $10.28 $10.59
====== ======
Total return (%)** 0.0+ 14.5+
Net assets, end of period (000) $2,778 $2,445
Ratio of expenses to average net assets
(%)*** 0.55++ 0.55++
Ratio of net income to average net assets
(%) 6.68++ 6.74++
Portfolio turnover rate (%) 48+ 112+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-61-

<PAGE>

LOOMIS SAYLES INVESTMENT GRADE BOND FUND (RETAIL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sep. 30, 1999 Sep. 30, 1998* Dec. 31, 1997
------------- -------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.59 $10.00
Income from investment operations --
Net investment income (loss) 0.48 0.62****
Net realized and unrealized gains (0.49) 0.78
(losses) on securities ------ ----
Total from investment operations (0.01) 1.40
Less distributions --
Dividends (from net investment
income) (0.31) (0.62)
Distributions in excess of net 0.00 (0.07)
investment income
Distributions (from capital gains) 0.00 (0.12)
---- ------
Total distributions (0.31) (0.81)
------ ------
Net asset value, end of period $10.27 $10.59
====== ======
Total return (%)** (0.2)+ 14.3+
Net assets, end of period (000) $1,743 $ 862
Ratio of expenses to average net 0.80++ 0.80++
assets (%)***
Ratio of net income to average net 6.43++ 6.51++
assets (%)
Portfolio turnover rate (%) 48+ 112+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

**** Total returns would have been lower had the adviser not reduced its
advisory fee and/or borne other operating expenses.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-62-

<PAGE>

LOOMIS SAYLES MUNICIPAL BOND FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995
--------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.70 $11.29 $11.53 $10.41
Income from investment operations --
Net investment income (loss) 0.40 0.56 0.52 0.52
Net realized and unrealized gains
(losses) on securities 0.27 0.51 (0.15) 1.16
---- ---- ------ ----
Total from investment operations 0.67 1.07 0.37 1.68
Less distributions --

Dividends (from net investment income) (0.40) (0.56) (0.52) (0.52)
Distributions (from capital gains) (0.01) (0.10) (0.09) (0.04)
------ ------ ------ ------
Total distributions (0.41) (0.66) (0.61) (0.56)
------ ------ ------ ------
Net asset value, end of period $11.96 $11.70 $11.29 $11.53
====== ====== ====== ======
Total return (%)** 5.9+ 9.8 3.3 16.5
Net assets, end of period (000) $10,056 $8,752 $8,701 $7,961
Ratio of expenses to average net assets
(%)*** 0.60++ 0.60 1.00 1.00
Ratio of net income to average net assets
(%) 4.62++ 4.90 4.61 4.72
Portfolio turnover rate (%) 30+ 50 38 41
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-63-

<PAGE>

LOOMIS SAYLES SHORT-TERM BOND FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995
-------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $9.75 $9.70 $9.81 $9.46
Income from investment operations --
Net investment income (loss) 0.44 0.61 0.55 0.63
Net realized and unrealized gains
(losses) on securities 0.21 0.06 (0.11) 0.35
---- ---- ------ ----
Total from investment operations 0.65 0.67 0.44 0.98
Less distributions --

Dividends (from net investment income) (0.44) (0.62) (0.55) (0.63)
Total distributions (0.44) (0.62) (0.55) (0.63)
------ ------ ------ ------
Net asset value, end of period $9.96 $9.75 $9.70 $9.81
===== ===== ===== =====
Total return (%)** 6.8+ 7.1 4.7 10.6
Net assets, end of period (000) $27,288 $18,792 $18,229 $26,039
Ratio of expenses to average net assets
(%)***` 0.50++ 0.50 1.00 1.00
Ratio of net income to average net assets
(%) 5.94++ 6.34 5.69 6.46
Portfolio turnover rate (%) 47+ 91 120 214
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-64-

<PAGE>

LOOMIS SAYLES SHORT-TERM BOND FUND (RETAIL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sep. 30, 1999 Sep. 30, 1998* Dec. 31, 1997
------------- -------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.75 $9.70
Income from investment operations --
Net investment income (loss) 0.42 0.59
Net realized and unrealized gains 0.21 0.06
(losses) on securities ---- ----
Total from investment operations 0.63 0.65
---- ----
Less distributions --

Dividends (from net investment income) (0.42) (0.60)
------ ------
Total distributions (0.42) (0.60)
------ ------
Net asset value, end of period $9.96 $9.75
===== =====
Total return (%)** 6.6+ 6.9+
Net assets, end of period (000) $ 773 $ 285
Ratio of expenses to average net assets 0.75++ 0.75++
(%)***`
Ratio of net income to average net assets 5.66++ 6.04++
(%)
Portfolio turnover rate (%) 47+ 91+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-65-

<PAGE>

LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------

Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995
-------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.70 $10.08 $10.64 $9.22
Income from investment operations --
Net investment income (loss) 0.43 0.63 0.68 0.66
Net realized and unrealized gains
(losses) on securities 0.58 0.61 (0.57) 1.42
---- ---- ------ ----
Total from investment operations 1.01 1.24 0.11 2.08
Less distributions --

Dividends (from net investment income) (0.30) (0.62) (0.67) (0.66)
Distributions (from capital gains) 0.00 0.00 0.00 0.00
---- ---- ---- ----
Total distributions (0.30) (0.62) (0.67) (0.66)
------ ------ ------ ------
Net asset value, end of period $11.41 $10.70 $10.08 $10.64
====== ====== ====== ======
Total return (%)** 9.6+ 12.7 1.3 23.0
Net assets, end of period (000) $29,246 $17,668 $14,192 $19,499
Ratio of expenses to average net assets
(%)*** 0.60++ 0.60 1.00 1.00
Ratio of net income to average net assets
(%) 5.61++ 6.29 6.23 6.47
Portfolio turnover rate (%) 84+ 156 137 169
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-66-

<PAGE>

APPENDIX A

DESCRIPTION OF BOND RATINGS ASSIGNED BY
STANDARD & POOR'S AND
MOODY'S INVESTORS SERVICE, INC.

STANDARD & POOR'S

AAA

This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and
repay principal.

Bonds rated AA also qualify as high quality debt obligations. Capacity to
pay interest and repay principal is very strong, and in the majority of
instances they differ from AAA issues only in small degree.

Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher rated
categories.

BBB

Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to repay principal and pay interest for
bonds in this category than for bonds in higher rated categories.

BB, B, CCC, CC

Bonds rated BB, B, CCC and CC are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such bonds will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.

-67-

<PAGE>

The rating C is reserved for income bonds on which no interest is being
paid.

Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.

This symbol is attached to the ratings of instruments with significant
noncredit risks such as risks to principal or volatility of expected returns.

Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

MOODY'S INVESTORS SERVICE, INC.

Aaa

Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large, or by an exceptionally
stable, margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Bonds that are rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa
securities.

Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
that suggest a susceptibility to impairment sometime in the future.

-68-

<PAGE>

Baa

Bonds that are rated Baa are considered as medium grade obligations; i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often, the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Should no rating be assigned by Moody's, the reason may be one of the
following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities that are not rated
as a matter of policy.

-69-

<PAGE>

3. There is a lack of essential data pertaining to the issue or issuer.

4. The issue was privately placed in which case the rating is not
published in Moody's publications.

Suspension or withdrawal may occur if new and material circumstances arise,
the effects of which preclude satisfactory analysis; if there is no longer
available reasonable up-to-date data to permit a judgment to be formed; if a
bond is called for redemption; or for other reasons.

Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1 and B1.

-70-

<PAGE>

[back cover page]

FOR MORE INFORMATION ABOUT THE FUNDS:

The Funds' statement of additional information (SAI) and annual and
semi-annual reports to shareholders provide additional information about the
Funds. The SAI and the auditor's report and financial statements included in
the Funds' most recent annual report to shareholders are incorporated by
reference into this Prospectus, which means that they are part of this
Prospectus for legal purposes.

In the Funds' annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the Funds'
performance during the last fiscal year.

You may get free copies of these materials, request other information
about the Funds and other Loomis Sayles Funds, or make shareholder inquiries
by contacting your financial adviser, by visiting the Loomis Sayles web site
at http://www.loomissayles.com, or by calling Loomis Sayles toll-free at
800-626-9390.

You may review and copy information about the Funds, including the SAI,
at the Securities and Exchange Commission's Public Reference Room in
Washington, DC. You may call the Commission at 800-SEC-0330 for information
about the operation of the Public Reference Room. You also may access reports
and other information about the Funds on the Commission's web site at
http://www.sec.gov. You may obtain these reports and other information about
the Funds, with payment of a duplicating fee, by writing the Public Reference
Section of the Commission, Washington, DC 20549-6009. You may need to refer to
the Funds' file number, which is listed at the bottom of this page.

Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
800-626-9390
www.loomissayles.com

File No. 811-6241

<PAGE>

[LOGO]

LOOMIS SAYLES FUNDS PROSPECTUS
JANUARY ___, 2000

LOOMIS SAYLES EMERGING MARKETS FUND

Loomis Sayles & Company, L.P., which has managed mutual funds since 1926,
is the investment adviser of the Fund.

<PAGE>

TABLE OF CONTENTS

RISK/RETURN SUMMARY.......................................................1
Loomis Sayles Emerging Markets Fund..................................2

EXPENSES OF THE FUND......................................................6

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
AND RISK CONSIDERATIONS..............................................8

MANAGEMENT...............................................................14
Investment Adviser..................................................14
Portfolio Managers..................................................14

GENERAL INFORMATION......................................................15
Pricing.............................................................15
How to Purchase Shares..............................................15
How to Redeem Shares................................................17
Dividends and Distributions.........................................19
Tax Consequences....................................................19

-i-

<PAGE>

RISK/RETURN SUMMARY

The following is a summary of certain key information about the Loomis
Sayles Emerging Markets Fund. You will find additional information about the
Fund, including a detailed description of the risks of an investment in the
Fund, after this summary.

This Risk/Return summary describes the Fund's objectives, principal
investment strategies, and principal risks. The summary includes a short
discussion of some of the principal risks of investing in the Fund. A further
discussion of these and other principal risks begins after this summary.

A more detailed description of the Fund, including some of the
additional risks associated with investing in the Fund, can be found further
back in this Prospectus after the Summary of Principal Risks. Please be sure to
read this additional information before you invest.

You can lose money by investing in the Fund. The Fund may not achieve
its objective and is not intended to be a complete investment program. An
investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

<PAGE>

LOOMIS SAYLES EMERGING MARKETS FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term
capital growth.

PRINCIPAL INVESTMENT STRATEGIES. The Fund pursues its objective by investing
primarily in stocks or other equity securities of issuers located in countries
with emerging securities markets. Countries with emerging markets are those
that, in the opinion of Loomis Sayles, are emerging as investment markets but
have yet to reach a level of maturity associated with developed foreign
securities markets. Countries with emerging securities markets include, among
others, Argentina, Brazil, Chile, China, Colombia, the Czech Republic, Greece,
Hungary, India, Indonesia, Israel, Italy, Jordan, Malaysia, South Africa, South
Korea, Taiwan, Thailand, and Venezuela.

In deciding which securities to buy and sell, Loomis Sayles seeks to
identify companies that Loomis Sayles believes have distinctive products,
technologies, or services, dynamic earnings growth, prospects for high levels of
profitability, and solid management. Loomis Sayles typically does not consider
current income when making buy/sell decisions.

The Fund may engage in options and futures transactions, securities
lending, and foreign currency hedging transactions and also may invest in Rule
144A securities, when-issued securities, swap transactions, repurchase
agreements, and, to the extent permitted by the Investment Company Act of 1940,
closed-end investment companies.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - derivatives risk (the risk that the value of the Fund's derivative
investments will fall as a result of pricing difficulties or lack of
correlation with the underlying investment);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

PERFORMANCE. No performance information is available for the Fund because it has
not yet been in operation for a full calendar year.

-2-

<PAGE>

SUMMARY OF PRINCIPAL RISKS

The value of your investment in the Fund will fluctuate with changes in
the values of the Fund's investments. Many factors can affect those values. This
section describes the principal risks that may affect the Fund's portfolio as a
whole. The Fund could be subject to additional principal risks because the types
of investments made by the Fund can change over time.

FOREIGN RISK

This is the risk associated with investments in issuers located in
foreign countries. The Fund's investments in foreign securities may experience
more rapid and extreme changes in value than investments in U.S. companies.

The securities markets of many foreign countries are relatively small,
with a limited number of issuers and a small number of securities. In addition,
foreign companies often are not subject to the same degree of regulation as U.S.
companies. Reporting, accounting, and auditing standards of foreign countries
differ, in some cases significantly, from U.S. standards. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes, or
diplomatic developments can cause the value of the Fund's investments in a
foreign country to decline. In the event of nationalization, expropriation, or
other confiscation, the Fund could lose its entire investment.

Because the Fund will invest significantly in emerging markets, the
Fund may face greater foreign risk since emerging market countries may be more
likely to experience political and economic instability.

CURRENCY RISK

This is the risk that fluctuations in exchange rates between the U.S.
dollar and foreign currencies may cause the value of the Fund's investments to
decline. The Fund is subject to currency risk because it may invest in
securities denominated in, or receiving revenues in, foreign currencies.

MARKET RISK

This is the risk that the value of the Fund's investments will change
as financial markets fluctuate and that prices overall may decline. The value of
a company's stock may fall as a result of factors that directly relate to that
company, such as decisions made by its management or lower demand for the
company's products or services. A stock's value also may fall because of factors
affecting not just the company, but companies in its industry or in a number of
different industries, such as increases in production costs. The value of a
company's stock also may be affected by changes in financial market conditions,
such as changes in interest rates or currency exchange rates. In addition, a
company's stock generally pays dividends only after the company

-3-

<PAGE>

makes required payments to holders of its bonds or other debt. For this reason,
the value of the stock will usually react more strongly than bonds and other
fixed income securities to actual or perceived changes in the company's
financial condition or prospects.

LEVERAGING RISK

When the Fund borrows money or otherwise leverages its portfolio, the
value of an investment in the Fund will be more volatile, and all other risks
generally are compounded. Since the Fund may create leverage by using
investments such as repurchase agreements, inverse floating rate instruments or
derivatives, or by borrowing money, the Fund faces this risk.

DERIVATIVES RISK

The Fund may use derivatives, which are financial contracts whose value
depends upon or is derived from the value of an underlying asset, reference
rate, or index. Examples of derivatives include options, futures, and swap
transactions. The Fund may use derivatives as part of a strategy designed to
reduce other risks ("hedging"). The Fund also may use derivatives to earn
income, enhance yield, and broaden Fund diversification. This use of derivatives
entails greater risk than using derivatives solely for hedging purposes. Funds
that use derivatives also face additional risks, such as the credit risk of the
other party to a derivative contract, the risk of difficulties in pricing and
valuation, and the risk that changes in the value of a derivative may not
correlate perfectly with relevant assets, rates, or indices.

LIQUIDITY RISK

Liquidity risk exists when particular investments are difficult to
purchase or sell, possibly preventing the Fund from selling out of these
illiquid securities at an advantageous price. Derivatives and securities that
involve substantial credit risk tend to involve greater liquidity risk. In
addition, liquidity risk tends to increase to the extent the Fund invests in
securities whose sale may be restricted by law or by contract, such as Rule 144A
securities.

MANAGEMENT RISK

Management risk is the risk that Loomis Sayles' investment techniques
could fail to achieve the Fund's objective and could cause your investment in
the Fund to lose value. The Fund is subject to management risk because the Fund
is actively managed by Loomis Sayles. Loomis Sayles will apply its investment
techniques and risk analyses in making investment decisions for the Fund, but
there can be no guarantee that Loomis Sayles' decisions will produce the desired
results. For example, in some cases derivative and other investment techniques
may be unavailable or Loomis Sayles may determine not to use them, even under
market conditions where their use could have benefited the Fund.

-4-

<PAGE>

CREDIT RISK

Funds that invest in lower rated fixed income securities ("junk bonds")
are subject to greater credit risk and market risk than Funds that invest in
higher quality fixed income securities. Lower rated fixed income securities are
considered predominantly speculative with respect to the ability of the issuer
to make timely principal and interest payments.

-5-

<PAGE>

EXPENSES OF THE FUND

The following tables present the expenses that you would pay if you buy
and hold shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

The following redemption fee applies to the Fund.

- -------------------------------------------------------------------------------
Redemption Fee Imposed on
Shares of the Fund Redeemed
Fund within One Year of Purchase
- -------------------------------------------------------------------------------
Loomis Sayles Emerging Markets Fund 2.00%
- -------------------------------------------------------------------------------

The redemption fee described in the above table applies only to shares
of the Fund that are redeemed within one year of purchase. Loomis Sayles may, in
its discretion, waive this redemption fee if Loomis Sayles determines that
minimal brokerage and transaction costs are incurred in connection with the
redemption.

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

[to be updated]

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Total Annual Fee
Management Distribution Other Fund Operating Waiver/ Net
Fund/Class Fees (12b-1) Fees Expenses Expenses Reimbursement* Expenses*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles Emerging
Markets Fund [Institutional 1.25% none [ %] [ %] [ %] 2.25%
Class]
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

* Reflects Loomis Sayles' contractual obligation to limit the Fund's expenses
through February 1, 2001.

-6-

<PAGE>

EXAMPLE

The following example translates the "Total Annual Fund Operating
Expenses" column shown in the preceding table into dollar amounts. This example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other mutual funds.

This example makes certain assumptions. It assumes that you invest
$10,000 in the Fund for the time periods shown and then either (1) redeem all
your shares or (2) do not redeem any of your shares at the end of those periods.
This example also assumes that your investment has a 5% return each year and
that the Fund's operating expenses remain the same. Please remember that this
example is hypothetical, so that your actual costs and returns may be higher or
lower.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Fund/Class 1 year 3 years
- -------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles Emerging Markets Fund
[Institutional Class] (with redemption)
- -------------------------------------------------------------------------------
Loomis Sayles Emerging Markets Fund
[Institutional Class] (without redemption)
- -------------------------------------------------------------------------------
</TABLE>

-7-

<PAGE>

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
AND RISK CONSIDERATIONS

This section provides more information on the Fund's investments and
risk considerations. Except for the Fund's investment objective, and any
investment policies that are identified as "fundamental," all of the investment
policies and strategies of the Fund may be changed without a vote of the Fund's
shareholders.

The Fund may use any of the investment strategies described in this
section. Some of these investment strategies are principal investment strategies
for the Fund, while others are secondary investment strategies for the Fund.

TEMPORARY DEFENSIVE STRATEGIES. For temporary defensive purposes, the Fund may
invest any portion of its assets in cash or in any securities Loomis Sayles
deems appropriate. Although Loomis Sayles has the option to use these defensive
strategies, Loomis Sayles may choose not to use them for a variety of reasons,
even in very volatile market conditions. The Fund may miss certain investment
opportunities if it uses defensive strategies and thus may not achieve its
investment objective.

PORTFOLIO TURNOVER. Portfolio turnover considerations will not limit Loomis
Sayles' investment discretion in managing the assets of the Fund. The Fund
anticipates that its portfolio turnover rate will vary significantly from time
to time depending upon the volatility of economic and market conditions. High
portfolio turnover may generate higher costs and higher levels of taxable gains,
both of which may hurt the performance of your investment.

COMMON STOCKS AND OTHER EQUITY SECURITIES. Common stocks and their equivalents,
together called "equity securities," are generally volatile and more risky than
some other forms of investment. Equity securities of companies with relatively
small market capitalizations may be more volatile than the securities of larger,
more established companies and than the broad equity market indices.

GROWTH STOCKS. Stocks of companies that Loomis Sayles believes have
earnings that will grow faster than the economy as a whole are known as
growth stocks. The Fund generally invests a significant portion of its
assets in growth stocks. Growth stocks typically trade at higher
multiples of current earnings than other stocks. As a result, the
values of growth stocks may be more sensitive to changes in current or
expected earnings than the values of other stocks. If Loomis Sayles'
assessment of the prospects for a company's earnings growth is wrong,
or if its judgment of how other investors will value the company's
earnings growth is wrong, then the price of that company's stock may
fall or may not approach the value that Loomis Sayles has placed on it.

VALUE STOCKS. Stocks of companies that are not expected to experience
significant earnings growth, but whose stocks Loomis Sayles believes
are undervalued compared

-8-

<PAGE>

to their true worth, are known as value stocks. The Fund also may
invest in value stocks. These companies may have experienced adverse
business developments or may be subject to special risks that have
caused their stocks to be out of favor. If Loomis Sayles' assessment of
a company's prospects is wrong, or if other investors do not eventually
recognize the value of the company, then the price of the company's
stock may fall or may not approach the value that Loomis Sayles has
placed on it.

FOREIGN SECURITIES. Securities of issuers organized or headquartered outside the
United States are foreign securities. The Fund may invest any portion of its
assets in foreign securities.

Foreign securities may present risks not associated with investments in
comparable securities of U.S. issuers. There may be less information publicly
available about a foreign corporate or governmental issuer than about a U.S.
issuer, and foreign corporate issuers are generally not subject to accounting,
auditing, and financial reporting standards and practices comparable to those in
the United States. The securities of some foreign issuers are less liquid and at
times more volatile than securities of comparable U.S. issuers. Foreign
brokerage commissions and securities custody costs are often higher than in the
United States. With respect to certain foreign countries, there is a possibility
of governmental expropriation of assets, confiscatory taxation, political or
financial instability, and diplomatic developments that could affect the value
of investments in those countries. The Fund's receipt of interest on foreign
government securities may depend on the availability of tax or other revenues to
satisfy the issuer's obligations.

The Fund's investments in foreign securities may include investments in
countries whose economies or securities markets are not yet highly developed.
Special considerations associated with these investments (in addition to the
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential buyers for
such securities, and delays and disruptions in securities settlement procedures.

Since most foreign securities are denominated in foreign currencies or
traded primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for distribution to shareholders of the Fund may be affected by
changes in currency exchange rates, exchange control regulations, or foreign
withholding taxes. Changes in the value relative to the U.S. dollar of a foreign
currency in which the Fund's holdings are denominated will result in a change in
the U.S. dollar value of the Fund's assets and the Fund's income available for
distribution.

-9-

<PAGE>

dividend, but before payment of the dividend, the Fund could be required to
liquidate portfolio securities to pay the dividend. Similarly, if the value of a
currency relative to the U.S. dollar declines between the time the Fund accrues
expenses in U.S. dollars and the time such expenses are paid, the amount of
foreign currency required to be converted into U.S. dollars will be greater than
the equivalent amount in foreign currency of the expenses at the time they were
incurred.

In determining whether to invest assets of the Fund in securities of a
particular foreign issuer, Loomis Sayles will consider the likely effects of
foreign taxes on the net yield available to the Fund and its shareholders.
Compliance with foreign tax law may reduce the Fund's net income available for
distribution to shareholders.

FOREIGN CURRENCY HEDGING TRANSACTIONS. Foreign currency hedging transactions are
an effort to protect the value of specific portfolio positions or to anticipate
changes in relative values of currencies in which current or future Fund
portfolio holdings are denominated or quoted. For example, to protect against a
change in the foreign currency exchange rate between the date on which the Fund
contracts to purchase or sell a security and the settlement date for the
purchase or sale, or to "lock in" the equivalent of a dividend or interest
payment in another currency, the Fund might purchase or sell a foreign currency
on a spot (that is, cash) basis at the prevailing spot rate. If conditions
warrant, the Fund may also enter into private contracts to purchase or sell
foreign currencies at a future date ("forward contracts"). The Fund might also
purchase exchange-listed and over-the-counter call and put options on foreign
currencies. Over-the-counter currency options are generally less liquid than
exchange-listed options and will be treated as illiquid assets. The Fund may not
be able to dispose of over-the-counter options readily.

Foreign currency transactions involve costs and may result in losses.

OPTIONS AND FUTURES TRANSACTIONS. Options and futures transactions involve the
Fund buying, selling, or writing options (or buying or selling futures
contracts) on securities, securities indices, or currencies. The Fund may engage
in these transactions either to enhance investment return or to hedge against
changes in the value of other assets that the Fund owns or intends to acquire.
Options and futures fall into the broad category of financial instruments known
as "derivatives" and involve special risks. Use of options or futures for other
than hedging purposes may be considered a speculative activity, involving
greater risks than are involved in hedging.

-10-

<PAGE>

option receives a premium from writing an option, which may increase its return
if the option expires or is closed out at a profit. If the Fund as the writer of
an option is unable to close out an unexpired option, it must continue to hold
the underlying security or other asset until the option expires, to "cover" its
obligation under the option.

A futures contract creates an obligation by the seller to deliver and
the buyer to take delivery of the type of instrument or cash at the time and in
the amount specified in the contract. Although many futures contracts call for
the delivery (or acceptance) of the specified instrument, futures are usually
closed out before the settlement date through the purchase (or sale) of a
comparable contract. If the price of the sale of the futures contract by the
Fund is less than the price of the offsetting purchase, the Fund will realize a
loss.

The value of options purchased by the Fund and futures contracts held
by the Fund may fluctuate based on a variety of market and economic factors. In
some cases, the fluctuations may offset (or be offset by) changes in the value
of securities held in the Fund's portfolio. All transactions in options and
futures involve the possible risk of loss to the Fund of all or a significant
part of the value of its investment. In some cases, the risk of loss may exceed
the amount of the Fund's investment. When the Fund writes a call option or sells
a futures contract without holding the underlying securities, currencies, or
futures contracts, its potential loss is unlimited. The Fund will be required,
however, to set aside with its custodian bank liquid assets in amounts
sufficient at all times to satisfy its obligations under options and futures
contracts.

The successful use of options and futures will usually depend on Loomis
Sayles' ability to forecast stock market, currency, or other financial market
movements correctly. The Fund's ability to hedge against adverse changes in the
value of securities held in its portfolio through options and futures also
depends on the degree of correlation between changes in the value of futures or
options positions and changes in the values of the portfolio securities. The
successful use of futures and exchange-traded options also depends on the
availability of a liquid secondary market to enable the Fund to close its
positions on a timely basis. There can be no assurance that such a market will
exist at any particular time. In the case of options that are not traded on an
exchange ("over-the-counter" options), the Fund is at risk that the other party
to the transaction will default on its obligations, or will not permit the Fund
to terminate the transaction before its scheduled maturity.

The options and futures markets of foreign countries are small compared
to those of the U.S. and consequently are characterized in most cases by less
liquidity than U.S. markets. In addition, foreign markets may be subject to less
detailed reporting requirements and regulatory controls than U.S. markets.
Furthermore, investments in options in foreign markets are subject to many of
the same risks as other foreign investments. See "Foreign Securities" above.

-11-

<PAGE>

marked to market on a daily basis. The Fund will continue to benefit from
interest or dividends on the securities loaned and will also receive interest
through investment of the cash collateral in short-term liquid investments. No
loans will be made if, as a result, the aggregate amount of such loans
outstanding at any time would exceed 33 1/3% of the Fund's assets (taken at
current value). Any voting rights, or rights to consent, relating to securities
loaned pass to the borrower. However, if a material event affecting the
investment occurs, such loans will be called so that the securities may be voted
by the Fund. The Fund pays various fees in connection with such loans, including
shipping fees and reasonable custodial or placement fees.

WHEN-ISSUED SECURITIES. A "when-issued" security involves the Fund entering into
a commitment to buy a security before the security has been issued. The Fund's
payment obligation and the interest rate on the security are determined when the
Fund enters into the commitment. The security is typically delivered to the Fund
15 to 120 days later. No interest accrues on the security between the time the
Fund enters into the commitment and the time the security is delivered. If the
value of the security being purchased falls between the time a Fund commits to
buy it and the payment date, the Fund may sustain a loss. The risk of this loss
is in addition to the Fund's risk of loss on the securities actually in its
portfolio at the time. In addition, when the Fund buys a security on a
when-issued basis, it is subject to the risk that market rates of interest will
increase before the time the security is delivered, with the result that the
yield on the security delivered to the Fund may be lower than the yield
available on other, comparable securities at the time of delivery. If a Fund has
outstanding obligations to buy when- issued securities, it will segregate liquid
assets at its custodian bank in an amount sufficient to satisfy these
obligations.

REPURCHASE AGREEMENTS. A repurchase agreement involves the Fund buying
securities from a seller, usually a bank or brokerage firm, with the
understanding that the seller will repurchase the securities at a higher price
at a later date. Such transactions afford an opportunity for a Fund to earn a
return on available cash at minimal market risk, although the Fund may be
subject to various delays and risks of loss if the seller is unable to meet its
obligations to repurchase.

-12-

<PAGE>

SWAP TRANSACTIONS. The Fund may enter into interest rate or currency swaps. The
Fund will enter into these transactions primarily to preserve a return or spread
on a particular investment or portion of its portfolio, to protect against
currency fluctuations, to manage duration, or to protect against any increase in
the price of securities the Fund anticipates purchasing at a later date.
Interest rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (for example, an exchange of
floating rate payments for fixed rate payments with respect to a notional amount
of principal). A currency swap is an agreement to exchange cash flows on a
notional amount based on changes in the relative values of the specified
currencies. The Fund will segregate liquid assets at its custodian bank in an
amount sufficient to cover its current obligations under swap agreements.
Because swap agreements are not exchange-traded, but are private contracts into
which the Fund and a swap counterparty enter as principals, the Fund may
experience a loss or delay in recovering assets if the counterparty defaults on
its obligations.

CLOSED-END INVESTMENT COMPANIES. A closed-end investment company is a fund that
does not redeem its shares on a daily basis. As a result, an investment in a
closed-end investment company may be less liquid than an investment that can be
sold any time a Fund holding such an investment decides to sell. Since the value
of a closed-end investment company is based on the value of the individual
securities it holds, a closed-end investment company's value will fall if the
value of its underlying securities declines. As a shareholder in a closed-end
investment company, the Fund will bear its ratable share of the investment
company's expenses, including management fees, and will remain subject to the
investment company's advisory and administration fees with respect to the assets
so invested.

-13-

<PAGE>

MANAGEMENT

INVESTMENT ADVISER

The Board of Trustees of Loomis Sayles Funds oversees the Fund and
supervises the Fund's investment adviser, Loomis Sayles & Co., L.P. ("Loomis
Sayles"), which is located at One Financial Center, Boston, Massachusetts.

Loomis Sayles was founded in 1926 and is one of the country's oldest
and largest investment firms. Loomis Sayles is responsible for making investment
decisions for the Fund and for managing the Fund's other affairs and business,
including providing executive and other personnel for the management of the
Fund.

As previously described in the "Expenses of the Fund" section, the Fund
pays Loomis Sayles a monthly investment advisory fee, also known as a management
fee, at the annual rate of 1.25% of its average net assets for these services.

Certain expenses incurred by the Fund would be higher if not for Loomis
Sayles' contractual obligation to limit the Fund's expenses through February 1,
2001.

PORTFOLIO MANAGERS

Alex Muromcew, John Tribolet, and Eswar Menon, Vice Presidents of
Loomis Sayles and of Loomis Sayles Funds, have served as portfolio managers of
the Fund since its inception in 1999. Prior to joining Loomis Sayles in 1999,
Mr. Muromcew was a portfolio manager at Nicholas Applegate Capital Management
since 1996. From 1993 to 1996, he was an investment analyst with Teton Partners
L.P. Prior to joining Loomis Sayles in 1999, Mr. Tribolet was a portfolio
manager at Nicholas Applegate Capital Management since 1997. From 1995 to 1997,
he was a full-time MBA student at the University of Chicago. Prior to 1995, he
spent three years as an investment banker, most recently at PaineWebber Inc.
Prior to joining Loomis Sayles in 1999, Mr. Menon was a portfolio manager at
Nicholas Applegate Capital Management since 1995. From 1990 to 1995, he was
employed as an equity analyst by Koaneman Management and as a senior engineer by
Integrated Device Technology.

-14-

<PAGE>

GENERAL INFORMATION

PRICING

The price of the Fund's shares is based on its net asset value ("NAV").
The NAV per share of the Fund equals the total value of its assets, less its
liabilities, divided by the number of outstanding shares. Shares are valued as
of the close of regular trading on the New York Stock Exchange on each day the
Exchange is open for trading.

The Fund values its investments for which market quotations are readily
available at market value. The Fund values short-term investments that will
mature within 60 days at amortized cost, which approximates market value. The
Fund values all other investments and assets at fair value.

The Fund translates prices for its investments quoted in foreign
currencies into U.S. dollars at current exchange rates. As a result, changes in
the value of those currencies in relation to the U.S. dollar may affect the
Fund's NAV. Because foreign markets may be open at different times than the New
York Stock Exchange, the value of the Fund's shares may change on days when
shareholders are not able to buy or sell shares. If events materially affecting
the values of the Fund's foreign investments occur between the close of foreign
markets and the close of regular trading on the New York Stock Exchange, these
foreign investments may be valued at their fair value.

HOW TO PURCHASE SHARES

You can buy shares of the Fund in several ways:

- - BY MAIL. You can mail a completed application form, which is available
by calling Loomis Sayles at 800-633-3330, along with a check payable to
State Street Bank and Trust Company for the amount of your purchase to:

State Street Bank and Trust Company
P.O. Box 1978
Boston, MA 02105
Attention: Loomis Sayles Funds

- - THROUGH A FINANCIAL ADVISER. Your financial adviser will be responsible
for furnishing all necessary documents to Loomis Sayles or State Street
Bank and Trust Company. Your financial adviser may charge you for his
or her services.

- - THROUGH A BROKER-DEALER. You may purchase shares of the Fund through
a broker-dealer that has been approved by Loomis Sayles Distributors,
L.P., which can be contacted at One Financial Center, Boston, MA 02111
(800-633-3330, option 6).

-15-

<PAGE>

The Fund sells its shares at the NAV next calculated after State Street
Bank and Trust Company receives a properly completed investment order. State
Street Bank and Trust Company generally must receive your properly completed
order before the close of regular trading on the New York Stock Exchange for
your shares to be bought or sold at the Fund's NAV on that day.

Shares of the Fund may be purchased by (1) cash, (2) exchanging
securities acceptable to Loomis Sayles, or (3) a combination of such methods.
The exchange of securities for shares of the Fund is subject to various
restrictions, as described in the Statement of Additional Information.

All purchases made by check should be in U.S. dollars and made payable
to State Street Bank and Trust Company. The Fund will not accept checks made
payable to anyone other than State Street Bank and Trust Company (including
checks made payable to you) or starter checks. When you make an investment by
check or by periodic account investment, to ensure that your investment has
cleared, you will not be permitted to redeem that investment until it has been
in your account for 15 days.

After your account has been established, you may send subsequent
investments directly to State Street Bank and Trust Company at the above
address. Please include either the account identification slip detached from
your account statement or a note containing the Fund's name, your account number
and your name, address, telephone number, and social security number.

You also may wire subsequent investments to the Fund by using the
following wire instructions:

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ABA No. 011000028
DDA 9904-622-9
(Your account number)
Attn: Custody and Shareholder Services
(Name of Fund)

Your bank may charge a fee for transmitting funds by wire.

The Fund may periodically close to new purchases of shares or refuse
any order to buy shares if the Fund determines that doing so would be in the
best interests of the Fund and its shareholders.

The Fund's shares may be purchased by all types of tax-deferred
retirement plans. If you wish to open an individual retirement account (IRA)
with the Fund, Loomis Sayles has retirement plan forms available.

-16-

<PAGE>

The minimum initial investment for the Fund generally is $5,000. Loomis
Sayles Funds may waive this minimum in its sole discretion.

Each subsequent investment must be at least $50.

HOW TO REDEEM SHARES

You can redeem shares of the Fund any day the New York Stock Exchange
is open, either through your financial adviser or directly from the Fund. If you
are redeeming shares that you purchased within the past 15 days by check or by
periodic account investment, your redemption will be delayed until your payment
for the shares clears.

Your redemptions generally will be sent to you via first class mail on
the business day after your request is received. Under unusual circumstances,
the Fund may suspend redemptions or postpone payment for more than seven days.
Although most redemptions are made in cash, as described in the Statement of
Additional Information, the Fund reserves the right to redeem shares in kind.

REDEMPTIONS DIRECTLY FROM THE FUND. State Street Bank and Trust Company must
receive your redemption request in proper form before the close of regular
trading on the New York Stock Exchange in order for you to receive that day's
NAV.

You may make redemptions directly from the Fund either by mail or by
telephone.

State Street Bank and Trust Company
P.O. Box 1978
Boston, MA 02105
Attention: Loomis Sayles Funds

If you have certificates for the shares you want to sell, you must
include them along with completed stock power forms.

-17-

<PAGE>

- - BY TELEPHONE. You may redeem shares by calling Loomis Sayles at
800-633-3330 (option 6). Proceeds from telephone redemption requests
can be wired to your bank account or sent by check in the name of the
registered owner(s) to the record address.

Before State Street Bank and Trust Company can wire redemption proceeds
to your bank account, you must provide specific wire instructions to
State Street Bank and Trust Company at the time you open your account
or make any subsequent investments. A wire fee (currently $5) will be
deducted from the proceeds of each wire.

A telephone redemption request must be received by State Street Bank
and Trust Company prior to the close of regular trading on the New York
Stock Exchange. If you telephone a redemption request after the
Exchange closes or on a day when the Exchange is not open for business,
State Street Bank and Trust Company cannot accept the request, and you
must make a new redemption request during regular trading on the
Exchange.

The maximum value of shares that you may redeem by telephone is
$50,000. For your protection, telephone redemption requests will not be
permitted if State Street Bank and Trust Company or the Fund has been
notified of an address change for your account within the preceding 30
days. Unless you indicate otherwise on your account application, State
Street Bank and Trust Company will be authorized to accept redemption
and transfer instructions by telephone. If you prefer, you can decline
telephone redemption and transfer privileges.

The telephone redemption privilege may be modified or terminated by the
Fund without notice.

SIGNATURE GUARANTEE. You must have your signature guaranteed by a bank,
broker-dealer, or other financial institution that can issue a signature
guarantee for the following types of redemptions:

- - If you are redeeming shares worth more than $50,000.

- - If you are requesting that the proceeds check be made out to someone
other than the registered owner(s) or sent to an address other than the
record address.

- - If the account registration has changed within the past 30 days.

- - If you are instructing us to wire the proceeds to a bank account not
designated on the application.

Please note that a notary public cannot provide a signature guarantee.
This guaranteed signature requirement may be waived by Loomis Sayles in certain
cases.

-18-

<PAGE>

Please remember that a 2.00% redemption fee applies to shares of the
Fund that are redeemed within one year of purchase. Loomis Sayles may, in its
discretion, waive this redemption fee if Loomis Sayles determines that minimal
brokerage and transaction costs are incurred in connection with the redemption.

REDEMPTION BY THE FUND. If you own fewer shares than the minimum set by the
Trustees, the Fund may redeem your shares and send you the proceeds. The Fund
also may redeem shares if you own more than a maximum amount set by the
Trustees. There is presently no maximum, but the Trustees could set a maximum
that would apply to both present and future shareholders.

DIVIDENDS AND DISTRIBUTIONS

The Fund declares and pays its net investment income to shareholders as
dividends annually. The Fund also distributes all of its net capital gains
realized from the sale of portfolio securities. The Fund typically will make
capital gain distributions annually, but the Fund may make more frequent capital
gain distributions.

You may choose to:

- - Reinvest all distributions in additional shares.

- - Receive all distributions in cash.

If you do not select an option when you open your account, all
distributions will be reinvested.

TAX CONSEQUENCES

For federal income tax purposes, distributions of investment income
from the Fund are taxable as ordinary income. Taxes on distributions of capital
gains are determined by how long the Fund owned the investments that generated
the capital gains, rather than by how long you have owned your shares of the
Fund. Distributions of short-term capital gains, which result from the sale of
securities that the Fund had held for one year or less, are taxable as ordinary
income. Properly designated distributions of long-term capital gains, which
result from the sale of securities that the Fund had held for more than one
year, are taxable as long-term capital gains (generally at a 20% federal income
tax rate for noncorporate shareholders).

Distributions of income and capital gains are taxable whether you
receive them in cash or reinvest them in additional shares. If a dividend or
distribution is made shortly after you purchase shares of the Fund, while in
effect a return of capital to you, the dividend or distribution is taxable, as
described above. This is called "buying a dividend" and should be avoided, if
possible.

-19-

<PAGE>

The Fund's investment in foreign securities may be subject to foreign
withholding taxes, which would decrease the Fund's yield on these securities.
Shareholders may be entitled to claim a credit or deduction with respect to
foreign taxes. In addition, the Fund's investment in foreign securities may
increase or accelerate the Fund's recognition of income and may affect the
timing or amount of the Fund's distributions.

In addition to income tax on the Fund's distributions, any gain that
results if you sell or exchange your shares generally is subject to income tax.
You should consult your tax adviser for more information on how an investment in
the Fund affects your own tax situation.

-20-

<PAGE>

[back cover page]

FOR MORE INFORMATION ABOUT THE FUND:

The Fund's statement of additional information (SAI) and annual and
semi-annual reports to shareholders provide additional information about the
Fund. The SAI is incorporated by reference into this Prospectus, which means
that it is part of this Prospectus for legal purposes.

You may get free copies of the SAI, request other information about the
Fund and other Loomis Sayles Funds, or make shareholder inquiries by contacting
your financial adviser, by visiting the Loomis Sayles web site at
http://www.loomissayles.com, or by calling Loomis Sayles toll-free at
800-633-3330 (option 6).

You may review and copy information about the Fund, including the SAI,
at the Securities and Exchange Commission's Public Reference Room in Washington,
DC. You may call the Commission at 800-SEC-0330 for information about the
operation of the Public Reference Room. You also may access reports and other
information about the Fund on the Commission's web site at http://www.sec.gov.
You may obtain these reports and other information about the Fund, with payment
of a duplicating fee, by writing the Public Reference Section of the Commission,
Washington, DC 20549-6009. You may need to refer to the Fund's file number,
which is listed at the bottom of this page.

Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
800-633-3330 (option 6)
www.loomissayles.com

File No. 811-6241

-21-

<PAGE>

[LOGO]

LOOMIS SAYLES FUNDS PROSPECTUS
JANUARY ___, 2000

LOOMIS SAYLES INVESTMENT GRADE BOND FUND

CLASS J SHARES

Loomis Sayles & Company, L.P., which has managed mutual funds since 1926,
is the investment adviser of the Fund.

<PAGE>

TABLE OF CONTENTS

RISK/RETURN SUMMARY.........................................................1
Loomis Sayles Investment Grade Bond Fund...............................2

EXPENSES OF THE FUND........................................................9

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
AND RISK CONSIDERATIONS...................................................11

MANAGEMENT.................................................................20
Investment Adviser....................................................20
Distribution Plan.....................................................20
Sales Charge..........................................................20
Portfolio Manager.....................................................21

GENERAL INFORMATION........................................................22
Pricing...............................................................22
How to Purchase Shares................................................22
How to Redeem Shares..................................................24
Dividends and Distributions...........................................26
Tax Consequences......................................................26

APPENDIX A.................................................................28

<PAGE>

RISK/RETURN SUMMARY

The following is a summary of certain key information about Class J
shares of the Loomis Sayles Investment Grade Bond Fund. You will find additional
information about the Fund, including a detailed description of the risks of an
investment in the Fund, after this summary.

This Risk/Return summary describes the Fund's objective, principal
investment strategies, principal risks, and performance. The summary includes a
short discussion of some of the principal risks of investing in the Fund. A
further discussion of these and other principal risks begins after this summary.

A more detailed descriptions of the Fund, including some of the
additional risks associated with investing in the Fund, can be found further
back in this Prospectus after the Summary of Principal Risks. Please be sure to
read this additional information before you invest.

-1-

<PAGE>

LOOMIS SAYLES INVESTMENT GRADE BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of current income and capital appreciation.

Loomis Sayles generally prefers securities that are protected against
calls (early redemption by the issuer).

The Fund may invest any portion of its assets in securities of Canadian
issuers and up to 20% of its assets in securities of other foreign issuers.

-2-

<PAGE>

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - interest rate risk (the risk that the value of the Fund's investments
will fall if interest rates rise);

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

Interest rate risk generally is greater for Funds, such as the Loomis
Sayles Investment Grade Bond Fund, that invest in fixed income securities with
relatively long maturities than for Funds that invest in fixed income securities
with shorter maturities.

BAR CHART. The following bar chart shows year-to-year changes in the
performance of the Fund.

[CHART]

<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
RETURN 14.5% 3.3% --
</TABLE>

-3-

<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return as of 1 year Since
December 31, 1999 Inception
of the Fund
(12/31/96)
- -------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles Investment Grade Bond Fund
Class J
- -------------------------------------------------------------------------------
Lehman Brothers Government/Corporate
Bond Index
- -------------------------------------------------------------------------------
</TABLE>

For periods before the inception of Class J shares (April 7, 1999),
performance shown for Class J shares is based on the performance of the Fund's
Institutional Class shares, adjusted to reflect the higher fees paid by Class J
shares. The Fund's performance through December 31, 1999 benefited from Loomis
Sayles' agreement to limit the Fund's expenses.

-4-

<PAGE>

SUMMARY OF PRINCIPAL RISKS

INTEREST RATE RISK

This is the risk that changes in interest rates will affect the value
of the Fund's investments in fixed income securities, such as bonds, notes,
asset-backed securities, and other income producing securities. Fixed income
securities are obligations of the issuer to make payments of principal and/or
interest on future dates. Interest rate risk affects the Fund. Increases in
interest rates may cause the value of the Fund's investments to decline.

Even funds that generally invest a significant portion of their assets
in high quality fixed income securities, such as the Loomis Sayles Investment
Grade Bond Fund, are subject to interest rate risk.

Interest rate risk also is greater for funds that generally invest in
fixed income securities with longer maturities, such as the Loomis Sayles
Investment Grade Bond Fund, than for Funds that invest in fixed income
securities with shorter maturities.

Interest rate risk is compounded for the Fund when it invests a
significant portion of its assets in mortgage-related securities or other
asset-backed securities. The value of mortgage-related and asset-backed
securities generally is more sensitive to changes in interest rates than other
types of fixed income securities. When interest rates rise, the maturities of
mortgage-related and asset-backed securities tend to lengthen, and the value of
the securities decreases more significantly. In addition, these types of
securities are subject to prepayment when interest rates fall, which generally
results in lower returns because the Fund must reinvest assets previously
invested in these types of securities in fixed income securities with lower
interest rates.

The Fund also faces increased interest rate risk when it invests in
fixed income securities paying no current interest, such as zero coupon
securities, principal-only securities, interest-only securities, and fixed
income securities paying non-cash interest in the form of other fixed income
securities.

-5-

<PAGE>

CREDIT RISK

This is the risk that the issuer or the guarantor of a fixed income
security, or the counterparty to an over-the-counter transaction, will be unable
or unwilling to make timely payments of interest or principal or to otherwise
honor its obligations. The degree of risk for a particular security may be
reflected in its credit rating. Credit risk is greater for the Fund if it
invests in lower rated fixed income securities ("junk bonds"). Lower rated fixed
income securities generally have speculative elements or are predominately
speculative credit risks.

If the Fund invests in fixed income securities issued in connection
with corporate restructurings by highly leveraged issuers or in fixed income
securities that are not current in the payment of interest or principal (i.e.,
in default), the Fund may be subject to greater credit risk because of these
investments.

If the Fund invests in foreign securities, it is subject to increased
credit risk because of the difficulties of requiring foreign entities to honor
their contractual commitments and because a number of foreign governments and
other issuers are already in default.

MARKET RISK

This is the risk that the value of the Fund's investments will change
as the markets for fixed income securities fluctuate and that prices overall may
decline.

FOREIGN RISK

-6-

<PAGE>

CURRENCY RISK

LEVERAGING RISK

DERIVATIVES RISK

The Fund may use derivatives, which are financial contracts whose value
depends upon or is derived from the value of an underlying asset, reference
rate, or index. Examples of derivatives include options, futures, and swap
transactions. The Fund may use derivatives as part of a strategy designed to
reduce other risks ("hedging"). The Fund also may use derivatives to earn
income, enhance yield, and broaden Fund diversification. This use of derivatives
entails greater risk than using derivatives solely for hedging purposes. If the
Fund uses derivatives, it also faces additional risks, such as the credit risk
of the other party to a derivative contract, the risk of difficulties in pricing
and valuation, and the risk that changes in the value of a derivative may not
correlate perfectly with relevant assets, rates, or indices.

LIQUIDITY RISK

Liquidity risk exists when particular investments are difficult to
purchase or sell, possibly preventing the Fund from selling out of these
illiquid securities at an advantageous price. Derivatives and securities that
involve substantial interest rate and credit risk tend to involve greater
liquidity risk. In addition, liquidity risk tends to increase to the extent the
Fund invests in securities whose sale may be restricted by law or by contract,
such as Rule 144A securities.

MANAGEMENT RISK

Management risk is the risk that Loomis Sayles' investment techniques
could fail to achieve the Fund's objective and could cause your investment in
the Fund to lose value. The

-7-

<PAGE>

Fund is subject to management risk because the Fund is actively managed by
Loomis Sayles. Loomis Sayles will apply its investment techniques and risk
analyses in making investment decisions for the Fund, but there can be no
guarantee that Loomis Sayles' decisions will produce the desired results. For
example, in some cases derivative and other investment techniques may be
unavailable or Loomis Sayles may determine not to use them, even under market
conditions where their use could have benefited the Fund.

-8-

<PAGE>

EXPENSES OF THE FUND

The following tables present the expenses that you would pay if you buy
and hold Class J shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

The following shareholder fees apply to Class J shares of the Fund.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Class of Fund Shares Purchases (as a percentage of offering price)
- -------------------------------------------------------------------------------
<S> <C>
Class J 3.50%
- -------------------------------------------------------------------------------
</TABLE>

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

[to be updated]

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Fund/Class Management Distribution Other Total Annual Fee Net
Fees (12b-1) Fees Expenses** Fund Operating Waiver/ Expenses*
Expenses Reimbursement*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles
Investment Grade
Bond Fund
Class J .40% .75% [ ] [ ] [ ] 1.30%
- --------------------------------------------------------------------------------------------------------------------
* Reflects Loomis Sayles' contractual obligation to limit the Fund's expenses through February 1, 2001.
** Includes distribution (12b-1) fees.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

-9-

<PAGE>

EXAMPLE

The following example translates the "Total Annual Fund Operating
Expenses" column shown in the preceding table into dollar amounts. This example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other mutual funds.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Fund/Class 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loomis Sayles Investment Grade
Bond Fund
Class J $ $ $ $
- ------------------------------------------------------------------------------------------
</TABLE>

-10-

<PAGE>

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
AND RISK CONSIDERATIONS

Except where specifically noted elsewhere in this Prospectus, the Fund
may use any of the investment strategies described in this section. Some of
these investment strategies are principal investment strategies for the Fund,
while others are secondary investment strategies for the Fund.

PORTFOLIO TURNOVER. Portfolio turnover considerations will not limit Loomis
Sayles' investment discretion in managing the assets of the Fund. The Fund
anticipates that its portfolio turnover rate will vary significantly from time
to time depending on the volatility of economic and market conditions. High
portfolio turnover may generate higher costs and higher levels of taxable gains,
both of which may hurt the performance of your investment.

FIXED INCOME SECURITIES. Fixed income securities pay a specified rate of
interest or dividends, or a rate that is adjusted periodically by reference to
some specified index or market rate. Fixed income securities include securities
issued by federal, state, local, and foreign governments and related agencies,
and by a wide range of private or corporate issuers. Fixed income securities
include, among others, bonds, debentures, notes, bills, and commercial paper.
Because interest rates vary, it is impossible to predict the income of the Fund
for any particular period. The net asset value of the Fund's shares will vary as
a result of changes in the value of the securities in the Fund's portfolio.

INVESTMENT GRADE FIXED INCOME SECURITIES. To be considered investment
grade quality, at least one major rating agency must have rated the
security in one of its top four rating categories at the time the Fund
acquires the security or, if the security is unrated, Loomis Sayles
must have determined it to be of comparable quality.

LOWER RATED FIXED INCOME SECURITIES. A fixed income security will be
considered a lower rated fixed income security ("junk bond") if it is
of below investment grade quality. To be considered investment grade
quality, at least one major rating agency must have rated the security
in one of its top four rating categories at the time the Fund acquires
the security or, if the security is unrated, Loomis Sayles must have
determined

-11-

<PAGE>

it to be of comparable quality. Therefore, lower rated fixed income
securities are securities that, at the time the Fund acquires the
security, none of the major rating agencies has rated in one of its top
four rating categories, or unrated securities that Loomis Sayles has
determined to be of comparable quality.

Lower rated fixed income securities are subject to greater
credit risk and market risk than higher quality fixed income
securities. Lower rated fixed income securities are considered
predominantly speculative with respect to the ability of the issuer to
make timely principal and interest payments. If the Fund invests in
lower rated fixed income securities, the Fund's achievement of its
objective may be more dependent on Loomis Sayles' own credit analysis
than is the case with funds that invest in higher quality fixed income
securities. The market for lower rated fixed income securities may be
more severely affected than some other financial markets by economic
recession or substantial interest rate increases, by changing public
perceptions of this market, or by legislation that limits the ability
of certain categories of financial institutions to invest in these
securities. In addition, the secondary market may be less liquid for
lower rated fixed income securities. This lack of liquidity at certain
times may affect the values of these securities and may make the
evaluation and sale of these securities more difficult. Securities in
the lowest rating categories may be in poor standing or in default.
Securities in the lowest investment rating categories (BBB or Baa or
below) have speculative characteristics.

For more information about the ratings services' descriptions of the
various rating categories, see Appendix A. The Fund may continue to hold fixed
income securities that are downgraded in quality subsequent to their purchase if
Loomis Sayles believes it would be advantageous to do so.

Some U.S. Government securities, such as Government National Mortgage
Association ("GNMA") certificates, are known as "mortgage-backed" securities.
Interest and principal payments on the mortgages underlying mortgage-backed U.S.
Government securities are passed through to the holders of the security. If the
Fund purchases mortgage-backed securities at a discount or a premium, the Fund
will recognize a gain or loss when the payments of principal, through prepayment
or otherwise, are passed through to the Fund and, if the payment occurs in a
period of falling interest rates, the Fund may not be able to reinvest

-12-

<PAGE>

the payment at as favorable an interest rate. As a result of these principal
prepayment features, mortgage-backed securities are generally more volatile
investments than many other fixed income securities.

In addition to investing directly in U.S. Government securities, the
Fund may purchase certificates of accrual or similar instruments ("strips")
evidencing undivided ownership interests in interest payments or principal
payments, or both, in U.S. Government securities. These investment
instruments may be highly volatile.

ZERO COUPON SECURITIES. Zero coupon securities accrue interest at a specified
rate, but do not pay interest in cash on a current basis. If the Fund invests in
zero coupon securities, it is required to distribute the income on these
securities to Fund shareholders as the income accrues, even though the Fund is
not receiving the income in cash on a current basis. The Fund thus may have to
sell other investments to obtain cash to make income distributions at times when
Loomis Sayles would not otherwise deem it advisable to do so. The market value
of zero coupon securities often is more volatile than that of other fixed income
securities of comparable quality and maturity.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities, such as GNMA
certificates or securities issued by the Federal National Mortgage Association
("Fannie Mae"), differ from traditional fixed income securities. Among the major
differences are that interest and principal payments are made more frequently,
usually monthly, and that principal may be prepaid at any time because the
underlying mortgage loans generally may be prepaid at any time. As a result, if
the Fund purchases these assets at a premium, a faster-than-expected prepayment
rate will reduce yield to maturity, and a slower-than-expected prepayment rate
will increase yield to maturity. If the Fund purchases mortgage-backed
securities at a discount, faster-than-expected prepayments will increase, and
slower-than-expected prepayments will reduce, yield to maturity. Prepayments,
and resulting amounts available for reinvestment by the Fund, are likely to be
greater during a period of declining interest rates and, as a result, are likely
to be reinvested at lower interest rates. Accelerated prepayments on securities
purchased at a premium may result in a loss of principal if the premium has not
been fully amortized at the time of prepayment. These securities will decrease
in value as a result of increases in interest rates generally, and they are
likely to appreciate less than other fixed-income securities when interest rates
decline because of the risk of prepayments.

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<PAGE>

assets. A rapid rate of principal prepayments may have a measurably adverse
effect on the Fund's yield to maturity to the extent it invests in IOs. If the
assets underlying the IOs experience greater than anticipated prepayments of
principal, the Fund may fail to recoup fully its initial investment in these
securities. Conversely, POs tend to decline in value if prepayments are slower
than anticipated.

The secondary market for stripped mortgage-backed securities may be
more volatile and less liquid than that for other mortgage-backed securities,
potentially limiting the Fund's ability to buy or sell those securities at any
particular time.

COLLATERALIZED MORTGAGE OBLIGATIONS. A collateralized mortgage obligation (CMO)
is a security backed by a portfolio of mortgages or mortgage-backed securities
held under an indenture. CMOs may be issued either by U.S. Government
instrumentalities or by non-governmental entities. The issuer's obligation to
make interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. CMOs are issued with a number of
classes or series which have different maturities and which may represent
interests in some or all of the interest or principal on the underlying
collateral or a combination thereof. CMOs of different classes are generally
retired in sequence as the underlying mortgage loans in the mortgage pool are
repaid. In the event of sufficient early prepayments on such mortgages, the
class or series of CMOs first to mature generally will be retired prior to its
maturity. As with other mortgage-backed securities, if a particular class or
series of CMOs held by the Fund is retired early, the Fund could lose any
premium it paid when it acquired the investment, and the Fund may have to
reinvest the proceeds at a lower interest rate than the retired CMO paid.
Because of the early retirement feature, CMOs may be more volatile than many
other fixed-income investments.

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<PAGE>

security between the time the Fund enters into the commitment and the time the
security is delivered. If the value of the security being purchased falls
between the time the Fund commits to buy it and the payment date, the Fund may
sustain a loss. The risk of this loss is in addition to the Fund's risk of loss
on the securities actually in its portfolio at the time. In addition, when the
Fund buys a security on a when-issued basis, it is subject to the risk that
market rates of interest will increase before the time the security is
delivered, with the result that the yield on the security delivered to the Fund
may be lower than the yield available on other, comparable securities at the
time of delivery. If the Fund has outstanding obligations to buy when-issued
securities, it will segregate liquid assets at its custodian bank in an amount
sufficient to satisfy these obligations.

CONVERTIBLE SECURITIES. Convertible securities include corporate bonds, notes,
or preferred stocks of U.S. or foreign issuers that can be converted into (that
is, exchanged for) common stocks or other equity securities at a stated price or
rate. Convertible securities also include other securities, such as warrants,
that provide an opportunity for equity participation. Because convertible
securities can be converted into equity securities, their value will normally
vary in some proportion with those of the underlying equity securities. Due to
the conversion feature, convertible securities generally yield less than
nonconvertible fixed income securities of similar credit quality and maturity.
The Fund's investment in convertible securities may at times include securities
that have a mandatory conversion feature, pursuant to which the securities
convert automatically into common stock at a specified date and conversion
ratio, or that are convertible at the option of the issuer. When conversion is
not at the option of the holder, the Fund may be required to convert the
security into the underlying common stock even at times when the value of the
underlying common stock has declined substantially.

REITs may have limited financial resources, may trade less frequently
and in a limited volume, and may be subject to more abrupt or erratic price
movements than larger securities. The Fund's investment in a REIT may require
the Fund to accrue and distribute income not yet received or may result in the
Fund making distributions that constitute a return of capital to Fund
shareholders for federal income tax purposes. In addition, distributions by the
Fund from REITs will not qualify for the corporate dividends-received deduction.

RULE 144A SECURITIES. Rule 144A securities are privately offered securities that
can be resold only to certain qualified institutional buyers. Rule 144A
securities are treated as illiquid,

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<PAGE>

unless Loomis Sayles has determined, under guidelines established by Loomis
Sayles Funds' trustees, that a particular issue of Rule 144A securities is
liquid.

FOREIGN SECURITIES. Securities of issuers organized or headquartered outside the
United States are known as foreign securities. Foreign securities may present
risks not associated with investments in comparable securities of U.S. issuers.
There may be less information publicly available about a foreign corporate or
government issuer than about a U.S. issuer, and foreign corporate issuers are
generally not subject to accounting, auditing, and financial reporting standards
and practices comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. Foreign brokerage commissions and securities custody
costs are often higher than in the United States. With respect to certain
foreign countries, there is a possibility of governmental expropriation of
assets, confiscatory taxation, political or financial instability and diplomatic
developments that could affect the value of investments in those countries. The
Fund's receipt of interest on foreign government securities may depend on the
availability of tax or other revenues to satisfy the issuer's obligations.

Since most foreign securities are denominated in foreign currencies or
traded primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for distribution to shareholders of the Fund investing in these
securities may be affected by changes in currency exchange rates, exchange
control regulations, or foreign withholding taxes. Changes in the value relative
to the U.S. dollar of a foreign currency in which the Fund's holdings are
denominated will result in a change in the U.S. dollar value of the Fund's
assets and the Fund's income available for distribution.

In addition, although part of the Fund's income may be received or
realized in foreign currencies, the Fund will be required to compute and
distribute its income in U.S. dollars. Therefore, if the value of a currency
relative to the U.S. dollar declines after the Fund's income has been earned in
that currency, translated into U.S. dollars, and declared as a dividend, but
before payment of the dividend, the Fund could be required to liquidate
portfolio securities to pay the dividend. Similarly, if the value of a currency
relative to the U.S. dollar declines between the time the Fund accrues expenses
in U.S. dollars and the time such expenses are paid, the amount of foreign
currency required to be converted into U.S. dollars will be greater than the
equivalent amount in foreign currency of the expenses at the time they were
incurred.

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<PAGE>

FOREIGN CURRENCY HEDGING TRANSACTIONS. Foreign currency exchange transactions
may allow the Fund to protect the value of specific portfolio positions or in
anticipation of changes in relative values of currencies in which current or
future Fund portfolio holdings are denominated or quoted. For example, to
protect against a change in the foreign currency exchange rate between the date
on which the Fund contracts to purchase or sell a security and the settlement
date for the purchase or sale, or to "lock in" the equivalent of a dividend or
interest payment in another currency, the Fund might purchase or sell a foreign
currency on a spot (that is, cash) basis at the prevailing spot rate. If
conditions warrant, the Fund may also enter into private contracts to purchase
or sell foreign currencies at a future date ("forward contracts"). The Fund
might also purchase exchange-listed and over-the-counter call and put options on
foreign currencies. Over-the-counter currency options are generally less liquid
than exchange-listed options and will be treated as illiquid assets. The Fund
may not be able to dispose of over-the-counter options readily.

Foreign currency transactions involve costs and may result in losses.

SWAP TRANSACTIONS. Interest rate or currency swaps involve the Fund entering
into these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, to manage duration, or to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date. Interest
rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (for example, an exchange of
floating rate payments for fixed rate payments with respect to a notional amount
of principal). A currency swap is an agreement to exchange cash flows on a
notional amount based on changes in the relative values of the specified
currencies. The Fund will segregate liquid assets at its custodian bank in an
amount sufficient to cover its current obligations under swap agreements.
Because swap agreements are not exchange-traded, but are private contracts into
which the Fund and a swap counterparty enter as principals, the Fund may
experience a loss or delay in recovering assets if the counterparty were to
default on its obligations.

OPTIONS AND FUTURES TRANSACTIONS. Options and futures transactions involve the
Fund buying, selling, or writing (or buying or selling futures contracts) on
securities, securities indices, or currencies. The Fund may engage in these
transactions either to enhance investment return or to hedge against changes in
the value of other assets that the Fund owns or intends to acquire. Options and
futures fall into the broad category of financial instruments known as
derivatives and involve special risks. Use of options or futures for other than
hedging purposes may be considered a speculative activity, involving greater
risks than are involved in hedging.

Options can generally be classified as either "call" or "put" options.
There are two parties to a typical options transaction: the "writer" and the
"buyer." A call option gives the

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<PAGE>

buyer the right to buy a security or other asset (such as an amount of currency
or a futures contract) from, and a put option gives the buyer the right to sell
a security or other asset to, the option writer at a specified price, on or
before a specified date. The buyer of an option pays a premium when purchasing
the option, which reduces the return on the underlying security or other asset
if the option is exercised, and results in a loss if the option expires
unexercised. The writer of an option receives a premium from writing an option,
which may increase its return if the option expires or is closed out at a
profit. If the Fund as the writer of an option is unable to close out an
unexpired option, it must continue to hold the underlying security or other
asset until the option expires, to "cover" its obligation under the option.

A futures contract creates an obligation by the seller to deliver and
the buyer to take delivery of the type of instrument or cash at the time and in
the amount specified in the contract. Although many futures contracts call for
the delivery (or acceptance) of the specified instrument, futures are usually
closed out before the settlement date through the purchase (or sale) of a
comparable contract. If the price of the sale of the futures contract by the
Fund is less than the price of the offsetting purchase, the Fund will realize a
loss.

The successful use of options and futures will usually depend on Loomis
Sayles' ability to forecast stock market, currency, or other financial market
movements correctly. The Fund's ability to hedge against adverse changes in the
value of securities held in its portfolio through options and futures also
depends on the degree of correlation between changes in the value of futures or
options positions and changes in the values of the portfolio securities. The
successful use of futures and exchange-traded options also depends on the
availability of a liquid secondary market to enable the Fund to close its
positions on a timely basis. There can be no assurance that such a market will
exist at any particular time. In the case of options that are not traded on an
exchange ("over-the-counter" options), the Fund is at risk that the other party
to the transaction will default on its obligations, or will not permit the Fund
to terminate the transaction before its scheduled maturity.

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<PAGE>

markets are subject to many of the same risks as other foreign investments. See
"Foreign Securities" above.

REPURCHASE AGREEMENTS. In a repurchase agreement, the Fund buys securities from
a seller, usually a bank or brokerage firm, with the understanding that the
seller will repurchase the securities at a higher price at a later date. Such
transactions afford an opportunity for the Fund to earn a return on available
cash at minimal market risk, although the Fund may be subject to various delays
and risks of loss if the seller is unable to meet its obligations to repurchase.

SECURITIES LENDING. Securities lending involves the Fund lending its portfolio
securities to broker-dealers or other parties under contracts calling for the
deposit by the borrower with the Fund's custodian of cash collateral equal to at
least the market value of the securities loaned, marked to market on a daily
basis. The Fund will continue to benefit from interest or dividends on the
securities loaned and will also receive interest through investment of the cash
collateral in short-term liquid investments. No loans will be made if, as a
result, the aggregate amount of such loans outstanding at any time would exceed
33 1/3% of the Fund's assets (taken at current value). Any voting rights, or
rights to consent, relating to securities loaned pass to the borrower. However,
if a material event affecting the investment occurs, such loans will be called
so that the securities may be voted by the Fund. The Fund pays various fees in
connection with such loans, including shipping fees and reasonable custodial or
placement fees.

-19-

<PAGE>

MANAGEMENT

INVESTMENT ADVISER

As previously described in the "Expenses of the Fund" section, the Fund
pays Loomis Sayles a monthly investment advisory fee, also known as a management
fee, at an annual rate of .40% of the Fund's average net assets for these
services.

Certain expenses incurred by the Fund would have been higher if not for
Loomis Sayles' contractual obligation to limit the Fund's expenses through
February 1, 2001.

DISTRIBUTION PLAN

The Fund has adopted a distribution plan under Rule 12b-1 of the
Investment Company Act of 1940 that allows the Fund to pay the distributor, a
subsidiary of Loomis Sayles, a monthly service fee of .25% of the Fund's average
daily net assets attributable to Class J shares and a monthly distribution fee
of .50% of the Fund's average daily net assets attributable to Class J shares.
The distributor may pay all or any portion of the service fee to securities
dealers or other organizations for providing personal service to you or for
maintaining shareholder accounts. The distributor may pay all or any portion of
the distribution fee to securities dealers who are dealers of record with
respect to the Fund's shares as distribution fees in connection with the sale of
the Fund's shares. The distributor retains the balance of these fees as
compensation for its services as distributor.

SALES CHARGE

A sales charge of 3.50% of the Fund's offering price will apply each
time you purchase shares of the Fund. This sales charge is not imposed on shares
purchased with reinvested dividends or other distributions.

The price you pay will be the per share net asset value ("NAV") next
calculated after a proper investment order is received by Loomis Sayles Funds'
transfer or other agent or subagent plus the 3.50% sales charge (the public
offering price), which is 3.63% of the net amount invested. The amount reallowed
to broker-dealers is 3.00% as a percentage of the public offering price. The
Fund receives the net asset value. The sales charge is allocated between your
broker-dealer and the distributor.

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<PAGE>

PORTFOLIO MANAGER

Daniel J. Fuss, President of Loomis Sayles Funds and Vice Chairman of
Loomis Sayles, has served as portfolio manager of the Fund since its inception
in 1997. Mr. Fuss has been employed by Loomis Sayles since 1976.

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<PAGE>

GENERAL INFORMATION

PRICING

The price of the Fund's shares is based on its NAV, plus the sales
charge described previously. The NAV per share of the Fund equals the total
value of its assets, less its liabilities, divided by the number of outstanding
shares. Shares are valued as of the close of regular trading on the New York
Stock Exchange on each day the Exchange is open for trading.

HOW TO PURCHASE SHARES

You can buy shares of the Fund in two ways:

- - BY MAIL. You can mail a completed application form, which is available
by calling Loomis Sayles at 800-633-3330, for the Fund, along with a
check payable to State Street Bank and Trust Company for the amount of
your purchase to:

State Street Bank and Trust Company
Mutual Fund Services
One Heritage Drive
North Quincy, MA 02171

- - THROUGH A BROKER-DEALER. You may purchase shares of the Fund through a
broker-dealer that has been approved by Loomis Sayles Distributors,
L.P., which can be contacted at One Financial Center, Boston, MA 02111
(800-633-3330).

The Fund sells its shares at the NAV next calculated after State Street
Bank and Trust Company receives a properly completed investment order, plus the
sales charge described previously. State Street Bank and Trust Company generally
must receive your properly

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<PAGE>

completed order before the close of regular trading on the New York Stock
Exchange for your shares to be bought or sold at the Fund's NAV on that day.

You also may wire subsequent investments to the Fund by using the
following wire instructions:

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ABA No. 011000028
DDA 4133-408-7
(Your account number)
Attn: Custody and Shareholder Services
(Name of Fund)

Your bank may charge a fee for transmitting funds by wire.

The Fund and the distributor reserve the right to reject any purchase
order, including orders in connection with exchanges, for any reason that the
Fund or the distributor in its sole discretion deems appropriate. Although the
Fund does not presently anticipate that it will do so, the Fund reserves the
right to suspend or change the terms of the offering of its shares. In order to
avoid dividend dilution, it is expected that the Fund will reject purchase
orders in excess of U.S. $5 million on each of the five Fund business days
preceding the ex-dividend date of each month. A Fund business day is any day on
which the New York Stock Exchange is open for business.

The distributor may accept telephone orders from broker-dealers who
have been previously approved by the distributor. Broker-dealers are responsible
for forwarding purchase or redemption orders to the distributor promptly.
Broker-dealers may charge you a transaction-based fee or other fee for their
services at either the time of purchase or the time of redemption. Such charges
may vary among broker-dealers but in all cases will be retained by the
broker-dealer and not remitted to the Fund.

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<PAGE>

The Fund may periodically close to new purchases of shares or refuse
any order to buy shares if the Fund determines that doing so would be in the
best interests of the Fund and its shareholders.

The minimum initial investment for the Fund generally is $________.
Loomis Sayles may waive this minimum in its sole discretion.

Each subsequent investment must be at least $___.

HOW TO REDEEM SHARES

You may make redemptions directly from the Fund either by mail or by
telephone.

State Street Bank and Trust Company
Mutual Fund Services
One Heritage Drive
North Quincy, MA 02171

If you have certificates for the shares you want to sell, you must
include them along with completed stock power forms.

- - BY TELEPHONE. You may redeem shares by calling Loomis Sayles at
800-633-3330. Proceeds from telephone redemption requests can be wired
to your bank account or sent by check in the name of the registered
owner(s) to the record address.

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<PAGE>

The telephone redemption privilege may be modified or terminated by the
Fund without notice. Certain of the telephone redemption procedures may
be waived for holders of Institutional Class shares.

SIGNATURE GUARANTEE. You must have your signature guaranteed by a bank,
broker-dealer, or other financial institution that can issue a signature
guarantee for the following types of redemptions:

- - If you are redeeming shares worth more than $50,000.

- - If you are requesting that the proceeds check be made out to someone
other than the registered owner(s) or sent to an address other than the
record address.

- - If the account registration has changed within the past 30 days.

- - If you are instructing us to wire the proceeds to a bank account not
designated on the application.

Please note that a notary public cannot provide a signature guarantee.
This guaranteed signature requirement may be waived by Loomis Sayles in certain
cases.

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<PAGE>

redemptions may be wired to your bank only if your bank is a member of the
Federal Reserve System or has a correspondent bank that is a member of the
System. Unless you indicate otherwise on the account application, State Street
Bank and Trust Company will be authorized to act upon redemption and exchange
instructions received by telephone from you or any person claiming to act as
your representative who can provide State Street Bank and Trust Company with
your account registration and address as it appears on the records of State
Street Bank and Trust Company. State Street Bank and Trust Company will employ
these or other reasonable procedures to confirm that instructions communicated
by telephone are genuine, but the Fund, State Street Bank and Trust Company, the
distributor, and Loomis Sayles will not be liable for any losses due to
unauthorized or fraudulent instructions if these or other reasonable procedures
are followed. For further information, please contact State Street Bank and
Trust Company. In times of heavy market activity, if you encounter difficulty in
placing a redemption or exchange order by telephone, you may wish to place the
order by mail as described above.

DIVIDENDS AND DISTRIBUTIONS

The Fund generally declares dividends daily and makes payments monthly.
The Fund also distributes all of its net capital gains realized from the sale of
portfolio securities. Any capital gain distributions are normally made annually,
but may be made more frequently. Loomis Sayles Funds' trustees may change the
frequency with which the Fund declares or pays dividends.

You may choose to:

- - Reinvest all distributions in additional shares.

- - Receive all distributions in cash.

If you do not select an option when you open your account, all
distributions will be reinvested.

TAX CONSEQUENCES

The following discussion addresses only the U.S. federal income tax
consequences of an investment in the Fund and does not address any foreign,
state or local tax consequences. You should consult your tax adviser for more
information on how an investment in the Fund affects your own tax situation,
including, for foreign shareholders, the possible imposition of

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<PAGE>

U.S. income withholding tax at rates of up to 30% on all Fund distributions
other than capital gain distributions.

For U.S. federal income tax purposes, distributions of investment
income from the Fund are taxable as ordinary income. Taxes on distributions of
capital gains are determined by how long the Fund owned the investments that
generated the capital gains, rather than by how long you have owned your shares
of the Fund. Distributions of short-term capital gains, which result from the
sale of securities that the Fund had held for one year or less, are taxable as
ordinary income. Properly designated distributions of long-term capital gains,
which result from the sale of securities that the Fund had held for more than
one year, are taxable as long-term capital gains (generally at a 20% federal
income tax rate for non-corporate shareholders).

Distributions of income and capital gains are taxable whether you
received them in cash or reinvested them in additional shares. If a dividend or
distribution is made shortly after you purchase shares of the Fund, while in
effect a return of capital to you, the dividend or distribution is taxable, as
described above. This is called "buying a dividend" and should be avoided, if
possible.

The Fund's investment in foreign securities may be subject to foreign
withholding taxes, which would decrease the Fund's yield on those securities.
Shareholders may be entitled to claim a credit or deduction with respect to
foreign taxes. In addition, the Fund's investment in foreign securities may
increase or accelerate the Fund's recognition of income and may affect the
timing or amount of the Fund's distributions.

In addition to income tax on the Fund's distributions, any gain that
results if you sell or exchange your shares generally is subject to income tax.

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<PAGE>

APPENDIX A

DESCRIPTION OF BOND RATINGS ASSIGNED BY
STANDARD & POOR'S AND
MOODY'S INVESTORS SERVICE, INC.

STANDARD & POOR'S

AAA

This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
principal.

Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories.

BBB

BB, B, CCC, CC

Bonds rated BB, B, CCC and CC are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such bonds will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.

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<PAGE>

The rating C is reserved for income bonds on which no interest is being
paid.

Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.

This symbol is attached to the ratings of instruments with significant
noncredit risks such as risks to principal or volatility of expected returns.

Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

MOODY'S INVESTORS SERVICE, INC.

Aaa

Bonds that are rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risks appear somewhat larger than in Aaa securities.

Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.

Baa

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<PAGE>

Caa

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Should no rating be assigned by Moody's, the reason may be one of the
following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities that are
not rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or
issuer.

4. The issue was privately placed in which case the rating is not
published in Moody's publications.

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<PAGE>

Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1 and B1.

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<PAGE>

[back cover page]

FOR MORE INFORMATION ABOUT THE FUND:

The Fund's statement of additional information (SAI) and annual and
semi-annual reports to shareholders provide additional information about the
Fund. The SAI and the auditor's report and financial statements included in the
Fund's most recent annual report to shareholders are incorporated by reference
into this Prospectus, which means that they are part of this Prospectus for
legal purposes.

In the Fund's annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the Fund's
performance during the last fiscal year.

You may get free copies of these materials, request other information
about the Fund and other Loomis Sayles Funds, or make shareholder inquiries by
contacting your financial adviser, by visiting the Loomis Sayles web site at
http://www.loomissayles.com, or by calling Loomis Sayles toll-free at
800-633-3330.

You may review and copy information about the Fund, including the
SAI, at the Securities and Exchange Commission's Public Reference Room in
Washington, DC. You may call the Commission at 800-SEC-0330 for information
about the operation of the Public Reference Room. You also may access reports
and other information about the Fund on the Commission's web site at
http://www.sec.gov. You may obtain these reports and other information about
the Fund, with payment of a duplicating fee, by writing the Public Reference
Section of the Commission, Washington, DC 20549-6009. You may need to refer
to the Fund's file number, which is listed at the bottom of this page.

Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
800-633-3330
www.loomissayles.com

File No. 811-6241

<PAGE>

LOGO

LOOMIS SAYLES FUNDS PROSPECTUS
JANUARY ___, 2000

LOOMIS SAYLES MANAGED BOND FUND

Loomis Sayles & Company, L.P., which has managed mutual funds since 1926,
is the investment adviser of the Fund.

<PAGE>

TABLE OF CONTENTS

RISK/RETURN SUMMARY.........................................................1
Loomis Sayles Managed Bond Fund...................................2

EXPENSES OF THE FUND........................................................9

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
AND RISK CONSIDERATIONS...............................................11

MANAGEMENT.................................................................20
Investment Adviser...............................................20
Distribution Plan................................................20
Sales Charge.....................................................20
Portfolio Managers...............................................21

GENERAL INFORMATION........................................................22
Pricing..........................................................22
How to Purchase Shares...........................................22
How to Redeem Shares.............................................24
Dividends and Distributions......................................26
Tax Consequences.................................................27

FINANCIAL HIGHLIGHTS.......................................................28

APPENDIX A.................................................................30

<PAGE>

RISK/RETURN SUMMARY

The following is a summary of certain key information about the Loomis
Sayles Managed Bond Fund. You will find additional information about the Fund,
including a detailed description of the risks of an investment in the Fund,
after this summary.

The Risk/Return summary includes a bar chart showing the Fund's annual
returns and a table showing the Fund's average annual returns. The bar chart and
table provide an indication of the historical risk of an investment in the Fund
by showing:

- how the Fund's performance varied from year to year over the life
of the Fund; and

- how the Fund's average annual returns for one year and over the
life of the Fund compared to those of a broad-based securities
market index.

The Fund's past performance, of course, does not necessarily indicate
how it will perform in the future.

-1-

<PAGE>

LOOMIS SAYLES MANAGED BOND FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of current income and capital appreciation.

Loomis Sayles generally prefers securities that are protected against
calls (early redemption by the issuer).

The Fund may invest any portion of its assets in securities of
Canadian issuers and up to 20% of its assets in other foreign securities.

The fixed income securities in which the Fund may invest include
corporate securities, U.S. Government securities, commercial paper, zero coupon
securities, mortgage-backed securities, stripped mortgage-backed securities,
collateralized mortgage obligations, asset- backed securities, when-issued
securities, Rule 144A securities, repurchase agreements, and convertible
securities. The Fund may engage in options and futures transactions, foreign
currency hedging transactions, and swap transactions.

-2-

<PAGE>

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - interest rate risk (the risk that the value of the Fund's investments will
fall if interest rates rise);

- - credit risk (the risk that companies in which the Fund invests, or with
which it does business, will fail financially, and be unwilling or unable
to meet their obligations to the Fund);

- - market risk (the risk that the value of the Fund's investments will fall as
a result of movements in financial markets generally); and

- - management risk (the risk that Loomis Sayles' investment techniques will be
unsuccessful and may cause the Fund to incur losses).

BAR CHART. The following bar chart shows year-to-year changes in the Fund's
performance.

[CHART]

<TABLE>
<CAPTION>
1998 1999
<S> <C> <C>
RETURN -- --
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up ___% (_____ quarter, 19__), and
the Fund's worst quarter was down __% (_______ quarter, 19__).

-3-

<PAGE>

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Lehman Brothers Government/Corporate Bond Index, an Index that tracks the
performance of a broad range of government and corporate fixed income
securities. The index is unmanaged, has no operating costs, and is included in
the table to facilitate your comparison of the Fund's performance to a
broad-based market index.

<TABLE>
<CAPTION>
- ------------------------------------------------ ------------- ----------------
Average Annual Total Return as of 1 year Since Inception
December 31, 1999 ( )
- ------------------------------------------------ ------------- ----------------
<S> <C> <C>
Loomis Sayles Managed Bond Fund
- ------------------------------------------------ ------------- ----------------
Lehman Brothers Government/Corporate Bond Index
- ------------------------------------------------ ------------- ----------------
</TABLE>

The Fund's performance through December 31, 1999 benefited from Loomis
Sayles' agreement to limit the Fund's expenses.

-4-

<PAGE>

SUMMARY OF PRINCIPAL RISKS

INTEREST RATE RISK

Even funds that generally invest a significant portion of their assets
in high quality fixed income securities, such as the Loomis Sayles Managed Bond
Fund, are subject to interest rate risk. Interest rate risk is greater for funds
that generally invest a significant portion of their assets in lower rated fixed
income securities ("junk bonds") or comparable unrated securities.

Interest rate risk also is greater for funds that generally invest in
fixed income securities with longer maturities than for funds that invest in
fixed income securities with shorter maturities.

Interest rate risk is compounded if the Fund invests a significant
portion of its assets in mortgage-related or other asset-backed securities. The
value of mortgage-related securities and asset-backed securities generally is
more sensitive to changes in interest rates than other types of fixed income
securities. When interest rates rise, the maturities of mortgage-related and
asset-backed securities tend to lengthen, and the value of the securities
decreases more significantly. In addition, these types of securities are subject
to prepayment when interest rates fall, which generally results in lower returns
because the Fund must reinvest assets previously invested in these types of
securities in fixed income securities with lower interest rates.

-5-

<PAGE>

CREDIT RISK

This is the risk that the issuer or the guarantor of a fixed income
security, or the counterparty to an over-the-counter transaction, will be unable
or unwilling to make timely payments of interest or principal or to otherwise
honor its obligations. The degree of risk for a particular security may be
reflected in its credit rating. Credit risk is greater for the Fund if it
invests a significant portion of its assets in lower rated fixed income
securities ("junk bonds"). Lower rated fixed income securities generally have
speculative elements or are predominately speculative credit risks.

If the Fund invests in fixed income securities issued in connection
with corporate restructurings by highly leveraged issuers or in fixed income
securities that are not current in the payment of interest or principal (i.e.,
in default), it may be subject to greater credit risk because of these
investments.

If the Fund invests a significant portion of its assets in foreign
securities, it may be subject to increased credit risk because of the
difficulties of requiring foreign entities to honor their contractual
commitments and because a number of foreign governments and other issuers are
already in default.

MARKET RISK

This is the risk that the value of the Fund's investments will change
as the markets for fixed income securities fluctuate and that prices overall may
decline.

FOREIGN RISK

-6-

<PAGE>

Nationalization, expropriation or confiscatory taxation, currency blockage,
political changes, or diplomatic developments can cause the value of the Fund's
investments in a foreign country to decline. In the event of nationalization,
expropriation, or other confiscation, if the Fund invests in foreign securities,
it could lose its entire foreign investment.

CURRENCY RISK

LEVERAGING RISK

DERIVATIVES RISK

LIQUIDITY RISK

Liquidity risk exists when particular investments are difficult to
purchase or sell, possibly preventing the Fund from selling out of these
illiquid securities at an advantageous price. Derivatives and securities that
involve substantial interest rate and credit risk tend to involve greater
liquidity risk. In addition, liquidity risk tends to increase to the extent the
Fund invests in securities whose sale may be restricted by law or by contract,
such as Rule 144A securities.

-7-

<PAGE>

MANAGEMENT RISK

-8-

<PAGE>

EXPENSES OF THE FUND

The following tables present the expenses that you would pay if you buy
and hold shares of the Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

The following shareholder fees apply to the Fund.
<TABLE>
<CAPTION>
- --------------------------------------- --------------------------------------
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage of
Fund offering price)
<S> <C>
- --------------------------------------- --------------------------------------
Loomis Sayles Managed Bond Fund 2.50%
- --------------------------------------- --------------------------------------
</TABLE>

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)

[to be updated]

<TABLE>
<CAPTION>
- -------------------------- ------------- -------------- ----------- ----------------- --------------- -----------
Fund Management Distribution Other Total Annual Fee Net
Fees (12b-1) Fees Expenses** Fund Operating Waiver/ Expenses*
Expenses Reimbursement*
- -------------------------- ------------- -------------- ----------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>

Loomis Sayles Managed .60% .75% [ ] [ ] [ ] 1.50%
Bond Fund
- -------------------------- ------------- -------------- ----------- ----------------- --------------- -----------
</TABLE>

* Reflects Loomis Sayles' contractual obligation to limit the Fund's expenses
through February 1, 2001.
** Includes distribution (12b-1) fees.
- --------------------------------------------------------------------------------

-9-

<PAGE>

EXAMPLE

The following example translates the "Total Annual Fund Operating
Expenses" column shown in the preceding table into dollar amounts. This example
is intended to help you compare the cost of investing in the Fund with the cost
of investing in other mutual funds.

This example makes certain assumptions. It assumes that you invest
$10,000 in the Fund for the time periods shown and then redeem all your shares
at the end of those periods. This example also assumes that your investment has
a 5% return each year and that the Fund's operating expenses remain the same.
Please remember that this example is hypothetical, so that your actual costs and
returns may be higher or lower.
<TABLE>
<CAPTION>
- --------------------------------------- ----------- ------------ ------------- -----------
Fund 1 year 3 years 5 years 10 years
- --------------------------------------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
Loomis Sayles Managed Bond Fund $ $ $ $
- --------------------------------------- ----------- ------------ ------------- -----------
</TABLE>

-10-

<PAGE>

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
AND RISK CONSIDERATIONS

PORTFOLIO TURNOVER. Portfolio turnover considerations will not limit Loomis
Sayles' investment discretion in managing the assets of the Fund. The Fund
anticipates that its portfolio turnover rate will vary significantly from time
to time depending on the volatility of economic and market conditions. High
portfolio turnover may generate higher costs and higher levels of taxable gains,
both of which may hurt the performance of your investment.

FIXED INCOME SECURITIES. Fixed income securities pay a specified rate of
interest or dividends, or a rate that is adjusted periodically by reference to
some specified index or market rate. Fixed income securities include securities
issued by federal, state, local, and foreign governments and related agencies,
and by a wide range of private or corporate issuers. Fixed income securities
include, among others, bonds, debentures, notes, bills, and commercial paper.
Because interest rates vary, it is impossible to predict the income of the Fund
for any particular period. The net asset value of the Fund's shares will vary as
a result of changes in the value of the securities in the Fund's portfolio.

INVESTMENT GRADE FIXED INCOME SECURITIES. To be considered investment
grade quality, at least one major rating agency must have rated the
security in one of its top four rating categories at the time the Fund
acquires the security or, if the security is unrated, Loomis Sayles
must have determined it to be of comparable quality.

-11-

<PAGE>

must have rated the security in one of its top four rating categories
at the time the Fund acquires the security or, if the security is
unrated, Loomis Sayles must have determined it to be of comparable
quality. Therefore, lower rated fixed income securities are securities
that, at the time the Fund acquires the security, none of the major
rating agencies has rated in one of its top four rating categories, or
unrated securities that Loomis Sayles has determined to be of
comparable quality.

Lower rated fixed income securities are subject to greater
credit risk and market risk than higher quality fixed income
securities. Lower rated fixed income securities are considered
predominantly speculative with respect to the ability of the issuer to
make timely principal and interest payments. If the Fund invests in
lower rated fixed income securities, the Fund's achievement of its
objective may be more dependent on Loomis Sayles' own credit analysis
than is the case with funds that invest in higher quality fixed income
securities. The market for lower rated fixed income securities may be
more severely affected than some other financial markets by economic
recession or substantial interest rate increases, by changing public
perceptions of this market, or by legislation that limits the ability
of certain categories of financial institutions to invest in these
securities. In addition, the secondary market may be less liquid for
lower rated fixed income securities. This lack of liquidity at certain
times may affect the values of these securities and may make the
evaluation and sale of these securities more difficult. Securities in
the lowest rating categories may be in poor standing or in default.
Securities in the lowest investment rating categories (BBB or Baa or
below) have speculative characteristics.

-12-

<PAGE>

passed through to the holders of the security. If the Fund purchases
mortgage-backed securities at a discount or a premium, the Fund will recognize a
gain or loss when the payments of principal, through prepayment or otherwise,
are passed through to the Fund and, if the payment occurs in a period of falling
interest rates, the Fund may not be able to reinvest the payment at as favorable
an interest rate. As a result of these principal prepayment features,
mortgage-backed securities are generally more volatile investments than many
other fixed income securities.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities, such as GNMA
certificates or securities issued by the Federal National Mortgage Association
("Fannie Mae"), differ from traditional fixed income securities. Among the major
differences are that interest and principal payments are made more frequently,
usually monthly, and that principal may be prepaid at any time because the
underlying mortgage loans generally may be prepaid at any time. As a result, if
the Fund purchases these assets at a premium, a faster-than-expected prepayment
rate will reduce yield to maturity, and a slower-than-expected prepayment rate
will increase yield to maturity. If the Fund purchases mortgage-backed
securities at a discount, faster-than-expected prepayments will increase, and
slower-than-expected prepayments will reduce, yield to maturity. Prepayments,
and resulting amounts available for reinvestment by the Fund, are likely to be
greater during a period of declining interest rates and, as a result, are likely
to be reinvested at lower interest rates. Accelerated prepayments on securities
purchased at a premium may result in a loss of principal if the premium has not
been fully amortized at the time of prepayment. These securities will decrease
in value as a result of increases in interest

-13-

<PAGE>

rates generally, and they are likely to appreciate less than other fixed-income
securities when interest rates decline because of the risk of prepayments.

STRIPPED MORTGAGE-BACKED SECURITIES. Stripped mortgage-backed securities include
interest-only and principal-only classes of mortgage-backed securities ("IOs"
and "POs"). The yield to maturity on an IO or PO is extremely sensitive not only
to changes in prevailing interest rates but also to the rate of principal
payments (including prepayments) on the underlying assets. A rapid rate of
principal prepayments may have a measurably adverse effect on the Fund's yield
to maturity to the extent it invests in IOs. If the assets underlying the IOs
experience greater than anticipated prepayments of principal, the Fund may fail
to recoup fully its initial investment in these securities. Conversely, POs tend
to decline in value if prepayments are slower than anticipated.

COLLATERALIZED MORTGAGE OBLIGATIONS. A collateralized mortgage obligation (CMO)
is a security backed by a portfolio of mortgages or mortgage-backed securities
held under an indenture. CMOs may be issued either by U.S. Government
instrumentalities or by non-governmental entities. The issuer's obligation to
make interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. CMOs are issued with a number of
classes or series which have different maturities and which may represent
interests in some or all of the interest or principal on the underlying
collateral or a combination thereof. CMOs of different classes are generally
retired in sequence as the underlying mortgage loans in the mortgage pool are
repaid. In the event of sufficient early prepayments on such mortgages, the
class or series of CMOs first to mature generally will be retired prior to its
maturity. As with other mortgage-backed securities, if a particular class or
series of CMOs held by the Fund is retired early, the Fund could lose any
premium it paid when it acquired the investment, and the Fund may have to
reinvest the proceeds at a lower interest rate than the retired CMO paid.
Because of the early retirement feature, CMOs may be more volatile than many
other fixed-income investments.

-14-

<PAGE>

Therefore, the Fund's ability to maintain a portfolio that includes
high-yielding asset-backed securities will be adversely affected to the extent
that prepayments of principal must be reinvested in securities that have lower
yields than the prepaid obligations. Moreover, prepayments of securities
purchased at a premium could result in a realized loss.

WHEN-ISSUED SECURITIES. A when-issued security involves the Fund entering into a
commitment to buy a security before the security has been issued. The Fund's
payment obligation and the interest rate on the security are determined when the
Fund enters into the commitment. The security is typically delivered to the Fund
15 to 120 days later. No interest accrues on the security between the time the
Fund enters into the commitment and the time the security is delivered. If the
value of the security being purchased falls between the time the Fund commits to
buy it and the payment date, the Fund may sustain a loss. The risk of this loss
is in addition to the Fund's risk of loss on the securities actually in its
portfolio at the time. In addition, when the Fund buys a security on a
when-issued basis, it is subject to the risk that market rates of interest will
increase before the time the security is delivered, with the result that the
yield on the security delivered to the Fund may be lower than the yield
available on other, comparable securities at the time of delivery. If the Fund
has outstanding obligations to buy when-issued securities, it will segregate
liquid assets at its custodian bank in an amount sufficient to satisfy these
obligations.

CONVERTIBLE SECURITIES. Convertible securities include corporate bonds, notes,
or preferred stocks of U.S. or foreign issuers that can be converted into (that
is, exchanged for) common stocks or other equity securities at a stated price or
rate. Convertible securities also include other securities, such as warrants,
that provide an opportunity for equity participation. Because convertible
securities can be converted into equity securities, their value will normally
vary in some proportion with those of the underlying equity securities. Due to
the conversion feature, convertible securities generally yield less than
nonconvertible fixed income securities of similar credit quality and maturity.
The Fund's investment in convertible securities may at times include securities
that have a mandatory conversion feature, pursuant to which the securities
convert automatically into common stock at a specified date and conversion
ratio, or that are convertible at the option of the issuer. When conversion is
not at the option of the holder, the Fund may be required to convert the
security into the underlying common stock even at times when the value of the
underlying common stock has declined substantially.

-15-

<PAGE>

corporate issuers are generally not subject to accounting, auditing, and
financial reporting standards and practices comparable to those in the United
States. The securities of some foreign issuers are less liquid and at times more
volatile than securities of comparable U.S. issuers. Foreign brokerage
commissions and securities custody costs are often higher than in the United
States. With respect to certain foreign countries, there is a possibility of
governmental expropriation of assets, confiscatory taxation, political or
financial instability and diplomatic developments that could affect the value of
investments in those countries. The Fund's receipt of interest on foreign
government securities may depend on the availability of tax or other revenues to
satisfy the issuer's obligations.

Since most foreign securities are denominated in foreign currencies or
traded primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for distribution to shareholders of the Fund may be affected by
changes in currency exchange rates, exchange control regulations, or foreign
withholding taxes. Changes in the value relative to the U.S. dollar of a foreign
currency in which the Fund's holdings are denominated will result in a change in
the U.S. dollar value of the Fund's assets and the Fund's income available for
distribution.

-16-

<PAGE>

Foreign currency transactions involve costs and may result in losses.

SWAP TRANSACTIONS. Interest rate or currency swaps involve the Fund entering
into these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, to manage duration, or to protect against any increase in the
price of securities the Fund anticipates purchasing at a later date. Interest
rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (for example, an exchange of
floating rate payments for fixed rate payments with respect to a notional amount
of principal). A currency swap is an agreement to exchange cash flows on a
notional amount based on changes in the relative values of the specified
currencies. The Fund will segregate liquid assets at its custodial bank in an
amount sufficient to cover its current obligations under swap agreements.
Because swap agreements are not exchange-traded, but are private contracts into
which the Fund and a swap counterparty enter as principals, the Fund may
experience a loss or delay in recovering assets if the counterparty were to
default on its obligations.

-17-

<PAGE>

premium when purchasing the option, which reduces the return on the underlying
security or other asset if the option is exercised, and results in a loss if the
option expires unexercised. The writer of an option receives a premium from
writing an option, which may increase its return if the option expires or is
closed out at a profit. If the Fund as the writer of an option is unable to
close out an unexpired option, it must continue to hold the underlying security
or other asset until the option expires, to "cover" its obligation under the
option.

A futures contract creates an obligation by the seller to deliver and
the buyer to take delivery of the type of instrument or cash at the time and in
the amount specified in the contract. Although many futures contracts call for
the delivery (or acceptance) of the specified instrument, futures are usually
closed out before the settlement date through the purchase (or sale) of a
comparable contract. If the price of the sale of the futures contract by the
Fund is less than the price of the offsetting purchase, the Fund will realize a
loss.

The successful use of options and futures will usually depend on Loomis
Sayles' ability to forecast stock market, currency, or other financial market
movements correctly. The Fund's ability to hedge against adverse changes in the
value of securities held in its portfolio through options and futures also
depends on the degree of correlation between changes in the value of futures or
options positions and changes in the values of the portfolio securities. The
successful use of futures and exchange-traded options also depends on the
availability of a liquid secondary market to enable the Fund to close its
positions on a timely basis. There can be no assurance that such a market will
exist at any particular time. In the case of options that are not traded on an
exchange ("over-the-counter" options), the Fund is at risk that the other party
to the transaction will default on its obligations, or will not permit the Fund
to terminate the transaction before its scheduled maturity.

-18-

<PAGE>

-19-

<PAGE>

MANAGEMENT

INVESTMENT ADVISER

As previously described in the "Expenses of the Fund" section, the Fund
pays Loomis Sayles a monthly investment advisory fee, also known as a management
fee, at an annual rate of .60% of the Fund's average net assets for these
services.

Certain expenses incurred by the Fund would have been higher if not for
Loomis Sayles' contractual obligation to limit the Fund's expenses through
February 1, 2001.

DISTRIBUTION PLAN

The Fund has adopted a distribution plan under Rule 12b-1 of the
Investment Company Act of 1940 that allows the Fund to pay the distributor, a
subsidiary of Loomis Sayles, a monthly service fee of .25% and a monthly
distribution fee of .50% of the Fund's average net assets. The distributor may
pay all or any portion of the service fee to securities dealers or other
organizations for providing personal service to you or maintaining shareholder
accounts. The distributor may pay all or any portion of the distribution fee to
securities dealers who are dealers of record with respect to the Fund's shares
as distribution fees in connection with the sale of the Fund's shares. The
distributor retains the balance of these fees as compensation for its services
as distributor.

SALES CHARGE

A sales charge of 2.50% of the Fund's offering price will apply each
time you purchase shares of the Fund. This sales charge is not imposed on shares
purchased with reinvested dividends or other distributions.

The price you pay will be the per share net asset value ("NAV") next
calculated after a proper investment order is received by Loomis Sayles Funds'
transfer or other agent or subagent plus the 2.50% sales charge (the public
offering price), which is 2.56% of the net amount invested. The amount reallowed
to broker-dealers is [2.00%] as a percentage of the

-20-

<PAGE>

public offering price. The Fund receives the net asset value. The sales charge
is allocated between your broker-dealer and the distributor.

PORTFOLIO MANAGERS

Daniel J. Fuss, President of Loomis Sayles Funds and Vice Chairman of
Loomis Sayles, has served as portfolio manager of the Fund since its inception
in 1998. Kathleen C. Gaffney, Vice President of Loomis Sayles Funds and of
Loomis Sayles, has served as associate portfolio manager of the Fund since its
inception in 1998. Each has been employed by Loomis Sayles for the past five
years.

-21-

<PAGE>

GENERAL INFORMATION

PRICING

HOW TO PURCHASE SHARES

You can buy shares of the Fund in two ways:

State Street Bank and Trust Company
Mutual Fund Services
One Heritage Drive
North Quincy, MA 02171

- - THROUGH A BROKER-DEALER. You may purchase shares of the Fund through a
broker-dealer that has been approved by Loomis Sayles Distributors,
L.P., which can be contacted at One Financial Center, Boston, MA 02111
(800-633-3330).

The Fund sells its shares at the NAV next calculated after State Street
Bank and Trust Company receives a properly completed investment order, plus the
sales charge described

-22-

<PAGE>

previously. State Street Bank and Trust Company generally must receive your
properly completed order before the close of regular trading on the New York
Stock Exchange for your shares to be bought or sold at the Fund's NAV on that
day.

You also may wire subsequent investments to the Fund by using the
following wire instructions:

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ABA No. 011000028
DDA 4133-408-7
(Your account number)
Attn: Custody and Shareholder Services
(Name of Fund)

Your bank may charge a fee for transmitting funds by wire.

-23-

<PAGE>

transaction-based fee or other fee for their services at either the time of
purchase or the time of redemption. Such charges may vary among broker-dealers
but in all cases will be retained by the broker-dealer and not remitted to the
Fund.

The Fund may periodically close to new purchases of shares or refuse
any order to buy shares if the Fund determines that doing so would be in the
best interests of the Fund and its shareholders.

The minimum initial investment for the Fund generally is $________.
Loomis Sayles may waive this minimum in its sole discretion.

Each subsequent investment must be at least $___.

HOW TO REDEEM SHARES

You may make redemptions directly from the Fund either by mail or by
telephone.

State Street Bank and Trust Company
Mutual Fund Services
One Heritage Drive
North Quincy, MA 02171

-24-

<PAGE>

If you have certificates for the shares you want to sell, you must
include them along with completed stock power forms.

The telephone redemption privilege may be modified or terminated by the
Fund without notice.

SIGNATURE GUARANTEE. You must have your signature guaranteed by a bank,
broker-dealer, or other financial institution that can issue a signature
guarantee for the following types of redemptions:

- - If you are redeeming shares worth more than $50,000.

- - If you are requesting that the proceeds check be made out to someone
other than the registered owner(s) or sent to an address other than the
record address.

- - If the account registration has changed within the past 30 days.

- - If you are instructing us to wire the proceeds to a bank account not
designated on the application.

-25-

<PAGE>

Please note that a notary public cannot provide a signature guarantee.
This guaranteed signature requirement may be waived by Loomis Sayles in certain
cases.

If you decide to change the bank account to which proceeds are to be
wired, you must submit this change to Loomis Sayles in writing on the Service
Options form with a signature guarantee. This form is available by calling
Loomis Sayles at 800-633-3330. Telephonic redemptions may be wired to your bank
only if your bank is a member of the Federal Reserve System or has a
correspondent bank that is a member of the System. Unless you indicate otherwise
on the account application, State Street Bank and Trust Company will be
authorized to act upon redemption and exchange instructions received by
telephone from you or any person claiming to act as your representative who can
provide State Street Bank and Trust Company with your account registration and
address as it appears on the records of State Street Bank and Trust Company.
State Street Bank and Trust Company will employ these or other reasonable
procedures to confirm that instructions communicated by telephone are genuine,
but the Fund, State Street Bank and Trust Company, the distributor, and Loomis
Sayles will not be liable for any losses due to unauthorized or fraudulent
instructions if these or other reasonable procedures are followed. For further
information, please contact State Street Bank and Trust Company. In times of
heavy market activity, if you encounter difficulty in placing a redemption or
exchange order by telephone, you may wish to place the order by mail as
described above.

DIVIDENDS AND DISTRIBUTIONS

The Fund generally declares and pays dividends monthly. The Fund also
distributes all of its net capital gains realized from the sale of portfolio
securities. Any capital gain distributions are normally made annually, but may
be made more frequently. The Fund normally pays distributions to investors who
own shares of the Fund as of the 22nd day of each month. Loomis Sayles Funds'
trustees may change the frequency with which the Fund declares or pays
dividends.

You may choose to:

- - Reinvest all distributions in additional shares.

- - Receive all distributions in cash.

-26-

<PAGE>

If you do not select an option when you open your account, all
distributions will be reinvested.

TAX CONSEQUENCES

Distributions of income and capital gains are taxable whether you
received them in cash or reinvested them in additional shares. If a dividend or
distribution is made shortly after you purchase shares of the Fund, while in
effect a return of capital to you, the dividend or distribution is taxable, as
described above. This is called "buying a dividend" and should be avoided, if
possible.

In addition to income tax on the Fund's distributions, any gain that
results if you sell or exchange your shares generally is subject to income tax.

-27-

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables below are intended to help you
understand the Fund's financial performance. Certain information reflects
financial results for a single Fund share. The total returns represent the rate
that you would have earned or lost on an investment in the Fund, assuming
reinvestment of all dividends and distributions.

This information has been audited by ____________________. The report
of _____________________ and the Fund's financial statements are included in the
Fund's annual reports to shareholders, which are available free of charge by
calling 800-633-3330.

-28-

<PAGE>

LOOMIS SAYLES MANAGED BOND FUND

Fiscal Year Ended
----------------------------------
Sept. 30, 1999 Sept. 30, 1998*
----------------------------------
Net asset value, beginning of period

Income from investment operations --

Net investment income (loss)

Net realized and unrealized gains
(losses) on securities

Total from investment operations

Less distributions --

Dividends (from net investment
income)

Distributions in excess of net
investment income

Distributions (from capital gains)

Total distributions

Net asset value, end of period

Total return (%)**

Net assets, end of period (000)

Ratio of expenses to average net assets
(%)***

Ratio of net income to average
net assets (%)

Portfolio turnover rate (%)

* In 1998, the Fund's fiscal year end changed from December 31 to
September 30.

** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.

*** 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.

+ Periods less than one year are not annualized.

++ Computed on an annualized basis.

-29-

<PAGE>

APPENDIX A

DESCRIPTION OF BOND RATINGS ASSIGNED BY
STANDARD & POOR'S AND
MOODY'S INVESTORS SERVICE, INC.

STANDARD & POOR'S

AAA

This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
principal.

Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories.

BBB

BB, B, CCC, CC

Bonds rated BB, B, CCC and CC are regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such bonds will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.

-30-

<PAGE>

The rating C is reserved for income bonds on which no interest is being
paid.

Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.

This symbol is attached to the ratings of instruments with significant
noncredit risks such as risks to principal or volatility of expected returns.

Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

MOODY'S INVESTORS SERVICE, INC.

Aaa

Bonds that are rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risks appear somewhat larger than in Aaa securities.

Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.

-31-

<PAGE>

Baa

Caa

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Should no rating be assigned by Moody's, the reason may be one of the
following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities that are not
rated as a matter of policy.

-32-

<PAGE>

3. There is a lack of essential data pertaining to the issue or
issuer.

4. The issue was privately placed in which case the rating is not
published in Moody's publications.

Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1 and B1.

-33-

<PAGE>

[back cover page]

FOR MORE INFORMATION ABOUT THE FUND:

In the Fund's annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the Fund's
performance during the last fiscal year.

Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
800-633-3330
www.loomissayles.com

File No. 811-6241

<PAGE>

LOGO

LOOMIS SAYLES FUNDS -- EQUITY FUNDS PROSPECTUS
JANUARY ___, 2000

LOOMIS SAYLES AGGRESSIVE GROWTH FUND
LOOMIS SAYLES CORE VALUE FUND
LOOMIS SAYLES GROWTH FUND
LOOMIS SAYLES INTERNATIONAL EQUITY FUND
LOOMIS SAYLES MID-CAP VALUE FUND
LOOMIS SAYLES SMALL CAP GROWTH FUND
LOOMIS SAYLES SMALL CAP VALUE FUND
LOOMIS SAYLES WORLDWIDE FUND

Loomis Sayles & Company, L.P., which has managed mutual funds since 1926,
is the investment adviser of the Funds.

<PAGE>

TABLE OF CONTENTS

RISK/RETURN SUMMARY...........................................................1
Loomis Sayles Aggressive Growth Fund......................................2
Loomis Sayles Core Value Fund ...........................................5
Loomis Sayles Growth Fund.................................................8
Loomis Sayles International Equity Fund..................................10
Loomis Sayles Mid-Cap Value Fund.........................................12
Loomis Sayles Small Cap Growth Fund......................................14
Loomis Sayles Small Cap Value Fund.......................................16
Loomis Sayles Worldwide Fund.............................................18

EXPENSES OF THE FUNDS........................................................24

MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS
AND RISK CONSIDERATIONS....................................................27

MANAGEMENT...................................................................34
Investment Adviser.......................................................34
Distribution Plans and Administrative Fees...............................34
Sales Charges for Class A Shares.........................................35
Portfolio Managers.......................................................37

GENERAL INFORMATION..........................................................39
Pricing..................................................................39
How to Purchase Shares...................................................39
How to Redeem Shares.....................................................41
How to Exchange Shares...................................................43
Dividends and Distributions..............................................44
Tax Consequences.........................................................44

FINANCIAL HIGHLIGHTS.........................................................46

-i-

<PAGE>

RISK/RETURN SUMMARY

The following is a summary of certain key information about the Loomis
Sayles Equity Funds. You will find additional information about each Fund,
including a detailed description of the risks of an investment in each Fund,
after this summary.

The Risk/Return summary includes bar charts showing the Funds' annual
returns and tables showing the Funds' average annual returns. The bar charts and
tables provide an indication of the historical risk of an investment in each
Fund by showing:

- how the Fund's performance varied from year to year over
the life of the Fund; and

- how the Fund's average annual returns for one year, five
years, and over the life of the Fund compared to those of a
broad-based securities market index.

A Fund's past performance, of course, does not necessarily indicate how
it will perform in the future.

<PAGE>

LOOMIS SAYLES AGGRESSIVE GROWTH FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
growth from investments in common stocks or their equivalent.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in common stocks or
other equity securities of companies with market capitalizations that fall
within the capitalization range of companies included in the Russell Mid-Cap
Growth Index, although the Fund may invest in companies of any size.

The Fund may invest any portion of its assets in securities of Canadian
issuers and up to 20% of its assets in other foreign securities. The Fund may
engage in foreign currency hedging transactions, options and futures
transactions, and securities lending. The Fund also may invest in real estate
investment trusts and Rule 144A securities.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - leveraging risk (the risk that the Fund will incur losses on
investments effectively purchased with borrowed money);

- - derivatives risk (the risk that the value of the Fund's derivative
investments will fall as a result of pricing difficulties or lack of
correlation with the underlying investment);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

-2-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the performance
of the Fund's Institutional Class shares. Until May 7, 1999, the Fund was called
the Loomis Sayles Mid-Cap Growth Fund.

[CHART]

<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
RETURN 22.7% 11.6%
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 26.9% (first quarter, 1999), and
the Fund's worst quarter was down 16.1% (third quarter, 1998).

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Russell Mid-Cap Growth Index, a market capitalization weighted index of
medium capitalization stocks determined by Russell to be growth stocks as
measured by their price-to-book ratios and forecasted growth values. The index
is unmanaged, has no operating costs, and is included in the table to facilitate
your comparison of the Fund's performance to a broad-based market index.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return as of 1 year Since Inception
December 31, 1999 (12/31/96)
- -------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles Aggressive Growth Fund
Institutional Class
Retail Class
Class A
- -------------------------------------------------------------------------------
Russell Mid-Cap Growth Index
- -------------------------------------------------------------------------------
</TABLE>

For periods before the inception of Class A shares ( ), performance
shown for Class A shares is based on the performance of the Fund's Institutional
Class shares, adjusted to

-3-

<PAGE>

reflect the higher fees paid by Class A shares. The Fund's performance through
December 31, 1999 benefited from Loomis Sayles' agreement to limit the Fund's
expenses.

-4-

<PAGE>

LOOMIS SAYLES CORE VALUE FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term growth of
capital and income.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests substantially all of its
assets in common stocks or their equivalent. The Fund invests primarily in
medium-sized and large-sized companies, although it may invest in companies of
any size.

In deciding which securities to buy and sell, Loomis Sayles generally
looks for companies that Loomis Sayles believes are undervalued by the market in
relation to earnings, dividends, assets, and growth prospects. The Fund's
investments may include companies that have suffered significant business
problems but that Loomis Sayles believes have favorable prospects for recovery.

Loomis Sayles does not consider current income when making buy/sell
decisions. Loomis Sayles seeks to identify companies that Loomis Sayles believes
have, among other things, attractive price/earnings, price/book, and price/cash
flow ratios. Loomis Sayles generally seeks to find value by selecting individual
stocks that Loomis Sayles believes are attractive, rather than by attempting to
achieve investment growth by rotating the Fund's holdings among various sectors
of the economy.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

-5-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the
performance of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURN
14.1% 11.9% -0.9% 35.2% 21.2% 29.2% 10.5%
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 15.7% (fourth quarter, 1998), and
the Fund's worst quarter was down 12.9% (third quarter, 1999).

-6-

<PAGE>

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Standard & Poor's 500 Index, a commonly used benchmark of U.S. equity
securities. The index is unmanaged, has no operating costs, and is included in
the table to facilitate your comparison of the Fund's performance to a
broad-based market index.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return 1 year 5 years Since
as of December 31, 1999 Inception
(5/13/91)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles Core Value Fund
Institutional Class
Retail Class
- -------------------------------------------------------------------------------
Standard & Poor's 500 Index
- -------------------------------------------------------------------------------
</TABLE>

For periods before the inception of Retail Class shares (December 31,
1996), performance shown for the Retail Class is based on the performance of the
Fund's Institutional Class shares, adjusted to reflect the higher fees paid by
Retail Class shares. The performance of Retail Class shares of the Fund through
December 31, 1999 benefited from Loomis Sayles' agreement to limit the Fund's
expenses.

-7-

<PAGE>

LOOMIS SAYLES GROWTH FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term growth
of capital.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests substantially all of its
assets in common stocks or their equivalent. The Fund focuses on stocks of large
capitalization companies, but the Fund may invest in companies of any size.

In deciding which securities to buy and sell, Loomis Sayles first seeks
to identify well-managed companies that Loomis Sayles believes have a leading
position within their industry. Loomis Sayles then targets those companies that
Loomis Sayles believes have the potential for strong revenue growth,
accelerating earnings growth, and rising profit margins.

Loomis Sayles typically does not consider current income when making
buy/sell decisions. Instead, Loomis Sayles looks for companies that Loomis
Sayles believes have dynamic earnings growth and prospects for high levels of
profitability, sustainable competitive advantages driven by proprietary products
or technologies, and solid management whose interests are aligned with those of
the company's shareholders.

The Fund typically buys stocks of companies that Loomis Sayles believes
are undervalued relative to future growth prospects. The Fund typically sells a
stock when Loomis Sayles believes the company's expected earnings or competitive
situation no longer meet Loomis Sayles' expectations.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are the
following:

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

-8-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the
performance of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURN
3.8% 9.3% 3.7% 30.9% 19.9% 24.5% 12.9%
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 22.3% (fourth quarter, 1998), and
the Fund's worst quarter was down 16.0% (third quarter, 1998).

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return as of 1 year 5 years Since
December 31, 1999 Inception
(5/16/91)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles Growth Fund
Institutional Class
Retail Class
- -------------------------------------------------------------------------------
Standard & Poor's 500 Index
- -------------------------------------------------------------------------------
</TABLE>

-9-

<PAGE>

LOOMIS SAYLES INTERNATIONAL EQUITY FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of capital appreciation and current income.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in common stocks or
other equity securities issued by companies headquartered or organized outside
the United States. The Fund generally focuses on stocks of larger companies, but
the Fund may invest in securities issued by companies of any size and in
securities from countries with emerging markets.

The Fund may engage in foreign currency hedging transactions,
securities lending, and options and futures transactions and also may invest in
real estate investment trusts, Rule 144A securities and, to the extent permitted
by the Investment Company Act of 1940, securities of closed-end investment
companies.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are
the following:

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - derivatives risk (the risk that the value of the Fund's derivative
investments will fall as a result of pricing difficulties or lack of
correlation with the underlying investment);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

-10-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the
performance of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURN
-5.1% 38.5% -1.8% 8.7% 18.3% -1.0% 9.3%
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 16.0% (first quarter, 1998), and
the Fund's worst quarter was down 12.7% (third quarter, 1998).

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the MSCI EAFE Index, an index that tracks the performance of more than 1,000
foreign stocks from 20 countries. The index is unmanaged, has no operating
costs, and is included in the table to facilitate your comparison of the Fund's
performance to a broad-based market index.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Average Annual Total Return as of 1 year 5 years Since
December 31, 1999 Inception
(5/10/91)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles International Equity Fund
Institutional Class
Retail Class
- ----------------------------------------------------------------------------------------
MSCI EAFE Index
- ----------------------------------------------------------------------------------------
</TABLE>

-11-

<PAGE>

LOOMIS SAYLES MID-CAP VALUE FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
growth from investments in common stocks or their equivalent.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in equity securities
of companies with market capitalizations that fall within the capitalization
range of companies included in the Standard & Poor's Mid-Cap 400 Index.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are
the following:

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - derivatives risk (the risk that the value of the Fund's derivative
investments will fall as a result of pricing difficulties or lack of
correlation with the underlying investment);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

-12-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the
performance of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
RETURN 26.3% 2.9%
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 17.6% (fourth quarter, 1998), and
the Fund's worst quarter was down 19.0% (third quarter, 1998).

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Standard & Poor's Mid-Cap 400 Index, an index that tracks the performance of
stocks of 400 mid-sized companies. The index is unmanaged, has no operating
costs, and is included in the table to facilitate your comparison of the Fund's
performance to a broad-based market index.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return as of 1 year Since
December 31, 1999 Inception
(12/31/96)
- -------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles Mid-Cap Value Fund
Institutional Class
Retail Class
- -------------------------------------------------------------------------------
Standard & Poor's Mid-Cap 400 Index
- -------------------------------------------------------------------------------
</TABLE>

The Fund's performance through December 31, 1999 benefited from Loomis
Sayles' agreement to limit the Fund's expenses.

-13-

<PAGE>

LOOMIS SAYLES SMALL CAP GROWTH FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
growth from investments in common stocks or their equivalent.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in equity securities
of companies with market capitalizations that fall within the capitalization
range of the Russell 2000 Index, an index that tracks stocks of 2,000 of the
smallest U.S. companies. The Fund may invest the rest of its assets in larger
companies.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are
the following:

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - derivatives risk (the risk that the value of the Fund's derivative
investments will fall as a result of pricing difficulties or lack of
correlation with the underlying investment);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

-14-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the
performance of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
RETURN 19.4% 18.7%
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 36.7% (fourth quarter, 1998), and
the Fund's worst quarter was down 21.9% (third quarter, 1998).

PERFORMANCE TABLE. The following table compares the performance of the Fund to
the Russell 2000 Index. The index is unmanaged, has no operating costs, and is
included in the table to facilitate your comparison of the Fund's performance to
a broad-based market index.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return as of 1 year Since
December 31, 1999 Inception
(12/31/96)
- -------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles Small Cap Growth Fund
Institutional Class
Retail Class
- -------------------------------------------------------------------------------
Russell 2000 Index
- -------------------------------------------------------------------------------
</TABLE>

The Fund's performance through December 31, 1999 benefited from Loomis
Sayles' agreement to limit the Fund's expenses.

-15-

<PAGE>

LOOMIS SAYLES SMALL CAP VALUE FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is long-term capital
growth from investments in common stocks or their equivalents.

The Fund may invest up to 20% of its assets in securities of foreign
issuers. The Fund may engage in foreign currency hedging transactions and also
may invest in real estate investment trusts, Rule 144A securities, and, to the
extent permitted by the Investment Company Act of 1940, securities of closed-end
investment companies.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are
the following:

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

-16-

<PAGE>

BAR CHART. The following bar chart shows year-to-year changes in the
performance of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURN
13.1% 24.7% -8.2% 32.1% 30.4% 26.0% -1.1%
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 18.1% (fourth quarter, 1998), and
the Fund's worst quarter was down 18.6% (third quarter, 1998).

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return as of 1 year 5 years Since
December 31, 1999 Inception
(5/13/91)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Loomis Sayles Small Cap Value Fund
Institutional Class
Retail Class
Admin Class
- -------------------------------------------------------------------------------
Russell 2000 Index
- -------------------------------------------------------------------------------
</TABLE>

For periods before the inception of Retail Class shares (December 31,
1996) and Admin Class shares (January 2, 1998), performance shown for those
classes is based on the performance of the Fund's Institutional Class shares,
adjusted to reflect the higher fees paid by Retail Class and Admin Class shares.
The performance of Admin Class shares of the Fund through December 31, 1999
benefited from Loomis Sayles' agreement to limit the Fund's expenses.

-17-

<PAGE>

LOOMIS SAYLES WORLDWIDE FUND

INVESTMENT OBJECTIVE. The Fund's investment objective is high total investment
return through a combination of capital appreciation and current income.

PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in equity and
fixed income securities of U.S. and foreign issuers. Loomis Sayles' Global
Asset Allocation Group allocates the Fund's assets among the following
four sectors:

- - Domestic equities.

- - International equities.

- - Domestic fixed income securities.

- - International fixed income securities.

In deciding how to allocate the Fund's assets among the four sectors,
Loomis Sayles' Global Asset Allocation Group attempts to determine the relative
attractiveness of each of the four sectors based on fundamental factors such as
economic cycles, relative interest rates, stock market valuations, and currency
considerations.

In deciding which domestic equity securities to buy and sell, Loomis
Sayles generally looks for companies that Loomis Sayles believes have the
potential for superior earnings growth relative to current value.

In deciding which international equity securities to buy and sell,
Loomis Sayles generally looks for companies that Loomis Sayles believes have the
potential for superior earnings growth.

In deciding which domestic and international fixed income securities to
buy and sell, Loomis Sayles generally looks for securities that Loomis Sayles
believes are undervalued and have the potential for credit upgrades. Loomis
Sayles may hedge currency risk for the Fund if Loomis Sayles believes the
outlook for a particular foreign currency is unfavorable.

The Fund may engage in foreign currency hedging transactions and
options and futures transactions. The Fund also may invest in collateralized
mortgage obligations, zero coupon securities, when-issued securities, real
estate investment trusts, and Rule 144A securities.

PRINCIPAL RISKS. Among the principal risks of investing in the Fund are
the following:

- - foreign risk (the risk that the value of the Fund's foreign investments
will fall as a result of foreign political, social, or economic
changes);

-18-

<PAGE>

- - currency risk (the risk that the value of the Fund's investments will
fall as a result of changes in exchange rates);

- - market risk (the risk that the value of the Fund's investments will
fall as a result of movements in financial markets generally);

- - credit risk (the risk that companies in which the Fund invests, or with
which it does business, will fail financially, and be unwilling or
unable to meet their obligations to the Fund);

- - derivatives risk (the risk that the value of the Fund's derivative
investments will fall as a result of pricing difficulties or lack of
correlation with the underlying investment);

- - liquidity risk (the risk that the Fund may be unable to find a buyer
for its investments when it seeks to sell them); and

- - management risk (the risk that Loomis Sayles' investment techniques
will be unsuccessful and may cause the Fund to incur losses).

BAR CHART. The following bar chart shows year-to-year changes in the
performance of the Fund's Institutional Class shares.

[CHART]

<TABLE>
<CAPTION>
1997 1998 1999
<S> <C> <C> <C>
RETURN 3.5% 3.0%
</TABLE>

The Fund's returns will vary. For example, during the period shown in
the bar chart, the Fund's best quarter was up 15.5% (fourth quarter, 1998), and
the Fund's worst quarter was down 10.8% (third quarter, 1999).

-19-

<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Average Annual Total Return as of 1 year Since
December 31, 1999 Inception
(5/1/96)
- -------------------------------------------------------------------------------
<S> <C> <C>
Loomis Sayles Worldwide Fund
Institutional Class
Retail Class
- -------------------------------------------------------------------------------
Standard & Poor's 500 Index
- -------------------------------------------------------------------------------
</TABLE>

-20-

<PAGE>

SUMMARY OF PRINCIPAL RISKS

The value of your investment in a Fund will fluctuate with changes in
the values of the Fund's investments. Many factors can affect those values. This
section describes the principal risks that may affect a Fund's portfolio as a
whole. All Funds could be subject to additional principal risks because the
types of investments made by each Fund can change over time.

MARKET RISK

This is the risk that the value of a Fund's investments will change as
financial markets fluctuate and that prices overall may decline. The value of a
company's stock may fall as a result of factors that directly relate to that
company, such as decisions made by its management or lower demand for the
company's products or services. A stock's value also may fall because of factors
affecting not just the company, but companies in its industry or in a number of
different industries, such as increases in production costs. The value of a
company's stock also may be affected by changes in financial market conditions,
such as changes in interest rates or currency exchange rates. In addition, a
company's stock generally pays dividends only after the company makes required
payments to holders of its bonds or other debt. For this reason, the value of
the stock will usually react more strongly than bonds and other fixed income
securities to actual or perceived changes in the company's financial condition
or prospects.

Market risk generally is greater for Funds, such as the Loomis Sayles
Aggressive Growth Fund, the Loomis Sayles Mid-Cap Value Fund, the Loomis Sayles
Small Cap Growth Fund, and the Loomis Sayles Small Cap Value Fund, that invest
substantially in small and medium-sized companies, since these companies tend to
be more vulnerable to adverse developments than large companies.

FOREIGN RISK

The securities markets of many foreign countries are relatively small,
with a limited number of issuers and a small number of securities. In addition,
foreign companies often are not subject to the same degree of regulation as U.S.
companies. Reporting, accounting, and auditing standards of foreign countries
differ, in some cases significantly, from U.S. standards. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes, or
diplomatic developments can cause the value of a Fund's investments in a foreign
country to decline. In the event of nationalization, expropriation, or other
confiscation, a Fund that invests in foreign securities could lose its entire
investment.

-21-

<PAGE>

Funds that may invest significantly in emerging markets, such as the
Loomis Sayles International Equity Fund and the Loomis Sayles Worldwide Fund,
may face greater foreign risk since emerging market countries may be more likely
to experience political and economic instability.

CURRENCY RISK

This is the risk that fluctuations in exchange rates between the U.S.
dollar and foreign currencies may cause the value of a Fund's investments to
decline. Each of the Funds is subject to currency risk because it may invest in
securities denominated in, or receiving revenues in, foreign currencies.

LEVERAGING RISK

When a Fund borrows money or otherwise leverages its portfolio, the
value of an investment in the Fund will be more volatile, and all other risks
generally are compounded. Since the Funds may create leverage by using
investments such as repurchase agreements, inverse floating rate instruments or
derivatives, or by borrowing money, each Fund faces this risk.

DERIVATIVES RISK

Each Fund may use derivatives, which are financial contracts whose
value depends upon or is derived from the value of an underlying asset,
reference rate, or index. Examples of derivatives include options, futures, and
swap transactions. The Funds may use derivatives as part of a strategy designed
to reduce other risks ("hedging"). The Funds also may use derivatives to earn
income, enhance yield, and broaden Fund diversification. This use of derivatives
entails greater risk than using derivatives solely for hedging purposes. Funds
that use derivatives also face additional risks, such as the credit risk of the
other party to a derivative contract, the risk of difficulties in pricing and
valuation, and the risk that changes in the value of a derivative may not
correlate perfectly with relevant assets, rates, or indices.

LIQUIDITY RISK

Liquidity risk exists when particular investments are difficult to
purchase or sell, possibly preventing a Fund from selling out of these illiquid
securities at an advantageous price. Derivatives and securities that involve
substantial credit risk tend to involve greater liquidity risk. In addition,
liquidity risk tends to increase to the extent a Fund invests in securities
whose sale may be restricted by law or by contract, such as Rule 144A
securities.

-22-

<PAGE>

MANAGEMENT RISK

CREDIT RISK

Funds that may invest a significant portion of their assets in foreign
fixed income securities, such as the Loomis Sayles Worldwide Fund, are subject
to increased credit risk because of the difficulties of requiring foreign
entities to honor their contractual commitments.

-23-

<PAGE>

EXPENSES OF THE FUNDS

The following tables present the expenses that you would pay if you buy
and hold shares of a Fund.

SHAREHOLDER FEES (fees paid directly from your investment)

The following sales charges apply to the respective classes of shares
of the Funds.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Redemption Fee Imposed on
Imposed on Purchases (as a Shares of the Fund Redeemed
Class of Fund Shares percentage of offering price) within One Year of Purchase
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Institutional Class none none
- ---------------------------------------------------------------------------------------------
Retail Class none none
- ---------------------------------------------------------------------------------------------
Class A 5.75% none(1)
- ---------------------------------------------------------------------------------------------
</TABLE>

For a more detailed description of the sales charges for Class A
shares, including a description of ways to lower the sales charge you pay for
Class A shares, please see the "Sales Charges for Class A Shares" section below.

- --------

(1) For purchases of $1,000,000 or more of Class A shares or purchases
of Class A shares by qualified retirement plans that have investments of
$1,000,000 or more or that have 100 or more eligible employees, there is no
front-end sales charge, but a contingent deferred sales charge of 1.00% may
apply to redemptions of your shares within one year of the date of purchase.

-24-

<PAGE>

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
[to be updated]

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Total Annual Fee
Management Distribution Other Fund Operating Waiver/ Net Expenses*
Fund/Class Fees (12b-1) Fees Expenses*** Expenses Reimbursement*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund
Institutional Class .75% none 6.38% 7.13% 6.13% 1.00%
Retail Class .75% .25% 27.22% 27.97% 26.72% 1.25%
Class A .75% .25% [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Core Value Fund
Institutional Class .50% none .29% .79% 0.00% .79%
Retail Class .50% .25% 1.70% 2.20% 1.10% 1.10%
- -----------------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Growth Fund
Institutional Class .50% none .52% 1.02% .17% .85%
Retail Class .50% .25% 4.24% 4.74% 3.64% 1.10%
- -----------------------------------------------------------------------------------------------------------------------------------
Loomis Sayles International Equity Fund
Institutional Class .75% none .43% 1.18% .18% 1.00%
Retail Class .75% .25% 9.51% 10.26% 9.01% 1.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Mid-Cap Value Fund
Institutional Class .75% none 3.58% 4.33% 3.33% 1.00%
Retail Class .75% .25% 12.56% 13.31% 12.06% 1.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Small Cap Growth Fund
Institutional Class .75% none 1.40% 2.15% 1.15% 1.00%
Retail Class .75% .25% 2.95% 3.70% 2.45% 1.25%
- -----------------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Small Cap Value Fund
Institutional Class .75% none .17% .92% 0.00% .92%
Retail Class .75% .25% .44% 1.19% 0.00% 1.19%
Admin Class .75% .25% 3.24%** 3.99% 2.49% 1.50%
- -----------------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Worldwide Fund
Institutional Class .75% none 2.53% 3.28% 2.28% 1.00%
Retail Class .75% .25% 23.94% 24.69% 23.44% 1.25%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Reflects Loomis Sayles' contractual obligation to limit the Funds' expenses
through February 1, 2001.
** Includes administrative fees of .25% and other expenses of .25%, after
expense reimbursement and fee waiver.
*** Includes distribution (12b-1) fees.

-25-

<PAGE>

EXAMPLE

This example makes certain assumptions. It assumes that you invest
$10,000 in a Fund for the time periods shown and then redeem all your shares at
the end of those periods. This example also assumes that your investment has a
5% return each year and that the Fund's operating expenses remain the same.
Please remember that this example is hypothetical, so that your actual costs and
returns may be higher or lower.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
FUND/CLASS 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
Class A $ $ $ $
- ------------------------------------------------------------------------------------------------------
Loomis Sayles Core Value Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- ------------------------------------------------------------------------------------------------------
Loomis Sayles Growth Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- ------------------------------------------------------------------------------------------------------
Loomis Sayles International Equity Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- ------------------------------------------------------------------------------------------------------
Loomis Sayles Mid-Cap Value Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- ------------------------------------------------------------------------------------------------------
Loomis Sayles Small Cap Growth Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- ------------------------------------------------------------------------------------------------------
Loomis Sayles Small Cap Value Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
Admin Class $ $ $ $
- ------------------------------------------------------------------------------------------------------
Loomis Sayles Worldwide Fund
Institutional Class $ $ $ $
Retail Class $ $ $ $
- ------------------------------------------------------------------------------------------------------
</TABLE>

-26-

<PAGE>

MORE INFORMATION ABOUT THE FUNDS' INVESTMENTS
AND RISK CONSIDERATIONS

Each of the Funds may use any of the investment strategies described in
this section. Some of these investment strategies are principal investment
strategies for the Funds, while others are secondary investment strategies for
the Funds.

COMMON STOCKS AND OTHER EQUITY SECURITIES. Common stocks and their equivalents,
together called "equity securities," are generally volatile and more risky than
some other forms of investment. Equity securities of companies with relatively
small market capitalizations may be more volatile than the securities of larger,
more established companies and than the broad equity market indices.

GROWTH STOCKS. Stocks of companies that Loomis Sayles believes have
earnings that will grow faster than the economy as a whole are known as
growth stocks. The Loomis Sayles Aggressive Growth Fund, the Loomis
Sayles International Equity Fund, and the Loomis Sayles Small Cap
Growth Fund generally invest a significant portion of their assets in
growth stocks. Growth stocks typically trade at higher multiples of
current earnings than other stocks. As a result, the values of growth
stocks may be more sensitive to changes in current or expected earnings
than the values of other stocks. If Loomis Sayles' assessment of the
prospects for a company's earnings growth is wrong, or if its judgment
of how other investors will value the company's earnings growth is
wrong, then the price of that company's stock may fall or may not
approach the value that Loomis Sayles has placed on it.

-27-

<PAGE>

VALUE STOCKS. Stocks of companies that are not expected to experience
significant earnings growth, but whose stocks Loomis Sayles believes
are undervalued compared to their true worth, are known as value
stocks. The Loomis Sayles Core Value Fund, the Loomis Sayles Mid-Cap
Value Fund, and the Loomis Sayles Small Cap Value Fund generally invest
a significant portion of their assets in value stocks. These companies
may have experienced adverse business developments or may be subject to
special risks that have caused their stocks to be out of favor. If
Loomis Sayles' assessment of a company's prospects is wrong, or if
other investors do not eventually recognize the value of the company,
then the price of the company's stock may fall or may not approach the
value that Loomis Sayles has placed on it.

WHEN-ISSUED SECURITIES. A "when-issued" security involves a Fund entering into a
commitment to buy a security before the security has been issued. The Fund's
payment obligation and the interest rate on the security are determined when the
Fund enters into the commitment. The security is typically delivered to the Fund
15 to 120 days later. No interest accrues on the security between the time the
Fund enters into the commitment and the time the security is delivered. If the
value of the security being purchased falls between the time a Fund commits to
buy it and the payment date, the Fund may sustain a loss. The risk of this loss
is in addition to the Fund's risk of loss on the securities actually in its
portfolio at the time. In addition, when the Fund buys a security on a
when-issued basis, it is subject to the risk that market rates of interest will
increase before the time the security is delivered, with the result that the
yield on the security delivered to the Fund may be lower than the yield
available on other, comparable securities at the time of delivery. If a Fund has
outstanding obligations to buy when-issued securities, it will segregate liquid
assets at its custodian bank in an amount sufficient to satisfy these
obligations.

FOREIGN SECURITIES. Securities of issuers organized or headquartered outside the
United States are foreign securities. Each of the Loomis Sayles Core Value Fund
and the Loomis Sayles Small Cap Value Fund will not purchase a foreign security
if, as a result, the Fund's holdings of foreign securities would exceed 20% of
the Fund's assets. The Loomis Sayles Aggressive Growth Fund, the Loomis Sayles
Growth Fund, the Loomis Sayles Mid-Cap Value Fund, and the Loomis Sayles
Small-Cap Growth Fund each may invest any portion of its assets in securities of
Canadian issuers, but will not purchase a foreign security other than those of
Canadian issuers if, as a result, the Fund's holding of non-U.S. and
non-Canadian securities would exceed 20% of the Fund's assets. The Loomis Sayles
International Equity Fund and the Loomis Sayles Worldwide Fund each may invest
any portion of its assets in foreign securities.

Foreign securities may present risks not associated with investments in
comparable securities of U.S. issuers. There may be less information publicly
available about a foreign

-28-

<PAGE>

corporate or governmental issuer than about a U.S. issuer, and foreign corporate
issuers are generally not subject to accounting, auditing, and financial
reporting standards and practices comparable to those in the United States. The
securities of some foreign issuers are less liquid and at times more volatile
than securities of comparable U.S. issuers. Foreign brokerage commissions and
securities custody costs are often higher than in the United States. With
respect to certain foreign countries, there is a possibility of governmental
expropriation of assets, confiscatory taxation, political or financial
instability, and diplomatic developments that could affect the value of
investments in those countries. A Fund's receipt of interest on foreign
government securities may depend on the availability of tax or other revenues to
satisfy the issuer's obligations.

-29-

<PAGE>

FOREIGN CURRENCY HEDGING TRANSACTIONS. Foreign currency hedging transactions are
an effort to protect the value of specific portfolio positions or to anticipate
changes in relative values of currencies in which current or future Fund
portfolio holdings are denominated or quoted. For example, to protect against a
change in the foreign currency exchange rate between the date on which a Fund
contracts to purchase or sell a security and the settlement date for the
purchase or sale, or to "lock in" the equivalent of a dividend or interest
payment in another currency, a Fund might purchase or sell a foreign currency on
a spot (that is, cash) basis at the prevailing spot rate. If conditions warrant,
the Funds may also enter into private contracts to purchase or sell foreign
currencies at a future date ("forward contracts"). The Funds might also purchase
exchange-listed and over-the-counter call and put options on foreign currencies.
Over-the-counter currency options are generally less liquid than exchange-listed
options and will be treated as illiquid assets. The Funds may not be able to
dispose of over-the-counter options readily.

Foreign currency transactions involve costs and may result in losses.

REPURCHASE AGREEMENTS. A repurchase agreement involves a Fund buying securities
from a seller, usually a bank or brokerage firm, with the understanding that the
seller will repurchase the securities at a higher price at a later date. Such
transactions afford an opportunity for a Fund to earn a return on available cash
at minimal market risk, although the Fund may be subject to various delays and
risks of loss if the seller is unable to meet its obligations to repurchase.

OPTIONS AND FUTURES TRANSACTIONS. Options and futures transactions involve a
Fund buying, selling, or writing options (or buying or selling futures
contracts) on securities, securities indices, or currencies. Funds may engage in
these transactions either to enhance investment return or to hedge against
changes in the value of other assets that the Funds own or intend to acquire.

-30-

<PAGE>

Options and futures fall into the broad category of financial instruments known
as "derivatives" and involve special risks. Use of options or futures for other
than hedging purposes may be considered a speculative activity, involving
greater risks than are involved in hedging.

-31-

<PAGE>

default on its obligations, or will not permit a Fund to terminate the
transaction before its scheduled maturity.

FIXED INCOME SECURITIES. Fixed income securities pay a specified rate of
interest or dividends, or a rate that is adjusted periodically by reference to
some specified index or market rate. Fixed income securities include securities
issued by federal, state, local and foreign governments and related agencies,
and by a wide range of private or corporate issuers. Fixed income securities
include, among others, bonds, debentures, notes, bills, and commercial paper.
Because interest rates vary, it is impossible to predict the income of a Fund
for any particular period. If a Fund holds fixed income securities, the net
asset value of the Fund's shares will vary as a result of changes in the value
of the fixed income securities in the Fund's portfolio. A Fund may continue to
hold fixed income securities that are downgraded in quality subsequent to their
purchase if Loomis Sayles believes it would be advantageous to do so.

ZERO COUPON SECURITIES. These securities are fixed income securities that accrue
interest at a specified rate, but do not pay interest in cash on a current
basis. A Fund investing in zero coupon securities is required to distribute the
income on these securities to Fund shareholders as the income accrues, even
though the Fund is not receiving the income in cash on a current basis. The Fund
thus may have to sell other investments to obtain cash to make income
distributions at times when Loomis Sayles would not otherwise deem it advisable
to do so. The market value of

-32-

<PAGE>

zero coupon securities often is more volatile than that of other fixed income
securities of comparable quality and maturity.

COLLATERALIZED MORTGAGE OBLIGATIONS. A collateralized mortgage obligation (CMO)
is a security backed by a portfolio of mortgages or mortgage-backed securities
held under an indenture. CMOs may be issued either by U.S. Government
instrumentalities or by non-governmental entities. The issuer's obligation to
make interest and principal payments is secured by the underlying portfolio of
mortgages or mortgage-backed securities. CMOs are issued with a number of
classes or series which have different maturities and which may represent
interests in some or all of the interest or principal on the underlying
collateral or a combination thereof. CMOs of different classes are generally
retired in sequence as the underlying mortgage loans in the mortgage pool are
repaid. In the event of sufficient early prepayments on such mortgages, the
class or series of CMOs first to mature generally will be retired prior to its
maturity. As with other mortgage-backed securities, if a particular class or
series of CMOs held by a Fund is retired early, the Fund would lose any premium
it paid when it acquired the investment, and the Fund may have to reinvest the
proceeds at a lower interest rate than the retired CMO paid. Because of the
early retirement feature, CMOs may be more volatile than many other fixed-income
investments.

CLOSED-END INVESTMENT COMPANIES. A closed-end investment company is a fund that
does not redeem its shares on a daily basis. As a result, an investment in a
closed-end investment company may be less liquid than an investment that can be
sold any time a Fund holding such an investment decides to sell. Since the value
of a closed-end investment company is based on the value of the individual
securities it holds, a closed-end investment company's value will fall if the
value of its underlying securities declines. As a shareholder in a closed-end
investment company, a Fund will bear its ratable share of the investment
company's expenses, including management fees, and will remain subject to the
investment company's advisory and administration fees with respect to the assets
so invested.

-33-

<PAGE>

MANAGEMENT

INVESTMENT ADVISER

As previously described in the "Expenses of the Funds" section, each
Fund pays Loomis Sayles a monthly investment advisory fee, also known as a
management fee, for these services. These fees are expressed as a percentage of
the Fund's average net assets:

<TABLE>
<CAPTION>
---------------------------------------------------------------------
FUND MANAGEMENT FEE
---------------------------------------------------------------------
<S> <C>
Loomis Sayles Aggressive Growth Fund .75%
Loomis Sayles Core Value Fund .50%
Loomis Sayles Growth Fund .50%
Loomis Sayles International Equity Fund .75%
Loomis Sayles Mid-Cap Value Fund .75%
Loomis Sayles Small Cap Growth Fund .75%
Loomis Sayles Small Cap Value Fund .75%
Loomis Sayles Worldwide Fund .75%
---------------------------------------------------------------------
</TABLE>

Certain expenses incurred by each Class of each Fund, except the Loomis
Sayles Core Value Fund (Institutional Class) and the Loomis Sayles Small Cap
Value Fund (Institutional Class and Retail Class) would have been higher if not
for Loomis Sayles' contractual obligation to limit the Funds' expenses through
February 1, 2001.

DISTRIBUTION PLANS AND ADMINISTRATIVE FEES

For the Retail Class, Admin Class, and Class A shares of the Funds, the
Funds have adopted distribution plans under Rule 12b-1 of the Investment Company
Act of 1940 that allow the Funds to pay distribution fees for the sale and
distribution of Retail, Admin, and Class A shares. This 12b-1 fee currently is
.25% of a Fund's average daily net assets attributable to the shares of a
particular Class.

-34-

<PAGE>

Admin Class shares of the Loomis Sayles Small Cap Value Fund are
offered exclusively through intermediaries, who will be the record owner of the
shares.

Admin Class shares of the Loomis Sayles Small Cap Value Fund may pay an
administrative fee at an annual rate of up to .25% of the average daily net
assets attributable to Admin Class shares to securities dealers or financial
intermediaries for providing personal service and account maintenance for their
customers who are shareholders of the Fund. Loomis Sayles also may pay these
parties a continuing fee at an annual rate of up to .25% of the value of Fund
shares held for those customers' accounts, although this continuing fee is paid
by Loomis Sayles out of its own assets and is not assessed against the Fund.

SALES CHARGES FOR CLASS A SHARES

The price you pay when you buy Class A shares of the Loomis Sayles
Aggressive Growth Fund is their net asset value (as described below), plus a
front-end sales charge, which varies depending upon the size of your purchase,
as shown in the table below.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS A SALES CHARGE AS A % OF CLASS A SALES CHARGE AS A % OF
YOUR INVESTMENT OFFERING PRICE YOUR INVESTMENT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.75% 6.10%
$50,000 - $99,999 4.50% 4.71%
$100,000 - $249,999 3.50% 3.63%
$250,000 - $499,999 2.50% 2.56%
$500,000 - $999,999 2.00% 2.04%
$1,000,000 or more 0.00%(2) 0.00%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

The sales charge is not imposed on shares purchased with reinvested
dividends or other distributions.

There are several ways you can lower your sales charge for Class A
shares, including the following:

- --------

(2) For purchases of $1,000,000 or more of Class A shares or purchases of
Class A shares by qualified retirement plans that have investments of $1,000,000
or more or that have 100 or more eligible employees, there is no front-end sales
charge, but a contingent deferred sales charge of 1.00% may apply to redemptions
of your shares within one year of the date of purchase.

-35-

<PAGE>

- - LETTER OF INTENT. A Letter of Intent allows you to purchase Class A
shares of the Loomis Sayles Aggressive Growth Fund over a 13-month
period but pay sales charges as if you had purchased all shares at
once. The program can save you money if you plan to invest $50,000 or
more over a 13-month period.

- - ELIMINATION OF SALES CHARGE. Class A shares may be offered without
a sales charge to the following individuals and institutions:

- Any government entity that is prohibited from paying a sales
charge or commission to purchase mutual fund shares;

- Selling brokers, sales representatives, or other
intermediaries;

- Fund trustees and other individuals who are affiliated with
any of the [New England Funds or the Loomis Sayles Funds]
(this also applies to any spouse, parents, children, siblings,
grandparents, grandchildren, and in-laws of those mentioned);

- Participants in certain qualified retirement plans with at
least 100 members (although these persons may be subject to a
continent deferred sales charge of 1.00% for redemptions
within one year of the date of purchase);

- Non-discretionary and non-retirement accounts of bank trust
departments or trust companies only if they principally engage
in banking or trust activities;

- Investments of $25,000 or more in the [New England Funds] by
clients of an adviser or sub-adviser to any of the [New
England Funds]; and

- Persons who have redeemed Class A shares of the Funds and then
repurchased Class A shares of a different series of Loomis
Sayles Funds. To qualify, you must reinvest some or all of
the proceeds within 120 days after your redemption and notify
Loomis Sayles Funds or your financial representative at the
time of reinvestment that you are taking advantage of this
privilege. You may reinvest your proceeds either by returning
the redemption check or by sending a new check for some or all
of the redemption amount. Please note that for income tax
purposes, a redemption is a sale that involves tax
consequences, even if the proceeds are later reinvested.
Please consult your tax adviser for how a redemption would
affect you. If you repurchase $1,000,000 or more of Class A
shares within 30 days after you redeem such shares, you will
receive a rebate for the amount of the contingent deferred
sales charge charged on your redemption.

-36-

<PAGE>

PORTFOLIO MANAGERS

LOOMIS SAYLES AGGRESSIVE GROWTH FUND. Christopher R. Ely, David L. Smith, and
Philip C. Fine, Vice Presidents of Loomis Sayles Funds and of Loomis Sayles,
have served as portfolio managers of the Fund since 1999. Prior to joining
Loomis Sayles in 1996, Mr. Ely was senior vice president and portfolio manager,
and Mr. Fine and Mr. Smith were vice presidents and portfolio managers, of
Keystone Investment Management Company, Inc.

LOOMIS SAYLES CORE VALUE FUND. Jeffrey W. Wardlow, Vice President of Loomis
Sayles Funds and of Loomis Sayles, has served as portfolio manager of the Fund
since its inception in 1991. Isaac H. Green, Director, Vice President and
Managing Partner of Loomis Sayles and Vice President of Loomis Sayles Funds, and
James L. Carroll, Vice President of Loomis Sayles Funds and of Loomis Sayles,
have served as portfolio managers of the Fund since 1997. Prior to joining
Loomis Sayles in 1996, Mr. Carroll was a managing director and senior energy
analyst at PaineWebber, Inc.

LOOMIS SAYLES GROWTH FUND. Mark B. Baribeau, Vice President of Loomis
Sayles and of Loomis Sayles Funds, has served as portfolio manager of the
Fund since 1999.

LOOMIS SAYLES INTERNATIONAL EQUITY FUND. Alex Muromcew, John Tribolet, and Eswar
Menon, Vice Presidents of Loomis Sayles and of Loomis Sayles Funds, have served
as portfolio managers of the Fund since 1999. Prior to joining Loomis Sayles in
1999, Mr. Muromcew was a portfolio manager at Nicholas Applegate Capital
Management since 1996. From 1993 to 1996, he was an investment analyst with
Teton Partners L.P. Prior to joining Loomis Sayles in 1999, Mr. Tribolet was a
portfolio manager at Nicholas Applegate Capital Management since 1997. From 1995
to 1997, he was a full time MBA student at the University of Chicago. Prior to
1995, he spent three years as an investment banker, most recently at PaineWebber
Inc. Prior to joining Loomis Sayles in 1999, Mr. Menon was a portfolio manager
at Nicholas Applegate Capital Management since 1995. From 1990 to 1995, he was
employed as an equity analyst by Koaneman Management and as a senior engineer by
Integrated Device Technology.

LOOMIS SAYLES MID-CAP VALUE FUND. Jeffrey C. Petherick, Dawn A. Paige, and Mary
C. Champagne, Vice Presidents of Loomis Sayles and of Loomis Sayles Funds, are
portfolio managers of the Fund. Ms. Paige has served as portfolio manager since
1998, and Mr. Petherick and Ms. Champagne have served as portfolio managers
since 1999.

LOOMIS SAYLES SMALL CAP GROWTH FUND. Christopher R. Ely, Philip C. Fine, and
David L. Smith have served as portfolio managers of the Fund since its inception
in 1997.

-37-

<PAGE>

LOOMIS SAYLES SMALL CAP VALUE FUND. Jeffrey C. Petherick has served as portfolio
manager of the Fund since 1993. Mary C. Champagne has served as portfolio
manager of the Fund since 1995.

LOOMIS SAYLES WORLDWIDE FUND. Daniel J. Fuss, President of Loomis Sayles Funds
and Vice Chairman of Loomis Sayles, has served as the portfolio manager of the
domestic fixed income securities sector of the Fund since its commencement of
operations in 1996. E. John deBeer, Vice President of Loomis Sayles Funds and of
Loomis Sayles, has served as portfolio manager of the international fixed income
securities sector of the Fund since its commencement of operations in 1996.
Quentin P. Faulkner, Vice President of Loomis Sayles Funds and of Loomis Sayles,
has served as the portfolio manger of the domestic equity securities sector of
the Fund since its commencement of operations in 1996. Alex Muromcew, John
Tribolet, and Eswar Menon have served as portfolio managers of the international
equity securities sector of the fund since 1999.

-38-

<PAGE>

GENERAL INFORMATION

PRICING

The price of each Fund's shares is based on its net asset value
("NAV"), plus a sales charge (as described previously) for Class A shares of the
Loomis Sayles Aggressive Growth Fund. The NAV per share of each Class equals the
total value of its assets, less its liabilities, divided by the number of
outstanding shares. Shares are valued as of the close of regular trading on the
New York Stock Exchange on each day the Exchange is open for trading.

HOW TO PURCHASE SHARES

You can buy shares of each Fund in several ways:

Boston Financial Data Services
P.O. Box 8314
Boston, MA 02266-8314
Attention: Loomis Sayles Funds

- - THROUGH A FINANCIAL ADVISER. Your financial adviser will be responsible
for furnishing all necessary documents to Loomis Sayles or Boston
Financial Data Services. Your financial adviser may charge you for his
or her services.

- - THROUGH SYSTEMATIC INVESTING. You can make regular investments of $50
or more per month through automatic deductions from your bank checking
or savings account.

-39-

<PAGE>

Application forms are available through your financial adviser or by
calling Loomis Sayles at 800-626-9390.

Each Fund sells its shares at the NAV, plus the previously described
sales charge in the case of Class A shares of the Loomis Sayles Aggressive
Growth Fund, next calculated after Boston Financial Data Services receives a
properly completed investment order. Boston Financial Data Services generally
must receive your properly completed order before the close of regular trading
on the New York Stock Exchange for your shares to be bought or sold at the
Fund's NAV on that day.

Shares of each Fund may be purchased by (1) cash, (2) exchanging shares
of the same Class of any other Fund, provided the value of the shares exchanged
meets the investment minimum of that Fund, (3) exchanging securities acceptable
to Loomis Sayles, or (4) a combination of such methods. The exchange of
securities for shares of a Fund is subject to various restrictions, as described
in the Statement of Additional Information.

You also may wire subsequent investments to the Funds by using the
following wire instructions:

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
ABA No. 011000028
DDA 9904-622-9
(Your account number)
Attn: Custody and Shareholder Services
(Name of Fund)

-40-

<PAGE>

Your bank may charge a fee for transmitting funds by wire.

A Fund may periodically close to new purchases of shares or refuse any
order to buy shares if the Fund determines that doing so would be in the best
interests of the Fund and its shareholders.

The minimum initial investment for each Fund generally is $1,000,000
for Institutional Class shares, $25,000 for Retail Class shares, and $2,500 for
Class A shares (which are offered only for the Loomis Sayles Aggressive Growth
Fund through New England Funds). Loomis Sayles Funds may waive these minimums in
its sole discretion.

Each subsequent investment must be at least $50.

HOW TO REDEEM SHARES

You may make redemptions directly from each Fund either by mail or by
telephone.

- - BY MAIL. Send a signed letter of instruction that includes the name of
the Fund, the exact name(s) in which the shares are registered, any
special capacity in which you are signing

-41-

<PAGE>

(such as trustee or custodian or on behalf of a partnership,
corporation, or other entity), your address, telephone number, account
number, social security number, and the number of shares or dollar
amount to be redeemed to the following address:

Boston Financial Data Services, Inc.
P.O. Box 8314
Boston, MA 02266
Attention: Loomis Sayles Funds

If you have certificates for the shares you want to sell, you must
include them along with completed stock power forms.

The telephone redemption privilege may be modified or terminated by the
Funds without notice. Certain of the telephone redemption procedures
may be waived for holders of Institutional Class shares.

-42-

<PAGE>

SIGNATURE GUARANTEE. You must have your signature guaranteed by a bank,
broker-dealer, or other financial institution that can issue a signature
guarantee for the following types of redemptions:

- - If you are redeeming shares worth more than $50,000.

- - If you are requesting that the proceeds check be made out to someone
other than the registered owner(s) or sent to an address other than the
record address.

- - If the account registration has changed within the past 30 days.

- - If you are instructing us to wire the proceeds to a bank account not
designated on the application.

Please note that a notary public cannot provide a signature guarantee.
This guaranteed signature requirement may be waived by Loomis Sayles in certain
cases.

HOW TO EXCHANGE SHARES

You may make an exchange by sending a signed letter of instruction or
by telephone, unless you have elected on your account application to decline
telephone exchange privileges.

-43-

<PAGE>

Please remember that an exchange may be a taxable event for federal
and/or state income tax purposes, so that you may realize a gain or loss that is
subject to income tax.

DIVIDENDS AND DISTRIBUTIONS

Each of the Funds declares and pays its net investment income to
shareholders as dividends annually. Each Fund also distributes all of its net
capital gains realized from the sale of portfolio securities. The Funds
typically will make capital gain distributions annually, but the Funds may make
more frequent capital gain distributions.

You may choose to:

- - Reinvest all distributions in additional shares.

- - Receive all distributions in cash.

If you do not select an option when you open your account, all
distributions will be reinvested.

TAX CONSEQUENCES

For federal income tax purposes, distributions of investment income
from each of the Funds are taxable as ordinary income. Taxes on distributions of
capital gains are determined by how long a Fund owned the investments that
generated the capital gains, rather than by how long you have owned your shares
of the Fund. Distributions of short-term capital gains, which result from the
sale of securities that a Fund had held for one year or less, are taxable as
ordinary income. Properly designated distributions of long-term capital gains,
which result from the sale of securities that a Fund had held for more than one
year, are taxable as long-term capital gains (generally at a 20% federal income
tax rate for noncorporate shareholders).

Distributions of income and capital gains are taxable whether you
receive them in cash or reinvest them in additional shares. If a dividend or
distribution is made shortly after you purchase shares of a Fund, while in
effect a return of capital to you, the dividend or distribution is taxable, as
described above. This is called "buying a dividend" and should be avoided, if
possible.

A Fund's investment in foreign securities may be subject to foreign
withholding taxes, which would decrease a Fund's yield on these securities.
Shareholders may be entitled to claim a credit or deduction with respect to
foreign taxes. In addition, a Fund's investment in foreign securities may
increase or accelerate a Fund's recognition of income and may affect the timing
or amount of a Fund's distributions.

-44-

<PAGE>

-45-

<PAGE>

FINANCIAL HIGHLIGHTS

This information has been audited by __________________. The report of
_____________________ and each Fund's financial statements are included in the
Funds' annual reports to shareholders, which are available free of charge by
calling 800-626-9390.

-46-

<PAGE>

LOOMIS SAYLES AGGRESSIVE GROWTH FUND (INSTITUTIONAL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.49 $10.00

Income from investment operations --

Net investment income (loss) (0.03) (0.03)

Net realized and unrealized gains (losses) on (0.95) 2.26
securities ------- ----

Total from investment operations (0.98) 2.23

Less distributions --

Dividends (from net investment income) 0.00 0.00

Distributions in excess of net investment income 0.00 (0.12)

Distributions (from capital gains) 0.00 (0.62)

Total distributions 0.00 (0.74)
---- ------

Net asset value, end of period $10.51 $11.49
------ ------

Total return (%)** (8.5)+ 22.7+

Net assets, end of period (000) $2,073 $1,848

Ratio of expenses to average net assets (%)*** 1.00++ 1.00++

Ratio of net income to average net assets (%) (0.35)++ (0.38)++

Portfolio turnover rate (%) 82+ 174+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-47-

<PAGE>

[LOOMIS SAYLES AGGRESSIVE GROWTH FUND (CLASS A)]

-48-

<PAGE>

LOOMIS SAYLES AGGRESSIVE GROWTH FUND (RETAIL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.49 $10.00

Income from investment operations --

Net investment income (loss) (0.05) (0.06)

Net realized and unrealized gains (losses) on
securities (0.95) 2.27
------- ----

Total from investment operations (1.00) 2.21

Less distributions --

Dividends (from net investment income) (0.00) (0.10)

Distributions in excess of net investment 0.00 0.00
income

Distributions (from capital gains) 0.00 (0.62)

Total distributions 0.00 (0.72)
---- ------

Net asset value, end of period $10.49 $11.49
------ ------

Total return (%)** (8.7)+ 22.4+

Net assets, end of period (000) $85 $74

Ratio of expenses to average net assets 1.25++ 1.25++
(%)***

Ratio of net income to average net assets (%) (0.60)++ (0.67)++

Portfolio turnover rate (%) 82+ 174+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-49-

<PAGE>

LOOMIS SAYLES CORE VALUE FUND (INSTITUTIONAL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995
-------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.64 $15.60 $14.57 $11.80

Income from investment operations --

Net investment income (loss) 0.18 0.18 0.22 0.23

Net realized and unrealized gains (0.97) 4.32 2.83 3.93
(losses) on securities ------- ---- ---- ----

Total from investment operations (0.79) 4.50 3.05 4.16

Less distributions --

Dividends (from net investment 0.00 (0.19) (0.22) (0.23)
income)

Distributions in excess of net 0.00 0.00 0.00 0.00
investment income

Distributions (from capital gains) 0.00 (2.27) (1.80) (1.16)

Total distributions 0.00 (2.46) (2.02) (1.39)
---- ------ ------ ------

Net asset value, end of period $16.85 $17.64 $15.60 $14.57
------ ------ ------ ------

Total return (%)** (4.5)+ 29.2 21.2 35.2

Net assets, end of period (000) 66,928 $63,303 $43,715 $36,465

Ratio of expenses to average net assets 0.79++ 0.84 1.13 1.20
(%)***

Ratio of net income to average net 1.36++ 1.12 1.44 1.61
assets (%)

Portfolio turnover rate (%) 49+ 64 58 60
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31
to September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-50-

<PAGE>

LOOMIS SAYLES CORE VALUE FUND (RETAIL CLASS)
<TABLE>
<CAPTION>

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $17.62 $15.60

Income from investment operations --

Net investment income (loss) 0.15 0.15

Net realized and unrealized gains (losses) on securities (0.98) 4.30
------- ----

Total from investment operations (0.83) 4.45

Less distributions --

Dividends (from net investment income) 0.00 (0.16)

Distributions in excess of net investment income 0.00 0.00

Distributions (from capital gains) 0.00 (2.27)

Total distributions 0.00 (2.43)
---- ------

Net asset value, end of period $16.79 $17.62
------ ------

Total return (%)** (4.7)+ 28.9+

Net assets, end of period (000) 1,015 $1,324

Ratio of expenses to average net assets (%)*** 1.10++ 1.10++

Ratio of net income to average net assets (%) 1.07++ 0.84++

Portfolio turnover rate (%) 49+ 64+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-51-

<PAGE>

LOOMIS SAYLES GROWTH FUND (INSTITUTIONAL CLASS)

Income from investment operations --

Net investment income (loss) (0.03) (0.04) (0.07) 0.00

Net realized and unrealized gains (0.95) 3.17 3.08 3.86
(losses) on securities ------- ----- ----- -----

Total from investment operations (0.98) 3.13 3.01 3.86

Less distributions --

Distributions from capital 0.00 0.00 0.00 0.00

Distributions (from capital gains) 0.00 (3.94) (4.84) (1.09)

Total distributions 0.00 (3.94) (4.84) (1.09)
----- ------ ------ ------

Net asset value, end of period $11.65 $12.63 $13.44 $15.27
------ ------ ------ ------

Total return (%)** (7.8)+ 24.5 19.9 30.9

Net assets, end of period (000) $24,663 $32,149 $39,497 $45,011

Ratio of expenses to average net assets 0.85++ 0.85 1.10 1.08
(%)***

Ratio of net income to average net (0.32)++ (0.26) (0.47) (0.29)
assets (%)

Portfolio turnover rate (%) 118+ 116 99 48
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-52-

<PAGE>

LOOMIS SAYLES GROWTH FUND (RETAIL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $12.59 $13.44

Income from investment operations --

Net investment income (loss) (0.03) (0.07)

Net realized and unrealized gains (losses) on securities (0.97) 3.16
------- -----

Total from investment operations (1.00) 3.09

Less distributions --

Dividends (from net investment income)

Distributions in excess of net investment income 0.00 0.00

Distributions (from capital gains) 0.00 (3.94)

Total distributions (0.00) (3.94)
------ ------

Net asset value, end of period $11.59 $12.59
------ ------

Total return (%)** (7.9)+ 24.2+

Net assets, end of period (000) $516 $194

Ratio of expenses to average net assets (%)*** 1.10++ 1.10++

Ratio of net income to average net assets (%) (0.58)++ (0.42)++

Portfolio turnover rate (%) 118+ 116+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-53-

<PAGE>

LOOMIS SAYLES INTERNATIONAL EQUITY FUND (INSTITUTIONAL CLASS)

Income from investment operations --

Net investment income (loss) 0.14 0.15 0.12 0.14

Net realized and unrealized gains (0.70) (0.27) 2.01 0.87
(losses) on securities ------- ------ ---- -----

Total from investment operations (0.56) (0.12) 2.13 1.01

Less distributions --

Dividends (from net investment 0.00 (0.19) (0.09) (0.14)
income)

Distributions from capital 0.00 0.00 0.00 0.00

Distributions (from capital gains) 0.00 (1.55) (0.53) (0.83)

Total distributions 0.00 (1.74) (0.62) (0.97)
----- ------ ------ ------

Net asset value, end of period $10.74 $11.30 $13.16 $11.65
------ ------ ------ ------

Total return (%)** (5.0)+ (1.0) 18.3 8.7

Net assets, end of period (000) $68,464 $82,188 $90,662 $79,488

Ratio of expenses to average net assets 1.00++ 1.00 1.42 1.45
(%)***

Ratio of net income to average net 1.49++ 1.12 0.96 1.16
assets (%)

Portfolio turnover rate (%) 96+ 119 151 133
</TABLE>

-54-

<PAGE>

LOOMIS SAYLES INTERNATIONAL EQUITY FUND (RETAIL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.28 $13.16

Income from investment operations --

Net investment income (loss) 0.10
0.10****

Net realized and unrealized gains (losses) on securities (0.68) ( 0.26)
------- ------

Total from investment operations (0.58) (0.16)

Less distributions --

Dividends (from net investment income) 0.00 (0.17)

Distributions in excess of net investment income 0.00 0.00

Distributions (from capital gains) 0.00 (1.55)

Total distributions 0.00 (1.72)
---- ------

Net asset value, end of period $10.70 $11.28
------ ------

Total return (%)** (5.1)+ (1.3)+

Net assets, end of period (000) $150 $233

Ratio of expenses to average net assets (%)*** 1.25++ 1.25++

Ratio of net income to average net assets (%) 1.16++ 0.73++

Portfolio turnover rate (%) 96+ 119+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
**** Per share net investment income has been determined on the basis of
the weighted average number of shares outstanding during the period.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-55-

<PAGE>

LOOMIS SAYLES MID-CAP VALUE FUND (INSTITUTIONAL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.53 $10.00

Income from investment operations --

Net investment income (loss) 0.02 0.07

Net realized and unrealized gains (losses) on (1.46) 2.54
securities ------- -----

Total from investment operations (1.44) 2.61

Less distributions --

Dividends (from net investment income) 0.00 (0.14)

Distributions in excess of net investment income 0.00 0.00

Distributions (from capital gains) 0.00 (0.94)

Total distributions 0.00 (1.08)
----- ------

Net asset value, end of period $10.09 $11.53
------ ------

Total return (%)** (12.5)+ 26.3+

Net assets, end of period (000) $3,291 $3,736

Ratio of expenses to average net assets (%)*** 1.00++ 1.00++

Ratio of net income to average net assets (%) 0.22++ 0.74++

Portfolio turnover rate (%) 225+ 130+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-56-

<PAGE>

LOOMIS SAYLES MID-CAP VALUE FUND (RETAIL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.53 $10.00

Income from investment operations --

Net investment income (loss) (0.01) 0.03

Net realized and unrealized gains (losses) on (1.45) 2.55
securities ------- -----

Total from investment operations (1.46) 2.58

Less distributions --

Dividends (from net investment income) 0.00 (0.11)

Distributions in excess of net investment income 0.00 0.00

Distributions (from capital gains) 0.00 (0.94)

Total distributions 0.00 (1.05)
---- ------

Net asset value, end of period 10.07 11.53
------ ------

Total return (%)** (12.7)+ 26.0+

Net assets, end of period (000) $121 $168

Ratio of expenses to average net assets (%)*** 1.25++ 1.25++

Ratio of net income to average net assets (%) (0.03)++ 0.42++

Portfolio turnover rate (%) 225+ 130+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-57-

<PAGE>

LOOMIS SAYLES SMALL CAP GROWTH FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.32 $10.00

Income from investment operations --

Net investment income (loss) (0.02) (0.07)

Net realized and unrealized gains (losses) on (1.47) 1.99
securities ------- ----

Total from investment operations (1.49) 1.92

Less distributions --

Dividends (from net investment income) 0.00 0.00

Distributions in excess of net investment income 0.00 (0.01)

Distributions in excess of net realized capital gains 0.00 (0.59)

Total distributions 0.00 (0.60)
----- ------

Net asset value, end of period $9.83 $11.32
----- ------

Total return (%)** (13.2)+ 19.4+

Net assets, end of period (000) $17,174 $3,893

Ratio of expenses to average net assets (%)*** 1.00++ 1.00++

Ratio of net income to average net assets (%) (0.53)++ (0.65)++

Portfolio turnover rate (%) 116+ 211+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-58-

<PAGE>

LOOMIS SAYLES SMALL CAP GROWTH FUND (RETAIL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $11.30 $10.00

Income from investment operations --

Net investment income (loss) (0.08) (0.10)****

Net realized and unrealized gains (losses) on (1.42) 1.99
securities ------- -----

Total from investment operations (1.50) 1.89

Less distributions --

Distributions in excess of net realized capital gains 0.00 (0.59)

Distributions in excess of net investment income 0.00 0.00

Distributions (from capital gains) 0.00 0.00

Total distributions 0.00 (0.59)
----- ------

Net asset value, end of period $9.80 $11.30
----- ------

Total return (%)** (13.3)+ 19.2+

Net assets, end of period (000) $1,057 $1,139

Ratio of expenses to average net assets (%)*** 1.25++ 1.25++

Ratio of net income to average net assets (%) (0.80)++ (0.94)++

Portfolio turnover rate (%) 116+ 211+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
**** Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-59-

<PAGE>

LOOMIS SAYLES SMALL CAP VALUE FUND (INSTITUTIONAL CLASS)

Income from investment
operations --

Net investment income (loss) 0.12 0.17 0.11 0.04

Net realized and unrealized gains (3.14) 4.26 4.47 4.06
(losses) on securities ------- ----- ----- -----

Total from investment operations (3.02) 4.43 4.58 4.10

Less distributions --

Dividends (from net investment 0.00 (0.15) (0.11) (0.04)
income)

Distributions in excess of net 0.00 0.00 0.00 0.00
investment income

Distributions (from capital gains) 0.00 (3.05) (2.41) (1.59)

Total distributions 0.00 (3.20) (2.52) (1.63)
----- ------ ------ ------

Net asset value, end of period $15.60 $18.62 $17.39 $15.33
------ ------ ------ ------

Total return (%)** (16.2)+ 26.0 30.4 32.1

Net assets, end of period (000) $296,116 $245,177 $163,625 $90,455

Ratio of expenses to average net 0.92++ 0.94 1.19 1.25
assets (%)***

Ratio of net income to average net 1.04++ 0.97 0.80 0.29
assets (%)

Portfolio turnover rate (%) 78+ 94 73 155
</TABLE>

-60-

<PAGE>

LOOMIS SAYLES SMALL CAP VALUE FUND (RETAIL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $18.62 $17.39

Income from investment operations --

Net investment income (loss) 0.10 0.15

Net realized and unrealized gains (losses) on securities (3.15) 4.21
------- ----

Total from investment operations (3.05) 4.36

Less distributions --

Dividends (from net investment income) 0.00 (0.08)

Distributions in excess of net investment income 0.00 0.00

Distributions (from capital gains) 0.00 (3.05)

Total distributions 0.00 (3.13)
----- ------

Net asset value, end of period $15.57 $18.62
------ ------

Total return (%)** (16.4)+ 25.6+

Net assets, end of period (000) $54,060 $34,353

Ratio of expenses to average net assets (%)*** 1.19++ 1.25++

Ratio of net income to average net assets (%) 0.79++ 0.79++

Portfolio turnover rate (%) 78+ 94+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-61-

<PAGE>

LOOMIS SAYLES SMALL CAP VALUE FUND (ADMIN CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998*
-------------- ---------------
<S> <C> <C>
Net asset value, beginning of period $18.62

Income from investment operations --

Net investment income (loss) 0.03

Net realized and unrealized gains (losses) on securities (3.11)
-------

Total from investment operations (3.08)

Less distributions --

Dividends (from net investment income) 0.00

Distributions in excess of net investment income 0.00

Distributions (from capital gains) 0.00

Total distributions 0.00
----

Net asset value, end of period (15.54)
-------

Total return (%)** (16.5)+

Net assets, end of period (000) $1,046

Ratio of expenses to average net assets (%)*** 1.50++

Ratio of net income to average net assets (%) 0.95++

Portfolio turnover rate (%) 78+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-62-

<PAGE>

LOOMIS SAYLES WORLDWIDE FUND (INSTITUTIONAL CLASS)

<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997 Dec. 31, 1996
-------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.86 $10.63 $10.00

Income from investment operations --

Net investment income (loss) 0.33 0.47 0.30

Net realized and unrealized gains (losses) (1.40) (0.10) 0.63
on securities ------- ------ ----

Total from investment operations (1.07) 0.37 0.93

Less distributions --

Dividends (from net investment income) 0.00 (0.47) (0.30)

Distributions in excess of net investment 0.00 0.00 0.00
income

Distributions (from capital gains) 0.00 (0.67) 0.00

Total distributions 0.00 (1.14) (0.30)
----- ------ ------

Net asset value, end of period $8.79 $9.86 $10.63
----- ----- ------

Total return (%)** (10.9)+ 3.5 9.2 +

Net assets, end of period (000) $4,907 $5,597 $5,189

Ratio of expenses to average net assets 1.00++ 1.00 1.00++
(%)***

Ratio of net income to average net assets 4.37++ 3.89 4.62++
(%)

Portfolio turnover rate (%) 93+ 134 76+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-63-

<PAGE>

LOOMIS SAYLES WORLDWIDE FUND (RETAIL CLASS)

Fiscal Year Ended
-----------------
Sept. 30, 1999 Sept. 30, 1998* Dec. 31, 1997
-------------- --------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period $9.86 $10.63

Income from investment operations --

Net investment income (loss) 0.30**** 0.38****

Net realized and unrealized gains (losses) on securities (1.40) (0.03)
------- ------

Total from investment operations (1.10) 0.35
Less distributions --

Dividends (from net investment income) 0.00 (0.45)

Distributions in excess of net investment income 0.00 0.00

Distributions (from capital gains) 0.00 (0.67)

Total distributions 0.00 (1.12)
----- ------

Net asset value, end of period $ 8.76 $9.86
------ ------

Total return (%)** (11.2)+ 3.3+

Net assets, end of period (000) $73 $20

Ratio of expenses to average net assets (%)*** 1.25++ 1.25++

Ratio of net income to average net assets (%) 3.88++ 3.58++

Portfolio turnover rate (%) 93+ 134+
</TABLE>

* In 1998, the Funds' fiscal year end changed from December 31 to
September 30.
** Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
*** 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.
**** Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
+ Periods less than one year are not annualized.
++ Computed on an annualized basis.

-64-

<PAGE>

[back cover page]

FOR MORE INFORMATION ABOUT THE FUNDS:

In the Funds' annual report, you will find a discussion of the market
conditions and investment strategies that significantly affected the Funds'
performance during the last fiscal year.

Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
800-626-9390
www.loomissayles.com

File No. 811-6241

-65-

<PAGE>

[LOGO]

STATEMENT OF ADDITIONAL
INFORMATION

This Statement of Additional Information is not a Prospectus. This
Statement of Additional Information relates to the Prospectus or Prospectuses of
each series ("Fund") of Loomis Sayles Funds dated January __, 2000, as revised
from time to time. Each reference to the Prospectus in this Statement of
Additional Information shall include all of the Funds' current Prospectuses,
unless otherwise noted. This Statement of Additional Information should be read
in conjunction with the applicable Prospectus. A copy of each Prospectus may be
obtained from Loomis Sayles Funds, One Financial Center, Boston, Massachusetts
02111.

LOOMIS SAYLES FUNDS
Loomis Sayles Aggressive Growth Fund
Loomis Sayles Bond Fund
Loomis Sayles Core Value Fund
Loomis Sayles Emerging Markets Fund
Loomis Sayles Global Bond Fund
Loomis Sayles Global Technology Fund
Loomis Sayles Growth Fund
Loomis Sayles High Yield Fund
Loomis Sayles Intermediate Maturity Bond Fund
Loomis Sayles International Equity Fund
Loomis Sayles Investment Grade Bond Fund
Loomis Sayles Mid-Cap Value Fund
Loomis Sayles Municipal Bond Fund
Loomis Sayles Short-Term Bond Fund
Loomis Sayles Small Cap Growth Fund
Loomis Sayles Small Cap Value Fund
Loomis Sayles U.S. Government Securities Fund
Loomis Sayles Worldwide Fund

<PAGE>

TABLE OF CONTENTS

THE TRUST.................................................................1

INVESTMENT STRATEGIES AND RISKS...........................................1
Investment Restrictions..........................................1
Investment Strategies............................................4
U.S. Government securities ......................................4
When-Issued Securities...........................................5
Convertible Securities...........................................6
Zero Coupon Bonds................................................6
Repurchase Agreements............................................6
Real Estate Investment Trusts....................................6
Rule 144A Securities.............................................7
Tax-Exempt Fixed Income Securities...............................7
Foreign Currency Transactions....................................8
Options ........................................................9
Small Companies.................................................10

MANAGEMENT OF THE TRUST..................................................12

INVESTMENT ADVISORY AND OTHER SERVICES...................................29

PORTFOLIO TRANSACTIONS AND BROKERAGE.....................................33

DESCRIPTION OF THE TRUST.................................................36
Voting Rights...................................................36
Shareholder and Trustee Liability ..............................37
How to Buy Shares ..............................................38
Net Asset Value ................................................38

SHAREHOLDER SERVICES ....................................................38
Open Accounts ..................................................38
Systematic Withdrawal Plan .....................................39
Exchange Privilege .............................................39
IRAs .......................................................40
Redemptions ....................................................40

INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS .............41

FINANCIAL STATEMENTS ....................................................44

CALCULATION OF YIELD AND TOTAL RETURN ...................................44

PERFORMANCE COMPARISONS .................................................45

PERFORMANCE DATA.........................................................49

<PAGE>

APPENDIX A

PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION .................54

APPENDIX B

ADVERTISING AND PROMOTIONAL LITERATURE .........................58

<PAGE>

THE TRUST

Loomis Sayles Funds (the "Trust") is a diversified, registered,
open-end management investment company. The Trust includes 19 series
(collectively, the "Funds," with each series being known as a "Fund"). The Trust
was organized as a Massachusetts business trust on February 20, 1991.

Shares of the Funds are freely transferable and entitle shareholders to
receive dividends as determined by the Trust's board of trustees and to cast a
vote for each share held at shareholder meetings. The Trust generally does not
hold shareholder meetings and expects to do so only when required by law.
Shareholders may call meetings to consider removal of the Trust's trustees.

INVESTMENT STRATEGIES AND RISKS

The investment objective and principal investment strategies of each
Fund are described in the Prospectus. The investment policies of each Fund set
forth in the Prospectus and in this Statement of Additional Information may be
changed by the Trust's board of trustees without shareholder approval, except
that the investment objective of each Fund as set forth in the Prospectus and
any policy explicitly identified as "fundamental" may not be changed without the
approval of the holders of a majority of the outstanding shares of the relevant
Fund (which in the Prospectus and this Statement of Additional Information means
the lesser of (i) 67% of the shares of that Fund present at a meeting at which
more than 50% of the outstanding shares are present or represented by proxy or
(ii) more than 50% of the outstanding shares). Except in the case of the 15%
limitation on illiquid securities, the percentage limitations set forth below
and in the Prospectus will apply at the time a security is purchased and will
not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such purchase.

INVESTMENT RESTRICTIONS

In addition to its investment objective and policies set forth in the
Prospectus, the following investment restrictions are policies of each Fund (and
those marked with an asterisk are fundamental policies of each Fund):

Each Fund will not:

(1) Invest in companies for the purpose of exercising control or
management.

*(2) Act as underwriter, except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal securities laws.

*(3) Invest in oil, gas or other mineral leases, rights or royalty
contracts or in real estate, commodities or commodity contracts. (This
restriction does not prevent any Fund from engaging in transactions in futures
contracts relating to securities indices, interest rates or financial
instruments or options, or from investing in issuers that invest or deal in the
foregoing types of assets or from purchasing securities that are secured by real
estate.)

*(4) Make loans, except that each of the Loomis Sayles Aggressive
Growth Fund, the Loomis Sayles Investment Grade Bond Fund, the Loomis Sayles
Intermediate Maturity Bond Fund, the Loomis Sayles Mid-Cap Value Fund, and the
Loomis Sayles Small Cap Growth Fund may lend its portfolio securities to the
extent permitted under the Investment Company Act of 1940 (the "1940 Act"). (For
purposes of this investment restriction, neither (i) entering into repurchase
agreements nor (ii) purchasing debt obligations in which a Fund may invest
consistent with its investment policies is considered the making of a loan.)

<PAGE>

(5) With respect to 75% of its assets, purchase any security (other
than a U.S. Government Security) if, as a result, more than 5% of the Fund's
assets (taken at current value) would then be invested in securities of a single
issuer. (For purposes of this restriction, the Municipal Bond Fund treats each
state and each separate political subdivision, agency, authority or
instrumentality of such state, each multistate agency or authority, and each
guarantor, if any, of obligations of any such issuer, as a separate issuer,
provided that the assets and revenues of the issuer are separate from those of
the government(s) that created the subdivision, agency, authority or
instrumentality.)

(6) With respect to 75% of its assets, acquire more than 10% of the
outstanding voting securities of an issuer.

(7) Pledge, mortgage, hypothecate or otherwise encumber any of its
assets, except that each Fund may pledge assets having a value not exceeding 10%
of its assets to secure borrowings permitted by restriction (9) below. (For the
purpose of this restriction, collateral arrangements with respect to options,
futures contracts and options on futures contracts and with respect to initial
and variation margin are not deemed to be a pledge or other encumbrance of
assets.)

*(8) Purchase any security (other than U.S. Government Securities) if,
as a result, more than 25% of the Fund's assets (taken at current value) would
be invested in any one industry (in the utilities category, gas, electric, water
and telephone companies will be considered as being in separate industries).
Tax-exempt securities issued by governments or political subdivisions of
governments and purchased by the Municipal Bond Fund are not subject to this
restriction, since such issuers are not members of any industry.

*(9) Borrow money in excess of 10% of its assets (taken at cost) or 5%
of its assets (taken at current value), whichever is lower, nor borrow any money
except as a temporary measure for extraordinary or emergency purposes.

(10) Purchase securities on margin (except such short term credits as
are necessary for clearance of transactions) or make short sales (except where,
by virtue of ownership of other securities, it has the right to obtain, without
payment of additional consideration, securities equivalent in kind and amount to
those sold).

(11) Participate on a joint or joint and several basis in any trading
account in securities. (The "bunching" of orders for the purchase or sale of
portfolio securities with Loomis Sayles & Company, L.P. ("Loomis Sayles") or
accounts under its management to reduce brokerage commissions, to average prices
among them or to facilitate such transactions is not considered a trading
account in securities for purposes of this restriction.)

(12) Purchase any illiquid security, including any security that is not
readily marketable, if, as a result, more than 15% of the Fund's net assets
(based on current value) would then be invested in such securities.

(13) Write or purchase puts, calls or combinations of both except that
each Fund may (1) acquire warrants or rights to subscribe to securities of
companies issuing such warrants or rights, or of parents or subsidiaries of such
companies, (2) purchase and sell put and call options on securities and (3)
write, purchase and sell put and call options on currencies and may enter into
currency forward contracts.

*(14) Issue senior securities. (For the purpose of this restriction
none of the following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restriction (7) above; any borrowing
permitted by restriction (9) above; any collateral arrangements with respect to
options, futures contracts and options on futures contracts and with respect to
initial and variation margin; and the purchase or sale of options, forward
contracts, futures contracts or options on futures contracts.)

2
<PAGE>

(15) Certain Funds have other non-fundamental investment parameters, as
listed below.

LOOMIS SAYLES AGGRESSIVE GROWTH FUND

The Fund normally will invest at least 65% of its
assets in equity securities of companies with market
capitalizations that fall within the capitalization range of
companies included in the Russell Mid-Cap Growth Index, an
index that tracks stocks of companies with medium market
capitalizations.

LOOMIS SAYLES BOND FUND

The Fund normally will invest at least 65% of its
assets in fixed income securities.

LOOMIS SAYLES EMERGING MARKETS FUND

The Fund normally will invest at least 65% of its
assets in stocks or other equity securities of issuers located
in countries with emerging securities market.

LOOMIS SAYLES GLOBAL BOND FUND

The Fund normally will invest at least 65% of its
assets in fixed income securities of issuers from at least
three countries, which may include the United States, and no
more than 40% of its assets in issuers headquartered in any
one country.

LOOMIS SAYLES GLOBAL TECHNOLOGY FUND

The Fund normally will invest at least 65% of its
assets in equity securities of technology companies located in
the United States or abroad.

LOOMIS SAYLES HIGH YIELD FUND

The Fund normally will invest at least 65% of its
assets in lower rated fixed income securities ("junk bonds").

LOOMIS SAYLES INTERNATIONAL EQUITY FUND

The Fund normally will invest at least 65% of its
assets in equity securities of issuers from at least three
countries outside the United States.

LOOMIS SAYLES INVESTMENT GRADE BOND FUND

The Fund normally will invest at least 65% of its
assets in investment grade fixed income securities.

LOOMIS SAYLES MID-CAP VALUE FUND

The Fund normally will invest at least 65% of its
assets in equity securities of companies with a market
capitalization that falls within the capitalization range of
companies included in the Standard & Poor's Mid-Cap 400 Index.

<PAGE>

LOOMIS SAYLES MUNICIPAL BOND FUND

The Fund normally will invest at least 65% of its
assets in fixed income securities.

LOOMIS SAYLES SHORT-TERM BOND FUND

The Fund normally will invest at least 65% of its
assets in fixed income securities with a remaining maturity of
five years or less.

LOOMIS SAYLES SMALL CAP GROWTH FUND

The Fund normally will invest at least 65% of its
assets in equity securities of companies with market
capitalizations that fall within the capitalization range of
the Russell 2000 Index, an index that tracks stocks of
companies that have small market capitalizations.

LOOMIS SAYLES SMALL CAP VALUE FUND

LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND

The Fund normally will invest at least 65% of its
assets in U.S. Government securities.

Each Fund intends, based on the views of the staff of the Securities
and Exchange Commission (the "SEC"), to restrict its investments in repurchase
agreements maturing in more than seven days, together with other investments in
illiquid securities, to the percentage permitted by restriction (12) above.

INVESTMENT STRATEGIES

Except to the extent prohibited by a Fund's investment policies as set
forth in the Prospectus or in this Statement of Additional Information, the
investment strategies used by Loomis Sayles in managing each of the Funds may
include investments in the types of securities described below.

U.S. GOVERNMENT SECURITIES

U.S. Government securities include direct obligations of the U.S.
Treasury, as well as securities issued or guaranteed by U.S. Government
agencies, authorities and instrumentalities, including, among others, the
Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the Federal Housing
Administration, the Resolution Funding Corporation, the Federal Farm Credit
Banks, the Federal Home Loan Bank, the Tennessee Valley Authority, the Student
Loan Marketing Association and the Small Business Administration. More detailed
information about some of these categories of U.S. Government securities
follows.

U.S. Treasury Bills--Direct obligations of the U.S. Treasury which are
issued in maturities of one year or less. No interest is paid on Treasury bills;
instead, they are issued at a discount and repaid at full face value when they
mature. They are backed by the full faith and credit of the U.S. Government.

<PAGE>

U.S. Treasury Notes and Bonds--Direct obligations of the U.S. Treasury
issued in maturities that vary between one and forty years, with interest
normally payable every six months. They are backed by the full faith and credit
of the U.S. Government.

"Ginnie Maes"--Debt securities issued by a mortgage banker or other
mortgagee which represent an interest in a pool of mortgages insured by the
Federal Housing Administration or the Farmer's Home Administration or guaranteed
by the Veterans Administration. The Government National Mortgage Association
("GNMA") guarantees the timely payment of principal and interest when such
payments are due, whether or not these amounts are collected by the issuer of
these certificates on the underlying mortgages. An assistant attorney general of
the United States has rendered an opinion that the guarantee by GNMA is a
general obligation of the United States backed by its full faith and credit.
Mortgages included in single family or multi-family residential mortgage pools
backing an issue of Ginnie Maes have a maximum maturity of up to 30 years.
Scheduled payments of principal and interest are made to the registered holders
of Ginnie Maes (such as the Fund) each month. Unscheduled prepayments may be
made by homeowners, or as a result of a default. Prepayments are passed through
to the registered holder of Ginnie Maes along with regular monthly payments of
principal and interest.

"Fannie Maes"--The Federal National Mortgage Association ("Fannie Mae")
is a government-sponsored corporation owned entirely by private stockholders
that purchases residential mortgages from a list of approved seller/servicers.
Fannie Maes are pass-through securities issued by Fannie Mae that are guaranteed
as to timely payment of principal and interest by Fannie Mae but are not backed
by the full faith and credit of the U.S.
Government.

"Freddie Macs"--The Federal Home Loan Mortgage Corporation ("FHLMC") is
a corporate instrumentality of the U.S. Government. Freddie Macs are
participation certificates issued by FHLMC that represent an interest in
residential mortgages from FHLMC's national portfolio. FHLMC guarantees the
timely payment of interest and ultimate collection of principal, but Freddie
Macs are not backed by the full faith and credit of the U.S. Government.

As described in the Prospectus, the yields available from U.S.
Government securities are generally lower than the yields available from
corporate fixed-income securities. Like other fixed-income securities, however,
the values of U.S. Government securities change as interest rates fluctuate.
Fluctuations in the value of portfolio securities will not affect interest
income on existing portfolio securities but will be reflected in the Fund's net
asset value.

WHEN-ISSUED SECURITIES

When-issued securities are agreements with banks or broker-dealers for
the purchase or sale of securities at an agreed-upon price on a specified future
date. Such agreements might be entered into, for example, when a Fund that
invests in fixed income securities anticipates a decline in interest rates and
is able to obtain a more advantageous yield by committing currently to purchase
securities to be issued later. When a Fund purchases securities on a when-issued
or delayed-delivery basis, it is required to create a segregated account with
the Trust's custodian and to maintain in that account liquid assets in an amount
equal to or greater than, on a daily basis, the amount of the Fund's when-issued
or delayed-delivery commitments. Each Fund will make commitments to purchase on
a when-issued or delayed-delivery basis only securities meeting that Fund's
investment criteria. The Fund may take delivery of these securities or, if it is
deemed advisable as a matter of investment strategy, the Fund may sell these
securities before the settlement date. When the time comes to pay for
when-issued or delayed-delivery securities, the Fund will meet its obligations
from then available cash flow or the sale of securities, or from the sale of the
when-issued or delayed-delivery securities themselves (which may have a value
greater or less than the Fund's payment obligation).

<PAGE>

CONVERTIBLE SECURITIES

Convertible securities include corporate bonds, notes or preferred
stocks of U.S. or foreign issuers that can be converted into (that is, exchanged
for) common stocks or other equity securities. Convertible securities also
include other securities, such as warrants, that provide an opportunity for
equity participation. Because convertible securities can be converted into
equity securities, their values will normally vary in some proportion with those
of the underlying equity securities.

ZERO COUPON BONDS

Zero coupon bonds are debt obligations that do not entitle the holder
to any periodic payments of interest either for the entire life of the
obligation or for an initial period after the issuance of the obligations. Such
bonds are issued and traded at a discount from their face amounts. The amount of
the discount varies depending on such factors as the time remaining until
maturity of the bonds, prevailing interest rates, the liquidity of the security
and the perceived credit quality of the issuer. The market prices of zero coupon
bonds generally are more volatile than the market prices of securities that pay
interest periodically and are likely to respond to changes in interest rates to
a greater degree than non-zero coupon bonds having similar maturities and credit
quality. In order to satisfy a requirement for qualification as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"), each Fund must distribute each year at least 90% of its net investment
income, including the original issue discount accrued on zero coupon bonds.
Because a Fund investing in zero coupon bonds will not on a current basis
receive cash payments from the issuer in respect of accrued original issue
discount, the Fund may have to distribute cash obtained from other sources in
order to satisfy the 90% distribution requirement under the Code. Such cash
might be obtained from selling other portfolio holdings of the Fund. In some
circumstances, such sales might be necessary in order to satisfy cash
distribution requirements even though investment considerations might otherwise
make it undesirable for the Fund to sell such securities at such time.

REPURCHASE AGREEMENTS

Under a repurchase agreement, a Fund purchases a security and obtains a
simultaneous commitment from the seller (a bank or, to the extent permitted by
the 1940 Act, a recognized securities dealer) to repurchase the security at an
agreed upon price and date (usually seven days or less from the date of original
purchase). The resale price is in excess of the purchase price and reflects an
agreed upon market rate unrelated to the coupon rate on the purchased security.
Such transactions afford the Fund the opportunity to earn a return on
temporarily available cash at minimal market risk. While the underlying security
may be a bill, certificate of indebtedness, note or bond issued by an agency,
authority or instrumentality of the U.S. Government, the obligation of the
seller is not guaranteed by the U.S. Government and there is a risk that the
seller may fail to repurchase the underlying security. In such event, the Fund
would attempt to exercise rights with respect to the underlying security,
including possible disposition in the market. However, the Fund may be subject
to various delays and risks of loss, including (a) possible declines in the
value of the underlying security during the period while the Fund seeks to
enforce its rights thereto, (b) possible reduced levels of income and lack of
income during this period and (c) inability to enforce rights and the expenses
involved in attempted enforcement.

REAL ESTATE INVESTMENT TRUSTS

REITs involve certain unique risks in addition to those risks
associated with investing in the real estate industry in general (such as
possible declines in the value of real estate, lack of availability of mortgage
funds or extended vacancies of property). Equity REITs may be affected by
changes in the value of the underlying property owned by the REITs, while
mortgage REITs may be affected by the quality of any credit extended. REITs are
dependent upon management skills, are not diversified, and are subject to heavy
cash flow dependency, risks of default by borrowers and self-liquidation. REITs
are also subject to the possibilities of failing to qualify

<PAGE>

for tax-free pass-through of income under the Code, and failing to maintain
their exemptions from registration under the 1940 Act.

Investment in REITs involves risk similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger securities.

RULE 144A SECURITIES

Rule 144A securities are privately offered securities that can be
resold only to certain qualified institutional buyers. Rule 144A securities are
treated as illiquid, unless Loomis Sayles has determined, under guidelines
established by the Trust's trustees, that the particular issue of Rule 144A
securities is liquid. Under the guidelines, Loomis Sayles considers such factors
as: (1) the frequency of trades and quotes for a security; (2) the number of
dealers willing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the nature of the marketplace trades in
the security.

TAX-EXEMPT FIXED INCOME SECURITIES

Tax-exempt fixed income securities include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities such as bridges, highways, hospitals, housing, mass
transportation, schools, streets, and water and sewer works. Other public
purposes for which tax-exempt fixed income securities may be issued include the
refunding of outstanding obligations, obtaining funds for general operating
expenses, and obtaining funds to lend to other public institutions and
facilities. In addition, prior to the Tax Reform Act of 1986, certain debt
obligations known as industrial development bonds could be issued by or on
behalf of public authorities to obtain funds to provide privately operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, port or parking facilities, air or water pollution
control facilities and certain local facilities for water supply, gas,
electricity, or sewage or solid waste disposal. Such obligations are included
within the term tax-exempt fixed income securities if the interest paid thereon
is, in the opinion of bond counsel, exempt from federal income tax. Interest on
certain industrial development bonds used to fund the construction, equipment,
repair or improvement of privately operated industrial or commercial facilities
may also be exempt from federal income tax. The Tax Reform Act of 1986
eliminated some types of tax-exempt industrial revenue bonds but retained others
under the general category of "private activity bonds." The interest on
so-called "private activity bonds" is exempt from ordinary federal income
taxation but is treated as a tax preference item in computing a shareholder's
alternative minimum tax liability. The Municipal Bond Fund may invest up to 20%
of its net assets in private activity bonds.

The Municipal Bond Fund may not be a desirable investment for
"substantial users" of facilities financed by industrial development bonds or
for "related persons" of substantial users. See "Income Dividends, Capital Gain
Distributions and Tax Status."

The two principal classifications of tax-exempt fixed income securities
are general obligation bonds and limited obligation (or revenue) bonds. General
obligation bonds are obligations involving the credit of an issuer possessing
taxing power and are payable from the issuer's general unrestricted revenues and
not from any particular fund or source. The characteristics and method of
enforcement of general obligation bonds vary according to the law applicable to
the particular issuer, and payment may be dependent upon an appropriation by the
issuer's legislative body. Limited obligation bonds are payable only from the
revenues derived from a particular facility or class of facilities, or in some
cases from the proceeds of a special excise or other specific revenue source
such as the user of the facility. Tax-exempt industrial development bonds and
private activity bonds are in most cases revenue bonds and generally are not
payable from the unrestricted revenues of the issuer.

<PAGE>

The credit and quality of such fixed income securities are usually directly
related to the credit standing of the corporate user of the facilities.
Principal and interest on such fixed income securities is the responsibility of
the corporate user (and any guarantor).

Prices and yields on tax-exempt fixed income securities are dependent
on a variety of factors, including general money market conditions, the
financial condition of the issuer, general conditions of the tax-exempt bond
market, the size of a particular offering, the maturity of the obligation and
the rating of the issue. A number of these factors, including the ratings of
particular issues, are subject to change from time to time. Information about
the financial condition of an issuer of tax-exempt fixed income securities may
not be as extensive as that made available by corporations whose securities are
publicly traded.

As noted in the Prospectus, obligations of issuers of tax-exempt fixed
income securities are subject to the provisions of bankruptcy, insolvency and
other laws, such as the Federal Bankruptcy Reform Act of 1978, affecting the
rights and remedies of creditors. Congress or state legislatures may seek to
extend the time for payment of principal or interest, or both, or to impose
other constraints upon enforcement of such obligations. There is also the
possibility that, as a result of litigation or other conditions, the power or
ability of issuers to meet their obligations for the payment of interest and
principal on their tax-exempt fixed income securities may be materially
affected, or their obligations may be found to be invalid or unenforceable. Such
litigation or conditions may from time to time have the effect of introducing
uncertainties in the market for tax-exempt fixed income securities or certain
segments thereof, or materially affecting the credit risk with respect to
particular fixed income securities. Adverse economic, business, legal or
political developments might affect all or a substantial portion of the Fund's
tax-exempt fixed income securities in the same manner.

From time to time the Municipal Bond Fund may have less than 80% of its
net assets invested in tax-exempt fixed income securities (1) for defensive
purposes when deemed prudent in the judgment of Loomis Sayles to protect
shareholders' capital or (2) on a temporary basis for liquidity purposes or
pending the investment of proceeds from sales of Fund shares. The ability of the
Fund to invest in securities other than tax-exempt fixed income securities is
limited by a requirement of the Code that at least 50% of the Fund's assets be
invested in tax-exempt securities at the end of each calendar quarter in order
to pass through to shareholders the tax-exempt interest earned by the Fund. See
"Income Dividends, Capital Gain Distributions and Tax Status."

The Municipal Bond Fund may purchase and sell portfolio investments to
take advantage of changes or anticipated changes in yield relationships, markets
or economic conditions. The Fund may also sell tax-exempt fixed income
securities due to changes in the adviser's evaluation of the issuer or cash
needs resulting from redemption requests for Fund shares. The secondary market
for tax-exempt fixed income securities typically has been less liquid than that
for taxable debt securities, and this may affect the Fund's ability to sell
particular tax-exempt fixed income securities, especially in periods when other
investors are attempting to sell the same securities.

FOREIGN CURRENCY TRANSACTIONS

Since investment in securities of foreign issuers will usually involve
currencies of foreign countries, and since a Fund may temporarily hold funds in
bank deposits in foreign currencies during the course of investment programs,
the value of the assets of a Fund as measured in U.S. dollars may be affected by
changes in currency exchange rates and exchange control regulations, and a Fund
may incur costs in connection with conversion between various currencies.

A Fund may enter into forward contracts under two circumstances. First,
when a Fund enters into a contract for the purchase or sale of a security
denominated or traded in a market in which settlement is made in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward

8
<PAGE>

contract for the purchase or sale, for a fixed amount of dollars, of the amount
of foreign currency involved in the underlying transactions, the Fund will be
able to protect itself against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and the subject foreign currency
during the period between the date on which the investment is purchased or sold
and the date on which payment is made or received.

Second, when Loomis Sayles believes that the currency of a particular
country may suffer a substantial decline against another currency, it may enter
into a forward contract to sell, for a fixed amount of another currency, the
amount of the first currency approximating the value of some or all of the
Fund's portfolio investments denominated in the first currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in a currency will change as a consequence of market movements in the
value of those investments between the date the forward contract is entered into
and the date it matures.

The Funds generally will not enter into forward contracts with a term
of greater than one year.

Options on foreign currencies are similar to forward contracts, except
that one party to the option (the holder) is not contractually bound to buy or
sell the specified currency. Instead, the holder has discretion whether to
"exercise" the option and thereby require the other party to buy or sell the
currency on the terms specified in the option. Options transactions involve
transaction costs and, like forward contract transactions, involve the risk that
the other party may default on its obligations (if the options are not traded on
an established exchange) and the risk that expected movements in the relative
value of currencies may not occur, resulting in an imperfect hedge or a loss to
the Fund.

Each Fund, in conjunction with its transactions in forward contracts,
options and futures, will maintain in a segregated account with its custodian
liquid assets with a value, marked to market on a daily basis, sufficient to
satisfy the Fund's outstanding obligations under such contracts, options and
futures.

OPTIONS

An option entitles the holder to receive (in the case of a call option)
or to sell (in the case of a put option) a particular security at a specified
exercise price. An "American style" option allows exercise of the option at any
time during the term of the option. A "European style" option allows an option
to be exercised only at the end of its term. Options may be traded on or off an
established securities exchange.

If the holder of an option wishes to terminate its position, it may
seek to effect a closing sale transaction by selling an option identical to the
option previously purchased. The effect of the purchase is that the previous
option position will be canceled. A Fund will realize a profit from closing out
an option if the price received for selling the offsetting position is more than
the premium paid to purchase the option; the Fund will realize a loss from
closing out an option transaction if the price received for selling the
offsetting option is less than the premium paid to purchase the option.

The use of options involves risks. One risk arises because of the
imperfect correlation between movements in the price of options and movements in
the price of the securities that are the subject of the hedge. The Fund's
hedging strategies will not be fully effective if such imperfect correlation
occurs.

Price movement correlation may be distorted by illiquidity in the
options markets and the participation of speculators in such markets. If an
insufficient number of contracts are traded, commercial users may not deal in
options because they do not want to assume the risk that they may not be able to
close out their positions within a reasonable amount of time. In such instances,
options market prices may be driven by different forces than those driving the
market in the underlying securities, and price spreads between these markets may
widen. The

9
<PAGE>

participation of speculators in the market enhances its liquidity. Nonetheless,
the trading activities of speculators in the options markets may create
temporary price distortions unrelated to the market in the underlying
securities.

An exchange-traded option may be closed out only on an exchange which
generally provides a liquid secondary market for an option of the same series.
If a liquid secondary market for an exchange-traded option does not exist, it
might not be possible to effect a closing transaction with respect to a
particular option, with the result that the Fund would have to exercise the
option in order to accomplish the desired hedge. Reasons for the absence of a
liquid secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or the Options Clearing Corporation
or other clearing organization may not at all times be adequate to handle
current trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options on that exchange that had
been issued by the Options Clearing Corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.

The successful use of options depends in part on the ability of Loomis
Sayles to forecast correctly the direction and extent of interest rate, stock
price or currency value movements within a given time frame. To the extent
interest rates, stock prices or currency values move in a direction opposite to
that anticipated, the Fund may realize a loss on the hedging transaction that is
not fully or partially offset by an increase in the value of portfolio
securities. In addition, whether or not interest rates or the relevant stock
price or relevant currency values move during the period that the Fund holds
options positions, the Fund will pay the cost of taking those positions (i.e.,
brokerage costs). As a result of these factors, the Fund's total return for such
period may be less than if it had not engaged in the hedging transaction.

An over-the-counter option (an option not traded on an established
exchange) may be closed out only with the other party to the original option
transaction. While the Fund will seek to enter into over-the-counter options
only with dealers who agree to or are expected to be capable of entering into
closing transactions with the Fund, there can be no assurance that the Fund will
be able to liquidate an over-the-counter option at a favorable price at any time
prior to its expiration. Accordingly, the Fund might have to exercise an
over-the-counter option it holds in order to achieve the intended hedge.
Over-the-counter options are not subject to the protections afforded purchasers
of listed options by the Options Clearing Corporation or other clearing
organization.

The staff of the SEC has taken the position that over-the-counter
options should be treated as illiquid securities for purposes of each Fund's
investment restriction prohibiting it from investing more than 15% of its net
assets in illiquid securities. The Funds intend to comply with this position.

Income earned by a Fund from its hedging activities will be treated as
capital gain and, if not offset by net recognized capital losses incurred by the
Fund, will be distributed to shareholders in taxable distributions. Although
gain from options transactions may hedge against a decline in the value of a
Fund's portfolio securities, that gain, to the extent not offset by losses, will
be distributed in light of certain tax considerations and will constitute a
distribution of that portion of the value preserved against decline.

SMALL COMPANIES

Investments in companies with relatively small capitalization may
involve greater risk than is usually associated with more established companies.
These companies often have limited product lines, markets or

10
<PAGE>

financial resources and they may be dependent upon a relatively small management
group. Their securities may have limited marketability and may be subject to
more abrupt or erratic movements in price than securities of companies with
larger capitalization or market averages in general. The net asset values of
funds that invest in companies with smaller capitalization therefore may
fluctuate more widely than market averages.

11
<PAGE>

MANAGEMENT OF THE TRUST

The trustees of the Trust supervise the affairs of the Trust and have
the other responsibilities assigned to them by the laws of the Commonwealth of
Massachusetts. The trustees and officers of the Trust, their ages, and their
principal occupations during the past five years are as follows:

JOSEPH ALAIMO (69)--Trustee. 727 N. Bank Lane, Lake Forest, Illinois.
President, Wintrust Asset Management Company.

RICHARD S. HOLWAY (73)--Trustee. 1314 Seaspray Lane, Sanibel, Florida.
Retired; formerly Vice President, Loomis Sayles. Director, Sandwich Cooperative
Bank.

MICHAEL T. MURRAY (69)--Trustee. 404 N. Western Ave., Lake Forest,
Illinois. Retired; formerly Vice President, Loomis Sayles.

DANIEL J. FUSS(1) (66)--President and Trustee. Vice Chairman and
Director, Loomis Sayles.

ROBERT J. BLANDING (52)--Executive Vice President. 555 California
Street, San Francisco, California. President, Chairman, Director and Chief
Executive Officer, Loomis Sayles.

MARK W. HOLLAND (50)--Treasurer. Vice President, Finance and
Administration and Director, Loomis Sayles.

PHILIP R. MURRAY ( )--Assistant Treasurer. Vice President and
Treasurer, Loomis Sayles.

NICHOLAS H. PALMERINO ( )--Assistant Treasurer. Vice President, Loomis
Sayles.

SHEILA M. BARRY (54)--Secretary and Compliance Officer. Assistant
General Counsel and Vice President, Loomis Sayles. Formerly, Senior Counsel and
Vice President, New England Funds, L.P.

BONNIE S. THOMPSON ( )--Assistant Secretary. Senior Blue Sky Paralegal,
Loomis Sayles.

DAWN M. ALSTON-PAIGE (35)--Vice President. 1533 N. Woodward, Bloomfield
Hills, Michigan. Vice President, Loomis Sayles.

MARK BARIBEAU (40)--Vice President. Vice President, Loomis Sayles.

JAMES C. CARROLL (49)--Vice President. 1533 N. Woodward, Bloomfield
Hills, Michigan. Vice President, Loomis Sayles. Formerly Managing Director and
Senior Energy Analyst at Paine Webber, Inc.

MARY C. CHAMPAGNE (43)--Vice President. 1533 N. Woodward, Bloomfield
Hills, Michigan. Vice President, Loomis Sayles.

E. JOHN DEBEER (61)--Vice President. Vice President, Loomis Sayles.

RODERICK H. DILLON, JR. (43)--Vice President. 2001 Pensylvania Avenue,
N.W., Suite 200, Washington, DC. Vice President, Loomis Sayles.

- --------
(1) Trustee deemed an "interested person" of the Trust, as defined
by the 1940 Act.

<PAGE>

WILLIAM H. EIGEN, JR. (62)--Vice President. Vice President, Loomis
Sayles; formerly Vice President, INVESCO Funds Group and Vice President, The
Travelers Corp.

CHRISTOPHER R. ELY (44)--Vice President. Vice President, Loomis Sayles;
formerly Senior Vice President and portfolio manager, Keystone Investment
Management Company, Inc.

QUENTIN P. FAULKNER (60)--Vice President. Vice President, Loomis
Sayles.

PHILIP C. FINE (50)--Vice President. Vice President, Loomis Sayles;
formerly Vice President and portfolio manager, Keystone Investment Management
Company, Inc.

KATHLEEN C. GAFFNEY (38)--Vice President. Vice President, Loomis
Sayles.

ISAAC GREEN (38)--Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Executive Vice President and Director, Loomis Sayles.

MARTHA F. HODGMAN (48)--Vice President. Vice President, Loomis Sayles.

JOHN HYLL (45)--Vice President. 555 California Street, San Francisco,
California.

JEFFREY L. MEADE (49)--Vice President. Executive Vice President, Chief
Operating Officer and Director, Loomis Sayles.

ESWAR MENON (35)--Vice President, 555 California Street, San Francisco,
California, Vice President, Loomis Sayles. Formerly, Portfolio Manager at
Nicholas Applegate Capital Management since 1995. From 1990-1995, he was
employed as an Equity Analyst by Koaneman Capital Management and as Senior
Engineer by Intergrated Device Technology.

ALEX MUROMCEW (36)--Vice President, 555 California Street, San
Francisco, California, Vice President, Loomis Sayles. Formerly, Portfolio
Manager at Nicholas Applegate Capital Management since 1995.
From 1993-1996, he was an investment analyst with Teton Partners, L.P.

KENT P. NEWMARK (61)--Vice President. 555 California Street, San
Francisco, California. Vice President, Managing Partner and Director, Loomis
Sayles.

JEFFREY C. PETHERICK (36)--Vice President. 1533 N. Woodward, Bloomfield
Hills, Michigan. Vice President, Loomis Sayles.

BRUCE G. PICARD, JR. (30)--Vice President. [ADDRESS] Vice President,
Loomis Sayles.

LAUREN B. PITALIS (39)--Vice President. Vice President, Loomis Sayles;
formerly Vice President and Assistant Secretary of Harris Associates Investment
Trust.

DAVID L. SMITH (46)--Vice President. Vice President, Loomis Sayles;
formerly Vice President and portfolio manager, Keystone Investment Management
Company, Inc.

SANDRA P. TICHENOR (50)--Vice President. 555 California Street, San
Francisco, California. General Counsel, Executive Vice President, Secretary and
Clerk, Loomis Sayles. Formerly Partner, Heller, Ehrman, White & McAuliffe.

<PAGE>

JOHN TRIBOLET (29)--Vice President. [ADDRESS] Vice President, Loomis
Sayles. Formerly Portfolio Manager at Nicholas-Applegate Capital Management
since 1977. From 1995 to 1997, he was a full time MBA student at the University
of Chicago. Prior to 1995, he spent three years in the investment banking
industry, most recently at PaineWebber, Inc.

JEFFREY W. WARDLOW (39)--Vice President. 1533 N. Woodward, Bloomfield
Hills, Michigan. Vice President, Loomis Sayles.

GREGG D. WATKINS (51)--Vice President. 1533 N. Woodward, Bloomfield
Hills, Michigan. Vice President, Loomis Sayles.

ANTHONY J. WILKINS (57)--Vice President. Executive Vice President and
Director, Loomis Sayles.

Previous positions during the past five years with Loomis Sayles are
omitted if not materially different.

Except as indicated above, the address of each trustee and officer of
the Trust affiliated with Loomis Sayles is One Financial Center, Boston,
Massachusetts. The Trust pays no compensation to its officers or to the trustees
listed above who are directors, officers or employees of Loomis Sayles. Each
trustee who is not a director, officer or employee of Loomis Sayles is
compensated at the rate of $1,250 per Fund per annum.

14
<PAGE>

COMPENSATION TABLE
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999

<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
--- --- --- --- ---
TOTAL
COMPENSATION
PENSION OR ESTIMATED FROM TRUST AND
AGGREGATE RETIREMENT BENEFITS ANNUAL FUND COMPLEX*
NAME OF PERSON, COMPENSATION ACCRUED AS PART OF BENEFITS UPON PAID TO
POSITION FROM TRUST FUND EXPENSES RETIREMENT TRUSTEE
--------------- ------------ ------------------- ------------- --------------
<S> <C> <C> <C> <C>
Richard S. Holway, Trustee [$21,250] N/A N/A [$21,250]

Daniel J. Fuss, Trustee $0 N/A N/A $0

Michael T. Murray, Trustee [$21,250] N/A N/A [$21,250]
</TABLE>

- ---------

* No Trustee receives any compensation from any mutual funds affiliated with
Loomis Sayles, other than the Trust.

As of September 30, 1999, the officers and trustees of the Trust
collectively owned beneficially shares of each Fund as follows: _______ shares
of the Loomis Sayles Aggressive Growth Fund, _______ shares of the Loomis Sayles
Bond Fund, _______ shares of the Loomis Sayles Core Value Fund, _______ shares
of the Loomis Sayles Emerging Markets Fund, _______ shares of the Loomis Sayles
Global Bond Fund, _______ shares of the [Loomis Sayles Global Technology Fund],
_______ shares of the Loomis Sayles Growth Fund, _______ shares of the Loomis
SAYLES High Yield Fund, _______ shares of the Loomis Sayles Intermediate
Maturity Bond Fund, _______ shares of the Loomis Sayles International Equity
Fund, _______ shares of the Loomis Sayles Investment Grade Bond Fund, _______
shares of the Loomis Sayles Mid-Cap Value Fund, _______ shares of the Loomis
Sayles Municipal Bond Fund, _______ shares of the Loomis Sayles Short-Term Bond
Fund, _______ shares of the Loomis Sayles Small Cap Growth Fund, _______ shares
of the Loomis Sayles Small Cap Value Fund, _______ shares of the Loomis Sayles
U.S. Government Securities Fund, and _______ shares of the Loomis Sayles
Worldwide Fund. These amounts include shares held by the Loomis Sayles
Employees' Profit Sharing Plan (the "Profit Sharing Plan") for the accounts of
officers and trustees of the Trust, but exclude all other holdings of the Profit
Sharing Plan and the Loomis-Sayles Funded Pension Plan (the "Pension Plan"). As
of September 30, 1999, the Pension Plan owned the following percentages of the
outstanding Institutional Class shares of the indicated Funds: ___ of the Loomis
Sayles Bond Fund, ___ of the Loomis Sayles Core Value Fund, ___ of the Loomis
Sayles Global Bond Fund, ___ of the Loomis Sayles Growth Fund, ___ of the Loomis
Sayles Intermediate Maturity Bond Fund, ___ of the Loomis Sayles International
Equity Fund, ___ of the Loomis Sayles Short Term Bond Fund, ___ of the Loomis
Sayles Small Cap Growth Fund, ___ of the Loomis Sayles Small Cap Value Fund, ___
of the Loomis Sayles U.S. Government Securities Fund, and ___ of the Loomis
Sayles Worldwide Fund. As of September 30, 1999, the Profit Sharing Plan owned
the following percentages of the outstanding Institutional Class shares of the
indicated Funds: ___ of the Loomis Sayles Bond Fund, ___ of the Loomis Sayles
Core Value Fund, ___ of the Loomis Sayles Global Bond Fund, ___ of the Loomis
Sayles Growth Fund, ___ of the Loomis Sayles High Yield Fund, ___ of the Loomis
Sayles Intermediate Maturity Bond Fund, ___ of the Loomis Sayles International
Equity Fund, ___ of the Loomis Sayles Investment Grade Bond Fund, ___ of the
Loomis Sayles

<PAGE>

Mid-Cap Growth Fund, ___ of the Loomis Sayles Mid-Cap Value Fund, ___ of the
Loomis Sayles Short-Term Bond Fund, ___ of the Loomis Sayles Small Cap Growth
Fund, ___ of the Loomis Sayles Small Cap Value Fund, ___ of the Loomis Sayles
U.S. Government Securities Fund, and ___ of the Loomis Sayles Worldwide Fund.
The trustee of the Pension Plan is Fleet Investment Management. The Pension
Plan's Advisory Committee, which is composed of the same individuals listed
below as trustees of the Profit Sharing Plan, has the sole voting and investment
power with respect to the Pension Plan's shares. The trustees of the
Profit Sharing Plan are E. John deBeer, Quentin P. Faulkner, Sandra P. Tichenor,
Larry K. Shaw, Kathleen C. Gaffney, Mark W. Holland, and Patrick P. Hurley, all
of whom are officers and employees of Loomis Sayles and (except for Messrs.
Hurley and Shaw) trustees or officers of the Trust. Plan participants are
entitled to exercise investment and voting power over shares owned of record by
the Profit Sharing Plan. Shares not voted by participants are voted in the same
proportion as the shares voted by the voting participants. The address for the
Profit Sharing Plan and the Pension Plan is One Financial Center, Boston,
Massachusetts. At the date of this Statement of Additional Information, no
officer or trustee, and as of [date], except as noted below, no person, owns
more than 5% of the outstanding shares of any Fund. The amount of shares of each
Fund owned collectively by the trustees and officers of the Trust is less than
1% of the Fund.

<PAGE>

PRINCIPAL HOLDERS

The following table provides information on the principal holders of
each fund. A principal holder is a person who owns of record or beneficially 5%
or more of any class of a Fund's outstanding securities. Information provided in
this table is as of ___________ [no more than 30 days prior to the date of
filing].

INSTITUTIONAL CLASS SHARES

PERCENTAGE OF
SHAREHOLDER ADDRESS SHARES HELD
- ----------- ------- -------------
<S> <C> <C>
LOOMIS SAYLES AGGRESSIVE
GROWTH FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

American National Bank 120 So. LaSalle St. ___
Howard Siegel or Catherine Chicago, IL 60603
Siegel Trust

LOOMIS SAYLES CORE VALUE FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

First Trust NA Trustee P.O. Box 64010 ___
Green Tree Financial Corp St. Paul, MN 55164
401K Plan

Asbestos Workers Local C/O Loomis Sayles & Co. Inc. ___
#84 Pension Fund 1593 North Woodward, Ste
300
Bloomfield Hills, MI 48304

John W. George, Trustee 590 Renaud ___
John W. George Trust Grosse Pointe, MI 48236
U/A/D 12/6/90

LOOMIS SAYLES EMERGING
MARKETS FUND

17
<PAGE>

LOOMIS SAYLES GLOBAL BOND FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

Northwest Bank MN NA P.O. Box 1450 NW 8477 ___
C/F Desert States UFCW Union Minneapolis, MN 55480
Employees Pension AC#1327982D

Fleet National Bank TTEE P.O. Box 92800 ___
Kaman Corp Master Trust Fixed Rochester, NY 14692
Income Fund U/A/D 10-1-96
Attn A/C# 0004884410

San Diego Transit Pension Plan P.O. Box 2511 ___
San Diego, CA 92112

LOOMIS SAYLES GLOBAL
TECHNOLOGY FUND

LOOMIS SAYLES GROWTH FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

Fiduciary Trust Co. Cust P.O. Box 3199 ___
FBO Scott R. Shoemaker Church St. Station
New York, NY 10008

Fiduciary Trust Co. Cust P.O. Box 3199 ___
FBO Charles Grant Shoemaker Church St. Station
New York, NY 10048

LOOMIS SAYLES HIGH YIELD FUND

Daniel J. Fuss 44 Longfellow Road ___
Wellesley, MA 02181

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

<PAGE>

Rosemary B. Fuss 44 Longfellow Road ___
Wellesley, MA 02181

LOOMIS SAYLES
INTERMEDIATE MATURITY BOND FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

Hawaii Sheet Metal Workers 1405 N. King St. Rm 403 ___
Health & Welfare Fund Honolulu, HI 96817

Pomona College Alexander Hall ___
550 N. College Ave.
Claremont, CA 91711

LOOMIS SAYLES
INTERNATIONAL EQUITY FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

Comerica Bank FBO P.O. Box 75000 MC 3446 ___
City of Livonia Employee Detroit, MI 48275
Retirement System A/C 82150B

The Security Mutual Life 200 Centennial Mall North ___
Insurance Co. of P.O. Box 82248
Lincoln Nebraska Lincoln, NE 68501

LOOMIS SAYLES
INVESTMENT GRADE BOND FUND

Loomis Sayles & Company, L.P. Attn: Paul Sherba ___
One Financial Center
Boston, MA 02111

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

<PAGE>

Pomona College Alexander Hall ___
550 N. College Ave.
Claremont, CA 91711

LOOMIS SAYLES MID-CAP VALUE FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

John W. George, Jr. Trustee 590 Renaud ___
John W. George, Jr. Trust Grosse Pointe, MI 48236
U/A/D 12/6/90

Carey & Co. P.O. Box 1558 ___
C/O Huntington National Bank Columbus, OH 43260
Attn: Mutual Funds HC1024

LOOMIS SAYLES MUNICIPAL BOND FUND

John W. George Jr. Trustee 590 Renaud ___
John W. George Jr. Trust Grosse Pointe, MI 48236
U/A/D 12/6/90

Ann A. Morris Trustee General Delivery ___
Ann A. Morris Trust Lummi Island, WA 98262

LOOMIS SAYLES SHORT-TERM
BOND FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

NFSC FEBO #179-257206 54 Jemez Canyon Road ___
Santa Ana Non-Profit Enterprise Box 9201
Bernalillo, NM 87004

George R. Rodrigues, Jr. 1109 Bethel St. Ste. 403 ___
Herbert S K Kaopua Sr TTEES Honolulu, HI 96813
Pamcah-UA Local 675

<PAGE>

Health & Welfare DTD 9/1/61

John W. George Jr. Trustee 590 Renaud ___
John W. George Jr. Trust Grosse Pointe, MI 48236
U/A/D 12/6/90

LOOMIS SAYLES SMALL CAP
GROWTH FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

The Community Foundation 456 King St. ___

Serving Coastal SC Charleston, SC 29403

Donaldson Lufkin Jenrette P.O. Box 2052 ___
Securities Corporation Jersey City, NJ 07303

Trussal & Co. P.O. Box 771072 ___
Detroit, MI 48277

Fifth Third Bank, Trustee P.O. Box 630074 ___
Catholic Community Foundation Cincinnati, OH 45263

Covie & Co. 5101 N. Francisco Ave. ___
C/O Covenant Trust Co. Chicago, IL 60625

Carey & Co. P.O. Box 1558 ___
Columbus, OH 43216

LOOMIS SAYLES SMALL CAP
VALUE FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

Smith Barney Inc. 333 West 34th St.; 7th Fl. ___
Book Entry Account New York, NY 10001

LOOMIS SAYLES U.S.
GOVERNMENT SECURITIES FUND

<PAGE>

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

LOOMIS SAYLES WORLDWIDE FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104
</TABLE>

22
<PAGE>

RETAIL CLASS SHARES
<TABLE>
<CAPTION>

PERCENTAGE OF
SHAREHOLDER ADDRESS SHARES HELD

<S> <C> <C>
LOOMIS SAYLES AGGRESSIVE
GROWTH FUND

Jane F. Clark 140 Enid Ln ___
Northfield, IL 60093

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

NFSC FEBO #127-599832 306 Hackensack St. ___
FBO Santo J. Pittsman Wood Ridge, NJ 07075

LOOMIS SAYLES CORE VALUE FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

Jupiter & Co. P.O. Box 9130 ___
C/O Investors Bank & Trust Boston, MA

NFSC FEBO 2651 Sleepy Hollow Dr. ___
Stephen M. Keil State College, PA 16803

LOOMIS SAYLES GLOBAL BOND FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
Attn. Mutual Fund Dept. San Francisco, CA 94104

Southwest Securities, Inc. P.O. Box 509002 ___
FBO First National Bank Dallas, TX 75250
Edinburg

LOOMIS SAYLES GROWTH FUND

Angelo V. Glorioso 225 Summit Dr. ___
Pittsburgh, PA 15238

23
<PAGE>

Charles Schwab & Co. Inc. 101 Montgomery St. ___
Attn. Mutual Fund Dept. San Francisco, CA 94104

NFSC FEBO 900 Palisade Ave. ___
FMT CO CUST IRA Fort Lee, NJ 07024
Rollover
Leslie G. Brady

LOOMIS SAYLES
INTERMEDIATE MATURITY BOND FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

LOOMIS SAYLES
INTERNATIONAL EQUITY FUND

CIBC Oppenheimer Corp. P.O. Box 3484 ___
FBO 371-11893-10 Church St. Station
New York, NY 10008

LOOMIS SAYLES INVESTMENT GRADE BOND FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

NFSC FEBO #157-197300 4 Buxton Lane ___
FBO George D. Dugan Riverside, CT 06878

NFSC FEBO #z11-056570 4545 SW 97th Terrace ___
Sappington Revocable Gainesville, FL 32608
Living Trust

LOOMIS SAYLES MID-CAP VALUE FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

Donaldson Lufkin Jenrette One Pershing Plaza--7th Fl ___
Securities Corporation Inc. Jersey City, NJ 07303

24
<PAGE>

LOOMIS SAYLES SHORT-TERM BOND FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

Donaldson Lufkin Jenrette P.O. Box 2052 ___
Securities Corporation Inc. Jersey City, NJ 07303

NFSC FEBO #201-528218 245 Tower Rd. ___
FBO Carmine A. Greco Lincoln, MA 01773

Donaldson Lufkin Jenrette P.O. Box 2052 ___
Securities Corporation Inc. Jersey City, NJ 07303

State Street Bank & Trust Co. 405 S. Yucca Dr. ___
C/F The IRA of Wickenburg, AZ 85390
Roger E. Wakefield

LOOMIS SAYLES SMALL CAP GROWTH FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

MO Institute of Sports
Medicine 621 New Ballas ___
Profit Sharing Plan & Trust Suite 101
DTD 5/1/80 St. Louis, MO 63141

LOOMIS SAYLES SMALL CAP VALUE FUND

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

First Trust National Association 180 East Fifth St. ___
Trustee for United Healthcare P.O. Box 64488
401K Savings Plan St. Paul, MN 55164

Chase Manhattan Bank Trustee 770 Broadway ___
Metlife Defined Contribution 10th Floor
Group; Attn: Cindy Chu New York, NY 10003

25
<PAGE>

LOOMIS SAYLES WORLDWIDE FUND

Donaldson Lufkin Jenrette P.O. Box 2052 ___
Securities Corporation Inc. Jersey City, NJ 07303

State Street Bank &Trust Co. 235 Arlington Road Apt. 214 ___
Custodian for the IRA of Redwood City, CA 94062
Benjamin T. Ream

Charles Schwab & Co. Inc. 101 Montgomery St. ___
San Francisco, CA 94104

National Investor Services 55 Water St. ___
Corp. New York, NY 10041
FBO Our Customers
Mutual Funds Dept. 32nd
Floor

Donaldson Lufkin Jenrette P.O. Box 2052 ___
Securities Corporation Inc. Jersey City, NJ 07303
</TABLE>

26
<PAGE>

ADMIN CLASS SHARES
<TABLE>
<CAPTION>
SHAREHOLDER ADDRESS PERCENTAGE OF SHARES HELD

LOOMIS SAYLES BOND FUND

LOOMIS SAYLES SMALL CAP VALUE FUND

<S> <C> <C>
Smith Barney Corp. Trust Two Tower Center ___
Smith Barney 401k Adviser P.O. Box 1063
Group Trust E. Brunswick, NJ 08816

Merrill Lynch Trust Co. 265 Davidson Ave. ___
FBO Qualified Retirement Somerset, NJ 08873
Plans
</TABLE>

27
<PAGE>

CLASS A SHARES

LOOMIS SAYLES AGGRESSIVE GROWTH FUND

LOOMIS SAYLES TECHNOLOGY FUND

To the extent that any shareholder listed above beneficially owns more
than 25% of a Fund, it may be deemed to "control" such Fund. [list holder's
jurisdiction and parents if holder is a control person]

<PAGE>

INVESTMENT ADVISORY AND OTHER SERVICES

ADVISORY AGREEMENTS. Under each advisory agreement, Loomis Sayles
manages the investment and reinvestment of the assets of the relevant Fund and
generally administers its affairs, subject to supervision by the board of
trustees of the Trust. Loomis Sayles furnishes, at its own expense, all
necessary office space, facilities and equipment, services of executive and
other personnel of the Funds and certain administrative services. For these
services, the advisory agreements provide that each Fund shall pay Loomis Sayles
a monthly investment advisory fee at the following annual percentage rates of
the particular Fund's average daily net assets:

<TABLE>
<CAPTION>
FUND RATE
---- ----
<S> <C>
Loomis Sayles Aggressive Growth Fund .75%
Loomis Sayles Bond Fund .60
Loomis Sayles Core Value Fund .50
Loomis Sayles Emerging Markets Fund 1.25
Loomis Sayles Global Bond Fund .60
Loomis Sayles Global Technology Fund 1.00
Loomis Sayles Growth Fund .50
Loomis Sayles High Yield Fund .60
Loomis Sayles Intermediate Maturity Bond Fund .40
Loomis Sayles International Equity Fund .75
Loomis Sayles Investment Grade Bond Fund .40
Loomis Sayles Mid-Cap Value Fund .75
Loomis Sayles Municipal Bond Fund .30
Loomis Sayles Short-Term Bond Fund .25
Loomis Sayles Small Cap Growth Fund .75
Loomis Sayles Small Cap Value Fund .75
Loomis Sayles U.S. Government Securities Fund .30
Loomis Sayles Worldwide Fund .75
</TABLE>

During the periods shown below, pursuant to the advisory agreements
described above, Loomis Sayles received the following amount of investment
advisory fees from each Fund (before voluntary fee reductions and expense
assumptions) and bore the following amounts of fee reductions and expense
assumptions for each Fund:

<PAGE>

FISCAL YEAR ENDED NINE MONTHS ENDED FISCAL YEAR ENDED
12/31/97 9/30/98* 9/30/99

Fee Waivers Fee Waivers Fee Waivers
Advisory and Expense Advisory and Expense Advisory and Expense
Fund Fees Assumptions Fees Assumptions Fees Assumptions
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund $ 11,993 $151,104 $ 11,818 $109,517 $ $
Loomis Sayles Bond Fund 5,460,675 197,170 6,920,645 112,593
Loomis Sayles Core Value Fund
Loomis Sayles Emerging Markets Fund
Loomis Sayles Global Bond Fund 178,622 123,445 155,995 85,930
Loomis Sayles Global Technology
Loomis Sayles Growth Fund 174,976 74,929 114,917 52,384
Loomis Sayles High Yield Fund 34,062 185,981 50,667 141,220
Loomis Sayles Intermediate Maturity
Bond Fund 17,125 147,955 25,473 122,162
Loomis Sayles International Equity Fund 705,111 178,102 451,871 124,877
Loomis Sayles Investment Grade Bond
Fund 8,585 162,568 12,300 119,899
Loomis Sayles Mid-Cap Value Fund 18,691 158,363 23,688 117,826
Loomis Sayles Municipal Bond Fund 34,082 102,318 28,142 77,070
Loomis Sayles Short-Term Bond Fund 41,211 143,266 45,845 74,443
Loomis Sayles Small Cap Value Fund 1,581,667 12,741 1,981,662 5,254
Loomis Sayles Small Cap Growth Fund 24,894 170,503 67,049 117,517
Loomis Sayles U.S. Government
Securities Fund 55,096 87,088 65,031 60,872
Loomis Sayles Worldwide Fund 55,489 148,392 32,580 112,466
</TABLE>

* The fiscal year-end for each of the Funds changed to September 30 in 1998.

The Trust pays the compensation of its trustees who are not directors,
officers or employees of Loomis Sayles or its affiliates (other than registered
investment companies); registration, filing and other fees in connection with
requirements of regulatory authorities; all charges and expenses of its
custodian and transfer agent; the charges and expenses of its independent
accountants; all brokerage commissions and transfer taxes in connection with
portfolio transactions; all taxes and fees payable to governmental agencies; the
cost of any certificates representing shares of the Funds; the expenses of
meetings of the shareholders and trustees of the Trust; the charges and expenses
of the Trust's legal counsel; interest on any borrowings by the Funds; the cost
of services, including services of counsel, required in connection with the
preparation of, and the cost of printing, the Trust's registration statements
and Prospectus, including amendments and revisions thereto, annual, semiannual
and other periodic reports of the Trust, and notices and proxy solicitation
material furnished to shareholders or regulatory authorities, to the extent that
any such materials relate to the Trust or its shareholders; and the Trust's
expenses of bookkeeping, accounting, auditing and financial reporting, including
related clerical expenses.

<PAGE>

Under each advisory agreement, if the total ordinary business expenses
of a Fund or the Trust as a whole for any fiscal year exceed the lowest
applicable limitation (based on percentage of average net assets or income)
prescribed by any state in which the shares of the Fund or the Trust are
qualified for sale, Loomis Sayles shall pay such excess. Loomis Sayles will not
be required to reduce its fee or pay such expenses to an extent or under
circumstances which would result in any Fund's inability to qualify as a
regulated investment company under the Code. The term "expenses" is defined in
the advisory agreements or in relevant state regulations and excludes brokerage
commissions, taxes, interest, distribution-related expenses and extraordinary
expenses.

As described in the Prospectus, Loomis Sayles has agreed to certain
additional, voluntary arrangements to limit Fund expenses. These arrangements
may be modified or terminated by Loomis Sayles at any time.

Each advisory agreement provides that it will continue in effect for
two years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
relevant Fund and (ii) by vote of a majority of the Trustees who are not
"interested persons" of the Trust, as that term is defined in the 1940 Act, cast
in person at a meeting called for the purpose of voting on such approval. Any
amendment to an advisory agreement must be approved by vote of a majority of the
outstanding voting securities of the relevant Fund and by vote of a majority of
the Trustees who are not such interested persons, cast in person at a meeting
called for the purpose of voting on such approval. Each agreement may be
terminated without penalty by vote of the Board of Trustees or by vote of a
majority of the outstanding voting securities of the relevant Fund, upon sixty
days' written notice, or by Loomis Sayles upon ninety days' written notice, and
each terminates automatically in the event of its assignment. In addition, each
agreement will automatically terminate if the Trust or the Fund shall at any
time be required by Loomis Sayles to eliminate all reference to the words
"Loomis" and "Sayles" in the name of the Trust or the Fund, unless the
continuance of the agreement after such change of name is approved by a majority
of the outstanding voting securities of the relevant Fund and by a majority of
the Trustees who are not interested persons of the Trust or Loomis Sayles.

Each advisory agreement provides that Loomis Sayles shall not be
subject to any liability in connection with the performance of its services
thereunder in the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.

Loomis Sayles acts as investment adviser or subadviser to New England
Value Fund, New England Strategic Income Fund, New England Star Advisers Fund;
New England Star Small Cap Fund and New England Balanced Fund, which are series
of New England Funds Trust I, a registered open- end management investment
company, New England High Income Fund, a series of New England Fund Trust II, a
registered, open-end management investment company, and to the Loomis Sayles
Balanced Series and the Loomis Sayles Small Cap Series of New England Zenith
Fund, which is also a registered open-end management investment company, as well
as to Loomis Sayles Investment Trust, also a registered open-end management
investment company. Loomis Sayles also provides investment advice to certain
other open-end management investment companies and numerous other corporate and
fiduciary clients.

The general partner of Loomis Sayles is a special purpose corporation
that is an indirect wholly-owned subsidiary of Nvest Companies, L.P. ("Nvest
Companies"). Nvest Companies' managing general partner, Nvest Corporation, is a
direct wholly-owned subsidiary of Metropolitan Life Insurance Company ("Met
Life"), a mutual life insurance company. Nvest Companies' advising general
partner, Nvest L.P., is a publicly traded company listed on the New York Stock
Exchange. Nvest Corporation is the sole general partner of Nvest L.P.

31
<PAGE>

or sell the same portfolio securities at the same time, purchases and sales may
be allocated, to the extent practicable, on a pro rata basis in proportion to
the amounts desired to be purchased or sold for each. It is recognized that in
some cases the practices described in this paragraph could have a detrimental
effect on the price or amount of the securities which a Fund purchases or sells.
In other cases, however, it is believed that these practices may benefit the
Funds. It is the opinion of the trustees that the desirability of retaining
Loomis Sayles as adviser for the Funds outweighs the disadvantages, if any,
which might result from these practices.

DISTRIBUTION AGREEMENT AND RULE 12B-1 PLANS. Under an agreement with
the Trust (the "Distribution Agreement"), Loomis Sayles Distributors, L.P.
serves as the general distributor of each class of shares of the Funds. Under
this agreement, Loomis Sayles Distributors, L.P. is not obligated to sell a
specific number of shares. Loomis Sayles Distributors, L.P. bears the cost of
making information about the Funds available through advertising and other means
and the cost of printing and mailing the Prospectus to persons other than
shareholders. The Funds pay the cost of registering and qualifying their shares
under state and federal securities laws and the distribution of the Prospectus
to existing shareholders.

As described in the Prospectus, the Funds have adopted Rule 12b-1 plans
("Plans") for their Retail and Admin Class shares. The Plans, among other
things, permit the relevant classes of the Funds to pay the Funds' distributor
(currently Loomis Sayles Distributors, L.P.) monthly fees, at annual rates not
exceeding 0.25% of the assets of the Retail Class, Admin Class, and Class A,
respectively, as compensation for its services as principal underwriter of these
Funds' shares. Pursuant to Rule 12b-1 under the 1940 Act, each Plan (together
with the Distribution Agreement) was approved by the board of trustees,
including a majority of the trustees who are not interested persons of the Trust
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operations of the Plan or the Distribution Agreement (the
"Independent Trustees"). The principal types of activities for which payments
under these Plans may be made include payments to intermediaries for shareholder
servicing, for no transaction fee or wrap programs, and for retirement plan
recordkeeping. Payments under these Plans also may be made for activities such
as advertising, printing and mailing the Prospectus to persons who are not
current shareholders, compensation to underwriters, compensation to
broker-dealers, compensation to sales personnel, and interest, carrying or other
financing charges.

Each Plan may be terminated by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of the
relevant class of shares of the Fund to which the Plan relates. Each Plan may be
amended by vote of the trustees, including a majority of the Independent
Trustees, cast in person at a meeting called for the purpose. Any change in any
Plan that would materially increase the fees payable thereunder by the Retail
Class, Admin Class, or Class A shares of a Fund requires approval of the Retail
Class, Admin Class, or Class A shareholders of that Fund. The Trust's trustees
review quarterly written reports of such costs and the purposes for which such
costs have been incurred. Each Plan provides that, for so long as that Plan is
in effect, selection and nomination of those trustees who are not interested
persons of the Trust shall be committed to the discretion of such disinterested
persons.

The Distribution Agreement may be terminated at any time with respect
to a Fund on 60 days' written notice without payment of any penalty by the Trust
or by vote of a majority of the outstanding voting securities of that Fund or by
vote of a majority of the Independent Trustees.

The Distribution Agreement and the Plans will continue in effect for
successive one-year periods, provided that each such continuance is specifically
approved (i) by the vote of a majority of the entire board of trustees and (ii)
by the vote of a majority of the Independent Trustees, in each case cast in
person at a meeting called for that purpose.

CUSTODIAL ARRANGEMENTS. State Street Bank and Trust Company ("State
Street Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such,
State Street Bank holds in safekeeping certificated

32
<PAGE>

securities and cash belonging to the Funds and, in such capacity, is the
registered owner of securities held in book entry form belonging to the Funds.
Upon instruction, State Street Bank receives and delivers cash and securities of
the Funds in connection with Fund transactions and collects all dividends and
other distributions made with respect to Fund portfolio securities. State Street
Bank also maintains certain accounts and records of the Funds and calculates the
total net asset value, total net income and net asset value per share of each
Fund on a daily basis.

INDEPENDENT ACCOUNTANTS. The Trust's independent accountants are
_______________. __________________ conducts an annual audit of the Trust's
financial statements, assists in the preparation of the Funds' federal and state
income tax returns and consults with the Funds as to matters of accounting and
federal and state income taxation. The information under the caption "Financial
Highlights" included in the Prospectus has been so included, and the financial
statements incorporated by reference herein from the Fund's 1998 Annual Report
have been so incorporated, in reliance on the reports of _______________, given
on the authority of said firm as experts in auditing and accounting.

PORTFOLIO TRANSACTIONS AND BROKERAGE

In placing orders for the purchase and sale of portfolio securities for
each Fund, Loomis Sayles always seeks the best price and execution. Transactions
in unlisted securities are carried out through broker-dealers who make the
primary market for such securities unless, in the judgment of Loomis Sayles, a
more favorable price can be obtained by carrying out such transactions through
other brokers or dealers.

Loomis Sayles selects only brokers or dealers which it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates
which, when combined with the quality of the foregoing services, will produce
best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing rates.
Loomis Sayles will use its best efforts to obtain information as to the general
level of commission rates being charged by the brokerage community from time to
time and will evaluate the overall reasonableness of brokerage commissions paid
on transactions by reference to such data. In making such evaluation, all
factors affecting liquidity and execution of the order, as well as the amount of
the capital commitment by the broker in connection with the order, are taken
into account. The Funds, other than the Loomis Sayles Emerging Markets Fund, the
Loomis Sayles Global Bond Fund, the Loomis Sayles Global Technology Fund, the
Loomis Sayles International Equity Fund, and the Loomis Sayles Worldwide Fund,
will not pay a broker a commission at a higher rate than otherwise available for
the same transaction in recognition of the value of research services provided
by the broker or in recognition of the value of any other services provided by
the broker that do not contribute to the best price and execution of the
transaction.

Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Loomis Sayles believes will provide best price and
execution for a transaction. These research services include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although it
is not possible to assign an exact dollar value to these services, they may, to
the extent used, tend to reduce Loomis Sayles' expenses. Such services may be
used by Loomis Sayles in servicing other client accounts and in some cases may
not be used with respect to the Funds. Receipt of services or products other
than research from brokers is not a factor in the selection of brokers.

LOOMIS SAYLES EMERGING MARKETS FUND, LOOMIS SAYLES GLOBAL BOND FUND,
LOOMIS SAYLES GLOBAL TECHNOLOGY FUND, LOOMIS SAYLES INTERNATIONAL EQUITY FUND,
AND LOOMIS SAYLES WORLDWIDE FUND. In placing orders for the purchase and sale of
securities for the Loomis Sayles Emerging Markets Fund, the Loomis Sayles Global
Bond Fund, the Loomis Sayles Global Technology Fund, the Loomis Sayles
International Equity Fund,

33
<PAGE>

and the Loomis Sayles Worldwide Fund, Loomis Sayles follows the same policies as
for the other Funds, except that Loomis Sayles may cause the these Funds to pay
a broker-dealer that provides brokerage and research services to Loomis Sayles
an amount of commission for effecting a securities transaction for these Funds
in excess of the amount another broker-dealer would have charged for effecting
that transaction. Loomis Sayles must determine in good faith that such greater
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker-dealer viewed in terms of that
particular transaction or Loomis Sayles' overall responsibilities to the Trust
and its other clients. Loomis Sayles's authority to cause these Funds to pay
such greater commissions is also subject to such policies as the Trustees of the
Trust may adopt from time to time.

The following tables set forth, for the 1997 and 1999 fiscal years and
the 1998 fiscal period (January 1, 1998 through September 30, 1998),
respectively, (1) the aggregate dollar amount of brokerage commissions paid on
portfolio transactions during such period, (2) the dollar amount of transactions
on which brokerage commissions were paid during such period that were directed
to brokers providing research services ("directed transactions") and (3) the
dollar amount of commissions paid on directed transactions during such period.
Funds not listed in a table did not pay brokerage commissions during the
relevant period.

FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(1) (2) (3)
AGGREGATE COMMISSIONS
BROKERAGE DIRECTED ON DIRECTED
FUND COMMISSIONS TRANSACTIONS TRANSACTIONS
- ---- ------------ ------------ ------------
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund $ 6,261 $ 45,426 $ 84
Loomis Sayles Core Value Fund $ 81,471 $ 22,718,537 $ 21,202
Loomis Sayles Growth Fund $ 81,395 $ 3,200,161 $ 4,782
Loomis Sayles International Equity Fund $ 759,784 $ 220, 336,814 $ 28,794
Loomis Sayles Mid-Cap Value Fund $ 7,298 $ 83,840 $ 319
Loomis Sayles Small Cap Growth Fund $ 9,774 $ 181,489 $ 672
Loomis Sayles Small Cap Value Fund $ 579,295 $ 29,877,865 $ 71,938
Loomis Sayles Worldwide Fund $ 9,953 $ 4,261,122 $ 489
</TABLE>

34
<PAGE>

FISCAL PERIOD ENDED SEPTEMBER 30, 1998
(January 1, 1998 - September 30, 1998)

(1) (2) (3)
AGGREGATE COMMISSIONS
BROKERAGE DIRECTED ON DIRECTED
FUND COMMISSIONS TRANSACTIONS TRANSACTIONS
- ---- ----------- ------------ ------------
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund $ 5,336 $ 4,300 $ 256
Loomis Sayles Core Value Fund $ 76,841 $ 23,336,695 $ 27,893
Loomis Sayles Growth Fund $ 84,990 $ 114,400 $ 6,864
Loomis Sayles International Equity Fund $ 466,218 $ 6,619,778 $ 15,145
Loomis Sayles Mid-Cap Value Fund $ 14,031 $ 246,357 $ 569
Loomis Sayles Small Cap Growth Fund $ 22,443 $ 154,320 $ 348
Loomis Sayles Small Cap Value Fund $ 872,492 $ 42,599,200 $ 78,151
Loomis Sayles Worldwide Fund $ 20,610 $ 3,333,161 $ 520
</TABLE>

FISCAL YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
(1) (2) (3)
AGGREGATE COMMISSIONS
BROKERAGE DIRECTED ON DIRECTED
FUND COMMISSIONS TRANSACTIONS TRANSACTIONS
- ---- ----------- ------------ ------------
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund
Loomis Sayles Core Value Fund
Loomis Sayles Growth Fund
Loomis Sayles International Equity Fund
Loomis Sayles Mid-Cap Value Fund
Loomis Sayles Small Cap Growth Fund
Loomis Sayles Small Cap Value Fund
Loomis Sayles Worldwide Fund
</TABLE>

35
<PAGE>

DESCRIPTION OF THE TRUST

The Trust, registered with the SEC as a diversified open-end management
investment company, is organized as a Massachusetts business trust under the
laws of Massachusetts by an Agreement and Declaration of Trust (the "Declaration
of Trust") dated February 20, 1991.

The Declaration of Trust currently permits the trustees to issue an
unlimited number of full and fractional shares of each series. Each share of
each Fund represents an equal proportionate interest in such Fund with each
other share of that Fund and is entitled to a proportionate interest in the
dividends and distributions from that Fund. The shares of each Fund do not have
any preemptive rights. Upon termination of any Fund, whether pursuant to
liquidation of the Trust or otherwise, shareholders of that Fund are entitled to
share pro rata in the net assets of that Fund available for distribution to
shareholders. The Declaration of Trust also permits the trustees to charge
shareholders directly for custodial, transfer agency and servicing expenses.

The assets received by each Fund for the issue or sale of its shares
and all income, earnings, profits, losses and proceeds therefrom, subject only
to the rights of creditors, are allocated to, and constitute the underlying
assets of, that Fund. The underlying assets are segregated and are charged with
the expenses with respect to that Fund and with a share of the general expenses
of the Trust. Any general expenses of the Trust that are not readily
identifiable as belonging to a particular Fund are allocated by or under the
direction of the trustees in such manner as the trustees determine to be fair
and equitable. While the expenses of the Trust are allocated to the separate
books of account of each Fund, certain expenses may be legally chargeable
against the assets of all Funds.

The Declaration of Trust also permits the trustees, without shareholder
approval, to subdivide any series of shares or Fund into various classes of
shares with such dividend preferences and other rights as the trustees may
designate. Shares of each Fund (other than the Loomis Sayles Emerging Markets
Fund, the Loomis Sayles High Yield Fund, the Loomis Sayles Municipal Bond Fund,
and the Loomis Sayles U.S. Government Securities Fund) are currently divided
into two classes, designated Retail Class and Institutional Class shares. The
Loomis Sayles Bond Fund and the Loomis Sayles Small Cap Value Fund offer a third
class of shares designated Admin Class shares. The Loomis Sayles Aggressive
Growth Fund and the Loomis Sayles Global Technology Fund offer a third class of
shares designated Class A shares, which have a sales charge of ___%. The
trustees may also, without shareholder approval, establish one or more
additional separate portfolios for investments in the Trust or merge two or more
existing portfolios. Shareholders' investments in such an additional or merged
portfolio would be evidenced by a separate series of shares (i.e., a new
"Fund").

The Declaration of Trust provides for the perpetual existence of the
Trust. The Declaration of Trust, however, provides that the trustees may
terminate the Trust or any Fund upon written notice to the shareholders.

VOTING RIGHTS

As summarized in the Prospectus, shareholders are entitled to one vote
for each full share held (with fractional votes for each fractional share held)
and may vote (to the extent provided in the Declaration of Trust) on the
election of trustees and the termination of the Trust and on other matters
submitted to the vote of shareholders.

36
<PAGE>

identical or that the matter does not affect any interest of such class. On
matters affecting an individual series, only shareholders of that series are
entitled to vote. Consistent with the current position of the SEC, shareholders
of all series vote together, irrespective of series, on the election of trustees
and the selection of the Trust's independent accountants, but shareholders of
each series vote separately on other matters requiring shareholder approval,
such as certain changes in investment policies of that series or the approval of
the investment advisory agreement relating to that series.

There will normally be no meetings of shareholders for the purpose of
electing trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of trustees at such time as
less than a majority of the trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the board of trustees,
less than two-thirds of the trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.

Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).

Except as set forth above, the trustees shall continue to hold office
and may appoint successor trustees. Voting rights are not cumulative.

No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the Declaration
of Trust and (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value).

SHAREHOLDER AND TRUSTEE LIABILITY

Under Massachusetts law shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund of
which they are shareholders. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of each Fund and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the trustees. The Declaration of Trust
provides for indemnification out of Fund property for all loss and expense of
any shareholder held personally liable for the obligations of the Fund. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is considered remote since it is limited to circumstances in which the
disclaimer is inoperative and the Fund itself would be unable to meet its
obligations.

The Declaration of Trust further provides that the trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a trustee against any liability to which the
trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. The By-Laws of the Trust provide for indemnification by the Trust of
the trustees and officers of the Trust except with respect to any matter as to
which any such person did not act in good faith in the reasonable belief that
such action was in or not opposed to the best interests of the Trust. No officer
or trustee may be indemnified against any liability to the Trust or the Trust's

37
<PAGE>

shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.

HOW TO BUY SHARES

The procedures for purchasing shares of each Fund are summarized in the
Prospectus under "General Information-How to Purchase Shares."

NET ASSET VALUE

The net asset value of the shares of each Fund is determined by
dividing that Fund's total net assets (the excess of its assets over its
liabilities) by the total number of shares of the Fund outstanding and rounding
to the nearest cent. Such determination is made as of the close of regular
trading on the New York Stock Exchange (generally 4:00 p.m. Eastern time) on
each day on which that Exchange is open for unrestricted trading, and no less
frequently than once daily on each day during which there is sufficient trading
in a Fund's portfolio securities that the value of that Fund's shares might be
materially affected. During the 12 months following the date of this Statement
of Additional Information, the New York Stock Exchange is expected to be closed
on the following weekdays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Equity securities listed on an established
securities exchange or on the Nasdaq National Market System are normally valued
at their last sale price on the exchange where primarily traded or, if there is
no reported sale during the day, and in the case of over-the-counter securities
not so listed, at the last bid price. Long-term debt securities are valued by a
pricing service, which determines valuations of normal institutional-size
trading units of long-term debt securities. Such valuations are determined using
methods based on market transactions for comparable securities and on various
relationships between securities which are generally recognized by institutional
traders. Other securities for which current market quotations are not readily
available (including restricted securities, if any) and all other assets are
taken at fair value as determined in good faith by the board of trustees,
although the actual calculations may be made by persons acting pursuant to the
direction of the board.

Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of regular trading on the
New York Stock Exchange. Occasionally, events affecting the value of foreign
fixed income securities and of equity securities of non-U.S. issuers not traded
on a U.S. exchange may occur between the completion of substantial trading of
such securities for the day and the close of regular trading on the New York
Stock Exchange, which events will not be reflected in the computation of the
Fund's net asset value. If events materially affecting the value of any Fund's
portfolio securities occur during such period, then these securities may be
valued at their fair value as determined in good faith by or in accordance with
procedures approved by the trustees.

SHAREHOLDER SERVICES

OPEN ACCOUNTS

A shareholder's investment in any Fund, except the Loomis Sayles
Emerging Markets Fund, is automatically credited to an open account maintained
for the shareholder by Boston Financial Data Services, Inc. ("BFDS"), the
shareholder servicing agent for State Street Bank. The shareholder servicing
agent for the Loomis Sayles Emerging Markets Fund is State Street Bank.
Certificates representing shares are issued only upon written request to BFDS
but are not issued for fractional shares. Following each transaction in the
account, a shareholder will receive an account statement disclosing the current
balance of shares owned and the details of recent transactions in the account.
After the close of each fiscal year BFDS will send each shareholder a statement

38
<PAGE>

providing federal tax information on dividends and distributions paid to the
shareholder during the year. This should be retained as a permanent record.
Shareholders will be charged a fee for duplicate information.

The open account system permits the purchase of full and fractional
shares and, by making the issuance and delivery of certificates representing
shares unnecessary, eliminates the problems of handling and safekeeping
certificates, and the cost and inconvenience of replacing lost, stolen,
mutilated or destroyed certificates.

The costs of maintaining the open account system are borne by the
Trust, and no direct charges are made to shareholders. Although the Trust has no
present intention of making such direct charges to shareholders, it reserves the
right to do so. Shareholders will receive prior notice before any such charges
are made.

SYSTEMATIC WITHDRAWAL PLAN

A Systematic Withdrawal Plan, referred to in the Prospectus under
"General Information--How to Redeem Shares," provides for monthly, quarterly,
semiannual or annual withdrawal payments of $50 or more from the account of an
eligible shareholder, as provided therein, provided that the account has a value
of at least $25,000 at the time the plan is established. The Systematic
Withdrawal Plan is not available for the Loomis Sayles Emerging Markets Fund.

Payments will be made either to the shareholder or to any other person
designated by the shareholder. If payments are issued to an individual other
than the registered owner(s), a signature guarantee will be required on the Plan
application. All shares in an account that is subject to a Systematic Withdrawal
Plan must be held in an open account rather than in certificated form. Income
dividends and capital gain distributions will be reinvested at the net asset
value determined as of the close of regular trading on the New York Stock
Exchange on the record date for the dividend or distribution.

Since withdrawal payments represent proceeds from liquidation of
shares, the shareholder should recognize that withdrawals may reduce and
possibly exhaust the value of the account, particularly in the event of a
decline in net asset value. Accordingly, the shareholder should consider whether
a Systematic Withdrawal Plan and the specified amounts to be withdrawn are
appropriate in the circumstances. The Fund makes no recommendations or
representations in this regard. It may be appropriate for the shareholder to
consult a tax adviser before establishing such a plan. See "Redemptions" and
"Income Dividends, Capital Gain Distributions and Tax Status" below for certain
information as to federal income taxes.

EXCHANGE PRIVILEGE

Shareholders may redeem their shares of any Fund, except the Loomis
Sayles Emerging Markets Fund, and have the proceeds applied on the same day to
purchase shares of the same class of any other Fund or of New England Cash
Management Trust or New England Tax Exempt Money Market Trust, as long as the
investment minimum of the Fund into which the exchange is made is met. Exchange
of shares of the Loomis Sayles High Yield Fund purchased within one year of such
exchanges will be subject to a redemption fee of 2.00% of the amount exchanged.
For purposes of determining whether a redemption fee is payable with respect to
shares of the Loomis Sayles High Yield Fund purchased by exchange of shares of
another fund, the one-year period shall be deemed to begin on the date of such
purchase by exchange. Class A shares of the Loomis Sayles Aggressive Growth Fund
and the Loomis Sayles Global Technology Fund can be exchanged into Class A
shares of any series of Loomis Sayles Funds or New England Funds that offers
Class A shares. This exchange privilege is summarized in the Prospectus under
"General Information--How to Exchange Shares."

Exchanges may be effected by (1) making a telephone request by calling
800-626-9390, provided that a special authorization form is on file with BFDS,
or (2) sending a written exchange request to BFDS accompanied

39
<PAGE>

by an account application for the appropriate fund. The Trust reserves the right
to modify this exchange privilege without prior notice. An exchange constitutes
a sale of the shares for federal income tax purposes on which the investor may
realize a capital gain or loss.

This exchange privilege is not available to shareholders of the Loomis
Sayles Emerging Markets Fund.

IRAS

IRAs may be established under a prototype plan made available by Loomis
Sayles. These plans may be funded with shares of any Fund, although it is
expected that shares of the Municipal Bond Fund would ordinarily not be an
appropriate investment for these plans.

All income dividends and capital gain distributions of plan
participants must be reinvested. Plan documents and further information can be
obtained from Loomis Sayles.

Check with your financial or tax adviser as to the suitability of Fund
shares for your retirement plan.

REDEMPTIONS

The procedures for redemption of Fund shares are summarized in the
Prospectus under "General Information--How to Redeem Shares."

Except as noted below, signatures on redemption requests must be
guaranteed by commercial banks, trust companies, savings associations, credit
unions or brokerage firms that are members of domestic securities exchanges.
Signature guarantees by notaries public are not acceptable. However, as noted in
the Prospectus, a signature guarantee will not be required if the proceeds of
the redemption do not exceed $50,000 and the proceeds check is made payable to
the registered owner(s) and mailed to the record address for an account whose
account registration has not changed in the past 30 days.

If a shareholder selects the telephone redemption service in the manner
described in the next paragraph, Fund shares may be redeemed by making a
telephone call directly to BFDS at 800-626-9390. When a telephonic redemption
request is received, the proceeds are wired to the bank account previously
chosen by the shareholder and a nominal wire fee (currently $5.00) is deducted.
Telephonic redemption requests must be received by BFDS prior to the close of
regular trading on the New York Stock Exchange on a day when the Exchange is
open for business. Requests made after that time or on a day when the New York
Stock Exchange is not open for business cannot be accepted by BFDS and a new
request will be necessary.

In order to redeem shares by telephone, a shareholder must either
select this service when completing the Fund application or must do so
subsequently in writing. When selecting the service, a shareholder must
designate a bank account to which the redemption proceeds should be wired. Any
change in the bank account so designated must be made by furnishing to BFDS a
written request with a signature guarantee. Telephone redemptions may only be
made if an investor's bank is a member of the Federal Reserve System or has a
correspondent bank that is a member of the System. If the account is with a
savings bank, it must have only one correspondent bank that is a member of the
System. The Trust, BFDS, Loomis Sayles Distributors, L.P., and State Street Bank
are not responsible for the authenticity of withdrawal instructions received by
telephone.

Telephone redemptions are not available for the Loomis Sayles Emerging
Markets Fund.

The redemption price will be the net asset value per share next
determined after the redemption request and any necessary special documentation
are received by BFDS in proper form, less, in the case of the High Yield

40
<PAGE>

Fund and the Emerging Markets Fund, a redemption fee of 2.00% of the amount
redeemed with respect to shares of that Fund redeemed within one (1) year of
purchase, if applicable. Proceeds resulting from a written redemption request
will normally be mailed to the shareholder within seven days after receipt of a
request in good order. Telephonic redemption proceeds will normally be wired on
the first business day following receipt of a proper redemption request. In
those cases where a shareholder has recently purchased shares by check and the
check was received less than fifteen days prior to the redemption request, the
Fund may withhold redemption proceeds until the check has cleared.

Each Fund will normally redeem shares for cash; however, each Fund
reserves the right to pay the redemption price wholly or partly in kind. If
portfolio securities are distributed in lieu of cash, the shareholder will
normally incur brokerage commissions upon subsequent disposition of any such
securities. However, the Trust has elected to be governed by Rule 18f-1 under
the 1940 Act pursuant to which the Trust is obligated to redeem shares solely in
cash for any shareholder during any 90-day period up to the lesser of $250,000
or 1% of the total net asset value of the Trust at the beginning of such period.

A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long- or short-term capital gain or
loss. See "Income Dividends, Capital Gain Distributions and Tax Status."

INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS

As described in the Prospectus under "Dividends and Distributions," it
is the policy of each Fund to pay its shareholders, as dividends, substantially
all net investment income and to distribute annually all net realized capital
gains, if any, after offsetting any capital loss carryovers.

Income dividends and capital gain distributions are payable in full and
fractional shares of the particular Fund based upon the net asset value
determined as of the close of regular trading on the New York Stock Exchange on
the record date for each dividend or distribution. Shareholders, however, may
elect to receive their income dividends or capital gain distributions, or both,
in cash. The election may be made at any time by submitting a written request
directly to BFDS. In order for a change to be in effect for any dividend or
distribution, it must be received by BFDS on or before the record date for such
dividend or distribution.

As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31 of
the succeeding year.

The Internal Revenue Service (IRS) requires any Fund to withhold 31% of
any redemption proceeds (including the value of shares exchanged) and of any
income dividends and capital gain distributions in the following situations:

- - If you do not provide a correct, certified taxpayer identification
number to the Fund.

- - If the IRS notifies the Fund that you have underreported your income in
the past and thus are subject to backup withholding.

- - If you fail to certify to the Fund that you are not subject to such
backup withholding.

Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Code. In order so to qualify and to qualify
for the favorable tax treatment accorded regulated investment companies and
their shareholders, the Fund must, among other things, (i) derive at least 90%
of its gross income from dividends, interest, payments with respect to certain
securities loans, gains from the sale of securities or

41
<PAGE>

foreign currencies, or other income (including, but not limited to, gains from
options, futures or forward contracts) derived with respect to its business of
investing in such stock, securities or currencies; (ii) distribute with respect
to each taxable year at least 90% of the sum of its taxable net investment
income, its tax-exempt income and the excess, if any, of net short-term capital
gains over net long-term capital losses for such year; and (iii) diversify its
holdings so that at the end of each fiscal quarter (a) at least 50% of the value
of its assets is invested in cash, U.S. government securities, securities of
other regulated investment companies, and other securities of issuers which
represent, with respect to each issuer, no more than 5% of the value of the
Fund's assets and 10% of the outstanding voting securities of such issuer and
(b) not more than 25% of its assets is invested in the securities (other than
those of the U.S. government or other regulated investment companies) of any one
issuer or of two or more issuers which the Fund controls and which are engaged
in the same, similar or related trades and businesses. To the extent it
qualifies for treatment as a regulated investment company, the Fund will not be
subject to federal income tax on income paid to its shareholders in the form of
dividends or capital gain distributions.

An excise tax at the rate of 4% will be imposed on the excess, if any,
of each Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund so elects) plus undistributed amounts from prior years. Each Fund
intends to make distributions sufficient to avoid imposition of the excise tax.
Distributions declared by a Fund during October, November or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which declared.

Shareholders of each Fund will be subject to federal income taxes on
distributions made by the Fund (other than "exempt-interest dividends" paid by
the Loomis Sayles Municipal Bond Fund, as described in the Prospectus) whether
received in cash or additional shares of the Fund. Distributions by each Fund of
net income and short-term capital gains, if any, will be taxable to shareholders
as ordinary income. Distributions designated by a Fund as deriving from net
gains on securities held for more than one year will be taxable to shareholders
as long-term capital gain (generally taxed at a rate of 20% for noncorporate
shareholders), without regard to how long a shareholder has held shares of the
Fund.

Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when a Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed. Such realized gains may be required to be
distributed even when a Fund's net asset value also reflects unrealized losses.

The Loomis Sayles Emerging Markets Fund, the Loomis Sayles Global
Technology Fund, the Loomis Sayles International Equity Fund, the Loomis Sayles
Worldwide Fund, and the Loomis Sayles Global Bond Fund each may be eligible to
make an election under Section 853 of the Code so that its shareholders will be
able to claim a credit or deduction on their income tax returns for, and will be
required to treat as part of the amounts distributed to them, their pro rata
portion of qualified taxes paid by the relevant Fund to foreign countries. The
ability of shareholders of the Fund to claim a foreign tax credit is subject to
certain limitations imposed by Section 904 of the Code, which in general limit
the amount of foreign tax that may be used to reduce a shareholder's U.S. tax
liability to that amount of U.S. tax which would be imposed on the amount and
type of income in respect of which the foreign tax was paid. In addition, a
shareholder must hold shares of the Fund (without protection from risk of loss)
on the ex-dividend date and for at least 16 days during the 30-day period
beginning on the date that is 15 days before the ex-dividend date in order to be
eligible to claim a foreign credit for his or her share of these foreign taxes.
A shareholder who for U.S. income tax purposes claims a foreign tax credit in
respect of Fund

42
<PAGE>

distributions may not claim a deduction for foreign taxes paid by the Fund,
regardless of whether the shareholder itemizes deductions. Also, under Section
63 of the Code, no deduction for foreign taxes may be claimed by shareholders
who do not itemize deductions on their federal income tax returns. It should
also be noted that a tax-exempt shareholder, like other shareholders, will be
required to treat as part of the amounts distributed to it a pro rata portion of
the income taxes paid by the Fund to foreign countries. However, that income
will generally be exempt from United States taxation by virtue of such
shareholder's tax-exempt status and such a shareholder will not be entitled to
either a tax credit or a deduction with respect to such income. The Loomis
Sayles Emerging Markets Fund, the Loomis Sayles Global Technology Fund, the
Loomis Sayles International Equity Fund, the Loomis Sayles Worldwide Fund and
the Loomis Sayles Global Bond Fund will notify shareholders each year of the
amount of dividends and distributions and the shareholder's pro rata share of
qualified taxes paid by each such Fund to foreign countries.

Each Fund's transactions, if any, in foreign currencies are likely to
result in a difference between the Fund's book income and taxable income. This
difference may cause a portion of the Fund's income distributions to constitute
a return of capital for tax purposes or require the Fund to make distributions
exceeding book income to avoid excise tax liability and to qualify as a
regulated investment company.

Investment by a Fund in "passive foreign investment companies" could
subject the Fund to U.S. federal income tax or other charge on the proceeds from
the sale of its investment in such a company; however, this tax can be avoided
by making an election to mark such investments to market annually or to treat
the passive foreign investment company as a "qualified electing fund."

If a Fund engages in hedging transactions, including hedging
transactions in options, futures contracts, and straddles, or other similar
transactions, it will be subject to special tax rules (including constructive
sale, mark-to-market, straddle, wash sale, and short sale rules), the effect of
which may be to accelerate income to the Fund, defer losses to the Fund, cause
adjustments in the holding periods of the Fund's securities, or convert
short-term capital losses into long-term capital losses. These rules could
therefore affect the amount, timing and character of distributions to
shareholders. Each Fund will endeavor to make any available elections pertaining
to such transactions in a manner believed to be in the best interests of the
Fund.

A Fund's investment in securities issued at a discount and certain
other obligations will (and investments in securities purchased at a discount
may) require the Fund to accrue and distribute income not yet received. In such
cases, a Fund may be required to sell assets (including when it is not
advantageous to do so) to generate the cash necessary to distribute as dividends
to its shareholders all of its income and gains and therefore to eliminate any
tax liability at the Fund level.

Generally a Fund may designate dividends eligible for the
dividends-received deduction only to the extent that such dividends are derived
from dividends paid to the Fund with respect to which Fund could have taken the
dividends-received deduction if it had been a regular corporation. The
dividends-received deduction is not available to non-corporate shareholders,
Subchapter S corporations or corporations who do not hold their shares for at
least 46 days during the 90-day period beginning on the date that is 45 days
before the ex-dividend date. The dividends-received deduction also is not
available with respect to dividends derived from a Fund's investment in foreign
securities or REITs.

Redemptions and exchanges of each Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions. In
general, any gain realized upon a taxable disposition of shares will be treated
as long-term capital gain if the shares have been held for more than one year.
Otherwise the gain on the sale, exchange or redemption of Fund shares will be
treated as short-term capital gain. However, if a shareholder sells Fund shares
at a loss within six months after purchasing the shares, the loss will be
treated as a long-term capital loss to the extent of any long-term capital gain
distributions received by the shareholder.

43
<PAGE>

Furthermore, no loss will be allowed on the sale of Fund shares to the extent
the shareholder acquired other shares of the same Fund within 30 days prior to
the sale of the loss shares or 30 days after such sale.

The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action.

Dividends and distributions also may be subject to foreign, state and
local taxes. Shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state, foreign, or local taxes.

The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty). The Internal Revenue Service
recently revised its regulations affecting the application to foreign investors
of the back-up withholding tax rules. The new regulations will generally be
effective for payments made on or after January 1, 2001 (although transition
rules will apply). In some circumstances, the new rules will increase the
certification and filing requirements imposed on foreign investors in order to
qualify for exemption from the 31% back-up withholding tax and for reduced
withholding tax rates under income tax treaties. Foreign investors in each Fund
should consult their advisors with respect to the potential application of these
new regulations.

FINANCIAL STATEMENTS

The financial statements of each Fund included in the Trust's 1999
Annual Report, filed with the Securities and Exchange Commission on
_______________, 1999, are incorporated by reference to such Report.

CALCULATION OF YIELD AND TOTAL RETURN

YIELD. Yield with respect to a Fund will be computed by dividing such
Fund's net investment income for a recent 30-day period by the maximum offering
price (reduced by any undeclared earned income expected to be paid shortly as a
dividend) on the last trading day of that period. Net investment income will
reflect amortization of any market value premium or discount of fixed income
securities (except for obligations backed by mortgages or other assets) and may
include recognition of a pro rata portion of the stated dividend rate of
dividend paying portfolio securities. The Funds' yields will vary from time to
time depending upon market conditions, the composition of the Funds' portfolios
and operating expenses of the Trust allocated to each Fund. These factors, and
possible differences in the methods used in calculating yield, should be
considered when comparing a Fund's yield to yields published for other
investment companies and other investment vehicles. Yield should also be
considered relative to changes in the value of the Funds' shares and to the
relative risks associated with the investment objectives and policies of the
Funds.

At any time in the future, yields may be higher or lower than past
yields and there can be no assurance that any historical results will continue.

Investors in the Funds are specifically advised that the net asset
value per share of each Fund may vary, just as yields for each Fund may vary. An
investor's focus on yield to the exclusion of the consideration of the value of
shares of that Fund may result in the investor's misunderstanding the total
return he or she may derive from that Fund.

TOTAL RETURN. Total Return with respect to a Fund is a measure of the
change in value of an investment in such Fund over the period covered, and
assumes any dividends or capital gains distributions are reinvested

44
<PAGE>

immediately, rather than paid to the investor in cash. The formula for total
return used herein includes four steps: (1) adding to the total number of shares
purchased through a hypothetical $1,000 investment in the Fund all additional
shares which would have been purchased if all dividends and distributions paid
or distributed during the period had been immediately reinvested; (2)
calculating the value of the hypothetical initial investment of $1,000 as of the
end of the period by multiplying the total number of shares owned at the end of
the period by the net asset value per share on the last trading day of the
period; (3) assuming redemption at the end of the period; and (4) dividing the
resulting account value by the initial $1,000 investment.

PERFORMANCE COMPARISONS

YIELD AND TOTAL RETURN. Each Fund may from time to time include its
total return information in advertisements or in information furnished to
present or prospective shareholders. Each of the Bond, Global Bond, High Yield,
Intermediate Maturity Bond, Investment Grade Bond, Municipal Bond, Short-Term
Bond, U.S. Government Securities and Worldwide Funds may from time to time
include the yield and/or total return of its shares in advertisements or
information furnished to present or prospective shareholders. Each Fund may from
time to time include in advertisements or information furnished to present or
prospective shareholders (i) the ranking of performance figures relative to such
figures for groups of mutual funds categorized by Lipper Analytical Services,
Inc. or Standard & Poor's Micropal, Inc. as having similar investment
objectives, (ii) the rating assigned to the Fund by Morningstar, Inc. based on
the Fund's risk-adjusted or straight performance relative to other mutual funds
in its broad investment class, and/or (iii) the ranking of performance figures
relative to such figures for mutual funds in its general investment category as
determined by CDA/Weisenberger's Management Results.

VOLATILITY. Each Fund may quote various measures of its volatility and
benchmark correlation. In addition, a Fund may compare these measures to those
of other funds and indices. Measures of volatility seek to compare a Fund's
historical share price fluctuations or total returns to those of a benchmark.
Measures of benchmark correlation indicate the extent to which a Fund's returns
change in ways similar to those of the benchmark. All measures of volatility and
correlation are calculated using averages of historical data. Each Fund may
utilize charts and graphs to present a Fund's volatility and average annual
total return. Each Fund may also discuss or illustrate examples of interest rate
sensitivity.

LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund rankings
monthly. The rankings are based on total return performance calculated by
Lipper, generally reflecting changes in net asset value adjusted for
reinvestment of capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a variety of performance
periods, including, but not limited to, year-to-date, 1-year, 5-year, and
10-year performance. Lipper classifies mutual funds by investment objective and
asset category.

STANDARD & POOR'S MICROPAL, INC. distributes mutual fund rankings
weekly and monthly. The rankings are based upon performance calculated by
Micropal, generally reflecting changes in net asset value that can be adjusted
for the reinvestment of capital gains and dividends. If deemed appropriate by
the user, performance can also reflect deductions for sales charges. Micropal
rankings cover a variety of performance periods, including, but not limited to,
year-to-date, 1-year, 5-year and 10-year performance. Micropal classifies mutual
funds by investment objective and asset category.

MORNINGSTAR, INC. distributes mutual fund ratings monthly. The ratings
are divided into five groups: highest, above average, neutral, below average and
lowest. They represent a fund's historical risk/reward ratio relative to other
funds in its broad investment class as determined by Morningstar, Inc.
Morningstar ratings cover a variety of performance periods, including 3-year,
5-year, 10-year and overall performance. The performance factor for the overall
rating is a weighted-average return performance (if available) reflecting
deduction of expenses and sales charges. Performance is adjusted using
quantitative techniques to reflect the risk profile of the

45
<PAGE>

fund. The ratings are derived from a purely quantitative system that does not
utilize the subjective criteria customarily employed by rating agencies such as
Standard & Poor's and Moody's Investor Service, Inc.

STANDARD & POOR'S SELECT FUNDS are funds selected by Standard & Poor's
that have demonstrated above-average absolute and volatility-adjusted returns
relative to funds with the same investment style, along with having investment
management attributes that are consistent with the fund's investment style.
Select Fund designation is based on a six-month moving average of three years of
absolute and volatility-adjusted performance. A Select Fund designation does not
address the market risk, credit risk, or counterparty risk of a fund, nor does
it address a fund's suitability as a counterparty or obligor.

VALUE LINE INVESTMENT SURVEY is an investment advisory service that
ranks approximately 1,700 stocks for "timeliness" and safety. Using a
computerized model based on earnings momentum, Value Line projects which stocks
will have the best or worst relative price performance over the next 6 to 12
months. In addition, each stock is assigned a risk rating, which identifies the
volatility of a stock's price behavior relative to the market average.
The service also ranks all major industry groups for timeliness.

CDA/WEISENBERGER'S MANAGEMENT RESULTS publishes mutual fund rankings
and is distributed monthly. The rankings are based entirely on total return
calculated by Weisenberger for periods such as year-to-date, 1- year, 3-year,
5-year and 10-year Mutual funds are ranked in general categories (e.g.,
international bond, international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of sales charges or fees.

Performance information may also be used to compare the performance of
the Fund to certain widely acknowledged standards or indices for stock and bond
market performance, such as those listed below.

CONSUMER PRICE INDEX. The Consumer Price Index, published by the U.S.
Bureau of Labor Statistics, is a statistical measure of changes, over time, in
the prices of goods and services in major expenditure groups.

DOW JONES INDUSTRIAL AVERAGE. The Dow Jones Industrial Average is a
market value-weighted and unmanaged index of 30 large industrial stocks traded
on the New York Stock Exchange.

LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX. The Lehman Brothers
Government/Corporate Bond Index is an index of publicly issued U.S. Treasury
obligations, debt obligations of U.S. government agencies (excluding
mortgage-backed securities), fixed-rate, non-convertible, investment-grade
corporate debt securities and U.S. dollar-denominated, SEC-registered
non-convertible debt issued by foreign governmental entities or international
agencies used as a general measure of the performance of fixed-income
securities.

LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX. Lehman
Brothers Government/Corporate Intermediate Bond Index consists of those bonds
held within the Lehman Brothers Government/Corporate Bond index which have an
average maturity of 1-10 years.

LEHMAN BROTHERS 1-3 YEAR GOVERNMENT INDEX. The Index contains fixed
rate debt issues of the U.S. government or its agencies rated investment grade
or higher with at least one year maturity and an outstanding par value of at
least $100 million for U.S. government issues.

LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX. The Index is
a market value weighted performance benchmark for government and corporate
fixed-rate debt issues with maturities of between one and three years.

46
<PAGE>

LEHMAN BROTHERS GOVERNMENT BOND INDEX. The Lehman Brothers Government
Bond Index is composed of all publicly issued, nonconvertible, domestic debt of
the U.S. government or any of its agencies, quasi-federal corporations, or
corporate debt guaranteed by the U.S. government.

LEHMAN BROTHERS MUNICIPAL BOND INDEX. The Lehman Brothers Municipal
Bond Index is computed from the prices of approximately 21,000 bonds consisting
of roughly 30% revenue bonds, 30% government obligation bonds, 27% insured bonds
and 13% prerefunded bonds.

MSCI-EAFE INDEX. The MSCI-EAFE Index contains over 1000 stocks from 20
different countries with Japan (approximately 50%), United Kingdom, France and
Germany being the most heavily weighted.

MSCI-EAFE EX-JAPAN INDEX. The MSCI-EAFE ex-Japan Index consists of all
stocks contained in the MSCI-EAFE Index, other than stocks from Japan.

MERRILL LYNCH GOVERNMENT/CORPORATE INDEX. The Merrill Lynch
Government/Corporate Index is a composite of approximately 4,900 U.S. government
and corporate debt issues with at least $25 million outstanding, greater than
one year maturity, and credit ratings of investment grade or higher.

MERRILL LYNCH HIGH YIELD MASTER INDEX. The Merrill Lynch High Yield
Master Index consists of fixed-rate, coupon-bearing bonds with an outstanding
par which is greater than or equal to $50 million, a maturity range greater than
or equal to one year and must be less than BBB/Baa3 rated but not in default.

RUSSELL 2000 INDEX. The Russell 2000 Index is comprised of the 2000
smallest of the 3000 largest U.S.- domiciled corporations, ranked by market
capitalization.

RUSSELL MID-CAP GROWTH INDEX. The Russell Mid-Cap Growth Index is a
market capitalization weighted index of medium capitalization stocks determined
by Russell to be growth stocks as measured by their price-to- book ratios and
forecasted growth values.

SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX. The Salomon Brothers
World Government Bond Index includes a broad range of institutionally-traded
fixed-rate government securities issued by the national governments of the nine
countries whose securities are most actively traded. The index generally
excludes floating- or variable-rate bonds, securities aimed principally at
non-institutional investors (such as U.S. Savings Bonds) and private-placement
type securities.

STANDARD & POOR'S/BARRA GROWTH INDEX. The Standard & Poor's/Barra
Growth Index is constructed by ranking the securities in the S&P 500 by
price-to-book ratio and including the securities with the highest price-to- book
ratios that represent approximately half of the market capitalization of the S&P
500.

STANDARD & POOR'S/BARRA VALUE INDEX. The Standard & Poor's/Barra Value
Index is constructed by ranking the securities in the S&P 500 by price-to-book
ratio and including the securities with the lowest price-to- book ratios that
represent approximately half of the market capitalization of the S&P 500.

STANDARD & POOR'S ("S&P") MID-CAP 400 INDEX. The 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 (stock price times shares
outstanding) with each stock affecting the index in proportion to its value. The
index is comprised of industrial, utility, financial and transportation stocks,
in size order.

47
<PAGE>

base period 1941-43. The S&P 500 is composed almost entirely of common stocks of
companies listed on the New York Stock Exchange, although the common stocks of a
few companies listed on the American Stock Exchange or traded over-the-counter
are included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange. The
S&P 500 is the most common index for the overall U.S. stock market.

From time to time, articles about the Funds regarding performance,
rankings and other characteristics of the Funds may appear in publications
including, but not limited to, the publications included in Appendix A. In
particular, some or all of these publications may publish their own rankings or
performance reviews of mutual funds, including the Funds. References to or
reprints of such articles may be used in the Funds' promotional literature.
References to articles regarding personnel of Loomis Sayles who have portfolio
management responsibility may also be used in the Funds' promotional literature.
For additional information about the Funds' advertising and promotional
literature, see Appendix B.

48
<PAGE>

INSTITUTIONAL CLASS

PERFORMANCE DATA*

The manner in which total return and yield of the Funds will be
calculated for public use is described above. The table summarizes the
calculation of total return and yield for Institutional Class shares of the
Funds, where applicable, (i) for the one-year period ended September 30, 1999,
(ii) for the three-year period ended September 30, 1999, (iii) the five-year
period ended September 30, 1999, and (iv) since the modified inception and (v)
since actual inception (as listed below) through September 30, 1999.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------

FOR THE
FOR THE THREE- FOR THE FROM FROM
CURRENT ONE-YEAR YEAR FIVE-YEAR MODIFIED ACTUAL
SEC PERIOD PERIOD PERIOD INCEPTION INCEPTION***
YIELD AT ENDED ENDED ENDED THROUGH THROUGH
9/30/99 9/30/99 9/30/99 9/30/99 9/30/99** 9/30/99
FUND ------- ------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund
Loomis Sayles Bond Fund
Loomis Sayles Core Value Fund
Loomis Sayles Emerging Markets Fund
Loomis Sayles Global Bond Fund
Loomis Sayles Global Technology Fund
Loomis Sayles Growth Fund
Loomis Sayles High Yield Fund
Loomis Sayles Intermediate Maturity Bond Fund
Loomis Sayles International Equity Fund
Loomis Sayles Investment Grade Bond Fund
Loomis Sayles Mid-Cap Value Fund
Loomis Sayles Municipal Bond Fund
Loomis Sayles Short-Term Bond Fund
Loomis Sayles Small Cap Growth Fund
Loomis Sayles Small Cap Value Fund
Loomis Sayles U.S. Government Securities Fund
Loomis Sayles Worldwide Fund
</TABLE>

* Performance (for other than the one-year, three-year and five-year
periods for the Core Value and Small Cap Value Funds, and the three-year
and five-year periods for the Bond Fund) would have been lower if a

<PAGE>

portion of the management fee had not been waived by Loomis Sayles. In
the absence of this limitation, actual yield and total return would have
been as follows:

[Insert table w/performance info]

** For the Mid-Cap Growth Fund, Mid-Cap Value Fund, Small Cap Growth Fund,
Intermediate Maturity Bond Fund, and Investment Grade Bond Fund, the
modified inception date is December 31, 1996. For the Short-Term Bond
Fund the modified inception date is August 31, 1992, for the Worldwide
Fund-- May 31, 1996, for the High Yield Fund--September 30, 1996 and
for all other Funds--May 31, 1991.

*** Actual Inception Dates:

Loomis Sayles Aggressive Growth Fund December 31, 1996
Loomis Sayles Bond Fund May 16, 1991
Loomis Sayles Core Value Fund May 13, 1991
Loomis Sayles Emerging Markets Fund [November ___, 1999]
Loomis Sayles Global Bond Fund May 10, 1991
Loomis Sayles Global Technology Fund
Loomis Sayles Growth Fund May 16, 1991
Loomis Sayles High Yield Fund September 11, 1996
Loomis Sayles Intermediate Maturity Bond Fund December 31, 1996
Loomis Sayles International Equity Fund May 10, 1991
Loomis Sayles Investment Grade Bond Fund December 31, 1996
Loomis Sayles Mid-Cap Value Fund December 31, 1996
Loomis Sayles Municipal Bond Fund May 29, 1991
Loomis Sayles Short-Term Bond Fund August 3, 1992
Loomis Sayles Small Cap Value Fund May 13, 1991
Loomis Sayles Small Cap Growth Fund December 31, 1996
Loomis Sayles U.S. Government Securities Fund May 21, 1991
Loomis Sayles Worldwide Fund May 1, 1996

<PAGE>

RETAIL CLASS

PERFORMANCE DATA*

The manner in which total return and yield of the Funds will be calculated
for public use is described above. The table summarizes the calculation of total
return and yield for Retail Class shares of the Funds, where applicable, (i) for
the one-year period ended September 30, 1999, (ii) since the modified inception
December 31, 1996 through September 30, 1999 and (iii) since the actual
inception January 2, 1997 through September 30, 1999.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------

FOR THE FROM
CURRENT ONE-YEAR ACTUAL
SEC PERIOD INCEPTION **
YIELD AT ENDED THROUGH
9/30/99 9/30/99 9/30/99
------- ------- -------
FUND
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund
Loomis Sayles Bond Fund
Loomis Sayles Core Value Fund
Loomis Sayles Global Bond Fund
Loomis Sayles Growth Fund
Loomis Sayles Intermediate Maturity Bond Fund
Loomis Sayles International Equity Fund
Loomis Sayles Investment Grade Bond Fund
Loomis Sayles Mid-Cap Value Fund
Loomis Sayles Short-term Bond Fund
Loomis Sayles Small Cap Value Fund
Loomis Sayles Small Cap Growth Fund
Loomis Sayles Worldwide Fund
</TABLE>

* Performance would have been lower if a portion of the management fee had
not been waived by Loomis Sayles. In the absence of this limitation,
actual yield and total return would have been as follows:

[Insert table with performance info]

** The modified and actual inception dates for the Retail Class of each of
the Funds is December 31, 1996 and January 2, 1997, respectively.

<PAGE>

ADMIN CLASS

PERFORMANCE DATA

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------

FOR THE FROM FROM
CURRENT ONE-YEAR ACTUAL MODIFIED
SEC PERIOD INCEPTION* INCEPTION
YIELD AT ENDED THROUGH THROUGH
9/30/99 9/30/99 9/30/99 9/30/99
FUND ------- ------- ------- -------
<S> <C> <C> <C> <C>
Loomis Sayles Bond Fund
Loomis Sayles Small Cap
Value Fund
</TABLE>
- ------------

* Actual Inception Date for the Admin Class of each of the Funds
is January 2, 1998.

[insert table re: performance without fee waiver]

<PAGE>

CLASS A

PERFORMANCE DATA

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------

FOR THE FROM FROM
CURRENT ONE-YEAR ACTUAL MODIFIED
SEC PERIOD INCEPTION* INCEPTION
YIELD ENDED THROUGH THROUGH
AT 9/30/99 9/30/99 9/30/99 9/30/99
---------- ------- ------- -------
FUND
<S> <C> <C> <C> <C>
Loomis Sayles Aggressive
Growth Fund

Loomis Sayles Global
Technology Fund
</TABLE>

- ---------------

* Actual Inception Date for Class A shares of each of the
Funds is _______________.

[insert table re: performance without fee waiver]

<PAGE>

APPENDIX A

PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION

ABC and affiliates
Adam Smith's Money World
America On Line
Anchorage Daily News
Atlanta Constitution
Atlanta Journal
Arizona Republic
Austin American Statesman
Baltimore Sun
Bank Investment Marketing
Barron's
Bergen County Record (NJ)
Bloomberg Business News
Bond Buyer
Boston Business Journal
Boston Globe
Boston Herald
Broker World
Business Radio Network
Business Week
CBS and affiliates
CDA Investment Technologies
CFO
Changing Times
Chicago Sun Times
Chicago Tribune
Christian Science Monitor
Christian Science Monitor News Service
Cincinnati Enquirer
Cincinnati Post
CNBC
CNN
Columbus Dispatch
CompuServe
Dallas Morning News
Dallas Times-Herald
Denver Post
Des Moines Register
Detroit Free Press
Donoghues Money Fund Report
Dorfman, Dan (syndicated column)
Dow Jones News Service
Economist
FACS of the Week
Fee Adviser
Financial News Network
Financial Planning

54
<PAGE>

Financial Planning on Wall Street
Financial Research Corp.
Financial Services Week
Financial World
Fitch Insights
Forbes
Fort Worth Star-Telegram
Fortune
Fox Network and affiliates
Fund Action
Fund Decoder
Global Finance
(the) Guarantor
Hartford Courant
Houston Chronicle
INC
Indianapolis Star
Individual Investor
Institutional Investor
International Herald Tribune
Internet
Investment Advisor
Investment Company Institute
Investment Dealers Digest
Investment Profiles
Investment Vision
Investor's Daily
IRA Reporter
Journal of Commerce
Kansas City Star
KCMO (Kansas City)
KOA-AM (Denver)
LA Times
Leckey, Andrew (syndicated column)
Life Association News
Lifetime Channel
Miami Herald
Milwaukee Sentinel
Money Magazine
Money Maker
Money Management Letter
Morningstar
Mutual Fund Market News
Mutual Funds Magazine
National Public Radio
National Underwriter
NBC and affiliates
New England Business
New England Cable News
New Orleans Times-Picayune
New York Daily News
New York Times

55
<PAGE>

Newark Star Ledger
Newsday
Newsweek
Nightly Business Report
Orange County Register
Orlando Sentinel
Palm Beach Post
Pension World
Pensions and Investments
Personal Investor
Philadelphia Inquirer
Porter, Sylvia (syndicated column)
Portland Oregonian
Prodigy
Public Broadcasting Service
Quinn, Jane Bryant (syndicated column)
Registered Representative
Research Magazine
Resource
Reuters
Rocky Mountain News
Rukeyser's Business (syndicated column)
Sacramento Bee
San Diego Tribune
San Francisco Chronicle
San Francisco Examiner
San Jose Mercury
Seattle Post-Intelligencer
Seattle Times
Securities Industry Management
Smart Money
St. Louis Post Dispatch
St. Petersburg Times
Standard & Poor's Outlook
Standard & Poor's Stock Guide
Stanger's Investment Advisor
Stockbroker's Register
Strategic Insight
Tampa Tribune
Time
Tobias, Andrew (syndicated column)
Toledo Blade
UP
US News and World Report
USA Today
USA TV Network
Value Line
Wall Street Journal
Wall Street Letter
Wall Street Week
Washington Post
WBZ

56
<PAGE>

WBZ-TV
WCVB-TV
WEEI
WHDH
Worcester Telegram
World Wide Web
Worth Magazine
WRKO

57
<PAGE>

APPENDIX B

ADVERTISING AND PROMOTIONAL LITERATURE

Loomis Sayles Funds' advertising and promotional material may include,
but is not limited to, discussions of the following information:

Loomis Sayles Funds' participation in wrap fee and no transaction fee
programs

Loomis Sayles Funds' and Loomis, Sayles & Company, L.P. Website

Loomis Sayles Publications, including fact sheets for each Fund

Characteristics of Loomis Sayles including the number and locations of
its offices, its investment practices and clients and assets under management

Specific and general investment philosophies, strategies, processes and
techniques

Specific and general sources of information, economic models, forecasts
and data services utilized, consulted or considered in the course of providing
advisory or other services

Industry conferences at which Loomis Sayles participates

Current capitalization, levels of profitability and other financial
information

Identification of portfolio managers, researchers, economists,
principals and other staff members and employees and descriptions of Loomis
Sayles' resources devoted to such staff

The specific credentials of the above individuals, including but not
limited to, previous employment, current and past positions, titles and duties
performed, industry experience, educational background and degrees, awards and
honors

Specific identification of, and general reference to, current
individual, corporate and institutional clients, including pension and profit
sharing plans

Current and historical statistics relating to:

--total dollar amount of assets managed
--Loomis Sayles assets managed in total and by Fund
--the growth of assets
--asset types managed

Loomis Sayles Funds' tag line -- "Listening Harder, Delivering More"
and statements that and examples of how Loomis Sayles Funds listens to its
clients and works hard to deliver results which exceed their expectations.

References may be included in Loomis Sayles Funds' advertising and
promotional literature about 401(k) and retirement plans that offer the Funds.
The information may include, but is not limited to:

58
<PAGE>

Specific and general references to industry statistics regarding 401(k)
and retirement plans including historical information and industry trends and
forecasts regarding the growth of assets, numbers or plans, funding vehicles,
participants, sponsors and other demographic data relating to plans,
participants and sponsors, third party and other administrators, benefits
consultants and firms with whom Loomis Sayles may or may not have a
relationship.

Specific and general reference to comparative ratings, rankings and
other forms of evaluation as well as statistics regarding the Fund as 401(k) or
retirement plan funding vehicles produced by industry authorities, research
organizations and publications.

59
<PAGE>

[LOGO]

STATEMENT OF ADDITIONAL
INFORMATION

This Statement of Additional Information is not a Prospectus. This
Statement of Additional Information relates to the Prospectus of Class J shares
of the Loomis Sayles Investment Grade Bond Fund series ("Fund") of Loomis Sayles
Funds dated January __, 2000, as revised from time to time. This Statement of
Additional Information should be read in conjunction with the applicable
Prospectus. A copy of the Prospectus may be obtained from Loomis Sayles Funds,
One Financial Center, Boston, Massachusetts 02111.

LOOMIS SAYLES FUNDS
Loomis Sayles Investment Grade Bond Fund (Class J shares)

<PAGE>

TABLE OF CONTENTS

THE TRUST...................................................................1

INVESTMENT STRATEGIES AND RISKS.............................................1
Investment Restrictions............................................1
Investment Strategies..............................................3
U.S. Government securities ........................................3
When-Issued Securities.............................................4
Convertible Securities.............................................4
Zero Coupon Bonds..................................................4
Repurchase Agreements..............................................5
Real Estate Investment Trusts......................................5
Rule 144A Securities...............................................5
Foreign Currency Transactions......................................6
Options ..........................................................6

MANAGEMENT OF THE TRUST.....................................................9

INVESTMENT ADVISORY AND OTHER SERVICES.....................................13

PORTFOLIO TRANSACTIONS AND BROKERAGE.......................................17

DESCRIPTION OF THE TRUST...................................................18
Voting Rights.....................................................18
Shareholder and Trustee Liability ................................19
How to Buy Shares ................................................20
Net Asset Value ..................................................20

SHAREHOLDER SERVICES ......................................................20
Open Accounts ....................................................20
Redemptions ......................................................21

INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS ...............22

FINANCIAL STATEMENTS ......................................................24

CALCULATION OF YIELD AND TOTAL RETURN .....................................24

PERFORMANCE COMPARISONS ...................................................25

PERFORMANCE DATA...........................................................29

APPENDIX A

PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION ...................30

<PAGE>

APPENDIX B

ADVERTISING AND PROMOTIONAL LITERATURE ...........................34

<PAGE>

THE TRUST

Loomis Sayles Funds (the "Trust") is a diversified, registered,
open-end management investment company. The Trust includes 19 series
(collectively, the "Funds"), including the Loomis Sayles Investment Grade Bond
Fund. The Trust was organized as a Massachusetts business trust on February 20,
1991.

Class J shares of the Fund are freely transferable and entitle
shareholders to receive dividends as determined by the Trust's board of trustees
and to cast a vote for each share held at shareholder meetings. The Trust
generally does not hold shareholder meetings and expects to do so only when
required by law. Shareholders may call meetings to consider removal of the
Trust's trustees.

INVESTMENT STRATEGIES AND RISKS

The investment objective and principal investment strategies of the
Fund are described in the Prospectus. The investment policies of the Fund set
forth in the Prospectus and in this Statement of Additional Information may be
changed by the Trust's board of trustees without shareholder approval, except
that the investment objective of the Fund as set forth in the Prospectus and any
policy explicitly identified as "fundamental" may not be changed without the
approval of the holders of a majority of the outstanding shares of the relevant
Fund (which in the Prospectus and this Statement of Additional Information means
the lesser of (i) 67% of the shares of the Fund present at a meeting at which
more than 50% of the outstanding shares are present or represented by proxy or
(ii) more than 50% of the outstanding shares). Except in the case of the 15%
limitation on illiquid securities, the percentage limitations set forth below
and in the Prospectus will apply at the time a security is purchased and will
not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such purchase.

INVESTMENT RESTRICTIONS

In addition to its investment objective and policies set forth in the
Prospectus, the following investment restrictions are policies of the Fund (and
those marked with an asterisk are fundamental policies of the Fund):

The Fund will not:

(1) Invest in companies for the purpose of exercising control or
management.

*(2) Act as underwriter, except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal securities laws.

*(3) Invest in oil, gas or other mineral leases, rights or royalty
contracts or in real estate, commodities or commodity contracts. (This
restriction does not prevent the Fund from engaging in transactions in futures
contracts relating to securities indices, interest rates or financial
instruments or options, or from investing in issuers that invest or deal in the
foregoing types of assets or from purchasing securities that are secured by real
estate.)

*(4) Make loans. (For purposes of this investment restriction, neither
(i) entering into repurchase agreements nor (ii) purchasing debt obligations in
which the Fund may invest consistent with its investment policies is considered
the making of a loan.)

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(6) With respect to 75% of its assets, acquire more than 10% of the
outstanding voting securities of an issuer.

(7) Pledge, mortgage, hypothecate or otherwise encumber any of its
assets, except that the Fund may pledge assets having a value not exceeding 10%
of its assets to secure borrowings permitted by restriction (9) below. (For the
purpose of this restriction, collateral arrangements with respect to options,
futures contracts and options on futures contracts and with respect to initial
and variation margin are not deemed to be a pledge or other encumbrance of
assets.)

(13) Write or purchase puts, calls or combinations of both except that
the Fund may (1) acquire warrants or rights to subscribe to securities of
companies issuing such warrants or rights, or of parents or subsidiaries of such
companies, (2) purchase and sell put and call options on securities and (3)
write, purchase and sell put and call options on currencies and may enter into
currency forward contracts.

(15) The Fund normally will invest at least 65% of its assets in
investment grade fixed income securities.

The Fund intends, based on the views of the staff of the Securities and
Exchange Commission (the "SEC"), to restrict its investments in repurchase
agreements maturing in more than seven days, together with other investments in
illiquid securities, to the percentage permitted by restriction (12) above.

In connection with the offering of its shares in Japan, the Fund has
undertaken to the Japanese Securities Dealers Association: (1) that the Fund
will not invest more than 10% of the Fund's net assets in securities that are
not traded on a recognized exchange; (2) that the Fund may not acquire more than
10% of the voting securities of any issuer; (3) that the Fund will not invest
more than 5% of its assets in the securities of any one issuer (other

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than the U.S. Government) and (4) that the Fund will not, together with other
registered investment companies managed by Loomis Sayles, acquire more than 15%
of the voting securities of any issuer.

If the undertaking is violated, the Fund will, promptly after
discovery, take such action as may be necessary to cause the violation to cease,
which shall be the only obligation of the Fund and the only remedy in respect of
the violation. This undertaking will remain in effect as long as shares of the
Fund are qualified for offer or sale in Japan and such undertaking is required
by the Japanese Securities Dealers Association as a condition of such
qualification.

INVESTMENT STRATEGIES

Except to the extent prohibited by the Fund's investment policies as
set forth in the Prospectus or in this Statement of Additional Information, the
investment strategies used by Loomis Sayles in managing the Fund may include
investments in the types of securities described below.

U.S. GOVERNMENT SECURITIES

<PAGE>

payment of principal and interest by Fannie Mae but are not backed by the full
faith and credit of the U.S. Government.

WHEN-ISSUED SECURITIES

When-issued securities are agreements with banks or broker-dealers for
the purchase or sale of securities at an agreed-upon price on a specified future
date. Such agreements might be entered into, for example, when the Fund that
invests in fixed income securities anticipates a decline in interest rates and
is able to obtain a more advantageous yield by committing currently to purchase
securities to be issued later. When the Fund purchases securities on a
when-issued or delayed-delivery basis, it is required to create a segregated
account with the Trust's custodian and to maintain in that account liquid assets
in an amount equal to or greater than, on a daily basis, the amount of the
Fund's when-issued or delayed-delivery commitments. The Fund will make
commitments to purchase on a when-issued or delayed-delivery basis only
securities meeting that Fund's investment criteria. The Fund may take delivery
of these securities or, if it is deemed advisable as a matter of investment
strategy, the Fund may sell these securities before the settlement date. When
the time comes to pay for when-issued or delayed-delivery securities, the Fund
will meet its obligations from then available cash flow or the sale of
securities, or from the sale of the when-issued or delayed-delivery securities
themselves (which may have a value greater or less than the Fund's payment
obligation).

CONVERTIBLE SECURITIES

ZERO COUPON BONDS

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including the original issue discount accrued on zero coupon bonds. Because a
Fund investing in zero coupon bonds will not on a current basis receive cash
payments from the issuer in respect of accrued original issue discount, the Fund
may have to distribute cash obtained from other sources in order to satisfy the
90% distribution requirement under the Code. Such cash might be obtained from
selling other portfolio holdings of the Fund. In some circumstances, such sales
might be necessary in order to satisfy cash distribution requirements even
though investment considerations might otherwise make it undesirable for the
Fund to sell such securities at such time.

REPURCHASE AGREEMENTS

Under a repurchase agreement, the Fund purchases a security and obtains
a simultaneous commitment from the seller (a bank or, to the extent permitted by
the 1940 Act, a recognized securities dealer) to repurchase the security at an
agreed upon price and date (usually seven days or less from the date of original
purchase). The resale price is in excess of the purchase price and reflects an
agreed upon market rate unrelated to the coupon rate on the purchased security.
Such transactions afford the Fund the opportunity to earn a return on
temporarily available cash at minimal market risk. While the underlying security
may be a bill, certificate of indebtedness, note or bond issued by an agency,
authority or instrumentality of the U.S. Government, the obligation of the
seller is not guaranteed by the U.S. Government and there is a risk that the
seller may fail to repurchase the underlying security. In such event, the Fund
would attempt to exercise rights with respect to the underlying security,
including possible disposition in the market. However, the Fund may be subject
to various delays and risks of loss, including (a) possible declines in the
value of the underlying security during the period while the Fund seeks to
enforce its rights thereto, (b) possible reduced levels of income and lack of
income during this period and (c) inability to enforce rights and the expenses
involved in attempted enforcement.

REAL ESTATE INVESTMENT TRUSTS

REITs involve certain unique risks in addition to those risks
associated with investing in the real estate industry in general (such as
possible declines in the value of real estate, lack of availability of mortgage
funds or extended vacancies of property). Equity REITs may be affected by
changes in the value of the underlying property owned by the REITs, while
mortgage REITs may be affected by the quality of any credit extended. REITs are
dependent upon management skills, are not diversified, are subject to heavy cash
flow dependency, risks of default by borrowers and self-liquidation. REITs are
also subject to the possibilities of failing to qualify for tax-free
pass-through of income under the Code, and failing to maintain their exemptions
from registration under the 1940 Act.

RULE 144A SECURITIES

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FOREIGN CURRENCY TRANSACTIONS

Since investment in securities of foreign issuers will usually involve
currencies of foreign countries, and since the Fund may temporarily hold funds
in bank deposits in foreign currencies during the course of investment programs,
the value of the assets of the Fund as measured in U.S. dollars may be affected
by changes in currency exchange rates and exchange control regulations, and the
Fund may incur costs in connection with conversion between various currencies.

The Fund may enter into forward contracts under two circumstances.
First, when the Fund enters into a contract for the purchase or sale of a
security denominated or traded in a market in which settlement is made in a
foreign currency, it may desire to "lock in" the U.S. dollar price of the
security. By entering into a forward contract for the purchase or sale, for a
fixed amount of dollars, of the amount of foreign currency involved in the
underlying transactions, the Fund will be able to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the date
on which the investment is purchased or sold and the date on which payment is
made or received.

The Fund generally will not enter into forward contracts with a term of
greater than one year.

The Fund, in conjunction with its transactions in forward contracts,
options and futures, will maintain in a segregated account with its custodian
liquid assets with a value, marked to market on a daily basis, sufficient to
satisfy the Fund's outstanding obligations under such contracts, options and
futures.

OPTIONS

If the holder of an option wishes to terminate its position, it may
seek to effect a closing sale transaction by selling an option identical to the
option previously purchased. The effect of the purchase is that the previous
option position will be canceled. The Fund will realize a profit from closing
out an option if the price received for selling the offsetting position is more
than the premium paid to purchase the option; the Fund will realize a

<PAGE>

loss from closing out an option transaction if the price received for selling
the offsetting option is less than the premium paid to purchase the option.

<PAGE>

The staff of the SEC has taken the position that over-the-counter
options should be treated as illiquid securities for purposes of the Fund's
investment restriction prohibiting it from investing more than 15% of its net
assets in illiquid securities. The Fund intends to comply with this position.

Income earned by the Fund from its hedging activities will be treated
as capital gain and, if not offset by net recognized capital losses incurred by
the Fund, will be distributed to shareholders in taxable distributions. Although
gain from options transactions may hedge against a decline in the value of the
Fund's portfolio securities, that gain, to the extent not offset by losses, will
be distributed in light of certain tax considerations and will constitute a
distribution of that portion of the value preserved against decline.