<PAGE>
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LOOMIS SAYLES FUNDS
FIXED INCOME FUNDS
// // //
SEMI-ANNUAL REPORT
MARCH 31, 1999
// BOND FUND
// GLOBAL BOND FUND
// HIGH YIELD FUND
// INTERMEDIATE MATURITY BOND FUND
// INVESTMENT GRADE BOND FUND
// MUNICIPAL BOND FUND
// SHORT-TERM BOND FUND
// U.S. GOVERNMENT SECURITIES FUND
A FAMILY OF NO-LOAD FUNDS
L O O M I S
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S A Y L E S
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F U N D S
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ONE FINANCIAL CENTER, BOSTON, MASSACHUSETTS 02111
800 - 633 - 3330
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<S> <C>
Corporate Overview.............................. 1
Letter from the President, Loomis Sayles
Funds......................................... 2
Economic and Market Overview.................... 3
Institutional Class Total Return vs. Lipper
Category and Lipper Category Index............ 6
Fund and Manager Reviews........................ 8
Portfolio of Investments........................ 24
Statements of Assets and Liabilities............ 62
Statements of Operations........................ 64
Statements of Changes in Net Assets............. 66
Financial Highlights............................ 74
Notes to Financial Statements................... 90
Additional Fund Information..................... 101
Board of Trustees and Officers.................. 105
</TABLE>
<PAGE>
CORPORATE OVERVIEW
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LOOMIS SAYLES FUNDS
- -------------------------------------------------------
Loomis Sayles Funds is a Boston-based family of 16 no-load mutual funds advised
by Loomis, Sayles & Company, L.P. At Loomis Sayles Funds, we follow a simple
strategy -- we pay close attention to what we hear from our clients and the
marketplace, then work to deliver high-quality products and services that exceed
expectations.
Our "listening harder" creed lets us design products and services that truly
answer our clients' needs. We offer a broad range of no-load funds to complement
your investment objectives and strategies. We believe we run one of the most
responsive support organizations in the business, providing timely information
and insightful solutions.
Beyond that, we're structured to take advantage of our institutional heritage.
The research department at Loomis, Sayles & Company, L.P. provides our portfolio
managers with the fundamental research they need to make sound investment
decisions. Our portfolio managers not only manage mutual funds, they manage
large institutional accounts that demand and appreciate the style consistency
that follows from our disciplined investment approach.
FOR INFORMATION ABOUT:
// ESTABLISHING AN ACCOUNT
// ACCOUNT PROCEDURES AND STATUS
// EXCHANGES
// SHAREHOLDER SERVICES
PHONE 800-626-9390
FOR ALL OTHER INFORMATION ABOUT THE FUNDS:
PHONE 800-633-3330
To request any of the following, press or say the number
/1/ Literature and Information
/2/ Net Asset Values and Yields
/3/ Speak to a Marketing Representative
/4/ Advisory and Broker/Dealer Services
/5/ Institutional and High Net Worth Operations, Trading and Client
Services
As always, we are interested in your comments about the job we are doing and in
answering any questions you may have. For more complete information about any of
the Loomis Sayles Funds, including charges and expenses, please call Loomis
Sayles Distributors, L.P. for a prospectus at 800-633-3330 Monday through
Friday, 8:45 a.m. to 4:45 p.m. EST. Read it carefully before you invest or send
money.
1
<PAGE>
LETTER FROM THE PRESIDENT
- -----------------------------------------------------------------------
DEAR SHAREHOLDERS,
- -------------------------------------------------------
[PHOTO]
DANIEL J. FUSS
The bad news is that the last six months were relatively
fruitless for most areas of fixed income. The good news is that
the worst is behind us and things are looking brighter on the
horizon. In fact, the Loomis Sayles Bond Fund has once again
been rated a 5-star fund overall by Morningstar for the 5-year
period ended March 31.
The degree of leverage in the bond market seems to be
increasing once again. Dealers continue to be cautious and
institutions that lend to hedge funds are still careful, but
are slowly becoming more liberal than they were last fall. If
this continues, market liquidity will further improve and
spreads ought to narrow, allowing corporate yields to either fall faster or rise
slower than treasury yields. Either scenario represents favorable price
movements for corporate bonds.
Despite a floundering market, the Loomis Sayles Bond Fund performed very well in
the past six months. Our motto has become "same bonds, new prices." The
investments made in undervalued bonds earlier in 1998 bore fruit in the last six
months. We had a strong fourth quarter as liquidity flowed back into the market,
helping restore a modicum of rationality on valuation spreads. These two factors
helped us produce positive performance relative to the rest of the market.
In the equity arena, growth stocks continue to be in favor over value. The
technological revolution is almost solely responsible for the market's momentum.
For the first quarter of 1999, only 172 stocks in the S&P 500 beat the
capitalization-weighted index average. These stocks represent 34% of the
equal-weighted index but 47% of the size-weighted index. On a size-weighted
basis, Standard & Poor's classifies over 20% of the outperforming stocks as
technology companies. Four of the seven largest contributors to the excess
return of the market were Microsoft, America Online, EMC Corp. and Cisco
Systems, all technology-related companies. Technology, with a return of nearly
12%, was the only industrial sector to exceed 8% for the first quarter.
There are some uncertainties for both the fixed income and equity markets. For
instance, we cannot predict the outcome of the tragic situation in the Balkans,
the effect of the Euro, the future of internet-related stocks or how soon or how
much interest rates will fluctuate. Our best course of action is precaution. As
a result of this uncertainty, we have attempted to position our funds to weather
wider than normal market swings. The way in which we do this is to buy as much
as we can that is not directly related to the markets -- without giving up
potential performance. Looking forward, the funds are structured to take
advantage of the above average spreads between U.S. Treasuries and everything
else that exists in the current market.
It has been an exciting six months for Loomis Sayles Funds. Mutual fund assets
were $2.3 billion at March 31. This represents a $170 million increase over the
past six months. We attribute most of this growth to the Loomis Sayles Bond Fund
on the fixed income side and Loomis Sayles Small and Mid-Cap Growth Funds on the
equity side. With $2.3 billion in total net assets, we are proud of our
accomplishments over the past six months and look forward to new challenges and
achievements for the '99 fiscal year.
Sincerely,
[SIG]
Daniel J. Fuss
President,
Loomis Sayles Funds
2
<PAGE>
ECONOMIC AND MARKET OVERVIEW
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- -----------------------------------------------------------------------
LOOMIS SAYLES MARKET AND ECONOMIC OVERVIEW
SEMI-ANNUAL REPORT FOR THE PERIOD ENDING MARCH 31, 1999
- -------------------------------------------------------
CAPITAL MARKETS REVIEW -- OCTOBER 1998 TO MARCH 1999
The stock market continued to defy conventional wisdom as it racked up its
fourth consecutive year of returns in excess of 23% (as measured by the Standard
& Poor's 500 Index). The 190% rise in this index over the last four calendar
years is the second highest in history, trailing only the 200% return of
1933-1936. Blue-chip stocks continued to lead the way, especially in the
technology, retail, and financial services industries.
The bond market was a bit more tumultuous, with the overall theme being that of
a reversal of the trends that developed in the third quarter. The summer of 1998
was marked by fears of global economic collapse, and saw a "flight to quality"
that benefited U.S. Treasury securities at the expense of bonds with any type of
credit risk. For the six months ended March 31, 1999, Treasury bonds lost 1.51%
while investment grade corporate bonds were only down 1.07%. However, both
high-yield bonds (+3.98%) and mortgage-backed securities (+1.80%) saw gains (as
measured by their respective Lehman Brothers indices).
U.S. AND GLOBAL ECONOMIC REVIEW
The worries of the summer saw a double-dip in the stock market, with the second
low coming on October 8, nearly 20% below its July 17 high. An earlier cut in
interest rates of 0.25% by the Fed did nothing to appease investors, who were
expecting a larger cut. So on October 15th, for the first time in six and a half
years, the Fed cut rates between meetings, and the market took off. The S&P 500
was up 4.2% on October 15th alone, and nearly all of that came in the last two
hours of trading.
The latest country to give rise to currency concerns was Brazil, where
devaluation of its currency was expected to become a worst-case reality,
particularly in light of the failed IMF policies in Indonesia. But a relief and
reform package put together by G-7 nations provided enough temporary relief
there to see the country through the end of the year.
On the home front, the United States continued to see an unprecedented
combination of low unemployment and low inflation. GDP growth remained strong,
and the only "losers" in that scenario were ordinary bond investors, who got
little return from their coupons, and had little economic basis to expect
further interest rate cuts. In fact, despite no further Fed action, the yield on
the 30-year treasury got as low as 4.7% in November. This level had never been
seen since the Treasury Department began issuing 30-year bonds in 1973. If you
extrapolate yield curves throughout history, the last time the U.S. saw
comparably low interest rates was in 1963-64. A great contributor to the
downward movement in rates was the fact that, for the first time since 1969, the
federal government took in more money than it spent.
3
<PAGE>
ECONOMIC AND MARKET OVERVIEW (CONTINUED)
- -----------------------------------------------------------------------
January didn't see much market news. The Denver Broncos won their second
consecutive Super Bowl, which used to be a sure indication that the market was
headed for a down year. Since 1967, the market has gone down in 4 of the 8 years
in which an original AFC team won the Super Bowl, compared to only 2 negative
years out of the other 24. However, the S&P 500 still rose 5% in the first
quarter.
In February, the depressed oil industry got a boost when OPEC announced that
they would cut production by 2.3 million barrels per day, or close to 3%, in
order to provide some price support and ease a world oversupply. The price of
crude oil, which had been trading near $11 per barrel, quickly rose to around
$15. Energy stocks in the S&P 500 were up 14.7% in March alone.
The OPEC announcement renewed inflationary fears among investors, who were no
doubt skittish about low interest rates anyway. And the uncertainty surrounding
the military conflict in Kosovo certainly didn't help. The 30-year Treasury,
which began the year at 5.09%, hit the 5.70% mark in early March, thereby making
February one of the worst months in history for U.S. Treasury bonds. But the bad
news for Treasuries was good news for corporate bonds, as continuing economic
strength helped tighten spreads. Investors shook off the credit risk fears that
had worked their way into the market last summer, and the effects of three
interest rate cuts in 1998 were finally being felt in the form of increased
liquidity in early 1999. Demand for investment grade debt increased, as
evidenced by the success of the record $8 billion AT&T deal and several other
over-subscribed new offerings.
Merger activity continued its torrid pace of the past few years, with the
following pairings grabbing headlines over the past six months: America Online
and Netscape; Exxon and Mobil; Travelers Group and Citibank; British Petroleum
and Amoco; and BankBoston and Fleet Financial Group.
MARKET TECHNICALS
Since 1994, the U.S. stock market has been in a cycle in which returns have been
driven by a small number of very large companies in a limited number of industry
groups. In the first quarter of 1999, only 172 of the stocks in the S&P 500
outperformed the index as a whole, and in the past four years, only the largest
68 stocks in the index have received a positive contribution from their size
alone. Compounding this situation is the fact that so many of these stocks are
concentrated in the areas of financial services, technology, healthcare,
consumer staples, and communications. And the triple-whammy is that these stocks
are trading at valuation levels which tend to be very unappealing for
price-sensitive investors.
This situation has created misery for active managers, who often look for hidden
values in somewhat smaller companies that are not quite as widely known as the
"nifty-fifty" type names. Additionally, with these high-performance industries
representing such a large percentage of the overall market, managers often feel
it
4
<PAGE>
ECONOMIC AND MARKET OVERVIEW (CONTINUED)
- -----------------------------------------------------------------------
imprudent to increase exposure above market levels. Many explanations have been
offered for this phenomenon. Some recurring themes include:
- - A CYCLICAL PATTERN, whereby high overall market returns lessen the need for
investors to absorb the perceived extra risk of smaller companies. A
comparable period was 1946-1957, when large stocks averaged 14.6% per year,
compared to 10.1% for small stocks.
- - INCREASED TRADING ACTIVITY AMONG INDIVIDUAL INVESTORS, who tend to gravitate
toward more recognizable names and are more inclined to seek "hot stories"
than cheap valuations. In this sense, recent years compare to the pronounced
boom in large stocks that took place in 1969-1972.
- - A FLOOD OF FOREIGN CAPITAL OUT OF WEAK ASIAN MARKETS AND INTO THE UNITED
STATES MARKETS. Foreign investors tend to emphasize liquidity and have
demonstrated a preference for simply participating in the U.S. stock market by
holding stocks in large recognizable companies.
- - NASDAQ REFORMS, which reduced the number of market makers for smaller
companies, making trading in these stocks more difficult and sometimes
unprofitable.
- - GREATER DIVERSIFICATION AMONG LARGER COMPANIES, which reduces the
opportunities for small companies to find a specialized niche in which to
grow.
Regardless of what theory one might choose to believe, market conditions have
been difficult for active managers lately. Even with perfect clairvoyance in
1994, prudent managers would have had to make a decision between constructing
portfolios that would outperform and constructing portfolios that were
adequately diversified. And since adequate diversification can be predicted with
much more accuracy than can future returns, they took the sensible road that
lately has not been rewarded.
Credit markets returned to a greater state of normalcy, as first quarter returns
in the corporate bond market showed an inverse relationship with credit
strength; in other words, lower-rated bonds provided higher returns. While this
relationship is both normal and logical, the fact that is often overlooked is
that a well-diversified portfolio of medium-grade bonds can actually outperform
a higher-grade portfolio over time with less volatility. In fact, since 1982,
corporate bonds rated BBB have provided 8% more (annualized) return than bonds
rated AAA, with 7% less volatility.
Mortgage bonds, which tend to do best in periods of stable or slightly rising
interest rates, also had a good six months after lagging corporate bonds for
most of this decade. After the rapid fall in interest rates over the last two
years and the subsequent wave of mortgage refinancing, most of the risk of
prepayments has been flushed out of the market.
5
<PAGE>
INSTITUTIONAL CLASS
- -----------------------------------------------------------------------
TOTAL RETURN(1) VS. LIPPER CATEGORY AND
LIPPER CATEGORY INDEX(2)
- -------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL HIGH
BOND BOND YIELD
<S> <C> <C> <C>
- --------------------------------------------------
SIX MONTHS
LOOMIS SAYLES 9.48 13.92 16.20
Lipper Category Average 0.44 1.24 5.74
Lipper Category Index 0.63 1.37 6.44
ONE YEAR
LOOMIS SAYLES 4.47 11.58 -7.98
Lipper Category Average 4.07 2.43 -1.94
Rank 55/108 2/141 237/266
Percentile 51 2 90
Lipper Category Index 3.95 2.56 -1.23
THREE YEARS
LOOMIS SAYLES 10.83 10.28 N/A
Lipper Category Average 7.45 5.83
Rank 1/67 7/112
Percentile 1 7
Lipper Category Index 7.47 6.24
FIVE YEARS
LOOMIS SAYLES 11.62 9.69 N/A
Lipper Category Average 7.61 6.27
Rank 1/42 2/69
Percentile 1 3
Lipper Category Index 7.61 6.58
MODIFIED INCEPTION(3)
LOOMIS SAYLES 13.01 9.71 4.33
Lipper Category Average 9.17 6.90 7.16
Rank 1/22 1/29 155/169
Percentile 1 1 92
Lipper Category Index 8.50 7.07 7.83
ACTUAL INCEPTION(4)
LOOMIS SAYLES 12.88 9.62 4.77
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment in the Fund will
fluctuate so that investors' shares, when redeemed, may be worth more or less
than their original cost.
(1) Total return assumes reinvestment of dividends and capital gains
distributions. Total return shown for periods of one year or less
represents cumulative total return. Total return for periods greater than
one year represents average annual total return. Total returns shown
reflect, if any, the effect of fee waivers and/or expense reimbursements.
Absent such fee waivers and/or expense reimbursements, total return would
have been lower.
(2) The Lipper Category total return represents the average total return for
all funds in each Fund's corresponding investment category as determined by
Lipper Analytical Services, Inc. The Lipper Category Index total return
represents the average total return of 30 funds in each Fund's
corresponding investment category as determined by Lipper Analytical
Services, Inc. Rankings are based on the total retun of each Fund for the
period relative to the total return of all funds in that Fund's
corresponding investment category.*
*Source: Lipper Analytical Services
6
<PAGE>
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<TABLE>
<CAPTION>
INTERMEDIATE INVESTMENT SHORT-
MATURITY GRADE MUNICIPAL TERM U.S. GOVERNMENT
BOND BOND BOND BOND SECURITIES
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
SIX MONTHS
LOOMIS SAYLES 1.93 6.05 0.49 0.02 -2.24
Lipper Category Average -0.45 0.44 0.58 1.34 -1.61
Lipper Category Index -0.29 0.63 0.71 1.51 -1.35
ONE YEAR
LOOMIS SAYLES 2.84 3.45 5.67 5.13 5.73
Lipper Category Average 5.15 4.07 4.87 5.13 5.29
Rank 244/257 74/108 36/252 68/109 58/182
Percentile 95 69 15 63 32
Lipper Category Index 5.80 3.95 5.12 5.26 5.26
THREE YEARS
LOOMIS SAYLES N/A N/A 7.16 6.16 8.68
Lipper Category Average 6.73 5.75 6.66
Rank 53/201 17/83 4/146
Percentile 27 21 3
Lipper Category Index 7.01 6.01 6.79
FIVE YEARS
LOOMIS SAYLES N/A N/A 7.11 6.26 8.29
Lipper Category Average 6.81 5.69 6.58
Rank 51/146 7/60 4/100
Percentile 35 12 4
Lipper Category Index 7.02 5.78 6.45
MODIFIED INCEPTION(3)
LOOMIS SAYLES 5.29 9.05 7.42 5.81 9.54
Lipper Category Average 6.84 6.99 7.27 5.34 7.21
Rank 193/200 4/82 32/89 6/33 1/57
Percentile 97 5 36 19 1
Lipper Category Index 7.18 3.66 7.35 5.57 6.89
ACTUAL INCEPTION(4)
LOOMIS SAYLES 5.29 9.05 7.45 5.80 9.53
</TABLE>
(3) Modified inception reflects the nearest Lipper reporting period following
actual inception. Lipper performance is reported as of month end.
(4) Actual Inception Dates:
Bond Fund ................................................... May 16, 1991
Global Bond Fund ............................................ May 10, 1991
High Yield Fund ....................................... September 11, 1996
Intermediate Maturity Bond Fund ........................ December 31, 1996
Investment Grade Bond Fund ............................. December 31, 1996
Municipal Bond Fund ......................................... May 29, 1991
Short-Term Bond Fund ...................................... August 3, 1992
U.S. Government Securities Fund ............................. May 21, 1991
7
<PAGE>
FUND AND MANAGER REVIEW
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LOOMIS SAYLES BOND FUND
- -------------------------------------------------------
[PHOTO] DANIEL J. FUSS
[PHOTO] KATHLEEN C. GAFFNEY
KEY FUND FACTS
OBJECTIVE: High total investment return
STRATEGY: Invests in debt securities, although
up to 20% of total assets may be in preferred
stocks.
FUND INCEPTION DATE: 5/16/91
COMMENCEMENT OF OPERATIONS OF CLASS:
Institutional - 5/16/91, Retail - 1/2/97, Admin.
- 1/2/98
EXPENSE RATIO: Institutional - 0.73%, Retail - 1.00%, Admin. - 1.25%
TOTAL NET ASSETS (ALL CLASSES): $1,601.9 MM
PERFORMANCE
The Institutional Class of the Loomis Sayles Bond Fund generated a 9.48% return
for the six-month period from October 1, 1998 through March 31, 1999,
significantly outperforming the -1.07% return of the Lehman Brothers
Government/Corporate Bond Index. The Retail and Admin Classes also outperformed
the index, returning 9.25% and 9.12% for the same period, respectively. The
Fund's structural and issue diversity allowed it to outperform its benchmark due
primarily to its Asian and emerging markets holdings. These securities rebounded
from their lows in the summer of 1998, and we believe there will be continued
strong performance from this market sector.
PORTFOLIO REVIEW
The Federal Reserve Bank cut interest rates three times in the fourth quarter,
ending the "flight to quality" and causing investors to shift their focus from
Treasuries to other segments of the market. Yield spreads versus Treasuries
narrowed dramatically, with lower rated bonds posting the strongest performance.
In our portfolios, it was just a case of "same bonds, different prices." We did
not initiate any dramatic repositioning when liquidity dried up last fall,
rather, we attempted to capitalize on the deeply discounted nature of the market
by buying issues of companies/countries that we believed would weather the
crisis the best. This strategy has benefited us so far, particularly in the
Yankee sector, where we had been accumulating positions since the "Asian
Contagion" began in July, 1997. Korea had its sovereign rating and several of
its corporate issuer's debt ratings upgraded due to their success in
implementing fiscal reforms and stabilizing their currency. The Fund's energy
exposure, which has been hampered by soft demand from Asia and a prolonged
weakness in oil prices, rebounded nicely in March. The Fund has maintained a
considerable position in Canadian government and provincial debt, due to
Canada's strong credit profile and the liquidity and call protection that these
bonds provide.
PORTFOLIO POSITIONING
Although yield spreads have tightened recently, they remain wide by historical
standards, particularly in the Yankee and commodity-sensitive sectors. These
sectors, along with telecommunications and cable/media continue to be our areas
of focus. The Fund remains well diversified across 276 issues and 19 countries.
[SIGNATURE] [SIGNATURE]
Daniel J. Fuss Kathleen C. Gaffney
8
<PAGE>
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AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SINCE
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Loomis Sayles Bond Fund
(Institutional) 9.48 4.47 10.83 11.62 12.88
Loomis Sayles Bond Fund
(Retail) 9.25 4.12 NA NA 9.04
Loomis Sayles Bond Fund
(Admin) 9.12 3.86 NA NA 6.13
Lipper BBB Rated Bond
Fund Index(b) 0.63 3.95 7.47 7.61 8.50
Lehman Brothers
Government/Corp. Bond
Index(c) -1.07 6.55 7.75 7.73 8.31
</TABLE>
CUMULATIVE PERFORMANCE - MAY 31, 1991 TO MARCH 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LIPPER BBB RATED LOOMIS SAYLES BOND LEHMAN BROTHERS GOVERNMENT/
BOND FUND INDEX FUND(d) CORP. BOND INDEX
<S> <C> <C> <C>
5/31/91 $10,000.00 $10,000.00 $10,000.00
6/30/91 $9,974.70 $9,849.40 $9,989.18
7/31/91 $10,083.63 $10,090.36 $10,114.47
8/31/91 $10,326.78 $10,502.01 $10,347.55
9/30/91 $10,551.34 $10,522.09 $10,563.71
10/31/91 $10,647.88 $10,814.79 $10,658.12
11/30/91 $10,733.58 $10,702.24 $10,764.33
12/31/91 $11,136.76 $10,931.19 $11,127.42
1/31/92 $11,001.51 $11,102.16 $10,962.40
2/29/92 $11,062.43 $11,379.98 $11,020.62
3/31/92 $11,025.26 $11,294.50 $10,960.43
4/30/92 $11,082.56 $11,456.07 $11,025.73
5/31/92 $11,307.64 $11,793.98 $11,239.73
6/30/92 $11,473.35 $11,837.58 $11,404.36
7/31/92 $11,788.77 $12,221.61 $11,696.05
8/31/92 $11,897.18 $12,332.72 $11,800.49
9/30/92 $12,041.21 $12,399.38 $11,961.58
10/31/92 $11,829.55 $12,255.16 $11,779.05
11/30/92 $11,843.49 $12,379.75 $11,769.61
12/31/92 $12,040.18 $12,493.01 $11,971.02
1/31/93 $12,302.94 $12,927.13 $12,231.44
2/28/93 $12,593.06 $13,180.37 $12,485.37
3/31/93 $12,671.01 $13,445.67 $12,527.66
4/30/93 $12,766.00 $13,650.50 $12,624.04
5/31/93 $12,796.46 $13,870.67 $12,617.35
6/30/93 $13,084.00 $14,164.23 $12,903.73
7/31/93 $13,205.83 $14,508.41 $12,986.14
8/31/93 $13,513.51 $14,769.71 $13,284.32
9/30/93 $13,552.74 $14,794.60 $13,330.54
10/31/93 $13,646.69 $15,017.94 $13,385.02
11/30/93 $13,489.75 $15,081.20 $13,233.76
12/31/93 $13,580.61 $15,268.65 $13,291.59
1/31/94 $13,816.01 $15,872.95 $13,491.62
2/28/94 $13,515.04 $15,604.37 $13,198.16
3/31/94 $13,129.93 $15,040.36 $12,875.39
4/30/94 $12,971.45 $14,703.08 $12,768.78
5/31/94 $12,938.41 $14,648.47 $12,745.18
6/30/94 $12,884.72 $14,607.51 $12,715.28
7/31/94 $13,105.15 $14,829.91 $12,969.40
8/31/94 $13,156.77 $15,052.08 $12,974.71
9/30/94 $12,975.06 $14,871.57 $12,778.22
10/31/94 $12,933.76 $14,802.86 $12,764.06
11/30/94 $12,899.17 $14,605.11 $12,741.24
12/31/94 $12,963.70 $14,647.04 $12,825.23
1/31/95 $13,172.78 $14,953.10 $13,071.49
2/28/95 $13,473.75 $15,390.33 $13,374.59
3/31/95 $13,579.58 $15,725.54 $13,464.28
4/30/95 $13,823.76 $16,300.03 $13,652.12
5/31/95 $14,420.01 $17,174.30 $14,224.29
6/30/95 $14,528.94 $17,411.39 $14,337.98
7/31/95 $14,494.87 $17,362.17 $14,282.71
8/31/95 $14,708.08 $17,723.25 $14,465.44
9/30/95 $14,880.50 $18,159.56 $14,612.37
10/31/95 $15,078.73 $18,339.88 $14,826.96
11/30/95 $15,326.01 $18,889.62 $15,071.05
12/31/95 $15,578.97 $19,328.18 $15,293.11
1/31/96 $15,704.93 $19,721.35 $15,388.31
2/29/96 $15,374.54 $19,123.73 $15,061.80
3/31/96 $15,261.12 $19,139.46 $14,935.33
4/30/96 $15,163.70 $18,984.47 $14,832.85
5/31/96 $15,153.32 $19,192.21 $14,807.87
6/30/96 $15,326.96 $19,447.89 $15,005.54
7/31/96 $15,364.93 $19,437.62 $15,040.55
8/31/96 $15,357.31 $19,600.14 $15,003.57
9/30/96 $15,664.65 $20,209.12 $15,270.28
10/31/96 $16,040.65 $20,883.67 $15,626.68
11/30/96 $16,398.29 $21,696.46 $15,914.44
12/31/96 $16,239.66 $21,317.55 $15,737.03
1/31/97 $16,291.26 $21,300.33 $15,755.72
2/28/97 $16,384.19 $21,610.28 $15,788.96
3/31/97 $16,131.21 $21,265.89 $15,601.32
4/30/97 $16,369.50 $21,543.36 $15,829.48
5/31/97 $16,556.99 $22,017.03 $15,977.19
6/30/97 $16,803.83 $22,508.25 $16,168.96
7/31/97 $17,384.84 $23,666.09 $16,663.64
8/31/97 $17,154.56 $23,147.72 $16,476.59
9/30/97 $17,456.32 $23,898.46 $16,735.63
10/31/97 $17,633.62 $23,818.20 $17,003.72
11/30/97 $17,719.80 $23,945.18 $17,093.21
12/31/97 $17,909.92 $24,023.77 $17,272.59
1/31/98 $18,138.50 $24,323.36 $17,516.09
2/28/98 $18,131.85 $24,585.51 $17,480.49
3/31/98 $18,223.88 $24,941.28 $17,534.38
4/30/98 $18,301.93 $25,035.65 $17,622.50
5/31/98 $18,458.45 $25,035.65 $17,811.91
6/30/98 $18,593.89 $25,054.67 $17,993.06
7/31/98 $18,579.43 $24,787.52 $18,007.42
8/31/98 $18,444.41 $23,007.31 $18,359.30
9/30/98 $18,824.66 $23,800.67 $18,884.27
10/31/98 $18,592.48 $23,731.20 $18,750.91
11/30/98 $18,936.23 $25,182.10 $18,862.63
12/31/98 $18,983.31 $25,151.93 $18,908.85
1/31/99 $19,148.49 $25,614.98 $19,043.19
2/28/99 $18,734.19 $25,151.93 $18,590.60
3/31/99 $18,942.95 $26,056.98 $18,682.85
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment
in the Fund will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their
original cost.
(a): Inception date of the Institutional Class of shares is May 16, 1991. Since
Lipper and Lehman Brothers Government/Corporate Bond Index performance
data is not available coincident with this date, comparative performance
is presented from May 31, 1991. Inception date of the Retail and Admin
Classes of shares are December 31, 1996 and January 2, 1998, respectively.
(b): Source: Lipper Analytical Services.
(c): Lehman Brothers Government/Corporate Bond Index is a composite of
approximately 5,300 corporate and government issues with at least $100
million outstanding for government issues and $25 million for corporates,
and greater than 1 year maturity. The index returns have not been lowered
for ongoing management and operating expenses applicable to mutual fund
investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail and Admin Classes of shares would be lower, due
to the higher fees paid by the Retail and Admin Classes of shares.
9
<PAGE>
FUND AND MANAGER REVIEW
- -----------------------------------------------------------------------
LOOMIS SAYLES GLOBAL BOND FUND
- -------------------------------------------------------
[PHOTO] E. JOHN DEBEER
KEY FUND FACTS
OBJECTIVE: High total investment return
STRATEGY: Invests primarily in investment grade fixed income
obligations (including convertibles) denominated in various
currencies, including U.S. dollars or multicurrency units.
FUND INCEPTION DATE: 5/10/91
COMMENCEMENT OF OPERATIONS OF CLASS: Institutional - 5/10/91,
Retail - 1/2/97
EXPENSE RATIO: Institutional - 0.90%, Retail - 1.15%
TOTAL NET ASSETS (ALL CLASSES): $41.2 MM
PERFORMANCE
The Institutional Class of the Loomis Sayles Global Bond Fund returned 13.92%
for the six-month period from October 1, 1998 through March 31, 1999, far
outpacing the Lipper Average Global Income Fund at 1.24% and the Salomon
Brothers World Government Bond Index at -0.45%. The Retail Class also
outperformed, returning 13.75% for the same period. We attribute much of this
stellar performance to the Asian recovery.
PORTFOLIO REVIEW
We continued to maintain the Fund's overall asset allocation over the past six
months, making few portfolio changes. We bought Colt Telecom during the last
quarter of 1998 and sold Korean bonds to buy Tenaga and Thai Farmers Bank in the
first quarter of 1999. We gradually eliminated our currency hedges during the
first quarter, so the net European currency exposure rose from 30.2% on 12/31/98
to 33.7% on 3/31/99.
The Asian recovery has been the primary factor driving the Fund's performance
for the past six months. The key structural elements in the Asian economy are
high savings rates (sometimes 30%), a hard-working labor force and strong
exporting capabilities. These factors were not heavily influenced by the fiscal
and economic turmoil of late 1997 and 1998. In fact, the turmoil gave us the
opportunity to buy good credits trading at distressed levels in Japan, Korea,
Thailand and the Philippines.
PORTFOLIO POSITIONING
The Fund's duration is currently slightly longer than the market at 6.2 years,
with the average yield to maturity at 7.4% and an average portfolio quality of
AA3. We continue to maintain our high exposure to Asia because we believe the
Asian economic and financial recovery is only beginning. European exposure is
also high at approximately 35% of the portfolio. While European bond performance
has been surprisingly weak, we believe the Euro will eventually strengthen to
the point where it will take its place alongside the dollar as one of the
world's reserve currencies.
[SIGNATURE]
E. John deBeer
10
<PAGE>
- -----------------------------------------------------------------------
AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SINCE
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION(a)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Loomis Sayles Global
Bond Fund
(Institutional) 13.92 11.58 10.28 9.69 9.62
Loomis Sayles Global
Bond Fund (Retail) 13.75 11.32 NA NA 7.18
Lipper Global Income
Fund Index(b) 1.37 2.56 6.24 6.58 7.07
Salomon Brothers World
Government Bond
Index(c) -0.45 9.99 5.47 7.00 8.82
</TABLE>
CUMULATIVE PERFORMANCE - MAY 31, 1991 TO MARCH 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LIPPER GLOBAL SALOMON BROTHERS
INCOME FUND LOOMIS SAYLES: WORLD GOVERNMENT
INDEX GLOBAL BOND FUND(d) BOND INDEX
<S> <C> <C> <C>
5/31/1991 $10,000.00 $10,000.00 $10,000.00
6/30/1991 $9,828.52 $9,560.00 $9,895.36
7/31/1991 $9,978.77 $9,860.00 $10,106.84
8/31/1991 $10,124.94 $10,000.00 $10,302.42
9/30/1991 $10,453.21 $10,530.00 $10,705.51
10/31/1991 $10,565.90 $10,580.87 $10,817.65
11/30/1991 $10,577.33 $10,822.03 $10,986.74
12/31/1991 $10,939.90 $11,687.29 $11,558.04
1/31/1992 $10,758.62 $11,266.22 $11,352.74
2/29/1992 $10,808.43 $11,173.79 $11,289.61
3/31/1992 $10,750.45 $11,112.17 $11,169.96
4/30/1992 $10,832.11 $11,214.63 $11,249.87
5/31/1992 $11,059.12 $11,603.52 $11,595.12
6/30/1992 $11,224.89 $12,044.96 $11,919.62
7/31/1992 $11,418.42 $12,351.14 $12,197.32
8/31/1992 $11,491.91 $12,222.26 $12,538.60
9/30/1992 $11,355.54 $11,846.36 $12,664.43
10/31/1992 $11,338.39 $11,995.50 $12,320.50
11/30/1992 $11,224.07 $11,731.86 $12,124.92
12/31/1992 $11,325.33 $11,785.91 $12,197.33
1/31/1993 $11,476.40 $11,808.75 $12,410.13
2/28/1993 $11,740.16 $12,060.00 $12,654.28
3/31/1993 $11,860.20 $12,356.93 $12,848.54
4/30/1993 $12,004.74 $12,734.89 $13,120.06
5/31/1993 $12,136.21 $12,815.78 $13,251.63
6/30/1993 $12,292.18 $12,388.20 $13,223.37
7/31/1993 $12,435.08 $12,248.94 $13,263.11
8/31/1993 $12,733.14 $12,899.74 $13,659.58
9/30/1993 $12,724.16 $13,190.27 $13,821.73
10/31/1993 $12,895.64 $13,422.30 $13,798.21
11/30/1993 $12,811.53 $13,293.91 $13,699.31
12/31/1993 $13,094.89 $13,508.21 $13,815.87
1/31/1994 $13,255.76 $13,764.70 $13,927.13
2/28/1994 $12,809.90 $13,361.65 $13,836.18
3/31/1994 $12,411.40 $13,007.46 $13,816.31
4/30/1994 $12,315.04 $12,922.29 $13,832.20
5/31/1994 $12,226.03 $12,637.60 $13,710.79
6/30/1994 $12,121.51 $12,192.00 $13,908.58
7/31/1994 $12,219.50 $12,268.06 $14,019.40
8/31/1994 $12,221.95 $12,217.83 $13,970.83
9/30/1994 $12,254.61 $12,155.05 $14,071.93
10/31/1994 $12,373.83 $12,192.72 $14,297.54
11/30/1994 $12,319.93 $12,343.40 $14,101.07
12/31/1994 $12,151.71 $12,330.84 $14,139.92
1/31/1995 $12,168.86 $12,255.50 $14,436.61
2/28/1995 $12,339.53 $12,230.39 $14,806.15
3/31/1995 $12,659.63 $11,966.70 $15,685.62
4/30/1995 $12,965.04 $12,506.65 $15,976.13
5/31/1995 $13,393.75 $13,260.06 $16,425.58
6/30/1995 $13,383.13 $13,109.38 $16,522.27
7/31/1995 $13,484.39 $13,460.97 $16,561.12
8/31/1995 $13,435.39 $13,900.46 $15,992.03
9/30/1995 $13,659.95 $14,176.71 $16,349.20
10/31/1995 $13,785.71 $14,339.95 $16,471.05
11/30/1995 $14,021.71 $14,942.68 $16,657.36
12/31/1995 $14,308.33 $15,278.87 $16,831.75
1/31/1996 $14,475.73 $15,641.06 $16,623.80
2/29/1996 $14,222.59 $15,319.12 $16,539.03
3/31/1996 $14,234.10 $15,399.61 $16,516.07
4/30/1996 $14,355.87 $15,694.72 $16,450.29
5/31/1996 $14,397.06 $15,788.62 $16,453.82
6/30/1996 $14,537.19 $16,150.81 $16,583.18
7/31/1996 $14,686.07 $16,123.98 $16,901.06
8/31/1996 $14,819.77 $16,298.37 $16,966.84
9/30/1996 $15,101.40 $16,792.29 $17,035.71
10/31/1996 $15,407.18 $17,196.92 $17,354.47
11/30/1996 $15,782.10 $17,736.43 $17,583.17
12/31/1996 $15,742.44 $17,573.83 $17,441.01
1/31/1997 $15,607.92 $17,360.38 $16,974.79
2/28/1997 $15,619.47 $17,644.98 $16,847.64
3/31/1997 $15,425.36 $17,488.45 $16,719.61
4/30/1997 $15,469.84 $17,403.07 $16,573.03
5/31/1997 $15,691.66 $17,801.50 $17,023.36
6/30/1997 $15,882.34 $18,199.93 $17,226.45
7/31/1997 $16,015.79 $18,399.15 $17,092.23
8/31/1997 $15,934.35 $18,185.70 $17,082.08
9/30/1997 $16,273.69 $18,555.68 $17,445.88
10/31/1997 $16,257.04 $18,299.54 $17,807.91
11/30/1997 $16,258.18 $18,242.62 $17,534.62
12/31/1997 $16,311.58 $17,979.31 $17,481.64
1/31/1998 $16,432.35 $18,374.46 $17,651.62
2/28/1998 $16,573.38 $18,724.02 $17,795.11
3/31/1998 $16,643.23 $18,511.25 $17,618.95
4/30/1998 $16,775.47 $18,754.42 $17,900.63
5/31/1998 $16,755.52 $18,693.63 $17,942.57
6/30/1998 $16,705.16 $18,313.68 $17,969.06
7/31/1998 $16,777.92 $18,480.86 $17,992.90
8/31/1998 $16,175.68 $17,386.60 $18,482.97
9/30/1998 $16,839.05 $18,131.31 $19,465.75
10/31/1998 $16,982.64 $19,164.78 $20,042.35
11/30/1998 $17,161.97 $19,955.08 $19,759.45
12/31/1998 $17,343.94 $19,883.18 $20,157.30
1/31/1999 $17,380.82 $20,277.56 $19,972.23
2/28/1999 $16,934.97 $19,998.21 $19,330.33
3/31/1999 $17,069.81 $20,655.51 $19,379.10
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment
in the Fund will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their
original cost.
(a): Inception date of the Institutional Class of shares is May 10, 1991. Since
Lipper and Salomon Brothers World Government Bond Index performance data
is not available coincident with this date, comparative performance is
presented from May 31, 1991. Inception date of the Retail Class of shares
is December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): Salomon Brothers World Government Bond Index is a capitalization-weighted
index which tracks the performance of 14 government bond markets. The
index returns have not been reduced for ongoing management and operating
expenses applicable to mutual fund investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
11
<PAGE>
FUND AND MANAGER REVIEW
- -----------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND
- -------------------------------------------------------
[PHOTO] DANIEL J. FUSS
[PHOTO] KATHLEEN C. GAFFNEY
KEY FUND FACTS
OBJECTIVE: High total investment return
STRATEGY: Invests in debt securities, although
up to 20% of total assets may be in preferred
stocks and up to 10% in common stocks. The Fund
normally invests at least 65% of its assets in
fixed income securities of below investment
grade quality.
FUND INCEPTION DATE: 9/11/96
COMMENCEMENT OF OPERATIONS OF CLASS: Institutional - 9/11/96
EXPENSE RATIO: Institutional - 0.75%
TOTAL NET ASSETS: $19.3 MM
PERFORMANCE
October 1, 1998 through March 31, 1999 was a successful period for the High
Yield Fund. The Institutional Class of the Fund returned 16.20% for this period,
significantly outperforming the 3.98% return of the Merrill Lynch High Yield
Master Index. Much of this excess return came from recoveries in various market
sectors that were temporarily beaten down last summer during a short-lived
"flight to quality".
PORTFOLIO REVIEW
Credit spreads have tightened considerably since the recessionary levels reached
during the global liquidity crisis last fall. The Federal Reserve Bank's three
consecutive cuts in short-term interest rates over the past six months ended the
"flight to quality" and alleviated some of the pressure on capital-starved
regions in Southeast Asia and Latin America. This had a positive impact on the
Fund, which had suffered as a result of the recent illiquidity in the high yield
market.
Our Yankee positions strengthened as capital began to flow freely again, which
helped stabilize currencies in Asia and Latin America and allowed them to begin
rebuilding their struggling economies. The stock market rebounded sharply from
its October lows, giving a boost to our significant convertible bond exposure.
The Fund's focus in the telecommunications sector also paid off, as demand
increased in response to new technological advances, rapid industry growth, and
improving fundamentals. Commodity-sensitive issues, particularly energy related
credits, lagged as a result of the supply/demand imbalances plaguing the oil
industry. However, we began to see a firming of oil prices in March, and if
inflationary pressures begin to materialize, we believe the Fund's exposure will
provide attractive returns as well as a sound hedge against inflation.
PORTFOLIO POSITIONING
Although yield spreads have tightened recently, they remain wide by historical
standards, particularly in the Yankee and commodity-sensitive sectors. The
portfolio continues to focus on individual credit specifics while attempting to
capitalize on cyclical changes in sectors/sovereigns to capture attractive
yields and lock them in for extended periods of time.
[SIGNATURE] [SIGNATURE]
Daniel J. Fuss Kathleen C. Gaffney
12
<PAGE>
- -----------------------------------------------------------------------
AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SINCE
6 MONTHS 1 YEAR INCEPTION(a)
<S> <C> <C> <C>
- ----------------------------------------------------------------------
Loomis Sayles High Yield Fund
(Institutional) 16.20 -7.98 4.77
Lipper High Current Yield Fund
Index(b) 6.44 -1.23 7.83
Merrill Lynch High Yield Master
Index(c) 3.98 1.94 8.59
</TABLE>
CUMULATIVE PERFORMANCE - SEPTEMBER 30, 1996 TO MARCH 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LIPPER HIGH MERRILL LYNCH
CURRENT YIELD LOOMIS SAYLES HIGH YIELD
FUND INDEX HIGH YIELD FUND MASTER INDEX
<S> <C> <C> <C>
9/30/1996 $10,000.00 $10,000.00 $10,000.00
10/31/1996 $10,047.67 $9,930.90 $10,109.59
11/30/1996 $10,220.81 $10,148.08 $10,313.98
12/31/1996 $10,346.76 $10,172.76 $10,393.34
1/31/1997 $10,449.36 $10,192.88 $10,473.21
2/28/1997 $10,624.81 $10,213.00 $10,620.13
3/31/1997 $10,394.67 $10,152.63 $10,502.18
4/30/1997 $10,483.20 $10,211.89 $10,621.71
5/31/1997 $10,760.60 $10,489.28 $10,835.77
6/30/1997 $10,944.94 $10,756.39 $11,000.74
7/31/1997 $11,236.88 $11,265.10 $11,264.73
8/31/1997 $11,262.43 $11,275.56 $11,245.02
9/30/1997 $11,535.21 $11,662.57 $11,431.28
10/31/1997 $11,489.98 $11,354.51 $11,507.14
11/30/1997 $11,573.40 $11,482.45 $11,616.05
12/31/1997 $11,709.83 $11,332.64 $11,726.27
1/31/1998 $11,937.33 $11,399.83 $11,900.91
2/28/1998 $12,049.84 $11,724.58 $11,950.02
3/31/1998 $12,224.48 $12,082.92 $12,053.00
4/30/1998 $12,262.63 $12,029.40 $12,110.25
5/31/1998 $12,249.08 $11,766.40 $12,194.57
6/30/1998 $12,270.58 $11,514.83 $12,254.96
7/31/1998 $12,354.29 $11,383.71 $12,324.85
8/31/1998 $11,412.85 $9,673.81 $11,793.02
9/30/1998 $11,344.42 $9,568.41 $11,816.54
10/31/1998 $11,086.88 $9,752.98 $11,622.41
11/30/1998 $11,737.92 $10,533.22 $12,151.76
12/31/1998 $11,701.27 $10,289.90 $12,155.79
1/31/1999 $11,913.20 $10,583.17 $12,275.98
2/28/1999 $11,865.26 $10,608.67 $12,182.35
3/31/1999 $12,074.45 $11,118.70 $12,287.33
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment in the Fund will
fluctuate so that investors' shares, when redeemed, may be worth more or less
than their original cost.
(a): Inception date of the Institutional Class of shares is September 11, 1996.
Since Lipper and Merrill Lynch High Yield Master Index performance data is
not available coincident with this date, comparative performance is
presented from September 30, 1996.
(b): Source: Lipper Analytical Services.
(c): Merrill Lynch High Yield Master Index consists of fixed-rate,
coupon-bearing bonds with an outstanding par which is greater than or
equal to $50 million, a maturity range greater than or equal to one year
and must be less than BBB/Baa3 rated but not in default. The index returns
have not been reduced for ongoing management and operating expenses
applicable to mutual fund investments.
13
<PAGE>
FUND AND MANAGER REVIEW
- -----------------------------------------------------------------------
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
- -------------------------------------------------------
[PHOTO] ANTHONY J. WILKINS
KEY FUND FACTS
OBJECTIVE: High total investment return
STRATEGY: Invests in investment grade debt securities, with a
dollar-weighted average maturity between three and ten years.
FUND INCEPTION DATE: 12/31/96
COMMENCEMENT OF OPERATIONS OF CLASS: Institutional - 1/2/97,
Retail - 1/2/97
EXPENSE RATIO: Institutional - 0.55%, Retail - 0.80%
TOTAL NET ASSETS (ALL CLASSES): $10.0 MM
PERFORMANCE
For the six-month period from October 1, 1998 through March 31, 1999, the
Institutional Class of the Intermediate Maturity Bond Fund returned 1.93%,
outpacing the 0.10% return of the Lehman Brothers Government/Corporate
Intermediate Bond Index. The Retail Class also outperformed the Index, returning
1.71% for the same period. This was almost exclusively attributable to spread
compression in all non-Treasury sectors of the bond market.
PORTFOLIO REVIEW
The beginning of October was marked by a massive, global "flight to quality".
This flight was triggered by recession in Asia, Russia's default, and the
subsequent de-coupling of markets (Treasuries fared well while corporate bonds
did not) that occurred as investors who previously borrowed money to buy bonds
sold them to repay their debts. Fortunately, the Federal Reserve Bank stepped in
with three consecutive interest rate cuts, which provided much needed liquidity
for the market. During the first quarter, diminished expectations of future
interest rate cuts, rising Japanese bond yields, and a stronger than expected
domestic economy, led investors to swap out of particularly rich Treasuries into
other segments of the market.
The Fund was well positioned to benefit from this transition. The Fund's
mortgage and asset-backed positions had a positive impact on performance,
outperforming similar duration Treasuries on a relative basis. The Fund's modest
Yankee allocation also provided a boost to returns, with Korea Development Bank
rallying after being upgraded to investment grade status. RJR Nabisco bonds
rallied following the company's announcement that it planned to spin off its
domestic tobacco unit and sell its international tobacco unit, allowing the
company to de-leverage and avoid possible future costly litigation. The Fund's
exposure to the REIT sector also proved beneficial as REIT spreads bounced back
in the first quarter of 1999, following a disappointing 1998.
PORTFOLIO POSITIONING
We will continue to focus on call-protected undervalued bonds that offer good
yield advantage. The duration of the Portfolio remains longer than that of the
benchmark index. This is done to capture the higher yield offered by extending
out along the corporate curve and enhance capital appreciation should yield
spreads narrow.
[SIGNATURE]
Anthony J. Wilkins
14
<PAGE>
- -----------------------------------------------------------------------
AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SINCE
6 MONTHS 1 YEAR INCEPTION(a)
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Loomis Sayles Intermediate
Maturity Bond Fund
(Institutional) 1.93 2.84 5.29
Loomis Sayles Intermediate
Maturity Bond Fund (Retail) 1.71 2.59 5.05
Lipper Intermediate Investment
Grade Bond Fund Index(b) -0.29 5.80 7.18
Lehman Brothers Government/Corp.
Intermediate Bond Index(c) 0.10 6.57 7.12
</TABLE>
CUMULATIVE PERFORMANCE - DECEMBER 31, 1996 TO MARCH 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
LIPPER INTERMEDIATE LOOMIS SAYLES GOVERNMENT/CORP.
INVESTMENT GRADE INTERMEDIATE MATURITY INTERMEDIATE
<S> <C> <C> <C>
Bond Fund Index Bond Fund(d) Bond Index
12/31/1996 $10,000.00 $10,000.00 $10,000.00
1/31/1997 $10,031.01 $10,060.00 $10,038.86
2/28/1997 $10,055.69 $10,080.00 $10,058.04
3/31/1997 $9,947.62 $9,990.00 $9,988.64
4/30/1997 $10,083.94 $10,106.37 $10,105.99
5/31/1997 $10,173.64 $10,228.01 $10,189.90
6/30/1997 $10,293.97 $10,339.51 $10,282.90
7/31/1997 $10,566.36 $10,574.08 $10,492.11
8/31/1997 $10,470.18 $10,502.36 $10,439.37
9/30/1997 $10,621.03 $10,625.31 $10,560.76
10/31/1997 $10,748.79 $10,585.81 $10,677.73
11/30/1997 $10,780.37 $10,606.57 $10,701.33
12/31/1997 $10,878.47 $10,642.54 $10,786.88
1/31/1998 $11,022.64 $10,759.26 $10,928.20
2/28/1998 $11,006.71 $10,812.31 $10,919.87
3/31/1998 $11,047.36 $10,918.42 $10,954.95
4/30/1998 $11,098.97 $10,969.02 $11,009.84
5/31/1998 $11,199.06 $11,022.90 $11,090.60
6/30/1998 $11,288.28 $11,033.68 $11,161.39
7/31/1998 $11,311.38 $11,059.37 $11,200.76
8/31/1998 $11,464.61 $10,895.12 $11,376.79
9/30/1998 $11,721.63 $11,015.57 $11,662.59
10/31/1998 $11,626.79 $10,968.82 $11,651.11
11/30/1998 $11,684.76 $11,080.18 $11,650.23
12/31/1998 $11,734.76 $11,067.60 $11,697.04
1/31/1999 $11,807.56 $11,124.95 $11,761.27
2/28/1999 $11,596.80 $11,033.20 $11,588.40
3/31/1999 $11,688.01 $11,228.17 $11,674.84
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment
in the Fund will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their
original cost.
(a):Inception date of the Institutional and Retail Classes of shares is
December 31, 1996.
(b):Source: Lipper Analytical Services.
(c):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. The Lehman Brothers
Government/Corporate Bond Index consists of approximately 5,300 corporate
and government issues with at least $100 million outstanding for government
issues and $25 million for corporates, and greater than 1 year maturity.
The index returns have not been lowered for ongoing management and
operating expenses applicable to mutual fund investments.
(d):Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees paid
by the Retail Class of shares, be lower.
15
<PAGE>
FUND AND MANAGER REVIEW
- -----------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
- -------------------------------------------------------
[PHOTO] DANIEL J. FUSS
KEY FUND FACTS
OBJECTIVE: High total investment return
STRATEGY: Invests in investment grade debt securities, including
convertibles, although up to 20% of assets may be in preferred
stocks.
FUND INCEPTION DATE: 12/31/96
COMMENCEMENT OF OPERATIONS OF CLASS: Institutional - 1/2/97,
Retail - 1/2/97
EXPENSE RATIO: Institutional - 0.55%, Retail - 0.80%
TOTAL NET ASSETS (ALL CLASSES): $6.1 MM
PERFORMANCE
October 1, 1998 through March 31, 1999 was a challenging period for fixed income
investors. Volatility in global markets brought uncertainty, which meant even
purchasing high quality bonds did not guarantee positive results. The
Institutional Class of the Investment Grade Bond Fund posted a 6.05% return in
this environment, topping the -1.07% return of the Lehman Brothers
Government/Corporate Bond Index. The Retail Class also outperformed the index,
posting a 5.83% return for the same period.
PORTFOLIO REVIEW
The Federal Reserve Bank cut interest rates three times from September to
December, ending the "flight to quality" and causing investors to shift their
focus from Treasuries to other segments of the market. Heavy new issuance was
offset by robust mutual fund inflows and strong institutional demand for
corporate debt. The Fund's considerable position in Canadian government and
provincial debt appreciated significantly over the past six months, due to
Canada's improving credit profile, strengthening Canadian dollar, and attractive
debt structure, which featured both good call protection and liquidity. The
Fund's modest Yankee allocation provided a boost to performance as well, with
bonds such as Enersis and Telekom Malaysia posting double-digit gains. Finally,
the Fund's exposure to the REIT sector added value as yield spreads in this
sector narrowed considerably over the last six months.
PORTFOLIO POSITIONING
We believe that the Fund is strongly positioned to take advantage of global
market conditions. The Fund remains underweighted in Treasuries relative to the
benchmark, primarily because we believe there are better values and more
attractive yields in other segments of the market. We continue to focus on the
Yankee, Energy, REIT, and Canadian government and provincial sectors. The
Portfolio is well diversified across sectors and countries. The Fund has a
longer average maturity and duration than its benchmark, the Lehman
Government/Corporate Bond Index, to capture additional yield and lock it in
through the call protection inherent in longer maturity bonds.
[SIGNATURE]
Daniel J. Fuss
16
<PAGE>
- -----------------------------------------------------------------------
AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SINCE
6 MONTHS 1 YEAR INCEPTION(a)
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Loomis Sayles Investment Grade
Bond Fund (Institutional) 6.05 3.45 9.05
Loomis Sayles Investment Grade
Bond Fund (Retail) 5.83 3.10 8.75
Lipper BBB Rated Bond Fund
Index(b) 0.63 3.95 3.66
Lehman Brothers Government/Corp.
Bond Index(c) -1.07 6.55 7.92
</TABLE>
CUMULATIVE PERFORMANCE - DECEMBER 31, 1996 TO MARCH 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LIPPER BBB LOOMIS SAYLES LEHMAN BROTHERS
RATED BOND INVESTMENT GRADE GOVERNMENT/CORP.
FUND INDEX BOND FUND(d) BOND INDEX
<S> <C> <C> <C>
12/31/1996 $10,000.00 $10,000.00 $10,000.00
1/31/1997 $10,031.77 $9,950.00 $10,011.87
2/28/1997 $10,088.99 $10,150.00 $10,032.99
3/31/1997 $9,933.21 $9,940.00 $9,913.75
4/30/1997 $10,079.95 $10,132.65 $10,058.73
5/31/1997 $10,195.40 $10,325.17 $10,152.59
6/30/1997 $10,347.40 $10,598.75 $10,274.45
7/31/1997 $10,705.18 $11,280.87 $10,588.79
8/31/1997 $10,563.38 $10,971.81 $10,469.93
9/30/1997 $10,749.20 $11,280.88 $10,634.54
10/31/1997 $10,858.37 $11,443.30 $10,804.90
11/30/1997 $10,911.44 $11,422.42 $10,861.77
12/31/1997 $11,028.51 $11,450.61 $10,975.76
1/31/1998 $11,169.26 $11,569.55 $11,130.49
2/28/1998 $11,165.16 $11,601.99 $11,107.87
3/31/1998 $11,221.83 $11,742.55 $11,142.12
4/30/1998 $11,269.89 $11,785.12 $11,198.11
5/31/1998 $11,366.27 $11,861.93 $11,318.47
6/30/1998 $11,449.67 $11,839.98 $11,433.58
7/31/1998 $11,440.77 $11,700.18 $11,442.70
8/31/1998 $11,357.63 $11,198.74 $11,666.30
9/30/1998 $11,591.78 $11,455.03 $11,999.89
10/31/1998 $11,448.81 $11,347.42 $11,915.15
11/30/1998 $11,660.48 $11,723.01 $11,986.14
12/31/1998 $11,689.47 $11,829.13 $12,015.51
1/31/1999 $11,791.19 $12,018.21 $12,100.88
2/28/1999 $11,536.07 $11,876.40 $11,813.29
3/31/1999 $11,664.62 $12,148.20 $11,871.91
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment
in the Fund will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their
original cost.
(a): Inception date of the Institutional and Retail Classes of shares is
December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): Lehman Brothers Government/Corporate Bond Index consists of approximately
5,300 corporate and government issues with at least $100 million
outstanding for government issues and $25 million for corporates, and
greater than 1 year maturity. The index returns have not been lowered for
ongoing management and operating expenses applicable to mutual fund
investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
17
<PAGE>
FUND AND MANAGER REVIEW
- -----------------------------------------------------------------------
LOOMIS SAYLES MUNICIPAL BOND FUND
- -------------------------------------------------------
[PHOTO] MARTHA F. HODGMAN
KEY FUND FACTS
OBJECTIVE: Current income
STRATEGY: Invests in fixed income securities the income of which
is exempt from federal income tax.
FUND INCEPTION DATE: 5/29/91
COMMENCEMENT OF OPERATIONS OF CLASS: Institutional - 5/29/91
EXPENSE RATIO: Institutional - 0.57%
TOTAL NET ASSETS: $10.7 MM
PERFORMANCE
For the six-month period from October 1, 1998 through March 31, 1999, the Loomis
Sayles Municipal Bond Fund's 0.49% return closely tracked the Lipper General
Municipal Bond Fund Average's 0.58% return and slightly trailed the 1.49% return
of the Lehman Brothers Municipal Bond Index. Unlike the taxable bond market, the
municipal bond market experienced falling interest rates due primarily to a
supply shortage. High interest rate exposure due to long maturities and low
coupons (discount bonds) paid off the best for the Fund's performance during the
period.
PORTFOLIO REVIEW
Over the past six months, the municipal bond market has been stable, with demand
keeping pace with issuance and credit trends remaining positive as state and
local finances continue to benefit from the strong economy. In the taxable
markets, long-term U.S. Treasury yields traded in about a 100-basis-point range,
as demand ebbed and flowed in response to world events such as the volatility in
emerging markets last fall, the continued strength in the U.S. economy, and the
crisis in Yugoslavia.
The Fund's slight underperformance over the past six months was due primarily to
our preference for longer maturity, and therefore higher yielding, bonds. The
best performing sector of the market was issues maturing in five years or less.
The Fund held few of these issues because their yields were so low. And, with
last year's rally, many longer term issues are trading to call dates in 8 to 10
years, a fairly common occurrence. When market yields fall and bonds trade above
par, the likelihood of the bonds being called increases to the point where the
call date is more relevant than the maturity date. This trend, coupled with
strong intermediate issuance has led to a glut in intermediate-term issues,
which weakened performance for this segment of the market. Consequently, the
Fund's intermediate term bonds had a negative effect on overall performance.
PORTFOLIO POSITIONING
We anticipate that the oversupply of intermediate bonds will subside, and as
they work their way through the market their performance should improve. We
believe this is a temporary situation and will continue to maintain our
portfolio strategy of seeking well-researched issues that provide extra yield
and good call protection.
[SIGNATURE]
Martha F. Hodgman
18
<PAGE>
- -----------------------------------------------------------------------
AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SINCE
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Loomis Sayles Municipal
Bond Fund
(Institutional) 0.49 5.67 7.16 7.11 7.45
Lipper General
Municipal Bond Fund
Index(b) 0.71 5.12 7.01 7.02 7.35
Lehman Brothers
Municipal Bond
Index(c) 1.49 6.20 7.43 7.62 7.70
</TABLE>
CUMULATIVE PERFORMANCE - MAY 31, 1991 TO MARCH 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LIPPER GENERAL LOOMIS SAYLES LEHMAN BROTHERS
MUNICIPAL BOND MUNICIPAL BOND MUNICIPAL
FUND INDEX FUND BOND INDEX
<S> <C> <C> <C>
5/31/91 $10,000.00 $10,000.00 $10,000.00
6/30/91 $9,971.05 $10,010.56 $9,990.14
7/31/91 $10,096.80 $10,131.13 $10,111.76
8/31/91 $10,227.97 $10,300.36 $10,245.06
9/30/91 $10,366.08 $10,418.25 $10,378.73
10/31/91 $10,462.88 $10,527.58 $10,471.86
11/30/91 $10,475.85 $10,521.37 $10,501.08
12/31/91 $10,727.34 $10,780.40 $10,726.42
1/31/92 $10,720.71 $10,763.94 $10,750.89
2/29/92 $10,735.79 $10,796.51 $10,754.54
3/31/92 $10,741.22 $10,777.01 $10,758.56
4/30/92 $10,842.54 $10,876.56 $10,854.25
5/31/92 $10,992.71 $11,058.32 $10,982.08
6/30/92 $11,199.57 $11,236.95 $11,166.15
7/31/92 $11,593.09 $11,706.58 $11,501.05
8/31/92 $11,407.03 $11,499.54 $11,388.93
9/30/92 $11,453.17 $11,540.57 $11,463.43
10/31/92 $11,251.13 $11,315.39 $11,350.58
11/30/92 $11,537.00 $11,668.34 $11,554.01
12/31/92 $11,682.05 $11,791.00 $11,671.98
1/31/93 $11,819.56 $11,921.59 $11,807.84
2/28/93 $12,292.99 $12,367.41 $12,234.78
3/31/93 $12,151.56 $12,175.86 $12,105.49
4/30/93 $12,280.32 $12,343.79 $12,227.47
5/31/93 $12,344.85 $12,413.08 $12,296.13
6/30/93 $12,562.57 $12,625.39 $12,501.75
7/31/93 $12,555.63 $12,593.83 $12,517.82
8/31/93 $12,838.18 $12,895.50 $12,778.59
9/30/93 $12,986.24 $13,065.25 $12,924.31
10/31/93 $13,007.35 $13,079.76 $12,949.14
11/30/93 $12,876.48 $12,915.43 $12,834.83
12/31/93 $13,134.31 $13,148.62 $13,105.82
1/31/94 $13,279.36 $13,311.06 $13,255.56
2/28/94 $12,953.99 $12,971.03 $12,912.26
3/31/94 $12,412.10 $12,422.09 $12,386.35
4/30/94 $12,453.11 $12,493.49 $12,491.53
5/31/94 $12,562.87 $12,647.37 $12,599.63
6/30/94 $12,483.56 $12,580.59 $12,522.57
7/31/94 $12,698.87 $12,828.92 $12,752.29
8/31/94 $12,739.28 $12,833.05 $12,796.48
9/30/94 $12,542.07 $12,614.10 $12,608.76
10/31/94 $12,302.34 $12,358.95 $12,384.88
11/30/94 $12,049.34 $12,138.90 $12,160.64
12/31/94 $12,341.54 $12,441.29 $12,428.34
1/31/95 $12,716.67 $12,803.74 $12,783.70
2/28/95 $13,096.02 $13,179.95 $13,155.49
3/31/95 $13,216.94 $13,255.70 $13,306.69
4/30/95 $13,216.94 $13,259.59 $13,322.39
5/31/95 $13,639.11 $13,663.99 $13,747.50
6/30/95 $13,486.22 $13,498.68 $13,627.34
7/31/95 $13,573.97 $13,613.68 $13,756.26
8/31/95 $13,728.67 $13,742.11 $13,930.83
9/30/95 $13,815.21 $13,833.93 $14,018.85
10/31/95 $14,034.14 $14,049.22 $14,222.64
11/30/95 $14,313.68 $14,339.65 $14,458.94
12/31/95 $14,478.02 $14,499.23 $14,597.72
1/31/96 $14,547.68 $14,616.36 $14,708.02
2/29/96 $14,442.44 $14,468.96 $14,608.68
3/31/96 $14,220.89 $14,231.95 $14,422.05
4/30/96 $14,160.83 $14,159.75 $14,381.15
5/31/96 $14,169.93 $14,163.82 $14,375.67
6/30/96 $14,301.26 $14,283.26 $14,532.35
7/31/96 $14,424.49 $14,454.76 $14,663.83
8/31/96 $14,416.69 $14,420.77 $14,660.54
9/30/96 $14,636.67 $14,603.17 $14,865.43
10/31/96 $14,799.60 $14,776.88 $15,033.43
11/30/96 $15,058.82 $15,069.52 $15,308.80
12/31/96 $14,996.02 $14,982.58 $15,244.16
1/31/97 $14,993.81 $14,991.65 $15,273.01
2/28/97 $15,125.58 $15,120.86 $15,413.25
3/31/97 $14,938.98 $14,902.12 $15,207.63
4/30/97 $15,067.50 $15,032.05 $15,335.09
5/31/97 $15,283.83 $15,283.49 $15,565.91
6/30/97 $15,464.72 $15,441.56 $15,731.72
7/31/97 $15,928.56 $15,949.90 $16,167.42
8/31/97 $15,747.33 $15,726.37 $16,015.86
9/30/97 $15,945.22 $15,955.67 $16,205.77
10/31/97 $16,051.02 $16,033.62 $16,310.22
11/30/97 $16,142.63 $16,153.02 $16,406.27
12/31/97 $16,404.24 $16,455.78 $16,645.49
1/31/98 $16,561.95 $16,617.99 $16,817.14
2/28/98 $16,561.73 $16,597.65 $16,822.25
3/31/98 $16,579.09 $16,576.71 $16,837.22
4/30/98 $16,478.30 $16,455.32 $16,761.25
5/31/98 $16,745.73 $16,761.84 $17,026.40
6/30/98 $16,805.82 $16,811.63 $17,093.60
7/31/98 $16,838.72 $16,847.65 $17,136.33
8/31/98 $17,101.18 $17,172.35 $17,401.11
9/30/98 $17,304.18 $17,430.73 $17,618.05
10/31/98 $17,241.06 $17,348.88 $17,617.68
11/30/98 $17,298.99 $17,398.10 $17,679.40
12/31/98 $17,329.29 $17,471.25 $17,723.96
1/31/99 $17,518.43 $17,715.11 $17,934.69
2/28/99 $17,419.54 $17,556.27 $17,856.53
3/31/99 $17,427.46 $17,516.42 $17,881.00
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment
in the Fund will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their
original cost.
(a): Inception date of the Loomis Sayles Municipal Bond Fund is May 29, 1991.
Since Lipper and Lehman Brothers Municipal Bond Index performance data is
not available coincident with this date, comparative performance is
presented from May 31, 1991.
(b): Source: Lipper Analytical Services.
(c): Lehman Brothers Municipal Bond Index is computed from prices on
approximately 21,000 bonds consisting of roughly 30% revenue bonds, 30%
government obligations bonds, 27% insured and 13% prerefunded bonds. The
index returns have not been reduced for ongoing management and operating
expenses applicable to mutual fund investments.
19
<PAGE>
FUND AND MANAGER REVIEW
- -----------------------------------------------------------------------
LOOMIS SAYLES SHORT-TERM BOND FUND
- -------------------------------------------------------
[PHOTO] JOHN HYLL
KEY FUND FACTS
OBJECTIVE: High total investment return
STRATEGY: Invest in debt securities (including convertibles),
although up to 20% may be invested in non-convertible preferred
stocks.
FUND INCEPTION DATE: 8/3/92
COMMENCEMENT OF OPERATIONS OF CLASS: Institutional - 8/3/92,
Retail - 1/2/97
EXPENSE RATIO: Institutional - 0.29%, Retail - 0.55%
TOTAL NET ASSETS (ALL CLASSES): $28.9 MM
PERFORMANCE
For the six-month period from October 1, 1998 through March 31, 1999, both the
Institutional Class and the Retail Class of the Loomis Sayles Short-Term Bond
Fund lagged the 1.52% return of the Lehman Brothers 1-3 Year
Government/Corporate Bond Index returning 0.02% and -0.11%, respectively. Unlike
the rest of the yield curve, bonds with very short maturities (less than two
years) did not experience a dramatic rise in interest rates.
PORTFOLIO REVIEW
During the past six months ending March 31, 1999, interest rates increased
substantially due to the unanticipated strength in the U.S. economy and
expectations that the Federal Reserve Bank would step in and tighten the money
supply further to restrain credit. The Fund's longer average maturity did not
help performance during this period of substantially rising rates. While the
Fund's allocation to corporate and mortgage securities boosted returns, strong
performance in these sectors was not enough to overcome the negative effects of
rising interest rates.
The Fund increased its allocation to the corporate sector during this period
with an emphasis in the finance, chemical, energy and real estate areas.
Chemical and energy issues, in particular, were purchased at attractive prices
due to downward pricing pressures in both industries. Financials performed well
as valuations rebounded significantly from last year's lows.
PORTFOLIO POSITIONING
Since June of 1998, we have increased the Fund's corporate allocation from
approximately 43% to approximately 60% as of March 31, 1999. The average
maturity of the Fund is 2.89 years, which is near its maximum allowable limit of
3 years.
The Fund is well-positioned for an environment of moderate economic growth with
low inflationary pressures. We expect to maintain the Fund's average maturity
near the longer end of its range with an emphasis on increasing our exposure to
corporate securities.
[SIGNATURE]
John Hyll
20
<PAGE>
- -----------------------------------------------------------------------
AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SINCE
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Loomis Sayles
Short-Term Bond Fund
(Institutional) 0.02 5.13 6.16 6.26 5.80
Loomis Sayles
Short-Term Bond Fund
(Retail) -0.11 4.86 NA NA 5.92
Lipper Short Investment
Grade Bond Fund
Index(b) 1.51 5.26 6.01 5.78 5.57
Lehman Brothers 1-3
Year Government/
Corp. Bond Index(c) 1.52 6.19 6.36 6.26 5.69
</TABLE>
CUMULATIVE PERFORMANCE - AUGUST 31, 1992 TO MARCH 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LIPPER SHORT LOOMIS SAYLES LEHMAN BROTHERS 1-3
INVESTMENT GRADE SHORT-TERM BOND YEAR GOVERNMENT/CORP.
BOND FUND INDEX FUND(d) BOND INDEX
<S> <C> <C> <C>
9/30/1992 $10,000.00 $10,000.00 $10,000.00
10/31/1992 $9,944.84 $9,917.55 $9,940.00
11/30/1992 $9,958.28 $9,881.64 $9,926.08
12/31/1992 $10,033.95 $9,948.95 $10,019.38
1/31/1993 $10,152.05 $10,076.76 $10,126.59
2/28/1993 $10,261.66 $10,228.40 $10,209.63
3/31/1993 $10,311.87 $10,271.01 $10,242.30
4/30/1993 $10,366.32 $10,334.99 $10,306.83
5/31/1993 $10,385.41 $10,336.58 $10,283.12
6/30/1993 $10,474.51 $10,411.02 $10,361.27
7/31/1993 $10,533.20 $10,434.33 $10,385.10
8/31/1993 $10,628.67 $10,529.79 $10,472.33
9/30/1993 $10,663.32 $10,559.49 $10,505.84
10/31/1993 $10,717.06 $10,611.74 $10,530.00
11/30/1993 $10,722.01 $10,610.63 $10,533.16
12/31/1993 $10,791.31 $10,640.96 $10,576.34
1/31/1994 $10,862.03 $10,714.64 $10,644.03
2/28/1994 $10,801.21 $10,648.56 $10,579.10
3/31/1994 $10,719.18 $10,592.87 $10,524.09
4/30/1994 $10,677.46 $10,560.64 $10,484.10
5/31/1994 $10,689.48 $10,577.03 $10,498.78
6/30/1994 $10,697.97 $10,619.42 $10,526.08
7/31/1994 $10,759.49 $10,728.69 $10,621.87
8/31/1994 $10,816.77 $10,782.99 $10,657.98
9/30/1994 $10,801.92 $10,773.04 $10,634.53
10/31/1994 $10,819.60 $10,803.84 $10,658.99
11/30/1994 $10,800.51 $10,814.47 $10,614.22
12/31/1994 $10,775.05 $10,830.56 $10,634.39
1/31/1995 $10,885.37 $10,951.12 $10,780.08
2/28/1995 $11,014.07 $11,106.11 $10,928.85
3/31/1995 $11,074.89 $11,182.67 $10,991.14
4/30/1995 $11,169.65 $11,267.53 $11,090.06
5/31/1995 $11,374.02 $11,456.91 $11,276.82
6/30/1995 $11,444.03 $11,530.29 $11,345.64
7/31/1995 $11,480.80 $11,546.78 $11,390.97
8/31/1995 $11,557.88 $11,631.67 $11,460.00
9/30/1995 $11,613.04 $11,692.68 $11,516.66
10/31/1995 $11,722.65 $11,777.08 $11,612.27
11/30/1995 $11,821.65 $11,898.09 $11,712.21
12/31/1995 $11,903.68 $11,978.91 $11,801.02
1/31/1996 $12,010.46 $12,107.08 $11,901.99
2/29/1996 $11,966.62 $12,025.09 $11,856.66
3/31/1996 $11,913.46 $11,993.02 $11,848.01
4/30/1996 $11,922.09 $11,998.21 $11,859.96
5/31/1996 $11,945.81 $11,968.83 $11,887.36
6/30/1996 $12,031.70 $12,090.15 $11,974.31
7/31/1996 $12,081.02 $12,111.77 $12,020.88
8/31/1996 $12,123.73 $12,133.94 $12,065.18
9/30/1996 $12,239.91 $12,281.78 $12,175.62
10/31/1996 $12,371.36 $12,444.43 $12,177.89
11/30/1996 $12,474.21 $12,569.81 $12,405.37
12/31/1996 $12,479.62 $12,539.94 $12,407.43
1/31/1997 $12,543.36 $12,592.71 $12,467.39
2/28/1997 $12,585.66 $12,632.32 $12,498.30
3/31/1997 $12,572.61 $12,594.33 $12,488.62
4/30/1997 $12,673.24 $12,701.31 $12,591.03
5/31/1997 $12,758.18 $12,795.25 $12,679.01
6/30/1997 $12,847.30 $12,902.07 $12,767.20
7/31/1997 $12,993.35 $13,085.73 $12,908.96
8/31/1997 $13,002.56 $13,073.30 $12,921.12
9/30/1997 $13,104.51 $13,208.09 $13,017.56
10/31/1997 $13,185.04 $13,317.08 $13,114.39
11/30/1997 $13,217.72 $13,362.54 $13,147.36
12/31/1997 $13,296.95 $13,435.95 $13,234.11
1/31/1998 $13,412.06 $13,600.76 $13,361.86
2/28/1998 $13,430.57 $13,595.77 $13,372.57
3/31/1998 $13,485.29 $13,650.31 $13,424.91
4/30/1998 $13,548.34 $13,703.60 $13,491.26
5/31/1998 $13,621.24 $13,786.08 $13,564.61
6/30/1998 $13,682.28 $13,868.19 $13,634.67
7/31/1998 $13,742.69 $13,922.74 $13,698.13
8/31/1998 $13,836.25 $14,078.36 $13,855.55
9/30/1998 $13,982.54 $14,347.37 $14,042.03
10/31/1998 $13,963.92 $14,257.90 $14,102.82
11/30/1998 $13,999.91 $14,283.44 $14,100.35
12/31/1998 $14,060.34 $14,330.59 $14,154.95
1/31/1999 $14,131.08 $14,375.03 $14,215.32
2/28/1999 $14,084.93 $14,212.33 $14,155.36
3/31/1999 $14,194.24 $14,350.32 $14,255.71
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment
in the Fund will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their
original cost.
(a): Inception date of the Institutional Class of shares is August 3, 1992.
Since Lipper and Lehman Brothers 1-3 Year Government/Corporate Bond Index
performance data is not available coincident with this date, comparative
performance is presented from August 31, 1992. Inception date of the
Retail Class of shares is December 31, 1996.
(b): Source: Lipper Analytical Services.
(c): Lehman Brothers 1-3 Year Government/Corporate Bond Index consists of fixed
rate debt issues rated investment grade or higher. All issues have at
least one year to three years to maturity and an outstanding par value of
at least $100 million for U.S. government issues. The index returns have
not been reduced for ongoing management and operating expenses applicable
to mutual fund investments.
(d): Cumulative performance is shown for the Institutional Class of shares.
Performance of the Retail Class of shares would, due to the higher fees
paid by the Retail Class of shares, be lower.
21
<PAGE>
FUND AND MANAGER REVIEW
- -----------------------------------------------------------------------
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND
- -------------------------------------------------------
[PHOTO] KENT P. NEWMARK
KEY FUND FACTS
OBJECTIVE: High total investment return
STRATEGY: Invests in securities issued or guaranteed by the U.S.
Government or its authorities, agencies or instrumentalities
FUND INCEPTION DATE: 5/21/91
COMMENCEMENT OF OPERATIONS OF CLASS: Institutional - 5/21/91
EXPENSE RATIO: Institutional - 0.54%
TOTAL NET ASSETS (ALL CLASSES): $20.0 MM
PERFORMANCE
The U.S. Government Securities Fund returned -2.24% for the six-month period
from October 1, 1998 through March 31, 1999, slightly lagging the -1.61% return
of the average fund in Lipper's General U.S. Government Bond Fund category, and
the -1.51% return of the Lehman Brothers Government Bond Index. The Fund's long
duration and tactical swapping among Treasury and Federal Agency sectors hurt
performance.
PORTFOLIO REVIEW
Treasury securities experienced a difficult 6-month period from October 1, 1998
through March 31, 1999, following a sharp rally in the summer of 1998. In
February, investors interpreted a rash of economic reports as the forerunner of
inflation. The 30-Year Treasury yield rose 54 basis points to close the month at
5.63%. It was one of the worst months for U.S. Treasury bonds since 1981.
The past six months ending March 31, 1999 have not been a good period for
investors in long-term bonds due to the sharp rise in yields. However, even with
our longer term focus, we were able to make some good decisions. The Fund began
the period with a fairly conservative portfolio duration of 6.8 years and
extended it to the current duration of 9.9 years.
Once again we were very active in the Tennessee Valley Authority issue, as we
sold our holding back to the company in the fourth quarter, only to repurchase
the debt soon thereafter at a lower price.
The relatively good performance of mortgage-backed securities and Treasury
Inflation Protected Securities (TIPS) over the past six months has partially
offset the weak returns for long-term Treasuries. About half of the Fund was
invested in TIPS, but we have reduced the Fund's position to add duration after
rates had risen, as we felt that a reversion of the trend was more likely than a
continuation.
PORTFOLIO POSITIONING
As of March 31, 1999, approximately 51% of the Portfolio was invested in
long-term U.S. Treasuries with another 32% in the mortgage sector. We believe a
low volatility interest rate environment lies ahead, which should benefit GNMAs.
The Fund's TIPS position is down to 16%, but still provides significant
protection against accelerating inflation. We anticipate that interest rates
will remain stable, and long-term Treasuries will at least earn the coupon. In
our opinion, the 0.39% differential in yield between 10- and 30-Year U.S.
Treasury issues at March 31 justifies holding the longer term issues.
[SIGNATURE]
Kent P. Newmark
22
<PAGE>
- -----------------------------------------------------------------------
AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
SINCE
6 MONTHS 1 YEAR 3 YEARS 5 YEARS INCEPTION(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Loomis Sayles U.S.
Government Securities
Fund (Institutional) -2.24 5.73 8.68 8.29 9.53
Lipper General U.S.
Government Bond Fund
Index(b) -1.35 5.26 6.79 6.45 6.89
Lehman Brothers
Government Bond
Index(c) -1.51 6.68 7.66 7.53 8.10
</TABLE>
CUMULATIVE PERFORMANCE - MAY 31, 1991 TO MARCH 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LIPPER GENERAL LOOMIS SAYLES LEHMAN BROTHERS
U.S. GOVERNMENT U.S. GOVERNMENT GOVERNMENT
BOND FUND INDEX SECURITIES FUND BOND INDEX
<S> <C> <C> <C>
5/31/91 $10,000.00 $10,000.00 $10,000.00
6/30/91 $9,974.88 $9,970.09 $9,985.81
7/31/91 $10,110.54 $10,119.64 $10,104.30
8/31/91 $10,334.41 $10,398.80 $10,338.59
9/30/91 $10,544.33 $10,687.93 $10,555.44
10/31/91 $10,637.01 $10,769.25 $10,647.85
11/30/91 $10,707.35 $10,880.48 $10,754.64
12/31/91 $11,073.03 $11,494.27 $11,121.03
1/31/92 $10,882.65 $11,099.39 $10,947.90
2/29/92 $10,941.83 $11,259.48 $10,990.66
3/31/92 $10,875.39 $11,110.07 $10,926.43
4/30/92 $10,934.01 $11,056.53 $10,995.26
5/31/92 $11,128.85 $11,392.89 $11,198.11
6/30/92 $11,274.56 $11,588.20 $11,358.59
7/31/92 $11,502.90 $12,033.57 $11,644.84
8/31/92 $11,597.81 $12,143.77 $11,753.36
9/30/92 $11,716.17 $12,397.22 $11,919.59
10/31/92 $11,561.53 $12,098.31 $11,747.61
11/30/92 $11,570.46 $12,143.08 $11,730.35
12/31/92 $11,748.55 $12,500.45 $11,924.76
1/31/93 $11,943.39 $12,787.54 $12,178.03
2/28/93 $12,120.92 $13,206.22 $12,421.91
3/31/93 $12,164.47 $13,218.18 $12,463.52
4/30/93 $12,239.28 $13,322.38 $12,559.38
5/31/93 $12,246.54 $13,346.67 $12,545.58
6/30/93 $12,472.09 $13,832.45 $12,823.97
7/31/93 $12,540.20 $14,042.03 $12,902.20
8/31/93 $12,752.35 $14,547.49 $13,190.18
9/30/93 $12,765.75 $14,596.80 $13,240.60
10/31/93 $12,798.69 $14,620.36 $13,290.64
11/30/93 $12,660.24 $14,408.11 $13,144.93
12/31/93 $12,726.12 $14,465.51 $13,195.74
1/31/94 $12,890.81 $14,836.42 $13,376.35
2/28/94 $12,648.51 $14,314.40 $13,093.17
3/31/94 $12,328.61 $13,709.95 $12,798.67
4/30/94 $12,186.81 $13,487.01 $12,698.01
5/31/94 $12,141.03 $13,403.24 $12,681.71
6/30/94 $12,089.11 $13,333.43 $12,652.57
7/31/94 $12,290.09 $13,732.00 $12,885.14
8/31/94 $12,292.32 $13,717.80 $12,887.63
9/30/94 $12,105.85 $13,320.18 $12,706.06
10/31/94 $12,070.12 $13,251.18 $12,696.47
11/30/94 $12,037.74 $13,308.98 $12,673.27
12/31/94 $12,122.60 $13,561.35 $12,750.34
1/31/95 $12,336.42 $13,914.36 $12,987.70
2/28/95 $12,611.65 $14,223.24 $13,267.24
3/31/95 $12,670.27 $14,326.20 $13,350.45
4/30/95 $12,826.59 $14,518.88 $13,524.92
5/31/95 $13,292.20 $15,251.55 $14,070.39
6/30/95 $13,372.59 $15,371.17 $14,178.33
7/31/95 $13,325.14 $15,306.48 $14,126.18
8/31/95 $13,480.90 $15,610.18 $14,292.22
9/30/95 $13,607.07 $15,837.95 $14,429.88
10/31/95 $13,786.84 $16,067.13 $14,649.60
11/30/95 $13,981.68 $16,360.10 $14,877.95
12/31/95 $14,176.52 $16,684.69 $15,088.85
1/31/96 $14,248.54 $16,700.37 $15,181.45
2/29/96 $13,956.56 $16,120.17 $14,872.19
3/31/96 $13,839.11 $15,900.63 $14,747.95
4/30/96 $13,744.24 $15,698.57 $14,653.81
5/31/96 $13,692.83 $15,618.88 $14,629.27
6/30/96 $13,851.91 $15,905.76 $14,818.12
7/31/96 $13,878.77 $15,944.56 $14,854.74
8/31/96 $13,842.40 $15,750.11 $14,821.57
9/30/96 $14,074.96 $16,187.61 $15,067.56
10/31/96 $14,379.75 $16,776.14 $15,399.06
11/30/96 $14,632.61 $17,237.11 $15,666.90
12/31/96 $14,482.36 $16,904.77 $15,507.00
1/31/97 $14,513.41 $16,854.46 $15,524.26
2/28/97 $14,543.99 $16,854.46 $15,545.54
3/31/97 $14,372.33 $16,485.51 $15,381.04
4/30/97 $14,584.69 $16,893.25 $15,603.06
5/31/97 $14,706.42 $17,080.76 $15,737.65
6/30/97 $14,880.05 $17,353.51 $15,914.23
7/31/97 $15,290.64 $18,161.09 $16,365.94
8/31/97 $15,131.29 $17,849.46 $16,204.12
9/30/97 $15,362.09 $18,247.65 $16,447.81
10/31/97 $15,587.58 $18,613.33 $16,732.34
11/30/97 $15,644.19 $18,824.25 $16,818.04
12/31/97 $15,802.67 $19,058.49 $16,993.86
1/31/98 $16,002.66 $19,343.48 $17,248.09
2/28/98 $15,972.45 $19,272.23 $17,201.31
3/31/98 $16,012.20 $19,307.85 $17,250.01
4/30/98 $16,073.95 $19,431.61 $17,327.66
5/31/98 $16,224.08 $19,666.16 $17,505.58
6/30/98 $16,361.82 $19,900.71 $17,704.59
7/31/98 $16,385.82 $19,929.06 $17,732.01
8/31/98 $16,707.31 $20,386.57 $18,193.31
9/30/98 $17,084.93 $20,880.68 $18,683.75
10/31/98 $16,958.35 $20,722.52 $18,620.10
11/30/98 $16,995.92 $20,870.54 $18,626.43
12/31/98 $17,042.47 $20,827.10 $18,668.04
1/31/99 $17,139.58 $21,015.07 $18,776.37
2/28/99 $16,770.02 $20,413.57 $18,329.83
3/31/99 $16,854.96 $20,413.57 $18,401.73
</TABLE>
Note: Past performance is not predictive of future performance. Total return
assumes reinvestment of dividends and capital gains distributions. The
investment return and principal value of an investment
in the Fund will fluctuate so that investors' shares, when redeemed, may be
worth more or less than their
original cost.
(a): Inception date of the Loomis Sayles U.S. Government Securities Fund is May
21, 1991. Since Lipper and Lehman Brothers Government Bond Index
performance data is not available coincident with this date, comparative
performance is presented from May 31, 1991.
(b): Source: Lipper Analytical Services.
(c): 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. The index returns have not been reduced for ongoing
management and operating expenses applicable to mutual fund investments.
23
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
<S> <C> <C> <C>
- ------------------------------------------------------------------------
BONDS AND NOTES -- 95.5% OF NET ASSETS
NON-CONVERTIBLE BONDS -- 78.4%
AIRLINES -- 0.1%
NWA Trust, 9.360%, 3/10/06....... USD 694,800 $ 773,506
---------------
BANKS/SAVINGS & LOANS -- 0.1%
First Union Institutional Trust,
7.850%, 1/01/27................ 2,000,000 2,062,640
---------------
BROADCASTING -- 0.6%
CBS, Inc., 7.125%, 11/01/23...... 1,435,000 1,379,250
Fox Family Worldwide, Inc., Zero
Coupon Bond, 11/01/07 (step to
10.250% on 11/01/02) #......... 14,000,000 8,960,000
---------------
10,339,250
---------------
BUILDING MATERIALS -- 0.4%
Owens Corning, 7.500%, 8/01/18... 5,925,000 5,745,710
---------------
CANADIAN -- 19.3%
Canadian Government, Zero Coupon
Bond, 6/01/22.................. CAD 11,050,000 2,140,855
Canadian Government, Zero Coupon
Bond, 6/01/25.................. 281,760,000 47,631,747
Clearnet Communications, Inc.,
Zero Coupon Bond, 8/13/07 (step
to 11.750% on 8/13/02) #....... 38,000,000 17,663,728
Clearnet Communications, Inc.,
Zero Coupon Bond, 5/15/08 (step
to 10.400% on 5/15/03) #....... 4,160,000 1,723,452
Clearnet Communications, Inc.,
Zero Coupon Bond, 2/15/09 (step
to 10.750% on 2/15/04) #....... 2,400,000 928,676
Hydro Quebec, Zero Coupon Bond,
8/15/20........................ 35,000,000 6,582,858
International Semi-Tech Corp.,
Zero Coupon Bond, 8/15/03 (step
to 11.50% on 8/15/00) #........ USD 23,975,000 3,356,500
Microcell Telecommunications,
Inc., Zero Coupon Bond,
10/15/07 (step to 11.125% on
10/15/02) #.................... CAD 5,000,000 2,121,172
Milit-Air, Inc., 5.750%, 6/30/19
144A........................... 6,950,000 4,721,310
New Brunswick FM Project, Zero
Coupon Bond, 11/30/27 (step to
6.470% on 5/30/03) 144A #...... 10,000,000 5,413,231
Ontario Hydro, Zero Coupon Bond,
11/27/20....................... 1,507,000 288,354
Ontario Hydro, Zero Coupon Bond,
10/15/21....................... 114,125,000 20,802,886
Province of Alberta, 5.930%,
9/16/16........................ 27,147,850 18,997,377
Province of British Columbia,
Zero Coupon Bond, 8/23/13...... 33,000,000 9,621,537
Province of British Columbia,
Zero Coupon Bond, 6/09/14...... 10,000,000 2,776,548
Province of British Columbia,
Zero Coupon Bond, 9/05/20...... 54,528,000 10,592,586
Province of British Columbia,
Zero Coupon Bond, 6/09/22...... 96,208,000 16,896,028
Province of British Columbia,
Zero Coupon Bond, 8/19/22...... 31,387,000 5,451,218
Province of British Columbia,
Zero Coupon Bond, 9/08/23...... 37,950,000 6,205,426
Province of British Columbia,
Zero Coupon Bond, 8/23/24...... 122,250,000 18,921,765
</TABLE>
24
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
CANADIAN -- CONTINUED
Province of British Columbia,
Zero Coupon Bond, 11/19/27..... CAD 41,600,000 $ 5,348,768
Province of British Columbia,
8.000%, 9/08/23................ 7,000,000 5,938,075
Province of Manitoba, Zero Coupon
Bond, 7/22/13.................. 2,500,000 731,307
Province of Manitoba, Zero Coupon
Bond, 3/05/31.................. 36,929,000 4,068,408
Province of Manitoba, 6.500%,
9/22/17........................ 34,300,000 25,086,337
Province of Manitoba, 7.750%,
12/22/25....................... 39,245,000 33,354,088
Province of Newfoundland, 6.150%,
4/17/28........................ 2,500,000 1,694,982
Province of Ontario, Zero Coupon
Bond, 7/13/22.................. 13,000,000 2,275,905
Province of Ontario, Zero Coupon
Bond, 6/02/27.................. 96,525,000 13,026,972
Province of Ontario, Zero Coupon
Bond, 3/08/29.................. 18,600,000 2,285,115
Province of Ontario (Certificate
of Deposit), Zero Coupon Bond,
12/02/25....................... 7,650,000 1,106,425
Province of Saskatchewan, Zero
Coupon Bond, 4/10/14........... 19,000,000 5,340,050
Province of Saskatchewan
(Certificate of Deposit), Zero
Coupon Bond, 2/04/22........... 2,350,000 430,916
Province of Saskatchewan
(Certificate of Deposit), Zero
Coupon Bond, 5/30/25........... 36,780,000 5,602,087
---------------
309,126,689
---------------
COMMUNICATIONS -- 0.8%
Arch Communications Group, Inc.,
Zero Coupon Bond, 3/15/08 (step
to 10.875% on 3/15/01) #....... USD 17,435,000 7,148,350
Century Communications Corp.,
8.375%, 11/15/17............... 5,000,000 4,975,000
---------------
12,123,350
---------------
COMPUTERS -- 1.5%
Apple Computer, Inc., 6.500%,
2/15/04........................ 5,665,000 5,070,175
Seagate Technology, Inc., 7.370%,
3/01/07........................ 6,000,000 5,617,380
Seagate Technology, Inc., 7.450%,
3/01/37........................ 3,850,000 3,645,835
Seagate Technology, Inc., 7.875%,
3/01/17........................ 10,250,000 9,251,035
---------------
23,584,425
---------------
ELECTRONICS -- 1.2%
Micron Technology, Inc., 6.500%,
9/30/05 144A................... 3,000,000 2,400,000
Pioneer Standard Electronics,
Inc., 8.500%, 8/01/06.......... 1,000,000 950,342
Westinghouse Electric Corp.,
7.875%, 9/01/23................ 15,350,000 16,032,001
---------------
19,382,343
---------------
ENTERTAINMENT -- 4.7%
Boston Celtics Ltd., 6.000%,
6/30/38........................ 1,166,000 709,802
Time Warner Entertainment Co.,
6.875%, 6/15/18................ 8,710,000 8,642,236
Time Warner Entertainment Co.,
6.950%, 1/15/28................ 36,900,000 36,859,410
Time Warner Entertainment Co.,
7.570%, 2/01/24................ 27,170,000 28,884,971
---------------
75,096,419
---------------
FINANCIAL SERVICES -- 0.9%
Security Capital Group, Inc.,
7.700%, 6/15/28................ 16,725,000 14,835,577
---------------
</TABLE>
25
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
FOOD & BEVERAGE -- 1.7%
Borden, Inc., 7.875%, 2/15/23.... USD 5,500,000 $ 4,583,150
ConAgra, Inc., 7.000%,
10/01/28....................... 23,375,000 23,158,314
---------------
27,741,464
---------------
FOREIGN GOVERNMENT/AGENCY -- 5.3%
Escom, 11.000%, 6/01/08.......... ZAR 26,500,000 3,413,385
Republic of Argentina, 5.9375%,
3/31/05 ++..................... USD 2,371,500 2,030,715
Republic of Argentina, 6.000%,
3/31/23........................ 1,000,000 698,750
Republic of Brazil, 10.125%,
5/15/27........................ 42,481,000 30,798,725
Republic of Brazil C Bond,
8.000%, 4/15/14 PIK............ 20,961,508 13,337,808
Republic of Ecuador, 4.000%,
2/28/25 (step to 4.500% on
2/28/01) #..................... 2,750,000 1,106,875
Republic of Ecuador, 6.000%,
2/27/15 PIK ++................. 7,251,085 2,239,135
Republic of Panama, 4.000%,
7/17/14 (step to 4.250% on
7/17/99) #..................... 950,000 756,438
Republic of South Africa,
12.000%, 2/28/05............... ZAR 20,000,000 2,920,785
Republic of South Africa,
12.500%, 12/21/06.............. 42,450,000 6,118,205
Republic of South Africa,
13.500%, 9/15/15............... 14,850,000 2,240,372
Republic of Venezuela, 9.250%,
9/15/27........................ USD 31,350,000 19,280,250
---------------
84,941,443
---------------
FOREIGN ISSUER -- 11.8%
Bangkok Bank Public Co. Ltd.,
9.025%, 3/15/29 144A........... 43,485,000 31,077,425
Centragas, 10.650%, 12/01/10
144A........................... 3,558,237 3,077,875
Cerro Negro Finance Ltd., 7.900%,
12/01/20 144A.................. 10,500,000 7,665,000
Compania de Alimentos Fargo,
13.250%, 8/01/08 144A.......... 2,000,000 1,520,000
Compania de Transporte Energia,
9.250%, 4/01/08 144A........... 2,250,000 2,041,875
Embotelladora Andina SA, 7.000%,
10/01/07....................... 1,500,000 1,397,790
Enersis SA, 7.400%, 12/01/16..... 2,500,000 2,327,468
Espirito Santo Centrais Eletricas
SA, 10.000%, 7/15/07........... 6,850,000 4,452,500
Hyundai Semiconductor, 8.625%,
5/15/07 144A................... 500,000 397,714
Indah Kiat Finance Mauritius
Ltd., 10.000%, 7/01/07......... 500,000 265,000
Industrial Finance Corp. of
Thailand, 7.375%, 1/14/07
144A........................... 1,500,000 1,320,345
Korea Electric Power Corp.,
7.400%, 4/01/16................ 11,834,045 10,826,968
Multicanal SA, 10.500%,
4/15/18........................ 4,000,000 3,195,000
National Power Corp., 9.625%,
5/15/28........................ 4,265,000 3,753,200
Pan Pacific Industrial Investment
Plc, Zero Coupon Bond, 4/28/07
144A........................... 13,950,000 6,556,500
Perez Companc SA, 8.125%, 7/15/07
144A........................... 3,590,000 3,195,100
Petroleos Mexicanos, 9.250%,
3/30/18........................ 1,000,000 862,500
Petroleos Mexicanos, 9.500%,
9/15/27........................ 1,500,000 1,335,000
Petroleos Mexicanos, Medium Term,
8.625%, 12/01/23 144A.......... 3,100,000 2,418,000
Philippine Long Distance
Telephone Co., 8.350%,
3/06/17........................ 4,950,000 4,030,072
Pindo Deli Finance Mauritius
Ltd., 10.750%, 10/01/07........ 9,000,000 4,950,000
Pindo Deli Finance Mauritius
Ltd., 10.875%, 10/01/27........ 15,500,000 7,207,500
</TABLE>
26
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- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
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AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
FOREIGN ISSUER -- CONTINUED
Pindo Deli Finance Mauritius
Ltd., 11.750%, 10/01/17........ USD 1,500,000 $ 765,000
Pycsa Panama SA, 10.280%,
12/15/12 144A.................. 2,000,000 1,500,000
Quezon Power Philippines Co.,
8.860%, 6/15/17................ 7,875,000 5,748,750
Samsung Electronics Co. Ltd.,
7.700%, 10/01/27 144A.......... 12,500,000 9,500,000
Siam Commercial Bank Public Co.,
7.500%, 3/15/06 144A........... 7,000,000 4,970,000
Tata Electric Co., 8.500%,
8/19/17 144A................... 10,000,000 8,000,000
Telekom Malaysia Berhad, 7.875%,
8/01/25 144A................... 12,025,000 9,775,604
Tenaga Nasional Berhad, 7.500%,
11/01/25 144A.................. 10,525,000 7,603,786
TFM SA de CV, Zero Coupon Bond,
6/15/09 (step to 11.750% on
6/15/02) #..................... 4,650,000 2,755,125
Thai Farmers Bank Plc, 8.250%,
8/21/16 144A................... 18,140,000 12,231,802
Tjiwi Kimia Mauritius Ltd.,
10.000%, 8/01/04............... 17,200,000 9,202,000
Total Access Communication Public
Co. Ltd., 7.625%, 11/04/01
144A........................... 5,400,000 4,212,000
Total Access Communication Public
Co. Ltd., 8.375%, 11/04/06
144A........................... 12,575,000 8,896,812
---------------
189,033,711
---------------
GOVERNMENT AGENCIES -- 2.3%
Federal Home Loan Mortgage Corp.,
6.000%, 4/15/28................ 5,000,000 4,675,000
Federal National Mortgage
Association, Zero Coupon Bond,
10/29/07....................... NZD 103,925,000 31,921,632
---------------
36,596,632
---------------
HEALTH CARE -- PRODUCTS -- 0.5%
Bausch & Lomb, Inc., 7.125%,
8/01/28........................ USD 9,500,000 8,738,955
---------------
HEALTH CARE -- SERVICES -- 0.7%
Columbia/HCA Healthcare Corp.,
7.050%, 12/01/27............... 6,000,000 4,689,240
Columbia/HCA Healthcare Corp.,
7.190%, 11/15/15............... 4,000,000 3,313,240
Columbia/HCA Healthcare Corp.,
7.500%, 12/15/23............... 1,965,000 1,588,231
Columbia/HCA Healthcare Corp.,
7.580%, 9/15/25................ 1,300,000 1,088,997
Integrated Health Services, Inc.,
9.250%, 1/15/08................ 1,000,000 640,000
---------------
11,319,708
---------------
HOME BUILDERS -- 0.4%
Pulte Corp., 7.300%, 10/24/05.... 1,000,000 973,760
Pulte Corp., 7.625%, 10/15/17.... 5,000,000 4,648,500
---------------
5,622,260
---------------
MANUFACTURING -- 0.1%
FMC Corp., 6.750%, 1/16/05....... 1,325,000 1,205,750
---------------
OIL & GAS -- 1.9%
Chesapeake Energy Corp., 8.500%,
3/15/12........................ 2,075,000 1,556,250
Hvide Marine, Inc., 8.375%,
2/15/08........................ 1,000,000 620,000
Pioneer Natural Resources Co.,
6.500%, 1/15/08................ 1,000,000 811,560
Pioneer Natural Resources Co.,
7.200%, 1/15/28................ 2,000,000 1,330,820
</TABLE>
27
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LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
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FACE
AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
OIL & GAS -- CONTINUED
R & B Falcon Corp., 6.750%,
4/15/05........................ USD 2,000,000 $ 1,580,000
R & B Falcon Corp., 7.375%,
4/15/18........................ 18,000,000 13,029,300
Seagull Energy Corp., 7.500%,
9/15/27........................ 3,850,000 2,923,805
Tennessee Gas Pipeline Co.,
7.000%, 10/15/28............... 8,000,000 7,875,920
---------------
29,727,655
---------------
RAIL -- TRANSPORT -- 0.1%
Missouri Pacific Railroad Co.,
5.000%, 1/01/45................ 2,876,000 1,513,495
---------------
REAL ESTATE INVESTMENT TRUSTS --
3.0%
AMB Property Corp., 7.500%,
6/30/18........................ 7,500,000 7,151,775
First Industrial, 7.500%,
12/01/17....................... 6,500,000 5,558,085
First Industrial, 7.600%,
7/15/28........................ 13,800,000 12,096,942
Highwoods Realty LP, 7.500%,
4/15/18........................ 3,750,000 3,421,013
Meditrust Corp., 7.000%,
8/15/07........................ 5,000,000 4,177,600
Susa Partnership LP, 7.450%,
7/01/18........................ 6,500,000 5,956,990
Susa Partnership LP, 7.500%,
12/01/27....................... 6,905,000 6,215,950
Trinet Corporate Realty Trust,
Inc., 7.700%, 7/15/17.......... 4,000,000 3,660,960
---------------
48,239,315
---------------
RETAIL -- GENERAL -- 1.4%
Bradlees, Inc., 9.250%, 3/01/03
^.............................. 250,000 937
Bradlees, Inc., 11.000%, 8/01/02
^.............................. 250,000 938
Dillon Read Structured Finance
Corp., 6.660%, 8/15/10......... 2,398,913 2,185,170
Dillon Read Structured Finance
Corp., 7.430%, 8/15/18......... 2,000,000 1,783,160
Dillon Read Structured Finance
Corp., 7.600%, 8/15/07......... 206,669 201,688
Dillon Read Structured Finance
Corp., 8.550%, 8/15/19......... 500,000 485,565
K Mart Corp., 7.950%, 2/01/23.... 14,365,000 14,939,600
Penn Traffic Co., 8.625%,
12/15/03 ^..................... 1,000,000 470,000
Penn Traffic Co., 9.625%, 4/15/05
^.............................. 17,083,000 939,565
Woolworth Corp., 8.500%,
1/15/22........................ 3,000,000 2,190,000
---------------
23,196,623
---------------
STEEL -- 0.0%
Geneva Steel Co., 9.500%, 1/15/04
^.............................. 3,500,000 630,000
---------------
SUPRANATIONAL -- 3.7%
International Bank for
Reconstruction & Development,
Zero Coupon Bond, 8/20/07...... NZD 152,375,000 47,996,307
International Bank for
Reconstruction & Development,
8.000%, 5/23/07................ 19,000,000 11,022,170
---------------
59,018,477
---------------
TAXABLE MUNICIPAL -- 0.1%
Orange County, California Pension
Obligation, Zero Coupon Bond,
9/01/16........................ USD 5,000,000 1,520,950
---------------
TELECOMMUNICATIONS -- 4.9%
Intermedia Communications, Inc.,
Zero Coupon Bond, 3/01/09 (step
to 12.250% on 3/01/04) 144A
#.............................. 10,000,000 6,300,000
</TABLE>
28
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LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
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AMOUNT VALUE !
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BONDS AND NOTES -- CONTINUED
TELECOMMUNICATIONS -- CONTINUED
Nextel Communications, Inc., Zero
Coupon Bond, 10/31/07 (step to
9.750% on 10/31/02) #.......... USD 33,180,000 $ 23,557,800
Nextel Communications, Inc., Zero
Coupon Bond, 2/15/08 (step to
9.950% on 2/15/03) #........... 1,800,000 1,260,000
Nextel International, Inc., Zero
Coupon Bond, 4/15/08 (step to
12.125% on 4/15/03) #.......... 23,650,000 11,115,500
Nextlink Communications, Inc.,
Zero Coupon Bond, 4/15/08 (step
to 9.450% on 4/15/03) #........ 5,000,000 3,200,000
RCN Corp., Zero Coupon Bond,
10/15/07 (step to 11.125% on
10/15/02) #.................... 8,350,000 5,636,250
RCN Corp., Zero Coupon Bond,
2/15/08 (step to 9.800% on
2/15/03) #..................... 4,670,000 2,930,425
RCN Corp., Zero Coupon Bond,
7/01/08 (step to 11.000% on
7/01/03) #..................... 15,650,000 9,624,750
Teligent, Inc., Zero Coupon Bond,
3/01/08 (step to 11.500% on
3/01/03) #..................... 22,750,000 11,943,750
Triton Communications LLC, Zero
Coupon Bond, 5/01/08 (step to
11.000% on 5/01/03) #.......... 5,000,000 2,856,250
---------------
78,424,725
---------------
TEXTILE & APPAREL -- 0.8%
Burlington Industries, Inc.,
7.250%, 8/01/27................ 9,000,000 7,972,200
Fruit of the Loom, Inc., 7.375%,
11/15/23....................... 3,000,000 2,499,720
Kellwood Co., 7.625%, 10/15/17... 2,500,000 2,206,725
Phillips Van Heusen Corp.,
7.750%, 11/15/23............... 1,000,000 860,410
---------------
13,539,055
---------------
TOBACCO -- 5.5%
Philip Morris Cos., Inc., 7.750%,
1/15/27........................ 43,410,000 45,676,436
RJR Nabisco, Inc., 7.625%,
9/15/03........................ 12,550,000 12,274,778
RJR Nabisco, Inc., 8.500%,
7/01/07........................ 8,150,000 8,600,858
RJR Nabisco, Inc., 8.750%,
8/15/05........................ 5,500,000 5,878,675
RJR Nabisco, Inc., 9.250%,
8/15/13........................ 14,143,000 15,524,347
---------------
87,955,094
---------------
TRANSPORTATION -- 0.0%
American President Cos. Ltd.,
8.000%, 1/15/24................ 1,425,000 712,500
---------------
U.S. GOVERNMENT -- 3.2%
U.S. Treasury Bonds, 6.000%,
2/15/26........................ 42,000,000 42,689,220
U.S. Treasury Strips, Zero Coupon
Bond, 8/15/20.................. 14,000,000 3,879,400
U.S. Treasury Strips, Zero Coupon
Bond, 8/15/23.................. 19,000,000 4,539,670
---------------
51,108,290
---------------
UTILITIES -- 1.4%
AES Corp., 8.875%, 11/01/27...... 5,000,000 4,468,750
Boston Edison Co., 7.800%,
3/15/23........................ 1,000,000 1,017,326
Commonwealth Edison Co., 4.750%,
12/01/11....................... 901,000 780,789
</TABLE>
29
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LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
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FACE
AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
UTILITIES -- CONTINUED
KN Capital Trust, 7.630%,
4/15/28........................ USD 15,750,000 $ 15,762,285
---------------
22,029,150
---------------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost
$1,293,795,387)................ 1,255,885,161
---------------
CONVERTIBLE BONDS -- 17.1%
AUTO & RELATED -- 0.2%
Exide Corp., 2.900%, 12/15/05
144A........................... 5,125,000 2,844,375
---------------
CANADIAN -- 0.1%
Rogers Communications, Inc.,
2.000%, 11/26/05............... 3,000,000 2,156,250
---------------
COMPUTERS -- 0.8%
Apple Computer, Inc., 6.000%,
6/01/01........................ 3,190,000 4,111,112
Cray Research, Inc., 6.125%,
2/01/11........................ 635,000 473,075
Maxtor Corp., 5.750%, 3/01/12.... 4,950,000 3,712,500
Read Rite Corp., Zero Coupon
Bond, 9/01/04.................. 3,625,000 2,193,125
Silicon Graphics, Inc., 5.250%,
9/01/04........................ 625,000 560,938
Telxon Corp., 5.750%, 1/01/03.... 225,000 153,000
Western Digital, Zero Coupon
Bond, 2/18/18.................. 4,150,000 933,750
---------------
12,137,500
---------------
DIVERSIFIED OPERATIONS -- 1.0%
Ogden Corp., 5.750%, 10/20/02.... 1,750,000 1,649,375
Thermo Electron Corp., 4.250%,
1/01/03 144A................... 16,600,000 14,691,000
---------------
16,340,375
---------------
ELECTRONICS -- 0.9%
Cirrus Logic, Inc., 6.000%,
12/15/03....................... 1,600,000 1,088,000
Cypress Semiconductor Corp.,
6.000%, 10/01/02............... 1,000,000 891,250
EDO Corp., 7.000%, 12/15/11...... 934,000 735,525
Kent Electronics Corp., 4.500%,
9/01/04........................ 6,800,000 4,964,000
Lam Research Corp., 5.000%,
9/01/02........................ 5,070,000 4,258,800
National Semiconductor Corp.,
6.500%, 10/01/02............... 1,500,000 1,235,625
Richardson Electronics Ltd.,
7.250%, 12/15/06............... 450,000 333,000
Thermedics, Inc., Zero Coupon
Bond, 6/01/03.................. 950,000 608,000
Zenith Corp., 6.250%, 4/01/11.... 2,405,000 721,500
---------------
14,835,700
---------------
ENVIRONMENTAL SERVICES -- 0.3%
Air & Water Technologies Corp.,
8.000%, 5/15/15................ 1,450,000 1,232,500
Thermo TerraTech, Inc., 4.625%,
5/01/03........................ 400,000 337,500
Thermo TerraTech, Inc., 4.625%,
5/01/03 144A................... 4,395,000 3,708,281
---------------
5,278,281
---------------
</TABLE>
30
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
FINANCIAL SERVICES -- 3.0%
Bell Atlantic Financial Services,
4.250%, 9/15/05................ USD 42,225,000 $ 46,341,937
Bell Atlantic Financial Services,
5.750%, 4/01/03................ 1,750,000 1,855,000
---------------
48,196,937
---------------
FOREIGN ISSUER -- 2.9%
Advanced Agro Public Co., 3.500%,
6/17/01........................ 1,625,000 1,385,313
APP Finance VII Mauritius Ltd.,
3.500%, 4/30/03................ 7,070,000 4,224,325
APP Finance VII Mauritius Ltd.,
3.500%, 4/30/03 144A........... 8,125,000 4,854,687
Bangkok Bank Public Co. Ltd.,
4.589%, 3/03/04................ 14,700,000 6,835,500
Banpu Public Co., 2.750%,
4/10/03........................ 5,030,000 4,024,000
Burns, Philp, 5.500%, 4/30/04.... 4,480,000 2,228,800
Empresas ICA Sociedad, 5.000%,
3/15/04........................ 3,700,000 2,442,000
Loxley Public Co. Ltd., 2.500%,
4/04/01........................ 7,700,000 770,000
Piltel, 1.750%, 7/17/06.......... 2,100,000 840,000
Samsung Electronics Co. Ltd.,
Zero Coupon Bond, 12/31/07..... 7,925,000 7,865,562
Sappi BVI Finance, 7.500%,
8/01/02........................ 4,650,000 4,248,937
Siam Commercial Bank Public Co.,
3.250%, 1/24/04................ 3,075,000 1,354,922
Ssangyong Oil Refining Co., Inc.,
3.000%, 12/31/04............... 1,930,000 1,230,375
Ssangyong Oil Refining Co., Inc.,
3.750%, 12/31/08............... 455,000 478,888
Telekom Malaysia Berhad, 4.000%,
10/03/04....................... 750,000 628,125
Total Access Communication Public
Co. Ltd., 2.000%, 5/31/06...... 3,400,000 2,720,000
---------------
46,131,434
---------------
FREIGHT TRANSPORTATION -- 0.1%
Builders Transportation, Inc.,
8.000%, 8/15/05 ^.............. 1,000,000 1,250
Preston Corp., 7.000%, 5/01/11... 750,000 622,500
Worldway Corp., 6.250%,
4/15/11........................ 1,463,000 1,192,345
---------------
1,816,095
---------------
HEALTH CARE -- DRUGS -- 0.4%
Chiron Corp., 1.900%, 11/17/00... 1,900,000 1,826,375
Dura Pharmaceuticals, Inc.,
3.500%, 7/15/02................ 1,500,000 1,132,500
Glycomed, Inc., 7.500%,
1/01/03........................ 1,148,100 927,091
NABI, Inc., 6.500%, 2/01/03...... 3,750,000 2,662,500
---------------
6,548,466
---------------
HEALTH CARE -- MEDICAL TECHNOLOGY
-- 0.0%
Heartport, Inc., 7.250%,
5/01/04........................ 1,000,000 600,000
---------------
HEALTH CARE -- PRODUCTS -- 0.1%
Centocor, Inc., 4.750%,
2/15/05........................ 1,750,000 1,697,500
---------------
HEALTH CARE -- SERVICES -- 0.1%
Healthsouth Corp., 3.250%,
4/01/03........................ 1,500,000 1,222,500
---------------
HOME BUILDERS -- 0.0%
Schuler Homes, Inc., 6.500%,
1/15/03........................ 750,000 600,000
---------------
</TABLE>
31
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
INSURANCE -- 3.1%
Loews Corp., 3.125%, 9/15/07..... USD 57,400,000 $ 48,933,500
---------------
LEISURE -- 0.0%
AMF Bowling, Inc., Zero Coupon
Bond, 3/15/06.................. 1,000,000 565,000
---------------
MACHINERY -- 0.1%
Intevac, Inc., 6.500%, 3/01/04... 1,250,000 631,250
---------------
MANUFACTURING -- 0.1%
Hexcel Corp., 7.000%, 8/01/11.... 1,775,000 1,295,750
---------------
MULTI-INDUSTRY -- 0.2%
Thermo Instrument Systems, Inc.,
4.500%, 10/15/03 144A.......... 3,375,000 3,007,969
---------------
OIL & GAS -- 2.4%
Baker Hughes, Inc., Zero Coupon
Bond, 5/05/08.................. 45,772,000 31,811,540
Diamond Offshore Drilling, Inc.,
3.750%, 2/15/07................ 5,175,000 5,382,000
Houston Industries, Inc., 6.000%,
3/15/12........................ 447,500 427,362
Key Energy Group, Inc., 5.000%,
9/15/04........................ 2,750,000 1,381,875
---------------
39,002,777
---------------
PUBLISHING -- 0.2%
Scholastic Corp., 5.000%, 8/15/05
144A........................... 2,550,000 2,451,188
---------------
REAL ESTATE INVESTMENT TRUSTS --
0.5%
Federal Realty Investors Trust,
5.250%, 10/28/03............... 2,250,000 1,980,000
Rockefeller Properties, Zero
Coupon Bond, 12/31/00.......... 7,000,000 5,495,000
Sizeler Property Investors, Inc.,
8.000%, 7/15/03................ 1,175,000 1,095,688
---------------
8,570,688
---------------
RESTAURANTS -- 0.3%
Boston Chicken, Inc., Zero Coupon
Bond, 6/01/15 ^................ 4,125,000 41,250
Boston Chicken, Inc., 4.500%,
2/01/04 ^...................... 3,250,000 130,000
Einstein/Noah Bagel Corp.,
7.250%, 6/01/04................ 2,880,000 1,670,400
Shoney's, Inc., Zero Coupon Bond,
4/11/04........................ 8,060,000 1,934,400
TPI Enterprises, Inc., 8.250%,
7/15/02........................ 700,000 402,500
---------------
4,178,550
---------------
RETAIL -- SPECIALTY -- 0.0%
Bell Sports Corp., 4.250%,
11/15/00....................... 96,000 77,640
CML Group, Inc., 5.500%, 1/15/03
^.............................. 1,224,000 24,480
Jacobson Stores, Inc., 6.750%,
12/15/11....................... 540,000 444,825
---------------
546,945
---------------
TELECOMMUNICATIONS -- 0.2%
Broadband Technologies, Inc.,
5.000%, 5/15/01................ 9,800,000 3,552,500
---------------
</TABLE>
32
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
TEXTILE & APPAREL -- 0.1%
Dixie Yarns, Inc., 7.000%,
5/15/12........................ USD 282,000 $ 225,600
Fieldcrest Cannon, Inc., 6.000%,
3/15/12........................ 890,000 703,100
---------------
928,700
---------------
TOTAL CONVERTIBLE BONDS
(Identified Cost
$293,727,428).................. 274,070,230
---------------
TOTAL BONDS AND NOTES
(Identified Cost
$1,587,522,815)................ 1,529,955,391
---------------
<CAPTION>
SHARES
<S> <C> <C> <C>
- ------------------------------------------------------------------------
COMMON STOCKS -- 0.2% OF NET ASSETS
COMPUTERS -- 0.0%
Streamlogic Corp.*............... 266,066 266
---------------
RESTAURANTS -- 0.2%
Advantica Restaurant Group,
Inc.*.......................... 646,448 3,232,240
---------------
TOTAL COMMON STOCKS
(Identified Cost $8,226,376)... 3,232,506
---------------
PREFERRED STOCKS -- 1.9% OF NET ASSETS
BUILDING MATERIALS -- 0.2%
Owens Corning, 6.500%............ 66,000 2,978,250
---------------
CHEMICALS -- MAJOR -- 0.0%
E.I. du Pont DeNemours & Co.,
$3.50.......................... 3,775 262,363
---------------
COMPUTER SOFTWARE & SERVICES --
0.1%
Unisys Corp., $3.75.............. 19,434 1,008,139
---------------
FINANCIAL SERVICES -- 0.1%
Hvide Capital Trust, 6.500%...... 77,500 813,750
---------------
FREIGHT TRANSPORTATION -- 0.1%
Arkansas Best Corp., $2.875...... 39,670 1,299,192
---------------
METALS -- 0.3%
Alcoa, Inc., $3.75............... 10,000 762,500
Bethlehem Steel Corp., $3.50..... 99,050 3,813,425
---------------
4,575,925
---------------
</TABLE>
33
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCKS -- CONTINUED
OIL & GAS -- 0.2%
Chesapeake Energy Corp.,
7.000%......................... 10,000 $ 127,500
Chesapeake Energy Corp., 7.000%
144A........................... 45,000 573,750
Weatherford International, Inc.,
5.000%......................... 94,500 2,894,062
---------------
3,595,312
---------------
REAL ESTATE INVESTMENT TRUSTS --
0.0%
Camden Property Trust, $2.25..... 13,500 315,563
Equity Residential Properties
Trust, 7.250%.................. 20,700 445,050
---------------
760,613
---------------
TELECOMMUNICATIONS -- 0.8%
Hyperion Telecommunications,
Inc., 12.875% PIK.............. 12,518 11,203,469
Nextel Communications, Inc.,
11.125% PIK.................... 1,388 1,415,297
---------------
12,618,766
---------------
UTILITIES -- 0.1%
Central Maine Power Co.,
3.500%......................... 2,230 109,270
Cleco Corp., 4.750%.............. 1,214 99,396
Commonwealth Energy Systems,
$4.80.......................... 3,090 251,449
Connecticut Light & Power Co.,
$1.90.......................... 2,925 77,512
Entergy Louisiana, Inc.,
4.160%......................... 2,600 182,000
Jersey Central Power & Light Co.,
4.000%......................... 2,020 145,440
MDU Resources Group, Inc.,
5.100%......................... 4,020 370,845
Minnesota Power & Light Co.,
5.000%......................... 200 16,900
Nevada Power Co., 4.700%......... 15,886 262,119
Niagara Mohawk Power Corp.,
4.850%......................... 5,000 415,000
Northern States Power Co.,
$3.60.......................... 1,000 61,813
Public Service Co., 4.000%....... 360 24,840
---------------
2,016,584
---------------
TOTAL PREFERRED STOCKS
(Identified Cost
$33,204,917)................... 29,928,894
---------------
WARRANTS -- 0.0% OF NET ASSETS
COMPUTERS -- 0.0%
Streamlogic Corp., expiring
10/7/01 *...................... 1,228 0
---------------
TOTAL WARRANTS
(Identified Cost $0)........... 0
---------------
</TABLE>
34
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT -- 0.6% OF NET ASSETS
Repurchase Agreement with State
Street Bank and Trust Co.,
dated 3/31/99 at 4.000% to be
repurchased at $9,957,106 on
4/1/99 collateralized by
$7,935,000 U.S. Treasury Bond,
8.125%, due 8/15/21 with a
value of $10,156,800........... USD 9,956,000 $ 9,956,000
---------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $9,956,000)... 9,956,000
---------------
TOTAL INVESTMENTS -- 98.2%
(IDENTIFIED COST $1,638,910,108)
@ .............................. 1,573,072,791
Cash and Other Assets, Less
Liabilities -- 1.8%............ 28,830,884
---------------
NET ASSETS -- 100%................. $ 1,601,903,675
---------------
---------------
</TABLE>
! See Note 1.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
144A Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
++ Floating Rate Bond: Coupon is six month London Interbank Offered Rate
(LIBOR) plus .8125%.
PIK All or a portion of income may be received as additional securities.
^ Security in default.
* Non-income producing security.
@ At March 31, 1999, the net unrealized depreciation on investments based on
cost of $1,638,910,108 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $85,922,849 and $151,760,166, respectively, resulting in
net unrealized depreciation of $65,837,317.
KEY TO ABBREVIATIONS:
<TABLE>
<S> <C>
CAD: Canadian Dollar
NZD: New Zealand Dollar
USD: United States Dollar
ZAR: South African Rand
</TABLE>
See accompanying notes to financial statements.
35
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES GLOBAL BOND FUND
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
<S> <C> <C> <C>
- -------------------------------------------------------------------
BONDS AND NOTES -- 89.6% OF NET ASSETS
AUSTRALIA -- 10.5%
New South Wales Trust, 6.500%,
5/01/06........................ AUD 1,900,000 $ 1,258,184
News America Holdings, Inc.,
8.625%, 2/07/14................ 1,240,000 817,086
Queensland Treasury, 6.500%,
6/14/05........................ 730,000 488,343
Queensland Treasury, 8.000%,
9/14/07........................ 1,600,000 1,176,484
South Australia Government
Finance Authority, Zero Coupon
Bond, 12/21/15................. 2,750,000 608,987
-----------
4,349,084
-----------
CANADA -- 3.7%
Government of Canada, 8.750%,
12/01/05....................... CAD 700,000 559,527
Province of British Columbia,
Zero Coupon Bond, 9/05/20...... 5,025,000 976,154
-----------
1,535,681
-----------
FINLAND -- 3.5%
Republic of Finland, 6.000%,
4/25/08........................ EUR 1,177,315 1,438,781
-----------
GERMANY -- 22.7%
Bayerische Vereinsbank, 6.000%,
1/23/06........................ 1,022,583 1,233,021
Deutsche Finance BV, 7.500%,
2/10/03........................ 2,300,000 1,427,113
Deutsche Telekom AG, 5.250%,
5/20/08........................ 869,196 989,628
Federal Republic of Germany,
6.500%, 3/15/00................ 1,022,583 1,140,266
Geberit International SA,
10.125%, 4/16/07............... 600,000 378,746
Germany Unity, 8.000%, 1/21/02... 1,124,842 1,370,648
Kreditanstalt Wierdarauf, 6.000%,
2/09/06........................ 562,421 681,925
Treuhandanstalt, 6.625%,
7/09/03........................ 153,387 186,815
Treuhandanstalt, 6.750%,
5/13/04........................ 869,196 1,079,680
Westdt Landesbank, 5.250%,
10/14/05....................... 766,937 889,341
-----------
9,377,183
-----------
IRELAND -- 3.1%
Republic of Ireland, 8.000%,
8/18/06........................ 952,303 1,293,907
-----------
JAPAN -- 3.4%
MBL International Finance
(Bermuda), 3.000%, 11/30/02 +.. USD 300,000 340,125
MBL International Finance
(Bermuda), 3.000%, 11/30/02 +.. 950,000 1,077,063
-----------
1,417,188
-----------
MALAYSIA -- 4.2%
Tenaga Nasional Berhad, 7.500%,
11/01/25 144A.................. 2,375,000 1,715,819
-----------
NETHERLANDS -- 2.6%
Dutch Government, 5.750%,
9/15/02........................ EUR 907,560 1,059,263
-----------
NEW ZEALAND -- 4.4%
Government of New Zealand,
7.000%, 7/15/09................ NZD 1,820,000 1,063,126
Government of New Zealand,
8.000%, 11/15/06............... 1,200,000 732,167
-----------
1,795,293
-----------
</TABLE>
36
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES GLOBAL BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- -------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
PHILIPPINES -- 6.0%
Bangko Sentral Pilipinas, 8.600%,
6/15/27........................ USD 1,300,000 $ 1,092,000
FLI Capital Cayman, 3.750%,
2/01/02 (step to 6.25% on
8/01/99) # +................... 900,000 756,000
MBIA, Inc., Zero Coupon Bond,
12/18/01 +..................... 800,000 609,000
-----------
2,457,000
-----------
POLAND -- 2.0%
Government of Poland, 5.000%,
10/27/14 (step to 6.000% on
10/27/02) #.................... 900,000 830,250
-----------
SOUTH AFRICA -- 5.9%
Escom, 11.000%, 6/01/08.......... ZAR 6,000,000 772,842
Republic of South Africa, 8.500%,
6/23/17........................ USD 1,000,000 855,000
Sappi BVI Finance, 7.500%,
8/01/02........................ 900,000 822,375
-----------
2,450,217
-----------
SOUTH KOREA -- 0.7%
Samsung Electronics Co. Ltd.,
5.375%, 12/16/01............... EUR 500,000 270,375
-----------
SUPRANATIONAL -- 1.1%
International Bank for
Reconstruction & Development,
Zero Coupon Bond, 8/20/07...... NZD 1,500,000 472,482
-----------
THAILAND -- 7.3%
Bangkok Bank Public Co. Ltd.,
4.589%, 3/03/04 +.............. USD 2,100,000 976,500
Kingdom of Thailand, 7.750%,
4/15/07........................ 400,000 397,637
Loxley Public Co. Ltd., 2.500%,
4/04/01 +...................... 700,000 70,000
Thai Farmers Bank Plc, 8.250%,
8/21/16 144A................... 2,300,000 1,550,890
-----------
2,995,027
-----------
UNITED KINGDOM -- 1.1%
Colt Telecom Group Plc, 7.625%,
7/31/08........................ EUR 800,000 453,844
-----------
UNITED STATES -- 7.4%
Federal National Mortgage
Association, 6.375%, 8/15/07... AUD 525,000 343,605
Federal National Mortgage
Association, 7.250%, 6/20/02... NZD 1,300,000 726,617
RJR Nabisco, Inc., 9.250%,
8/15/13........................ USD 500,000 548,835
U.S. Treasury Bonds, 5.500%,
8/15/28........................ 1,500,000 1,435,545
-----------
3,054,602
-----------
TOTAL BONDS AND NOTES
(Identified Cost
$37,310,760)................... 36,965,996
-----------
</TABLE>
37
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES GLOBAL BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE !
- -------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCKS -- 4.9% OF NET ASSETS
JAPAN -- 4.9%
Sakura Finance, 0.750%........... 186,000,000 $ 1,098,734
Sanwa International Ltd.
(Bermuda), 1.250% 144A......... 102,000,000 929,620
-----------
2,028,354
-----------
TOTAL PREFERRED STOCKS
(Identified Cost $1,931,253)... 2,028,354
-----------
<CAPTION>
FACE
AMOUNT
<S> <C> <C> <C>
- -------------------------------------------------------------------
SHORT-TERM INVESTMENT -- 2.2% OF NET ASSETS
Repurchase Agreement with State
Street Bank and Trust Co.,
dated 3/31/99 at 4.000% to be
repurchased at $902,100 on
4/1/99 collateralized by
$720,000 U.S. Treasury Bond,
8.125%, due 8/15/21 with a
value of $921,600.............. USD 902,000 902,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $902,000)..... 902,000
-----------
TOTAL INVESTMENTS -- 96.7%
(IDENTIFIED COST $40,144,013)
@................................ 39,896,350
Cash and Other Assets, Less
Liabilities -- 3.3%............ 1,352,011
-----------
NET ASSETS -- 100%................. $41,248,361
-----------
-----------
</TABLE>
! See Note 1.
+ Convertible Bond.
144A Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
@ At March 31, 1999, the net unrealized depreciation on investments based on
cost of $40,144,013 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $2,335,872 and $2,583,535, respectively, resulting in net
unrealized depreciation of $247,663.
KEY TO ABBREVIATIONS:
<TABLE>
<S> <C>
AUD: Australian Dollar
CAD: Canadian Dollar
EUR: Euro
NZD: New Zealand Dollar
USD: United States Dollar
ZAR: South African Rand
</TABLE>
38
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES GLOBAL BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
Ten Largest Sector Holdings at March 31, 1999
as a Percentage of Net Assets
<TABLE>
<S> <C>
Foreign Government/Agency 39.5%
Banking & Finance 23.7%
Financial 11.4%
Utilities 4.2%
Telecommunications 3.5%
U.S. Government 3.5%
Government Agencies 2.6%
Media & Entertainment 2.0%
Tobacco 1.3%
Supranational 1.1%
</TABLE>
See accompanying notes to financial statements.
39
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
<S> <C> <C> <C>
- ------------------------------------------------------------------
BONDS AND NOTES -- 88.7% OF NET ASSETS
NON-CONVERTIBLE BONDS -- 58.0%
BROADCASTING -- 0.9%
Fox Family Worldwide, Inc., Zero
Coupon Bond, 11/01/07
(step to 10.250% on 11/01/02)
#.............................. USD 275,000 $ 176,000
-----------
CANADIAN -- 5.2%
Clearnet Communications, Inc.,
Zero Coupon Bond, 8/13/07
(step to 11.750% on 8/13/02)
#.............................. CAD 300,000 139,451
Clearnet Communications, Inc.,
Zero Coupon Bond, 5/15/08
(step to 10.400% on 5/15/03)
#.............................. 300,000 124,287
Clearnet Communications, Inc.,
Zero Coupon Bond, 2/15/09
(step to 10.750% on 2/15/04)
#.............................. 350,000 135,432
International Semi-Tech Corp.,
Zero Coupon Bond, 8/15/03
(step to 11.50% on 8/15/00)
#.............................. USD 1,275,000 178,500
Microcell Telecommunications,
Inc., Zero Coupon Bond,
10/15/07 (step to 11.125% on
10/15/02) #.................... CAD 985,000 417,871
-----------
995,541
-----------
COMMUNICATIONS -- 0.8%
Arch Communications Group, Inc.,
Zero Coupon Bond, 3/15/08 (step
to 10.875% on 3/15/01) #....... USD 390,000 159,900
-----------
ENTERTAINMENT -- 0.2%
Boston Celtics Ltd., 6.000%,
6/30/38........................ 62,000 37,743
-----------
FOREIGN GOVERNMENT/AGENCY -- 7.7%
Escom, 11.000%, 6/01/08.......... ZAR 275,000 35,422
Republic of Argentina, 5.9375%,
3/31/05 ++..................... USD 47,000 40,246
Republic of Argentina, 8.875%,
3/01/29........................ 325,000 249,243
Republic of Brazil, 10.125%,
5/15/27........................ 255,000 184,875
Republic of Brazil C Bond,
8.000%, 4/15/14 PIK............ 500,486 318,459
Republic of Ecuador, 6.000%,
2/27/15 PIK ++................. 172,643 53,312
Republic of Panama, 4.000%,
7/17/14
(step to 4.250% on 7/17/99)
#.............................. 150,000 119,438
Republic of Peru, 3.750%, 3/07/17
(step to 4.000% on 3/07/01)
#.............................. 400,000 235,520
Republic of South Africa,
12.500%, 12/21/06.............. ZAR 1,000,000 144,127
Republic of Venezuela, 9.250%,
9/15/27........................ USD 175,000 107,625
-----------
1,488,267
-----------
FOREIGN ISSUER -- 26.1%
Bangko Sentral Pilipinas, 8.600%,
6/15/27........................ 350,000 294,000
Bangkok Bank Public Co. Ltd.,
9.025%, 3/15/29 144A........... 500,000 357,335
Centragas, 10.650%, 12/01/10
144A........................... 222,390 192,368
Cerro Negro Finance Ltd., 7.900%,
12/01/20 144A.................. 100,000 73,000
Compania de Alimentos Fargo,
13.250%, 8/01/08 144A.......... 100,000 76,000
Espirito Santo Centrais Eletricas
SA, 10.000%, 7/15/07........... 350,000 227,500
Indah Kiat Finance Mauritius
Ltd., 10.000%, 7/01/07......... 300,000 159,000
Korea Electric Power Corp.,
7.400%, 4/01/16................ 234,802 214,820
Multicanal SA, 10.500%,
2/01/07........................ 125,000 115,000
</TABLE>
40
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
FOREIGN ISSUER -- CONTINUED
Multicanal SA, 10.500%,
4/15/18........................ USD 125,000 $ 99,844
Murrin Murrin Holdings Property
Ltd., 9.375%, 8/31/07.......... 50,000 44,875
National Power Corp., 9.625%,
5/15/28........................ 100,000 88,000
Pan Pacific Industrial Investment
Plc, Zero Coupon Bond, 4/28/07
144A........................... 1,000,000 470,000
Petroleos Mexicanos, Medium Term,
8.625%, 12/01/23 144A.......... 145,000 113,100
Philippine Long Distance
Telephone Co., 8.350%,
3/06/17........................ 200,000 162,831
Pindo Deli Finance Mauritius
Ltd., 10.750%, 10/01/07........ 450,000 247,500
Pindo Deli Finance Mauritius
Ltd., 10.875%, 10/01/27........ 410,000 190,650
Pycsa Panama SA, 10.280%,
12/15/12 144A.................. 100,000 75,000
Quezon Power Philippines Co.,
8.860%, 6/15/17................ 550,000 401,500
Siam Commercial Bank Public Co.,
7.500%, 3/15/06 144A........... 100,000 71,000
Tata Electric Co., 8.500%,
8/19/17 144A................... 200,000 160,000
Tenaga Nasional Berhad, 7.500%,
11/01/25 144A.................. 850,000 614,082
Tjiwi Kimia Mauritius Ltd.,
10.000%, 8/01/04............... 400,000 214,000
Total Access Communication Public
Co. Ltd., 7.625%, 11/04/01
144A........................... 100,000 78,000
Total Access Communication Public
Co. Ltd., 8.375%, 11/04/06
144A........................... 400,000 283,000
-----------
5,022,405
-----------
HEALTH CARE -- SERVICES -- 0.3%
Columbia/HCA Healthcare Corp.,
7.050%, 12/01/27............... 75,000 58,616
-----------
OIL & GAS -- 4.1%
Chesapeake Energy Corp., 7.875%,
3/15/04........................ 50,000 39,000
Chesapeake Energy Corp., 8.500%,
3/15/12........................ 250,000 187,500
HS Resources, Inc., 9.250%,
11/15/06....................... 100,000 98,250
Hvide Marine, Inc., 8.375%,
2/15/08........................ 400,000 248,000
R & B Falcon Corp., 7.375%,
4/15/18........................ 300,000 217,155
-----------
789,905
-----------
RAIL -- TRANSPORT -- 0.1%
Missouri Pacific Railroad Co.,
4.750%, 1/01/20................ 30,000 18,900
-----------
REAL ESTATE INVESTMENT TRUSTS --
0.4%
Meditrust Corp., 7.000%,
8/15/07........................ 100,000 83,552
-----------
RETAIL -- GENERAL -- 2.2%
Dillon Read Structured Finance
Corp., 7.430%, 8/15/18......... 300,000 267,474
Penn Traffic Co., 9.625%, 4/15/05
^.............................. 275,000 15,125
Woolworth Corp., 8.500%,
1/15/22........................ 200,000 146,000
-----------
428,599
-----------
STEEL -- 0.2%
Geneva Steel Co., 9.500%, 1/15/04
^.............................. 150,000 27,000
-----------
TELECOMMUNICATIONS -- 6.6%
Hyperion Telecommunications,
Inc., Zero Coupon Bond, 4/15/03
(step to 13.000% on 4/15/01)
#.............................. 200,000 165,000
</TABLE>
41
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
TELECOMMUNICATIONS -- CONTINUED
Nextel Communications, Inc., Zero
Coupon Bond, 10/31/07
(step to 9.750% on 10/31/02)
#.............................. USD 145,000 $ 102,950
Nextel Communications, Inc., Zero
Coupon Bond, 2/15/08
(stepto 9.950% on 2/15/03) #... 100,000 70,000
RCN Corp., Zero Coupon Bond,
10/15/07
(step to 11.125% on 10/15/02)
#.............................. 375,000 253,125
RCN Corp., Zero Coupon Bond,
2/15/08
(step to 9.800% on 2/15/03)
#.............................. 550,000 345,125
RCN Corp., Zero Coupon Bond,
7/01/08
(step to 11.000% on 7/01/03)
#.............................. 100,000 61,500
Teligent, Inc., Zero Coupon Bond,
3/01/08
(step to 11.500% on 3/01/03)
#.............................. 400,000 210,000
Triton Communications LLC, Zero
Coupon Bond, 5/01/08
(step to 11.000% on 5/01/03)
#.............................. 100,000 57,125
-----------
1,264,825
-----------
TEXTILE & APPAREL -- 1.1%
Phillips Van Heusen Corp.,
7.750%, 11/15/23............... 250,000 215,102
-----------
TRANSPORTATION -- 0.5%
American President Cos. Ltd.,
8.000%, 1/15/24................ 200,000 100,000
-----------
UTILITIES -- 1.6%
AES Corp., 8.875%, 11/01/27...... 350,000 312,812
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost
$12,057,552)................... 11,179,167
-----------
CONVERTIBLE BONDS -- 30.7%
AUTO & RELATED -- 0.7%
Exide Corp., 2.900%, 12/15/05
144A........................... 250,000 138,750
-----------
CANADIAN -- 0.7%
Rogers Communications, Inc.,
2.000%, 11/26/05............... 190,000 136,563
-----------
COMPUTERS -- 4.4%
Cray Research, Inc., 6.125%,
2/01/11........................ 113,000 84,185
Data General Corp., 6.000%,
5/15/04........................ 50,000 42,250
HMT Technology Corp., 5.750%,
1/15/04........................ 75,000 35,062
Maxtor Corp., 5.750%, 3/01/12.... 500,000 375,000
Read Rite Corp., 6.500%,
9/01/04........................ 150,000 90,750
S3, Inc., 5.750%, 10/01/03....... 200,000 152,750
Telxon Corp., 5.750%, 1/01/03.... 50,000 34,000
Western Digital, Zero Coupon
Bond, 2/18/18.................. 150,000 33,750
-----------
847,747
-----------
ELECTRONICS -- 6.2%
Cirrus Logic, Inc., 6.000%,
12/15/03....................... 250,000 170,000
Cypress Semiconductor Corp.,
6.000%, 10/01/02............... 100,000 89,125
EDO Corp., 7.000%, 12/15/11...... 50,000 39,375
Integrated Device Technology,
5.500%, 6/01/02................ 50,000 34,000
</TABLE>
42
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
ELECTRONICS -- CONTINUED
Kent Electronics Corp., 4.500%,
9/01/04........................ USD 325,000 $ 237,250
Lam Research Corp., 5.000%,
9/01/02........................ 575,000 483,000
Richardson Electronics Ltd.,
7.250%, 12/15/06............... 50,000 37,000
Zenith Corp., 6.250%, 4/01/11.... 350,000 105,000
-----------
1,194,750
-----------
ENVIRONMENTAL SERVICES -- 0.1%
Air & Water Technologies Corp.,
8.000%, 5/15/15................ 25,000 21,250
-----------
FINANCIAL SERVICES -- 3.8%
Bell Atlantic Financial Services,
4.250%, 9/15/05................ 675,000 740,812
-----------
FOREIGN ISSUER -- 4.6%
Advanced Agro Public Co., 3.500%,
6/17/01........................ 125,000 106,562
APP Finance VII Mauritius Ltd.,
3.500%, 4/30/03................ 150,000 89,625
APP Finance VII Mauritius Ltd.,
3.500%, 4/30/03 144A........... 125,000 74,687
Bangkok Bank Public Co. Ltd.,
4.589%, 3/03/04................ 225,000 104,625
Banpu Public Co., 2.750%,
4/10/03........................ 25,000 20,000
Burns, Philp, 5.500%, 4/30/04.... 50,000 24,875
Empresas ICA Sociedad, 5.000%,
3/15/04........................ 80,000 52,800
Loxley Public Co. Ltd., 2.500%,
4/04/01........................ 100,000 10,000
Samsung Electronics Co. Ltd.,
Zero Coupon Bond, 12/31/07..... 100,000 99,250
Sappi BVI Finance, 7.500%,
8/01/02........................ 125,000 114,219
Siam Commercial Bank Public Co.,
3.250%, 1/24/04................ 250,000 110,156
Ssangyong Oil Refining Co., Inc.,
3.000%, 12/31/04............... 125,000 79,688
-----------
886,487
-----------
FREIGHT TRANSPORTATION -- 0.3%
Builders Transportation, Inc.,
8.000%, 8/15/05 ^.............. 75,000 94
Worldway Corp., 6.250%,
4/15/11........................ 62,000 50,530
-----------
50,624
-----------
HEALTH CARE -- DRUGS -- 2.6%
Dura Pharmaceuticals, Inc.,
3.500%, 7/15/02................ 450,000 339,750
Glycomed, Inc., 7.500%,
1/01/03........................ 100,000 80,750
NABI, Inc., 6.500%, 2/01/03...... 125,000 88,750
-----------
509,250
-----------
HEALTH CARE -- PRODUCTS -- 0.3%
Centocor, Inc., 4.750%,
2/15/05........................ 50,000 48,500
-----------
HEALTH CARE -- SERVICES -- 0.3%
Tenet Healthcare Corp., 6.000%,
12/01/05....................... 75,000 60,000
-----------
HOME BUILDERS -- 0.3%
Schuler Homes, Inc., 6.500%,
1/15/03........................ 70,000 56,000
-----------
INSURANCE -- 2.2%
Loews Corp., 3.125%, 9/15/07..... 500,000 426,250
-----------
</TABLE>
43
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
MACHINERY -- 0.1%
Intevac, Inc., 6.500%, 3/01/04... USD 25,000 $ 12,625
-----------
MANUFACTURING -- 0.7%
Hexcel Corp., 7.000%, 8/01/03.... 50,000 42,000
Hexcel Corp., 7.000%, 8/01/11.... 125,000 91,250
-----------
133,250
-----------
OIL & GAS -- 1.7%
Key Energy Group, Inc., 5.000%,
9/15/04........................ 550,000 276,375
Pogo Producing Co., 5.500%,
6/15/06........................ 75,000 56,250
-----------
332,625
-----------
REAL ESTATE INVESTMENT TRUSTS --
0.1%
Sizeler Property Investors, Inc.,
8.000%, 7/15/03................ 15,000 13,988
-----------
RESTAURANTS -- 0.7%
Boston Chicken, Inc., Zero Coupon
Bond, 6/01/15 ^................ 625,000 6,250
Boston Chicken, Inc., 4.500%,
2/01/04 ^...................... 100,000 4,000
Einstein/Noah Bagel Corp.,
7.250%, 6/01/04................ 50,000 29,000
Shoney's, Inc., Zero Coupon Bond,
4/11/04........................ 350,000 84,000
TPI Enterprises, Inc., 8.250%,
7/15/02........................ 25,000 14,375
-----------
137,625
-----------
RETAIL -- SPECIALTY -- 0.7%
CML Group, Inc., 5.500%, 1/15/03
^.............................. 100,000 2,000
Jacobson Stores, Inc., 6.750%,
12/15/11....................... 150,000 123,563
-----------
125,563
-----------
TELECOMMUNICATIONS -- 0.2%
Broadband Technologies, Inc.,
5.000%, 5/15/01................ 100,000 36,250
-----------
TOTAL CONVERTIBLE BONDS
(Identified Cost $6,734,954)... 5,908,909
-----------
TOTAL BONDS AND NOTES
(Identified Cost
$18,792,506)................... 17,088,076
-----------
</TABLE>
44
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE !
- ------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS -- 3.6% OF NET ASSETS
COMPUTER SOFTWARE & SERVICES --
0.1%
Unisys Corp. *................... 480 $ 13,290
-----------
FOREIGN ISSUER -- 0.7%
Sappi Ltd., ADR.................. 2,950 126,481
Siam Commercial Bank Public Co.
*.............................. 16,500 9,661
-----------
136,142
-----------
OIL & GAS -- 0.1%
Chesapeake Energy Corp........... 16,000 23,000
-----------
REAL ESTATE INVESTMENT TRUSTS --
2.5%
Associated Estates Realty
Corp........................... 15,500 161,781
Berkshire Realty Co., Inc........ 15,500 173,406
Developers Diversified Realty
Corp........................... 4,825 69,058
Meditrust Corp................... 5,500 68,406
-----------
472,651
-----------
RESTAURANTS -- 0.2%
Advantica Restaurant Group, Inc.
*.............................. 7,197 35,985
-----------
TOTAL COMMON STOCKS
(Identified Cost $977,043)..... 681,068
-----------
PREFERRED STOCKS -- 2.9% OF NET ASSETS
COMPUTER SOFTWARE & SERVICES --
0.2%
Unisys Corp., $3.75.............. 712 36,935
-----------
FOREIGN ISSUER -- 0.2%
Philippine Long Distance
Telephone Co., $3.50, GDS...... 1,000 47,500
-----------
OIL & GAS -- 0.5%
Chesapeake Energy Corp.,
7.000%......................... 3,750 47,812
Chesapeake Energy Corp., 7.000%
144A........................... 3,500 44,625
-----------
92,437
-----------
TELECOMMUNICATIONS -- 1.6%
Hyperion Telecommunications,
Inc., 12.875% PIK.............. 232 207,856
Nextel Communications, Inc.,
11.125% PIK.................... 103 104,837
-----------
312,693
-----------
UTILITIES -- 0.4%
Central Maine Power Co.,
3.500%......................... 1,460 71,540
Entergy Gulf States, Inc.,
4.400%......................... 50 3,263
-----------
74,803
-----------
TOTAL PREFERRED STOCKS
(Identified Cost $639,126)..... 564,368
-----------
TOTAL INVESTMENTS -- 95.2%
(IDENTIFIED COST $20,408,675)
@.............................. 18,333,512
Cash and Other Assets, Less
Liabilities -- 4.8%............ 923,763
-----------
NET ASSETS -- 100%................. $19,257,275
-----------
-----------
</TABLE>
45
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
! See Note 1.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
++ Floating Rate Bond: Coupon is six month London Interbank Offered Rate
(LIBOR) plus .8125%.
PIK All or a portion of income may be received as additional securities.
144A Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
^ Security in default.
* Non-income producing security.
@ At March 31, 1999, the net unrealized depreciation on investments based on
cost of $20,408,675 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $818,194 and $2,893,357, respectively, resulting in net
unrealized depreciation of $2,075,163.
KEY TO ABBREVIATIONS:
<TABLE>
<S> <C>
ADR: American Depositary Receipts
CAD: Canadian Dollar
GDS: Global Depositary Shares
USD: United States Dollar
ZAR: South African Rand
</TABLE>
See accompanying notes to financial statements.
46
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
- -----------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
<S> <C> <C> <C>
- -----------------------------------------------------------------
BONDS AND NOTES -- 93.8% OF NET ASSETS
AUTO & RELATED -- 1.5%
Dana Corp., 6.250%, 3/01/04...... USD 150,000 $ 150,329
------------
BANKS/SAVINGS & LOANS -- 4.3%
Capital One Bank, 5.950%,
2/15/01........................ 200,000 199,860
Capital One Bank, 6.375%,
2/15/03........................ 100,000 100,304
Capital One Bank, 6.830%,
5/17/99........................ 70,000 70,105
NationsBank Corp., 7.000%,
9/15/01........................ 55,000 56,751
------------
427,020
------------
CANADIAN -- 3.2%
Canadian Government, 5.500%,
6/01/09........................ CAD 150,000 102,840
International Semi-Tech Corp.,
Zero Coupon Bond, 8/15/03
(step to 11.50% on 8/15/00)
#.............................. USD 500,000 70,000
MacMillan Bloedel Ltd., 6.750%,
2/15/06........................ 150,000 144,995
------------
317,835
------------
ENTERTAINMENT -- 1.7%
Time Warner Entertainment Co.,
7.750%, 6/15/05................ 155,000 166,138
------------
FINANCIAL SERVICES -- 12.0%
Associates Manufactured Housing,
6.475%, 3/15/28................ 50,000 50,757
CIT Group, Inc., 5.800%,
2/26/01........................ 230,000 230,646
Green Tree Financial Corp.,
6.950%, 3/15/27................ 200,000 190,562
Household Finance Corp., 5.875%,
9/25/04........................ 350,000 346,164
Morgan Stanley Dean Witter & Co.,
5.625%, 1/20/04................ 200,000 197,506
OSCC Home Equity Loan Trust,
6.025%, 6/15/08................ 187,742 187,115
------------
1,202,750
------------
FOOD -- 1.9%
Dole Food, Inc., 6.375%,
10/01/05....................... 200,000 193,276
------------
FOREIGN GOVERNMENT/AGENCY -- 3.6%
Republic of Brazil C Bond,
8.000%, 4/15/14 PIK............ 176,642 112,397
Republic of South Africa, 8.375%,
10/17/06....................... 250,000 247,500
------------
359,897
------------
FOREIGN ISSUER -- 10.4%
Espirito Santo Centrais Eletricas
SA, 10.000%, 7/15/07........... 150,000 97,500
Gruma SA de CV, 7.625%,
10/15/07....................... 150,000 135,750
Korea Development Bank, 6.750%,
12/01/05....................... 100,000 89,471
Perez Companc SA, 8.125%, 7/15/07
144A........................... 250,000 222,500
Southern Peru Ltd., 7.900%,
5/30/07........................ 220,000 202,730
Tenaga Nasional Berhad, 7.625%,
4/29/07 144A................... 125,000 112,310
Total Access Communication Public
Co. Ltd., 8.375%, 11/04/06
144A........................... 220,000 155,650
YPF SA, 7.000%, 10/26/02......... 23,997 22,124
------------
1,038,035
------------
</TABLE>
47
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (CONTINUED)
- -----------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- -----------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
GOVERNMENT AGENCIES -- 7.9%
Federal Home Loan Mortgage Corp.,
6.000%, 4/15/06................ USD 50,750 $ 50,987
Federal Home Loan Mortgage Corp.,
6.250%, 10/15/07............... 55,000 55,515
Federal National Mortgage
Association, 5.500%, 4/25/06... 250,000 249,295
Federal National Mortgage
Association, 6.000%, 5/25/08... 126,723 126,723
Federal National Mortgage
Association, 6.500%, 1/18/16... 144,004 144,094
Federal National Mortgage
Association, 6.500%, 8/15/16... 165,000 165,721
------------
792,335
------------
HEALTH CARE -- PRODUCTS -- 2.4%
Bausch & Lomb, Inc., 6.500%,
8/01/05........................ 250,000 242,693
------------
OIL & GAS -- 4.8%
Pioneer Natural Resources Co.,
6.500%, 1/15/08................ 250,000 202,890
R & B Falcon Corp., 6.750%,
4/15/05........................ 350,000 276,500
------------
479,390
------------
PAPER PRODUCTS -- 1.0%
Temple-Inland, Inc., 6.750%,
3/01/09........................ 100,000 98,945
------------
REAL ESTATE INVESTMENT TRUSTS --
17.7%
American Health Properties, Inc.,
7.050%, 1/15/02................ 65,000 63,718
American Health Properties, Inc.,
7.500%, 1/15/07................ 275,000 259,922
Excel Realty Trust, Inc., 6.875%,
10/15/04....................... 165,000 164,805
First Industrial, 7.000%,
12/01/06....................... 250,000 232,593
Highwoods Realty LP, 6.750%,
12/01/03....................... 350,000 341,029
Oasis Residential, Inc., 6.750%,
11/15/01....................... 350,000 339,910
Trinet Corporate Realty Trust,
Inc., 6.750%, 3/01/03.......... 335,000 320,538
Trinet Corporate Realty Trust,
Inc., 7.300%, 5/15/01.......... 55,000 54,872
------------
1,777,387
------------
SECURITIES -- 1.6%
Lehman Brothers Holdings, Inc.,
6.125%, 2/01/01................ 60,000 59,886
Lehman Brothers Holdings, Inc.,
7.125%, 9/15/03................ 100,000 102,160
------------
162,046
------------
TELECOMMUNICATIONS -- 5.9%
Cox Communications, Inc., 6.500%,
11/15/02....................... 165,000 168,168
Intermedia Communications, Inc.,
8.600%, 6/01/08................ 125,000 125,000
TCI Communications, Inc., 6.875%,
2/15/06........................ 290,000 303,404
------------
596,572
------------
TEXTILE & APPAREL -- 2.0%
Tommy Hilfiger Corp., 6.500%,
6/01/03........................ 200,000 196,018
------------
TOBACCO -- 3.9%
Philip Morris Cos., Inc., 7.250%,
9/15/01........................ 65,000 66,894
RJR Nabisco, Inc., 7.625%,
9/15/03........................ 65,000 63,575
RJR Nabisco, Inc., 8.250%,
7/01/04........................ 90,000 94,846
</TABLE>
48
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (CONTINUED)
- -----------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- -----------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
TOBACCO -- CONTINUED
RJR Nabisco, Inc., 8.750%,
8/15/05........................ USD 160,000 $ 171,016
------------
396,331
------------
TRUCKING & LEASING -- 2.1%
Amerco, 7.490%, 9/18/01.......... 200,000 206,796
------------
U.S. GOVERNMENT -- 3.9%
U.S. Treasury Notes, 5.375%,
6/30/03........................ 100,000 100,625
U.S. Treasury Notes, 5.500%,
5/31/00........................ 190,000 191,187
U.S. Treasury Notes, 5.500%,
2/15/08........................ 100,000 101,125
------------
392,937
------------
UTILITIES -- 2.0%
Texas Utilities Co., 5.940%,
4/15/99........................ 200,000 201,646
------------
TOTAL BONDS AND NOTES
(Identified Cost $9,826,875)... 9,398,376
------------
SHORT-TERM INVESTMENT -- 4.6% OF NET ASSETS
Repurchase Agreement with State
Street Bank and Trust Co.,
dated 3/31/99 at 4.000% to be
repurchased at $464,052 on
4/1/99 collateralized by
$370,000 U.S. Treasury Bond,
8.125%, due 8/15/21 with a
value of $473,600.............. 464,000 464,000
------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $464,000)..... 464,000
------------
TOTAL INVESTMENTS -- 98.4%
(IDENTIFIED COST $10,290,875)
@................................ 9,862,376
Cash and Other Assets, Less
Liabilities -- 1.6%............ 156,170
------------
NET ASSETS -- 100%................. $ 10,018,546
------------
------------
</TABLE>
! See Note 1.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
PIK All or a portion of income may be received as additional securities.
144A Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
@ At March 31, 1999, the net unrealized depreciation on investments based on
cost of $10,290,875 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $115,473 and $543,972, respectively, resulting in net
unrealized depreciation of $428,499.
KEY TO ABBREVIATIONS:
<TABLE>
<S> <C>
CAD: Canadian Dollar
USD: United States Dollar
</TABLE>
See accompanying notes to financial statements.
49
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
<S> <C> <C> <C>
- -----------------------------------------------------------------
BONDS AND NOTES -- 86.1% OF NET ASSETS
NON-CONVERTIBLE BONDS -- 67.9%
CANADIAN -- 17.4%
Canadian Government, Zero Coupon
Bond, 6/01/21.................. CAD 150,000 $ 30,108
Canadian Government, Zero Coupon
Bond, 6/01/25.................. 940,000 158,908
MacMillan Bloedel Ltd., 7.700%,
2/15/26........................ USD 100,000 94,282
New Brunswick FM Project, Zero
Coupon Bond, 11/30/27 (step to
6.470% on 5/30/03) 144A #...... CAD 75,000 40,599
Ontario Hydro, 8.900%, 8/18/22... 55,000 51,128
Province of Alberta, 5.930%,
9/16/16........................ 47,050 32,924
Province of British Columbia,
Zero Coupon Bond, 6/09/22...... 250,000 43,905
Province of British Columbia,
Zero Coupon Bond, 8/19/22...... 605,000 105,075
Province of British Columbia,
Zero Coupon Bond, 8/23/24...... 200,000 30,956
Province of Manitoba, Zero Coupon
Bond, 3/05/31.................. 1,100,000 121,185
Province of Manitoba, 6.500%,
9/22/17........................ 25,000 18,285
Province of Manitoba, 7.750%,
12/22/25....................... 55,000 46,744
Province of Ontario, Zero Coupon
Bond, 6/02/27.................. 1,000,000 134,960
Province of Saskatchewan
(Certificate of Deposit), Zero
Coupon Bond, 2/04/22........... 650,000 119,190
Province of Saskatchewan
(Certificate of Deposit), Zero
Coupon Bond, 5/30/25........... 215,000 32,747
----------
1,060,996
----------
COMMUNICATIONS -- 0.3%
Arch Communications Group, Inc.,
Zero Coupon Bond, 3/15/08 (step
to 10.875% on 3/15/01) #....... USD 50,000 20,500
----------
COMPUTERS -- 1.5%
Seagate Technology, Inc., 7.450%,
3/01/37........................ 25,000 23,674
Seagate Technology, Inc., 7.875%,
3/01/17........................ 75,000 67,691
----------
91,365
----------
FINANCIAL SERVICES -- 1.8%
Security Capital Group, Inc.,
7.700%, 6/15/28................ 125,000 110,879
----------
FOREIGN GOVERNMENT/AGENCY -- 2.0%
Republic of Brazil, 10.125%,
5/15/27........................ 10,000 7,250
Republic of Brazil C Bond,
8.000%, 4/15/14 PIK............ 29,440 18,733
Republic of South Africa,
12.500%, 12/21/06.............. ZAR 400,000 57,651
Republic of South Africa,
13.000%, 8/31/10............... 125,000 18,260
Republic of South Africa,
13.500%, 9/15/15............... 150,000 22,630
----------
124,524
----------
FOREIGN ISSUER -- 12.0%
Bangkok Bank Public Co. Ltd.,
9.025%, 3/15/29 144A........... USD 50,000 35,733
Centragas, 10.650%, 12/01/10
144A........................... 88,956 76,947
Cerro Negro Finance Ltd., 7.900%,
12/01/20 144A.................. 50,000 36,500
Embotelladora Andina SA, 7.625%,
10/01/27....................... 125,000 105,335
Enersis SA, 7.400%, 12/01/16..... 100,000 93,099
PDVSA Finance Ltd., 7.500%,
11/15/28....................... 50,000 36,921
Pindo Deli Finance Mauritius
Ltd., 10.875%, 10/01/27........ 100,000 46,500
</TABLE>
50
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- -----------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
FOREIGN ISSUER -- CONTINUED
Quezon Power Philippines Co.,
8.860%, 6/15/17................ USD 50,000 $ 36,500
Samsung Electronics Co. Ltd.,
7.700%, 10/01/27 144A.......... 100,000 76,000
Telekom Malaysia Berhad, 7.875%,
8/01/25 144A................... 125,000 101,617
Tenaga Nasional Berhad, 7.500%,
11/01/25 144A.................. 100,000 72,245
Total Access Communication Public
Co. Ltd., 8.375%, 11/04/06
144A........................... 25,000 17,688
----------
735,085
----------
GOVERNMENT AGENCIES -- 1.0%
Federal National Mortgage
Association, Zero Coupon Bond,
10/29/07....................... NZD 200,000 61,432
----------
HEALTH CARE -- PRODUCTS -- 1.5%
Bausch & Lomb, Inc., 7.125%,
8/01/28........................ USD 100,000 91,989
----------
HEALTH CARE -- SERVICES -- 1.9%
Columbia/HCA Healthcare Corp.,
7.050%, 12/01/27............... 150,000 117,231
----------
HOME BUILDERS -- 0.4%
Pulte Corp., 7.625%, 10/15/17.... 25,000 23,243
----------
OIL & GAS -- 5.3%
Pioneer Natural Resources Co.,
7.200%, 1/15/28................ 40,000 26,616
R & B Falcon Corp., 7.375%,
4/15/18........................ 100,000 72,385
Seagull Energy Corp., 7.500%,
9/15/27........................ 180,000 136,698
Union Pacific Resources Group,
Inc., 7.150%, 5/15/28.......... 100,000 89,349
----------
325,048
----------
PAPER PRODUCTS -- 1.5%
Westvaco Corp., 7.000%,
8/15/23........................ 100,000 94,160
----------
RAIL -- TRANSPORT -- 2.5%
Louisville & Nashville Railroad
Co., 2.875%, 4/01/03........... 4,000 3,498
Louisville & Nashville Railroad
Co., 3.375%, 4/01/03........... 12,000 10,943
Missouri Pacific Railroad Co.,
4.250%, 1/01/05................ 39,000 34,560
Missouri Pacific Railroad Co.,
4.750%, 1/01/20................ 34,000 21,420
Missouri Pacific Railroad Co.,
4.750%, 1/01/30................ 86,000 52,890
Missouri Pacific Railroad Co.,
5.000%, 1/01/45................ 50,000 26,313
----------
149,624
----------
REAL ESTATE INVESTMENT TRUSTS --
8.8%
First Industrial, 7.500%,
12/01/17....................... 100,000 85,509
First Industrial, 7.600%,
7/15/28........................ 150,000 131,488
Highwoods Realty LP, 7.500%,
4/15/18........................ 50,000 45,614
Susa Partnership LP, 7.500%,
12/01/27....................... 125,000 112,526
Trinet Corporate Realty Trust,
Inc., 7.700%, 7/15/17.......... 175,000 160,167
----------
535,304
----------
SUPRANATIONAL -- 3.4%
International Bank for
Reconstruction & Development,
Zero Coupon Bond, 8/20/07...... NZD 585,000 184,268
</TABLE>
51
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- -----------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
SUPRANATIONAL -- CONTINUED
International Bank for
Reconstruction & Development,
8.000%, 5/23/07................ NZD 45,000 $ 26,105
----------
210,373
----------
TEXTILE & APPAREL -- 0.4%
Kellwood Co., 7.625%, 10/15/17... USD 25,000 22,067
----------
TOBACCO -- 1.1%
RJR Nabisco, Inc., 9.250%,
8/15/13........................ 60,000 65,860
----------
U.S. GOVERNMENT -- 5.1%
U.S. Treasury Bonds, 5.500%,
8/15/28........................ 300,000 287,109
U.S. Treasury Bonds, 6.000%,
2/15/26........................ 25,000 25,410
----------
312,519
----------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $4,265,200)... 4,152,199
----------
CONVERTIBLE BONDS -- 18.2%
COMPUTERS -- 0.1%
Maxtor Corp., 5.750%, 3/01/12.... 10,000 7,500
----------
DIVERSIFIED OPERATIONS -- 0.4%
Thermo Electron Corp., 4.250%,
1/01/03 144A................... 25,000 22,125
----------
ELECTRONICS -- 1.0%
Thermedics, Inc., Zero Coupon
Bond, 6/01/03.................. 100,000 64,000
----------
ENVIRONMENTAL SERVICES -- 1.5%
Thermo TerraTech, Inc., 4.625%,
5/01/03 144A................... 110,000 92,812
----------
FINANCIAL SERVICES -- 1.8%
Bell Atlantic Financial Services,
4.250%, 9/15/05................ 100,000 109,750
----------
FOREIGN ISSUER -- 1.8%
Banpu Public Co., 2.750%,
4/10/03........................ 20,000 16,000
Burns, Philp, 5.500%, 4/30/04.... 20,000 9,950
Ssangyong Oil Refining Co., Inc.,
3.000%, 12/31/04............... 30,000 19,125
Telekom Malaysia Berhad, 4.000%,
10/03/04....................... 50,000 41,875
Total Access Communication Public
Co. Ltd., 2.000%, 5/31/06...... 30,000 24,000
----------
110,950
----------
HEALTH CARE -- SERVICES -- 0.7%
Healthsouth Corp., 3.250%,
4/01/03........................ 50,000 40,750
----------
INSURANCE -- 2.0%
Loews Corp., 3.125%, 9/15/07..... 140,000 119,350
----------
MULTI-INDUSTRY -- 1.8%
Thermo Instrument Systems, Inc.,
4.500%, 10/15/03 144A.......... 125,000 111,406
----------
OIL & GAS -- 6.3%
Baker Hughes, Inc., Zero Coupon
Bond, 5/05/08.................. 400,000 278,000
Diamond Offshore Drilling, Inc.,
3.750%, 2/15/07................ 50,000 52,000
</TABLE>
52
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- -----------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES -- CONTINUED
OIL & GAS -- CONTINUED
Houston Industries, Inc., 6.000%,
3/15/12........................ USD 60,000 $ 57,300
----------
387,300
----------
PUBLISHING -- 0.8%
Scholastic Corp., 5.000%, 8/15/05
144A........................... 50,000 48,063
----------
TOTAL CONVERTIBLE BONDS
(Identified Cost $1,115,467)... 1,114,006
----------
TOTAL BONDS AND NOTES
(Identified Cost $5,380,667)... 5,266,205
----------
<CAPTION>
SHARES
<S> <C> <C> <C>
- -----------------------------------------------------------------
PREFERRED STOCKS -- 2.2% OF NET ASSETS
OIL & GAS -- 1.5%
Weatherford International, Inc.,
5.000%......................... 3,000 91,875
----------
REAL ESTATE INVESTMENT TRUSTS --
0.3%
Camden Property Trust, $2.25..... 250 5,844
Carramerica Reality Corp.,
8.450%......................... 200 4,175
Equity Residential Properties
Trust, 7.250%.................. 400 8,600
----------
18,619
----------
UTILITIES -- 0.4%
Duquesne Light Co., 4.000%....... 500 16,750
New York State Electric & Gas
Corp., 3.750%.................. 100 7,050
----------
23,800
----------
TOTAL PREFERRED STOCKS
(Identified Cost $133,389)..... 134,294
----------
</TABLE>
53
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
- -----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- -----------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT -- 6.3% OF NET ASSETS
Repurchase Agreement with State
Street Bank and Trust Co.,
dated 3/31/99 at 4.000% to be
repurchased at $386,043 on
4/1/99 collateralized by
$310,000 U.S. Treasury Bond,
8.125%, due 8/15/21 with a
value of $396,800.............. USD 386,000 $ 386,000
----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $386,000)..... 386,000
----------
TOTAL INVESTMENTS -- 94.6%
(IDENTIFIED COST $5,900,056) @... 5,786,499
Cash and Other Assets, Less
Liabilities -- 5.4%............ 327,842
----------
NET ASSETS -- 100%................. $6,114,341
----------
----------
</TABLE>
! See Note 1.
144A Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
PIK All or a portion of income may be received as additional securities.
@ At March 31, 1999, the net unrealized depreciation on investments based on
cost of $5,900,056 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $288,056 and $401,613, respectively, resulting in net
unrealized depreciation of $113,557.
KEY TO ABBREVIATIONS:
<TABLE>
<S> <C>
CAD: Canadian Dollar
NZD: New Zealand Dollar
USD: United States Dollar
ZAR: South African Rand
</TABLE>
See accompanying notes to financial statements.
54
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES MUNICIPAL BOND FUND
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
<S> <C> <C>
- --------------------------------------------------------------------
GOVERNMENT AND AGENCY SECURITIES -- 4.6% OF NET ASSETS
U.S. GOVERNMENT -- 4.6%
U.S. Treasury Notes, 5.500%,
1/31/03............................. $125,000 $ 126,309
U.S. Treasury Notes, 5.750%,
8/15/03............................. 350,000 357,108
----------------
483,417
----------------
TOTAL GOVERNMENT AND AGENCY SECURITIES
(Identified Cost $486,641).......... 483,417
----------------
MUNICIPAL BONDS AND NOTES -- 92.9% OF NET ASSETS
ALASKA -- 0.8%
Alaska State Housing Finance Corp.,
6.600%, 12/01/15.................... 85,000 90,551
----------------
ARIZONA -- 1.5%
Phoenix Street & Highway User, 6.250%,
7/01/11............................. 150,000 162,864
----------------
CALIFORNIA -- 10.7%
California State Department Water
Resources, 5.625%, 12/01/12......... 100,000 107,286
California State Public Works Lease,
5.500%, 6/01/14..................... 300,000 325,461
Foothill Eastern Transportation
Corridor, Zero Coupon Bond,
1/01/23............................. 500,000 139,685
Foothill Eastern Transportation
Corridor, 6.000%, 1/01/16........... 250,000 274,722
Fresno Sewer Revenue, (AMBAC Insured),
6.250%, 9/01/14..................... 250,000 292,150
----------------
1,139,304
----------------
CONNECTICUT -- 2.0%
Connecticut State Resources Recovery
Authority, 7.625%, 1/01/09.......... 200,000 207,940
----------------
DISTRICT OF COLUMBIA -- 2.5%
District Columbia Water & Sewer, (FSA
Insured), 5.500%, 10/01/11.......... 250,000 268,255
----------------
FLORIDA -- 2.8%
Florida State Board of Education,
Capital Outlay, 5.000%, 6/01/19..... 300,000 297,345
----------------
HAWAII -- 4.6%
Hawaii State, 4.750%, 4/01/18......... 300,000 289,443
Honolulu, Hawaii City & County,
Prerefunded Series B, 5.000%,
10/01/13............................ 60,000 61,686
Honolulu, Hawaii City & County,
Unrefunded Series B, 5.000%,
10/01/13............................ 140,000 142,901
----------------
494,030
----------------
ILLINOIS -- 9.8%
Chicago O'Hare International Airport,
5.000%, 1/01/16..................... 300,000 294,966
Chicago, Illinois, General Obligation,
(AMBAC Insured), 5.250%, 1/01/15.... 250,000 255,255
Illinois Development Finance Authority
Pollution Control, 7.250%, 6/01/11.. 25,000 26,719
Illinois State Sales Tax Revenue,
6.375%, 6/15/14..................... 150,000 167,778
Illinois State Sales Tax Revenue,
(FGIC Insured), 5.000%, 6/15/16..... 300,000 298,608
----------------
1,043,326
----------------
MARYLAND -- 2.3%
Baltimore Maryland Pollution Control,
5.350%, 4/01/08..................... 225,000 241,610
----------------
MASSACHUSETTS -- 2.4%
Massachusetts, Grant Anticipation,
Series B, 5.125%, 6/15/15........... 250,000 254,435
----------------
</TABLE>
55
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES MUNICIPAL BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- --------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES -- CONTINUED
MICHIGAN -- 4.7%
Detroit, Michigan, (MBIA Insured),
5.000%, 4/01/06..................... $250,000 $ 262,772
Michigan State Trunk Line, Refunding
Series A, 4.750%, 11/01/20.......... 250,000 238,620
----------------
501,392
----------------
NEW JERSEY -- 7.2%
New Jersey Building Authority State
Building, 5.750%, 6/15/09........... 250,000 276,150
New Jersey State Transportation
Authority, Series A, 5.250%,
6/15/08............................. 250,000 267,292
New Jersey State Turnpike Authority,
6.500%, 1/01/08..................... 200,000 227,720
----------------
771,162
----------------
NEW YORK -- 18.9%
Long Island Power Authority New York,
(FSA Insured), 5.000%, 12/01/18..... 250,000 247,513
New York City Housing Development
Corp., 5.625%, 5/01/12.............. 145,000 153,936
New York City Transitional Finance
Authority, 5.000%, 8/15/13.......... 200,000 203,226
New York State Certificates of
Participation, 5.650%, 8/01/02...... 160,000 168,306
New York State Dormitory Authority,
5.100%, 2/15/12..................... 250,000 253,445
New York State Dormitory Authority,
6.375%, 7/01/08..................... 85,000 92,094
New York State Dormitory Authority,
6.500%, 5/15/05..................... 250,000 279,885
New York State Environmental Pollution
Control, 5.150%, 6/15/13............ 125,000 128,985
New York State Environmental Pollution
Control, 5.750%, 6/15/10............ 250,000 276,785
New York State, General Obligation,
5.250%, 7/15/10..................... 200,000 210,666
----------------
2,014,841
----------------
PENNSYLVANIA -- 4.8%
Indiana County Pennsylvania Industrial
Development Authority, 5.350%,
11/01/10............................ 250,000 268,775
Philadelphia Pennsylvania, General
Obligation, 4.750%, 5/15/16......... 250,000 240,625
----------------
509,400
----------------
PUERTO RICO -- 2.4%
Puerto Rico Electric Power Authority,
6.125%, 7/01/09..................... 225,000 254,543
----------------
RHODE ISLAND -- 2.4%
Rhode Island Convention Center
Authority, (MBIA Insured), 5.000%,
5/15/10............................. 250,000 260,165
----------------
SOUTH CAROLINA -- 2.4%
Georgetown County Pollution Control,
Refunding Project Series A, 5.125%,
2/01/12............................. 250,000 255,775
----------------
TENNESSEE -- 3.1%
Metropolitan Nashville Airport, (FGIC
Insured), 6.600%, 7/01/15........... 30,000 32,293
Shelby County, General Obligation
Series A, 4.750%, 5/01/15........... 300,000 295,677
----------------
327,970
----------------
TEXAS -- 2.3%
San Antonio Electric & Gas Revenue,
Refunding Series A, 5.000%,
2/01/18............................. 250,000 247,875
----------------
</TABLE>
56
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES MUNICIPAL BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- --------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS AND NOTES -- CONTINUED
VIRGINIA -- 5.3%
Pocahontas Parkway Associates Virginia
Toll, 5.000%, 8/15/11............... $300,000 $ 296,172
Southeastern Public Service Authority
Virginia, 5.150%, 7/01/09........... 250,000 263,840
----------------
560,012
----------------
TOTAL MUNICIPAL BONDS AND NOTES
(Identified Cost $9,482,983)........ 9,902,795
----------------
SHORT-TERM INVESTMENT -- 1.5% OF NET ASSETS
Repurchase Agreement with State Street
Bank and Trust Co., dated 3/31/99 at
4.000% to be repurchased at $162,018
on 4/1/99 collateralized by $130,000
U.S. Treasury Bond, 10.75%, due
8/15/05 with a value of $167,863.... 162,000 162,000
----------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $162,000).......... 162,000
----------------
TOTAL INVESTMENTS -- 99.0%
(IDENTIFIED COST $10,131,624) @ ..... 10,548,212
Cash and Other Assets, Less
Liabilities -- 1.0%................. 108,394
----------------
NET ASSETS -- 100%...................... $ 10,656,606
----------------
----------------
</TABLE>
! See Note 1.
@ At March 31, 1999, the net unrealized appreciation on investments based on
cost of $10,131,624 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $442,295 and $25,707, respectively, resulting in net
unrealized appreciation of $416,588.
KEY TO ABBREVIATIONS:
<TABLE>
<S> <C>
AMBAC: American Municipal Bond Assurance Corporation
FGIC: Federal Guaranty Insurance Corporation
FSA: Financial Security Assurance
MBIA: Municipal Bond Insurance Association
</TABLE>
See accompanying notes to financial statements.
57
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES SHORT-TERM BOND FUND
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
<S> <C> <C>
- ------------------------------------------------------------------
BONDS AND NOTES -- 93.4% OF NET ASSETS
AEROSPACE/DEFENSE -- 2.0%
Lockheed Martin Corp., 6.550%,
5/15/99............................. $ 570,000 $ 570,610
------------
AIRLINES -- 1.4%
Northwest Airlines Corp., 8.375%,
3/15/04............................. 400,000 393,144
------------
BANKS/SAVINGS & LOANS -- 4.1%
Capital One Bank, 6.830%, 5/17/99..... 560,000 561,131
Household Bank FSB, 6.250%, 4/01/99... 625,000 625,000
------------
1,186,131
------------
CHEMICALS -- 3.6%
ICI Wilmington, Inc., 8.750%,
5/01/01............................. 1,000,000 1,046,200
------------
DIVERSIFIED OPERATIONS -- 2.8%
Williams Companies, Inc., 5.950%,
2/15/00............................. 800,000 795,400
------------
ELECTRONICS -- 3.8%
Tektronix, Inc., 7.625%, 8/15/02...... 1,070,000 1,094,364
------------
ENTERTAINMENT -- 0.7%
Time Warner, Inc., 7.950%, 2/01/00.... 200,000 204,022
------------
FINANCIAL SERVICES -- 9.2%
Associates Corp. of North America,
5.750%, 11/01/03.................... 770,000 765,026
BankBoston Home Equity Loan Trust,
6.140%, 1/25/19..................... 550,000 541,406
Fleetwood Credit Grantor Trust,
6.900%, 3/15/12..................... 277,553 281,996
Ford Motor Credit Co., 6.125%,
4/28/03............................. 710,000 715,403
Sears Roebuck Acceptance Corp.,
6.950%, 5/15/02..................... 340,000 350,180
------------
2,654,011
------------
FOREIGN ISSUER -- 1.9%
PDVSA Finance Ltd., 6.650%, 2/15/06... 645,000 560,105
------------
GOVERNMENT AGENCIES -- 9.1%
Federal Home Loan Mortgage Corp.,
6.000%, 2/01/13..................... 438,569 435,828
Federal Home Loan Mortgage Corp.,
6.500%, 5/15/08..................... 411,652 416,151
Federal National Mortgage Association,
6.000%, 3/01/13..................... 1,030,134 1,022,408
Federal National Mortgage Association,
6.000%, 4/01/13..................... 748,771 743,155
------------
2,617,542
------------
MANUFACTURING -- 3.3%
FMC Corp., 7.125%, 11/25/02........... 975,000 964,333
------------
OIL & GAS -- 8.8%
Nabors Industries, Inc., 6.800%,
4/15/04............................. 1,000,000 1,001,900
Occidental Petroleum Corp., 6.400%,
4/01/03............................. 500,000 492,975
Tosco Corp., 7.625%, 5/15/06.......... 1,000,000 1,051,920
------------
2,546,795
------------
PACKAGING -- 3.5%
Stone Container Corp., 12.750%,
4/01/02............................. 1,000,000 1,006,250
------------
PAPER PRODUCTS -- 1.3%
Fort James Corp., 6.625%, 9/15/04..... 360,000 366,394
------------
REAL ESTATE INVESTMENT TRUSTS -- 4.0%
Meditrust Corp., 7.375%, 7/15/00...... 1,000,000 963,780
Oasis Residential, Inc., 7.000%,
11/15/03............................ 200,000 194,572
------------
1,158,352
------------
</TABLE>
58
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES SHORT-TERM BOND FUND (CONTINUED)
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
- ------------------------------------------------------------------
<S> <C> <C>
BONDS AND NOTES -- CONTINUED
RESTAURANTS -- 2.4%
Tricon Global Restaurants, Inc.,
7.450%, 5/15/05..................... $ 680,000 $ 695,722
------------
RETAIL -- GENERAL -- 1.4%
Dillard's, Inc., 6.430%, 8/01/04...... 410,000 406,868
------------
SECURITIES -- 1.6%
Salomon Brothers, Inc., 7.125%,
8/01/99............................. 450,000 452,655
------------
TELECOMMUNICATIONS -- 5.3%
A T & T Corp., 6.800%, 2/01/01........ 1,000,000 1,017,750
Sprint Spectrum L.P., Zero Coupon
Bond, 8/15/06 (step to 12.500% on
8/15/01) #.......................... 560,000 511,369
------------
1,529,119
------------
TEXTILE & APPAREL -- 1.0%
Tommy Hilfiger Corp., 6.500%,
6/01/03............................. 300,000 294,027
------------
TRUCKING & LEASING -- 1.4%
Amerco, 7.850%, 5/15/03............... 420,000 411,235
------------
U.S. GOVERNMENT -- 18.5%
U.S. Treasury Notes, 6.125%,
7/31/00............................. 1,060,000 1,075,402
U.S. Treasury Notes, 6.250%,
10/31/01............................ 1,000,000 1,027,970
U.S. Treasury Notes, 6.250%,
1/31/02............................. 675,000 694,615
U.S. Treasury Notes, 6.375%,
4/30/99............................. 300,000 300,375
U.S. Treasury Notes, 6.625%,
7/31/01............................. 1,500,000 1,550,865
U.S. Treasury Strips, Zero Coupon
Bond, 11/15/01...................... 800,000 700,792
------------
5,350,019
------------
UTILITIES -- 2.3%
Detroit Edison Co., 6.340%, 3/15/00... 670,000 675,092
------------
TOTAL BONDS AND NOTES
(Identified Cost $27,052,953)....... 26,978,390
------------
SHORT-TERM INVESTMENT -- 6.9% OF NET ASSETS
Repurchase Agreement with State Street
Bank and Trust Co., dated 3/31/99 at
4.000% to be repurchased at
$2,000,222 on 4/1/99 collateralized
by $1,595,000 U.S. Treasury Bond,
8.125%, due 8/15/21 with a value of
$2,041,600.......................... 2,000,000 2,000,000
------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $2,000,000)........ 2,000,000
------------
TOTAL INVESTMENTS -- 100.3%
(IDENTIFIED COST $29,052,953) @....... 28,978,390
Liabilities, Less Cash and Other
Assets -- (0.3%).................... (85,337)
------------
NET ASSETS -- 100%...................... $ 28,893,053
------------
------------
</TABLE>
! See Note 1.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
@ At March 31, 1999, the net unrealized depreciation on investments based on
cost of $29,052,953 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $145,059 and $219,622, respectively, resulting in net
unrealized depreciation of $74,563.
See accompanying notes to financial statements.
59
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND
- -------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- AS OF MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE !
<S> <C> <C>
- ------------------------------------------------------------------
BONDS AND NOTES -- 101.6% OF NET ASSETS
GOVERNMENT AGENCIES -- 34.6%
Government National Mortgage
Association, 6.500%, 5/15/28........ $2,048,075 $ 2,039,104
Government National Mortgage
Association, 6.500%, 8/15/28........ 1,291,242 1,285,587
Government National Mortgage
Association, 7.000%, 1/15/28........ 903,596 917,430
Government National Mortgage
Association, 7.500%, 8/15/26........ 400,312 412,322
Government National Mortgage
Association, 7.500%, 9/15/27........ 1,695,199 1,746,055
Tennessee Valley Authority, 8.625%,
11/15/29............................ 500,000 536,250
------------
6,936,748
------------
U.S. GOVERNMENT -- 67.0%
U.S. Treasury Bonds, 3.625%, 4/15/28
&................................... 2,005,790 1,920,544
U.S. Treasury Bonds, 6.000%,
2/15/26............................. 1,525,000 1,550,026
U.S. Treasury Bonds, 6.125%,
11/15/27............................ 825,000 856,193
U.S. Treasury Bonds, 7.250%,
5/15/16............................. 3,800,000 4,356,928
U.S. Treasury Bonds, 7.500%,
11/15/24............................ 2,910,000 3,522,904
U.S. Treasury Notes, 3.375%, 1/15/07
&................................... 1,244,124 1,197,469
------------
13,404,064
------------
TOTAL BONDS AND NOTES
(Identified Cost $20,462,228)....... 20,340,812
------------
TOTAL INVESTMENTS -- 101.6%
(IDENTIFIED COST $20,462,228) @....... 20,340,812
Liabilities, Less Cash and Other
Assets -- (1.6%).................... (322,027)
------------
NET ASSETS -- 100%...................... $ 20,018,785
------------
------------
</TABLE>
! See Note 1.
& Treasury Inflation Protection Securities (TIPS): Face amount of these bonds
and notes will be adjusted for changes in the level of inflation as indexed
to the non-seasonally adjusted consumer price index (CPI).
@ At March 31, 1999, the net unrealized depreciation on investments based on
cost of $20,462,228 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $61,173 and $182,589, respectively, resulting in net
unrealized depreciation of $121,416.
See accompanying notes to financial statements.
60
<PAGE>
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- -----------------------------------------------------------------------
[THIS PAGE INTENTIONALLY LEFT BLANK]
61
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
GLOBAL
BOND BOND
FUND FUND
-------------- -----------
<S> <C> <C>
ASSETS
Investments at value....................... $1,573,072,791 $39,896,350
Cash....................................... 75,361 843
Receivable for:
Fund shares sold......................... 6,081,767 22,519
Securities sold.......................... 4,965,200 497,500
Forward foreign currency exchange
contracts (Note 1D).................... 0 140,202
Dividends and interest -- net............ 21,874,238 760,455
Due from the adviser (Note 3).............. 6,585 7,095
Other assets............................... 0 0
-------------- -----------
1,606,075,942 41,324,964
-------------- -----------
LIABILITIES
Payable for:
Securities purchased..................... 739,855 0
Fund shares redeemed..................... 2,411,835 20,954
Dividends declared....................... 0 0
Accrued expenses:
Management fees (Note 3)................. 798,974 20,778
Trustees' fees (Note 3A)................. 1,957 1,957
Administrative fees...................... 62,671 2,319
Other...................................... 156,975 30,595
-------------- -----------
4,172,267 76,603
-------------- -----------
NET ASSETS................................... $1,601,903,675 $41,248,361
-------------- -----------
-------------- -----------
Net Assets consist of:
Capital paid in.......................... $1,631,593,793 $40,249,794
Undistributed (or Distribution in excess
of) net investment income.............. 31,427,643 969,239
Accumulated net realized gain (loss)..... 4,705,098 155,217
Unrealized appreciation (depreciation)
on:
Investments.......................... (65,837,317) (247,663)
Foreign currency translations........ 14,458 121,774
-------------- -----------
NET ASSETS................................... $1,601,903,675 $41,248,361
-------------- -----------
-------------- -----------
INSTITUTIONAL CLASS:
Net assets................................. $1,544,095,863 $34,797,068
Shares of beneficial interest
outstanding, no par value.............. 124,756,962 2,768,380
Net asset value and redemption price per
Institutional share*................... $ 12.38 $ 12.57
RETAIL CLASS:
Net assets................................. $ 56,340,356 $ 6,451,293
Shares of beneficial interest
outstanding, no par value.............. 4,556,925 513,639
Net asset value and redemption price per
Retail share........................... $ 12.36 $ 12.56
ADMIN CLASS:
Net assets................................. $ 1,467,456 --
Shares of beneficial interest outstanding,
no par value............................. 118,787 --
Net asset value and redemption price per
Admin share.............................. $ 12.35 --
Identified cost of investments............... $1,638,910,108 $40,144,013
-------------- -----------
-------------- -----------
</TABLE>
* The redemption price per share for the Institutional class of the High
Yield Fund for shares held less than one year is equal to net asset value
less 2% of the amount redeemed. (See note 1H).
See accompanying notes to financial
statements.
62
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
- -------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE INVESTMENT U.S.
HIGH MATURITY GRADE MUNICIPAL SHORT-TERM GOVERNMENT
YIELD BOND BOND BOND BOND SECURITIES
FUND FUND FUND FUND FUND FUND
----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at value....................... $18,333,512 $ 9,862,376 $5,786,499 $10,548,212 $28,978,390 $20,340,812
Cash....................................... 99,674 881 575 941 17,720 78,635
Receivable for:
Fund shares sold......................... 507,614 10,000 501,538 0 10,180 0
Securities sold.......................... 0 0 0 250,008 0 0
Forward foreign currency exchange
contracts (Note 1D).................... 0 0 0 0 0 0
Dividends and interest -- net............ 350,400 157,363 77,740 153,564 455,867 312,481
Due from the adviser (Note 3).............. 13,718 13,544 14,296 9,352 10,573 8,855
Other assets............................... 4,310 60 0 0 0 0
----------- ----------- ---------- ----------- ----------- -----------
19,309,228 10,044,224 6,380,648 10,962,077 29,472,730 20,740,783
----------- ----------- ---------- ----------- ----------- -----------
LIABILITIES
Payable for:
Securities purchased..................... 0 0 241,197 271,873 0 0
Fund shares redeemed..................... 5,922 0 364 0 535,887 693,512
Dividends declared....................... 0 0 0 11,807 16,322 0
Accrued expenses:
Management fees (Note 3)................. 9,313 3,371 1,833 2,714 0 5,246
Trustees' fees (Note 3A)................. 1,957 1,957 1,957 1,957 1,957 1,957
Administrative fees...................... 1,282 1,017 719 518 1,559 1,104
Other...................................... 33,479 19,333 20,237 16,602 23,952 20,179
----------- ----------- ---------- ----------- ----------- -----------
51,953 25,678 266,307 305,471 579,677 721,998
----------- ----------- ---------- ----------- ----------- -----------
NET ASSETS................................... $19,257,275 $10,018,546 $6,114,341 $10,656,606 $28,893,053 $20,018,785
----------- ----------- ---------- ----------- ----------- -----------
----------- ----------- ---------- ----------- ----------- -----------
Net Assets consist of:
Capital paid in.......................... $20,912,444 $10,279,249 $6,142,943 $10,217,243 $29,446,899 $20,036,845
Undistributed (or Distribution in excess
of) net investment income.............. 498,862 168,075 91,998 9,525 (1,502) 300,506
Accumulated net realized gain (loss)..... (78,768) (292) (7,062) 13,250 (477,781) (197,150)
Unrealized appreciation (depreciation)
on:
Investments.......................... (2,075,163) (428,499) (113,557) 416,588 (74,563) (121,416)
Foreign currency translations........ (100) 13 19 0 0 0
----------- ----------- ---------- ----------- ----------- -----------
NET ASSETS................................... $19,257,275 $10,018,546 $6,114,341 $10,656,606 $28,893,053 $20,018,785
----------- ----------- ---------- ----------- ----------- -----------
----------- ----------- ---------- ----------- ----------- -----------
INSTITUTIONAL CLASS:
Net assets................................. $19,257,275 $ 9,187,860 $3,504,933 $10,656,606 $28,413,058 $20,018,785
Shares of beneficial interest
outstanding, no par value.............. 2,209,093 938,738 341,081 920,800 2,939,802 1,843,452
Net asset value and redemption price per
Institutional share*................... $ 8.72 $ 9.79 $ 10.28 $ 11.57 $ 9.66 $ 10.86
RETAIL CLASS:
Net assets................................. -- $ 830,686 $2,609,408 -- $ 479,995 --
Shares of beneficial interest
outstanding, no par value.............. -- 84,977 254,389 -- 49,676 --
Net asset value and redemption price per
Retail share........................... -- $ 9.78 $ 10.26 -- $ 9.66 --
ADMIN CLASS:
Net assets................................. -- -- -- -- -- --
Shares of beneficial interest outstanding,
no par value............................. -- -- -- -- -- --
Net asset value and redemption price per
Admin share.............................. -- -- -- -- -- --
Identified cost of investments............... $20,408,675 $10,290,875 $5,900,056 $10,131,624 $29,052,953 $20,462,228
----------- ----------- ---------- ----------- ----------- -----------
----------- ----------- ---------- ----------- ----------- -----------
</TABLE>
* The redemption price per share for the Institutional class of the High
Yield Fund for shares held less than one year is equal to net asset value
less 2% of the amount redeemed. (See note 1H).
See accompanying notes
to financial statements.
63
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF OPERATIONS
- -------------------------------------------------------
FOR THE SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
GLOBAL
BOND BOND
FUND FUND
------------ ----------
<S> <C> <C>
INVESTMENT INCOME
Dividends*................................. $ 1,291,135 $ 7,828
Interest................................... 68,802,901 1,433,340
------------ ----------
70,094,036 1,441,168
------------ ----------
Expenses
Management fees (Note 3)................. 4,629,263 117,349
12b-1 fees (Retail Class)................ 67,814 7,780
12b-1 fees (Admin Class)................. 1,533 0
Trustees' fees and expenses (Note 3A).... 2,837 2,837
Administrative fees...................... 350,884 11,568
Custodian and accounting fees............ 246,505 35,749
Transfer agent fees (Institutional
Class)................................. 173,951 11,021
Transfer agent fees (Retail Class)....... 25,111 10,582
Transfer agent fees (Admin Class)........ 11,287 0
Audit and tax services fees.............. 24,532 13,912
Registration fees........................ 107,284 10,889
Amortization of organization expenses
(Note 1I):
Institutional Class.................... 0 0
Other expenses........................... 112,709 8,410
------------ ----------
Total expenses........................... 5,753,710 230,097
Less expenses waived and reimbursed by
the investment adviser (Note 3)........ (23,584) (46,294)
------------ ----------
Net expenses............................. 5,730,126 183,803
------------ ----------
Net investment income...................... 64,363,910 1,257,365
------------ ----------
NET REALIZED GAIN (LOSS) ON:
Investments................................ 27,022,857 333,526
Foreign currency transactions.............. (26,443) (167,502)
------------ ----------
Total net realized gain (loss)............. 26,996,414 166,024
------------ ----------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON:
Investments................................ 48,505,429 3,341,001
Foreign currency translations.............. 22,787 246,048
------------ ----------
Total net change in unrealized appreciation
(depreciation)........................... 48,528,216 3,587,049
------------ ----------
Total net realized gain (loss) and change
in unrealized appreciation
(depreciation)........................... 75,524,630 3,753,073
------------ ----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS................................. $139,888,540 $5,010,438
------------ ----------
------------ ----------
</TABLE>
*Net of foreign withholding taxes of $1,957 and $408 for the Global Bond and
High Yield Funds, respectively.
See accompanying notes to financial statements.
64
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
- -------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE U.S.
HIGH MATURITY INVESTMENT MUNICIPAL SHORT-TERM GOVERNMENT
YIELD BOND GRADE BOND BOND BOND SECURITIES
FUND FUND FUND FUND FUND FUND
---------- ------------ ----------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends*................................. $ 54,391 $ 0 $ 4,948 $ 0 $ 0 $ 0
Interest................................... 954,064 360,520 188,491 259,261 919,061 742,538
---------- ------------ ----------- ------------ --------- -----------
1,008,455 360,520 193,439 259,261 919,061 742,538
---------- ------------ ----------- ------------ --------- -----------
Expenses
Management fees (Note 3)................. 47,329 19,103 10,245 18,919 5,031 41,469
12b-1 fees (Retail Class)................ 5,507 904 2,808 0 632 0
12b-1 fees (Admin Class)................. 0 0 0 0 0 0
Trustees' fees and expenses (Note 3A).... 2,838 2,837 2,837 2,837 2,837 2,837
Administrative fees...................... 6,341 4,781 3,660 2,392 8,954 5,689
Custodian and accounting fees............ 34,535 28,686 29,650 22,307 30,000 21,110
Transfer agent fees (Institutional
Class)................................. 10,572 10,410 10,728 10,948 13,212 12,149
Transfer agent fees (Retail Class)....... 9,166 9,510 9,905 0 9,679 0
Transfer agent fees (Admin Class)........ 0 0 0 0 0 0
Audit and tax services fees.............. 12,056 8,303 8,303 7,704 8,751 7,704
Registration fees........................ 15,217 8,996 9,188 7,201 11,454 7,849
Amortization of organization expenses
(Note 1I):
Institutional Class.................... 848 0 0 0 0 0
Other expenses........................... 6,020 4,531 5,306 6,129 7,095 7,462
---------- ------------ ----------- ------------ --------- -----------
Total expenses........................... 150,429 98,061 92,630 78,437 97,645 106,269
Less expenses waived and reimbursed by
the investment adviser (Note 3)........ (85,837) (70,891) (75,735) (49,200) (56,441) (40,314)
---------- ------------ ----------- ------------ --------- -----------
Net expenses............................. 64,592 27,170 16,895 29,237 41,204 65,955
---------- ------------ ----------- ------------ --------- -----------
Net investment income...................... 943,863 333,350 176,544 230,024 877,857 676,583
---------- ------------ ----------- ------------ --------- -----------
NET REALIZED GAIN (LOSS) ON:
Investments................................ (75,848) 17,464 60,893 35,817 (85,121) 205,437
Foreign currency transactions.............. (108) (2) (105) 0 0 0
---------- ------------ ----------- ------------ --------- -----------
Total net realized gain (loss)............. (75,956) 17,462 60,788 35,817 (85,121) 205,437
---------- ------------ ----------- ------------ --------- -----------
CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON:
Investments................................ 1,386,862 (167,718) 76,793 (210,909) (762,402) (1,489,952)
Foreign currency translations.............. (220) 9 (53) 0 0 0
---------- ------------ ----------- ------------ --------- -----------
Total net change in unrealized appreciation
(depreciation)........................... 1,386,642 (167,709) 76,740 (210,909) (762,402) (1,489,952)
---------- ------------ ----------- ------------ --------- -----------
Total net realized gain (loss) and change
in unrealized appreciation
(depreciation)........................... 1,310,686 (150,247) 137,528 (175,092) (847,523) (1,284,515)
---------- ------------ ----------- ------------ --------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS................................. $2,254,549 $ 183,103 $ 314,072 $ 54,932 $ 30,334 $ (607,932)
---------- ------------ ----------- ------------ --------- -----------
---------- ------------ ----------- ------------ --------- -----------
</TABLE>
*Net of foreign withholding taxes of $1,957 and $408 for the Global Bond and
High Yield Funds, respectively.
See accompanying notes to financial statements.
See accompanying notes to financial statements.
65
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------
<TABLE>
<CAPTION>
BOND FUND
----------------------------------------------
SIX MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
(UNAUDITED)
FROM OPERATIONS
Net investment income...................... $ 64,363,910 $ 84,620,936 $ 66,908,609
Net realized gain (loss)................... 26,996,414 33,129,810 27,681,737
Change in unrealized appreciation
(depreciation)........................... 48,528,216 (145,159,973) 11,946,926
-------------- -------------- --------------
Increase (decrease) in net assets from
operations............................. 139,888,540 (27,409,227) 106,537,272
-------------- -------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income.................... (61,619,090) (51,713,345) (65,355,045)
Net realized gain on investments......... (61,872,754) 0 (20,396,586)
RETAIL CLASS
Net investment income.................... (2,212,879) (1,623,641) (1,374,734)
Net realized gain on investments......... (2,285,657) 0 (518,253)
ADMIN CLASS
Net investment income.................... (39,286) (5,149) 0
Net realized gain on investments......... (52,029) 0 0
-------------- -------------- --------------
(128,081,695) (53,342,135) (87,644,618)
-------------- -------------- --------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 6)
Increase (decrease) in net assets derived
from capital share transactions.......... 80,246,959 295,451,399 735,013,367
-------------- -------------- --------------
Total increase (decrease) in net assets.... 92,053,804 214,700,037 753,906,021
NET ASSETS
Beginning of the period.................... 1,509,849,871 1,295,149,834 541,243,813
-------------- -------------- --------------
End of the period.......................... $1,601,903,675 $1,509,849,871 $1,295,149,834
-------------- -------------- --------------
-------------- -------------- --------------
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period.......................... $ 31,427,643 $ 30,934,988 $ (72,275)
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes to financial statements.
66
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL BOND FUND
-------------------------------------
NINE MONTHS
SIX MONTHS ENDED YEAR ENDED
ENDED SEPTEMBER DECEMBER
MARCH 31, 30, 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
(UNAUDITED)
FROM OPERATIONS
Net investment income...................... $ 1,257,365 $ 1,550,983 $ 1,741,065
Net realized gain (loss)................... 166,024 1,097,316 975,971
Change in unrealized appreciation
(depreciation)........................... 3,587,049 (2,518,126) (2,148,586)
----------- ----------- -----------
Increase (decrease) in net assets from
operations............................. 5,010,438 130,173 568,450
----------- ----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income.................... (1,752,877) 0 (1,536,299)
In excess of net investment income....... 0 0 (277,442)
Net realized gain on investments......... (736,862) 0 0
RETAIL CLASS
Net investment income.................... (288,728) 0 (205,307)
In excess of net investment income....... 0 0 (34,122)
Net realized gain on investments......... (127,023) 0 0
----------- ----------- -----------
(2,905,490) 0 (2,053,170)
----------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 6)
Increase (decrease) in net assets derived
from capital share transactions.......... 2,907,866 3,010,563 8,066,659
----------- ----------- -----------
Total increase (decrease) in net assets.... 5,012,814 3,140,736 6,581,939
NET ASSETS
Beginning of the period.................... 36,235,547 33,094,811 26,512,872
----------- ----------- -----------
End of the period.......................... $41,248,361 $36,235,547 $33,094,811
----------- ----------- -----------
----------- ----------- -----------
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period.......................... $ 969,239 $ 1,753,479 $ (156,023)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying notes to financial statements.
67
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD FUND
-------------------------------------------
SIX MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1997
----------- -------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
FROM OPERATIONS
Net investment income............ $ 943,863 $ 875,527 $ 504,906
Net realized gain (loss)......... (75,956) 280,272 281,454
Change in unrealized appreciation
(depreciation)................. 1,386,642 (3,203,138) (263,154)
----------- -------------- -------------
Increase (decrease) in net
assets from operations....... 2,254,549 (2,047,339) 523,206
----------- -------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income.......... (505,412) (283,957) (358,018)
Net realized gain on
investments.................. (238,840) 0 (122,085)
RETAIL CLASS
Net investment income.......... (270,450) (259,684) (165,367)
Net realized gain on
investments.................. (125,847) 0 (77,373)
----------- -------------- -------------
(1,140,549) (543,641) (722,843)
----------- -------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 6)
Increase (decrease) in net assets
derived from capital share
transactions................... 7,463,226 4,814,422 6,653,668
----------- -------------- -------------
Redemption Fees (Note 1H)........ 35,636 13,317 14,733
----------- -------------- -------------
Total increase (decrease) in net
assets......................... 8,612,862 2,236,759 6,468,764
NET ASSETS
Beginning of the period.......... 10,644,413 8,407,654 1,938,890
----------- -------------- -------------
End of the period................ $19,257,275 $ 10,644,413 $ 8,407,654
----------- -------------- -------------
----------- -------------- -------------
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period................ $ 498,862 $ 330,861 $ (313)
----------- -------------- -------------
----------- -------------- -------------
</TABLE>
See accompanying notes to financial statements.
68
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE MATURITY BOND FUND
-------------------------------------------
SIX MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1997*
----------- -------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
FROM OPERATIONS
Net investment income............ $ 333,350 $ 426,463 $ 273,997
Net realized gain (loss)......... 17,462 67,050 34,360
Change in unrealized appreciation
(depreciation)................. (167,709) (224,304) (36,473)
----------- -------------- -------------
Increase (decrease) in net
assets from operations....... 183,103 269,209 271,884
----------- -------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income.......... (324,846) (255,807) (261,480)
In excess of net investment
income....................... 0 0 (21,107)
Net realized gain on
investments.................. (77,718) 0 (9,770)
RETAIL CLASS
Net investment income.......... (23,553) (15,521) (12,922)
In excess of net investment
income....................... 0 0 (1,154)
Net realized gain on
investments.................. (6,918) 0 (660)
----------- -------------- -------------
(433,035) (271,328) (307,093)
----------- -------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 6)
Increase (decrease) in net assets
derived from capital share
transactions................... 1,004,602 2,538,483 6,762,701
----------- -------------- -------------
Total increase (decrease) in net
assets......................... 754,670 2,536,364 6,727,492
NET ASSETS
Beginning of the period.......... 9,263,876 6,727,512 20
----------- -------------- -------------
End of the period................ $10,018,546 $ 9,263,876 $ 6,727,512
----------- -------------- -------------
----------- -------------- -------------
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period................ $ 168,075 $ 183,124 $ (768)
----------- -------------- -------------
----------- -------------- -------------
</TABLE>
*Commencement of operations, January 2, 1997.
See accompanying notes to financial statements.
69
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT GRADE BOND FUND
---------------------------------------------
SIX MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1997*
------------ -------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
FROM OPERATIONS
Net investment income............ $ 176,544 $ 202,996 $ 144,252
Net realized gain (loss)......... 60,788 46,898 53,214
Change in unrealized appreciation
(depreciation)................. 76,740 (283,537) 93,259
------------ -------------- -------------
Increase (decrease) in net
assets from operations....... 314,072 (33,643) 290,725
------------ -------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income.......... (90,620) (87,749) (116,549)
In excess of net investment
income....................... 0 0 (18,144)
Net realized gain on
investments.................. (69,630) 0 (26,811)
RETAIL CLASS
Net investment income.......... (69,650) (39,214) (27,969)
In excess of net investment
income....................... 0 0 (5,864)
Net realized gain on
investments.................. (64,828) 0 (9,286)
------------ -------------- -------------
(294,728) (126,963) (204,623)
------------ -------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 6)
Increase (decrease) in net assets
derived from capital share
transactions................... 1,574,343 1,374,285 3,220,853
------------ -------------- -------------
Total increase (decrease) in net
assets......................... 1,593,687 1,213,679 3,306,955
NET ASSETS
Beginning of the period.......... 4,520,654 3,306,975 20
------------ -------------- -------------
End of the period................ $ 6,114,341 $ 4,520,654 $ 3,306,975
------------ -------------- -------------
------------ -------------- -------------
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period................ $ 91,998 $ 75,724 $ (44)
------------ -------------- -------------
------------ -------------- -------------
</TABLE>
* Commencement of operations, January 2, 1997.
See accompanying notes to financial statements.
70
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
-------------------------------------------
SIX MONTHS NINE MONTHS YEAR
ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1997
----------- -------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
FROM OPERATIONS
Net investment income............ $ 230,024 $ 324,727 $ 417,885
Net realized gain (loss)......... 35,817 145,955 70,207
Change in unrealized appreciation
(depreciation)................. (210,909) 92,266 291,399
----------- -------------- -------------
Increase (decrease) in net
assets from operations....... 54,932 562,948 779,491
----------- -------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income.......... (230,024) (324,727) (421,574)
Net realized gain on
investments.................. (163,734) (11,732) (76,418)
----------- -------------- -------------
(393,758) (336,459) (497,992)
----------- -------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 6)
Increase (decrease) in net assets
derived from capital share
transactions................... 939,072 1,077,927 (230,703)
----------- -------------- -------------
Total increase (decrease) in net
assets......................... 600,246 1,304,416 50,796
NET ASSETS
Beginning of the period.......... 10,056,360 8,751,944 8,701,148
----------- -------------- -------------
End of the period................ $10,656,606 $ 10,056,360 $ 8,751,944
----------- -------------- -------------
----------- -------------- -------------
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period................ $ 9,525 $ 9,525 $ 0
----------- -------------- -------------
----------- -------------- -------------
</TABLE>
See accompanying notes to financial statements.
71
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM BOND FUND
-------------------------------------------
SIX MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1997
----------- -------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
FROM OPERATIONS
Net investment income............ $ 877,857 $ 1,089,305 $ 1,044,815
Net realized gain (loss)......... (85,121) 27,770 4,131
Change in unrealized appreciation
(depreciation)................. (762,402) 531,158 82,076
----------- -------------- -------------
Increase (decrease) in net
assets from operations....... 30,334 1,648,233 1,131,022
----------- -------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income.......... (863,055) (1,073,593) (1,046,180)
RETAIL CLASS
Net investment income.......... (14,802) (15,712) (10,909)
----------- -------------- -------------
(877,857) (1,089,305) (1,057,089)
----------- -------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 6)
Increase (decrease) in net assets
derived from capital share
transactions................... 1,679,253 8,425,891 773,904
----------- -------------- -------------
Total increase (decrease) in net
assets......................... 831,730 8,984,819 847,837
NET ASSETS
Beginning of the period.......... 28,061,323 19,076,504 18,228,667
----------- -------------- -------------
End of the period................ $28,893,053 $ 28,061,323 $ 19,076,504
----------- -------------- -------------
----------- -------------- -------------
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period................ $ (1,502) $ (1,502) $ (3,124)
----------- -------------- -------------
----------- -------------- -------------
</TABLE>
See accompanying notes to financial statements.
72
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
-------------------------------------------
SIX MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, DECEMBER 31,
1999 1998 1997
----------- -------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
FROM OPERATIONS
Net investment income............ $ 676,583 $ 911,351 $ 865,819
Net realized gain (loss)......... 205,437 513,739 377,725
Change in unrealized appreciation
(depreciation)................. (1,489,952) 750,226 420,082
----------- -------------- -------------
Increase (decrease) in net
assets from operations....... (607,932) 2,175,316 1,663,626
----------- -------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income.......... (724,526) (566,117) (857,571)
----------- -------------- -------------
(724,526) (566,117) (857,571)
----------- -------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 6)
Increase (decrease) in net assets
derived from capital share
transactions................... (7,894,664) 9,968,273 2,670,263
----------- -------------- -------------
Total increase (decrease) in net
assets......................... (9,227,122) 11,577,472 3,476,318
NET ASSETS
Beginning of the period.......... 29,245,907 17,668,435 14,192,117
----------- -------------- -------------
End of the period................ $20,018,785 $ 29,245,907 $ 17,668,435
----------- -------------- -------------
----------- -------------- -------------
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period................ $ 300,506 $ 348,449 $ 3,216
----------- -------------- -------------
----------- -------------- -------------
</TABLE>
See accompanying notes to financial statements.
73
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
<TABLE>
<CAPTION>
BOND FUND
--------------------------
INSTITUTIONAL CLASS
--------------------------
1999*
(UNAUDITED) 1998**
------------ -----------
<S> <C> <C>
Net asset value,
beginning of period.... $ 12.30 $ 12.83
------------ -----------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.51 0.69
Net realized and
unrealized gain
(loss) on
investments.......... 0.61 (0.78)
------------ -----------
Total from investment
operations......... 1.12 (0.09)
------------ -----------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.52) (0.44)
Distributions in excess
of net investment
income............... 0.00 0.00
Distributions from net
realized capital
gains................ (0.52) 0.00
------------ -----------
Total
distributions...... (1.04) (0.44)
------------ -----------
Net asset value, end of
period................. $ 12.38 $ 12.30
------------ -----------
------------ -----------
Total return (%)(a)(b)... 9.5 (0.9)
Net assets, end of period
(000).................. $ 1,544,096 $ 1,455,312
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.73 0.75
Ratio of net investment
income to average net
assets (%)(c).......... 8.35 7.34
Portfolio turnover
(%)(a)................. 24 24
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)............. 0.73 0.76
Net investment income
per share would
have been.......... $ 0.51 $ 0.69
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of class operations on January 2, 1997 through December
31, 1997.
# From commencement of class operations on January 2, 1998 through September
30, 1998.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
74
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND FUND
----------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
---------------------------------------------- RETAIL CLASS ADMIN CLASS
------------------------------------ ------------
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------- 1999* 1999*
1997 1996 1995 1994 (UNAUDITED) 1998** 1997*** (UNAUDITED)
----------- --------- --------- -------- ------------ --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 12.38 $ 12.29 $ 10.05 $ 11.37 $ 12.29 $ 12.82 $ 12.38 $ 12.28
----------- --------- --------- -------- ------------ --------- --------- ------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.86 0.86 0.82 0.83 0.49 0.66 0.84(e) 0.47(e)
Net realized and
unrealized gain
(loss) on
investments.......... 0.67 0.35 2.32 (1.29) 0.60 (0.77) 0.65 0.61
----------- --------- --------- -------- ------------ --------- --------- ------
Total from investment
operations......... 1.53 1.21 3.14 (0.46) 1.09 (0.11) 1.49 1.08
----------- --------- --------- -------- ------------ --------- --------- ------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.86) (0.86) (0.82) (0.84) (0.50) (0.42) (0.83) (0.49)
Distributions in excess
of net investment
income............... 0.00 0.00 0.00 (0.02) 0.00 0.00 0.00 0.00
Distributions from net
realized capital
gains................ (0.22) (0.26) (0.08) 0.00 (0.52) 0.00 (0.22) (0.52)
----------- --------- --------- -------- ------------ --------- --------- ------
Total
distributions...... (1.08) (1.12) (0.90) (0.86) (1.02) (0.42) (1.05) (1.01)
----------- --------- --------- -------- ------------ --------- --------- ------
Net asset value, end of
period................. $ 12.83 $ 12.38 $ 12.29 $ 10.05 $ 12.36 $ 12.29 $ 12.82 $ 12.35
----------- --------- --------- -------- ------------ --------- --------- ------
----------- --------- --------- -------- ------------ --------- --------- ------
Total return (%)(a)(b)... 12.7 10.3 32.0 (4.1) 9.3 (1.1) 12.4 9.1
Net assets, end of period
(000).................. $ 1,261,910 $ 541,244 $ 255,710 $ 82,985 $ 56,340 $ 53,908 $ 33,240 $ 1,467
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.75 0.75 0.79 0.84 1.00 1.00 1.00 1.25
Ratio of net investment
income to average net
assets (%)(c).......... 7.36 7.93 8.34 7.92 8.08 7.13 7.09 7.84
Portfolio turnover
(%)(a)................. 41 42 35 87 24 24 41 24
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)............. 0.77 0.75 0.79 0.84 1.05 1.06 1.20 2.80
Net investment income
per share would
have been.......... $ 0.85 $ 0.86 $ 0.82 $ 0.83 $ 0.49 $ 0.66 $ 0.82(e) $ 0.38(e)
<CAPTION>
1998#
---------
<S> <C>
Net asset value,
beginning of period.... $ 12.83
---------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.47
Net realized and
unrealized gain
(loss) on
investments.......... (0.62)
---------
Total from investment
operations......... (0.15)
---------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.40)
Distributions in excess
of net investment
income............... 0.00
Distributions from net
realized capital
gains................ 0.00
---------
Total
distributions...... (0.40)
---------
Net asset value, end of
period................. $ 12.28
---------
---------
Total return (%)(a)(b)... (1.3)
Net assets, end of period
(000).................. $ 630
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 1.25
Ratio of net investment
income to average net
assets (%)(c).......... 7.45
Portfolio turnover
(%)(a)................. 24
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)............. 6.32
Net investment income
per share would
have been.......... $ 0.15
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of class operations on January 2, 1997 through December
31, 1997.
# From commencement of class operations on January 2, 1998 through September
30, 1998.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
75
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL BOND FUND
------------------------
INSTITUTIONAL CLASS
------------------------
1999*
(UNAUDITED) 1998**
------------ ---------
<S> <C> <C>
Net asset value,
beginning of period.... $ 11.93 $ 11.83
------------ ---------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.39 0.53
Net realized and
unrealized gain
(loss) on
investments.......... 1.24 (0.43)
------------ ---------
Total from investment
operations......... 1.63 0.10
------------ ---------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.70) 0.00
Distributions in excess
of net investment
income............... 0.00 0.00
Distributions from
capital.............. 0.00 0.00
Distributions from net
realized capital
gains................ (0.29) 0.00
------------ ---------
Total
distributions...... (0.99) 0.00
------------ ---------
Net asset value, end of
period................. $ 12.57 $ 11.93
------------ ---------
------------ ---------
Total return (%)(a)(b)... 13.9 0.9
Net assets, end of period
(000).................. $ 34,797 $ 29,860
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.90 0.90
Ratio of net investment
income to average net
assets (%)(c).......... 6.47 6.00
Portfolio turnover
(%)(a)................. 7 28
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have
been (%)(c)........ 1.09 1.18
Net investment income
per share would
have been.......... $ 0.38 $ 0.51
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of class operations on January 2, 1997 through December
31, 1997.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
76
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL BOND FUND
-----------------------------------------------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------- RETAIL CLASS
-----------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------- 1999*
1997 1996 1995 1994 (UNAUDITED) 1998** 1997***
--------- --------- --------- --------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 12.35 $ 11.39 $ 9.82 $ 11.06 $ 11.91 $ 11.83 $ 12.35
--------- --------- --------- --------- ------------ --------- --------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.71 0.44 1.04 0.67 0.38(e) 0.44 0.63(e)
Net realized and
unrealized gain
(loss) on
investments.......... (0.42) 1.27 1.31 (1.63) 1.23 (0.36) (0.37)
--------- --------- --------- --------- ------------ --------- --------
Total from investment
operations......... 0.29 1.71 2.35 (0.96) 1.61 0.08 0.26
--------- --------- --------- --------- ------------ --------- --------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.69) (0.75) (0.78) (0.04) (0.67) 0.00 (0.69)
Distributions in excess
of net investment
income............... (0.12) 0.00 0.00 0.00 0.00 0.00 (0.09)
Distributions from
capital.............. 0.00 0.00 0.00 (0.24) 0.00 0.00 0.00
Distributions from net
realized capital
gains................ 0.00 0.00 0.00 0.00 (0.29) 0.00 0.00
--------- --------- --------- --------- ------------ --------- --------
Total
distributions...... (0.81) (0.75) (0.78) (0.28) (0.96) 0.00 (0.78)
--------- --------- --------- --------- ------------ --------- --------
Net asset value, end of
period................. $ 11.83 $ 12.35 $ 11.39 $ 9.82 $ 12.56 $ 11.91 $ 11.83
--------- --------- --------- --------- ------------ --------- --------
--------- --------- --------- --------- ------------ --------- --------
Total return (%)(a)(b)... 2.3 15.0 23.9 (8.7) 13.8 0.7 2.0
Net assets, end of period
(000).................. $ 28,401 $ 26,513 $ 10,304 $ 25,584 $ 6,451 $ 6,376 $ 4,694
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.90 1.50 1.50 1.30 1.15 1.15 1.15
Ratio of net investment
income to average net
assets (%)(c).......... 5.88 6.37 8.17 7.02 6.22 5.77 5.60
Portfolio turnover
(%)(a)................. 75 131 148 153 7 28 75
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have
been (%)(c)........ 1.22 1.77 1.69 1.30 1.62 1.78 2.44
Net investment income
per share would
have been.......... $ 0.67 $ 0.42 $ 1.02 $ 0.67 $ 0.36(e) $ 0.39 $ 0.49(e)
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of class operations on January 2, 1997 through December
31, 1997.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
77
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD FUND
---------------------------------------------
INSTITUTIONAL CLASS
---------------------------------------------
FOR THE PERIOD
ENDED, DECEMBER 31,
1999* -------------------
(UNAUDITED) 1998** 1997 1996***
------------ -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period................. $ 8.17 $ 10.12 $ 10.11 $ 10.00
------------ -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss).................... 0.40 0.78(e) 0.83 0.20
Net realized and unrealized
gain (loss) on
investments............... 0.84 (2.28) 0.27 0.11
------------ -------- -------- --------
Total from investment
operations.............. 1.24 (1.50) 1.10 0.31
------------ -------- -------- --------
LESS DISTRIBUTIONS --
Dividends from net
investment income......... (0.49) (0.46) (0.86) (0.20)
Distributions from net
realized capital gains.... (0.21) 0.00 (0.26) 0.00
------------ -------- -------- --------
Total distributions....... (0.70) (0.46) (1.12) (0.20)
------------ -------- -------- --------
Redemption fees............. 0.01 0.01 0.03 0.00
------------ -------- -------- --------
Net asset value, end of
period.................... $ 8.72 $ 8.17 $ 10.12 $ 10.11
------------ -------- -------- --------
------------ -------- -------- --------
Total return (%)(a)(b)...... 16.2 (15.6) 11.4 3.1
Net assets, end of period
(000)..................... $ 19,257 $ 6,624 $ 5,266 $ 1,939
Ratio of operating expenses
to average net assets
(%)(c)(d)................. 0.75 0.75 0.75 0.75
Ratio of net investment
income to average net
assets (%)(c)............. 11.99 10.54 8.96 8.85
Portfolio turnover (%)(a)... 14 33 68 0
Without giving effect to the
voluntary expense
limitations described in
Note 3 to the Financial
Statements:
Ratio of expenses to
average net assets would
have been (%)(c)........ 1.76 2.42 3.81 12.06
Net investment income per
share would have been... $ 0.37 $ 0.65(e) $ 0.54 $ (0.05)
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** Commencement of operations on September 11, 1996.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
78
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
[THIS PAGE INTENTIONALLY LEFT BLANK]
79
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE MATURITY BOND FUND
-------------------------------
INSTITUTIONAL CLASS
-------------------------------
1999*
(UNAUDITED) 1998** 1997***
----------- ------- ------
<S> <C> <C> <C>
Net asset value, beginning
of period................ $ 10.06 $ 10.03 $10.00
----------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)................. 0.34 0.51(e) 0.64(e)
Net realized and
unrealized gain (loss)
on investments......... (0.15) (0.16) 0.00
----------- ------- ------
Total from investment
operations........... 0.19 0.35 0.64
----------- ------- ------
LESS DISTRIBUTIONS --
Dividends from net
investment income...... (0.37) (0.32) (0.56)
Distributions in excess
of net investment
income................. 0.00 0.00 (0.03)
Distributions from net
realized capital
gains.................. (0.09) 0.00 (0.02)
----------- ------- ------
Total distributions.... (0.46) (0.32) (0.61)
----------- ------- ------
Net asset value, end of
period................... $ 9.79 $ 10.06 $10.03
----------- ------- ------
----------- ------- ------
Total return (%)(a)(b)..... 1.9 3.5 6.4
Net assets, end of period
(000).................... $ 9,188 $ 8,601 $6,305
Ratio of operating expenses
to average net assets
(%)(c)(d)................ 0.55 0.55 0.55
Ratio of net investment
income to average net
assets (%)(c)............ 7.00 6.71 6.38
Portfolio turnover
(%)(a)................... 7 32 119
Without giving effect to
the voluntary expense
limitations described in
Note 3 to the Financial
Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)................. 1.85 2.27 3.66
Net investment income per
share would have
been................... $ 0.27 $ 0.38(e) $ 0.29(e)
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of fund operations on January 2, 1997 through December
31, 1997.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
80
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE MATURITY BOND FUND
--------------------------------
RETAIL CLASS
--------------------------------
1999*
(UNAUDITED) 1998** 1997***
----------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning
of period................ $ 10.06 $ 10.03 $ 10.00
----------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)................. 0.34 0.49(e) 0.64(e)
Net realized and
unrealized gain (loss)
on investments......... (0.17) (0.15) (0.02)
----------- ------- -------
Total from investment
operations........... 0.17 0.34 0.62
----------- ------- -------
LESS DISTRIBUTIONS --
Dividends from net
investment income...... (0.36) (0.31) (0.54)
Distributions in excess
of net investment
income................. 0.00 0.00 (0.03)
Distributions from net
realized capital
gains.................. (0.09) 0.00 (0.02)
----------- ------- -------
Total distributions.... (0.45) (0.31) (0.59)
----------- ------- -------
Net asset value, end of
period................... $ 9.78 $ 10.06 $ 10.03
----------- ------- -------
----------- ------- -------
Total return (%)(a)(b)..... 1.7 3.4 6.2
Net assets, end of period
(000).................... $ 831 $ 663 $ 423
Ratio of operating expenses
to average net assets
(%)(c)(d)................ 0.80 0.80 0.80
Ratio of net investment
income to average net
assets (%)(c)............ 6.77 6.47 6.13
Portfolio turnover
(%)(a)................... 7 32 119
Without giving effect to
the voluntary expense
limitations described in
Note 3 to the Financial
Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)................. 4.50 5.64 14.56
Net investment income per
share would have
been................... $ 0.15 $ 0.12(e) $ (0.50)(e)
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of fund operations on January 2, 1997 through December
31, 1997.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
81
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT GRADE BOND FUND
-----------------------------------
INSTITUTIONAL CLASS
-----------------------------------
1999*
(UNAUDITED) 1998** 1997***
------------ --------- --------
<S> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.28 $ 10.59 $ 10.00
------ --------- --------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.32 0.52 0.65
Net realized and
unrealized gain
(loss) on
investments.......... 0.28 (0.50) 0.77
------ --------- --------
Total from investment
operations......... 0.60 0.02 1.42
------ --------- --------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.34) (0.33) (0.63)
Distributions in excess
of net investment
income............... 0.00 0.00 (0.08)
Distributions from net
realized capital
gains................ (0.26) 0.00 (0.12)
------ --------- --------
Total
distributions...... (0.60) (0.33) (0.83)
------ --------- --------
Net asset value, end of
period................. $ 10.28 $ 10.28 $ 10.59
------ --------- --------
------ --------- --------
Total return (%)(a)(b)... 6.1 0.0 14.5
Net assets, end of period
(000).................. $ 3,505 $ 2,778 $ 2,445
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.55 0.55 0.55
Ratio of net investment
income to average net
assets (%)(c).......... 7.02 6.68 6.74
Portfolio turnover
(%)(a)................. 20 48 112
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have
been (%)(c)........ 3.46 4.19 7.59
Net investment income
per share would
have been.......... $ 0.19 $ 0.24 $ (0.03)
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of fund operations on January 2, 1997 through December
31, 1997.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
82
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT GRADE BOND FUND
-----------------------------------
RETAIL CLASS
-----------------------------------
1999*
(UNAUDITED) 1998** 1997***
------------ --------- --------
<S> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.27 $ 10.59 $ 10.00
------ --------- --------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.31 0.48 0.62(e)
Net realized and
unrealized gain
(loss) on
investments.......... 0.27 (0.49) 0.78
------ --------- --------
Total from investment
operations......... 0.58 (0.01) 1.40
------ --------- --------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.33) (0.31) (0.62)
Distributions in excess
of net investment
income............... 0.00 0.00 (0.07)
Distributions from net
realized capital
gains................ (0.26) 0.00 (0.12)
------ --------- --------
Total
distributions...... (0.59) (0.31) (0.81)
------ --------- --------
Net asset value, end of
period................. $ 10.26 $ 10.27 $ 10.59
------ --------- --------
------ --------- --------
Total return (%)(a)(b)... 5.8 (0.2) 14.3
Net assets, end of period
(000).................. $ 2,609 $ 1,743 $ 862
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.80 0.80 0.80
Ratio of net investment
income to average net
assets (%)(c).......... 6.73 6.43 6.51
Portfolio turnover
(%)(a)................. 20 48 112
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have
been (%)(c)........ 3.82 5.25 10.95
Net investment income
per share would
have been.......... $ 0.17 $ 0.15 $ (0.31)(e)
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of fund operations on January 2, 1997 through December
31, 1997.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
(e) Per share net investment income has been determined on the basis of the
weighted average number of shares outstanding during the period.
83
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
------------------------
INSTITUTIONAL CLASS
------------------------
1999*
(UNAUDITED) 1998**
------------ ---------
<S> <C> <C>
Net asset value,
beginning of period.... $ 11.96 $ 11.70
------------ ---------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.26 0.40
Net realized and
unrealized gain
(loss) on
investments.......... (0.20) 0.27
------------ ---------
Total from investment
operations......... 0.06 0.67
------------ ---------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.26) (0.40)
Distributions from net
realized capital
gains................ (0.19) (0.01)
------------ ---------
Total
distributions...... (0.45) (0.41)
------------ ---------
Net asset value, end of
period................. $ 11.57 $ 11.96
------------ ---------
------------ ---------
Total return (%)(a)(b)... 0.5 5.9
Net assets, end of period
(000).................. $ 10,657 $ 10,056
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.57 0.60
Ratio of net investment
income to average net
assets (%)(c).......... 4.46 4.62
Portfolio turnover
(%)(a)................. 18 30
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)............. 1.52 1.70
Net investment income
per share would
have been.......... $ 0.20 $ 0.31
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
84
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
-----------------------------------------
INSTITUTIONAL CLASS
-----------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------
1997 1996 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 11.29 $ 11.53 $ 10.41 $ 11.54
-------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.56 0.52 0.52 0.52
Net realized and
unrealized gain
(loss) on
investments.......... 0.51 (0.15) 1.16 (1.13)
-------- -------- -------- --------
Total from investment
operations......... 1.07 0.37 1.68 (0.61)
-------- -------- -------- --------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.56) (0.52) (0.52) (0.52)
Distributions from net
realized capital
gains................ (0.10) (0.09) (0.04) 0.00
-------- -------- -------- --------
Total
distributions...... (0.66) (0.61) (0.56) (0.52)
-------- -------- -------- --------
Net asset value, end of
period................. $ 11.70 $ 11.29 $ 11.53 $ 10.41
-------- -------- -------- --------
-------- -------- -------- --------
Total return (%)(a)(b)... 9.8 3.3 16.5 (5.4)
Net assets, end of period
(000).................. $ 8,752 $ 8,701 $ 7,961 $ 7,270
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.60 1.00 1.00 1.00
Ratio of net investment
income to average net
assets (%)(c).......... 4.90 4.61 4.72 4.79
Portfolio turnover
(%)(a)................. 50 38 41 28
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)............. 1.80 2.31 2.02 2.37
Net investment income
per share would
have been.......... $ 0.42 $ 0.37 $ 0.41 $ 0.37
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
85
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM BOND FUND
------------------------
INSTITUTIONAL CLASS
------------------------
1999*
(UNAUDITED) 1998**
------------ ---------
<S> <C> <C>
Net asset value,
beginning of period.... $ 9.96 $ 9.75
------------ ---------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.30 0.44
Net realized and
unrealized gain
(loss) on
investments.......... (0.30) 0.21
------------ ---------
Total from investment
operations......... 0.00 0.65
------------ ---------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.30) (0.44)
------------ ---------
Net asset value, end of
period................. $ 9.66 $ 9.96
------------ ---------
------------ ---------
Total return (%)(a)(b)... 0.0 6.8
Net assets, end of period
(000).................. $ 28,413 $ 27,288
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.29 0.50
Ratio of net investment
income to average net
assets (%)(c).......... 6.18 5.94
Portfolio turnover
(%)(a)................. 56 47
Without giving effect to
the voluntary expense
limitations described
in
Note 3 to the Financial
Statements:............
Ratio of expenses to
average net assets
would have been
(%)(c)............. 0.62 0.83
Net investment income
per share would
have been.......... $ 0.28 $ 0.41
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of class operations on January 2, 1997 through December
31, 1997.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
86
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM BOND FUND
---------------------------------------------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------- RETAIL CLASS
---------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------- 1999*
1997 1996 1995 1994 (UNAUDITED) 1998** 1997***
--------- --------- --------- --------- ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 9.70 $ 9.81 $ 9.46 $ 9.95 $ 9.96 $ 9.75 $ 9.70
--------- --------- --------- --------- ----- ------- --------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.61 0.55 0.63 0.66 0.29 0.42 0.59
Net realized and
unrealized gain
(loss) on
investments.......... 0.06 (0.11) 0.35 (0.49) (0.30) 0.21 0.06
--------- --------- --------- --------- ----- ------- --------
Total from investment
operations......... 0.67 0.44 0.98 0.17 (0.01) 0.63 0.65
--------- --------- --------- --------- ----- ------- --------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.62) (0.55) (0.63) (0.66) (0.29) (0.42) (0.60)
--------- --------- --------- --------- ----- ------- --------
Net asset value, end of
period................. $ 9.75 $ 9.70 $ 9.81 $ 9.46 $ 9.66 $ 9.96 $ 9.75
--------- --------- --------- --------- ----- ------- --------
--------- --------- --------- --------- ----- ------- --------
Total return (%)(a)(b)... 7.1 4.7 10.6 1.8 (0.1) 6.6 6.9
Net assets, end of period
(000).................. $ 18,792 $ 18,229 $ 26,039 $ 19,440 $ 480 $ 773 $ 285
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.50 1.00 1.00 1.00 0.55 0.75 0.75
Ratio of net investment
income to average net
assets (%)(c).......... 6.34 5.69 6.46 6.88 5.86 5.66 6.04
Portfolio turnover
(%)(a)................. 91 120 214 34 56 47 91
Without giving effect to
the voluntary expense
limitations described
in
Note 3 to the Financial
Statements:............
Ratio of expenses to
average net assets
would have been
(%)(c)............. 1.19 1.17 1.03 1.33 4.62 6.00 17.77
Net investment income
per share would
have been.......... $ 0.55 $ 0.53 $ 0.62 $ 0.63 $ 0.09 $ 0.03 $ (1.08)
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
*** From commencement of class operations on January 2, 1997 through December
31, 1997.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
87
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES FUND
------------------------
INSTITUTIONAL CLASS
------------------------
1999*
(UNAUDITED) 1998**
------------ ---------
<S> <C> <C>
Net asset value,
beginning of period.... $ 11.41 $ 10.70
------------ ---------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.33 0.43
Net realized and
unrealized gain
(loss) on
investments.......... (0.58) 0.58
------------ ---------
Total from investment
operations......... (0.25) 1.01
------------ ---------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.30) (0.30)
------------ ---------
Net asset value, end of
period................. $ 10.86 $ 11.41
------------ ---------
------------ ---------
Total return (%)(a)(b)... (2.2) 9.6
Net assets, end of period
(000).................. $ 20,019 $ 29,246
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.54 0.60
Ratio of net investment
income to average net
assets (%)(c).......... 5.53 5.61
Portfolio turnover
(%)(a)................. 30 84
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)............. 0.87 0.97
Net investment income
per share would
have been.......... $ 0.31 $ 0.40
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
88
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
---------------------------------------------
INSTITUTIONAL CLASS
---------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.08 $ 10.64 $ 9.22 $ 10.53
--------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS --
Net investment income
(loss)............... 0.63 0.68 0.66 0.64
Net realized and
unrealized gain
(loss) on
investments.......... 0.61 (0.57) 1.42 (1.30)
--------- --------- --------- ---------
Total from investment
operations......... 1.24 0.11 2.08 (0.66)
--------- --------- --------- ---------
LESS DISTRIBUTIONS --
Dividends from net
investment income.... (0.62) (0.67) (0.66) (0.65)
--------- --------- --------- ---------
Net asset value, end of
period................. $ 10.70 $ 10.08 $ 10.64 $ 9.22
--------- --------- --------- ---------
--------- --------- --------- ---------
Total return (%)(a)(b)... 12.7 1.3 23.0 (6.3)
Net assets, end of period
(000).................. $ 17,668 $ 14,192 $ 19,499 $ 17,341
Ratio of operating
expenses to average net
assets (%)(c)(d)....... 0.60 1.00 1.00 1.00
Ratio of net investment
income to average net
assets (%)(c).......... 6.29 6.23 6.47 6.60
Portfolio turnover
(%)(a)................. 156 137 169 242
Without giving effect to
the voluntary expense
limitations described
in Note 3 to the
Financial Statements:
Ratio of expenses to
average net assets
would have been
(%)(c)............. 1.23 1.19 1.22 1.22
Net investment income
per share would
have been.......... $ 0.57 $ 0.66 $ 0.64 $ 0.62
</TABLE>
* For the six months ended March 31, 1999.
** For the nine months ended September 30, 1998.
(a) Periods less than one year are not annualized.
(b) Total returns would have been lower had the adviser not reduced its
advisory fees and/or borne other operating expenses.
(c) Annualized for periods less than one year.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during
the period. Without this reimbursement the Fund's ratio of operating
expenses would have been higher.
89
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
1. The Loomis Sayles Funds is comprised of sixteen no-load mutual funds (the
"Funds").
Each Fund is a series of Loomis Sayles Funds (the "Trust"). The Trust is a
diversified open-end management investment company organized as a Massachusetts
business trust. The Trust is authorized to issue an unlimited number of full and
fractional shares of beneficial interest in multiple series.
Each Fund is separately managed and has its own investment objective and
policies. Loomis, Sayles & Company, L.P. ("Loomis Sayles") is the investment
adviser of each Fund.
The Trust consists of the following Funds:
<TABLE>
<CAPTION>
FIXED INCOME FUNDS EQUITY FUNDS
- --------------------------------------------- ---------------------------------------
<S> <C>
Loomis Sayles Bond Fund Loomis Sayles Core Value Fund
Loomis Sayles Global Bond Fund Loomis Sayles Growth Fund
Loomis Sayles High Yield Fund Loomis Sayles International Equity Fund
Loomis Sayles Intermediate Maturity Bond Fund Loomis Sayles Mid-Cap Growth Fund
Loomis Sayles Investment Grade Bond Fund Loomis Sayles Mid-Cap Value Fund
Loomis Sayles Municipal Bond Fund Loomis Sayles Small Cap Growth Fund
Loomis Sayles Short-Term Bond Fund Loomis Sayles Small Cap Value Fund
Loomis Sayles U.S. Government Securities Fund Loomis Sayles Worldwide Fund
</TABLE>
The Fixed Income Funds (excluding the High Yield Fund, which ceased to offer
Retail Class shares effective March 1, 1999, the Municipal Bond and U.S.
Government Securities Funds which only offer Institutional Class shares) offer
Institutional and Retail Class shares. The Bond Fund also offers Admin Class
shares. Each class of shares has an equal pro rata interest in the assets of the
relevant fund and general voting privileges. Retail, Institutional and Admin
Classes differ with respect to distribution and certain other class-specific
expenses and expense reductions. Retail and Admin Class shares are subject to
distribution fees at an annual rate of 0.25% of the relevant class' average net
assets, pursuant to distribution plans adopted in accordance with Rule 12b-1
under the Investment Company Act of 1940. The Admin Class shares are subject to
service and account maintenance fees at an annual rate of 0.25% of the Admin
Class' average net assets. Retail and Admin Class shares have exclusive voting
rights with respect to their distribution plans.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. Effective September 30, 1998, the
Board of Trustees approved a change in the fiscal year end of the Funds to
September 30. Certain amounts in the Statements of Changes in Net Assets for
prior periods have been reclassified to conform to current period presentations.
The following summarizes the significant accounting policies of the Fixed Income
Funds:
A. SECURITY VALUATION -- Long-term debt securities for which quotations are
readily available are valued by a pricing service, as approved by the Board of
Trustees, which
90
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
generally uses the most recent bid prices in the principal market in which such
securities are normally traded. Municipal debt securities are valued by a
pricing service, as approved by the Board of Trustees, which generally uses a
computerized matrix system or dealer supplied quotations that consider market
transactions for comparable securities. Equity securities for which quotations
are readily available are valued at their last sale price on the exchange where
primarily traded or, if there is no reported sale during the day, at the closing
bid price. Short-term securities with a remaining maturity of 60 days or less
are valued at amortized cost, which approximates market value. Other securities
for which quotations are not readily available (including restricted securities,
if any) are valued primarily using dealer supplied quotations or at their fair
values as determined in good faith under the general supervision of the Board of
Trustees.
B. REPURCHASE AGREEMENTS -- The Funds may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Funds take
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Funds to resell, the obligation at an agreed-upon
price and time. This arrangement results in a fixed rate of return that is not
subject to market fluctuations during the Funds' holding period. The Funds,
through their custodian, receive delivery of the underlying securities
collateralizing repurchase agreements. It is the Funds' policy that the market
value of the collateral be at least equal to 102% of the repurchase price. These
securities are marked-to-market daily. Loomis Sayles is responsible for
determining that the value of the collateral is at all times at least equal to
102% of the repurchase price. In connection with transactions in repurchase
agreements, if the seller defaults and the value of the collateral declines or
if the seller enters into insolvency proceedings, realization of the collateral
by the Funds may be delayed or limited.
C. FOREIGN CURRENCY TRANSLATION AND FOREIGN INVESTMENTS -- The books and
records of each of the Funds (including those Funds that invest in foreign
securities) are maintained in U.S. dollars. The value of securities, currencies
and other assets and liabilities denominated in currencies other than U.S.
dollars is translated into U.S. dollars based upon foreign exchange rates
prevailing at the end of the period. Purchases and sales of investment
securities are translated at contractual currency exchange rates established at
the time of the trade. Income and expenses are translated at prevailing exchange
rates on the respective dates of such transactions.
The results of operations resulting from changes in foreign exchange rates on
investments are not isolated from fluctuations arising from changes in market
prices of securities held. All such fluctuations are included with net realized
and unrealized gain or loss on investments.
Net realized and unrealized gains and losses on foreign currency transactions
represent foreign exchange gains and losses from the sale of short-term
securities and holdings of foreign currencies, foreign currency gains and losses
between trade dates and settlement dates on investment securities transactions,
sales and maturities of forward foreign
91
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
currency exchange contracts, and the difference between the amounts of daily
interest accruals on the books of the Funds and the amounts actually received
resulting from changes in exchange rates on the payable date.
Certain funds use foreign currency exchange contracts to facilitate transactions
in foreign-denominated securities. Losses may arise from changes in the value of
the foreign currency or if the counterparties do not perform under the
contracts' terms. The U.S. dollar value of foreign currency exchange contracts
is determined using contractual currency exchange rates established at the time
of each trade. The cost of foreign currency exchange contracts is included in
the cost basis of the associated investment.
Each Fund (except the Municipal Bond and U.S. Government Securities Funds) may
purchase securities of foreign issuers. Investing in securities of foreign
companies and foreign governments involves special risks and considerations not
typically associated with investing in U.S. companies and securities of the U.S.
government. These risks include revaluation of currencies and the risk of
appropriation. Moreover, the markets for securities of many foreign companies
and foreign governments and their markets may be less liquid and the prices of
such securities may be more volatile than those of securities of comparable U.S.
companies and the U.S. government.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- Each Fund that may invest in
foreign securities may enter into forward foreign currency exchange contracts to
protect securities against changes in future foreign exchange rates. A forward
foreign currency exchange contract is an agreement between two parties to buy or
sell currency at a set price on a future date.
The market value of the contract will fluctuate with changes in currency
exchange rates. The contract is marked-to-market daily using the forward
currency exchange rate and the change in market value is recorded as unrealized
appreciation (depreciation) on foreign currency translations in the Funds'
Statements of Assets and Liabilities. Realized gain or loss is recognized when
the contract is closed equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed and recorded
as realized gain (loss) on foreign currency transactions in the Funds'
Statements of Operations.
Risks may arise upon entering into forward foreign currency exchange contracts
from the potential inability of the counterparties to meet the terms of their
contracts and from
92
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. At March 31, 1999, the Global Bond Fund had the following open forward
foreign currency exchange contracts:
<TABLE>
<CAPTION>
LOCAL AGGREGATE UNREALIZED
DELIVERY CURRENCY FACE TOTAL APPRECIATION
DATE AMOUNT AMOUNT VALUE (DEPRECIATION)
-------- ----------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Euro (buy) 5/28/99 200,000 $ 226,486 $ 216,544 $ (9,942)
Euro (buy) 5/28/99 1,200,000 1,348,620 1,299,265 (49,355)
Euro (buy) 5/28/99 825,000 917,829 893,245 (24,584)
Euro (buy) 5/28/99 1,100,000 1,219,097 1,190,993 (28,104)
Euro (sell) 5/28/99 3,325,000 3,877,582 3,600,047 277,535
Japanese Yen (sell) 12/22/99 175,000,000 1,505,635 1,530,983 (25,348)
---------------
$ 140,202
---------------
---------------
</TABLE>
E. SECURITY TRANSACTIONS, RELATED INVESTMENT INCOME AND EXPENSES -- Security
transactions are accounted for on the trade date (the date the buy or sell is
executed). Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Interest income is increased by the
accretion of discount. Discounts on zero coupon bonds, original issues, step
bonds and payment in kind bonds are accreted according to the effective interest
method. Interest income on the Municipal Bond Fund is decreased by the
amortization of premium. Premiums are amortized using the yield to maturity
method. In determining net gain or loss on securities sold, the cost of
securities has been determined on the identified cost basis.
Most expenses of the Trust can be directly attributed to a particular fund.
Expenses which cannot be directly attributed are apportioned among the Funds
based on relative net assets.
Investment income, realized and unrealized gains and losses, and the common
expenses of the fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the fund. Each
class of shares differs in its respective distribution and certain other class
specific fees and expense reductions.
F. FEDERAL INCOME TAXES -- Each Fund is a separate entity for federal income
tax purposes. Each Fund intends to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies, and to distribute to its
shareholders all of its net investment income and any net realized capital
gains. Accordingly, no provision for federal income tax or excise tax has been
made.
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Municipal Bond Fund and
Short-Term Bond Fund declare dividends daily to shareholders of record at the
time and pay dividends monthly. The Bond, High Yield, Intermediate Maturity
Bond, Investment Grade Bond and U.S. Government Securities Funds declare and pay
their net investment income quarterly. The Global Bond Fund declares and pays
its net investment income to shareholders annually. Distributions from net
realized capital gains are declared and paid
93
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
on an annual basis by all of the funds. Income and capital gain distributions
are determined in accordance with Federal income tax regulations which may
differ from generally accepted accounting principles. These differences, which
may result in reclassifications to the Fund's capital accounts to reflect income
and gains available for distribution, are primarily due to differing book and
tax treatments for litigation proceeds, foreign currency transactions, capital
loss carryforwards, non-deductible organization costs, deferred losses due to
wash sales, excise tax regulations and net operating losses. Some of these
classifications may include temporary book and tax basis differences that will
reverse in subsequent periods. Dividends from net investment income are
determined on a class level. Capital gains are determined on a Fund level.
H. REDEMPTION FEES -- Shares held in the High Yield Fund less than one year are
subject to a redemption fee equal to 2% of the amount redeemed. For the six
months ended March 31, 1999, the redemption fees amounted to $35,636 for the
Institutional Class.
I. ORGANIZATION EXPENSE AND DEFERRED REGISTRATION COSTS -- Organization costs
incurred by the High Yield Fund are being amortized over 60 months.
2. PURCHASES AND SALES OF SECURITIES -- (excluding short-term investments) for
each Fund for the six months ended March 31, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES
---------------------------------
U.S. GOVERNMENT OTHER
---------------- --------------
<S> <C> <C>
Bond Fund............................... $ 54,379,688 $ 312,791,678
Global Bond Fund........................ 1,444,453 2,547,910
High Yield Fund......................... 593,469 8,072,938
Intermediate Maturity Bond Fund......... 103,281 1,231,565
Investment Grade Bond Fund.............. 590,340 1,267,262
Municipal Bond Fund..................... 820,785 1,757,013
Short-Term Bond Fund.................... 5,898,032 9,923,956
U.S. Government Securities Fund......... 6,657,120 543,750
</TABLE>
<TABLE>
<CAPTION>
SALES
--------------------------
U.S.
GOVERNMENT OTHER
------------ ------------
<S> <C> <C>
Bond Fund............................... $175,068,371 $210,359,484
Global Bond Fund........................ 0 2,741,439
High Yield Fund......................... 607,647 1,431,238
Intermediate Maturity Bond Fund......... 348,782 333,251
Investment Grade Bond Fund.............. 269,260 715,548
Municipal Bond Fund..................... 329,873 1,495,372
Short-Term Bond Fund.................... 11,721,909 3,554,838
U.S. Government Securities Fund......... 11,301,434 2,745,787
</TABLE>
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES -- For the six months
ended March 31, 1999, the Funds incurred management fees payable to Loomis
Sayles.
94
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
Certain officers and employees of Loomis Sayles are also officers or Trustees of
the Trust. Loomis Sayles' general partner is indirectly owned by NVEST, L.P., a
publicly-traded limited partnership whose general partner is indirectly owned by
Metropolitan Life Insurance Company. Separate management agreements for each
Fund in effect during the six months ended March 31, 1999 provided for fees at
the following annual percentage rate of each Fund's average daily net assets
indicated below. Loomis Sayles voluntarily agreed, for an indefinite period, to
reduce its advisory fees and/or bear other expenses, to the extent necessary to
limit the total operating expenses of each Fund to the following percentage rate
of the Fund's average daily net assets:
<TABLE>
<CAPTION>
MAXIMUM EXPENSE RATIOS
-------------------------------------
MANAGEMENT INSTITUTIONAL RETAIL ADMIN
FUND FEES CLASS CLASS CLASS
- ------------------------------ ---------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Bond Fund..................... 0.60% 0.75% 1.00% 1.25%
Global Bond Fund.............. 0.60% 0.90% 1.15% --
High Yield Fund............... 0.60% 0.75% -- --
Intermediate Maturity Bond
Fund........................ 0.40% 0.55% 0.80% --
Investment Grade Bond Fund.... 0.40% 0.55% 0.80% --
Municipal Bond Fund (1)....... 0.30% 0.50% -- --
Short-Term Bond Fund (2)...... 0.00% 0.25% 0.50% --
U.S. Government Securities
Fund (3).................... 0.30% 0.50% -- --
</TABLE>
(1) Effective February 1, 1999, the Municipal Bond Fund reduced its management
fees and expense limitation for the Institutional Class from 0.40% and
0.60%, respectively.
(2) Effective October 27, 1998, the Short-Term Bond Fund waived its management
fees and reduced the Fund's expense limitation for the Institutional and
Retail Classes. Previously, the management fees were 0.25%, and the expense
limitations were 0.50% and 0.75% for the Institutional and Retail Classes,
respectively. The waiver of management fees will remain in effect through
December 31, 1999.
(3) Effective December 1, 1998, the U.S. Government Securities Fund reduced its
management fees and expense limitation for the Institutional Class from
0.40% and 0.60%, respectively.
Loomis Sayles may change or terminate these voluntary agreements at any time,
but the relevant prospectus would be supplemented at the time to describe the
change.
A. TRUSTEES FEES AND EXPENSES -- The Trust does not pay any compensation
directly to its officers or trustees who are directors, officers or employees of
Loomis Sayles, NVEST, L.P. or their affiliates. Each independent trustee is
compensated by the Trust on behalf of each Fund at the rate of $1,250 per Fund
per year, plus travel expenses for each meeting attended.
B. SHAREHOLDERS -- At March 31, 1999, Loomis Sayles held 118,174 shares of the
Investment Grade Bond Fund. Loomis Sayles Distributors, LP held 18,165 shares of
the
95
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
U.S. Government Securities Fund. In addition, Loomis-Sayles Funded Pension Plan
and the Loomis Sayles & Company, L.P. Employees' Defined Contribution Retirement
Plans held shares of beneficial interest in the Funds as follows:
<TABLE>
<CAPTION>
DEFINED
PENSION CONTRIBUTION
PLAN PLANS
-------- ----------
<S> <C> <C>
Bond Fund............................... 917,828 1,073,308
Global Bond Fund........................ 693,388 243,202
High Yield Fund......................... 251,570 461,371
Intermediate Maturity Bond Fund......... 328,386 182,713
Investment Grade Bond Fund.............. 0 93,177
Short-Term Bond Fund.................... 3,157 348,828
U.S. Government Securities Fund......... 237,319 421,154
</TABLE>
4. CREDIT RISK -- The Bond Fund may invest up to 35%, the Global Bond and
Short-Term Bond Funds each may invest up to 20%, the Intermediate Maturity Bond
and the Investment Grade Bond Funds each may invest up to 10%, and the High
Yield Fund will normally invest at least 65% of its assets in securities
offering high current income, which generally will be in the lower rating
categories of recognized rating agencies. These securities are regarded as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligations and will generally
involve more credit risk than securities in the higher rating categories. In
addition, the trading market for high yield securities may be relatively less
liquid than the market for higher-rated securities.
5. LINE OF CREDIT -- The Trust has entered into an agreement which enables each
Fund to borrow under a $25 million unsecured line of credit with several banks.
Borrowings will be made solely to temporarily finance the repurchase of capital
shares. Interest is charged to each participating Fund based on its borrowings
at a rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a
commitment fee of 0.08% per annum, payable at the end of each calendar quarter,
is accrued by the Trust and apportioned among the Funds based on each Fund's
average daily unused portion of the line of credit. During the six months ended
March 31, 1999, the Funds had no borrowings under the agreement.
96
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
6. CAPITAL STOCK TRANSACTIONS -- The tables below summarize the transactions in
Fund shares for the periods indicated:
<TABLE>
<CAPTION>
LOOMIS SAYLES BOND FUND
----------------------------------------------------------------------------------
SIX MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998 DECEMBER 31, 1997
INSTITUTIONAL CLASS -------------------------- -------------------------- --------------------------
SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 21,913,184 $ 264,791,210 49,569,713 $ 643,942,732 63,069,086 $ 809,023,819
Issued in connection with
the reinvestment of
distributions.......... 8,719,017 104,473,070 3,232,707 42,426,449 5,492,835 70,465,752
Redeemed................. (24,166,841) (291,921,459) (32,878,290) (415,107,300) (13,902,007) (177,561,664)
----------- ------------- ----------- ------------- ----------- -------------
Net change............... 6,465,360 $ 77,342,821 19,924,130 $ 271,261,881 54,659,914 $ 701,927,907
----------- ------------- ----------- ------------- ----------- -------------
----------- ------------- ----------- ------------- ----------- -------------
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT SHARES* AMOUNT*
- ------------------------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 997,250 $ 12,056,465 2,932,181 $ 38,054,173 2,944,758 $ 37,693,272
Issued in connection with
the reinvestment of
distributions.......... 346,242 4,148,645 108,877 1,427,318 124,248 1,597,794
Redeemed................. (1,172,751) (14,116,087) (1,247,077) (15,934,708) (476,803) (6,205,606)
----------- ------------- ----------- ------------- ----------- -------------
Net change............... 170,741 $ 2,089,023 1,793,981 $ 23,546,783 2,592,203 $ 33,085,460
----------- ------------- ----------- ------------- ----------- -------------
----------- ------------- ----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
ADMIN CLASS SHARES SHARES AMOUNT SHARES** AMOUNT**
- ------------------------------ ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Issued from the sale of
shares...................... 78,573 $ 948,357 56,540 $ 710,656
Issued in connection with the
reinvestment of
distributions............... 7,626 91,336 273 3,555
Redeemed...................... (18,670) (224,578) (5,555) (71,476)
---------- ------------- ----------- -------------
Net change.................... 67,529 $ 815,115 51,258 $ 642,735
---------- ------------- ----------- -------------
---------- ------------- ----------- -------------
</TABLE>
* From January 2, 1997 (commencement of class operations).
** From January 2, 1998 (commencement of class operations).
97
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
LOOMIS SAYLES GLOBAL BOND FUND
--------------------------------------------------------------------
SIX MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998 DECEMBER 31, 1997
INSTITUTIONAL CLASS ---------------------- --------------------- ---------------------
SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- --------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 198,971 $ 2,460,864 318,651 $ 3,936,730 450,349 $ 5,703,587
Issued in connection with
the reinvestment of
distributions.......... 192,759 2,349,727 0 0 141,324 1,676,109
Redeemed................. (125,327) (1,563,891) (217,195) (2,625,824) (338,278) (4,226,586)
--------- ----------- -------- ----------- -------- -----------
Net change............... 266,403 $ 3,246,700 101,456 $ 1,310,906 253,395 $ 3,153,110
--------- ----------- -------- ----------- -------- -----------
--------- ----------- -------- ----------- -------- -----------
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT SHARES* AMOUNT*
- ------------------------- --------- ----------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 123,308 $ 1,522,648 348,774 $ 4,233,202 568,889 $ 7,115,633
Issued in connection with
the reinvestment of
distributions.......... 32,073 390,975 0 0 18,404 218,453
Redeemed................. (176,892) (2,252,457) (210,389) (2,533,545) (190,528) (2,420,537)
--------- ----------- -------- ----------- -------- -----------
Net change............... (21,511) $ (338,834) 138,385 $ 1,699,657 396,765 $ 4,913,549
--------- ----------- -------- ----------- -------- -----------
--------- ----------- -------- ----------- -------- -----------
</TABLE>
* From January 2, 1997 (commencement of class operations).
<TABLE>
<CAPTION>
LOOMIS SAYLES HIGH YIELD FUND
------------------------------------------------------------------
SIX MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998 DECEMBER 31, 1997
INSTITUTIONAL CLASS ---------------------- --------------------- -------------------
SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- --------- ----------- -------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 1,406,368 $11,678,877 403,057 $ 3,805,612 345,923 $3,577,772
Issued in connection with
the reinvestment of
distributions.......... 87,543 703,582 24,997 253,653 41,158 424,573
Redeemed................. (95,703) (799,384) (137,504) (1,355,726) (58,540) (600,500)
--------- ----------- -------- ----------- ------- ----------
Net change............... 1,398,208 $11,583,075 290,550 $ 2,703,539 328,541 $3,401,845
--------- ----------- -------- ----------- ------- ----------
--------- ----------- -------- ----------- ------- ----------
<CAPTION>
RETAIL CLASS SHARES SHARES** AMOUNT** SHARES AMOUNT SHARES* AMOUNT*
- ------------------------- --------- ----------- -------- ----------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 249,386 $ 2,039,291 518,798 $ 5,290,659 343,422 $3,602,850
Issued in connection with
the reinvestment of
distributions.......... 36,252 290,541 20,313 204,878 20,171 207,933
Redeemed................. (778,096) (6,449,681) (357,083) (3,384,654) (53,163) (558,960)
--------- ----------- -------- ----------- ------- ----------
Net change............... (492,458) $(4,119,849) 182,028 $ 2,110,883 310,430 $3,251,823
--------- ----------- -------- ----------- ------- ----------
--------- ----------- -------- ----------- ------- ----------
</TABLE>
* From January 2, 1997 (commencement of class operations).
** The High Yield Fund's Retail Class ceased to be offered on March 1, 1999.
98
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
-----------------------------------------------------------------
SIX MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998 DECEMBER 31, 1997*
INSTITUTIONAL CLASS --------------------- ------------------- ---------------------
SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- --------- ------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 73,870 $ 717,424 233,463 $2,368,867 713,449 $ 7,196,630
Issued in connection with
the reinvestment of
distributions.......... 37,290 364,068 22,897 232,444 26,496 269,072
Redeemed................. (26,998) (261,871) (30,328) (303,969) (111,401) (1,136,539)
---------- --------- ------- ---------- -------- -----------
Net change............... 84,162 $ 819,621 226,032 $2,297,342 628,544 $ 6,329,163
---------- --------- ------- ---------- -------- -----------
---------- --------- ------- ---------- -------- -----------
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- --------- ------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 20,619 $ 200,065 24,281 $ 245,832 40,713 $ 419,211
Issued in connection with
the reinvestment of
distributions.......... 2,923 28,527 1,478 15,004 1,410 14,327
Redeemed................. (4,468) (43,611) (1,979) (19,695) 0 0
---------- --------- ------- ---------- -------- -----------
Net change............... 19,074 $ 184,981 23,780 $ 241,141 42,123 $ 433,538
---------- --------- ------- ---------- -------- -----------
---------- --------- ------- ---------- -------- -----------
</TABLE>
* From January 2, 1997 (commencement of operations).
<TABLE>
<CAPTION>
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
-------------------------------------------------------------
SIX MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998 DECEMBER 31, 1997*
INSTITUTIONAL CLASS ------------------- ------------------- -------------------
SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- ------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 91,965 $ 927,500 83,930 $ 899,316 217,283 $2,218,354
Issued in connection with
the reinvestment of
distributions.......... 13,864 139,357 6,974 75,189 14,216 150,066
Redeemed................. (35,061) (348,420) (51,401) (544,680) (689) (7,042)
------- ---------- ------- ---------- ------- ----------
Net change............... 70,768 $ 718,437 39,503 $ 429,825 230,810 $2,361,378
------- ---------- ------- ---------- ------- ----------
------- ---------- ------- ---------- ------- ----------
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- ------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 169,720 $1,709,496 175,281 $1,867,621 80,460 $ 849,980
Issued in connection with
the reinvestment of
distributions.......... 12,127 121,689 3,339 35,976 3,968 42,198
Redeemed................. (97,211) (975,279) (90,210) (959,137) (3,085) (32,703)
------- ---------- ------- ---------- ------- ----------
Net change............... 84,636 $ 855,906 88,410 $ 944,460 81,343 $ 859,475
------- ---------- ------- ---------- ------- ----------
------- ---------- ------- ---------- ------- ----------
</TABLE>
* From January 2, 1997 (commencement of operations).
99
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------
MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
LOOMIS SAYLES MUNICIPAL BOND FUND
--------------------------------------------------------------------------
SIX MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998 DECEMBER 31, 1997
INSTITUTIONAL CLASS ------------------------ ---------------------- ------------------------
SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- ------------ --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 71,914 $ 844,694 143,442 $ 1,678,346 146,945 $ 1,692,152
Issued in connection with
the reinvestment of
distributions.......... 23,887 279,877 18,995 222,768 29,000 331,863
Redeemed................. (15,668) (185,499) (70,077) (823,187) (198,471) (2,254,718)
---------- ------------ --------- ----------- ---------- ------------
Net change............... 80,133 $ 939,072 92,360 $ 1,077,927 (22,526) $ (230,703)
---------- ------------ --------- ----------- ---------- ------------
---------- ------------ --------- ----------- ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
LOOMIS SAYLES SHORT-TERM BOND FUND
--------------------------------------------------------------------------
SIX MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998 DECEMBER 31, 1997
INSTITUTIONAL CLASS ------------------------ ---------------------- ------------------------
SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- ------------ --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 692,339 $ 6,757,321 1,356,852 $13,272,732 1,184,127 $ 11,497,925
Issued in connection with
the reinvestment of
distributions.......... 78,276 763,283 96,022 940,824 94,766 918,722
Redeemed................. (570,506) (5,565,754) (639,795) (6,265,207) (1,232,069) (11,926,660)
---------- ------------ --------- ----------- ---------- ------------
Net change............... 200,109 $ 1,954,850 813,079 $ 7,948,349 46,824 $ 489,987
---------- ------------ --------- ----------- ---------- ------------
---------- ------------ --------- ----------- ---------- ------------
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT SHARES* AMOUNT*
- ------------------------- ---------- ------------ --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 19,155 $ 188,325 82,800 $ 812,944 45,040 $ 436,711
Issued in connection with
the reinvestment of
distributions.......... 1,408 13,734 1,371 13,467 1,073 10,404
Redeemed................. (48,503) (477,656) (35,738) (348,869) (16,930) (163,198)
---------- ------------ --------- ----------- ---------- ------------
Net change............... (27,940) $ (275,597) 48,433 $ 477,542 29,183 $ 283,917
---------- ------------ --------- ----------- ---------- ------------
---------- ------------ --------- ----------- ---------- ------------
</TABLE>
* From January 2, 1997 (commencement of class operations).
<TABLE>
<CAPTION>
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------------------------------
SIX MONTHS ENDED NINE MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30, 1998 DECEMBER 31, 1997
INSTITUTIONAL CLASS ------------------------ ---------------------- ------------------------
SHARES SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------------- ---------- ------------ --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Issued from the sale of
shares................. 322,269 $ 3,638,193 1,006,132 $11,019,527 444,723 $ 4,676,742
Issued in connection with
the reinvestment of
distributions.......... 60,412 679,918 47,646 517,587 77,074 792,744
Redeemed................. (1,101,890) (12,212,775) (142,676) (1,568,841) (277,818) (2,799,223)
---------- ------------ --------- ----------- ---------- ------------
Net change............... (719,209) $ (7,894,664) 911,102 $ 9,968,273 243,979 $ 2,670,263
---------- ------------ --------- ----------- ---------- ------------
---------- ------------ --------- ----------- ---------- ------------
</TABLE>
100
<PAGE>
- -----------------------------------------------------------------------
ADDITIONAL FUND INFORMATION
- -------------------------------------------------------
SUPPLEMENTS TO LOOMIS SAYLES PROSPECTUSES
- -----------------------------------------------------------------------
LOOMIS SAYLES MUNICIPAL BOND FUND
SUPPLEMENT DATED JANUARY 21, 1999 TO PROSPECTUS DATED JANUARY 1, 1999
Effective February 1, 1999, Loomis Sayles has voluntarily agreed, for an
indefinite period, to limit the Management Fees for the Municipal Bond Fund to
.30% of the Fund's daily net assets. In addition, Loomis Sayles has voluntarily
agreed to limit the Fund's total operating expenses to 0.50% of the Fund's daily
net assets. This waiver and expense limitation may, however, be terminated at
any time upon notice to the Fund.
- -----------------------------------------------------------------------
LOOMIS SAYLES SHORT-TERM BOND FUND
SUPPLEMENT DATED FEBRUARY 16, 1999 TO PROSPECTUSES DATED JANUARY 1, 1999
John Hyll, Vice President of the Trust and of Loomis Sayles, serves as the sole
portfolio manager of the Short-Term Bond Fund. Mr. Hyll has been employed by
Loomis Sayles for over five years.
- -----------------------------------------------------------------------
LOOMIS SAYLES STRATEGIC VALUE FUND
SUPPLEMENT DATED FEBRUARY 22, 1999 TO PROSPECTUSES DATED JANUARY 1, 1999
Effective immediately, shares of the Loomis Sayles Strategic Value Fund are no
longer available for purchase or exchange.
- -----------------------------------------------------------------------
LOOMIS SAYLES PARTNERS SERIES
SUPPLEMENT DATED APRIL 1, 1999 TO PROSPECTUS DATED JANUARY 1, 1999
The Loomis Sayles Municipal Bond Fund may invest up to 25% of its total assets
in fixed income securities of below investment grade quality (commonly referred
to as "junk bonds").
- -----------------------------------------------------------------------
LOOMIS SAYLES EQUITY FUNDS
SUPPLEMENT DATED APRIL 1, 1999 TO PROSPECTUSES DATED JANUARY 1, 1999
The Loomis Sayles Mid-Cap Value and Loomis Sayles Small Cap Value Funds may
invest in securities of closed-end investment companies, to the extent permitted
by the Investment Company Act of 1940.
- -----------------------------------------------------------------------
LOOMIS SAYLES GROWTH FUND
SUPPLEMENT DATED APRIL 15, 1999 SUPERSEDING SUPPLEMENTS DATED MARCH 16, 1999 AND
JANUARY 20, 1999 TO PROSPECTUS DATED JANUARY 1, 1999
Robert S. Takazawa, Jr. and Mark B. Baribeau, Vice Presidents of Loomis Sayles,
serve as the portfolio managers of the Loomis Sayles Growth Fund. Both Mr.
Takazawa and Mr. Baribeau have been employed by Loomis Sayles for more than five
years.
- -----------------------------------------------------------------------
101
<PAGE>
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
LOOMIS SAYLES ADMIN CLASS PROSPECTUS
SUPPLEMENT DATED APRIL 15, 1999 TO PROSPECTUS DATED JANUARY 1, 1999
The second paragraph on page 19 under the section captioned "Fund Expenses"
should be revised as follows:
Loomis Sayles has voluntarily agreed, for an indefinite period, to
reduce its advisory fees and/or bear other Fund expenses to the extent
necessary to limit Fund total annual operating expenses of the Admin
Class of shares of each Fund to the following annual percentage rate of
the Fund's average daily net assets:
<TABLE>
<CAPTION>
FUND RATE
- -------------------------------------------------- -----
<S> <C>
Bond.............................................. 1.25%
Small Cap Value................................... 1.50%
</TABLE>
- -----------------------------------------------------------------------
LOOMIS SAYLES MID-CAP GROWTH FUND
SUPPLEMENT DATED MAY 7, 1999 SUPERSEDING SUPPLEMENT DATED JANUARY 20, 1999 TO
THE LOOMIS SAYLES FUNDS' EQUITY FUNDS PROSPECTUSES DATED JANUARY 1, 1999
Effective May 7, 1999, the name of the Loomis Sayles Mid-Cap Growth Fund is
changed to the Loomis Sayles Aggressive Growth Fund.
Christopher R. Ely, Philip C. Fine and David L. Smith, Vice Presidents of the
Trust and of Loomis Sayles, serve as portfolio managers of the Fund. Prior to
joining Loomis Sayles in 1996, Messrs. Ely, Fine and Smith were Vice Presidents
and Portfolio Managers of Keystone Investment Management Company, Inc.
The first sentence of the second paragraph of the prospectus captioned "Loomis
Sayles Mid-Cap Growth Fund" in the section captioned "Investment Objectives and
Policies" is revised to state:
The Fund generally expects to achieve its objective by investing
most of its assets in equity securities of companies with a market
capitalization that falls within the capitalization range of
companies included in the Russell Mid-Cap Growth Index.
- -----------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
SUPPLEMENT DATED MAY 11, 1999 TO FIXED INCOME FUNDS
INSTITUTIONAL AND RETAIL CLASS PROSPECTUSES DATED JANUARY 1, 1999
The Loomis Sayles Investment Grade Bond Fund has changed its dividend payment
policy and now will declare and pay dividends monthly. It is expected that the
first monthly dividend will be paid on or about July 7, 1999.
- -----------------------------------------------------------------------
102
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
[THIS PAGE INTENTIONALLY LEFT BLANK]
103
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
- -----------------------------------------------------------------------
[THIS PAGE INTENTIONALLY LEFT BLANK]
104
<PAGE>
BOARD OF TRUSTEES AND OFFICERS
- -----------------------------------------------------------------------
BOARD OF TRUSTEES
- -------------------------------------------------------
Earl W. Foell
Richard S. Holway
Daniel J. Fuss
Michael T. Murray
OFFICERS
- -------------------------------------------------------
PRESIDENT
Daniel J. Fuss
EXECUTIVE VICE PRESIDENT
TREASURER
Robert J. Blanding
Mark W. Holland
VICE PRESIDENTS
ASSISTANT TREASURERS
Mark B. Baribeau
Philip R. Murray
James L. Carroll
Nicholas H. Palmerino
Mary C. Champagne
SECRETARY
E. John deBeer
Sheila M. Barry
Paul H. Drexler
William H. Eigen, Jr.
ASSISTANT SECRETARY
Christopher R. Ely
Bonnie S. Thompson
Quentin P. Faulkner
Philip C. Fine
Kathleen C. Gaffney
Isaac H. Green
Dean A. Gulis
Martha F. Hodgman
John Hyll
Jeffrey L. Meade
Kent P. Newmark
Dawn Alston Paige
Jeffrey C. Petherick
Lauren B. Pitalis
Peter B. Ramsden
Philip J. Schettewi
David L. Smith
Robert S. Takazawa, Jr.
Sandra P. Tichenor
Jeffrey W. Wardlow
Gregg D. Watkins
Anthony J. Wilkins
John F. Yeager III
105
<PAGE>
- -----------------------------------------------------------------------
INVESTMENT ADVISER
Loomis, Sayles & Company, L.P.
One Financial Center
Boston, Massachusetts 02111
TRANSFER AND DIVIDEND PAYING AGENT AND CUSTODIAN OF ASSETS
State Street Bank and Trust Company
Boston, Massachusetts 02102
SHAREHOLDER SERVICING AGENT
FOR STATE STREET BANK AND TRUST COMPANY
Boston Financial Data Services, Inc.
P.O. Box 8314
Boston, Massachusetts 02266
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
One Post Office Square
Boston, Massachusetts 02109
This report has been prepared for the shareholders of the Funds and is not
authorized for distribution to
prospective investors in the Funds unless it is accompanied or preceded by an
effective prospectus.
